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UK and European stocks gain as Labour wins election / Image source: Adobe

European stocks were under pressure on Tuesday, while US equities are set to open lower, after eurozone inflation data veered towards being unfavourable, as core price pressure remains robust.

The data may have given European Central Bank President Christine Lagarde some food for thought. Lagarde, and her Federal Reserve counterpart Jerome Powell, speak at a conference in Sintra, Portugal later.

The FTSE 100 index was down 25.64 points, or 0.3%, at 8,141.12. The FTSE 250 was down 30.43 points, or 0.1%, at 20,192.78, and the AIM All-Share was down 1.50 points, or 0.2%, at 763.62.

The Cboe UK 100 was down 0.5% at 809.87, the Cboe UK 250 was down 0.5% at 17,559.12, and the Cboe Small Companies was down 0.3% at 16,877.04.

In European equities on Tuesday, the CAC 40 in Paris was down 0.7%, while the DAX 40 in Frankfurt was down 0.9%.

According to Eurostat, annual consumer price inflation in the single currency bloc eased to 2.5% in June, from 2.6% in May. The figure landed in line with FXStreet cited consensus. On a monthly basis, consumer prices rose 0.2% in June from May. They had risen at the same pace in May from April.

Core inflation was hotter-than-expected, however. The yearly core inflation rate was steady at 2.9%, but had been expected to ease to 2.8%.

‘Nothing in these figures would make the ECB cut again in July, and we think it’ll be eagerly awaiting data over the summer before seriously debating a next rate cut in September,’ analysts at ING commented.

ECB President Christine Lagarde will speak at a central banking conference in Sintra, Portugal, as will Federal Reserve Chair Jerome Powell.

At 1500 BST, the latest US job openings and labour turnover survey is reported. The data comes ahead of Friday’s nonfarm payrolls, and Wednesday’s pre-cursor ADP jobs report.

The pound was quoted at $1.2635 at midday on Tuesday in London, slipping from $1.2639 at the equities close on Monday. The euro stood at $1.0711, down against $1.0723. Against the yen, the dollar was trading at JP¥161.68 up compared to JP¥161.58.

In London, Sainsbury’s fell 1.6% as it reported a growth slowdown. However, it noted it made the biggest market share strides in the grocery industry in recent weeks.

The supermarket chain said total sales in the 16 weeks to June 22, its first quarter, rose 4.2% on-year. Grocery sales alone rose 4.8%. Sainsbury’s said total retail sales, excluding fuel, rose 2.6%, while like-for-like sales climbed 3.0%. Like-for-like sales growth eased from 4.8% in the fourth-quarter.

Away from grocery, the picture was less bullish for the firm. General Merchandise & Clothing sales were down 4.3%. Argos sales fell 6.2%.

Wizz Air dropped 1.5%.

It reported a decline in passenger numbers in June, with the budget carrier noted some aircraft were ‘grounded due to GTF engine inspections’. The GTF engine is made by manufacturer Pratt & Whitney, whose customers include plane maker Airbus.

Wizz Air said June capacity rose 0.4% on-year to 5.8 million seats. Passenger numbers fell 0.2% to 5.3 million. Its load factor shrank to 91.7% from 92.2% a year earlier. On a rolling 12-month basis, however, capacity was 14% higher, passengers numbers up 15% and the load factor improved to 90.1% from 89.4%. For the whole of the first-quarter of its financial year, seat capacity rose 0.7% year-on-year, with passenger numbers up 0.5%, Wizz Air said. Wizz Air’s financial year runs to March.

‘Airbus updated the market on its revised manufacturing output on 25 June 2024. While the airline’s long-term growth plan remains unchanged, Wizz anticipates that this could impact the scheduled fleet program in the coming years, as previously indicated,’ Wizz Air added.

Retailer Shoe Zone warned on profit, as it cautioned it is still grappling with ‘cost pressures associated with container prices’. The stock slumped 16%.

Shoe Zone, which said the cost climb is due to a fall in the supply of shipping vessels and the continuation of a reroute away from the Suez Canal, now expects adjusted pretax profit for the year to October 2 of ‘not less than £10.0 million’. In May, it had lowered its profit forecast to £13.8 million from £15.2 million.

‘Budget footwear firm Shoe Zone left investors with cold feet after its latest profit warning. Perhaps the most significant takeaway from the downbeat guidance was the flagged increase in shipping costs, with upward pressure on container prices thanks to the reroute away from the Red Sea and the Suez Canal,’ AJ Bell analyst Russ Mould commented.

‘It is a reminder that inflationary pressures remain in the global economic system which may have wider implications than tripping up Shoe Zone. It also means investors will be closely monitoring companies with global supply chains to see if they are experiencing a similar impact.’

Stocks in New York were called lower. The Dow Jones Industrial Average was called down 0.3%, the S&P 500 index down 0.4%, and the Nasdaq Composite down 0.5%.

Brent oil was quoted at $87.24 a barrel at midday in London on Tuesday, up from $86.18 late Monday. Gold was quoted at $2,324.20 an ounce, down against $2,327.85.

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Issue Date: 02 Jul 2024