Stocks calm before the storm of the Biden/Trump tv debate / Image Source: Adobe

With investors biding time until Friday’s US Federal Reserve preferred inflation gauge, shares in London mostly fell on Thursday.

Thursday also marks a week until the UK heads to the polls. Two opinion polls published in the past 24 hours see Labour taking the lead, with Conservatives taking second place and Reform coming in third.

Amongst individual stocks, DS Smith shot up, but failed to take the FTSE 100 index with it. It rallied after news that Brazil’s Suzano ended the pursuit of International Paper.

The FTSE 100 index closed down 45.65 points, 0.6%, at 8,179.68. The FTSE 250 ended up 33.70 points, 0.2%, at 20,331.80, and the AIM All-Share closed down 1.45 points, 0.2%, at 764.47.

The Cboe UK 100 ended down 0.5% at 814.33, the Cboe UK 250 closed up 0.3% at 17,717.52, and the Cboe Small Companies ended down 0.5% at 16,916.42.

In European equities on Thursday, the CAC 40 in Paris ended down 1.0%, while the DAX 40 in Frankfurt ended up 0.3%.

Stocks in New York lacked direction at the London equities close, as investors digested a wave of US economic data and eyed Friday’s inflation print.

The DJIA was up 0.1% and the S&P 500 index up 0.2%, whilst the Nasdaq Composite lost 0.2%.

US first-quarter economic growth was upwardly revised slightly on Thursday, as expected.

US gross domestic product increased 1.4% quarter-on-quarter on an annualised basis in the three months to March 31. Growth eased from a 3.4% rally in the final three months of 2023.

The GDP rise was upwardly revised from the second estimate, which suggested it grew 1.3%. The first estimate had said GDP rose 1.6%.

Year-on-year, the US economy advanced 2.9% in the first-quarter, slowing from a 3.1% rise in the fourth.

‘Growth during the first half of the year is a little disappointing but it does not signal a significant increase in the odds of a recession or that the expansion is increasingly vulnerable. GDP is volatile and subject to large revisions. Since the economy is inherently seasonal, GDP is seasonally adjusted, although it is not perfect. The revisions to the PCE deflator will not alter the Federal Reserve’s calculus,’ analysts at Oxford Economics commented.

On Friday there is the latest monthly US PCE data. According to FXStreet, the PCE reading is expected to ebb slightly to 2.6% in May on-year from 2.7% a month earlier.

AJ Bell’s Russ Mould said the data ‘could play a crucial role in deciding the next steps for the Federal Reserve’s monetary policy’.

In the UK, politics continues to dominate headlines, with just one week until people take to the polls.

Two opinion polls have been published in the past 24 hours, both of which show Labour continuing to hold a large lead over the Conservatives, while Reform are several points behind the Tories in third place.

A poll by More In Common, carried out online from June 24-26 among 3,420 adults in Britain, gives Labour a 17-percentage point lead over the Tories.

The figures are Labour 40%, Conservative 23%, Reform 14%, Liberal Democrats 11%, Green 5%, SNP 3% and other parties 3%.

A poll by Norstat, carried out online from June 24-26 among 2,025 adults in Britain, puts Labour 16 points ahead.

The figures are Labour 39%, Conservative 23%, Reform 15%, Lib Dems 12%, Green 6%, SNP 4%, Plaid Cymru 1% and other parties 1%.

The pound was quoted at $1.2650 at the London equities close Thursday, higher compared to $1.2624 at the close on Wednesday. The euro stood at $1.0710 at the European equities close Thursday, up against $1.0678 at the same time on Wednesday.

Against the yen, the dollar was trading at JP¥160.67, little changed compared to JP¥160.66 late Wednesday.

In London, the FTSE 100’s DS Smith ended up 6.1%. Brazil’s Suzano ended the pursuit of International Paper, which is on the verge of sealing a deal to acquire DS Smith.

Suzano last month confirmed its interest in acquiring International Paper. Such a deal would have thrown into doubt International Paper’s acquisition of DS Smith.

However, Suzano said Wednesday: ‘It is important to emphasize that it has always been a condition of Suzano for the completion of this transaction that the engagement between the parties be based on private, confidential, and amicable terms. As it was not possible to proceed in this manner, Suzano has decided to terminate the negotiations.’

Shares in International Paper were down 7.8% in New York.

In the FTSE 250, Moonpig closed up 12% at the top of the index. It reported strong financial results.

The London-based online greeting cards and gift company said in the year that ended April 30, pretax profit rose 33% to £46.4 million from £34.9 million the previous year. Revenue grew 6.6% to £341.1 million from £320.1 million, 89% of which came from existing customers.

On the other hand, Currys lost 5.8%. Its shares struggled following the release of its annual results, perhaps hurt by the absence of a guidance lift.

Revenue in the year ended April 27 fell 4.5% to £8.48 billion from £8.87 billion. It swung to a pretax profit of £28 million, from a loss of £462 million.

Amongst London’s small-caps, Regional REIT plummeted 26%, after the commercial property investor announced a £110.5 million fundraising plan.

It will raise the funds through a placing, overseas placing and open offer of 1.11 billion shares at 10p each.

Harworth Group edged up 7.5%.

The regenerator of land and property for sustainable development and investment said it has exchanged contracts for the conditional sale of 48 acres of land at the Skelton Grange site in Leeds for £106.6 million.

Brent oil was quoted at $85.13 a barrel at the London equities close Thursday, up from $84.21 late Wednesday. Gold was quoted at $2,327.60 an ounce at the London equities close Thursday, up against $2,297.70 at the close on Wednesday.

In Friday’s UK corporate calendar, there are full year results from Record and Thruvision.

Other than the PCE reading in the US, the economic calendar for Friday has a GDP reading paired with current account data for the UK out at 0700 BST.

In mainland Europe, France will be digesting the latest inflation data before people head to the polls on Sunday. In Germany, there is retail sales and unemployment data due out.

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Issue Date: 27 Jun 2024