FTSE 100 and European stocks rise as Wall Street opens mixed on US services contraction

Live18 updates

• Wed 3 July 2024 at 8:49 am GMT-6

  US services contracts for first time since 2020

  The US economy suffered its first contraction in the services sector since May 2020.

  According to the latest services survey from the Institute for Supply Management, the PMI headline index fell to 48.8, down from May’s 53.8. The 50 mark separates growth from contraction.

  The business activity index plunged from 61.2 to just 49.6.

  Steve Miller, chair of the ISM services business survey committee, said:

  “The decrease in the composite index in June is a result of notably lower business activity, a contraction in new orders for the second time since May 2020 and continued contraction in employment.

  “Survey respondents report that in general, business is flat or lower, and although inflation is easing, some commodities have significantly higher costs.

  “Panelists indicate that slower supplier delivery performance is due primarily to transportation challenges, not increases in demand.”

• Wed 3 July 2024 at 8:26 am GMT-6

  Jeff Bezos to sell $5bn of Amazon

  Jeff Bezos has disclosed a plan to unload 25 million additional shares of Amazon, worth $5bn on the day the stock hit a fresh record high.

  The notice was filed after the market closed on Tuesday, although sales could also take place as early as that day, according to the filing.

  Bezos sold shares worth about $8.5bn over nine trading days in February — the first time he disposed of company stock since 2021.

  The additional sales would bring his total this year to roughly $13.5 billion, according to calculations by the Bloomberg Billionaires Index.

  Bezos would still hold nearly 912 million shares, or about 8.8% of Amazon, following the latest sale. He’s the world’s second-richest person with a net worth of $221.6bn, according to Bloomberg’s wealth index.

  Amazon’s shares closed Tuesday at $200, the highest since its 1997 listing.

• Wed 3 July 2024 at 7:04 am GMT-6

  Wall Street to open flat as US private sector adds fewer jobs

  Wall Street futures are muted at the moment, around half an hour before opening in New York.

  It comes as the US private sector added fewer new jobs than expected in June.

  According to the ADP National Employment Report, firms added 150,000 positions to their payrolls last month, lower than the 165,000 expected and below the upwardly revised 157,000 added in May.

  Nela Richardson, chief economist at ADP, said:

  “Job growth has been solid, but not broad-based.Had it not been for a rebound in hiring in leisure and hospitality, June would have been a downbeat month.”

  June ADP payrolls +150k vs. +165k est. & +157k prior … some industry highlights include: leisure/hospitality +63k; construction +27k; professional/business services +25k; information -3k; manufacturing -5k pic.twitter.com/lqioPKZvLt

  — Liz Ann Sonders (@LizAnnSonders) July 3, 2024

• Wed 3 July 2024 at 6:42 am GMT-6

  What to do with an inheritance

  

  It might not feel like it, but as a nation we’re getting richer. We’re sitting on more value in property, investments and savings than ever before.

  This wealth is predominantly held by older people, and unless they’re busy spending their kids’ inheritance, there’s a good chance they’ll end up leaving at least some of this to their family.

  Around one in 20 people will inherit money during their lifetime, and while some will spend it overnight, others could use it to make a significant difference to their lives.

  A fifth of people said they would use at least some of an inheritance to pay off debt and a fifth would put it towards buying a house, according to a survey by Hargreaves Lansdown.

  Almost half would save at least some of it and almost a quarter would invest. Only a fifth said they wanted to have fun with at least some of the money.

  Of course, there’s a world of difference between what we say we’d do, and what we’d actually be tempted to do if we were handed thousands of pounds.

  So here are seven tips on what to do with an inheritance…

• Wed 3 July 2024 at 6:15 am GMT-6

  Wizz Air president steps down

  The president of Wizz Air has stepped down from his position at the helm, triggering the promotions of three executives.

  Robert Carey, who previously worked at Delta Air Lines and EasyJet, will leave the Hungarian low cost airline to “pursue other interests”.

  Chief operations officer Michael Delehant is now set to become senior chief commercial and operations officer, while Diarmuid O’Conghaile, the managing director of Wizz Air Malta, will become chief operating officer.

  Head of operations control Mauro Peneda will be taking on Mr O’Conghaile’s role.

  Wizz Air chief executive József Váradi, who will take on Mr Carey’s commercial leadership role until October, said:

  “Today’s announcement marks significant and well-deserved career advancements for Michael, Diarmuid and Mauro.

  “These promotions underscore Wizz Air’s steadfast commitment to promoting from within, based on performance and merit. Their leadership and contributions will continue to drive our success as we progress towards our WIZZ500 goals in the years ahead.

  At the same time, we thank Robert for his contribution and wish him success in his future endeavours.

• Wed 3 July 2024 at 5:53 am GMT-6

  Gold prices rise

  

  Gold prices rose in early Wednesday trading, benefiting from a softening of the dollar. The precious metal’s gains are relatively modest, driven by hopes of a US rate cut following the Federal Reserve Chairman’s acknowledgement that inflation is finally moving in the right direction.

  Ricardo Evangelista, senior Analyst at ActivTrades, said:

  “Such declarations raised hopes among traders that an interest rate cut would arrive soon after the summer.”

  “However, Jerome Powell also noted that more progress is required before the central bank starts loosening its monetary policy. In this context, today’s release of the latest Fed minutes could provide more clues on the sentiment of decision-makers within the FOMC, with the publication of employment figures on Friday being another crucial moment for gold traders.”

  “The resilience of the US economy has created room for the Fed to maintain elevated rates, with the robust labour market playing an essential role in this dynamic.”

  “Therefore, Friday’s NFP reading may impact traders’ expectations, influencing treasury yields and the dollar’s performance in relation to other major currencies, with gold prices likely reacting accordingly.”

• Wed 3 July 2024 at 5:31 am GMT-6

  Here’s the biggest risk to Nvidia being a $10trn juggernaut

  Nvidia’s (NVDA) mind-blowing success story is attracting hungry competitors — and that may stand in the way of the chip juggernaut eventually hitting a $10 trillion market cap.

  “There’s very little likelihood that there isn’t competition out there [for Nvidia],” Goldman Sachs portfolio manager Brook Dane told Yahoo Finance Executive Editor Brian Sozzi on his “Opening Bid” podcast (see video above or listen here).

  “We think the ASIC [application-specific integrated circuit] guys are doing an incredible job and likely to build scale,” Dane added.

  Dane foresees strength in data centers with the capability to run large language models, which lifts up ASIC manufacturers who supply chips needed for data infrastructure.

  “We think the market does not appreciate how big the ASIC chip opportunity is for them,” he said regarding Marvell (MRVL), one of his fund’s top 10 holdings.

  Read the full article here

• Wed 3 July 2024 at 5:01 am GMT-6

  Tile market slumps as homeowners avoid repairs

  Shares in Topps Tiles fell as 6% on Wednesday, to the bottom of the FTSE Small Cap index, after the British tile retailer said tough market conditions had lasted into the second half of its year. It blamed weakness in the home repair and sales segments.

  Total sales were 6.9% lower year on year in its third quarter, while the UK tile market is down between 10% and 15%, and the company said it was taking market share.

  The sales figure for the three months to 29 June was slightly lower than the 9.2% decline seen in the first half of its financial year.

  Demand for repair, maintenance and improvement has remained weak, especially for bigger projects.

  It told shareholders in a trading update: “Market conditions have remained challenging overall, with subdued demand in the domestic repair, maintenance and improvement sector, especially for bigger ticket projects.”

• Wed 3 July 2024 at 4:38 am GMT-6

  Vodafone strikes fresh network deal with Virgin Media O2

  Vodafone (VOD.L) struck a fresh network sharing agreement with Virgin Media O2 on Wednesday, boosting hopes of winning approval for its merger deal with Three.

  The operators have agreed to extend a partnership that was due to expire in 2025, while Virgin Media O2 will acquire more spectrum to better align spectrum holding between different operators in anticipation of the takeover being waived through.

  The acquisition is conditional upon the merger being completed.

  Vodafone’s planned merger with Three is currently under investigation by the Competition and Markets Authority (CMA). The UK competition regulator will reach a decision expected before the end of the year.

  Lutz Schüler, chief executive of Virgin Media O2 said:

  “This new agreement with Vodafone ensures that quality mobile network choice, performance, coverage and competition is enhanced to the benefit of millions of consumers, businesses and our mobile operator partners across the country.

  “We are extending and bolstering elements of our existing network-sharing arrangement, while also ensuring there is a robust, balanced and functional structure in place for the long-term should Vodafone and Three’s proposed merger gain consent.

  “We believe that this new agreement addresses the issues we have voiced and the CMA outlined in its initial decision, and will now continue our engagement with the regulator in this spirit.”

• Wed 3 July 2024 at 4:19 am GMT-6

  What Labour winning the election would mean for workers

  

  The general election on 4th July could mean a raft of changes to workers’ rights and employment law if the Labour party comes to power.

  Although the detail of how and when Labour plan to execute the “biggest upgrade to rights at work for a generation” remains to be seen, the party’s manifesto, employment rights green paper and Plan to Make Work Pay give an insight into the key priorities, including more rights from day one of employment.

  Kate Palmer, employment services director at Peninsula, the global HR, Health & Safety, and employment law advisory company, explains: “The Labour party manifesto has laid out approximately 60 changes to employment laws that they would look to bring in, should they win the general election. They have also pledged to bring about these changes within 100 days of taking office.

  “We don’t know what that would look like in practice, whether consultation periods on draft bills would happen within the 100 days or if they would be looking to push through the end legislation.”

  Here are some of the key pledges on work, employment and worker rights.

• Wed 3 July 2024 at 3:54 am GMT-6

  UK private sector growth slumps amid ‘pre-election seize up’

  The UK services sector slowed in June with a “pre-election seize up” causing a loss of momentum as companies and consumers held back ahead of the general election.

  Clients adopted a “wait-and-see” approach before placing orders and commissioning new projects.

  The S&P Global UK services PMI dipped to a seven-month low of 52.1 during the month but it was still the eighth-consecutive reading above 50, indicating growth in the sector.

  The average for PMI for the second quarter as a whole stood at 53.3, which was only marginally slower than that of the opening three months of 2024 at 53.7.

  New business intakes rose at a historically subdued pace, while the pace of job creation also eased.

  Meanwhile, firms’ cost pressures continued to cool, but remained elevated. The rate of output price inflation accelerated slightly from May’s recent low.

  Joe Hayes, principal economist at S&P Global Market Intelligence, said:

  “We are seeing some evidence of a pre-general election seize up across the UK services economy, with growth in business activity slowing to a seven-month low in June as the prospect of a change in government led to the adoption of a “wait-and-see” approach by some, restraining sales.

  “Nevertheless, we’re on track for another quarter of GDP growth, according to composite PMI data for the three months to June, albeit one that will be less punchy than the first quarter’s 0.7%.”

• Wed 3 July 2024 at 3:33 am GMT-6

  Turkish inflation falls to 71.6%

  Inflation in Turkey fell to 71.6% in the year to June, declining further than expected from a peak of 75.45% in May.

  It comes as the country has been battling a cost-of-living crisis that prompted President Recep Tayyip Erdogan to drop his opposition to interest-rate hikes to combat inflation.

  The central bank began to raise its key rate in June 2023, gradually taking it from 8.5% to 50%.

  Erdogan said this week: “We will all see the fever of inflation decrease in the coming months.”

  The staggering rise of consumer prices and the collapse of the Turkish lira are deemed responsible for the severe electoral setback inflicted on Erdogan’s AKP party in March municipal elections.

• Wed 3 July 2024 at 3:07 am GMT-6

  GSK buys flu and Covid jab rights from CureVac

  

  GSK (GSK.L) has bought the full rights to develop, make and sell COVID and influenza vaccines from Germany’s CureVac

  The UK’s second-biggest drugmaker is paying €400m upfront and up to an additional €1.05bn to the biotech firm, which was founded in Tübingen in southwest Germany in 2000.

  The two companies have restructured their existing collaboration into a new licensing agreement.

  Since 2020, GSK and CureVac have worked together to develop mRNA vaccines for infectious diseases. GSK will now take control of CureVac’s leading experimental vaccines to fight infections, including seasonal flu and bird flu.

  They currently have vaccine candidates for seasonal influenza and Covid-19 in intermediate clinical trials (phase II) and avian influenza in phase I clinical development. The jabs are based on CureVac’s mRNA technology.

  GSK shares were steady on the back of the news, while CureVac shares surged, trading 24% higher to reach a three-week high.

  Tony Wood, GSK’s chief scientific officer, said:

  “We are excited about our flu/Covid-19 programmes and the opportunity to develop best-in-class mRNA vaccines to change the standard of care. With this new agreement, we will apply GSK’s capabilities, partnerships and intellectual property to CureVac’s technology, to deliver these promising vaccines at pace.”

• Wed 3 July 2024 at 2:50 am GMT-6

  SoftBank’s shares hit record high overnight

  SoftBank (9984.T) shares rose 1.5% overnight to a record all-time high as it ramps up investments in artificial intelligence and semiconductors.

  The Japanese tech firm is gaining investor attention as its telecom arm moves aggressively towards generative AI, tying up with Microsoft and start-up Perplexity AI Inc. It is also building data centres stocked with Nvidia accelerators.

  Its chip unit Arm Holdings is also trying to position its architecture as a means to conserve energy in devices running AI.

  Tomoaki Kawasaki, a senior analyst at Iwaicosmo Securities, said: “It’s getting another boost as more investors see it as a semiconductor-related stock.”

  Last month, SoftBank founder Masayoshi Son told shareholders that investments the technology group had made in the past were “just a warm-up” for his grand ambition to create an era of artificial intelligence.

• Wed 3 July 2024 at 2:35 am GMT-6

  Hawksmoor restaurant chain up for sale

  Restaurant chain Hawksmoor is up for sale in a deal that could value the restaurant chain at about £100m.

  It has hired investment bank Stephens to search potential suitors for the business.

  Hawksmoor, established in 2006 by Will Beckett and Huw Gott in London, has now expanded to 13 locations, including three outside of the UK. It is currently looking to expand its overseas operation.

  Last week it opened its first restaurant in Chicago, while also owning restaurants in Dublin and New York.

  Graphite Capital has owned a 51% stake in the chain since 2013 after it paid £35m to support a management buy out by both founders.

  The investment process, which was first reported by the FT, will see Beckett, who is the current chief executive, and Gott, who owns a minority stake, retain their stake after a deal is concluded.

• Wed 3 July 2024 at 2:18 am GMT-6

  Traders optimistic on US interest rate outlook

  

  Markets have received a boost this morning thanks to optimism on the near-term outlook for US interest rates.

  Comments by Federal Reserve chair Jerome Powell reassured investors that the central bank is becoming more confident about the path of inflation.

  Speaking on a panel in Portugal for a European Central Bank conference, Powell sounded positive about disinflation, saying that “inflation now shows signs of resuming its disinflationary trend”.

  This reassured investors that the Fed was becoming more confident about the path of inflation, although Powell also pointed out that given the strength of the economy and the labour market “we have the ability to take our time and get this right”.

  Markets are now pricing a 75% chance of a cut by September.

  Minutes from the Fed’s June meeting are due later today and could offer clues on the central bank’s thinking on rates.

  Read more here: Powell encouraged by cooler inflation data: ‘We are getting back on a disinflationary path’

• Wed 3 July 2024 at 1:47 am GMT-6

  Asia and US stocks

  Stocks in Asia were mostly higher overnight with the exception of mainland China. The Nikkei (^N225) climbed 1.3% on the day in Japan, breaking back above the 40,000 level for the first time in three months, while the Hang Seng (^HSI) rose 1.2% in Hong Kong.

  However, the Shanghai Composite (000001.SS) was 0.5% down by the end of the session, following a disappointing reading on service sector activity which decelerated in June, dragged down by slower growth in new orders.

  The Caixin services PMI fell to 51.2 (compared to the 53.4 expected) from 54 in May, marking the lowest reading since October 2023 thus raising concerns over a broader slowdown.

  Elsewhere, retail sales in Australia advanced 0.6% in May, reinforcing the case for an interest-rate hike.

  Across the pond on Wall Street, the S&P 500 (^GSPC) rose 0.6%, and the tech-heavy Nasdaq (^IXIC) was 0.8% higher. The Dow Jones (^DJI) also gained 0.4%.

• Wed 3 July 2024 at 1:31 am GMT-6

  Coming up…

  Good morning, and welcome back to our markets live blog. Be sure to follow along for all the latest news of what’s moving markets, and what’s happening across the global economy.

  Here’s a quick look at what’s on the agenda for today:

  • 7am: Trading updates: Cairn Homes

  • 9am: Eurozone HCOB Services and Composite PMIs final for June

  • 9.30am: UK S&P Global Services and Composite PMIs final for June

  • 11.30am: ECB policymaker Philip Lane speaks at forum in Sintra

  • 1.30pm: US Trade for May, initial jobless claims

  • 2.45pm: US S&P Global Composite PMI final for June

  • 3pm: US ISM Services PMI for June

  • 3.15pm: ECB president Christine Lagarde closing remarks at forum

  • 7pm: US Federal Open Market Committee minutes of last meeting