FTSE 100 closes down after US inflation figures temper tech firms' results

Independent

6 days ago

The FTSE 100 gave up early gains as a strong US inflation reading and weak mining stocks tempered enthusiasm provided by well-received earnings on both sides of the Atlantic.
The index closed down 4.13 points at 9,132.81. It had earlier traded as high as 9,190.73, a new all-time peak.
The FTSE 250 closed 186.25 points higher, 0.9%, at 21,962.83, and the AIM All-Share closed down 1.22 points, 0.2%, at 761.50.
In Europe on Thursday, the Cac 40 in Paris fell 1.1%, while the Dax 40 in Frankfurt slid 0.8%.
In New York on Thursday, the Dow Jones Industrial Average was down 0.1%, the S&P 500 was 0.4% higher, and the Nasdaq Composite rose 0.7%.
Stocks in London opened brightly after strong earnings in the capital and from two of the so-called Magnificent Seven on Wall Street.
'Stellar results from Microsoft and Meta have fired up investors, quickly shifting the focus from US interest rates potentially staying higher for longer to an environment where big tech is ruling the roost again,' said Russ Mould, investment director at AJ Bell.
'The probability of a US rate cut in September has fallen since the Fed's rate decision on Wednesday with the market now pricing in a 57% chance of rates staying level versus 35% a day ago.
'Normally, such a shift would be negative for investors who typically prefer rates to be trending lower. However, the big tech reporting season has got everyone excited about mega profits and tremendous earnings growth.'
The Federal Reserve left interest rates unchanged on Wednesday in a split vote, although markets detected a hawkish tone from chairman Jerome Powell.
'As expected, the FOMC kept policy rates unchanged amid two dissents. Powell appeared unfazed by the strong pressures to cut rates immediately, delivered hawkish comments and offered no new guidance about the future path of rates. We retain our call for one 25bp cut this year, in December,' said Marc Giannoni, at Barclays.
The Fed call was soon overtaken by the results from Microsoft and Meta Platforms, benefiting from the growth of artificial intelligence.
Software and technology firm Microsoft jumped 4.5% after a strong fourth quarter and guidance, which Dan Ives at Wedbush said reflected 'eye-popping cloud and AI strength'.
Mr Ives said it was a 'watershed' moment for Microsoft, with AI already changing the growth trajectory of the firm's cloud growth story.
Facebook owner Meta Platforms soared 12% after its second quarter results and better-than-expected guidance.
JPMorgan's Doug Anmuth said Meta's outsized revenue growth continues to support outsized infrastructure investments, with the sales increase largely due to AI-driven engagement increases and advertising improvements.
But the mood was dampened a touch by worries of a pick-up in the Fed's preferred inflation gauge.
Annual core PCE inflation index stood at 2.8% in June, the same rate as in May, which was, however, upwardly revised from 2.7%.
Analysts at TD Economics said an uptick in inflation was visible in the month-over-month and three-month annualised figures.
'With inflationary pressures likely to heat up further in the coming months alongside some easing in the labour market, we anticipate that consumer spending will see some additional easing in the third quarter,' the broker added.
Earnings also provided a spur in London with Rentokil, Rolls-Royce and Shell among those in the green.
Pest control specialist Rentokil leapt 9.5% as it said sales and marketing initiatives in North America are starting to have an impact, with organic revenue growth of 1.4% in the second quarter, up from 0.7% in the first quarter.
Rolls-Royce gained 7.1%, hitting an all-time high, as it raised its outlook for all of 2025, saying a strong first half showed 'our multi-year transformation continues to deliver'.
Shares in the jet engine and power turbine maker have soared by 80% in 2025 so far.
Charles Armitage at Citi said results were 'very strong', driven by Civil and Power Systems
Shell rose 1.2% as it maintained the pace of its share buyback and raised its dividend, as second-quarter profit fell but still topped expectations.
But Mondi fell 12% as the packaging firm warned of tariff risks in the second half of 2025.
On the FTSE 250, Just Group soared 67% after it accepted a £2.4 billion takeover from Bermuda-based wealth management firm, Brookfield Wealth Solutions.
Under the proposal, shareholders in the London-based provider of retirement income products will receive 220p cash for each share held.
Just Group chairman John Hastings-Bass said the offer 'delivers certain value for shareholders at an attractive cash premium'.
Meanwhile, JTC surged 14% as it agreed a deal to buy an estate planning firm and said net organic revenue growth was above 10% in the first half of the year.
The Jersey-based professional services company said it delivered a 'resilient and sector-leading performance' in the first half of 2025.
The pound eased to 1.3230 dollars late on Thursday afternoon in London, compared to 1.3285 at the equities close on Wednesday. The euro traded at 1.1442 dollars, lower against 1.1479.
The yield on the US 10-year Treasury was at 4.34%, trimmed from 4.37%. The yield on the US 30-year Treasury was at 4.87%, narrowed from 4.91%.
Brent oil was quoted lower at 71.11 dollars a barrel in London on Thursday, down from 72.99 dollars late on Wednesday. Gold was flat at 3,292.45 dollars an ounce against 3,292.75 dollars.
The biggest risers on the FTSE 100 were St James's Place, up 139p at 1,308.50p, Rentokil Initial, up 32.9p at 379.5p, Rolls-Royce, up 84p at 1,072p, Rightmove, up 22.2p at 818.6p and Prudential, up 25.6p at 963.8p.
The biggest fallers on the FTSE 100 were Mondi, down 141p at 1,027.5p, London Stock Exchange, down 795p at 9,260p, Antofagasta, down 117.5p at 1,877p, Diageo, down 86.5p at 1,853p and Anglo American, down 83p at 2,148p.