FTSE 100 closes on fresh high and US stocks buoyant as earnings season kicks into gear

Tesla is the stock to watch as it reports earnings on Monday. The FTSE 100 was up 0.2% by the opening bell in the US. (REUTERS / Reuters)

The FTSE 100, European and US stocks were tracking higher by the the time Europe closed on Tuesday, spelling a positive start to the week as geopolitical tensions unwind.

The FTSE was trading at record levels — reaching 8,076 points on Tuesday morning — heading past its previous high of 8,047 seen in February 2023. US stocks ticked into the green ahead of a raft of company updates.

• The FTSE 100 (^FTSE) was up 0.2% by the end of the trading day, at around 8,041 points. The DAX (^GDAXI) in Germany rose 1.4% and the CAC (^FCHI) in Paris was 0.7% higher.

• The S&P 500 (^GSPC) rose 1.1% after staging a comeback from a six-day run of losses the previous session. The Dow (^DJI) was up roughly 0.6%, while contracts on the tech-heavy Nasdaq Composite (^IXIC) also stepped up 0.4% by the end of the day in London.

• Tesla (TSLA) is the stock to watch as it reports earnings after the bell on Monday. The EV maker has suffered a dramatic couple of weeks, including a headcount cut and a price reduction on some of its key models. It was up around 2.1% by the close in London.

• The positive sentiment in the UK came as analysts look to August for the Bank of England's first interest rate cut. Markets are now pricing in two base rate cuts by the end of the year.

• The moves higher also came following fresh data from the Office for National Statistics, that show borrowing hit around £121bn in the financial year just ended — a decrease of £8bn on the previous year. Borrowing tracked £6.6bn higher than forecast by the Office for Budget Responsibility.

• Spending rose about £58bn due to the bill for public services and benefits outstripping large reductions in interest payable and energy support scheme costs.

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That's all for today!

Tue, April 23, 2024 at 11:30 a.m. EDT, Lucy Harley-McKeown

Thanks for reading — head over to our US live blog for more market moving news.

US stocks at the open

Tue, April 23, 2024 at 9:30 a.m. EDT, Lucy Harley-McKeown

Tue, April 23, 2024 at 8:00 a.m. EDT, Lucy Harley-McKeown

JD Sports has agreed to buy US rival Hibbett for around $1.1bn (£899m) in a bid to push ahead with its expansion in the US.

The deal, which will be funded using $300m of cash and a $1bn extension to its existing bank facilities, works out at $87.50 per share for Hibbett, compared with a $72.49 closing price on Monday. This represents a 20% premium.

Régis Schultz, JD Sports chief executive, said the move will speed up its US growth plans. He said: “Hibbett’s footprint is highly complementary, adding a stronger presence in communities across the southeastern US, where we currently have a limited presence.”

It comes as Britain's biggest sportswear retailer has come under pressure globally after weak outlooks from sports apparel makers such as Nike (NKE) and Puma (PUM.DE).

Hibbett, which also runs the City Gear sporting goods chain, has 1,169 stores across the US. The enlarged group would have combined revenues of about £4.7bn in North America, JD Sports said, adding that the region's contribution to total sales would increase to about 40% from the current 32%.

JD Sports shares rose 7% in London after the news.

Selling season lifts Taylor Wimpey

Tue, April 23, 2024 at 7:30 a.m. EDT, Lucy Harley-McKeown

Shares in Taylor Wimpey rose as much as 1% in London as the UK housebuilder reiterated its guidance for 2024 thanks to a rise in its sales rate during the key spring selling season.

The company also reaffirmed its home-build targets of around 9,500 to 10,000 homes in Britain this year, excluding joint ventures. The midpoint of that range is about 7% lower than last year's 10,438 units.

Net private sales rate, as of 21 April, came in at 0.73 units per outlet, better than the 0.67 homes logged in from the start of the year till 25 February.

"While we are mindful of ongoing market uncertainty and affordability challenges, it is pleasing to see continued market stability supported by good mortgage availability and sustained customer confidence," Jennie Daly, chief executive, said in the trading statement.

Oli Creasey, property research analyst at Quilter Cheviot, said: "While this is encouraging, we do not know what assumptions are being made about house prices and mortgage rates to support that growth.

“We expect little change to share price or expectations given these in-line results.”

Stocks to watch ahead of the open: Tesla

Tue, April 23, 2024 at 7:14 a.m. EDT, Lucy Harley-McKeown

Tesla is set to report earnings for its first quarter after the bell on Tuesday, delivering an update on its current and future prospects as investor sentiment slides. It comes amid slowing global demand for EVs and pressure on prices from Chinese rivals.

The electric carmaker's share price is down a more than 40% year-to-date after disappointing Q4 results issued weak and non-specific delivery guidance for the year and missed on deliveries by about 13%.

The company is expected to report adjusted earnings per share of $0.52 on top-line revenue of $22.31bn, per Bloomberg consensus estimates. This would be its first revenue decline in four years.

It is also expected to post $1.49bn in operating profit, a 40% slide from a year ago. In terms of non-GAAP metrics, Wall Street is expecting $1.79bn in adjusted net income, and EBITDA of $3.32bn.

Investors will also be watching for Tesla’s future product roadmap.

It comes as Tesla attempted to boost demand for its EVs on Friday by cutting the prices of three of its five models in the US. It then went on to cut prices around the world during the weekend, including in China, the Middle East, Africa and Europe.

It cut the US prices of the Model Y, Tesla’s most popular model and the top-selling EV, and also of the older and more expensive Models X and S.

Those cuts reduced the starting price for a Model Y to $42,990 (£34,874), and to $72,990 for a Model S and $77,990 for a Model X. It also slashed the US price of its Full Self-Driving driver assistance software from $12,000 to $8,000.

UK PMI analysis

Tue, April 23, 2024 at 4:56 a.m. EDT, Lucy Harley-McKeown

Here's Chris Williamson, chief business economist at S&P Global Market Intelligence's take:

“Early PMI survey data for April indicate that the UK economy's recovery from recession last year continued to gain momentum. Improved growth in the service sector offset a renewed downturn in manufacturing to propel overall business growth to the fastest for nearly a year, indicating that GDP is rising at a quarterly rate of 0.4% after a 0.3% gain in the first quarter.

“The upturn encouraged firms to take on workers in increased numbers which, alongside April's rise in the National Living Wage, drove cost pressures sharply higher. Although selling price inflation cooled slightly, the upturn in costs alongside solid demand suggests firms may seek to raise prices in the coming months.

“While the improving economic recovery picture is welcome news, the upward pressure on inflation will add to concerns that a sustainable path to below target inflation has not yet been achieved.”

Positive PMI numbers for the UK

Tue, April 23, 2024 at 4:55 a.m. EDT, Lucy Harley-McKeown

Here are the top lines (any reading above 50 indicates growth):

• Flash UK PMI Composite Output Index at 54.0 (Mar: 52.8). 11-month high.

• Flash UK Services PMI Business Activity Index at 54.9 (Mar: 53.1). 11-month high.

• Flash UK Manufacturing Output Index at 49.1 (Mar: 50.9). 2-month low.

• Flash UK Manufacturing PMI at 48.7 (Mar: 50.3). 2-month low.

UK private sector activity expanded for the sixth consecutive month in April as a robust recovery in service sector output helped to offset a marginal decline in manufacturing production. Output growth was supported by a solid upturn in new order volumes and a modest acceleration in staff hiring, in each case driven by the service economy.

April data indicated a steep increase in average cost burdens across the private sector, with the rate of inflation up sharply from March and the highest since May 2023. Stronger input price inflation was overwhelmingly linked to higher staff wages, particularly in the hospitality and leisure sector.

Many survey respondents noted pressure on labour costs from a near 10% annual increase in the National Living Wage and an indirect impact on pay awards to other employees.

Primark owner ABF leads FTSE gains

Tue, April 23, 2024 at 4:51 a.m. EDT, Lucy Harley-McKeown

Primark's parent company AB Foods is leading gains in the FTSE 100 today as it reported interim results.

The company's stock popped 9.6% after markets opened in London as it reported adjusted operating profit ran up 39% to £951m, with adjusted earnings per share (EPS) increasing 46% to 90.4p.

CEO George Weston praised the restoration of some supply chains and "normality in [the company's] markets" for the uptick.

FTSE strength down to currency weakness?

Tue, April 23, 2024 at 4:31 a.m. EDT, Lucy Harley-McKeown

Here's Neil Wilson from Finalto's take on the index's ascent:

The usual caveats apply – do you really need to read them all again? In dollar terms it’s still a way off. And the ‘record’ high in sterling terms doesn’t mask the longer-term structural weaknesses. But it does seem things may be improving for the UK – inflation is down, growth picking up, real wages seem set to rise for a year or two without leading to a wage-price-spiral, rates coming down and mortgage shock behind us….maybe there are reasons to be cheerful? We will look at this in an upcoming episode.

Recent strength in the equity index may have something to do with sterling weakness – GBPUSD touched the big Fib level at 1.23 and found support but it’s at 5-month lows.

US on the path to gains in premarket

Tue, April 23, 2024 at 4:30 a.m. EDT, Lucy Harley-McKeown

Eurozone PMI shows activity at 11-month high

Tue, April 23, 2024 at 4:24 a.m. EDT, Lucy Harley-McKeown

Here are the top lines:

Business activity in the euro area grew at the fastest rate for nearly a year in April, according to provisional PMI survey data. The improvement indicates that the region continues to pull out of the recent downturn, albeit growing only modestly amid divergent sector performances. Increasingly robust service sector growth was nevertheless accompanied by signs of a further moderation of the manufacturing downturn.

Jobs growth also accelerated as business confidence remained elevated by recent standards. Especially solid growth outside of France and Germany was again reported, but Germany also returned to growth in April and France came close to stabilising.

Despite the good news, price pressures also picked up across the eurozone alongside the improvement in output and hiring, often linked to higher wage bills. Input costs and average selling prices both rose at faster rates, reflecting stubbornly elevated price pressures in the service sector.

UK government borrowing ticks up above forecasts

Tue, April 23, 2024 at 3:27 a.m. EDT, Lucy Harley-McKeown

The key figure here is the difference between spending and tax income, which hit £120.7bn in the year to March, according to the ONS.

That's £6.6bn more than forecast.

A Treasury spokesperson said:

“Debt increased in recent years because we rightly protected millions of jobs during Covid and paid half of people’s energy bills after Putin’s invasion of Ukraine sent bills skyrocketing.

“We can’t leave future generations to pick up the tab, so we must stick to the plan to get debt falling. And with inflation falling and wages rising – we have been able to cut National Insurance by a third, which shows our determination to end the double taxation of work”.

Overnight in Asia

Tue, April 23, 2024 at 3:24 a.m. EDT, Lucy Harley-McKeown

Stocks across Asia were mixed overnight with gains in Hong Kong and Japan and a day in negative territory for Korea's major index.

Hong Kong's Hang Seng (^HSI) rose by 290 points, or 1.8%, as investors watched big corporate earnings, PMIs for the region and easing macroeconomic tensions.

The Nikkei in Japan (^N225) meanwhile rose 0.3%. New data showed that Japanese manufacturing numbers were still in contraction in April while growth in the services sector improved. Its PMI read 49.9 in April, compared to expectations of 48 and 48.2 in March. Japan's manufacturing sector hasn't recorded growth since June 2023.

Overnight in the US

Tue, April 23, 2024 at 3:10 a.m. EDT, Lucy Harley-McKeown

US stocks rebounded on Monday, with the S&P 500 snapping a six-day losing streak as investors braced for a rush of Big Tech earnings.

The S&P 500 (^GSPC) rose 0.9% to climb back above 5,000 after closing below the key level on Friday for the first time since February. The Dow Jones Industrial Average (^DJI) added 0.7%, or more than 200 points. The tech-heavy Nasdaq Composite (^IXIC) also gained 1.1% as AI darling Nvidia (NVDA) rebounded by adding than 4%.

Hopes are now resting on Big Tech earnings this week to reassure and reignite the market. On deck are quarterly reports from Meta (META), Microsoft (MSFT), and Alphabet (GOOG).

Good morning!

Tue, April 23, 2024 at 3:09 a.m. EDT, Lucy Harley-McKeown

Hello from another cold day in London! This morning we've already had government borrowing stats. Later the market will look to PMIs in the UK and Europe.

We also have corporate updates from:

• Novartis, Kering, Deutsche Boerse, ASM International, Renault, Akzo Nobel, Randstad and Temenos in Europe.

• Tesla, GM, Visa, PepsiCo, Danaher, GE Aerospace, Texas Instruments, Philip Morris, UPS, Lockheed Martin, Freeport-McMoRan, Spotify, General Motors, Kimberly-Clark, Halliburton, Baker Hughes, Seagate and Mattel in the US.

Let's get to it.

Watch: Tesla encourages investors to reinstate Musk's pay package

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