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Wall Street and FTSE stocks down on interest rate uncertainty

A look at how the major markets are performing on Tuesday

US stocks were slightly lower on Tuesday after mixed economic data left investors considering which direction the Federal Reserve may go on interest rates next week. Photo: Getty.
US stocks were slightly lower on Tuesday after mixed economic data left investors considering which direction the Federal Reserve may go on interest rates next week. Photo: Getty. (LeonU via Getty Images)

Wall Street opened lower on Tuesday while the FTSE 100 and European stocks remained in the red as investors assessed the Federal Reserve’s possible next steps on interest rates ahead of its meeting following the release of mixed economic data.

The Dow Jones (^DJI) fell 0.05% to 33,547.67 points, while the S&P 500 (^GSPC) gained 0.16% to 4,267.14 points. The tech-heavy NASDAQ (^IXIC) also opened lower, by 0.36% to 13,181.42.

Figures on Monday showed that the US services sector barely grew in May as new orders slowed. However, US jobs data from last week came in strong, clouding the Fed’s policy path outlook.

FTSE 100 and European stocks

Across the pond, the FTSE 100 (^FTSE) fell 0.11% to 7,591.57 points, while the CAC 40 (^FCHI) in Paris dropped 0.18% to 7,185.27 points. In Germany, the DAX (^GDAXI) also declined, by 0.08% to 15,950.97 points, before market close.

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Investment company Abrdn (ABDN.L) was top of the FTSE index, along with financial services firm Legal & General Group (LGEN.L), while Vodafone (VOD.L), Shell (SHEL.L) and BP (BP.L) were at the bottom of the basket.

“The FTSE 100 slipped 0.1% to 7,589 as strength among mining stocks was offset by weakness in financials. With limited corporate news on the agenda this week to drive trading volumes, it’s likely that we could see markets struggle to find direction until we get updates on inflation, jobs and monetary policy,” Russ Mould, investment director at AJ Bell, commented.

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Shares in British American Tobacco (BATS.L) also got a boost after a reassuring update in which the company said it was sticking to guidance for revenues growth in the current year of between 3% and 5%.

Meanwhile, Primark owner AB Foods (ABF.L) announced plans to acquire National Milk Records, a dairy technology business for £48m ($59.53m), although its stock closed in the red.

US and Asia markets

The main US indexes were lower as investors weighed weaker-than-expected economic data ahead of next week's Federal Reserve meeting.

Data from the US Census Bureau showed that new orders for US manufactured goods climbed 0.4% in April from the previous month. That represented a slowdown from the downwardly revised 0.6% gain in March and missed economists expectations of a 0.8% increase.

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In Asia, the markets were mixed. Tokyo’s Nikkei 225 (^N225) rose 0.90% to close at 32,506.78 points, while the Hang Seng (^HSI) in Hong Kong lost 0.21% to settle at19,067.57. In mainland China, the Shanghai Composite (000001.SS) also declined, by 1.16% to 3,195.08 points.

Pound

The pound (GBPUSD=X) was up against the US dollar by 0.04% to 1.24. Against the euro, sterling (GBPEUR=X) was down, by 0.03% to 1.16.

Oil markets

In commodities, oil prices reversed Monday’s gains despite Saudi Arabia announcing at the weekend that it will reduce how much oil it sends to the global economy in a bid to prop up the price of crude.

US crude oil, or West Texas Intermediate (CL=F), lost 1.14% to trade at $71.33 a barrel, while Brent crude (BZ=F) fell 1.06% to $75.89 a barrel.

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Economic data

The British Retail Consortium’s measure of annual retail sales grew by 3.9% in May, falling from 5.2% in April to a seven-month low. However the figure is still sharply higher than the 1.1% drop logged in May last year.

“The retail sales figure remains supported by inflation, with higher prices flattering the reading. This masks the fact that the volume of goods purchased is under pressure with consumers forced to spend more pounds to acquire fewer items. Food price inflation remains particularly elevated, and given the essential nature of this category, individuals and households are unable to make significant cutbacks in this area,” Victoria Scholar, head of investment at Interactive Investor, commented.

Elsewhere, the Reserve Bank of Australia (RBA) lifted interest rates for a 12th time in just over a year in a bid to tame inflation. The decision to hike by another 25 basis points brings the cash rate to 4.1%, its highest level in 11 years.

Investors will also be keeping across Canada’s rate decision on Wednesday, as well as Eurozone GDP, US wholesale inventories and initial jobless claims, which are due on Thursday.

On Friday, there will be more data to digest from China with CPI and PPI figures out.

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