Wall Street lower as Tesla sinks and FTSE closes muted
A look at how the major markets are performing this Thursday
The FTSE 100 and European stocks finished mostly lower this Thursday amid a mixed bag of earnings and concerns over further rate increases by the US Federal Reserve.
The FTSE 100 (^FTSE) managed to finish flat at 7,899 points after trading in the red for most of the session, while the CAC 40 (^FCHI) in Paris tumbled 0.25% to 7,530 points. In Germany, the DAX (^GDAXI) slipped 0.61% to 15,789.
Markets were lower in London for most of the session amid a series of weak earnings reports from companies, with WH Smith (SMWH.L), Deliveroo (ROO.L) and Dunelm (DNLM.L) in the spotlight.
Oil giants BP (BP.L) and Shell (SHEL.L) lost 0.67% and 0.24% respectively, with crude prices falling against the dollar as fears of a rate hike in the US hurt growth and weighed on fuel demand.
WH Smith posted a better-than-expected half-year profit, following an improvement in passenger numbers at airports and train stations.
The London-listed retailer made a headline group profit before tax of £45m for the six months ended 28 February, compared with £14m a year earlier and market expectations of £42.6m.
WH Smith said in a statement it had made a strong start to its second half and was trading ahead of its full-year expectations.
Read more: Trending tickers: Tesla | Deliveroo | Glencore | Jet2
Orders at Deliveroo fell 9% in the first three months of 2023 as cost of living pressures continue to hurt demand for takeaways.
Chief executive Will Shu said it was a "resilient performance", driven by the British and Irish markets, as the company maintained its guidance for the year for low to mid-single digit GTV growth and core earnings of £20m-£50m.
Susannah Streeter, head of money and markets at Hargreaves Lansdown said: “Equity trading is lacklustre and oil prices have continued their descent downwards as more worries bubble up about the strength of the global economy and economies brace for further rate hikes from central banks.”
“Concerns are colliding about stubbornly high inflation in Europe, expectations of a US recession and this week’s weaker than expected data on investment in the beleaguered property sector in China,” she added.
Meanwhile, Glencore (GLEN.L) has ramped up pressure on Teck Resources as it continues a bid to take control of the Canadian miner.
In a letter to Teck shareholders, the FTSE 100 firm said it was ‘willing to consider’ upping a £18.5bn bid after it was rejected by management.
"We have sought to engage with your board regarding our proposal, but your board has consistently refused any engagement,’ Glencore wrote, adding it was willing to talk to shareholders directly if its advances were continually rebuffed, effectively threatening a hostile takeover.
"We urge Teck shareholders to take action to ensure that the board engage in bona fide negotiations regarding Glencore’s proposal," said chief executive Gary Nagle.
US and Asia financial markets
US stocks traded lower as weaker-than-expected quarterly profit at Tesla (TSLA) weighed on electric-vehicle stocks.
The Dow Jones (^DJI) lost 0.30% to 33,796 points. The S&P 500 (^GSPC) slipped 0.53% to 4,132 points and the tech-heavy NASDAQ (^IXIC) tumbled 0.55% to 12,091.
Tesla shares sank more than 8% after the company reported first-quarter earnings on Wednesday that fell short of Wall Street’s expectations. Tesla’s recent price cuts weighed on profits as the electric-vehicle maker reported quarterly gross margins of 19.3%, while Wall Street analysts had expected 20.7%.
Shares of traditional automakers making the push into EVs followed Tesla lower with both Ford (F) and General Motors (GM) falling more than 4%. EV focused companies, Rivian (RIVN) and NIO (NIO) also saw declines as Rivian shares fell nearly 5%.
Wall Street continued to be fixated on any indicators about the Fed's next policy move. According to the Fed's Beige Book survey released Wednesday afternoon, inflation and hiring slowed across the 12 Fed districts, and lending volumes and loan demand among businesses and consumers declined.
Read more: UK inflation eases but remains above 10% as food prices soar
In Asia, Tokyo’s Nikkei 225 (^N225) rose 0.18% to 28,657 points, while the Hang Seng (^HSI) in Hong Kong advanced 0.19% to 20,406. The Shanghai Composite (000001.SS) fell 0.10% to 3,366 points.
Pound vs dollar
The pound (GBPUSD=X) was flat against the US dollar, trading at $1.2440.
According to market experts, the 1.25 level continues to act as a significant barrier for the pound to overcome.
The same is happening against the euro, with sterling (GBPEUR=X) hovering around €1.13.
Sterling is the second-best performing currency in the G10 against the dollar so far this year, with a gain of 2.7%, just behind the Swiss franc, which has gained 3% in that time.
Meanwhile, Brent crude (BZ=F) slipped and was trading at around $81/barrel as the dollar strengthened on fears that looming Federal Reserve interest rate hikes could curb energy demand in the world's top consumer.
Also weighing negatively on oil prices this week have been soaring inflation in Europe and economic data coming out of China that makes demand uncertain.
Watch: 'The Fed is doing the correct thing,' says Raymond James' chief economist
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