FTSE 100 in the red and Wall Street set for mixed open after US growth and jobs data

• FTSE 100 down 21 points
• Dow expected to open 0.14% higher
• CRH climbs after results

1.44pm: US growth revised up slightly

The US figures are out and they look a little mixed.

Second quarter GDP has been revised up from an annualised 6.5% to 6.6%, which is slightly less than the 6.7% analysts had been expecting but is still a sturdy performance.

US GDP Annualized (Q/Q) Q2 S: 6.6% (est 6.7%; prev 6.5%)

— LiveSquawk (@LiveSquawk) August 26, 2021

The upward revision reflected higher consumer spending than initially estimated, helped by the government’s stimulus cheques sent out during the three months.

Meanwhile weekly US jobs claims have come in at 353,000, around 3,000 higher than expected and 4,000 more than the previous week’s figure which has itself been revised up by 1,000.

The four week moving average was down 11,500 to 366,500, while the unemployment raate was unchanged at 2.1%.

Investors now have to work out what that all means for the Federal Reserves policy on whether to taper its support for the economy, ahead of Friday’s speech from the central bank’s head Jerome Powell at the Jackson Hole get-together.

At the moment Wall Street is fairly sanguine about the data, with the Dow Jones Industrial Average expected to edge up 0.14% while the S&P 500 is virtually flat and the Nasdaq down 0.12%.

Meanwhile the FTSE 100 seems stuck on the spot, down 21.21 or 0.3% at 7128.91.

12.20pm: US markets to make hesitant start

US stocks look set for a retreat on Thursday ahead of revised second quarter GDP figures and weekly jobless data that could add to the clues over possible Federal Reserve tapering ahead of the central bank’s Jackson Hole symposium.

Futures for the Dow Jones Industrial Average and the S&P 500 index were both 0.1% lower, while Nasdaq-100 futures shed 0.3%. The S&P 500 and the Nasdaq Composite index have both hit new all-time highs this week.

Investors are awaiting speeches from Federal Reserve officials on Friday that could offer clues on the central bank’s plans for tapering stimulus measures, with some betting that the Fed may slow those plans if there are signs that the economic recovery is faltering.

Data on the US economy’s growth in the second quarter and the latest weekly jobless claims are both due at 1.30pm BST. Jobless claims reached a new coronavirus (COVID-19) pandemic low in the second week of August and forecasters expect the latest numbers to be relatively unchanged at 350,000.

On the corporate front, Salesforce.com shares rose after the business software company reported a jump in quarterly sales and raised its full-year outlook on Wednesday evening. Gap and Dell Technologies are among firm’s scheduled to post results after the market close on Thursday.

Back in the UK, and the FTSE 100 continues to falter, down 22.43 or 0.31% at 7127.69.

The FTSE 250, another index to reach a new peak on Wednesday, is virtually flat at 23,979.86, down just 6.55 points.

12.04pm: Housebuilders higher

In the generally down market, housebuilders are making gains, after postive comments about the outlook from building materials group ().

() PLC is up 0.86%, () has put on 0.73% and () PLC is 0.68% better.

However the FTSE 100 remains rooted in negative territory, down 20.9 points or 0.29% at 7129.22.

11.14am: Oil dips after recent rises

Oil has slipped back after a three day rally on renewed demand fears.

Brent crude is down 0.64% at $71.79 a barrel while West Texas Intermediate – the US benchmark – is 0.79% lower at $67.82.

US crude inventories fell last week for the third consecutive week but some analysts believe demand may have peaked.

said: « For now, U.S. consumers appear to be shrugging off the spread of the Delta variant … However, it seems likely that we are near the peak in US demand, which will act as a lid on oil prices. »

Meanwhile production from Mexico has resumed after a fire on Sunday which killed at least five workers and reduced supply by around  400,000 barrels a day.

Meanwhile the FTSE 100 continues to lurk in the red. It is now down 30.48 points or 0.43% at 7119.64.

But it is off its worst levels, having earlier fallen as low as 7095.

Mining shares are putting the index under pressure, with () falling 2.83% and () down 1.57%.

9.58am: German consumer confidence falls

More downbeat news, with German consumer confidence falling by more than expected.

The GfK institute’s index showing how confident consumers are for September came in at -1.2, worse than the -0.7 expected by economists. This compares to the previous month’s figure of -0.4.

Neil Wilson at Markets.com said: « Germany’s GfK consumer sentiment declined to –1.2, data this morning showed. It comes after the Ifo business climate index declined for a second month as supply chain problems and rising COVID-19 cases worried companies. Another worry emerged as the EU may reimpose travel restrictions on the US. »

9.51am: Construction group bucks downward trend

Leading shares may be in the red ahead of the Jackson Hole meeting, but it is not all gloomy.

Constructions materials business () is up 1.83% to 3842p, making it the day’s biggest riser in the blue chip index, following a well received set of results.

AJ Bell financial analyst Danni Hewson said: « CRH looks set to be pretty busy for the foreseeable future as the US gets set to launch a huge infrastructure programme.

“But it’s not just US spending on roads and bridges, CRH is a highly diversified business across different products, geographies and end-uses providing exposure to different sweet spots in the global economic recovery.

“Little wonder the company was feeling so confident as it unveiled a very strong set of first half results which inevitably benefited from the lifting of COVID-19 restrictions which blighted numbers in the first half of 2020.

“It was particularly encouraging to hear CRH say it expects to do better than the record second half it enjoyed last year.

“The company is building up a wall of cash which it can deploy by investing organically in the business, returning cash to shareholders through dividends and buybacks and pursuing bolt-on acquisitions.

“CRH’s record on M&A is pretty strong, with a focus on easy to swallow deals, rather than big messy transactions which could give the company indigestion.

“There are two specks in this pretty cloudless sky for CRH – one is the risk of adverse weather causing construction delays and the other is the input cost inflation which is dogging many businesses right now.”

The rise in CRH shares has helped limit the damage on the FTSE 100, which is currently down 27.19 points or 0.38% at 7122.93.

 

9.14am: July vehicle production at its worst since 1956

It is perhaps not a surprise that markets have taken a dip, with some gloomy reports around about the state of the UK economy.

UK car production fell to the lowest level for a July since 1956, according to the latest figures from the Society of Motor Manufacturers and Traders.

It is the well rehearsed problems of the global chip shortage and workers absent after being pinged by the NHS app.

So UK manufacturers turned out 53,400 vehicles last month, down 37.6% on the same month last year, even though demand for vehicles is still strong.

Meanwhile more evidence that staff shortages are a growing concern for hospitality companies and other consumer facing businesses comes from a new CBI survey.

 Concerns among consumer companies about labour shortages have gained ground, receiving the highest number of citations on record, said the CBI.

Overall the survey showed a mixed picture for the whole sector, with sentiment about the general business situation improving amongst business and professional services, while consumer services saw sentiment fall compared to the previous quarter. 

Charlotte Dendy, CBI principal economist, said: “It’s clear that the service sector has performed well over the three months to August, revealing strong volumes and profits growth in our latest survey as the economy reopened over the summer. However, the outlook between sub-sectors is set to diverge over the quarter ahead, with a deterioration in prospects expected in consumer services.  

“Firms in sectors such as hotels, restaurants and travel, do not expect this strength to persist into the next quarter, reflecting the pressure that consumer services firms continue to face.  

“With the vaccine roll-out continuing to deliver, it is vital that this autumn is used by the Government to help unlock investment in the private sector to cement the economic recovery. Major reform of an unfair, uncompetitive and unproductive business rates system would be a good place to start.” 

Back with the market and the FTSE 100 is off its worst levels, but is still down 24.26 points or 0.34% at 7125.86.

8.25am: Ex-divs help send market lower

Leading shares have made a negative start to the day, with the FTSE 100 down 46.02 points or 0.64% at 7104.10.

The more domestically focused FTSE 250, which hit a new peak on Wednesday, is 0.34% lower at 23,904.7.

The market seems to be taking more notice of a dip in Asian markets rather than the new records on the S&P 500 and Nasdaq Composite in the US.

Having said that, volumes are fairly light as is to be expected in the holiday season. There is also a sense that investors are holding fire until the Jackson Hole meeting of central bankers in the US begins later.

Richard Hunter, head of markets at interactive investor, said: « A tepid opening to trading has seen investors choosing to react to further weakness in Asian markets, as opposed to the further strength of Wall Street. From a technical perspective, the usual slew of FTSE 100 stocks being marked ex-dividend on a Thursday also weighs on the index.

« Even so, the progress of the major indices is reflective of the general move towards a return to normality, with the imminent Jackson Hole symposium providing an opportunity for the Federal Reserve to assure investors that the punch bowl will not be taken away just yet.”

Ahead of Federal Reserve chair Jerome Powell’s comments at Jackson Hole, there are more indicators of the state of the US economy.

Investors will read the runes of the latest US weekly jobless claims and second quarter GDP revision to see what they could mean for the Fed’s attitute to tapering its support for the economy.

Among the ex-div fallers are (), down 2.35%, (), 1.65% lower and (), off 1.13%.

Meanwhile () has added 0.22%. The pharmaceutical company said its Forxiga product had been approved in Japan for the treatment of chronic kidney disease in patients with and without type-2 diabetes. 

There were also positive results from a phase 3 trial of a treatment for Wilson disease, a genetic condition in which the body’s pathway for removing excess copper is compromised.

7am: Leading shares set to start on the back foot

The FTSE 100 is set to start Thursday on the back foot, though ahead of the Jackson Hole get-together and the UK Bank Holiday it will likely be a particularly light summer’s day.

IG Markets makes the FTSE 100 around 16 points lower, pitching its price at 7,123 to 7,126 with just over an hour to go until the open.

The corporate diary is notably quiet, naturally so for the third week of August, meanwhile market macros are similarly uneventful until later today when the US Federal Reserve’s annual symposium kicks off at Jackson Hole, Wyoming.

Markets are expecting anything ground moving from the central bank or its chair Jay Powell, other than perhaps better detail of what they have in store in the coming weeks and months as they look to curtail the extra layers of stimulus adding during Covid.

“It’s still difficult to envisage that anything he says will change the markets outlook significantly on the timing of a taper,” said Michael Hewson, analyst at CMC Markets.

“The picture on that is more likely to become clearer in the aftermath of next week’s payrolls report.”

On Wall Street, equity benchmarks were modestly positive overnight.

The Dow Jones added 39 points or 0.1% to close at 35,405 whilst the S&P 500 was marked up 0.2% at 4,496.

The Nasdaq moved 0.15% into positive territory finishing at 15,041 whilst the small-cap focussed Russell 2,000 gained 0.37% to 2,239.

Around the markets

The pound: US$1.3758, down 0.04%

Gold: US$1,787 per ounce, down 0.24%

Silver: US$23.73 per ounce, down 0.5%

Brent crude: US$71.88 per barrel, up 1.16%

WTI crude: US$67.81 per barrel, up 0.4%

Bitcoin: US$47,090, down 2.7%

Ethereum: US$3,121, down 2.8%

6.50am: Early Markets – Asia / Australia

Stocks in the Asia-Pacific region were lower on Thursday after South Korea’s central bank raised interest rates, making it the first major economy to do so in the pandemic era.

The Bank of Korea hiked its rate by 25 basis points to 0.75%.

In Japan, the Nikkei 225 fell 0.02% while South Korea’s Kospi declined 0.60%.

The Shanghai Composite in China dipped 0.66% and Hong Kong’s Hang Seng index slumped 1.37%

Australia’s S&P/ASX 200 retracted 0.61% after disappointing reporting results dragged the market down, with eight of the 10 worst-performing stocks reporting in the past two days.

READ OUR ASX REPORT HERE