FTSE 100 dips below 7000, while Wall Street set to slip after goods orders and IMF update

FTSE 100 dips below 7000, while Wall Street set to slip after goods orders and IMF update

FTSE 100 falls 26 points Dow expected to lose ground  Reckitt drops after disappointing results 2.19pm: Slightly worse US orders, IMF holds 2021 growth forecast US durable goods orders have come in below expectations. They rose 0.8% to US$258bn compared to forecasts of a 2.1% increase. But orders for these long lasting manufactured goods – cars, fridges etc – have still risen in 13 of the last 14 months.   US Durable Goods Orders Jun P: 0.8% (est 2.1%; prevR 3.2%; prev 2.3%) US Durable Goods Orders Ex-Transportation Jun P: 0.3% (est 0.8%; prevR 0.5%; prev 0.3%) — LiveSquawk (@LiveSquawk) July 27, 2021 Meanwhile the International Monetary Fund has held its global economic forecast for this year at 6% but raised its estimate for 2022 from 4.4% to 4.9%. For the UK it expected growth of 7% this year 4.8% next. But it said the gap between rich and poorer countries had widened during the pandemic and risked getting even worse next year.   IMF Holds World Growth Estimate At 6% For 2021 While Vaccine Gap Widens -Advanced Economies To Grow Faster, Emerging Markets More Slowly -Forecasts 2022 Global Growth At 4.9% Vs 4.4% In April — LiveSquawk (@LiveSquawk) July 27, 2021 As for inflation it echoed the central bank view it was transitory but warned there could be a reassessment if there were persistently high readings. That raft of data has seen Wall Street futures improve slightly, with the Dow Jones Industrial Average now forecast to open 77 points or 0.23% lower, the S&P 500 down 0.15% and the Nasdaq Composite flat. In the UK the FTSE 100 is down 26.84 points or 0.38% at 6998.59 12.21pm: US markets await Fed news and tech results Wall Street is set for a slow start but the Chinese regulatory clampdown on tech does not seem to be having much effect. The Dow Jones Industrial Average is expected to open down 91 points or 0.27% while the S&P 500 is set for a 0.2% decline. But the tech heavy Nasdaq Composite is indicated just 0.05% lower. US markets are probably more concerned with the rise in Delta variant cases, as well as the latest Federal Reserve meeting which begins today and reveals its latest deliberations tomorrow. There are also a number of heavyweight company results due later, not least Apple, Google-owner Alphabet and Microsoft, all due after the market closes. Before that come the latest US consumer confidence figures, which are expected to slip back after a strong outcome in June. Michael Hewson, chief market analyst at CMC Markets UK, said: “As the Fed meeting gets underway in Washington DC, we have the latest US consumer confidence numbers for July, which are expected to soften a bit after they hit a post pandemic peak in June of 127.3, as the US economy continued on its path to recovery. “Consumer confidence still remains quite fickle if recent retail sales numbers have been any guide, and the latest personal spending data would also suggest that a lot of US consumers are in no rush to spend their stimulus payments over concern about rising cases of the Delta variant. “June retail sales saw a decent rebound in retail activity, however as has been the case for most of this year US consumer spending has been very much an on-off affair, which suggests the scope for a slight slowdown in this week’s consumer confidence numbers is highly likely with expectations of a fall back to 123.9.” Meanwhile the FTSE 100 continues its recovery, and is now down just 22.53 points or 0.32% at 7002.9. 11.23am: Shops still buoyant in July Retail sales in July were stronger than expected, according to the latest CBI survey. Its distributive trends index came in at 23, down from 25 in June but better than the forecast figure of 21. And sales next month are expected to grow at a slightly faster pace. The internet retail sales figure was however the weakest on record (which means since August 2009) as shops reopened. Retailers expect this to pick up again next month but growth is expected to be below the long term average. Perhaps the stay-at-home parcel ordering frenzy has abated a little. Meanwhile orders grew at the fastest pace since December 2010, Ben Jones, principal economist at the CBI, said: “Retail sales have been at or above seasonal norms for the last four months now, although this picture is not universal, with the clothing and footwear stores in particular yet to see demand recover to usual levels. “While demand may be more stable, operational issues worsen. Relative stock levels are at a record low and expected to fall further still, while the number one worry for many firms at the minute is labour shortages throughout the supply chain as staff self-isolate.” The news has done little for the market, with the FTSE 100 still down 37.17 points or 0.53% at 6988.26. 10.52am: Miners slip back Mining companies are among the day’s fallers, with Glencore PLC (LSE:GLEN) down 2.01%. Rio Tinto PLC (LSE:RIO) is 1.56% lower, after the company said late on Monday that it would cut production at its alumium smelter in Canada because of strike action. Meanwhile the FTSE 100 has recovered from its worst levels and is now down 38.27 points or 0.54% at 6987.16. 10.10am: Investor says food delivery firm risks a hostile takeover Just Eat Takeaway.com (LSE:JET, NASDAQ:GRUB) NV is heading higher despite the overall market going in precisely the opposite direction. Its shares are up 2.19% or 131p at 6122p after one of its largest shareholders called on the company to take action to bolster its share price or run the risk of a hostile takeover. Cat Rock Capital, which owned Just Eat and Takeaway.com shares before the two merged last year and now has around 5% of the joint business, said the company should look at strategic options including divestments or indeed another merger with a rival. It believes the company could be vulnerable to a cheap offer if it does not take action. It also criticised what it called the company’s poor handling of its relationship with investors. Meanwhile the FTSE 100 remains in the red, down 62.2p or 0.89% at 6963.23 amid worries about China’s continuing clampdown on tech companies. Danni Hewson, financial analyst at AJ Bell, said: “It’s been a difficult year for investors in Chinese stocks due to regulatory interference. This has been an underappreciated risk for companies where most of the attention has been on the fast levels of revenue growth. “Another bout of US companies will report earnings later today including Alphabet, Apple and Microsoft and a strong showing from them could encourage some investors to ditch Chinese tech names in favour of the more familiar US names. However, regulatory intervention also remains a big risk to this part of the market, as concerns grow over the largest players having too much power.” Also coming later are the latest CBI survey on UK retail sales and US consumer confidence figures. 9.16am: Asian shares suffer late declines Leading shares have lost more ground, with the FTSE 100 now down 1.15% or 80.93 points at 6944.5. The mid-cap FTSE 250 index is also on the slippery slope, losing 0.88% or 201.74 points to 22,731.45. The further falls follow a sharp downturn in Asian markets as trading ended, with the Shanghai Composite Index closing 2.5% lower and Hong Kong’s Hang Seng dropping around 5%. China’s continuing crackdown on the tech sector is the driving force for the slump. Hang Seng Index extends loss to 5.5% w/Tencent plunges as much as 10%, Meituan as much as 16% as #China rout deepens. Hang Seng Tech Index has lost 17% in 3days, now in negative territory 1yr after launch. pic.twitter.com/dvV0VjAoTt — Holger Zschaepitz (@Schuldensuehner) July 27, 2021 There are some bright spots, notably speciality chemicals group Croda International PLC (LSE:CRDA). Its shares have now jumped 4.78% or 374p to 8200p after it said full year profits were now expected to be significantly ahead of expectations. This follows a 39% rise in half year revenues and a 42% increase in operating profits, with business boosted by its contract to supply vaccine maker Pfizer (NYSE:PFE). UBS said: “The shares are outperforming in early trading reflecting the implied double-digit upgrade to consensus estimates for 2021.” 8.38am: China clampdown hits UK market The FTSE 100 followed Asia lower as the shockwaves from China’s tech clampdown were felt in the Square Mile. Scottish Mortgage Trust (LON:SMT), one of Britain’s biggest investors in innovative giants such as Tencent and Alibaba, was caught in the fall-out from Beijing’s assault as its shares fell 2%. Market watchers expect it to be a bumpy ride all the way through to the Federal Reserves interest rate call after hours on Wednesday, which may provide guidance on the potential tapering of monetary support. None of the above had much bearing on Reckitt Benckiser’s (LON:RB.), whose wounds were purely self-inflicted. Shares in the consumer products giant tumbled 10% after it said it had been hit hard by rising commodity costs. “In terms of the immediate outlook, the company is also anticipating a difficult third quarter against tough comparatives, with some improvement in the final quarter,” said Richard Hunter, head of markets at Interactive Investor. On the up early on was speciality chemicals group Croda (LON:CRDA), which advanced 2.2% after its annual profits beat forecasts. 6.50 am: Back foot start predicted  The FTSE 100 is poised to slide further on Tuesday but could be set back on its feet later as results season starts to get into gear. Spread-betters have tipped London’s main equity benchmark for a 12.5-point fall, following a start to the week when it only just finished in the red at 7,025.43. Croda International PLC (LSE:CRDA) and Reckitt Benckiser PLC are among the blue chip reporters due today, though the mid-cap index is where more optimism resides, having come close to regaining its all-time highs above 23,000 yesterday and with Games Workshop Group PLC (LSE:GAW) and newcomer Moonpig Group PLC (LSE:MOON) among the results on show shortly.  READ: Tuesday to show how Games Workshop and Moonpig are navigating reopening trend Overnight, US stocks were in cautiously optimistic mode as big tech earnings started to come in, though Tesla Inc (NASDAQ:TSLA)’s strong set of results came after the closing bell, including net income topping US$1bn for the first time and earnings per share tripling. The S&P 500 and Dow Jones both rose 0.2%, while the Nasdaq Composite only just managed to finish in positive territory as investors await earnings reports from big guns Apple Inc, Microsoft Corp and Alphabet Inc (NASDAQ:GOOG) this evening. “There is no doubt that the uncertainty surrounding the Fed’s next move, as well as disruptions caused by rising coronavirus cases and events in Asia, are forcing investors to cash out their profits before going on vacation this summer,” said market analyst Naeem Aslam at AvaTrade. “However, investors should not be overly concerned because the Fed is expected to maintain its dovish stance in the coming months, and stock traders should closely monitor the performance of technology stocks this week in light of Tesla’s strong earnings yesterday.” Gold eased back below the $1800.00 an ounce mark. As analyst Jeffrey Halley at Oanda said: “Residual fears that the FOMC may mention the taper world is mainly responsible for the selling pressure, and gold is unlikely to rally significantly until the FOMC decision and statement.” 6.50am: Early Markets – Asia / Australia Stocks in the Asia-Pacific region were mixed on Tuesday as regulatory fears surrounding China’s technology and private education sector hit stocks in the region. The Shanghai Composite in China slipped 0.40% and Hong Kong’s Hang Seng index slumped 2.05% In Japan, the Nikkei 225 lifted 0.35% while South Korea’s Kospi rose 0.24%. Shares in Australia gained, with the S&P/ASX 200 trading 0.41% higher.