FTSE 100 and US stocks lower as markets digest hawkish Powell comments
In This Article:
The FTSE 100 (^FTSE) and European stocks were tepid on Friday in London as UK chancellor Rachel Reeves said she is "not satisfied" with the latest UK GDP estimate, showing tepid growth for the July to September quarter. Meanwhile, US stocks were on track for weekly losses as investors took on board chair Jerome Powell's signal that the Federal Reserve won't hurry to make interest-rate cuts.
-
The FTSE 100 (^FTSE) fell 0.5% in early trade before regaining some ground to trade 0.1% lower by the closing bell. In the 30 days since 15 October, London's premier index is down 2.5%, as political uncertainty around the UK's budget and US election has shaken markets.
-
AstraZeneca (AZN.L) was among the top fallers in early trade as the market continues to digest the news that several former and current executives of the company were being investigated over allegations of illegally importing cancer medicines. The head of AstraZeneca’s China business, Leon Wang, was also detained by the authorities. The drugmaker also reported results earlier this week which met expectations.
-
The DAX (^GDAXI) in Germany fell 0.3%. Over in France, the CAC 40 (^FCHI) was also around 0.6% lower.
-
The Dow (^DJI) opened 0.5% lower, alongside the S&P 500 (^GSPC) fell 1.1% and the Nasdaq (^IXIC) was 1.9% down.
-
Powell's hawkish comments are casting a pall on markets as the initial optimism for president-elect Donald Trump's policies starts to wear off. The S&P 500 has already reversed one-third of its post-election rally, and the Nasdaq is shaping up for a weekly loss of almost 1%.
-
The moves came after UK GDP data showed growth slowed to 0.1% in the third quarter.
-
Reeves said: "Improving economic growth is at the heart of everything I am seeking to achieve, which is why I am not satisfied with these numbers."
Thanks for reading!
Head over to our US site for more market moving news. Happy Friday!
Odds on US rate cut in November decline
Week ending on a weaker note
Chris Beauchamp, chief market analyst at online trading platform IG said:
How US markets are faring at the opening bell
SpaceX share tender offer to value company at more than $250bn: FT
SpaceX is on the cusp of launching a tender offer, selling shares at a price of $135 per share, according to a report in the FT. The move would value the Elon Musk-led company at around $250bn, the report said.
The sale comes as Musk prepares to garner more political sway in the US. When Donald Trump takes office next year, the entrepreneur is set to lead the Department of Government Efficiency (DOGE).
Domino's Pizza on the up
Vicky McKeever writes:
Shares in Domino's Pizza surged 7% in after hours trading, after it was revealed that Warren Buffett's Berkshire Hathaway (BRK-B) had bought a stake in the business last quarter.
The conglomerate bought nearly 1.3 million shares in the company at the end of September, according to multiple reports, representing a stake of 3.7% which was worth $549m.
Berkshire Hathaway's portfolio update reportedly showed that it had also purchased a 1% stake in wholesale distributor of swimming pool supplies Pool Corp. (POOL).
Shares in Pool Corp. were up 6% in pre-market trading on Friday morning. Meanwhile, shares in Berkshire Hathaway were flat.
Earlier this week, Bloomberg reported that Berkshire Hathaway's B shares were being packaged into a leveraged exchange-traded fund (ETF), aimed at producing a 200% return on this class of stock.
Stocks to watch at the open: Tesla
Shares in Tesla, along with other auto stocks, fell in Thursday's session following reports that president-elect Donald Trump plans to eliminate a consumer tax credit aimed at encouraging electric vehicle (EV) adoption.
Reuters reported that Trump's transition team is planning to nix the $7,500 (￡5,921) tax credit, a measure of Democratic president Joe Biden's Inflation Reduction Act (IRA).
While Trump's transition team reportedly did not comment on what would happen to the subsidy, they said in a statement that the president-elect would deliver on "promises he made on the campaign trail".
Shares in EV maker Tesla fell nearly 6% on Thursday, while rival Rivian Automotive slid more than 14%, and another company in the space, Lucid Group, fell nearly 5%.
The fall in Tesla shares took the company's market valuation back below the $1tn mark, to $998.9bn, with shares having rallied after Trump's election win last week.
Tesla CEO Elon Musk, a major supporter of Trump's campaign, had previously said that while eliminating the tax credit might slightly impact the company's sales, the move would be "devastating" to its rivals.
Earlier this week, Trump tapped Musk and former Republican presidential candidate Vivek Ramaswamy to lead his proposed Department of Government Efficiency (DOGE).
Pound edges up
Pedro Goncalves writes:
The value of the pound has edged higher after official figures showed Britain’s economy slowed down in the run-up to the budget.
Sterling was up 0.1% against the dollar to $1.2665 but slipped 0.2% against the euro (GBPEUR=X) to €1.1991.
In the second quarter, the economy expanded 0.5% amidst expectations that the economic recovery was gaining momentum and a business-friendly Labour government was about to take the reins.
“The pound is higher on Friday; however, this is due to a general move lower in the dollar and does not appear to be linked to the GDP report. If the dollar continues its decline, then we could see a return to the $1.27 handle in GBP/USD. The market is not expecting the BOE to cut rates next [month], with only a 15% chance of a cut,” Kathleen Brooks, research director at XTB UK, wrote.
Growth of 0.1% represents an undershoot of the Bank of England's projection made in the November Monetary Policy Report.
Activity should get a boost next year
Debapratim De, director of economic research at Deloitte, said:
Did the budget make households less likely to spend?
Barret Kupelian, chief economist at PwC, pointed out:
Our take on Q3 GDP
The UK economy expanded by just 0.1% in the third quarter of 2024, falling short of the 0.2% growth forecast by economists and marking a slowdown from the 0.5% increase recorded in the second quarter.
The latest GDP figures, released by the Office for National Statistics (ONS), revealed weakening momentum in the UK’s dominant services sector.
In its first estimate of activity for the three months to September, the ONS reported that output from both the services and manufacturing sectors had eased. The slowdown has been attributed to lingering uncertainty surrounding the new Labour government’s budget and persistently high borrowing costs.
The services sector, which contributes roughly 80% of UK GDP, grew by just 0.1% during the quarter while construction grew 0.8% and production fell by 0.2%.
Here's how US stocks are faring in premarket
Here are some of the major Asian indexes
Asian markets mixed
It was a mixed day of trade in Asia on Friday, as traders digest fresh data about Chinese consumer sales growth.
China's retail sales expanded 4.8% year-on-year in October, speeding up from September and far better than expected, lifting hopes for the world's number two economy. It was the best performance since February.
The Hang Seng (^HSI) in Hong Kong ended the day just below the flatline, while the SSE Composite (000001.SS) finished 1.5% lower.
Over in Japan, the Nikkei (^N225) was 0.3% higher.
The performance of Asian stocks this week has been coloured by the looming fears of a China-US trade war, as president-elect Donald Trump readies his cabinet for power.
Thursday trade in he US
From our US team:
US stocks slid on Thursday as the post-election rally stalled further and investors assessed remarks from Federal Reserve Chair Jerome Powell, who said in a speech that the central bank does not need to be "in a hurry" to lower interest rates.
Markets took a noticeable step lower after Powell's comments. The Dow Jones Industrial Average (^DJI) slipped 0.5%, or more than 200 points, while the S&P 500 (^GSPC) dipped 0.6%. The Nasdaq Composite (^IXIC) was down about 0.7%, coming off a mixed day for the three major gauges.
Though the mood is muted, stocks are still near recent records after the latest consumer inflation data kept hopes for a December rate cut aloft. But a reading on wholesale inflation showed prices firmed slightly more than expected in October, prompting fresh questions on the Fed's path next year.
The focus is on how the Federal Reserve and its chair sees inflation developing as investors gauge the odds of rates going back to staying higher for longer. To that point, Powell stressed the US's economic strength, saying the Fed would be "watching carefully" to make sure inflation measures stay within an acceptable range.
Good morning!
Hello from London. It's Friday! If you were up bright and early you might have already read about the UK GDP reading (more on that here later). Looks liked a mixed day of trade yesterday in the US and overnight in Asia.
We'll also be bringing you the latest from companies reporting earnings.
Let's get to it.