Yahoo Finance US stocks mixed as FTSE and European stocks fall ahead of US GDP update
A look at how the major markets are performing on Wednesday
Wall Street was mixed on Wednesday afternoon while European stocks and the FTSE 100 ended the day lower as investors now look ahead to a GDP update on Thursday on the state of the US economy.
Economists forecast the US economy to have expanded by 2.1% on a quarterly basis while Federal Open Market Committee (FOMC) policymakers have also raised the projection to 2.1% for 2023, an upgrade from the 1.0% growth projected in June.
The Dow Jones (^DJI) opened higher but then fell 0.17% to 33,563.36 points, while the S&P 500 (^GSPC) rose 0.03% to 4,274.84 points. The tech-heavy NASDAQ (^IXIC), meanwhile, remained in the green, up 0.21% to trade at 13,091.57.
The moves follow a brutal selloff on Tuesday that saw the Dow post its worst day since March.
FTSE 100 and European stocks
Across the pond, the FTSE 100 (^FTSE) closed down 0.46% to 7,590.92 points, while the CAC 40 (^FCHI) in Paris fell 0.05% to 7,070.22 points. In Germany, the DAX (^GDAXI) also declined, by 0.27% to 15,214.48- points.
Meanwhile, the STOXX Europe 600 Index (^STOXX) was down 0.19% at 446.82 as investors also continue to digest central bank decisions from last week and the possibility of higher interest rates for longer.
Also in the UK, Norwegian state energy company Equinor (EQNR.OL) has been given the green light to go-ahead with the Rosebank field in the North Sea, which is roughly 80 miles west of the Shetland Islands.
The company expects to produce 300 million barrels of oil from the field in its lifetime.
“The imposition of windfall taxes and continual tinkering with the country’s fiscal terms for oil and gas have led to a lot of grumbling in the sector – could this be a turning point? Ithaca Energy, which partners Norway’s Equinor on the Rosebank project, gushed higher on the news, helping shift the trajectory for a company which had endured a difficult time since its return to the market last year,” AJ Bell investment director, Russ Mould, said.
US and Asia
Wall Street will be focused now on US durable goods orders data – plus an EIA crude oil inventory update on stockpiles after the latest home sales and consumer confidence reports missed expectations on Tuesday and sent stocks lower in the aftermath.
“The looming threat of a government shutdown in the US, a weak consumer confidence reading overnight and continued industrial action by the country’s auto workers are creating a mood of instability which, when added to the strong hints that rates will stay elevated for an extended period, is not a happy cocktail for stocks,” Russ Mould added.
However, it will be the Personal Consumption Expenditures (PCE) index, the Fed's preferred inflation indicator, out Friday morning that will be the week's biggest economic data release.
In Asia, investors continue to consider the state of the property sector in China after it emerged that Evergrande was struggling to organise a process to restructure its debt, prompting weakness in basic resources.
However, the rebound in Chinese industrial profits provided some relief with the markets experiencing a mixed trading session.
Japan’s Nikkei 225 (^N225) gained 0.18% to close at 32,371.90 points, while the Hang Seng (^HSI) in Hong Kong rose 0.77% to 17,600.81. In mainland China, the Shanghai Composite (000001.SS) went up 0.34% to 3,112.69 points.
Pound
At the time of writing, the pound to dollar exchange rate (GBPUSD=X) was at 1.21, meaning £1 will get you $1.21. Meanwhile, the pound to euro exchange rate (GBPEUR=X) was at 1.14.
“The concept of ‘higher for longer’ interest rates is providing a tailwind to the greenback which is trading at 10-month highs, sending the euro and the pound to six-month lows against it,” Victoria Scholar, head of investment at Interactive Investor, said.
Scholar also noted that Sterling is on track for its worst month since the fiscal fiasco around the mini-Budget last year, reflecting the increased risk of a recession in the UK as rising borrowing rates weigh on the economy.
Oil prices
Crude oil prices gained on Wednesday morning as tighter supply concerns appear to be overshadowing further rate hike jitters slowing activity and thus demand.
At the time of writing, US crude oil, or West Texas Intermediate (CL=F), rose 1.01% to trade at $91.30 a barrel, while Brent crude (BZ=F) climbed 0.87% to $94.78 a barrel.
“Hedge funds have been getting in on the long oil trade in anticipation that there could be further upside to come. Markets are also pinning their hopes on a resilient US economy with most economic data supporting the idea of a soft landing. These factors are helping to offset concerns about a sluggish global demand backdrop and higher interest rates,” Victoria Scholar also noted.
Corporate highlights
UK car dealership Pendragon (PDG.L) has posted higher half-year profits as the group also finds itself at the centre of a bidding war.
US company AutoNation (AN) has put in an unsolicited takeover proposal worth around £447m, while US motor group Lithia Motors (LAD) has offered to buy its UK motor and leasing businesses for £250m.
In response, Pendragon said it was looking at all three proposals "in consultation with shareholders". Shares in Pendragon climbed nearly 9% following the update.
H&M (HM-B.ST) said warm September weather in many of its European markets has sent sales lower due to a delay in shopping for the autumn season.
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However, the Swedish fashion retailer reported a jump in profit in the third quarter, posting a net profit of €285.1m in the quarter ended 31 August, up from €45.6m the prior year. Its shares climbed 4.70% following the update.
Saga (SAGA.L) said that full-year revenue rose 15% to £355.3m, while its pre-tax loss shrank to £77.8m from £261.8m a year earlier. Shares in the company were down 1.70% following the update.
Old Mutual (OMU.L) shares were up nearly 5% after the insurance company reported a rise in adjusted headline earnings for the first-half as sales grew 14%. The company put it down to improved productivity levels.
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Meanwhile, Senior (SNR.L) has been awarded a 12-year contact extension with Rolls-Royce (RR.L) for an undisclosed amount.
Avacta (AVCT.L), Nike (NKE) and Carnival (CCL) are also releasing financial updates this week.
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