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Wall Street took its lead from European stock markets on Tuesday, falling into the red as US bond yields hit 16-year high.
The FTSE 100 (^FTSE) was trading 0.5% lower on the day, amid expectations that UK interest rates will remain higher for longer to tackle inflation, while the CAC (^FCHI) was 1% lower in Paris, and the Frankfurt DAX (^GDAXI) was 1.1% lower.
The 30-year Treasury yield surged to its highest level since 2007 at 4.856%, putting pressure on stocks.
It came UK food prices fell month-on-month in September for the first time in two years.The British Retail Consortium (BRC) revealed that food inflation decelerated to 9.9% last month, down from 11.5% in August. It is now at its lowest point since August 2022.
Outside of supermarkets, general shop inflation eased to 4.4% in September, down from 4.7% the previous month.
Helen Dickinson, chief executive of the BRC, said: "Customers who bought dairy, margarine, fish and vegetables – all typically own-brand lines – will have found lower prices compared to last month. Households also benefitted from price cuts for school uniforms and other back-to-school essentials.
“We expect shop price inflation to continue to fall over the rest of the year, however there are still many risks to this trend — high interest rates, climbing oil prices, global shortages of sugar, as well as the supply chain disruption from the war in Ukraine.”
London's benchmark index was also held back by energy and mining companies as prices of most commodities fell due to a stronger dollar.
The pound (GBPUSD=X) dipped as low as $1.2059 during the session, its lowest since mid-March, amid expectations that the BoE might be done with interest rate rises.
Michael Hewson, chief markets analyst at CMC Markets said: "The weekend agreement by US lawmakers to fund the government until 17 November, while kicking that problem into the long grass, has merely served to refocus investor attention on the resilience of the US economy.
"The agreement also shifted the odds towards another rate hike from the Federal Reserve in just under a months’ time given that economic activity in the manufacturing sector appears to have bottomed out in the short term.
"Yields in US treasuries, as well as UK gilts rose sharply on the day helping to act as a drag on equity markets"
Blog close and recap..
Well that's all from us today, thanks for following along. Be sure to join us again tomorrow.
Here's a quick reminder of some of the top stories from today...
Pound hits fresh six-month low
Oil falls 1% on strong US dollar
US JOLTS: rise in vacancies
Greggs puts price hike on hold as it adds more stores
Boohoo shares fall 10% as it cuts revenue forecasts
London Underground strikes called off
Have a good evening!
The best places to retire in the UK
Around a third (36%) of people ready for or approaching retirement said they had already moved or have considered moving house as part of their later-life plans, according to a survey by consumer group Which?.
Healthcare access (88%) was the most important factor for people looking to retire in the UK, followed by green space (75%) and proximity to local leisure activities (31%). Many also said they would prefer to live somewhere with low crime levels.
The analysis applied these factors to find the top-scoring local authority for Scotland, Wales and Northern Ireland, and each of the nine regions in England.
Which? gave each local authority a score out of 10 for healthcare, happiness, green space — specifically parks and playing fields — and also considered house price affordability.
Former Wilko staff get jobs at Poundland
Poundland has offered roles to more than 200 former Wilko staff, according to reports.
It comes as the chain bought up to 71 Wilko stores from administrator PwC after its collapse.
All the stores will be relaunched under the Poundland brand.
US JOLTS: rise in vacancies
US job openings rose from 8.9 million in July to 9.6 million in August as demand for workers remains high, the latest data revealed.
Meanwhile, the number of workers quitting their jobs marginally changed, at 3.6 million – leaving the quits rate unchanged at 2.3%.
The Bureau of Labor Statistics said on Tuesday:
Over the month, job openings increased in professional and business services (+509,000), finance and insurance (+96,000), state and local government education (+76,000), nondurable goods manufacturing (+59,000), and federal government (+31,000).
Strong passenger growth at Wizzair and Ryanair
Both Wizz Air (WIZZ.L) and Ryanair (RYA.L) have updated on passenger numbers today, revealing strong growth aid demand for cheap flights.
Wizz Air carried 5.5 million passengers last month, a 21.1% increase compared to the same month in 2022 while Ryanair carried 17.9 million travellers, a rise of 9 on the previous year.
Big Tech takes a back seat after the AI hype cycle
Throwing the word "AI" around isn't what it used to be, writes my colleague Hamza Shaban.
The biggest names in tech drove the stock market's surge this year, pivoting from the cold afterglow of cost-cutting layoffs to riding high on the exuberance of AI.
But the mega-cap stocks that led the way won't be what takes the S&P 500 higher on its next journey upward. It will be the other 493 companies with much lower valuations but higher potential to outperform, analysts say, without the baggage of inflated valuations or the pain from the tumble after the AI run-up.
Opportunities for value stocks, cyclicals, and beaten-down industries lie in the S&P's weighting.
Wall Street on track to open lower
We have just over an hour left until the opening bell...
Ricardo Evangelista, senior analyst, and Pierre Veyret, technical analyst at ActivTrades said:
"More volatility is likely later in the afternoon with the key US JOLTS report for August, alongside the Atlanta Fed president Raphael Bostic’s speech on the economic outlook and rising price pressure.”
“The STOXX-50 index, led lower by almost all sectors with real estate and utility shares as the worst performers, has now pulled back towards last week’s support level over 4,110.0pts. The market, still trading under its bearish trendline, shows no sign of a bullish reversal to come, technically speaking.”
“A break-out of the 4,100 pts / 4,110 pts zone could quickly lead the market deeper, around 4,065 pts and even 4,015 pts by extension.”
London Underground strikes called off
Two days of strikes across the London Underground have now been called off.
General secretary Mick Lynch said: “I congratulate all our members who were prepared to take strike action and our negotiations team for securing this victory in our tube dispute.
“Without the unity and industrial power of our members, there is no way we would have been able to make the progress we have.
“We still remain in dispute over outstanding issues around pensions and working agreements and will continue to pursue a negotiated settlement.”
Russian rouble nears 100 to the dollar
The Russian rouble weakened past the 100 to the dollar threshold on Tuesday, before paring back losses.
Previously the the Bank of Russia made an emergency 350-basis-point rate hike to 12% after the currency tumbled into triple digits in August.
The rouble hit 100.2550 in early trade, a more than seven-week low.
It was also down 0.1% against the pound at 120.10 and had gained 0.6% against the euro to 104.29.
Oil slide 'all to so with rising Treasury yields'
Warren Patterson, head of commodities strategy at ING, said:
Oil’s downward move has very little to do with fundamentals and all to do with rising Treasury yields and the stronger US dollar.
I still think oil has some room to move higher. Fundamentally, it is looking constructive.