The declined from its own record closing high at the open, weighed down by the usual Thursday raft of stocks being marked ex-dividend, today in the form of Tesco (LON:), Kingfisher (LON:), Barratt Redrow (LON:) and WPP (LON:). Lloyds Banking (LON:) shares eased by more than 2% after the initial relief of the motor finance consultation was erased by the group issuing a statement that its provision for the fines may be “material”. More positively, the focus on copper lifted the likes of Antofagasta and Anglo American, while Burberry shares popped following a broker upgrade.
Despite any weakness in opening exchanges, the premier index has posted an impressive gain of 16.5% in the year to date, quite apart from the additional boost across its constituents of an average 3.1% dividend yield. With an increasing appetite for haven destinations in evidence and with a still heavily discounted valuation to many of its global peers, the FTSE 100 for many continues to represent compelling value.
Meanwhile, there may be little room for manoeuvre on earnings misses in the imminent quarterly reporting season, given current valuation levels, but for the moment, the technology sector continues to ride roughshod over the bears, with the and roaring to new closing record highs.
At present, the theme is playing out that bull markets must climb a wall of worry. This has been evidenced not only but the flight to haven assets such as which is at record highs, but also by the increasing questions of valuation, particularly in regard to the AI trade.
Oracle (NYSE:) shares weakened earlier in the week as speculation emerged that margins on its cloud business were far lighter than those currently being pencilled in by analysts. Nor is there much room for any earnings disappointments in the upcoming reporting season.
One bank has estimated earnings growth of 20.9% in the tech sector for the third quarter, up from 15.9% in the second, with actual earnings expected to grow by 8% and revenues by 6.3% in an unusual ramping up of estimates affecting some 80% of stocks in the sector.
However, the current signals are suggesting that this particular rally is showing few signs of running out of steam. Nvidia (NASDAQ:) shares added 2% following some upbeat thoughts on the future of AI and its associated financial benefits, while Advanced Micro Devices (NASDAQ:) built on its run to jump another 11%, with Dell Technologies (NYSE:) not far behind with a further gain of 9% after its own bullish update on prospects.
A dearth of economic releases due to the government shutdown has left investors to focus elsewhere, although the release of the Fed’s latest minutes did little to move the dial, with some division among its members on the future path of after the highly anticipated cut to come this month.
In the meantime, Delta Air Lines (NYSE:) and PepsiCo (NASDAQ:) kick off a Q3 season today, which is expected to show overall earnings growth of 7.9% year on year for S&P 500 constituents, in what would represent a ninth consecutive quarter of earnings growth. The new record closing highs take the gains so far this year for the S&P 500 and Nasdaq to 14.8% and 19.3% respectively, with the more traditional Dow Jones posting a 9.5% advance.