Asian markets were mixed to positive, but China made its own statement of intent as its fractious relationship with the US rumbles on. Exports expanded by 7.2% in July overall, which came despite a 6.1% decline in exports to the US, its largest trading partner. China’s trade surplus fell as a result to $98 billion from $115 billion the previous month, but the numbers nonetheless show a resilience regardless of the current trade negotiations.
A significant technical overhang weighed on the premier index at the open, as a dozen companies traded ex-dividend, including heavyweights such as AstraZeneca (LON:), Barclays (LON:), NatWest (LON:), BT (LON:), Rolls-Royce (LON:) and Reckitt Benckiser (LON:).
Hikma shares slumped after a disappointing interim update which adds to the pressure which the pharmaceutical sector has been facing of late, not least of which is due to the various tariff threats emanating from the US. WPP (LON:) can currently do little right in the eyes of investors at the moment, with its half-year numbers failing to impress, with a drop in opening exchanges leading to a decline of 53%
in the share price this year alone. InterContinental (LON:) Hotels offered some scant relief after sailing past revenue expectations, with a 6% hike in the price following. Despite the general limitations, the remains up by 11.8% in the year to date, continuing to flex its muscles as an attractive investment destination.
The Bank of England is widely expected to cut interest rates later today by 0.25% to 4%, although how much of an impact it will have on an unstable UK economy is moot. On the one hand, there are sufficient emerging signs of weakness which invite the need for stimulus, although inflation remains a nagging concern. Of equal interest to the decision itself will be the accompanying comments, which may reveal the bank’s latest guidance on the likelihood of any further cuts to come as the economy continues to flounder.
Meanwhile, US markets regained some poise after a troubling few trading sessions, with most company results continuing to shore up recent gains.
An estimated 80% of corporates in the earnings season so far have surpassed expectations, removing some of the valuation concerns which had resulted from the main indices trading at record highs. The latest beneficiaries were McDonald’s (NYSE:), which beat on earnings and profits, while the wider indices were boosted by a 5% jump in Apple shares (NASDAQ:) after the White House confirmed that the group would be upping its domestic manufacturing investment by a further $100 billion, taking the cumulative total to some $600 billion.
At the same time, earnings misses continue to be punished amid the fragile sentiment, as the likes of Snap (NYSE:), Advanced Micro Devices (NASDAQ:) and Walt Disney (NYSE:) found to their cost.
Tariff threats and trauma have become a way of investing life of late, such that the latest announcements had limited effect. President Trump doubled the tariffs on India to 50% given its purchases of Russian , while also promising a 100% levy on all imported chips, exempting those companies which manufacture in the US.
More broadly, investors are now looking for a catalyst to rekindle the animal spirits which had significantly boosted markets. More recent economic data has shown definite signs of weakening, especially within the labour market, which has apparently opened the door to a Federal Reserve in September, even though the central bank remains committed to judging inflationary tariff effects before easing.
In the meantime, the main indices remain in rude health for the year to date, with gains of 3.9%, 7.9% and 9.6% for the , and respectively.