Lunchtime market roundup: Stocks up ahead of US ADP, home sales data

Stock prices in London were mostly higher on Tuesday midday ahead of US ADP employment figures; however gold and oil-linked stocks were major laggers as prices declined.

“European equity markets pushed forward with gains across all the major indices as investors digested softer than expected US sanctions against Iran,” AJ Bell Investment Director Russ Mould summarised. “While there was a sense of calm across markets, the situation could easily change as the week progresses.”

The FTSE 100 index was up 21.18 points, 0.2%, at 10,875.50. The FTSE 250 was up 152.31 points, 0.6%, at 24,869.79, and the AIM all-share was up 1.10 points, 0.1%, at 815.14.

The Cboe UK 100 was up 0.2% at 1,080.84, the Cboe UK 250 was up 0.7% at 21,683.71, and the Cboe small companies was down 0.4% at 19,039.16.

Oil and gold-linked stocks were major laggers in London. On the FTSE 100, Endeavour lost 1.3% while Fresnillo fell 1.1%. Shell lost 0.5%, and BP was down 0.4%. On the FTSE 250, Hochschild led the laggers, down 1.8%, while Ithaca Energy fell 1.2% and Harbour Energy lost 0.5%.

Gold was quoted lower at USD4,640.62 an ounce against USD4,670.28.

Brent oil was quoted at USD87.91 a barrel at midday in London on Tuesday, down from USD92.74 late on Monday.

“The swinging movements of oil within narrow ranges may reflect hesitation in the market as it evaluates the risks of supply disruptions from the Middle East, but it may also reflect short-term reassurance about the low likelihood of a return to military conflict,” XS Senior Market Analyst Samer Hasn commented. “Despite US Treasury Secretary Scott Bessent announcing the launch of Operation Economic Outcast against Iran, which would, at best, restrict access to Iranian oil supplies to markets if implemented, the market reaction reflected a conclusion that this step confirms the US administration is not seeking military escalation…this rapid shift toward an economic blockade may stem from the US administration’s desire to abandon this war, at least temporarily, without explicitly stating so or declaring a false victory.”

The defence and travel sectors gained a boost: Melrose led the FTSE 100, up 9.4%, having also announced an up to USD100 million claims programme for residents and businesses affected by May’s evacuation from Garden Grove, California, due to an issue in a tank storing methyl methacrylate.

“It’s an unfortunate event for Melrose but importantly there will be no criminal charges brought against the group,” Mould noted. “That means the industrial investor has escaped with a bruised reputation and is only out of pocket temporarily. The priority now is to ensure that safety standards are improved, otherwise Melrose could have much bigger problems on its hands.”

Rolls-Royce rose 2.3%, and Babcock 0.3%.

International Consolidated Airlines rose 2.3%, while Wizz Air rose 1.7% and easyJet edged up 0.1%. InterContinental Hotels was up 1.5%, and PPHE Hotel gained 4.3%, the second-highest FTSE 250 stock.

Housebuilders continued to rise, in light of the announcement that £10 billion in UK government funding will be allocated, in the first phase of its £39 billion social & affordable homes programme, for the construction of more “genuinely affordable homes”.

Vistry, which has won initial funding of £350 million, led the FTSE 250 with a 16% jump. Real estate platform Rightmove rose 3.1%. Housebuilders Taylor Wimpey, Bellway, and Berkeley Group rose 1.1%, 0.7%, and 0.7%, respectively. Large-caps Persimmon and Barratt Redrow gained 1.3% and 0.9%.

Meanwhile on AIM, Galileo Resources surged 24%.

The copper, gold and lithium mine developer announced that initial surface work has discovered a copper porphyry mineralised system within its Ferber licence in Nevada, with “scope for the potential discovery of a substantial mineralised body.” It said that this “strongly positive outcome…provides substantial encouragement for the drilling programme currently being planned at Ferber.”

In European equities on Tuesday, the CAC 40 in Paris was up 0.5%, while the DAX 40 in Frankfurt was up 0.8%.

The pound was quoted at USD1.3637 midday Tuesday, almost flat compared to USD1.3639 on Monday. Against the euro, sterling barely moved to EUR1.1688 from EUR1.1689 a day prior. The euro stood at USD1.1662, down from USD1.1669. Against the yen, the dollar was trading higher at JPY159.27 compared to JPY159.13.

Stocks in New York were called higher. The Dow Jones Industrial Average was called up 0.4%, the S&P 500 index up 0.5%, and the Nasdaq Composite up 0.9%.

“Nvidia’s upcoming results have the power to move markets up or down, with investors looking for clues on whether AI demand is losing momentum,” Mould commented. “The forthcoming Jackson Hole meeting will also be scrutinised by the market as investors seek more information from new Fed chair Kevin Warsh on how the US central bank will fight inflation. So far, Warsh is adopting a ‘less is more’ attitude to communicating what the Fed’s interest rate committee is thinking, and the market is still trying to adjust to this approach.”

The yield on the US 10-year Treasury was quoted at 4.67%, narrowing from 4.70%. The yield on the US 30-year Treasury was quoted at 5.20%, narrowing from 5.23%.

Still to come on Tuesday’s economic calendar, the US has building permits, ADP employment figures and new home sales.

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