The FTSE 100 jumped on Tuesday and traded at the highest level since the start of July as investors reacted to mixed corporate news and prepared for earnings from US stocks.
The FTSE 100 bounced back from overnight jitters in US markets as earnings season begins the heat up.
“Speculation that Apple may slow hiring and spending took a bite out of any market momentum overnight and set the tone for a weak start in London on a scorching Tuesday,” said AJ Bell financial analyst Danni Hewson.
“The current second quarter earnings season in the US was always likely to be crunch time for markets as investors looked for signs that the weaker economic outlook was weighing on earnings, which until now have held up reasonably well.”
However, the US markets appeared unperturbed, with the Dow Jones pre-open trading 0.6% higher to 31,243, the S&P 500 up 0.8% to 3,866.7 and the NASDAQ gaining 0.9% to 12,016.2.
UK Real Term Pay Falls
Meanwhile, real term total pay (including bonuses) fell 0.9% and real term regular pay (without bonuses) fell by a record 2.8%.
“Wages are rising, but prices are rising much faster, resulting in a record 2.8% fall in regular pay in real terms,” said AJ Bell head of investment analysis Laith Khalaf.
“With inflation set to rise even further from here, there looks to be little prospect of the salary squeeze abating any time soon, leaving household finances firmly under the cosh.”
China goes into lockdown
New Covid-19 lockdowns in China sent commodities groups falling on renewed fears of decreased demand.
BHP followed mining giant Rio Tinto in its warning on a lowered demand outlook going forward over the next year.
Anglo American shares dipped 0.8% to 2,614.7p, Antofagasta fell 0.2% to 1,034.5p, Croda slid 0.2% to 6,818, Endeavor dropped 0.3% to 1,625, Glencore decreased 0.6% to 417p and Glencore declined 0.6% to 416.9p.
“After last week’s disappointing Chinese growth figures, signs of a continuing rise in Covid cases were the last thing markets wanted to hear,” said Hewson.
“Given China is such a big consumer of commodities, this created a negative backdrop for mining outfit BHP. It has followed peer Rio Tinto in warning of a bleaker outlook for demand, as well as rising costs and struggles with availability of labour.”
“After a strong start to 2022, it seems the miners are starting to find life much, much tougher.”