The FTSE 100 was slightly weaker on Thursday despite another record high for the S&P 500 in the US overnight as weakness in housebuilders and another step down in miners dragged on London.
The S&P 500 hit its 44th record of the year last night even after mixed feelings on Federal Reserve minutes raised questions about the outlook for interest rates.
Notwithstanding the ongoing certainty around Fed policy and interest rates, many are still positive on US stocks choosing to focus on earnings rather than the macro picture.
“I remain bullish, as I have done for the bulk of the year, though the start of Q3 earnings season on Friday does present a risk for the bulls to navigate,” said Michael Brown Senior Research Strategist at Pepperstone.
“Nevertheless, with consensus EPS expectations having been downwardly revised by around 4% during the last quarter, there’s plenty of room for firms to deliver upside surprises, while the season should result in a 5th straight quarter of overall earnings growth, leaving the bull case firmly intact.”
In the UK, where the equity market’s dynamics are very different to the US, the FTSE 100 was down 0.2% at the time of writing with minor losses in housebuilders, miners and retail stocks weighing on the index.
Taylor Wimpey was the top faller after trading ex-dividend. Vistry was again weaker as shares in the builder continued to suffer after revealing cost miscalculations.
Mondi slipped back 2% following a bounce on acquisition news yesterday. Miners remained under pressure as the China stimulus rally continued to unwind.
GSK was the top riser, gaining around 5%, on the news it had reached an agreement for the Zantac litigation which has dogged the stock since cancer allegations came to light.
“Pharmaceutical firm GSK is looking to leave its litigation woes around its heartburn medicine Zantac behind with a $2.2 billion settlement to resolve the vast majority of cases, brought on the basis of an alleged link to cancer,” said Russ Mould, investment director at AJ Bell.
“The company has not accepted liability and today’s news is welcomed by the market for two big reasons. First, investors would have been pleased to see the company get this monkey off its back almost regardless of the cost. Second, while clearly a lot of money, estimates of how much GSK might have been on the hook for were substantially higher.
“Since Morgan Stanley estimated GSK’s liability could run to $27 billion in 2022, nearly £30 billion has been wiped off its market value.”
“While some cases are still outstanding, it is a small proportion of the total and GSK will now seek to tidy up the loose ends.”