The FTSE 100 started the bank holiday-shortened week on the front foot, with strength observed in the mining and commodity sectors, helping London’s leading index outperform Europe.
After being closed on Monday, Tuesday is the first full session London has had to react to last week’s Jackson Hole Symposium and the confirmation that the Federal Reserve will begin cutting rates.
“The FTSE 100 got off to a strong post-Bank Holiday start, lifted by its healthy contingent of resources companies,” said AJ Bell investment director Russ Mould.
“Index heavyweights BP and Shell were higher as heightened tensions between Israel and Lebanese militant group Hezbollah, along with outages in Libya, saw oil prices surge back above $80 per barrel. Commodities traders will be watching closely to see if the apparent step back from the brink by both parties holds for now.
“This week is likely to be dominated by Nvidia results and a second estimate of US second-quarter GDP. Federal Reserve chair Jerome Powell’s virtual confirmation there will be a rate cut at the next meeting in September means the debate now is whether it will be a 25-basis point or 50-basis point cut.”
Notwithstanding anticipation around Nvidia’s results tomorrow, knowing the Fed will begin to ease borrowing costs has helped lift investor sentiment, and if we were to strip out tension around what Nvidia’s number may be, it’s likely the FTSE 100 would be higher on Tuesday.
Bunzl
Bunzl was the FTSE 100’s best performer, with a gain of 7% after the logistics group hiked its dividend by 10 amid steady profit growth.
“Distribution services may not be the most exciting sector that investors are initially drawn to but Bunzl seems to be making a habit of turning a profit and growing its dividend, which investors definitely do like to see,” said Adam Vettese, Market Analyst at investment platform eToro.
“The firm’s strategy of focusing on acquisitions continues to pay off with a profit upgrade after strong H1 performance this year. Bunzl manages to keep cash flow strong enough so that leverage is still under control when self-funding their acquisitions in order to add value to the business.”
Although Easyjet has been earmarked for a demotion to the FTSE 250, shares in the airliner rose 6% on Tuesday and were the second top riser.
JD Sports was the top faller as investors banked profits after a strong rally in recent weeks.