Healthcare boosts UK's FTSE 100 as earnings, Fed meeting in focus
The benchmark index (.FTSE), opens new tab rose 0.6%.
Healthcare stocks (.FTNMX201030), opens new tab gained 2.2% after AstraZeneca (AZN.L), opens new tab beat second-quarter revenue and profit expectations. Shares of the drugmaker climbed 3.4%.
Heavyweight bank stocks (.FTNMX301010), opens new tab advanced 1.5%, tracking gains in European peers. Barclays (BARC.L), opens new tab gained 2.8% after the British lender's first-half profit rose by a better-than-expected 23%.
Europe's bank stocks rose to their highest level since September 2008 as investors bet on improved profits and resilience in an industry broadly insulated from tariff turmoil.
Precious metal miners (.FTNMX551030), opens new tab led sectoral gains with a 2.4% rise as gold prices steadied after hitting their lowest level since July 9 on Monday.
Conversely, chemical stocks (.FTNMX552010), opens new tab lost 5.4%, pressured by Croda International's (CRDA.L), opens new tab 10.4% fall, after the chemical company reported first-half sales below estimates.
Industrial miners (.FTNMX551020), opens new tab lost 1.3%, tracking lower copper prices.
Glencore (GLEN.L), opens new tab and Anglo American (AAL.L), opens new tab fell 3.4% and 1.6% respectively.
Among other individual stocks, Games Workshop (GAW.L), opens new tab surged 5.4% to top the FTSE 100 index, after the miniature wargames maker reported a nearly 30% jump in annual pre-tax profit.
The domestically-focused midcap FTSE 250 index (.FTMC), opens new tab closed down 0.7%, pressured by Inchcape's (INCH.L), opens new tab 11.7% fall after the car distributor reported a 4% drop in first-half adjusted pre-tax profit at constant currency.
Greggs (GRG.L), opens new tab slipped 4.7% after reporting a 14% fall in first-half profit.
On trade, U.S. Commerce chief Howard Lutnick said on Tuesday that President Donald Trump would make his trade deal decisions this week, even as separate negotiations with China and the European Union continue.
U.S. and EU officials were still discussing steel and aluminium tariffs as well as digital services regulations.
Trump also flagged a "world tariff" rate of 15% to 20% on Monday for countries that were not negotiating a deal, among the highest rates since the Great Depression of the 1930s.
Focus will be on the U.S. central bank's policy meeting, which is expected to leave rates unchanged on Wednesday.
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Reuters
16 minutes ago
- Reuters
Fed's reticence on rate cuts forces market to rethink outlook
NEW YORK, July 30 (Reuters) - The Federal Reserve's decision to avoid signaling imminent rate cuts despite relentless political pressure underscores its prevailing caution and has forced investors to dial back expectations for an easing at the next policy meeting. The Federal Open Market Committee held interest rates on Wednesday in a split decision that gave little indication of when borrowing costs might be lowered. It also drew dissent from two Fed governors, both appointees of President Donald Trump who agree with him that monetary policy is too tight. The overnight policy rate controlled by the Fed remains in a 4.25%-4.50% range. The last rate cut was in December and the Fed hiked rates from March 2022 to July 2023 to fight inflation. The lack of a clear signal that the Fed was warming to interest rate cuts as soon as the next meeting in September lifted Treasury yields and the dollar in late trade and turned stocks lower. "I think the Fed has pushed out the probability of a rate cut," Sonu Varghese, global macro strategist at Carson Group. "They're going to wait for more data, but more data means more time, and more time means rates are going to remain restrictive for a few more months," Varghese said. Fed funds futures traders are pricing in a 46% probability of a rate cut by September, down from about 65% a day ago, according to the CME Group's FedWatch Tool. They are no longer pricing in two full 25 basis point cuts by year-end as they were in recent days. Fed Chair Jerome Powell was careful to keep his options open on monetary policy. "We have made no decisions about September," he said in a press conference. He also noted there was still time to take in a wide range of data before the central bank next met in mid-September. "There was some possibility that (Powell) would softly signal that a September rate cut is the base case, and (that it) would only not happen if the data didn't play out in a way that's consistent with that," said David Seif, chief economist for Developed Markets at Nomura in New York. "I'd say he did not do that at all." Bond yields climbed on Wednesday as Powell reiterated the economy was showing resilience despite interest rates remaining "modestly restrictive". Benchmark Treasury 10-year yields and two-year yields both rose by about two basis points after those remarks. Investor positioning may have amplified the bond market reaction, said Jamie Patton, co-head of global rates at TCW. "I think the market had gotten a bit ahead of itself thinking we already had enough data to justify a cut in September," said Patton, who remains bullish on short-term bonds due to expectations of imminent interest rate cuts. Powell has come under intense pressure from the White House to lower interest rates, with President Trump regularly berating him for being too slow to lower borrowing costs. Powell's reticence in guiding when the Fed may start cutting rates will leave investors to parse two more months' worth of inflation and employment data for the timing of policy easing, and put some pressure on small-cap stocks in the near term, investors said. The Russell 2000 small-cap index (.RUT), opens new tab, which had been outperforming the S&P 500 index on the day before Powell took the stage, finished the session down 0.47% against a 0.12% loss for the large-cap benchmark. For the dollar, which has come under intense selling pressure this year, the Fed's relatively hawkish message gave some support, lifting the currency to a two-month high against a basket of peers. The dollar index ended up 1%, leaving it down about 8% for the year. "We still envision medium-term weakness for the USD, but in the near-term the risk profile is more two-way," BofA Global Research strategists said in a note. Higher rates in the U.S. help boost the allure of the dollar relative to other developed market currencies. "This patience from the Fed and strength of the U.S. economy coming through is putting a little bit of a pause to that dollar depreciation," Vishal Khanduja, head of broad markets fixed income at Morgan Stanley Investment Management, said. Khanduja, however, warned against reading too much into the market's reaction to the Fed meeting. "Overall, I thought they did not change their stance at all," he said. Khanduja expects three to five cuts by the end of next year, though he sees the next two inflation releases as important. "They're still going to be wait-and-see, still very convinced that inflation is going to be slightly higher in the next two prints," he said. "But they are still very convinced it's going to be a one-time bump."
Reuters
16 minutes ago
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Japan June retail sales rise 2.0% year/year
TOKYO, July 31 (Reuters) - Japanese retail sales rose 2.0% in June from a year earlier, against the median market forecast for a 1.8% rise, government data showed on Thursday. To view full tables, go to the website of the Ministry of Economy, Trade and Industry at: opens new tab
Reuters
16 minutes ago
- Reuters
Trump hits Brazil with tariffs, sanctions but key sectors excluded
SAO PAULO/BRASILIA, July 30 (Reuters) - U.S. President Donald Trump on Wednesday slapped a 50% tariff on most Brazilian goods to fight what he has called a "witch hunt" against former President Jair Bolsonaro, but softened the blow by excluding sectors such as aircraft, energy and orange juice from heavier levies. Trump announced the tariffs, some of the steepest levied on any economy in the U.S. trade war, as his administration also unveiled sanctions on the Brazilian supreme court justice who has been overseeing Bolsonaro's trial on charges of plotting a coup. "Alexandre de Moraes has taken it upon himself to be judge and jury in an unlawful witch hunt against U.S. and Brazilian citizens and companies," Treasury Secretary Scott Bessent said in a statement. Moraes, he said, "is responsible for an oppressive campaign of censorship, arbitrary detentions that violate human rights, and politicized prosecutions — including against former President Jair Bolsonaro." Trump's final tariff order and the sanctions followed weeks of sparring with Brazilian leader Luiz Inacio Lula da Silva, who has likened the U.S. president, a close ideological ally of Bolsonaro's, to an unwanted "emperor." Despite Trump's effort to use the tariffs to alter the trajectory of a pivotal criminal trial, the range of exemptions came as a relief for many in Brasilia, who since Trump announced the tariff earlier this month had been urging protections for major exporters caught in the crossfire. Shares of planemaker Embraer ( opens new tab and pulpmaker Suzano ( opens new tab rose. "We're not facing the worst-case scenario," Brazilian Treasury Secretary Rogerio Ceron told reporters. "It's a more benign outcome than it could have been." The new tariffs will go into effect on August 6, not on Friday as Trump announced originally. In a factsheet about Trump's executive order on Wednesday, the White House tied the tariffs to Brazil's prosecution of Bolsonaro, who is standing trial on charges of plotting to overturn his 2022 electoral loss. Trump's executive order formalizing a 50% tariff excluded dozens of key Brazilian exports to the United States, including civil aircraft, pig iron, precious metals, wood pulp, energy and fertilizers. Embraer said an initial review indicated that a 10% tariff imposed by Trump in April remains in place, with the exclusion applying to the additional 40%. The exceptions are likely a response to concerns from U.S. companies, rather than a step back from Trump's efforts to influence Brazilian politics, said Rafael Favetti, a partner at political consultancy Fatto Inteligencia Politica in Brasilia. "This also shows that Brazilian diplomacy did its work correctly by working to raise awareness among U.S. companies," he said. Brazilian Minister of Foreign Affairs Mauro Vieira said he met with U.S. Secretary of State Marco Rubio on Wednesday to reaffirm the country's willingness to negotiate the tariffs, in a sign that negotiations that had stalled in June could restart. Vieira stressed that Bolsonaro's legal woes cannot be included in negotiations, he said. The State Department did not immediately reply to a request for comment. Despite the exemptions, it was too soon to celebrate, said former Brazilian trade secretary Welber Barral, estimating that Brazil exports some 3,000 different products to the United States. "There will be an impact," Barral said. An analysis by the American Chamber of Commerce for Brazil showed that almost 700 products were exempted from the higher tariffs, covering 43.4% of Brazil's total exports to the United States by value. Among the top concerns in the government of Lula, Bolsonaro's leftist rival, was Embraer, which exports 45% of its commercial aircraft and 70% of its executive jets to the United States. Analysts had also warned of a serious potential impact on Suzano, one the world's largest wood pulp producers. Embraer shares rose 11% in Sao Paulo, and Suzano gained over 1% in afternoon trading. Oil lobby group IBP said oil shipments to the U.S., which had been suspended, would resume after oil products were listed as exempt from the new tariffs. Mining lobby Ibram, meanwhile, said the exemptions covered 75% of mining exports. But other crucial sectors could not dodge Trump's fusillade. Wednesday's executive order did not include exemptions for beef or coffee, two key exports to the United States. Roberto Perosa, the head of Brazilian meatpacking lobby Abiec, which represents beef producers including JBS and Marfrig ( opens new tab, told reporters on Wednesday that the group estimates losses of $1 billion in the second half of this year because of the new tariffs. Brazilian coffee exporters group Cecafe said in a statement that it will continue working for coffee to be included among the exemptions. And the battle over the tariffs is set to continue, with the political motivation behind them providing ammunition to plaintiffs who have launched a court challenge. Alex Jacquez, who served at the White House National Economic Council under then-President Joe Biden, said in a statement that the new tariffs were a clear violation "of both the law and Trump's own stated trade policy." "We run a trade surplus with Brazil - these punitive tariffs will not serve to rebalance any unfair trade, it will only serve to make a cup of coffee more expensive," he said.
