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- FTSE 100 opens higher on better-than-expected GDP growth.
- FCA sets out new listing rules.
- S&P 500 and Nasdaq post fresh highs ahead of Consumer Price Inflation (CPI) data.
- Costco bumps its membership prices.
- Oil prices edge higher.
Matt Britzman, senior equity analyst, Hargreaves Lansdown:
As England football fans nurse some headaches, UK markets have opened higher after GDP figures came in better than expected and Wall Street continued on its record run. GDP grew by 0.4% in May, compared to a consensus of 0.2%. The consumer-led recovery is taking shape, buoyed by the return of real income growth and improved housing activity. The double-edged sword for markets is that if GDP runs too hot, it’ll likely make the Bank of England’s rate-cutting decision a little tougher.
The FCA has simplified the rules for companies looking to list in the UK. This comes after the UK has been shunned by companies, both new and existing, due to an overcomplicated system and valuations that lag some of the overseas markets on offer. Simplified listing rules are a first step, but there’s still more work to be done if the UK wants to regain a reputation for nurturing exciting new businesses.
US investors have been putting their chips on the table and betting on inflation’s path ahead of today’s CPI print. Tech and Semi stocks led the way as both the S&P 500 and Nasdaq continued their unwavering run. Investors have voted with their dollars, banking on today’s inflation data behaving as expected. Core CPI, which strips out more volatile food and energy prices, is expected to rise 0.2% from May and 3.4% since June last year. Comments from Fed Chair Jay Powell have also brought renewed optimism that cuts could come as soon as September, with the Fed perhaps willing to offer more flex on inflation levels than some may have thought.
Costco has hiked its membership fees in the US and Canada in a fresh sign that the consumer across the pond is doing just fine. Don’t read too much into this; it was widely expected to come at some point, given that Costco had delayed its regular pace of membership hikes as it looked for more stable conditions. Still, it’s a positive read and highlights Costco’s own strengths, where renewal rates and membership growth have made the hike possible.
Brent Crude Oil prices rose towards $86 a barrel, rising for the second day in a row. US crude inventories dropped 3.4mn barrels in the week ended 5 July, higher than the 3.0mn dip traders were expecting to see. There was also an update from OPEC suggesting oil demand was set to remain robust over the year, especially over the summer period. Perhaps a little case of talking your own book there but it’s enough to wet the appetite of bullish traders.
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