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China regulatory crackdown fuels European share sell-off, Reckitt falls 9% – live |

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Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

FirstGroup, the Aberdeen-based rail and bus operator, has announced that its chief executive Matthew Gregory intends to step down after its annual meeting, in a victory for shareholders. Chairman David Martin will run the firm as interim CEO while it looks for a permanent replacement.

FirstGroup’s biggest shareholder, a US hedge fund, had demanded the resignation of the transport firm’s chief executive and two board members, after failing to prevent the sell-off of its American businesses.

Coast Capital, the New York-based hedge fund which owns about 15% of the group, had opposed the $3.1bn sale of the FirstStudent and FirstTransit businesses to Swedish group EQT, arguing the price was too low for the school and city bus services.

Meanwhile, UK house prices hit a new high of £230,700 in June and are now 30% higher than the peak they hit before the 2008 financial crisis, according to the property website Zoopla.

European stock markets have started the week cautiously, pressured by a downbeat Ifo business survey for Germany and concerns over rising Delta infection rates. Cases in the UK remain much higher but continue to fall, for the sixth da in a row. On Tuesday, the FTSE 100 index fell 30 points, or 0.4%, at the open to 6,694 while European shares also headed lower.

On Wall Street, the S&P 500 and the Nasdaq set fresh record highs on Monday despite a fall in US new homes sales. Microsoft and Apple are expected to report positive results later today.

In Asia, most stocks followed the US lead on Tuesday, with Japan’s Nikkei nearly 0.5% ahead and the Australian market up 0.4%. Chinese and Hong Kong stocks tumbled after a regulatory crackdown in Beijing. Also, data from China showed industrial profit growth slowed to 20% year-on-year in June. The Shanghai Composite Index fell 2.5% while Hong Kong’s Hang Seng lost 3.4%.

Michael Hewson, chief market analyst at CMC Markets UK, explains:

Concerns about over-reach by Chinese regulators saw equity markets get off to a cautious start yesterday. The clampdown on various sectors within the Chinese economy that rely on overseas investment has seen a flight of capital out of Chinese stocks, particularly those with overseas listings, raising concerns as to what other sectors might be next. This caution has continued in Asia markets this morning with the Hang Seng sinking to a nine-month low.

[In the US:] With Microsoft and Apple expected to post some bullish earnings numbers later today, expectations are high that even with today’s decent results already priced in, and there’s little doubt that they are, in the absence of other alternatives, any dips are likely to be bought into.

Also coming up

In a quiet week for UK economic data, the highlight today is the release of the CBI’s latest retail sales survey for July. This will provide an update on retail sector activity at the start of the third quarter following June’s moderate growth of 0.5% reported in the official retail sales figures last Friday.

As the US Federal Reserve’s latest meeting gets underway in Washington DC, we get US consumer confidence numbers for July, which are expected to ease a bit from June’s peak of 127.3. Investors are waiting for further clues on when US stimulus might start winding down, when Fed chair Jerome Powell holds a press conference at the end of the meeting on Wednesday evening.

Danielle DiMartino Booth of Quill Intelligence says:

We expect Jay Powell to reiterate that the tapering discussion is underway, but that it’s too soon to reveal a specific date.

The Agenda

  • 9.30am BST: UK trade data
  • 11am BST: UK CBI retail sales survey for July (forecast: 21)
  • 1.30pm BST: US Durable gods orders for June (forecast: 2.1%)
  • 2pm BST: US House prices for May
  • 3pm BST: US Conference Board Consumer confidence for July (forecast: 123.9)

Read More: China regulatory crackdown fuels European share sell-off, Reckitt falls 9% – live |

2021-07-27 07:32:03

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