Stock Market News – FTSE 100 gains following pound plunge, US markets open broadly flat as Tesla powers ahead


Ioannis Fotiadis, XM Investment Research Desk

Both the pan-European STOXX 600 and the blue chip STOXX 50 index rose 0.20% ahead of the US open with the healthcare and consumer non-cyclical sectors leading the gainers. However, a plunge in the energy sector eased the gains elsewhere. In the US, the three major indices opened broadly flat.

The FTSE 100 index outperformed other major indices in Europe as it rose 0.90% ahead of the US open, amid the weakness in sterling. The pound hit a nine-month low against the euro, following a dovish take on monetary policy by the Bank of England. Better-than-expected results from British retailer Next (up 9.2%) and pharmaceutical company Shire (up 4.8%) also helped drive the gain. Standard Chartered’s share price continued falling amid declaration of no dividend in its half-year results yesterday.

The Italian FTSE MIB was one of the better performing indices in Europe, up 0.57%, helped by a 6% rise in UniCredit share price. UniCredit, one of Italy’s strongest banks reported better-than-expected second quarter results, a reduction in its exposure to non-performing loans and strong capital. The set of upbeat results lifted optimism and drove the overall index higher.

German DAX was one of the worst performing indices today dragged down by tumbling Siemens and Beiersdorf (down 2.5%) stock prices. Siemens’ share price fell 2.7% as the company announced a delay in the IPO of its healthcare business and its energy-related business weighed on quarterly profits. By contrast, BMW rose following upbeat results this morning and comments from the company about the optimistic H2 outlook.

European energy stocks fell 0.40%, dragged down by Finnish refiner Neste that dropped 5.9% following disappointing second quarter results. Declines in the share price of Norwegian oil services firm TGS, which was down 5.5%, also contributed to the weakening sentiment in the sector.

Meanwhile, Tesla’s share price jumped 8% higher after the bell last night as the company delivered double quarterly revenues till June-end and growing demand for its new Model 3. The share price jumped despite the largest quarterly loss Tesla recorded and its negative free cash flow of $1.2 billion. Upon the market open the share price traded 6.6% higher.

Among US companies that reported earnings today, health insurer Aetna reported higher-than-expected profit in the quarter to June-end as the company improved its core business and kept costs under control. AIG, another US insurer, also reported strong quarterly profit on strength in its consumer business and ebbed costs. Yum! Brands, the owner of KFC and Pizza Hut disappointed with lower-than-forecasted growth in its quarterly sales. The company’s core profit fell more than 50% from a year ago period.