FTSE Testing Three Week Lows On Earnings Concerns

The FTSE 100 in London reached its lowest point in more than three weeks on Wednesday as investors processed the earnings reports from U.S. tech giants Tesla and Alphabet. However, Aston Martin saw a surge in its stock after releasing its half-yearly earnings update.The blue-chip FTSE 100 index was down 0.17%, while the mid-cap FTSE 250 also traded in the red, marking a second consecutive session of losses. The quarterly earnings reports from Alphabet and Tesla failed to meet investor expectations, resulting in a decrease in risk appetite.

In London, stocks in the personal goods sector dropped by 1.3%, with luxury group Burberry, the UK luxury retailer, saw its shares drop by 1.9% to 705.4p, making it the second top loser on the FTSE blue-chip index. The decline was attributed to weak results from LVMH, the world's largest luxury group, which reported slower sales growth in Q2 due to reduced spending by Chinese shoppers. LVMH's shares in Paris also dropped by 4.6% in early trade. Burberry had previously issued a profit warning and cancelled its dividend following a slowdown in the luxury retail sector. As a result, its shares have fallen by more than 50% so far this year. This decline in the personal goods sector contributed to broader market losses, with sub-sectors like financial stocks and energy companies also trending lower. 

On the other hand, there was a 2% increase in precious metal miners, leading gains as gold prices strengthened. This sector was on track to break a five-session losing streak, its longest since February. There was also a 2.1% rise in automobile and parts stocks, with Aston Martin experiencing a significant 9.3% jump after reporting its half-yearly results, set to be its best performance since September 2023.

UK's easyJet shares surged by 6.3% to 454.3p after the company raised its annual forecast for its holidays division. Hargreaves Lansdown described the Q3 numbers as "a little better than expected" and provided a respite from the share price instability for UK airlines following Ryanair's results. Ryanair's profits slumped and its shares crashed after ticket prices plunged on Monday. Bernstein noted that investors were expecting a challenging quarter after Ryanair's fare collapse but did not get it. The gap between Europe's two largest airlines raises questions, especially as Ryanair cites widespread weakness despite its significant presence in easyJet's main markets. JP Morgan stated that despite a large weakening in demand/pricing reported by rival Ryanair earlier in the week, easyJet's outlook for peak summer appears 'ok', while Barclays believes that easyJet benefits from its more upmarket customer demographic and more modest capacity growth. Prior to the latest surge, easyJet shares were down 16.1% year to date.

Technical & Trade View

FTSE Bias: Bullish Above Bearish below 8225

• Above 8363 opens 8500

• Primary support 8000

• Primary objective 8023

• 5 Day VWAP bearish

• 20 Day VWAP bearish

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