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“The UK market was steady on Thursday morning after mixed trading in Asia and modest gains on Wall Street overnight,” says AJ Bell Investment Director Russ Mould.
“Nvidia may have taken a bit of a tumble as its earnings proved mixed but that didn’t damage investor sentiment too much on a broader scale.
“A modest recovery in the dollar, despite the ongoing concern about the independence of the Federal Reserve, was good news for big US earners like JD Sports and Diageo. Miners also did some of the heavy lifting for the UK index early on. Several stocks trading without the rights to their dividends was a mild headwind.
“Tesla sales continue to be in hard reverse in Europe, suggesting Elon Musk’s divisive role in politics is still hurting the brand on this side of the Atlantic.
“Later on, a second estimate of US GDP for the second quarter and jobless claims data will be in focus as investors try to guess what the Federal Reserve will do at its next summit in mid-September – amid all the noise around the Trump administration’s interventions.
“While Fed chair Jerome Powell seemed to hint a cut was in the offing at Jackson Hole recently, there is ongoing debate about the potential scale of any cut.”
Drax
“Having previously drawn fire from the media for the sourcing of wood for its biomass pellets, Drax now faces the potentially more serious situation of being under the harsh glare of the Financial Conduct Authority over the same issue.
“Notably the investigation covers several years’ worth of accounts and follows accusations from one of its former top lobbyists earlier this year at an employment tribunal that it had misled regulators, the government and the public.
“Drax was already fined a meaningful sum by Ofgem almost exactly a year ago for inaccurate data on sourcing for its pellets.
“There will be concern about any sanction levied by the FCA but also what it might mean for the subsidies the company continues to receive from government.
“The share price reaction shows the market is concerned about the impact this could have on the business and, while the company is important to the UK’s energy security, that doesn’t mean it can escape scrutiny on its sustainability credentials.”
Russ Mould: Investment Director
Russ Mould is AJ Bell's Investment Director. He has a Master's degree in Modern History from the University of Oxford and more than 30 years' experience of the capital markets.
He started out at Scottish...
