Wednesday, August 14: FTSE indices edged higher at the open, following a broadly buoyant Asian trading session and US indices which closed out yesterday firmly in the green. However, relief proved short lived as the FTSE 100 tumbled to more than a two month low after the yield curve on both US and UK government fixed income securities inverted for the first time since the global financial crisis, fuelling recession fears. The yield on the 10-year gilt dipped below the yield on the two-year gilt mid-morning for the first time since 2008, indicating a potential recession is on the horizon. Perhaps some degree of worry is warranted given recent GDP prints for both the UK and Germany indicated both economies were half way to recession.
FTSE 250 Balfour Beatty(+10.01%) closed out the day in the green as it announced pretax profit rose 26% in H1 2019, margin expansion and that the business would achieve market expectations for FY2019. The UK builder said pretax profit came in at £63m, versus £50m in the prior half-year period. The company’s preferred metric, underlying profit from operations, which excludes exceptional costs, grew 9% to £72m, compared with £66m in the prior period on a marginal revenue increase of 1.2% to £3.88bn.
Sports Direct(-10.01%) led the FTSE 250 lower as the sportswear retailer confirmed its auditor Grant Thornton UK did not intend to seek reappointment at the retailer’s AGM on September 11. Sports Direct noted that a further announcement will be made in due course.
European equities were lower at the close, with the FTSE 100 -1.42%, the CAC 40 -2.08% and the DAX 30 -2.19%.