Shares round-up: Sage Group, Relx, Glencore, Rio Tinto, IBM

A soft US inflation reading today calmed nerves after FTSE 100 tech-focused stocks including Sage Group (The) (LSE:SGE) and Experian (LSE:EXPN) were earlier shaken by an International Business Machines Corp (NYSE:IBM) profit warning.

The fall in June’s annual rate of CPI to 3.5% from May’s three-year high of 4.2% meant US traders pushed back against fears of a near-term rise in Federal Reserve interest rates.

Wall Street benchmarks recouped some of last night’s losses at today’s opening bell, meaning a 80-point upward swing for the FTSE 100 index compared with its position at noon.

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A stronger copper price and dollar weakness on the back of revised interest rate expectations combined to put Glencore (LSE:GLEN), Rio Tinto  Ordinary Shares (LSE:RIO) and Anglo American (LSE:AAL) at the top of the FTSE 100.

The fallers board was dominated by the read-across to the noon update by IBM, whose second-quarter guidance on revenues and earnings came in short of Wall Street forecasts.

IBM shares opened a fifth lower and were on track for their worst performance since 1987 after the technology firm said clients shifted their buying patterns towards the end of the quarter.

It said this was driven by a focus on servers, storage and memory purchases in order to secure supply-constrained infrastructure ahead of expected price increases.

Chief executive Arvind Krishna said: “While we anticipated some supply chain-related impact in our expectations, we did not anticipate the magnitude of the capex reprioritisation.

“In addition, clients were distracted with rapidly evolving, industry-wide cybersecurity concerns in the quarter.”

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The impact on sentiment meant FTSE 100-listed RELX (LSE:REL), Pearson (LSE:PSON) and The Sage Group shares fell by about 4% in the hour after the warning before a recovery later in the session.

Their subsequent resilience reflected a stronger session for the Nasdaq Composite, which last night lost 1.6% as traders reacted to higher oil prices and a surge in Treasury bond yields.

Prior to today’s inflation reading, Wall Street saw a 43% chance of the Federal Reserve increasing interest rates at its meeting in a fortnight’s time. This view was supported by some hawkish comments from Governor Christopher Waller.

Wealth management firm Quilter said Waller’s remarks showed the central bank is keen not to be seen as repeating its post-pandemic mistake of being too late to tame inflation.

This message was reinforced by new Federal Reserve chair Kevin Warsh, who vowed to restore price stability when he appeared before Congress today.

Quilter investment director Lindsay James added: “While Warsh has now firmly got his feet under the table, it does not mean rate cuts are looming in order to appease President Trump.

“Instead, we are likely to see a conservative outlook from the Federal Reserve when it meets in a fortnight.”

Today’s fall in CPI inflation was driven by a near 10% month-on-month decline in gasoline prices, while there was little sign of travel-related upward pressure from the World Cup.

However, Capital Economics continues to expect the Fed will hike interest rates later this year.

The consultancy said: “The big picture to us is that the AI investment boom, coupled with signs of rebounding consumer demand, will continue to keep core inflation above target.”