Hot Features
Premium
Level up your trading with our powerful tools and real-time insights all in one place.
London open: FTSE gains as sterling steadies after record lows
London stocks rose in early trade on Tuesday as sterling regained some poise after hitting a record low a day earlier.
At 0845 BST, the FTSE 100 was up 0.6% at 7,063.34, while the pound was 1.1% firmer against the dollar at 1.0807, having fallen to its lowest level against the greenback since 1971 on Monday.
Oanda analyst Craig Erlam said: “Stock markets have steadied in Asia and early European trade on Tuesday but that is not reflective of the mood in the markets at the moment so it may struggle to hold.
“The volatility in FX markets at the start of the week has been extreme but it’s also been building for weeks as authorities desperately try to arrest the decline in their currencies, particularly against the US dollar.
“On Monday it was the UK that was front and centre following the mini-budget on Friday that showed total disregard for the environment in which it was being implemented. Promising much higher borrowing to fund huge tax cuts at a time of double-digit inflation that hasn’t even peaked is beyond bold and the backlash is well underway.
“There’s nothing wrong with being ambitious on the economy but timing is everything and when the cost is much higher interest rates, there won’t be many winners and the economy simply won’t see the benefit. The question now is whether the pressure both externally and from within will force a rethink in order to settle things down.
“The Bank of England did little to help. After speculation all day of an impending announcement, the central bank only sought to reassure markets that they stand ready to act but probably not until the next meeting in early November when it is armed with new macroeconomic projections. Needless to say, that reassured no one and sterling plummeted again after recovering amid the rumours of the announcement.”
In equity markets, waste management firm Biffa surged to the top of the FTSE 250 after agreeing to be bought by private equity firm Energy Capital Partners (ECP) for around £1.3bn.
Travel food outlet operator SSP rallied after saying it still expects a return to pre-Covid levels of like-for-like revenue and core earnings by 2024.
On the downside, United Utilities slumped as it warned on profits after the water company was hit by lower consumption and higher costs.
JD Sports fell as it it was fined along with Glasgow Rangers football club and Elite Sports by the UK’s Competition and Markets Authority after being found guilty of price fixing on official merchandise.
Merchant bank Close Brothers lost ground after it posted a decline in full-year operating profit, with the Winterflood business hit by a slowdown in trading activity.
Outside the FTSE 350, over-50s specialist Saga tumbled after a profit warning.
Top 10 FTSE 100 Risers
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Burberry Group Plc | +2.29% | +38.00 | 1,695.00 |
| 2 |  |
Hargreaves Lansdown Plc | +1.72% | +15.00 | 884.60 |
| 3 |  |
Bhp Group Limited | +1.47% | +32.50 | 2,249.50 |
| 4 |  |
3i Group Plc | +1.38% | +15.50 | 1,138.50 |
| 5 |  |
Intercontinental Hotels Group Plc | +1.35% | +59.00 | 4,429.00 |
| 6 |  |
Diageo Plc | +1.32% | +51.00 | 3,901.00 |
| 7 |  |
Hikma Pharmaceuticals Plc | +1.32% | +16.00 | 1,225.50 |
| 8 |  |
Rio Tinto Plc | +1.32% | +62.00 | 4,760.00 |
| 9 |  |
Smurfit Kappa Group Plc | +1.27% | +33.00 | 2,636.00 |
| 10 |  |
International Consolidated Airlines Group S.a. | +1.19% | +1.20 | 102.46 |
Top 10 FTSE 100 Fallers
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Rightmove Plc | -4.99% | -27.40 | 521.80 |
| 2 |  |
Admiral Group Plc | -4.95% | -100.50 | 1,929.50 |
| 3 |  |
Direct Line Insurance Group Plc | -3.41% | -6.50 | 183.85 |
| 4 |  |
Barratt Developments Plc | -3.17% | -12.20 | 373.00 |
| 5 |  |
Segro Plc | -3.04% | -22.40 | 715.20 |
| 6 |  |
Taylor Wimpey Plc | -3.01% | -2.88 | 92.96 |
| 7 |  |
Kingfisher Plc | -2.86% | -6.70 | 227.30 |
| 8 |  |
Persimmon Plc | -2.66% | -33.50 | 1,227.00 |
| 9 |  |
United Utilities Group Plc | -2.53% | -23.80 | 918.40 |
| 10 |  |
Sse Plc | -2.18% | -36.50 | 1,634.50 |
US close: Stocks lower as USD and Treasuries surge
Wall Street stocks closed lower on Monday as a surging dollar and heightened bond yields took centre stage.
At the close, the Dow Jones Industrial Average was down 1.11% at 29,260.81, while the S&P 500 was 1.03% weaker at 3,655.04 and the Nasdaq Composite saw out the session 0.60% softer at 10,802.92.
The Dow closed 329.60 points lower on Monday, extending losses recorded at the end of last week amid concerns that the central bank’s aggressive monetary policy may send the US economy into a recession.
In focus on Monday was news that the British pound dropped to a record low against the US dollar, with Sterling falling 4% to an all-time low of $1.0382 as the Federal Reserve’s monetary policy, paired with tax cuts announced by the UK last week caused the greenback to surge. The euro also hit its lowest level against the dollar in two decades.
The bond market was also drawing an amount of investor attention throughout the session, with the 2-year Treasury note up at 4.304%, while its benchmark 10-year counterpart was more than nine basis points higher at 3.875%.
On the macro front, the Chicago Fed‘s national activity index fell to 0 in August, down from a five-month high of 0.29 in July, pointing to a moderation in overall economic growth during the month.
No major corporate earnings were released on Monday.
Tuesday newspaper round-up: Banker bonuses, Elon Musk, Matalan
Bankers could rake in bumper bonuses from a “wave of bids” by overseas buyers for UK businesses made temptingly cheaper as a result of the plunge in the pound against the dollar. A fresh frenzy of merger and acquisition activity would mean a ramp-up in payouts for City dealmakers. Sterling fell by nearly 5% at one point on Monday to $1.0327, its lowest since Britain went decimal in 1971. The currency has fallen by more than a fifth against the dollar this year. – Guardian
Elon Musk is scheduled to spend the next few days with lawyers for Twitter, answering questions ahead of an October trial that will determine whether he must follow through on his $44bn agreement to acquire the social platform after attempting to back out of the deal. The deposition, planned for Monday, Tuesday and a possible extension on Wednesday, will not be public. As of Sunday evening, it was not clear whether Musk would appear in person or by video. Reuters reported the deposition did not happen Monday nor was a reason given for the delay, citing sources with knowledge of the situation. – Guardian
As the pound continued its dramatic slide on Monday morning, there were the usual attempts in some quarters to paint this as a victory for Britain’s exporters. Similar protests were made when investor confidence frayed following the EU referendum. Yet, even the FTSE-100 dipped 50 points at one stage this time around, below the psychologically important 7,000 level, underlining the extent to which government supporters are clutching at straws again. – Telegraph
An Aim-listed esports franchise backed by David Beckham has signed its largest ever sponsorship deal with Sky, helping to send its shares up by more than 58 per cent. No financial details were disclosed by Guild Esports, which runs teams competing in video game tournaments, including Fifa and Rocket League, but it called the three-year deal “one of the largest ever sponsorships signed in Europe.” – The Times
Matalan has named the former New Look boss Nigel Oddy as its interim chief executive with the retailer putting itself up for sale. In another boardroom change yesterday, John Hargreaves, Matalan’s founder, who only rejoined the business in July as chairman, is also stepping down in order to take part in a bid. – The Times
