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London open: Stocks steady as investors mull earnings; Barclays, StanChart in focus
London stocks were steady in early trade on Wednesday as investors mulled results from US technology giants Alphabet and Microsoft overnight, with Barclays and Standard Chartered in focus on home turf.
At 0850 BST, the FTSE 100 was flat at 7,014.87, while sterling was up 0.9% against the dollar at 1.1576.
The greenback was under pressure after data released on Tuesday showed that house price growth in the US slowed in August amid higher interest rates. The S&P CoreLogic Case-Shiller home price index covering all nine US census divisions rose 13% on the year, down from 15.6%growth in July.
Victoria Scholar, head of investment at Interactive Investor, said: “European markets are trading around the flatline as investors digest a raft of corporate earnings from the UK, continental Europe, and the US.
“In the United States, earnings across sectors appeared to confirm fears of a growth slowdown facing corporate America highlighting worries about a recession and further weakness for equity markets ahead. A disappointing update from Google’s parent company Alphabet highlighted the pressures facing the digital ad sector as the US economy begins to show signs of weakness, and also pointed to the stiff competition for eyeballs particularly among fickle social media users who are currently fixated on their latest obsession, TikTok.”
On home shores, Prime Minister Rishi Sunak was due to make his first appearance in Parliament later in the day at PMQs, amid speculation that the fiscal statement, which is due on Halloween, could be delayed.
In equity markets, banks were in focus after results from Barclays and Standard Chartered.
Barclays was trading down even as it reported a better-than-expected rise in third-quarter profits despite a sharp jump in bad loan charges as consumers started to feel the impact of the cost-of-living crisis.
StanChart was also lower despite posting an estimate-beating 40% increase in third-quarter profit and lifting its annual outlook.
WPP was under the cosh even as the advertising giant lifted its revenue forecast for the full year and reported a 10% increase in third-quarter revenue.
Consumer goods giant Reckitt Benckiser fell even as it narrowed its sales target and posted a jump in third-quarter revenues despite “challenging” market conditions.
Transport operator FirstGroup was in the red after saying it expects to receive $85m from EQT’s sale of First Transit.
Software, security and cloud services specialist Bytes Technology slumped despite reporting a rise in first-half profit and revenues amid growth across all areas of the business.
On the upside, AstraZeneca rallied as it said its capivasertib breast cancer drug combined with Faslodex hormone treatment demonstrated a “statistically significant and clinically meaningful improvement” in progression-free patient (PFS) survival during a late-stage trial.
Hochschild gained as the silver and gold miner announced a major discovery at its Pallancata deposit in Southern Peru and said it was on course to meet full-year production after its third quarter turned out to be the strongest quarter so far this year.
Specialty chemicals company Elementis rose after it backed its full-year outlook and said trading in the third quarter had been in line.
Top 10 FTSE 100 Risers
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Hikma Pharmaceuticals Plc | +3.23% | +38.50 | 1,229.00 |
| 2 |  |
Fresnillo Plc | +2.88% | +20.60 | 734.80 |
| 3 |  |
Ocado Group Plc | +2.77% | +14.00 | 518.80 |
| 4 |  |
Johnson Matthey Plc | +2.22% | +43.00 | 1,982.00 |
| 5 |  |
Antofagasta Plc | +1.83% | +21.00 | 1,167.50 |
| 6 |  |
Astrazeneca Plc | +1.81% | +177.00 | 9,930.00 |
| 7 |  |
Kingfisher Plc | +1.64% | +3.50 | 216.70 |
| 8 |  |
Barratt Developments Plc | +1.64% | +6.10 | 379.00 |
| 9 |  |
Melrose Industries Plc | +1.19% | +1.30 | 110.50 |
| 10 |  |
Smith (ds) Plc | +1.07% | +3.10 | 293.30 |
Top 10 FTSE 100 Fallers
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Standard Chartered Plc | -4.22% | -23.40 | 531.00 |
| 2 |  |
Coca-cola Hbc Ag | -3.74% | -73.00 | 1,880.50 |
| 3 |  |
Whitbread Plc | -3.62% | -95.00 | 2,527.00 |
| 4 |  |
Wpp Plc | -3.59% | -27.60 | 742.00 |
| 5 |  |
Diageo Plc | -3.28% | -119.00 | 3,510.50 |
| 6 |  |
Unilever Plc | -2.52% | -99.00 | 3,827.50 |
| 7 |  |
Scottish Mortgage Investment Trust Plc | -2.32% | -17.80 | 748.60 |
| 8 |  |
Flutter Entertainment Plc | -1.71% | -195.00 | 11,180.00 |
| 9 |  |
Hsbc Holdings Plc | -1.49% | -6.60 | 436.05 |
| 10 |  |
Barclays Plc | -1.40% | -2.10 | 148.12 |
US close: Stocks extend gains as Q3 tech earnings arrive
Wall Street stocks ended the session in positive territory on Tuesday as market participants digested key consumer confidence figures and earnings from Microsoft and Google owner Alphabet.
At the close, the Dow Jones Industrial Average was up 1.07% at 31,836.74, while the S&P 500 advanced 1.63% to 3,859.11 and the Nasdaq Composite saw out the session 1.25% firmer at 11,199.12.
The Dow closed 337.12 points higher on Tuesday, extending gains recorded in the previous session as market participants prepped for a week packed full of earnings from the nation’s top tech firms.
Alphabet reported a 27% drop in quarterly profits as the Google and YouTube parent company struggled to compete with TikTok throughout the period, while Microsoft bested expectations with its first-quarter revenue performance despite being hit by a slowing economy.
Outside of tech stocks, consumer goods giant 3M posted a 4% fall in quarterly revenues on Tuesday as declining international earnings due to a stronger US dollar and divestitures both weighed on its performance, while automaker General Motors beat third-quarter earnings expectations and held full-year guidance on Tuesday.
Elsewhere, UPS backed its full-year revenue guidance on Tuesday as it posted a rise in third-quarter profit and revenue. Consolidated operating profit jumped 7.5% from the third quarter of last year to $3.1bn, while revenues rose 4.2% to $24.2b, and Chipotle reported revenues that fell just short of expectations as increased prices for its meals seemingly failed to impact sales.
Turning now to data, US house price growth eased in August amid higher interest rates, according to the latest S&P CoreLogic Case-Shiller national home price index. The index covering all nine US census divisions rose 13% on the year, down from 15.6%growth in July.
On another note, the Conference Board‘s consumer confidence index decreased to 102.5 in October, down from 107.8 in September, after back-to-back monthly gains. The present situation index, based on consumers’ assessment of current business and labour market conditions, declined sharply to 138.9 from 150.2, while the expectations index, based on consumers’ short-term outlook for income, business, and labour market conditions, dropped to 78.1 from 79.5.
Finally, the Richmond Fed‘s manufacturing index fell to -10 in October, down from 0 in September and the lowest reading since May, as two of its three component indices deteriorated notably.
Wednesday newspaper round-up: Alphabet, Uber, Marks & Spencer
Alphabet revenue fell below analysts’ expectations in the third quarter, it announced on Tuesday, as it continues to battle an industry-wide tech slowdown. The company reported a third quarter revenue of $69bn, up 6% from last year but lower than analyst estimates of $70.9bn. Like many tech and social media firms, Alphabet is struggling to compete with TikTok amid a broader economic downturn. – Guardian
The whistleblower who revealed how Uber flouted the law and secretly lobbied governments around the world has called on European lawmakers to take on the “disproportionate” and “undemocratic” power held by tech companies. Speaking to a committee of MEPs in the European parliament, Mark MacGann, who was Uber’s top lobbyist in Europe, said the cab-hailing company’s practices were “borderline immoral” as he recalled the “almost unlimited finance” executives had to lobby and silence drivers with legal disputes. – Guardian
Marks & Spencer has vowed to abandon its flagship Marble Arch store if plans to knock down the building are blocked. The upmarket retailer warned that it will leave the Oxford Street shopping district if it is unable to demolish the Art Deco landmark and replace it with a new 10-storey retail and office block. – Telegraph
Plans to cut EU energy bills have sparked anger in Brussels after it emerged the bloc may end up subsidising cheap power for Britain. Low prices on the continent could see electricity vacuumed up by export markets, European Commission officials are warning. One solution would be to charge higher prices to export markets such as Britain but officials fear this could be in breach of the Brexit agreement. – Telegraph
The boss of HSBC has become the first chief executive of a big British bank to publicly signal his resistance to a windfall levy on lenders after he warned that the sector already faced higher taxes than other industries. Noel Quinn, 60, said yesterday that the combination of corporation tax, the bank surcharge and the bank levy on balance sheets meant “there is already a large amount of tax paid by the financial services sector in the UK”. – The Times
