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London open: Stocks flat but banks rally
London stocks were steady in early trade on Monday ahead of a busy week that includes rate announcements from the US Federal Reserve and the Bank of England.
At 0825 GMT, the FTSE 100 was flat at 7,047.70.
Richard Hunter, head of markets at Interactive Investor, said: “Asian markets were flat to negative following some further local issues as well as the impending threat of a global economic recession. China’s factory activity fell unexpectedly in October to suggest contraction, with the ongoing zero-tolerance policy towards Covid-19 continuing to hamper any thoughts of recovery. At the same time, an embattled consumer and a faltering property sector have given little cause for immediate optimism in the region.
“In economic terms, the Bank of England interest rate decision on Thursday is likely to take centre stage. Muddied by some emergency measures which were brought on by the ill-conceived government announcements of the ‘fiscal event’, the Bank needs to return to its knitting with measures designed to contain inflationary pressures. This could even result in an aggressive hike of 0.75%, despite a clearly lagging economy which could already be in recessionary territory.”
On the macro front, net lending, consumer credit and mortgage approvals data for September are all due at 0930 GMT.
In equity markets, banks were on the rise following a report the government had denied suggestions it is considering a windfall tax on the sector as one means of closing the budget hole.
According to The Times, Prime Minister Rishi Sunak and Chancellor Jeremey Hunt played down the notion that they were looking at new taxes on banks. It was understood that Hunt is likely to cut the current 8% surcharge for financial institutions to 3%, which would mean that if the corporate tax rate goes up to 25%, banks will face a 28% tax rate.
NatWest, Lloyds and Barclays all gained. NatWest was also recovering from heavy losses last week on the back of results.
British Gas owner Centrica surged after an upgrade to ‘buy’ at Jefferies, while Drax powered ahead after the same upgrade. Centrica was also boosted after Citi reiterated its ‘buy’ rating on the shares.
International Distribution Services shot higher after strikes planned by Royal Mail workers over the next two weeks were called off.
On the downside, Harbour Energy fell following a report that the windfall tax on energy companies could be raised to 30% and extended by three years. According to The Times, under options being considered by Jeremy Hunt, the energy profit levy would increase by up to five percentage points.
Bodycote slumped after saying it had appointed Ben Fidler as chief financial officer, succeeding Dominique Yates who announced his intention to retire earlier this year. Fidler is currently the deputy CFO of Rolls-Royce, a position he has held since January 2021.
Top 10 FTSE 100 Risers
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Easyjet Plc | +6.09% | +20.00 | 348.50 |
| 2 |  |
Centrica Plc | +3.85% | +2.82 | 75.98 |
| 3 |  |
International Consolidated Airlines Group S.a. | +3.24% | +3.74 | 119.02 |
| 4 |  |
Carnival Plc | +2.75% | +18.20 | 680.20 |
| 5 |  |
Bt Group Plc | +1.78% | +2.25 | 128.90 |
| 6 |  |
Prudential Plc | +1.65% | +13.20 | 810.80 |
| 7 |  |
Aviva Plc | +1.62% | +6.70 | 420.00 |
| 8 |  |
Lloyds Banking Group Plc | +1.44% | +0.60 | 41.87 |
| 9 |  |
Legal & General Group Plc | +1.43% | +3.30 | 233.80 |
| 10 |  |
Coca-cola Hbc Ag | +1.38% | +25.50 | 1,877.50 |
Top 10 FTSE 100 Fallers
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Intertek Group Plc | -1.94% | -73.00 | 3,685.00 |
| 2 |  |
Rentokil Initial Plc | -1.87% | -10.20 | 534.20 |
| 3 |  |
Segro Plc | -1.74% | -13.80 | 777.80 |
| 4 |  |
Spirax-sarco Engineering Plc | -1.42% | -155.00 | 10,745.00 |
| 5 |  |
3i Group Plc | -1.24% | -14.50 | 1,151.50 |
| 6 |  |
Sage Group Plc | -1.23% | -9.00 | 722.60 |
| 7 |  |
Shell Plc | -1.03% | -25.00 | 2,393.50 |
| 8 |  |
Croda International Plc | -0.99% | -68.00 | 6,798.00 |
| 9 |  |
Bae Systems Plc | -0.98% | -8.00 | 806.40 |
| 10 |  |
Halma Plc | -0.98% | -21.00 | 2,117.00 |
Monday newspaper round-up: Public sector workers, Royal Mail, energy suppliers
Nearly 2 million public sector workers could be close to quitting over poor pay, their representatives have warned, leaving the UK’s public services facing a looming crisis. The Trades Union Congress (TUC) said the efforts of millions of key workers got the UK through the worst of the Covid pandemic, but now those same workers were facing another year of “pay misery” at the hands of the government – while the cost of living continues to soar. – Guardian
Planned strikes by Royal Mail workers in the next two weeks have been called off after a challenge by the company. Members of the Communication Workers Union (CWU) are involved in a long-running dispute over pay and conditions. A series of strikes has taken place in recent weeks and more had been planned on 2, 3, 4, 8, 9 and 10 November. – Guardian
Elon Musk could avoid giving a payout of up to $90m (£78m) to sacked senior Twitter executives after dismissing them “for cause”, it has been reported. The new owner of the social media giant sacked four senior executives, including chief executive Parag Agrawal and finance chief Ned Segal, on Thursday, as he moved quickly to assert control over the company following the completion of his $44bn takeover. – Telegraph
Struggling household energy suppliers have been thrown a financial lifeline by a key player in the market, reducing the risk that taxpayer bailouts will be needed in a boost for Rishi Sunak. Elexon, which manages the electricity trades that keep Britain’s lights on, has significantly cut the size of the deposits it requires suppliers to offer for power plants when they order electricity in advance. – Telegraph
Eight people have been arrested over alleged “organised criminal attacks” on multibillion-pound government tax incentives meant to spur investment in technology and innovation. HM Revenue & Customs is investigating a suspected conspiracy to submit fraudulent claims for relief under the research and development tax credit schemes. – The Times
