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London open: Stocks edge up despite uninspiring data
London stocks edged higher in early trade on Wednesday despite uninspiring Chinese factory data, grim UK shop price inflation and a bleak survey on service sector confidence.
At 0840 GMT, the FTSE 100 was up 0.3% at 7,530.94.
Figures released earlier by the National Bureau of Statistics showed that China’s manufacturing activity shrank faster than expected in November as Covid restrictions took their toll.
The purchasing managers’ index for the sector fell to 48.0 from 49.2 in October, coming in below consensus expectations of 49.0. A reading above 50.0 indicates growth, while a reading below signals contraction.
NBS Senior Statistician Zhao Qinghe said: “In November, impacted by multiple factors including the wide and frequent spread of domestic outbreaks, and the international environment becoming more complex and severe, China’s purchasing managers’ index fell.”
Zhao said domestic Covid outbreaks had caused production activity to slow down and product orders to fall.
Meanwhile, the non-manufacturing PMI declined to 46.7 in November from 48.7 the month before, versus consensus of 48.0.
On home shores, industry data showed that shop price inflation ramped up in November, leaving retailers braced for an increasingly difficult Christmas.
According to the latest BRC-NielsenIQ Shop Price Index, annual inflation was 7.4%, compared to October’s 6.6% and the three-month average of 6.5%. Annual food inflation surged to 12.4%, up from 11.6% in October, while non-food inflation was 4.8%, against 4.1% in October.
For many retailers, the weeks leading up to Christmas are the most important of the year, as shoppers splash out on big ticket items like furniture as well as presents and festive food.
But Helen Dickinson, chief executive of the British Retail Consortium, said: “Winter looks increasingly bleak, as pressures on prices continue unabated.
“Food prices have continued to soar, especially for meat, eggs and dairy, which have been hit by rocketing energy costs and rising costs of animal feed and transport. Christmas gifting is also set to become more expensive than in previous years, with sports and recreation equipment seeing particularly high increases.
“Christmas cheer will be dampened this year, as households cut back on seasonal spending to prioritise the essentials.”
Separately, an industry survey showed that business optimism across the UK service sector continued to slide over the last three months. According to the latest CBI Service Sector Survey, optimism deteriorated for the third consecutive quarter across the sector in the three months to November.
Looking ahead to the rest of the day, investors were eyeing eurozone consumer price inflation figures for November at 1000 GMT and a speech by Federal Reserve chair Jerome Powell.
In equity markets, Rolls-Royce rallied after Barclays initiated coverage of the stock at ‘overweight’.
Specialist media publisher Future was also up after it reported a rise in full-year profits, driven by strong revenue growth and contributions from acquisitions.
Home REIT pushed higher after it published a full response to allegations made by short seller Viceroy Research last week, which sent its shares sliding.
Pennon was under the cosh as it said half-year profits tumbled after it was hit by higher costs.
Top 10 FTSE 100 Risers
| Sponsored by Plus500 |
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| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Carnival Plc | +3.60% | +25.40 | 731.80 |
| 2 |  |
Rolls-royce Holdings Plc | +3.10% | +2.76 | 91.88 |
| 3 |  |
Flutter Entertainment Plc | +2.10% | +250.00 | 12,165.00 |
| 4 |  |
Ocado Group Plc | +2.07% | +12.80 | 629.80 |
| 5 |  |
Antofagasta Plc | +2.05% | +28.00 | 1,392.00 |
| 6 |  |
Pearson Plc | +2.03% | +20.00 | 1,004.00 |
| 7 |  |
Easyjet Plc | +1.96% | +7.50 | 390.40 |
| 8 |  |
Intertek Group Plc | +1.85% | +73.00 | 4,017.00 |
| 9 |  |
Compass Group Plc | +1.83% | +33.50 | 1,864.00 |
| 10 |  |
Informa Plc | +1.80% | +11.00 | 621.40 |
Top 10 FTSE 100 Fallers
| Sponsored by Plus500 |
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| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Itv Plc | -0.63% | -0.48 | 75.92 |
| 2 |  |
Severn Trent Plc | -0.59% | -16.00 | 2,698.00 |
| 3 |  |
United Utilities Group Plc | -0.54% | -5.50 | 1,020.50 |
| 4 |  |
Coca-cola Hbc Ag | -0.50% | -10.00 | 2,008.00 |
| 5 |  |
Centrica Plc | -0.36% | -0.34 | 94.48 |
| 6 |  |
Hsbc Holdings Plc | -0.27% | -1.40 | 508.90 |
| 7 |  |
Tesco Plc | -0.26% | -0.60 | 232.40 |
| 8 |  |
Legal & General Group Plc | -0.24% | -0.60 | 253.80 |
| 9 |  |
Hargreaves Lansdown Plc | -0.21% | -1.80 | 848.80 |
| 10 |  |
Imperial Brands Plc | -0.14% | -3.00 | 2,120.00 |
US close: Stocks mostly lower as consumer confidence drops to four-month low
Wall Street stocks closed mostly lower on Tuesday as turmoil in China and declining consumer confidence weighed on sentiment.
At the close, the Dow Jones Industrial Average was up 0.01% at 33,852.53, while the S&P 500 lost 0.16% to 3,957.63 and the Nasdaq Composite saw out the session 0.59% weaker at 10,983.78.
The Dow closed just 3.07 points higher on Tuesday, narrowly halting further losses amid concerns about social unrest in China stemming from the nation’s ongoing Covid-19 restrictions.
Stocks traded mostly lower after growing frustration in mainland China weighed on global markets around the world and briefly pushed West Texas Intermediate crude futures to their lowest level since December 2021. Both Brent and WTI futures have since changed direction and traded higher at the start of the session.
On the macro front, the Conference Board‘s consumer confidence index dropped to a four-month low of 100.2 in November, down from October’s print of 102.5 amid an outlook that pointed to still “elevated” recession risks. Market participants were looking very closely at the outcome as they hope to glean some hints as to consumer health in the US.
Elsewhere, US home price inflation continued to slow in September, dragged lower by fast-rising interest and mortgage rates, surveys showed. The Federal Housing Finance Agency‘s house price index edged up at a seasonally adjusted month-on-month pace of 0.1% (consensus: -1.3%). In annual terms, meanwhile, the rate of increase in the index slowed from 11.9% to 11.0%. Elsewhere, the 20-city S&P Corelogic Case-Shiller home price index meanwhile fell by 1.5% versus August. That pushed the annual rate down from 12.9% to 10.4% (consensus: 10.7%).
Finally, the Dallas Federal Reserve‘s general business activity index for services in Texas rose slightly to -11 in November, up from a more than two-year low of -13.6 in the prior month.
In the corporate space, financial software firm Intuit beat first-quarter earnings and revenue estimates after the close, leading the group to raise its second-quarter guidance yet again.
Wednesday newspaper round-up: Avanti West Coast, Twitter, FTSE reshuffle
Labour has called on ministers to claw back £12m in dividends paid by Avanti West Coast to its shareholders last year, when it was subsidised by £343m by the taxpayer. Figures released by the rail watchdog on Tuesday showed that Avanti paid out £12m in 2021-22 from management and performance fees. – Guardian
Subsidising the railways has cost British households £1,800 each over the past six years, new figures show. Taxpayers have been forced to inject £50.4bn to prop up the railways since 2016/17 as fare income is not enough to balance the books. Figures released by regulator the Office of Rail and Road (ORR) on Tuesday showed Government funding was £13.3bn in the year to March 2022, compared with £17.6bn in the previous year. – Telegraph
Republican rising star Ron DeSantis has warned Apple that banning Twitter from the iPhone would be a “huge mistake” as a row rages over free speech on the social network. The Florida governor, seen as a leading contender for the presidency in 2024, on Tuesday praised changes pushed through at Twitter by Elon Musk, including the end of bans for right-wing politicians such as Donald Trump. – Telegraph
Three companies look set to be promoted to the FTSE 100 next month, including what would be a blue-chip debut for the insurer Beazley, although Abrdn now looks likely to miss out. The fund manager had seemed set for a swift re-entry to the top tier of the London Stock Exchange, having been demoted at the reshuffle in September. – The Times
The government has repeated its goal of making the UK a global cryptocurrency hub even as the fallout from the FTX collapse continues to reverberate around the world. Andrew Griffith, economic secretary to the Treasury and City minister, said he stood by that ambition, although he placed the emphasis on fiat-backed stable coins rather than the more volatile privately-created crypto assets. – The Times
