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London open: Stocks edge lower; Lloyds drops after results
London stocks edged lower in early trade on Wednesday as investors mulled the latest stimulus measures announced by China and mixed reactions to results from Microsoft and Google owner Alphabet overnight.
At 0845 BST, the FTSE 100 was down 0.2% at 7,372.80.
Market participants were mulling the latest efforts from authorities in Beijing, after they announced plans to issue 1 trillion yuan in government bonds to support the economy. According to state media, the bulk of this will be used for infrastructure spending.
Investors were also digesting a mixed showing from Microsoft and Alphabet.
The former rose after the close as it reported a 13% increase in first-quarter revenues, but the latter slumped on the back of lower-than-forecast cloud division revenues.
CMC Markets analyst Michael Hewson said: “Both sets of numbers were impressive, although judging by the market reaction the market had a somewhat mixed view, sending Alphabet lower and Microsoft higher in aftermarket trading, even though both beat expectations on revenues and profits.”
In UK equity markets, Reckitt Benckiser slumped even as the consumer goods giant unveiled plans to return £1bn to shareholders and laid out a strategy to boost revenues over the medium term.
Lloyds Bank was also in the red even as it reported a massive jump in third-quarter profits as it continued to cash in on higher interest rates, despite a reduction in lending to customers amid tough macroeconomic conditions.
Pre-tax profit for the three months to September 30 soared to £1.85bn from £576m a year earlier.
Essentra tumbled as it said full-year adjusted operating profit was set to be “towards the lower end” of its expectations due to a “softer” trading environment.
Brick and building materials maker Ibstock lost ground as it maintained annual guidance despite lower volumes as higher prices and cost controls offset weaker demand in the housebuilding market.
Paper and packaging group Mondi was knocked lower by a downgrade to ‘underweight’ from ‘equalweight’ at Barclays.
On the upside, Bytes Technology gained as the software, security and cloud services company hiked its interim dividend by 12.5% after a strong first half, with revenues and profits rising by double-digits and billed income jumping by over a third.
Top 10 FTSE 100 Risers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Rio Tinto Plc | +2.63% | +133.00 | 5,193.00 |
| 2 |  |
Sage Group Plc | +1.77% | +16.80 | 967.60 |
| 3 |  |
Bhp Group Limited | +1.72% | +39.50 | 2,341.00 |
| 4 |  |
Smurfit Kappa Group Plc | +1.63% | +42.00 | 2,624.00 |
| 5 |  |
Bae Systems Plc | +0.88% | +9.50 | 1,087.00 |
| 6 |  |
Standard Chartered Plc | +0.76% | +5.40 | 714.60 |
| 7 |  |
Gsk Plc | +0.67% | +9.80 | 1,479.80 |
| 8 |  |
Hsbc Holdings Plc | +0.57% | +3.50 | 616.30 |
| 9 |  |
Lloyds Banking Group Plc | +0.54% | +0.22 | 40.80 |
| 10 |  |
British American Tobacco Plc | +0.53% | +13.00 | 2,455.50 |
Top 10 FTSE 100 Fallers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Ocado Group Plc | -5.00% | -25.40 | 482.20 |
| 2 |  |
Tui Ag | -3.29% | -13.80 | 405.80 |
| 3 |  |
St. James’s Place Plc | -2.95% | -18.20 | 599.40 |
| 4 |  |
Persimmon Plc | -2.27% | -22.00 | 949.20 |
| 5 |  |
International Consolidated Airlines Group S.a. | -2.18% | -3.10 | 138.95 |
| 6 |  |
British Land Company Plc | -2.09% | -6.20 | 290.70 |
| 7 |  |
Schroders Plc | -2.07% | -7.60 | 360.30 |
| 8 |  |
Fresnillo Plc | -1.81% | -9.60 | 520.00 |
| 9 |  |
Land Securities Group Plc | -1.75% | -10.00 | 560.00 |
| 10 |  |
Segro Plc | -1.57% | -11.00 | 689.00 |
US close: Strong earnings from blue chips drive markets higher
US markets rose on Tuesday with the Dow snapping a four-day losing streak as a raft of blue chips impressed the market with better-than-expected earnings.
Traders were reacting positively to earnings from Spotify, General Electric, Coca-Cola, Spotify, 3M and General Motors, which all surpassed estimates with their third-quarter results.
According to data from FactSet, of the 23% of S&P 500 constituents that have already released results this earnings season, more than three quarters have beaten consensus forecasts.
The Dow Jones Industrial Average closed up 0.6%, the S&P 500 gained 0.7%, while the tech-heavy Nasdaq rose 0.9%.
Heavyweights Alphabet and Microsoft were in focus ahead of their results due out after the closing bell, with optimism rising high that the two giant tech stocks will continue their recent run, having risen 52% and 36% so far this year, respectively.
David Morrison, senior market analyst at Trade Nation, highlighted that the so-called Magnificent Seven – of which Alphabet and Microsoft are a part – have driven much of the stock-market gains so far this year. “The importance of these companies to the health of the major US stock indices can’t be overstated. Just five companies, Alphabet, Microsoft, NVIDIA, Apple and Amazon account for around 25% of the market capitalisation of the S&P 500.”
Investors were also digesting a small pick-up in private-sector activity, as shown in the S&P Global purchasing managers’ indices (PMIs) released shortly after the opening bell. The S&P Global flash composite purchasing managers’ index – which measures activity in the services and manufacturing sectors – rose to 51.0 from 50.2 in September. A reading above 50.0 indicates expansion, while a reading below signals contraction.
The manufacturing PMI ticked up to 50.0 in October from 49.8 the month before, hitting a six-month high. Meanwhile, the services business activity index came in at 50.9 this month, versus 50.1 in September.
Chris Williamson, chief business economist at S&P Global Market Intelligence, said: “Hopes of a soft landing for the US economy will be encouraged by the improved situation seen in October. The S&P Global PMI survey has been among the most downbeat economic indicators in recent months, so the upturn in US output growth signalled at the start of the fourth quarter is good news.”
Blue chips top forecasts
General Electric raised its full-year profit forecast for the third time this year on the back of strong quarterly earnings. The engineering giant said the boost in earnings was mainly due to robust demand for jet engine parts and services and improved performance in its renewable energy operations.
Spotify delivered a return to profitability in the third quarter after user and subscriber numbers beat expectations and revenues grew ahead of guidance. Monthly active users grew 26% to 574m, while subscribers increased 16% to 226m, with both figures coming in 2m ahead of guidance.
Soft drink behemoth Coca-Cola topped expectations on quarterly earnings and revenue in its latest report, with earnings per share coming in at 74 cents. That was well ahead of the 69 cents pencilled in by analysts surveyed by LSEG, while revenue reached $11.91bn, comfortably beating the expected $11.44bn.
American conglomerate 3M raised its earnings and cash flow guidance following a solid third quarter. 3M said the upgrade was a result if its “year-to-date performance and the continued strong operational execution”.
General Motors delivered better-than-expected third-quarter earnings but the auto giant said it was pulling its annual guidance due to the impact of strikes. GM said it was withdrawing its guidance for the year due to volatility caused by strikes. It had previously guided to between $12bn and $14bn in adjusted earnings and net income attributable to shareholders of $9.3bn to $10.7bn.
Wednesday newspaper round-up: AI laws, Microsoft, AstraZeneca
Scammers were responsible for nearly 1.4m cases of fraud in the UK during the first half of 2023 – the equivalent of one every 12 seconds – with romance scams and ID theft among the fastest growing categories. Overall, criminals stole £580m in the first six months of the year, according to the banking trade association UK Finance, suggesting households are set to lose more than £1bn to fraudsters during 2023. – Guardian
The EU is within “touching distance” of passing the world’s first laws on artificial intelligence, giving Brussels the power to shut down services that cause harm to society, says the AI tsar who has spent the last four years developing the legislation. A forthcoming EU AI Act could introduce rules for everything from homemade chemical weapons made through AI to copyright theft of music, art and literature, with negotiations between MEPs, EU member states and the European Commission over final text coming to a head on Wednesday. – Guardian
The world is at a “tipping point” on debt that threatens to spark a global reckoning after years of government borrowing binges, the boss of HSBC has warned. Noel Quinn, chief executive of the bank, which is one of the world’s biggest, said countries risked being “hit hard” after allowing borrowing to balloon in the wake of the financial crisis and pandemic. – Telegraph
Sales at Microsoft have surged as the technology giant cashes in on the artificial intelligence (AI) gold rush in a race against Silicon Valley rival Google. Revenues at Microsoft jumped 13pc to $56.5bn (£46.5bn) as boss Satya Nadella claimed the company was “making the age of AI real”. The technology company has invested in ChatGPT-developer OpenAI and launched a series of AI-powered tools for its Office and Word products in recent months. – Telegraph
Sir Pascal Soriot has said it would be a failure of his leadership if AstraZeneca did not appoint an internal candidate to eventually succeed him, as he committed himself to leading the FTSE 100 drugs company for another five years. Soriot, 64, has overseen the transformation of AstraZeneca since he became chief executive in 2012, turning down a £69 billion takeover offer from Pfizer and transforming the Cambridge business into one of Britain’s biggest public companies, valued at about £172 billion, after reviving its drugs pipeline. – The Times
