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London open: Stocks nudge down ahead of US PCE; NatWest tumbles
London stocks nudged lower in early trade on Friday as investors eyed the release of a key US inflation reading, with NatWest under the cosh after results.
At 0900 BST, the FTSE 100 was down 0.1% at 7,344.42.
Investors were also mulling strong results from Amazon overnight, which showed that third-quarter net income jumped to $9.9bn from $2.9bn in the same period a year earlier, while net sales rose 13% to $143.1bn.
Looking ahead to the rest of the day, attention will turn to US personal consumption expenditure figures – the Federal Reserve’s preferred measure of inflation – at 1330 BST.
CMC Markets analyst Michael Hewson said: “Today’s September numbers are expected to show a further slowdown to 3.7% for PCE core deflator while personal spending is forecast to remain steady at 0.4%.”
In equity markets, NatWest tumbled after third-quarter results.
Matt Britzman, equity analyst at Hargreaves Lansdown, said the results were “largely disappointing” as net interest margin dipped below 3%, and the outlook was lowered.
He noted that deposit levels grew, which is a positive sign that NatWest is pricing itself at the right levels to attract customers searching for higher rates. However, he also pointed out that it’s a less profitable business than non/low-interest current accounts.
“Add in mortgage headwinds as highly profitable business written over the pandemic rolls off, and that’s caused the hit to net interest margin,” he said.
Lloyds, Barclays and Standard Chartered – which took a hammering of its own on Thursday after its third-quarter results – were all down.
British Airways and Iberia owner IAG was also in the red despite posting a record third-quarter profit of €1.75bn, driven by strong demand.
On the upside, Digital 9 Infrastructure surged after saying that it was assessing a potential divestment of its entire stake in the Verne Global group of companies for an undisclosed sum.
Top 10 FTSE 100 Risers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Fresnillo Plc | +2.55% | +13.60 | 547.40 |
| 2 |  |
Prudential Plc | +2.17% | +18.00 | 847.60 |
| 3 |  |
Shell Plc | +2.12% | +57.00 | 2,745.50 |
| 4 |  |
Vodafone Group Plc | +1.99% | +1.49 | 76.30 |
| 5 |  |
Smurfit Kappa Group Plc | +1.99% | +52.00 | 2,664.00 |
| 6 |  |
Smith (ds) Plc | +1.84% | +5.00 | 277.20 |
| 7 |  |
Bp Plc | +1.82% | +9.70 | 543.50 |
| 8 |  |
Croda International Plc | +1.68% | +71.00 | 4,288.00 |
| 9 |  |
Antofagasta Plc | +1.66% | +22.50 | 1,374.50 |
| 10 |  |
Wpp Plc | +1.61% | +11.00 | 695.40 |
Top 10 FTSE 100 Fallers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Crh Plc | -2.41% | -107.00 | 4,331.00 |
| 2 |  |
Lloyds Banking Group Plc | -2.14% | -0.88 | 40.29 |
| 3 |  |
Diageo Plc | -1.95% | -60.50 | 3,049.00 |
| 4 |  |
Rentokil Initial Plc | -1.57% | -6.40 | 400.00 |
| 5 |  |
International Consolidated Airlines Group S.a. | -1.51% | -2.15 | 140.70 |
| 6 |  |
Easyjet Plc | -1.50% | -5.50 | 361.60 |
| 7 |  |
Barclays Plc | -1.18% | -1.56 | 130.68 |
| 8 |  |
Rightmove Plc | -1.04% | -5.00 | 477.50 |
| 9 |  |
Smith & Nephew Plc | -0.86% | -7.80 | 897.60 |
| 10 |  |
Compass Group Plc | -0.82% | -17.00 | 2,058.00 |
US close: Major indices down as Meta weighs on stocks
Major indices closed lower on Thursday as Meta Platforms joined Alphabet in underwhelming the market with its quarterly earnings.
At the close, the Dow Jones Industrial Average was down 0.76% at 32,784.30, while the S&P 500 was 1.18% lower at 4,137.23 and the Nasdaq Composite saw out the session 1.76% weaker at 12,595.61.
The Dow closed 251.63 points lower after Facebook and Instagram owner Meta beat analysts’ forecasts but failed to impress with its fourth-quarter guidance and worrying investors with comments about a “softening” ad market.
Meanwhile, the latest batch of economic data was also somewhat mixed when looking at the details of the reports, with US GDP growth hitting an annualised pace of 4.9% during the third quarter, as household spending leapt higher – ahead of consensus estimates for a print of 4.0% and up from 0.8% over the previous three months.
Furthermore, the core PCE price deflator slowed to 2.4% (consensus: 2.5%), its slowest pace of gains since the last quarter of 2019.
However, Ian Shepherdson at Pantheon Macroeconomics said such strength in consumption could not be sustained and was anticipating flat GDP growth in the fourth quarter.
On another note, first time claimes for unemployment increased last week, with initial weekly jobless claims meanwhile rising by 10,000 to 210,000, as expected, according to the Labor Department.
Elsewhere, durable goods orders surged by 4.7% month-on-month in September, but that was entirely the result – and more – of a near doubling in the often volatile category of orders for civilian aircraft.
On Friday, the much-anticipated personal consumption expenditures index – the Fed’s preferred measure of inflation – was forecast to show that core inflation slowed to an annual rate of 3.7% in September from 3.9% in August.
Friday newspaper round-up: Amazon, Wimbledon, EY
Profits almost tripled at Amazon in the latest quarter as consumers continued to spend heavily despite the sharp rise in interest rates. The world’s largest retailer forecast that sales would continue to rise at a robust pace for the rest of the year. Growth had been knocked by surging prices and customers returning to bricks-and-mortar stores. – Guardian
Controversial plans to expand the All England Club’s grounds, which host the Wimbledon championships, have been approved by local council leaders. Merton council’s development and planning application committee voted on Thursday night to approve the application to expand the tennis complex. – Guardian
Michael Gove has told councils to ditch four-day working weeks or face financial penalties. The department for Levelling Up, Housing & Communities (DLUHC), led by Mr Gove, issued new guidance on Thursday criticising shorter working weeks that fail to deliver “value for money” for taxpayers. It said councils choosing to ignore the advice were now “on notice”, saying the policy of allowing four-day weeks on full pay should be axed “immediately”. – Telegraph
EY’s army of auditors and consultants in Britain generated more fees than ever over the past year, despite the distraction of its failed break-up plan. The Big Four firm’s UK revenues climbed by 16 per cent to £3.76 billion in the year to the end of June, surpassing its previous record of £3.23 billion in 2022. Pre-tax profits rose to £659 million, up 4 per cent from £634 million last time around. – The Times
Sir Paul Marshall will seek to emulate the business model of The New York Times with a significant expansion of the Telegraph in the United States if he prevails in the bidding war for the British newspaper group. The hedge fund tycoon is drawing up plans to target a market of about 100 million centre-right American voters with a substantial investment in the Telegraph’s overseas operations. – The Times
