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London open: Stocks flat as BP results disappoint
London stocks were steady in early trade on Tuesday, with BP under pressure after disappointing third-quarter numbers, as investors mulled the latest data out of China and UK shop price index.
At 0830 GMT, the FTSE 100 was flat at 7,327.27.
Susannah Streeter, head of money and markets at Hargreaves Lansdown, said: “Relief about the prospects for inflation is rippling through, as the rate of food price rises falls in the UK and oil beds in lower, but it’s being offset by renewed concerns about China’s economic fragility.”
Data released earlier by China’s National Bureau of Statistics showed that the manufacturing purchasing managers’ index fell to 49.5 in October from 50.2 a month earlier, coming in below the 50 mark that separates contraction from expansion and missing expectations for a reading of 50.2.
The non-manufacturing PMI declined to 50.6 in October from 51.7 from in September.
On home shores, meanwhile, industry data showed that shop price inflation fell in October to its lowest level since August 2022.
According to the British Retail Consortium-NielsenIQ shop price index, annual inflation eased to 5.2% from 6.2% in September. This marked the fifth consecutive month of deceleration.
Food inflation eased to 8.8% this month from 9.9% in September, marking the sixth consecutive month of deceleration and hitting the lowest since July 2022.
Fresh Food inflation slowed to 8.3% in October from 9.6% in September, while ambient food inflation eased to 9.5% from 10.4%.
Meanwhile, non-food inflation fell from 4.4% to 3.4% – its lowest since September 2022.
BRC chief executive Helen Dickinson said: “Imported goods saw higher levels of inflation due to a weaker pound, still-high producer costs and emerging trade frictions, while prices for some domestically produced foods, such as fruit, were lower compared to last month.
“Prices of children’s and baby clothing also fell as retailers continued to support families as the colder weather descended.
“Retailers have been battling to keep prices down for their customers in the face of rising transport costs, high interest rates and other input costs. To keep inflation heading in the right direction, it is vital that the Government does not burden businesses with unnecessary new costs.
“Without immediate action from the Chancellor, retailers have an additional £470m per year on their business rates bill, jeopardising the progress made. Ultimately, it’s consumers who would pay the price for the rising rates bill.”
In equity markets, oil giant BP was under the cosh as it reported a third-quarter underlying replacement cost profit of $3.3bn, an improvement from $2.6bn in the second quarter but down from $8.2bn in the same period a year earlier and missing forecasts of $4bn.
InterContinental Hotels was knocked lower by a downgrade to ‘underweight’ from ‘neutral’ at JPMorgan Cazenove.
On the upside, Rolls-Royce was boosted by an upgrade to ‘overweight’ from ‘equalweight’ at Barclays, which highlighted a “buying opportunity” after the shares de-rated around 10% in the past month.
IG Group gained as the online trading platform announced plans to axe around 10% of its worldwide workforce as it looks to cut costs and streamline the business. Alongside other efficiency measures, this is expected to deliver full run rate cost savings of £50m a year.
Precision instrumentation and controls company Spectris advanced as it said it expects full-year profits to be at the top end of forecasts after continued strong sales growth and margin improvements in the third quarter.
Top 10 FTSE 100 Risers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Rolls-royce Holdings Plc | +4.16% | +8.40 | 210.40 |
| 2 |  |
Standard Chartered Plc | +2.64% | +16.40 | 636.80 |
| 3 |  |
Pearson Plc | +2.22% | +21.00 | 967.20 |
| 4 |  |
Experian Plc | +2.18% | +53.00 | 2,488.00 |
| 5 |  |
Smith & Nephew Plc | +2.16% | +19.60 | 927.20 |
| 6 |  |
British Land Company Plc | +2.11% | +6.20 | 299.90 |
| 7 |  |
Persimmon Plc | +2.09% | +21.00 | 1,025.00 |
| 8 |  |
Segro Plc | +2.08% | +14.40 | 707.80 |
| 9 |  |
Kingfisher Plc | +2.06% | +4.20 | 208.50 |
| 10 |  |
Taylor Wimpey Plc | +1.96% | +2.15 | 111.80 |
Top 10 FTSE 100 Fallers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Bp Plc | -5.01% | -26.40 | 500.30 |
| 2 |  |
Ferguson Plc | -3.60% | -455.00 | 12,175.00 |
| 3 |  |
Vodafone Group Plc | -1.08% | -0.83 | 75.90 |
| 4 |  |
Intercontinental Hotels Group Plc | -1.03% | -62.00 | 5,930.00 |
| 5 |  |
Bhp Group Limited | -0.93% | -22.00 | 2,342.50 |
| 6 |  |
Shell Plc | -0.78% | -21.00 | 2,666.00 |
| 7 |  |
Bae Systems Plc | -0.59% | -6.50 | 1,096.50 |
| 8 |  |
Ocado Group Plc | -0.22% | -1.00 | 461.70 |
| 9 |  |
Coca-cola Hbc Ag | -0.19% | -4.00 | 2,138.00 |
| 10 |  |
Direct Line Insurance Group Plc | -0.10% | -0.15 | 155.05 |
US close: Stocks rebound strongly as markets rise over 1%
US stocks rebounded strongly on Monday as investors hunted for bargains after the S&P 500 touched a five-month low ahead of a busy week for earnings, data and central bank action.
The S&P 500 finished 1.2% higher after falling 5% over the past 10 trading sessions to settle at 4,137.23 on Friday – its lowest close since late-May. The Dow rose 1.6% while the Nasdaq gained 1.2%.
Stocks have been under heavy selling pressure over recent weeks on the back of rising bond yields, Middle Eastern geopolitical uncertainty and mixed corporate earnings.
Conflict in Israel escalated over the weekend after government forces made a large-scale ground assault on Gaza, drawing condemnation from neighbouring countries. However, reports of military action being more cautious than initially predicted may have tempered the market’s reaction to the news on Monday.
“The limited and incremental nature of the incursions thus far appears to be helping assuage concerns that the escalations might prompt another front opening on Israel’s northern border with Lebanon and Hezbollah,” said analyst Michael Hewson from CMC Markets.
Rising hopes that the ground assault will not spread into wider regional conflict hit oil prices with West Texas Intermediate crude dropping 3.5% to $82.59 a barrel.
Back to the US, the economic data calendar for Monday was relatively light; though things will pick up in the coming days with the ADP employment report, ISM manufacturing data and non-farm payrolls figures – not to mention central bank policy decisions from the Federal Reserve, Bank of England and Bank of Japan.
“The market is currently pricing in a probability of over 90% that the Fed will keep interest rates unchanged. Therefore, the primary focus will shift to the messaging from the Fed, especially considering the mixed signals that have been coming from the central bank since the September meeting,” said market expert Patrick Munnelly from Tickmill Group.
Meanwhile, this week is another busy one for corporate earnings, with McDonald’s, SoFi Technologies and Western Digital reporting pre-market on Monday and Pinterest, VF Corporation and Transocean publishing results after markets close. Apple will also be in focus ahead of its results on Thursday.
McDonald’s beats forecasts
Fast food titan McDonald’s saw shares rise after the company surpassed analysts’ estimates with its third-quarter results, helped by “strategic menu price increases”. Adjusted earnings per share came in at $3.19, ahead of the the $3 forecast, while revenues were up 14% at $6.69bn, exceeding the $6.56bn prediction.
Broadcom and VMWare both finished higher despite the news that the tech companies’ $70bn merger – originally scheduled for Monday – would be delayed, with Chinese regulators still yet to give their approval. Broadcom said it expects the deal to close “soon”.
Meanwhile, sector giant Alphabet was rebounding after a post-results 10% plunge last week.
Tuesday newspaper round-up: BNPL, Unilever, oil prices
The Trades Union Congress has accused the Tory government of promoting a “greed is good” culture among bankers, who it said would be able to “cash in on unlimited bonuses” after a cap on payouts was lifted on Tuesday. The TUC said that while ministers had repeatedly called for pay restraint for most workers, they had been “silent over excess in the City”. – Guardian
The City regulator has taken action after finding that customers of two leading buy now, pay later providers were “at risk of harm” because of potentially unfair and unclear small print. The US-based online payments group PayPal and the TV shopping channel QVC have changed the terms of their contracts after the Financial Conduct Authority (FCA) expressed “concern” over the impact to customers. – Guardian
Unilever is freezing its chief executive’s salary until 2026 as it tries to calm frustration among shareholders unhappy with the performance of the company which owns Marmite and Ben & Jerry’s. Hein Schumacher, who took over from Alan Jope in July, will not get any increase to his fixed pay packet of €1.85m (£1.62m) in 2024 or 2025, Unilever said. – Telegraph
MPs have accused Britain’s biggest high street banks of seeking “to do as little as they can get away with” on raising savings rates for customers. The Commons’ Treasury select committee stepped up its pressure after quarterly trading reports from banks over the past week and amid continued scrutiny from the financial regulator over their practices. – The Times
Oil prices could surge to a record high of more than $150 a barrel if the Israel-Gaza war escalates into a regional conflict, the World Bank has warned. Brent crude, the global benchmark price, rose from less than $85 a barrel before Hamas’s October 7 attack on Israel to exceed $93 a barrel on October 18, amid fears that escalation could result in supply disruption. Prices have receded slightly since and yesterday Brent was 1.7 per cent lower at $86.49. – The Times
