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London open: Stocks nudge higher; airlines rally on Ryanair results
London stocks were just a touch firmer in early trade on Monday despite solid gains in Asia, but airlines rallied after well-received results from Ryanair.
At 0835 GMT, the FTSE 100 was up 0.1% at 7,422.51.
Stocks racked up solid gains last week after the US Federal Reserve and the Bank of England stood pat on interest rates, sparking hopes that rates have peaked. A softer-than-expected US non-farm payrolls report on Friday added to those hopes.
Victoria Scholar, head of investment at Interactive Investor, said: “The US non-farm payrolls report on Friday saw 150k job additions in October, almost halving from 297k in September and shy of expectations for 180k.
“The weaker data helped to extend last week’s rally with US stocks logging their best week in a year. The S&P 500 gained 5.9% last week while US Treasury yields retreated. Investors are hoping that the Federal Reserve is at the peak of its tightening cycle, also fuelling gains for equities last week after a torrid month for price action in October.”
In equity markets, airlines were in the black after Ryanair said it will pay its first ever dividend and posted a 59% jump in first-half profit after tax to €2.18bn, thanks to a strong Easter in the first quarter, record summer traffic and higher fares. IAG, easyjet and Wizz all rose.
Scholar said: “Ryanair has been able to pass on additional cost pressures to consumers through higher airfares with ticket prices likely to continue to go up next year. Plus, it has been enjoying a tailwind from strong demand post pandemic which it expects will be even stronger next year, despite cost-of-living pressures with elevated inflation and interest rates. Ryanair has also been more focussed than rivals on keeping its debt down – the airline expects it will be debt-free by the end of 2026.
“Investors have lots to be cheerful about in this set of results including its better-than-expected earnings, its outlook, and its dividend announcement.”
Aerospace group Melrose gained as it signed a new $5bn aftermarket services agreement with engines giant GE Aerospace.
JD Sports was a high riser after Citi initiated coverage of the stock at ‘buy’. “We see a significant opportunity for JD Sports to deploy capital, generating returns above its WACC, with cash generation supported by working capital control,” it said.
On the downside, Prudential lost ground after the insurer said new business sales and profits slowed slightly from the half-year stage in the third quarter.
Music rights owner Hipgnosis was under the cosh as it said it will not declare dividends before the new financial year, having undertaken a review of its financial position.
Top 10 FTSE 100 Risers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Melrose Industries Plc | +3.76% | +18.40 | 508.20 |
| 2 |  |
Easyjet Plc | +3.71% | +14.50 | 405.70 |
| 3 |  |
Fresnillo Plc | +2.33% | +13.00 | 572.00 |
| 4 |  |
Ocado Group Plc | +1.88% | +10.20 | 552.40 |
| 5 |  |
Rolls-royce Holdings Plc | +1.63% | +3.60 | 224.50 |
| 6 |  |
Standard Chartered Plc | +1.49% | +9.20 | 628.40 |
| 7 |  |
Tui Ag | +1.12% | +5.00 | 451.40 |
| 8 |  |
International Consolidated Airlines Group S.a. | +1.00% | +1.50 | 151.95 |
| 9 |  |
Antofagasta Plc | +0.59% | +8.00 | 1,365.50 |
| 10 |  |
Legal & General Group Plc | +0.58% | +1.30 | 224.00 |
Top 10 FTSE 100 Fallers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Croda International Plc | -1.49% | -68.00 | 4,490.00 |
| 2 |  |
Bunzl Plc | -1.41% | -41.00 | 2,877.00 |
| 3 |  |
National Grid Plc | -1.30% | -13.00 | 983.80 |
| 4 |  |
Marks And Spencer Group Plc | -1.21% | -2.70 | 219.80 |
| 5 |  |
Kingfisher Plc | -1.21% | -2.70 | 219.80 |
| 6 |  |
Segro Plc | -1.15% | -9.00 | 774.60 |
| 7 |  |
British Land Company Plc | -1.14% | -3.70 | 322.00 |
| 8 |  |
Persimmon Plc | -1.12% | -12.50 | 1,103.00 |
| 9 |  |
Severn Trent Plc | -1.11% | -30.00 | 2,663.00 |
| 10 |  |
United Utilities Group Plc | -1.06% | -11.50 | 1,069.00 |
US close: Stocks higher despite weaker-than-expected jobs report
US stocks closed higher on Friday following the release of a weaker-than-expected non-farm payrolls report for last month.
At the close, the Dow Jones Industrials was up 0.66% at 34,061.32, while the S&P 500 advanced 0.94% to 4,358.34 and the Nasdaq Composite saw out the session 1.28% firmer at 13,478.28.
The Dow advanced 222.24 points on Friday despite the Department of Labor revealing that hiring had slowed to a pace of 150,000 in October, short of consensus estimates for a reading of 170,000. Average hourly earnings growth also came in below forecasts at 0.2% month-on-month (consensus: 0.3%), while readings for the prior two months were revised down by a combined 101,000.
“The October jobs report provides plenty of evidence that labor market conditions are softening and will allow the Fed to keep policy on hold as it monitors its progress toward returning inflation to 2%,” said Nancy Vanden Houten at Oxford Economics.
US equity markets had rallied since the start of the week – with Wall Street’s three major equity indices surging between 3.2% and 4.7% – on rising hopes that the Federal Reserve’s current rate-hiking cycle might be over.
“The fact markets across the US, Europe and Asia remained in an up-trend suggests investors are gaining confidence that we’ve finally reached the much-anticipated pivot in central bank policy,” chipped in AJ Bell investment director Russ Mould.
Turning to Treasuries, the yield on the benchmark 10-year note had slipped 14 basis points to 4.519%, while its two-year counterpart was down ten basis points at 4.870%.
In the corporate space, Apple shares were 0.52% lower after fourth-quarter revenues were down 1% at $89.5bn. The tech giant did surpass analysts’ estimates with its results – which included a record $43.8bn in quarterly iPhone revenues – but disappointed with its outlook for hardware and China sales.
“Once again, we have a tech stock managing to beat on both top and bottom-line growth, but markets continue to take somewhat unforgiving stance, opting to instead focus on weak iPad, wearables and Greater China revenue. Nonetheless, shareholders should remain optimistic given the strong figures across their key iPhone and services segments,” said Joshua Mahony, chief market analyst at Scope Markets.
Monday newspaper round-up: Aviva, NatWest, CAB Payments
A fashion industry push to reduce the environmental impact of the clothing it sells is being undermined by an ongoing addiction to buying new clothes, with the average Briton buying 28 items every year. Asos and Primark are among the big names signed up to Wrap’s voluntary environmental pact, Textiles 2030. – Guardian
Rishi Sunak will this week announce legislation for a new annual system for awarding oil and gas licences as part of a highly political king’s speech which the Conservatives hope will open up clear dividing lines with Labour. The government said the plans would protect thousands of jobs and bolster energy security, reducing the UK’s reliance on imports from hostile foreign regimes such as Russia, even though the UK has committed to move away from fossil fuels. – Guardian
Grant Shapps has warned Aviva against any “immoral” withdrawal of backing for defence companies, after a letter it sent to investors triggered a backlash from the Ministry of Defence. Aviva, which manages £221bn of assets including insurance and pension funds, told customers last week it would be selling out of “certain companies that do not meet our Aviva Baseline Exclusion Policy”. – Telegraph
NatWest is to launch an artificial intelligence (AI) chatbot that it claims will provide more human interaction to customers after closing hundreds of bank branches in recent years. The bot, built using technology from IBM, will employ so-called “generative” AI technology, similar to that of ChatGPT, which can hold human-like conversations with customers looking for information about the bank. – Telegraph
Shareholders in CAB Payments have called on regulators to investigate whether the prospectus for one of London’s biggest stock market flops this year misled investors. The initial public offering of CAB, promoted by JPMorgan and Barclays, has come under scrutiny after the company issued a profit warning four months after floating. The FTSE 250 foreign exchange firm, which specialises in processing payments to and from developing nations, floated in July with a valuation of £851 million, raising £335 million. It was London’s largest conventional IPO this year. Its market capitalisation has since collapsed to only £173 million, making it the world’s worst performing IPO this year, data from Bloomberg shows. – The Times
Dominic Chappell, who became engulfed in the BHS scandal, has been released from prison after serving half of his six-year sentence for evading tax. Chappell, 56, was released on parole from Guys Marsh prison in Dorset on Friday. BHS collapsed into administration in April 2016 just over a year after Sir Philip Green sold the chain for £1 to a consortium led by Chappell. – The Times
