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London open: Stocks little changed as investors mull China, UK data releases
London stocks were little changed in early trade on Tuesday after a downbeat Asian session, as investors mulled the latest house price and retail sales data and waded through a deluge of corporate news.
At 0920 GMT, the FTSE 100 was down 0.1% at 7,408.78.
Data out earlier in China showed that exports declined by 6.4% year-on-year in October, following a 6.2% decline in September and versus expectations for a 3.5% drop.
Meanwhile, imports unexpectedly rose in October, by 3%, following a 6.3% decline in September. The trade surplus narrowed to $56.5bn from an upwardly-revised $77.8bn in September.
On home shores, figures released earlier by the British Retail Consortium and KPMG showed that retail sales growth slowed to an annual rate of 2.5% in October, as milder weather and deal-hunting delayed seasonal spending.
The BRC-KPMG Retail Sales Monitor revealed that growth fell from 2.7% in September, and 4.1% in August. This was well below the three-month average of +3.1% and the 12-month average of +4.2%.
The three-month average growth in food sales rose to 7.9%, from 7.4% the month before, while non-food sales were down 1%, from -1.2% the month before.
“Retail sales growth slowed as high mortgage and rental costs further shook consumer confidence,” said BRC chief executive Helen Dickinson.
“Many households are also delaying their Christmas spending in the hopes they can grab a bargain in the upcoming Black Friday sales. The cost-of-living squeeze meant more was spent on lower-price indulgences, such as beauty products – the so-called ‘Lipstick Effect’. Meanwhile, the arrival of some colder weather helped to boost fashion sales, particularly for outdoor wear.”
Elsewhere, data from Halifax showed that house prices rose in October after six consecutive monthly falls amid constrained supply, but demand remains weak overall.
House prices ticked up 1.1% on the month following a 0.3% fall in September.
On the year, prices were down 3.2% in October following a 4.5% decline the month before. The average price of a home stood at £281,974.
Kim Kinnaird, director, Halifax Mortgages, said: “Prospective sellers appear to be taking a cautious attitude, leading to a low supply of homes for sale. This is likely to have strengthened prices in the short-term, rather than prices being driven by buyer demand, which remains weak overall.
“While many people will have seen their income grow through wage rises, higher interest rates and wider affordability pressures continue to be challenges for buyers.
“Across the medium-term, with financial markets not anticipating a decline in the Bank of England’s Base Rate soon, we expect house prices to fall further overall – with a return to growth from 2025.
“The current picture should continue to be seen in the context of the longer-term house price trend as, on average, prices remain around £40,000 above pre-pandemic levels.”
The latest figures from Kantar were also in focus, as they showed that grocery price inflation fell to single digits for the first time since July 2022. In the four weeks to 29 October, inflation was 9.7% higher than a year earlier.
Fraser McKevitt, head of retail and consumer insight at Kantar, said: “Grocery price inflation has finally dropped into single digits after 16 months of double digit growth, marking a big milestone for the British public and retailers.
“While the drop to 9.7% is positive news and something of a watershed, consumers will still be feeling the pinch. We’re only seeing year on year price falls in a limited number of major categories including butter, dried pasta and milk.”
In equity markets, Watches of Switzerland surged as it reiterated full-year guidance and posted a jump in second-quarter revenue. The company also outlined plans to more than double sales and profits by FY28.
Primark owner Associated British Foods was up after saying it was returning another £500m to shareholders as it reported double-digit growth on both the top and bottom lines in the last financial year.
Persimmon gained as the housebuilder raised its guidance for new home completions despite a 37% slump in finished builds in the third quarter and a significant fall in its order book.
Direct Line rallied as it said pricing actions had led to strong premium growth, with third-quarter gross written premiums from ongoing operations up 68.3% to £1.1bn.
On the downside, RS Group lost ground as it posted a fall in first-half revenue and profit.
Restaurant Group was in the red after Pizza Express Wheel Topco said it does not intend to make an offer for the Wagamama Owner, citing “market conditions”.
4imprint nudged lower despite lifting its full-year profit outlook, as it pointed to further progress since the first half update.
Outside the FTSE 350, Naked Wines tumbled after the online wine retailer downgraded its full-year guidance, citing a weaker-than-expected performance in the US.
Top 10 FTSE 100 Risers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Associated British Foods Plc | +6.51% | +137.00 | 2,243.00 |
| 2 |  |
Persimmon Plc | +4.21% | +45.50 | 1,127.00 |
| 3 |  |
Direct Line Insurance Group Plc | +3.94% | +6.20 | 163.75 |
| 4 |  |
Barratt Developments Plc | +2.57% | +11.30 | 451.10 |
| 5 |  |
Marks And Spencer Group Plc | +2.33% | +5.10 | 224.10 |
| 6 |  |
Taylor Wimpey Plc | +2.25% | +2.55 | 115.70 |
| 7 |  |
Next Plc | +1.97% | +142.00 | 7,348.00 |
| 8 |  |
Admiral Group Plc | +1.94% | +48.00 | 2,528.00 |
| 9 |  |
Segro Plc | +1.90% | +14.40 | 772.40 |
| 10 |  |
Sainsbury (j) Plc | +1.74% | +4.70 | 275.20 |
Top 10 FTSE 100 Fallers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Anglo American Plc | -2.34% | -52.00 | 2,166.00 |
| 2 |  |
Antofagasta Plc | -1.82% | -24.50 | 1,325.00 |
| 3 |  |
Hikma Pharmaceuticals Plc | -1.72% | -31.00 | 1,770.00 |
| 4 |  |
Glencore Plc | -1.67% | -7.40 | 434.60 |
| 5 |  |
Bp Plc | -1.46% | -7.20 | 484.30 |
| 6 |  |
Shell Plc | -1.37% | -36.50 | 2,637.00 |
| 7 |  |
Standard Chartered Plc | -1.30% | -8.20 | 623.80 |
| 8 |  |
Bhp Group Limited | -1.05% | -25.00 | 2,355.50 |
| 9 |  |
Rio Tinto Plc | -0.90% | -48.00 | 5,287.00 |
| 10 |  |
Astrazeneca Plc | -0.76% | -78.00 | 10,198.00 |
US close: Stocks inch higher in catalyst-free session
US stock markets finished with small gains on Monday with investors choosing not to take on too much risk after the strongest weekly rally for markets in about a year.
Markets were trading within a tight range for most of the session, with the Dow Jones Industrial Average finishing 0.1% higher, the S&P 500 gaining 0.2% while the Nasdaq rising 0.3%.
Last week, the Dow rose 5.07% for its biggest weekly gain since October 2022. The S&P 500 advanced 5.85% and the Nasdaq jumped 6.6% for both indices’ best weeks since November 2022.
Chris Beauchamp, chief market analyst at IG, said Monday’s trading session was “lacking in catalysts” after last week’s busy agenda. “After their exuberant performance last week, stocks have seen a quieter session, with some profit-taking in Europe and Wall Street eking out only small gains. Last week’s action-packed sessions saw a step-change in the outlook for global central bank policy, convincing investors that the period of steady rate increases is behind us,” Beauchamp said.
The week ahead will be light on both economic data and company earnings, though Vertex Pharmaceuticals, Uber and Walt Disney the only major blue chips to be reporting in the coming days.
Earnings season is starting to slow down with 81% of the S&P 500 having now released earnings. According to Factset data, 82% and 62% of those who have reported have beaten expectations on earnings and revenues, respectively.
Meanwhile, a speech on Wednesday from Federal Reserve chairman Jerome Powell will be closely watched following the central bank’s interest rate decision last week. Fed presidents like New York’s John Williams, Atlanta’s Raphael Bostic, Richmond’s Thomas Barkin and Dallas’s Lorie Logan will also make public remarks throughout the course of the week.
“Fed officials will be providing their own views about the macro and policy outlooks after last week’s FOMC decision to pause for a second consecutive meeting,” said Oscar Munoz, chief US macro strategist at TD Securities. “Given the dovish reaction in markets after the meeting, policymakers might push back on said interpretation this week, erring on the side of being more hawkish.”
Citi job cut rumours
Citigroup‘s managers and consultants working on chief executive Jane Fraser’s reorganisation have reportedly discussed job cuts of at least 10% in several major businesses. Shares finished down 0.5%.
Citi announced in September that it would strip out a layer of management and cut jobs in a sweeping reorganisation – known internally as ‘Project Bora Bora’ – that would give Fraser more direct control as she seeks to simplify the bank and boost its stock price. CNBC on Monday cited people with knowledge of the process as saying that the talks are early and numbers may shift in coming weeks.
Other banks such as Bank of America, Wells Fargo and US Bancorp also finished in the red.
Tesla was in reverse after it was revealed the electric carmaker will be building its new ‘affordable’, $27,000 model at its plant outside Berlin, where it also announced plans to raise wages for factory workers.
Tuesday newspaper round-up: Royal Mail, energy security, Shein-Topshop
Royal Mail is to lose its 360-year-old monopoly on delivering parcels from Post Office branches, after concerns about poor quality of service persuaded the postal service to sign deals with rivals Evri and DPD in the run-up to Christmas. The two couriers would be added to the options available at the counter from later this month, the Post Office said, with customers given a choice for the first time. – Guardian
Rishi Sunak’s plan to boost energy security by issuing new North Sea licences every year has been cast into doubt by claims Britain will be unable to handle the crude oil. Up to half of the oil produced in the North Sea will be incompatible with UK refineries by 2035, campaigners have warned. Britain’s refineries are geared up to handle what is known as light oil, rather than heavy crude. – Telegraph
Britain faces record shortages of medicines amid a row between drug makers and the NHS over payments. Patients face issues getting hold of drugs for epilepsy and ADHD, as well as hormone replacement therapy (HRT) for the menopause. A total of 111 drugs are currently facing supply issues, according to the British Generic Manufacturers Association (BGMA). – Telegraph
More than 100 UK companies have admitted breaching sanctions against Russia since its full-scale invasion of Ukraine last year. The Office of Financial Sanctions Implementation (OFSI) recorded that 127 businesses had voluntarily reported sanctions violations as of May 17. fter the invasion in February 2022, the UK government added hundreds of individuals and organisations linked to Russia to its sanctions list. There are now 1,637 individuals and 239 entities on that list, according to Pinsent Masons, a law firm that obtained the figures on sanctions breaches after it made a freedom of information request to the OFSI. The Treasury body, which oversees sanction enforcement, did not name the companies in its response. – The Times
One of the world’s fastest-growing fast-fashion groups has taken a shine to the Topshop brand. Shein has formally registered its interest in making an offer with Asos, the struggling online retailer that bought Topshop for £330 million in 2021 from Sir Philip Green’s Arcadia retail empire. It would represent Shein’s second acquisition of a British fashion brand after it bought Missguided and intellectual property rights from Frasers Group last week for an undisclosed sum. – The Times
