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London open: Markets struggle for direction, but M&S shares surge
The FTSE 100 was struggling for direction in early deals on Wednesday as investors continued to act cautiously following strong gains made last week.
After an initial dip into the red, London’s benchmark index was up just 0.1% at 7,417 by 0848 GMT, having traded within a tight range of 50 points or so for the past three sessions.
However, high street stalwart Marks & Spencer was a standout performer, surging nearly 10% after restoring its dividend and impressing with its first-half results.
“The last two days have seen European markets struggle to build on the gains of last week, with some modest profit taking starting to kick in, even as investors start to price in the prospect of rate cuts as soon as next year,” said analyst Michael Hewson from CMC Markets.
“In the space of a week, we’ve gone from higher for longer back to rate cuts in 2024, and this time the push back from central bankers isn’t anywhere near as aggressive.”
In economic news on Wednesday, German consumer prices stalled over the month of October, meaning the annual rate of inflation held steady at 3.8%, as expected by the market. Eurozone retail sales, due out at 1000 GMT, are forecast to show a 0.2% decline in September after a 1.2% drop in August.
However, the focus of the session is likely to be on speeches from central bank heads in the UK and US, Bank of England governor Andrew Bailey and Federal Reserve chair Jerome Powell, as markets look for any indication of how future monetary policy will pan out.
M&S impresses
UK retailer Marks & Spencer on Wednesday reinstated its dividend and delivered a 56.2% rise in first-half profits. The company posted pre-tax profits of £325.6m in the six months to September 30, compared with £208m a year ago. Revenue rose 10.8% to £6.1bn, driven by a 14.7% rise in food sales, up 11% on a like-for-like basis. Shares were up 9.3% even as the company sounded a note of caution about future trade in the run in to Christmas citing higher interest rates, weather and geopolitical events.
Sector peers Next, B&M, AB Foods and Ocado were also performing well early on.
A bunch of financial stocks were limiting gains on the FTSE 100, with shares in Hargreaves Lansdown, Prudential and Legal & General all lower.
However, Hiscox edged higher reported a 6.8% increase in group insurance contract written premiums in the first nine months of the year, to $3.76bn, driven by strategic capital deployment in London Market and Re & ILS.
ITV disappointed after reporting just a 1% improvement in total revenue for the first nine months of the year to £2.98bn, causing shares to fall over 5%. The broadcaster said the growth in revenue from ITV Studios and M&E digital revenues offset the decline in linear advertising revenue as it continued to diversify its business.
Mining giant Anglo American fell after reporting another big slide in diamond sales at its latest tender of De Beers, blaming continuing macroeconomic “challenges”. De Beers sold just $80m of rough diamonds in its ninth sales cycle of the year, down from $200m at the previous tender and $454m in the ninth tender of 2022.
Pub operator JD Wetherspoon rose after announcing a 9.5% increase in like-for-like sales in the first quarter, driven by growth in bar, food, and fruit machine sales.
Top 10 FTSE 100 Risers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Marks And Spencer Group Plc | +10.12% | +22.80 | 248.00 |
| 2 |  |
Associated British Foods Plc | +2.49% | +56.00 | 2,306.00 |
| 3 |  |
Rolls-royce Holdings Plc | +2.12% | +4.80 | 230.80 |
| 4 |  |
Flutter Entertainment Plc | +1.66% | +225.00 | 13,775.00 |
| 5 |  |
Carnival Plc | +1.47% | +13.20 | 910.60 |
| 6 |  |
Melrose Industries Plc | +1.42% | +7.20 | 514.00 |
| 7 |  |
Compass Group Plc | +1.37% | +28.00 | 2,078.00 |
| 8 |  |
Next Plc | +1.12% | +82.00 | 7,410.00 |
| 9 |  |
Easyjet Plc | +1.03% | +4.10 | 402.10 |
| 10 |  |
Tui Ag | +1.03% | +4.60 | 451.60 |
Top 10 FTSE 100 Fallers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Itv Plc | -6.07% | -3.98 | 61.62 |
| 2 |  |
Hargreaves Lansdown Plc | -2.23% | -16.20 | 711.60 |
| 3 |  |
Prudential Plc | -1.88% | -17.00 | 885.00 |
| 4 |  |
Legal & General Group Plc | -1.58% | -3.50 | 218.30 |
| 5 |  |
National Grid Plc | -1.54% | -15.20 | 975.00 |
| 6 |  |
Sse Plc | -1.50% | -25.00 | 1,636.50 |
| 7 |  |
St. James’s Place Plc | -1.46% | -9.60 | 648.40 |
| 8 |  |
Centrica Plc | -1.39% | -2.10 | 148.75 |
| 9 |  |
Direct Line Insurance Group Plc | -1.38% | -2.35 | 167.85 |
| 10 |  |
Intertek Group Plc | -1.37% | -53.00 | 3,818.00 |
US close: S&P 500 logs seventh straight gain, its longest streak in two years
US stocks rose for a seventh straight day on Tuesday as both oil prices and bond yields dropped.
The Dow Jones Industrial Average finished 0.2% higher while the S&P 500 gained 0.3% and Nasdaq rose 0.9%.
The S&P 500 has now risen every day since closing at a five-month low on 27 October, gaining 6.3% over seven consecutive sessions and registering its longest winning streak since early November 2021.
“After three months of relentless selling, we finally got a strong bounce from oversold levels. This was helped along by a sharp retreat in bond yields which came as the US Federal Reserve held rates unchanged for a second consecutive meeting, and after Friday’s non-farm payrolls came in significantly weaker than expected,” said David Morrison, senior market analyst at Trade Nation.
“The overall takeaway is that no matter what the FOMC and Fed chair Jerome Powell said, or didn’t say last Wednesday, as far as the market is concerned, the US central bank’s programme of rate hikes has finally come to an end. Maybe, or maybe not.”
Speaking on Tuesday however, Minneapolis Fed president Neel Kashkari said he wasn’t convinced that the central bank’s rate-hiking programme was over just yet, noting the Fed’s primary goal was to bring inflation fully down to its 2% target.
In a separate speech, Chicago Fed head Austan Goolsbee said a “golden path” soft landing that would see the US avoid a recession was still on the cards.
Focus will remain on the Fed this week, with Powell set to give his assessment of the current state of the US economy on Wednesday.
On the macro front, the US trade deficit in goods ticked up to $85.8bn in September, according to the Census Bureau, from an upwardly revised print of $84.6bn in August. Exports rose 2.9% to $174.0bn, while imports grew 2.4% to $259.8bn.
The yield on a 10-year US Treasury fell 8.3 basis points to 4.567%.
Meanwhile, oil prices were hammered on Tuesday as a result of Chinese trade highlighting decreased demand, while industrial output in Germany slumped more than forecast. WTI crude was down a whopping 4.2% at $77.41 a barrel – its lowest level since July.
Chinese exports dropped 6.4% year-on-year in October, slightly worse than the 6.2% decline in September but much worse than the 3.5% fall expected by analysts. However, imports were up 3% after a 6.3% drop the previous month, meaning the trade surplus fell to $56.5bn after a revised $77.8bn the month before.
“Weaker-than-expected Chinese exports for October have fed into concerns that the global economy is languishing in stagflation territory, with little prospect of an upturn,” said analyst Michael Hewson from CMC Markets.
Uber accelerates
After a tentative start, ridesharing giant Uber finished 4% higher after it beat profit expectations for the third quarter. The company posted revenues that missed estimates, principally due to a change in accounting methods, but earnings per share came in at 10 cents, up from a loss of 61 cents a year before ahead of the 7 cents estimate.
Sector peer Lyft also finished the day with strong gains.
Housebuilder DR Horton beat fourth-quarter estimates with its latest set of earnings, citing tight housing supply.
Chevron, Exxon Mobil and ConocoPhillips all finished firmly lower as oil prices dropped to a four-month low, while airline and travels stocks like Carnival, American Airlines, Delta and United all finished in positive territory.
Wednesday newspaper round-up: Public investment, debanking, housing crisis, recession fears
The economy is on course for another “decade in the doldrums” unless politicians increase public investment by £15 billion annually, starting at the autumn statement in two weeks’ time, a think tank has claimed. Growth is poised to limp along over the coming years and to remain far below its pre-2008 financial crisis trend, extending a 15-year squeeze on household living standards, according to the National Institute of Economic and Social Research. – The Times
