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London open: FTSE little changed after China data, earnings avalanche
London stocks were little changed in early trade on Thursday as investors mulled the latest Chinese inflation data and waded through another deluge of corporate news.
At 0920 GMT, the FTSE 100 was down 0.1% at 7,393.06.
Figures released earlier by the National Bureau of Statistics showed that China fell back into deflationary territory in October.
The consumer price index declined by 0.2% versus the same month last year, and compared to expectations for a 0.1% drop. The data showed that pork prices tumbled 30.1%.
Meanwhile, the producer price index fell 2.6% on the year in October following a 2.5% drop in September.
Core inflation – which excludes volatile elements such as food and fuel – fell to 0.6% from 0.8%.
Robert Carnell, regional head of research, Asia-Pacific, at ING, argued that China is not dealing with deflation, but rather low underlying inflation”.
He said: “Let’s be very clear about what deflation is and what it isn’t. It is a very pernicious situation, where the ‘general price level’ which includes consumer prices, but also other prices such as real and financial assets and money wages decline. And it leads to a sharp slowdown in economic activity as it deters consumer spending and investment,” he said.
“What China has right now, is a low rate of underlying inflation, which reflects the fact that domestic demand is fairly weak. What today’s data show is that it doesn’t take much of a negative shock from one of the components to push a low underlying headline inflation rate below zero on a year-on-year basis.
“If you want to use any term ‘disinflation’ would be my preference, but what we are seeing today is mainly the result of a supply excess, rather than a collapse in demand.”
On home shores, the latest survey from the Royal Institution of Chartered Surveyors showed the decline in house prices was steadying.
The net balance of surveyors reporting that house prices have risen over the last three months ticked up to -63 in October, from -69 in September, coming in above consensus expectations of -65.
In equity markets, there was more corporate news than you can shake a stick at.
Auto Trader rallied as it posted a 10% jump in first-half operating profit and a 12% increase in revenue.
AstraZeneca advanced as it lifted its full-year guidance for core earnings per share and total revenue excluding Covid medicines.
Taylor Wimpey rose as the housebuilder highlighted an uncertain market backdrop but said it now expects full-year operating profit to be at the top end of its guidance range thanks to a “focus on optimising price and sharp cost discipline”.
National Grid and Lancashire Holdings also racked up healthy gains after results and a trading statement, respectively.
On the downside, Flutter Entertainment tumbled as it said full-year group adjusted EBITDA excluding the US was set to come in at the bottom end of the range of £1.44bn to £1.6bn.
Discount retailer B&M was under the cosh even as it raised guidance for profits and store openings after a strong first half, with double-digit growth in both revenues and earnings.
HSBC and Sainsbury’s were both weaker as they traded without entitlement to the dividend.
Wizz Air flew lower after the low-cost airline said full-year profits would be at the bottom end of guidance due to a “difficult” environment.
Domino’s, Indivior and Wood Group also lost ground after trading updates and results.
Top 10 FTSE 100 Risers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Auto Trader Group Plc | +7.43% | +47.20 | 682.60 |
| 2 |  |
Astrazeneca Plc | +2.77% | +282.00 | 10,452.00 |
| 3 |  |
Rightmove Plc | +2.17% | +10.20 | 479.60 |
| 4 |  |
Taylor Wimpey Plc | +1.82% | +2.10 | 117.65 |
| 5 |  |
Unilever Plc | +1.20% | +47.00 | 3,951.00 |
| 6 |  |
Coca-cola Hbc Ag | +0.94% | +20.00 | 2,138.00 |
| 7 |  |
Smith & Nephew Plc | +0.81% | +8.00 | 998.80 |
| 8 |  |
Relx Plc | +0.65% | +19.00 | 2,932.00 |
| 9 |  |
Smurfit Kappa Group Plc | +0.65% | +18.00 | 2,790.00 |
| 10 |  |
Mondi Plc | +0.63% | +8.50 | 1,359.50 |
Top 10 FTSE 100 Fallers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Flutter Entertainment Plc | -11.57% | -1,585.00 | 12,115.00 |
| 2 |  |
Fresnillo Plc | -2.40% | -13.00 | 528.80 |
| 3 |  |
Ocado Group Plc | -2.11% | -11.40 | 527.80 |
| 4 |  |
Hsbc Holdings Plc | -1.99% | -12.10 | 595.20 |
| 5 |  |
3i Group Plc | -1.81% | -37.00 | 2,004.00 |
| 6 |  |
Anglo American Plc | -1.60% | -33.50 | 2,062.00 |
| 7 |  |
British Land Company Plc | -1.55% | -4.90 | 311.00 |
| 8 |  |
Hargreaves Lansdown Plc | -1.35% | -9.60 | 701.20 |
| 9 |  |
Land Securities Group Plc | -1.23% | -7.40 | 593.80 |
| 10 |  |
Bp Plc | -1.21% | -5.75 | 471.40 |
US close: Dow Jones snaps winning streak following Powell speech
Wall Street stocks delivered a mixed performance on Wednesday as investors digested comments from Federal Reserve chairman Jerome Powell.
At the close, the Dow Jones Industrial Average was up 0.12% at 34,112.27, while the S&P 500 advanced 0.10% to 4,382.78 and the Nasdaq Composite saw out the session 0.08% firmer at 13,650.41.
The Dow closed 40.33 points lower on Wednesday, snapping the blue-chip’s recent winning streak. The S&P 500 and Nasdaq, on the other hand, extended their longest winning streak since November 2021 for another session.
Wednesday’s primary focus was on a speech from Fed head Jerome Powell, who gave no hints at future monetary policy in an eagerly awaited speech in Washington, but did call on economists to be “flexible and dynamic” in their assessments of the economic outlook.
A week after the Fed kept interest rates unchanged, expectations have risen that the central bank may be done with further rate hikes in the current cycle, particularly with labour market conditions beginning to soften. However, Powell did not make any reference to current monetary policy, like many had hoped for. Instead, he urged the R&S division to be flexible in their methods for forecasting.
Elsewhere on the macro front, the Mortgage Bankers Association revealed mortgage applications had risen 2.5% in the week ended 3 November, putting a halt to three consecutive weeks of declines.
Finally, wholesale inventories were flat month-on-month in September, according to the Census Bureau, following a 0.1% drop in August and six months of falling inventories. On an annual basis, wholesale inventories fell 1.3%.
In the corporate space, Array Technologies tumbled after the solar tracker company issued some weak full-year guidance for earnings and revenue, while Spirit AeroSystems lost on the back of it revealing its intention to raise capital through stock and note offerings.
MGM Resorts announced it was launching a $2.0bn share buyback as its third-quarter revenues came in 16% higher year-on-year, and Walt Disney posted sharp quarterly profit growth.
Thursday newspaper round-up: Lloyd’s of London insurers, rail strikes, Anglo American
Insurers operating in the Lloyd’s of London market are the world’s biggest underwriters of fossil fuel projects, research has found. Fifty years after the insurance industry first warned about the impact of the climate crisis, it is continuing to contribute to the climate emergency, the Insure Our Future campaign, a global group of 24 NGOs, said in its annual “scorecard” on 30 major insurers and their involvement in fossil fuels. – Guardian
The RMT union has reached a possible deal with train operators to resolve their long-running national rail dispute, allaying fears of a repeat of last year’s Christmas strikes. The union, which represents 20,000 crew and station staff, has drawn up a “memorandum of understanding” (MOU) with employers to ballot members at train operating companies over a deal that would backdate the 2022 pay rise and extend guarantees over jobs until the end of 2024. – Guardian
Marks & Spencer’s turnaround is well on track, with the department store reclaiming its crown as Britain’s biggest women’s wear retailer and food sales booming. Shares surged nearly 10pc after the retailer unveiled a jump in half-year profit and surging sales. – Telegraph
The UK’s biggest semiconductor manufacturer has been acquired by an American rival after the government forced its owner to sell the business over its links to China. Vishay agreed to buy Newport Wafer Fab (NWF) from Nexperia for $177 million in cash yesterday, bringing to an end a year of uncertainty about the future of the facility and its staff. – The Times
The estimated cost of Britain’s largest private sector infrastructure project to build a fertiliser mine in Yorkshire has tripled in seven years. Anglo American’s Woodsmith project involves extracting polyhalite, a nutrient-rich fertiliser, from a mile beneath the North York Moors National Park, near Whitby, and transporting it on a conveyor belt through a 23-mile tunnel to Teesside for processing. – The Times
