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London open: Stocks little changed; Burberry tumbles on sales warning
London stocks were little changed in early trade on Thursday as investors paused for breath following recent gains on the back of softer-than-expected UK and US inflation data, with Burberry under the cosh after a sales warning.
At 0900 GMT, the FTSE 100 was up just 0.1% at 7,492.34.
Susannah Streeter, head of money and markets at Hargreaves Lansdown, said: “A subdued session looks set to bed in after the enthusiasm sparked by the dip in inflation. Cautiousness about the trajectory of interest rates in the United States is edging back in after retail sales didn’t slow by as much as expected.
“Consumers are still showing enduring resilience, even as lockdown savings are whittled away, leading to some speculation a rate cut move from the Fed will be further off than earlier hopes. China’s fragile housing market has loomed back into focus, after data showed new home prices in 70 major cities across the vast country fell for the fourth month in a row, dipping 0.3% month on month.
“Hopes for a significant trade breakthrough from talks between Joe Biden and Xi Jinping haven’t materialised, despite some limited progress in healing the relationship. But the meeting has underwhelmed, with Chinese stocks largely falling as investors cast an eye back to domestic economic problems.”
In equity markets, Halma rallied as it reported record first-half profit and revenue and said it was on track to deliver full-year 2024 adjusted pre-tax profit in line with analyst expectations.
Aviva was also a high riser as it posted a 13% jump in nine-month premiums, while Melrose Industries gained as it lifted its full-year profit outlook, highlighting stronger aftermarket demand and pricing.
Mr Kipling and Bisto owner Premier Foods advanced as it boosted its full-year profit expectations following a “strong” first-half performance.
On the downside, Burberry tumbled as it warned that the slowdown in luxury demand was having an impact on current trading and could affect full-year sales. It also reported a huge deceleration in sales growth in the first half.
B&M European Value Retail and Shell were both lower as they traded without entitlement to the dividend.
Outside the FTSE 350, Hotel Chocolat rocketed after the premium chocolatier agreed to be bought by US food giant Mars in a 534m deal.
Top 10 FTSE 100 Risers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Halma Plc | +5.11% | +100.50 | 2,066.00 |
| 2 |  |
Sse Plc | +1.91% | +33.50 | 1,784.50 |
| 3 |  |
Easyjet Plc | +1.85% | +7.90 | 435.90 |
| 4 |  |
National Grid Plc | +1.60% | +15.80 | 1,005.00 |
| 5 |  |
Tesco Plc | +1.43% | +3.90 | 277.40 |
| 6 |  |
Spirax-sarco Engineering Plc | +1.10% | +98.00 | 9,036.00 |
| 7 |  |
Vodafone Group Plc | +0.83% | +0.60 | 73.29 |
| 8 |  |
Relx Plc | +0.82% | +24.00 | 2,948.00 |
| 9 |  |
Experian Plc | +0.76% | +22.00 | 2,905.00 |
| 10 |  |
Centrica Plc | +0.68% | +1.00 | 148.60 |
Top 10 FTSE 100 Fallers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Burberry Group Plc | -7.71% | -134.50 | 1,610.00 |
| 2 |  |
Hargreaves Lansdown Plc | -5.25% | -39.60 | 714.40 |
| 3 |  |
Ocado Group Plc | -5.00% | -29.80 | 566.40 |
| 4 |  |
Shell Plc | -1.90% | -50.00 | 2,585.50 |
| 5 |  |
Whitbread Plc | -1.89% | -64.00 | 3,325.00 |
| 6 |  |
Kingfisher Plc | -1.75% | -4.10 | 230.70 |
| 7 |  |
Dcc Plc | -1.68% | -88.00 | 5,148.00 |
| 8 |  |
St. James’s Place Plc | -1.65% | -11.60 | 692.40 |
| 9 |  |
Prudential Plc | -1.51% | -14.20 | 924.80 |
| 10 |  |
Smurfit Kappa Group Plc | -1.47% | -42.00 | 2,816.00 |
US close: Stocks manage gains as wholesale prices shrink
US stock markets closed with slight gains on Wednesday, driven by growing investor optimism that the era of rate hikes may be drawing to a close.
The sentiment was fuelled by recent data indicating a slowdown in October’s consumer and producer price inflation.
At the close, the Dow Jones Industrial Average was up 0.47% at 34,991.21 points.
Similarly, the S&P 500 edged up by 0.16%, closing at 4,502.88, while the Nasdaq Composite posted a modest gain of 0.07%, ending the day at 14,103.84.
In currency markets, the dollar was last up 0.01% on sterling at 80.55p, while it slipped 0.01% against the euro to 92.18 euro cents and declined 0.04% on the yen to change hands at JPY 151.30.
“Better US PPI and retail sales figures have piled on the good news, helping equities around the globe to extend their gains,” said IG chief market analyst Chris Beauchamp earlier.
“Investors continue to rejoice in the hope of no more Fed rate hikes, with UK traders cheered by this morning’s CPI drop, too.
“Overall the skies have cleared dramatically for markets, and hopes of a soft landing and improved earnings have driven flows back into stocks.”
Wholesale prices take a surprise dip in October
In economic news, the Department of Labor reported earlier that wholesale prices took an unexpected dip in October.
The data, adjusted for seasonal factors, revealed a 0.5% decrease in producer prices, surpassing the consensus expectation of a 0.1% decline.
Furthermore, September’s initial increase of 0.4% was revised down by two-tenths of a percentage point.
The decline in wholesale prices was primarily driven by a significant 1.4% drop in so-called final demand prices for goods compared to September.
That decline was led by a sharp 6.5% reduction in energy prices.
In contrast, final demand services prices remained unchanged, but trade prices, which include retailers’ margins, fell by 0.7%.
Elsewhere, consumer spending in the US demonstrated resilience in October.
According to seasonally-adjusted data from the Department of Commerce, retail sales volumes only saw a minor dip of 0.1% month-on-month, reaching $705bn.
Economists had anticipated a more significant decline of 0.3%.
Additionally, September’s initial increase of 0.9% was revised up by two-tenths of a percentage point.
Breaking down the retail sales data, sales of automobiles and parts experienced a 1.0% decline, while sales excluding automobiles and parts showed a modest increase of 0.1%.
The furniture and home furnishing stores segment faced a more substantial decrease of 2.0% during the month.
In contrast, non-store retailers saw a 0.2% increase, and sales at food services and drinking places rose by 0.3%.
Target surges while TJ Maxx owner sinks
In equity markets, Target Corporation surged 17.81% in the wake of a strong performance from the big-box retailer, which comfortably surpassed quarterly profit forecasts.
Target reported sales of $25bn for the three months ended 28 October, marking a 4.3% decrease from the same period last year.
Its adjusted earnings per share reached $2.10, a remarkable 36% increase and exceeding the high end of the retailer’s guidance range.
Another notable gainer was credit reporting agency TransUnion, which climbed 2.43% after it announced plans to implement a cost-cutting programme involving the axing of 1,300 jobs.
On the downside, off-price retailer TJX Companies fell 3.32% despite beating quarterly profit forecasts and reporting solid revenues and profits that exceeded both internal and external targets.
Investor sentiment soured, however, on disappointing full-year earnings guidance, with the company’s estimated full-year diluted earnings per share of $3.71 to $3.74 falling short of market expectations.
General Motors saw a minor dip of 0.21% after reports that members of the United Auto Workers (UAW) union at its factories had voted against a proposed labour pact.
Thursday newspaper round-up: Offshore windfarms, hydrogen heating trial, Amazon
The Cyprus police force is investigating how an oligarch attempted to transfer a £1bn stake in a public company on the day he was placed under EU sanctions, government insiders have told the Guardian. News of the involvement of the financial crime squad came as the Cypriot government and the European Union responded to revelations that local service providers appear to have played a key role in enabling Russian oligarchs to shield assets from EU sanctions within days of Moscow’s full-scale invasion of Ukraine. – Guardian
The government will offer significantly higher subsidies for new offshore windfarms after crisis talks with developers that are battling cost inflation across global energy supply chains. Ministers have agreed to raise the starting price of the government’s next auction for offshore wind subsidies by around two-thirds to £73 per megawatt hour to help more offshore windfarm projects to move ahead despite higher costs. – Guardian
The Energy Secretary is poised to approve a landmark hydrogen heating trial in a north Yorkshire town despite growing local protests. It is understood Claire Coutinho is “minded to approve” the scheme in Redcar, with an announcement expected in weeks. Government support for the project will pave the way for Northern Gas Networks (NGN) to start supplying up to 2,000 homes with hydrogen instead of gas for heating and cooking, in the first trial of its size. – Telegraph
The owner of Boots is understood to be close to striking a deal for Legal & General to take over more responsibility for its £5 billion legacy staff pension scheme in a transaction that could help revive plans to sell the health and beauty chain. The US group Walgreens Boots Alliance has been negotiating a so-called pension risk transfer deal with L&G for some time, taking advantage of rising bond yields that have propelled the traditional defined benefit scheme into surplus. – The Times
Amazon is refusing to promote employees who do not follow its policy of returning to the office for at least three days a week. “Promotions are one of the many ways we support employees’ growth and development, and there are a variety of factors we consider when determining an employee’s readiness for the next level, an Amazon spokesman said. – The Times
