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London open: Stocks fall; Rightmove rejects another takeover bid from REA
London stocks fell in early trade on Wednesday following two days of gains, with China in focus again after a rate cut.
At 0840 BST, the FTSE 100 was down 0.3% at 8,258.71.
Earlier in the day, China’s central bank slashed it medium-term lending facility from 2.3% to 2.0%, marking the largest reduction of interest rates for one-year loans to financial institutions in history.
Just one day after unveiling a list of measures designed to stimulate demand and put the economic recovery back on track, the People’s Bank of China said it was also lending 300bn yuan ($43bn) to financial institutions.
The move, which was widely expected following comments from PBoC governor Pan Gongsheng the previous day, follows a raft of cuts to reserve requirements and lending rates, including for existing home loans.
Richard Hunter, head of markets at Interactive Investor, said: “Taken in tandem, the measures represent the largest set of stimulus since the pandemic, with the stock market and the beleaguered property sector in particular focus. The general wave of positive sentiment also lifted commodity prices, with oil and copper particular beneficiaries, while the currency also strengthened.
“Of course, the measures will also come with a time lag before any benefits can be seen in the real economy, but the fact that the authorities have at last responded to a growing clamour from investors for economic support has been warmly received. Chinese markets generally added another 2% in the trading session, adding to the 4% gains from the previous day when the shock announcements caught the attention of investors who had for the most part been seeking opportunities in other markets across the region, such as Japan.
“However, the FTSE 100 did not follow suit, weighed by some further sterling strength which is a headwind for the premier index and also perhaps by a more circumspect view of the Chinese stimulative measures after a positive reaction in the previous trading session. Mining stocks were for the most part unmoved by the further cut from the Chinese authorities, while Prudential gave up most of its previous gains.”
In equity markets, easyJet flew higher as JPMorgan Cazenove highlighted the stock as “a high conviction” ‘overweight’ in the low-cost carrier space, “where the shares are flat this year despite more resilient pricing (and earnings) than peers”.
JPM said it currently sees a “cleaner” pathway to high earnings growth in September 2025.
Property platform Rightmove was little changed after saying it had rejected a third, £6.1bn takeover offer from Australian outfit REA Group, saying it “materially undervalues the company and its future prospects”.
REA’s latest cash-and-shares proposal, equivalent to an offer price of 759p, was a 37% premium to Rightmove’s share price on 30 August, the day before the first offer.
However, as Rightmove pointed out, since that time REA’s own share price has dropped by 12%, essentially bringing the offer price down.
Outside the FTSE 350, DFS Furniture lost ground after saying it swung to a full-year loss in an “extremely challenging” market.
Top 10 FTSE 100 Risers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Rentokil Initial Plc | +4.83% | +17.40 | 378.00 |
| 2 |  |
South32 Limited | +2.62% | +4.50 | 176.00 |
| 3 |  |
Natwest Group Plc | +1.96% | +6.70 | 348.00 |
| 4 |  |
Smiths Group Plc | +1.62% | +28.00 | 1,753.00 |
| 5 |  |
Compass Group Plc | +1.45% | +35.00 | 2,448.00 |
| 6 |  |
Croda International Plc | +1.40% | +56.00 | 4,068.00 |
| 7 |  |
International Consolidated Airlines Group S.a. | +1.33% | +2.70 | 206.30 |
| 8 |  |
Smurfit Westrock Plc | +1.28% | +45.00 | 3,572.00 |
| 9 |  |
Bhp Group Limited | +1.27% | +27.00 | 2,159.00 |
| 10 |  |
Weir Group Plc | +1.22% | +26.00 | 2,160.00 |
Top 10 FTSE 100 Fallers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Prudential Plc | -1.84% | -12.20 | 652.60 |
| 2 |  |
Smith (ds) Plc | -1.17% | -5.40 | 454.60 |
| 3 |  |
Sage Group Plc | -1.12% | -11.50 | 1,014.00 |
| 4 |  |
Antofagasta Plc | -1.11% | -21.50 | 1,918.50 |
| 5 |  |
Centrica Plc | -0.96% | -1.15 | 118.45 |
| 6 |  |
Diageo Plc | -0.80% | -20.50 | 2,528.50 |
| 7 |  |
Wpp Plc | -0.68% | -5.20 | 760.20 |
| 8 |  |
Associated British Foods Plc | -0.65% | -15.00 | 2,280.00 |
| 9 |  |
Taylor Wimpey Plc | -0.64% | -1.05 | 164.30 |
| 10 |  |
National Grid Plc | -0.62% | -6.50 | 1,038.00 |
US close: Dow, S&P 500 reach new highs on China stimulus
US stocks rose on Tuesday, helping the Dow and S&P 500 both to set new record highs, with sentiment continuing to be lifted by last week’s bumper rate cut by the Federal Reserve, along with a raft of stimulus measures announced in China.
Investors were largely shrugging off data showing an unexpected plunge in US consumer confidence this month, after China’s central bank unveiled a raft of cuts to reserve requirements and lending rates, including for existing home loans, as it tried to stimulate the country’s stagnant economy.
The Dow finished 0.20% higher at a new closing high of 42,208.22, while the S&P 500 rose 0.25% to a new peak of 5,732.93. The Nasdaq meanwhile gained 0.56% to 18,074.52.
However, market sentiment was still relatively cautious, according to AJ Bell’s head of financial analysis, Danni Hewson. “There’s still a lot of volatility around as investors second guess last week’s jumbo Fed move and wonder if today’s weak US consumer confidence data heralds a gloomy fourth quarter,” she said.
“Coming off the back of another slew of record-breaking highs investors would do well not to read too much into today’s slight cooldown, although there is plenty of other data which might upset the apple cart later in the week.”
In economic data on Tuesday, confidence levels among US consumers fell by their most in more than three years in September, with the outlook on business conditions turning negative. The Conference Board’s US Consumer Confidence Index dropped below the long-term average to 98.7 in September, down from an upwardly revised 105.6 in August. Economists had expected a small decline to around 104.
In other news, house-price growth in the US slowed in July but still reached another all-time high, according to closely watched S&P CoreLogic Case-Shiller data on Tuesday. The national home price NSA index increased by 5% on last year, down from a 5.5% gain in June, while the 20-city home price index slowed to 5.9% from 6.5%.
Market movers
Shares in Visa dropped 5.5% as the payments giant was sued by the Department of Justice for an alleged illegal monopoly of the debit-card market. “Visa has unlawfully amassed the power to extract fees that far exceed what it could charge in a competitive market,” the attorney general said.
Boeing has made its “best and final” offer to striking Boeing workers, which proposed a 30% pay rise over a four-year period, also included the reinstatement of performance bonuses and improved retirement benefits.
Precious metal miners Newmont Corporation, First Majestic Silver and Barrick Gold all rose strongly as gold prices hit another record high on the back of a falling dollar and Chinese stimulus. Gold futures were up 1.3% at $2,687 an ounce.
Nasdaq-listed shares of Chinese ecommerce giant JD.com surged nearly 14% as investors placed bets on a recovery in the world’s second-largest economy, with Beijing-headquartered tech group Baidu also rising strongly.
Wednesday newspaper round-up: Visa, Caroline Ellison, Brookfield
Business leaders have warned that the government’s plans for a major global investment summit are in danger of falling flat, amid growing frustrations over high costs of involvement and its timing two weeks before the budget. As a central plank in Labour’s proposals to drive up investment in Britain, the party pledged in the general election campaign to host the summit within the first 100 days of winning power to show that the UK would be “open for business” under a new government. – Guardian
The US Department of Justice has sued Visa, accusing one of the world’s largest payment networks of antitrust violations that affect “the price of nearly everything”. The financial giant has suppressed competition by threatening merchants with high fees and paying off potential rivals, according to the complaint, filed in US district court for the southern district of New York. – Guardian
Caroline Ellison, the ex-girlfriend of FTX founder Sam Bankman-Fried, has been sentenced to two years in prison for her role in the $8bn (£6bn) fraud that triggered the implosion of the cryptocurrency exchange. Ellison, 29, was given a prison sentence on Tuesday night at a hearing in Manhattan, even though the judge recognised her extensive cooperation with prosecutors. She had pleaded guilty to seven felony counts of fraud and conspiracy. – Telegraph
The City regulator has admitted that it mishandled plans to start naming firms it is investigating after the proposals faced a fierce backlash from the financial services industry. In a sign that the Financial Conduct Authority is preparing to compromise on elements of its plan, a senior official at the watchdog used a speech on Tuesday to reassure the industry that the regulator was listening to business concerns. – The Times
Brookfield, the asset manager chaired by Mark Carney, the former Bank of England governor, has sold its 25 per cent stake in the hydropower group First Hydro Company to a leading Canadian pension fund. Caisse de dépôt et placement du Québec (CDPQ) is buying the stake for £500 million, valuing the company at £2 billion. Engie, the French utility company, remains the largest shareholder with a 75 per cent holding. – The Times
