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London open: Stocks rise on China stimulus news
London stocks rose in early trade on Thursday, taking their cue from strong gains in Asia after China pledged more measures to boost the economy.
At 0900 BST, the FTSE 100 was up 0.5% at 8,309.18.
Sentiment got a boost after China said it would deploy “necessary fiscal spending” to meet its full-year growth target of roughly 5%.
Investors were also mulling a report suggesting that China is considering injecting up to 1 trillion yuan of capital into its biggest state banks. According to Bloomberg, the move is part of broad stimulus measures announced this week by Beijing to bolster the country’s markets.
Bloomberg cited people with knowledge of the matter as saying that funding will come mainly from the issuance of new special sovereign bonds.
Richard Hunter, head of markets at Interactive Investor, said: “China was again the primary driver of market rallies across Asia, where the authorities have come out with all guns blazing this week. Overnight there was an announcement of more stimulus in the form of a pledge to prop up the ailing economy with ‘forceful’ interest rate cuts and adjustments to both monetary and fiscal policies.
“There was an additional commitment to remedy the situation within the beleaguered property sector, while the possibility of an injection of some $140 billion into its state banks was also teased. The moves over recent days have been in sharp contrast to the last few months, where an increasing investor clamour for more meaningful stimulus had apparently fallen on deaf ears.
“The Chinese cheer washed onto UK shores, with a strong open propelled by some notable gains in the mining sector as the potential for higher demand and therefore commodity prices attracted some meaningful buying interest. The likes of Prudential and Standard Chartered also rode the wave given their Asian focus.”
On home shores, a survey showed that consumer confidence fell in September as people waited anxiously for next month’s Budget.
According to the British Retail Consortium’s latest consumer sentiment monitor – which asks about expectations for the coming three months – concerns about both the economy and personal finances have worsened.
The personal financial situation fell to -6 from 1 in August, while the state of the economy slumped to -21 in September from -8.
Personal spending on retail edged up one point to -8. But personal spending overall was a point lower at 10.
The BRC attributed the shaken consumer confidence to the upcoming Budget, with new chancellor Rachel Reeves due to address Parliament on 30 October.
The government has repeatedly warned of a £22bn “black hole” in the public finances. In August, shortly after taking office, prime minister Kier Starmer said the Budget was going to be “painful”.
Helen Dickinson, chief executive of the BRC, said: “Retailers could face a turbulent few months. Negative publicity surrounding the state of the UK’s finances appears to have damaged confidence in the economic outlook, particularly among older generations.
“The Budget is a key opportunity to inject some confidence back into the economy, boosting spending and helping to foster much needed investment in businesses.”
In equity markets, drinks maker Diageo shot to the top of the FTSE 100 as it maintained guidance amid a “challenging” global environment for the industry. In a brief trading statement ahead of its annual general meeting, chief executive Debra Crew said consumers continued to be “cautious”.
Diageo in July reported a drop in full-year organic operating profit as it pointed to a weaker performance in Latin America and the Caribbean.
Heavily-weighted miners rose on the China boost, with Anglo American, Glencore, Rio and Antofagasta all up.
Luxury stocks were also lifted by the China news, with Burberry and Watches of Switzerland sharply higher.
Halma gained after it backed its guidance for the full year as it said further progress was made in the first half in trading conditions “which remain varied across our end markets”.
On the downside, oil giants BP and Shell gushed lower amid weaker oil prices, following reports that Saudi Arabia could be lifting its output.
British American Tobacco, Barratt Developments and Petershill Partners all fell as they traded without entitlement to the dividend.
Top 10 FTSE 100 Risers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Prudential Plc | +5.82% | +37.40 | 679.60 |
| 2 |  |
Anglo American Plc | +4.87% | +112.00 | 2,410.00 |
| 3 |  |
Antofagasta Plc | +4.58% | +88.00 | 2,008.00 |
| 4 |  |
Glencore Plc | +4.45% | +17.95 | 421.30 |
| 5 |  |
Diageo Plc | +4.16% | +104.00 | 2,601.50 |
| 6 |  |
Standard Chartered Plc | +4.14% | +31.60 | 794.80 |
| 7 |  |
Rio Tinto Plc | +3.41% | +173.00 | 5,250.00 |
| 8 |  |
Bhp Group Limited | +3.33% | +72.00 | 2,237.00 |
| 9 |  |
Wise Plc | +3.24% | +21.00 | 670.00 |
| 10 |  |
South32 Limited | +3.21% | +5.60 | 180.20 |
Top 10 FTSE 100 Fallers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Bp Plc | -4.16% | -16.65 | 383.60 |
| 2 |  |
Shell Plc | -3.50% | -88.50 | 2,443.50 |
| 3 |  |
British American Tobacco Plc | -2.81% | -80.00 | 2,762.00 |
| 4 |  |
Woodside Energy Group Ltd | -2.33% | -30.00 | 1,260.00 |
| 5 |  |
Barratt Developments Plc | -1.06% | -5.20 | 483.80 |
| 6 |  |
Haleon Plc | -1.04% | -4.10 | 389.00 |
| 7 |  |
Unilever Plc | -1.04% | -51.00 | 4,850.00 |
| 8 |  |
Tesco Plc | -0.93% | -3.40 | 362.50 |
| 9 |  |
Compass Group Plc | -0.77% | -19.00 | 2,436.00 |
| 10 |  |
London Stock Exchange Group Plc | -0.53% | -55.00 | 10,325.00 |
US close: Indices retreat from record highs in quiet session
US stocks finished mostly lower on Wednesday as investors chose to take profits after the record highs seen on the Dow and S&P 500 the previous session, as optimism surrounding stimulus measures in China quickly faded.
The Dow settled 0.7% lower at 41,914.75, pulling back from Tuesday’s all-time closing high of 42,208.22, while the S&P 500 slipped 0.2% to 5,722.26 from 5,732.93. The Nasdaq, meanwhile, finished more or less flat at 18,082.21, eking out a gain of just 0.04%.
Equity markets worldwide rallied on Tuesday after the People’s Bank of China unveiled a significant stimulus package aimed at boosting the country’s flagging economy, including cuts to reserve requirements and lending rates, including for existing home loans.
However, even further PBoC stimulus announced on Wednesday – by way of a cut to the the largest reduction in interest rates for one-year loans to financial institutions in history – wasn’t enough to keep the rally going.
Investors may have been scaling back risk appetite ahead of a flurry of speeches from eight Federal Reserve policymakers scheduled for Thursday, including chair Jerome Powell, at the US Treasury Market Conference in New York.
While he is unlikely to reveal anything new, his comments will be closely watched following last week’s bumper 50bp rate cut by the US central bank, as markets look out for any hints at how policy will change in the coming months.
Wednesday was a relatively quiet day for economic data, though indicators from the housing market were in focus. Mortgage applications surged 11% in the week ended 20 September, according to the Mortgage Bankers Association of America, extending the previous week’s 14.2% increase and lifting application volumes to their highest level in more than two years.
Meanwhile, US new home sales slipped to 716,000 in August, according to the Census Bureau, a 4.7% drop from July’s revised reading of 751,000. The median sales price of homes sold in August was $420,600, while the average price came to $492,700.
Market movers
Microsoft saw shares rise despite the company being accused by Google of using anti-competitive legacy licensing practices to lock European customers into its cloud platform. In a complaint to the European Commission on Wednesday, Google claimed that Microsoft is creating barriers to prevent customers switching to other providers, citing a study showing a €1bn negative impact to European businesses in 2022. Alphabet finished in the red.
Chipmaker were performing well, with Micron Technology rising ahead of its latest earnings released following the closing bell. Nvidia and Intel also gained.
US-listed shares of Flutter Entertainment jumped 5% as the Ireland-based gambling company announced a $5bn share buyback and said profits were expected to more than double by 2027.
Hewlett Packard shares traded higher after analysts at Barclays upgraded the stock to ‘overweight’, while shares in automotive giants General Motors and Ford both slid on the back of downgrades by Morgan Stanley to ‘underweight’ and ‘equal weight’, respectively.
Thursday newspaper round-up: JLR, electric cars, Royal Mail
Rachel Reeves is pushing for the UK’s tax and spending watchdog to upgrade its national growth forecasts to reflect the economic boost Labour says can be achieved from its blitz of planning reforms. In a development that could open up additional spending headroom for the chancellor before next month’s budget, the Treasury has held talks with the Office for Budget Responsibility to try to persuade its officials that unblocking the planning system could drive up growth. – Guardian
Jaguar Land Rover has said it will spend half a billion pounds to upgrade a Merseyside factory to build hybrid cars and prepare for electric vehicle production. Britain’s largest automotive employer – officially known as JLR – said it has already spent £250m on new car production lines, machinery, people and digital technology at the Halewood plant, with plans for £250m more over the coming years. – Guardian
Labour ministers have sought legal advice about a £1.6bn Royal Navy shipbuilding contract as the struggling British company hired for the work faces a Spanish takeover. Belfast-based Harland & Wolff, which built the Titanic, was hired alongside Navantia, a Spanish state-owned shipbuilding giant, to build three Navy vessels but Harland’s decision to call in administrators last week has plunged the project into crisis. – Telegraph
The production of electric cars including hybrids fell by 25.9 per cent last month as demand waned, new figures show. This led to a decline in their share of overall car output to 29.6 per cent, according to the Society of Motor Manufacturers and Traders, the car industry body. – The Times
The chairman of Royal Mail’s parent company has criticised the slow timetable of Ofcom’s consultation on reform of the struggling postal operator’s universal service obligation. Keith Williams, 68, told International Distribution Services’ shareholders at Wednesday’s annual meeting, that while the loss-making Royal Mail welcomed Ofcom’s plans to consult, the process is “frustratingly slow”, with no decision due until next summer. – The Times
