FTSE 100 set to make a lacklustre start to the trading week amid rate hike concerns

  • FTSE 100 rises 17 points
  • Consumer confidence plunges
  • Shortage of everyday items starts to bite

The London stock market is a bit like the nightmare 1982 England forward line of Paul Mariner and Peter Withe, which is to say there is not a lot of movement.

The FTSE 100 continues to hover around 7,112, up 17 points on the day.

Supply issues are increasingly featuring in many companies’ stock market announcements so we probably did not need telling by the Office for National Statistics (ONS) that around one in six adults have recently not been able to buy essential food items because they were not available.

The ONS’s survey found that around 15% were unable to buy fuel; 23% reported that they had not been able to buy other non-essential food items, and 57% reported that everything they needed had been available to buy.

When food shopping, 61% of adults reported experiencing some differences compared with usual; the most commonly reported were that there was less variety in the shops (43%), that items they needed were not available but they could find a replacement (20%), that items they needed were not available and they could not find a replacement (20%), or that they had to go to more shops to get what they needed (14%).

Meanwhile, the latest survey from the Centre for Economics and Business Research (CEBR), conducted by YouGov, revealed that consumer confidence declined substantially in September.

The index tumbled to 110.5, its lowest level since April of this year, from 112.8 in August.

The index that measured expectations fell to 90.9 from 101.5; a value of less than 100 means that there were more people who expected their household finances to worsen than there were expecting an improvement.

The September fall was the largest single-month fall on record, apart from the 16.5 fall plunge seen in March of last year, which was the first month in the western world when the Covid-19 panic started and everyone was desperate to get hold of toilet paper, possibly for immediate use.

12.20pm: Will it go round in circles?

It has been a quiet morning for equity markets but a good session for commodity bulls.

The FTSE 100 is up 17 points (0.2%) at 7,122, thanks to the strength of miners.

“Lumber, iron ore, coal, and crude and all pushing into long-term highs today, highlighting how the commodities space appears to bring the greatest area of opportunity at a time when markets appear at risk thanks to surging inflation and the potential for a monetary squeeze. Inflation looks like it will be here for some time, and thus the ability to get long physical assets looks an attractive play at a time when traders question the stability of markets,” said Joshua Mahony at IG.

Ole Hansen, the head of commodity strategy at Saxo Bank, said crude oil has started the week on a strong footing “as the global power crunch continues to raise expectations for higher gas-to-oil switching demand at a time where OPEC+ maintains its modest pace of monthly oil production increases.”

“Saudi Aramco estimates the gas shortage has already lifted oil demand by an additional 0.5m barrels/day. Coal futures in China surged 8% overnight after torrential rain and landslides halted some production at mines in the Shanxi province, the nation’s top-producing region, thereby adding further support to global fuel prices, including crude,” Hansen added/

It’s not just the miners going well in the commodity sector; oils are also on the up with Royal Dutch Shell PLC (LSE:RDSB) 2.2% firmer at 1,752.6p, as Brent crude for December delivery was up US$1.84 at US$84.23 a barrel.

Asia-focused banks are also in demand; Standard Chartered is 2.7% better at 493.6p while HSBC Holdings PLC is 2.1% to the good at 428.35p.

Futures for the Dow Jones Industrial Average futures fell 0.22% in Monday pre-market trading, while the broader S&P 500 index declined 0.48% and those for the tech-heavy Nasdaq 100 shed 0.95%. It is Columbus Day in the US which means bond markets will be closed but equity markets remain open.

This week, big banks will kick off the earnings season with JP Morgan, Bank of America (NYSE:BAC), Citigroup, Morgan Stanley (NYSE:MS) and Goldman Sachs (NYSE:GS) all announcing results.

11.10am: Quiet session continues

Leading shares are marking time this morning.

The FTSE 100 was up 15 points (0.2%) at 7,111.

Ahead of the grocery sector market share release from market research firm Kanta tomorrow, J Sainsbury PLC (LSE:SBRY) is down 1.8% at 290.3p and Tesco PLC (LSE:TSCO) is off 1.8% at 270.75p.

Pod Point, Britain’s largest provider of home charging points for electric vehicles plans, confirmed it plans to float in London, probably in November.

The announcement overshadowed Pantheon Infrastructure’s announcement of an initial public offering in which it will seek to raise GBP300mln via a share placing.

London needs another company called Pantheon like the Marx Brothers needed Gummo (who was replaced in the act by Zeppo, quiz night fans) and the fact its ticker symbol will be the wildly misleading PINT is another mark against it.

9.50am: Miners buoy the Footsie

Miners are keeping the Footsie in positive territory this morning.

The FTSE 100 was up 7 points (0.1%) at 7,103, with the likes of Anglo American PLC (LSE:AAL), Rio Tinto PLC (LSE:RIO), Glencore PLC (LSE:GLEN), Antofagasta PLC (LSE:ANTO) and BHP Group PLC (LSE:BHP) each up by more than 2%.

Ferrexpo PLC (LSE:FXPO), the mid-cap iron ore pellets producer, was 3.6% firmer at 321p after it announced its inaugural decarbonisation targets.

The group has committed to achieving net-zero carbon emissions from its operations by the year 2050.

Elsewhere in the mid-cap space, XP Power Limited edged 0.2% higher to 5,010p after its third-quarter trading update.

Research house Edison said XP’s revenues and bookings for the first nine months of 2021 were ahead of its expectations, prompting a revision of its full-year earnings estimates by 2%.

8.45am: ASOS CEO walks the plank

The FTSE 100 made a slightly better than expected start to proceedings as the pull of Asia’s strong start to the trading week trumped niggling rate hike concerns.

Earlier, China’s tech sector enjoyed a buoyant session after Beijing’s opted to issue a comparatively lenient fine to food delivery giant Meituan for alleged monopolistic practices.

Here at home, comments from Michael Saunders, an external member of the Bank of England‘s Monetary Policy Committee, got some hares racing.

He said he expects the cost of borrowing to go up “significantly earlier” than currently forecast. Economists are now betting a rate hike will occur before the end of 2021.

On the market, the big story was the 15% fall in the value of ASOS PLC (AIM:ASC), the online fashion group, whose chief executive Nick Beighton has quit with immediate effect after a slowdown in growth.

On the Footsie, miners led the way with Anglo American up 2.5% in early trade and copper specialist Antofagasta ahead 2.3%.

6.50 am: FTSE 100 set for a lacklustre start

The FTSE 100 looks set to make a subdued start to proceedings amid interest rate concerns.

Michael Saunders, an external member of the Bank of England‘s Monetary Policy Committee, said he expects the cost of borrowing to go up “significantly earlier” than currently forecast.

“He isn’t alone in thinking along these lines either after new chief economist Huw Pill voiced concerns over longer lasting inflation, something that the UK tends to be especially vulnerable to, while governor, Andrew Bailey, also appears to be leaning in that direction as well,” explained Michael Hewson, an analyst at CMC Markets.

As a result, economists are now starting to factor in a hike to base rates before the year-end against a backdrop of rising prices here in the UK, with inflation proving far more longer-lived than first anticipated.

Asia’s main markets, meanwhile, started the trading week in good cheer, led by China’s two international bourses.

There was a tech-inspired rally after food delivery group Meituan escaped with what is being seen as a fairly light financial sanction from Beijing for alleged monopolistic practices.

Elsewhere, travel stocks were flying higher in Singapore with international travel corridors with the rest of the world expanding rapidly.

Looking ahead, international investors are braced for the start of the US third-quarter earnings season, which analysts suggest will underline the threat from inflation as the supply chain struggles to cope with the recovery from Covid.

Among those reporting will be a slew of banks including JPMorgan, Bank of America (NYSE:BAC), Morgan Stanley (NYSE:MS), Citigroup and Goldman.

On this side of the Pond, updating the market this week will be Rio Tinto, ASOS, Entain and Dunelm.

Around the markets

  • Pound US$1.3644 (+0.21%)
  • Bitcoin US$56,355.42 (+1.40%)
  • Gold US$1,757.60 (flat)
  • Brent crude US$83.55 (+1.41%)

6.50am: Early Markets – Asia / Australia

Stocks in the Asia-Pacific region were mostly higher on Monday with Aviation-related stocks in Singapore surging after the Southeast Asian country launched vaccinated travel lanes (VTL) with Canada, Denmark, France, Italy, Netherlands, Spain and the U.K.

China’s Shanghai Composite gained 0.41% while Hong Kong’s Hang Seng index surged 2.25%

In Japan, the Nikkei 225 jumped 1.55% but South Korea’s Kospi dipped 0.11%.

Australia’s S&P/ASX200 dropped 0.38% to 7,262.60 as Star Entertainment Group Ltd shares fell 22.66% after Crown-like allegations were made against it.



Please enter your comment!
Please enter your name here