FTSE 100 closes higher as investors shrug off inflation fears

  • FTSE jumped 66 points or 0.92%
  • Markets on the rise despite increased energy prices
  • BHP Group PLC (LSE:BHP) the day’s top performer

5:00 pm: FTSE 100 closes higher as investors ignore inflation fears

The FTSE 100 closed higher Thursday despite rising energy prices and inflation fears.

At the close, the UK blue-chip index jumped 66 points, or 0.92%, to hit 7,207.

Joshua Mahony, senior market analyst at online trading group IG, said improving earnings for US banks and shrinking US jobless claims are helping to drive positive market sentiment despite rising energy prices.

“Markets throughout Europe and the US have enjoyed a welcome day of positivity, with the FTSE 100 moving within touching distance of 19-month highs,” he said.

“Fears around energy prices and inflation appear to have eased for now, although today’s 5% rise in natural gas prices raise the risk that this respite may be brief in nature. The collapse of another three UK energy providers this week highlight the fact that prices are going to rise sharply for providers to stay in business. The business secretary has stated that forecasts of a mild winter could avoid the kind of squeeze seen in China.”

Mahony added: “However, the risk of factory closures and a jump in the cost of living remain a distinct possibility if temperatures drop and usage heads upwards. Seven-year highs for unleaded petrol prices highlight ongoing inflationary pressures for consumers, with the continued rise in costs also likely hamper business margins.”

The top gainer was BHP Group PLC (LSE:BHP), which increased by 3.70% to 1,992p.

3.50pm: FTSE 100 reaches two-month high lifted by metals and energy prices

The Footsie was on track to close on a two-month high after jumping 63 points to 7,205 in the late afternoon.

London’s largest stocks have been lifted by surging metals and energy prices.

BHP Group PLC (LSE:BHP), Rio Tinto PLC (LSE:RIO), Antofagasta plc, Glencore PLC (LSE:GLEN) and Anglo American PLC (LSE:AAL) were the top five risers in the index, with Polymetal International PLC (LSE:POLY) and Royal Dutch Shell Plc sitting not too further away.

Copper prices have risen back to their highest levels since July, while aluminium prices are back at 2008 levels.

“Rising oil and gas prices are once again putting pressure on energy intensive industries, forcing them to cut production in the face of spiralling costs and creating supply shortages, with Belgian metals supplier and manufacturer Nyrstar cutting output by 50% at three of its European zinc smelters,” noted Michael Hewson at CMC Markets.

“Brent crude prices also rising again after two days of declines, and on course for its highest daily close since 2018. European natural gas prices are once again leading the move higher, as concerns over higher prices drives moves into the likes of crude oil as well as coal.”

2.45pm: Wall Street off to strong start

Wall Street shares started on the front foot Thursday as traders appeared to be buoyed by the latest jobs data and better-than-expected company earnings.

The Dow Jones Industrial Average gained over 382 points at 34,760. The S&P 500 added around 40 to stand at 4,404.

The tech heavy Nasdaq index added almost 134 points at 14,705.

It comes as US claims for unemployment benefits fell below 300,000 for the first time since the pandemic in the seven days to October 9.

According to a report, only 293,000 people applied for benefits as companies desperately try and hire more staff amid labor shortages. Economists had forecast that new claims would drop to a seasonally adjusted 318,000.

On the corporate front, banking behemoths, Bank of America (NYSE:BAC) (up 2.7%), Morgan Stanley (NYSE:MS) (up 1,48%), Citigroup (up 0.3%) all beat third quarter earnings expectations.

Back home, the FTSE 100 surged 62 points to 7,202.

1.30pm: EDF not ready to take customers of collapsed energy suppliers

The Footsie remained on the front foot at lunchtime, but little moved from its early gains, up 51 points or 0.72% to 7,192p.

After two more UK residential energy companies collapsed, French-owned giant EDF said it’s not ready to take any more customers from competitors that have fallen by the wayside.

“What we are seeing is that the supplier of last resort [process] has worked really well until now and we can be very proud that industry has stepped in in order to help the customers who were in distress,” boss Philippe Commaret told the BBC.

“The question is whether or not we will be able to take that any further and I think that for ourselves our top priority is obviously to maintain the quality of service for customers, not to create any detriment to customers.”

“As you can imagine, on-boarding tens of thousands of customers is a challenge for the operations. I won’t apply to be supplier of last resort for any further customers before we have ended with the on-boarding of the Utility Point customers.”

Pure Planet and Colorado Energy, which together covered 250,000 customers, confirmed they stopped trading due to rocketing wholesale gas prices.

12pm: US stocks called higher after strong JP Morgan update

US stocks are expected to open higher after JP Morgan kicked of the US earnings season with stronger-than-expected quarterly results, with revenue and profits boosted by a continued flow of initial public offers and takeover deals.

Futures for the Dow Jones Industrial Average futures gained 0.58% in Thursday pre-market trading, while the broader S&P 500 index rose 0.64% and those for the tech-heavy Nasdaq 100 added 0.76%.

Stocks closed mixed on Wednesday as investors mulled when the Federal Reserve could pull back its easy monetary policy and considered latest inflation data.

Minutes released from Federal Open Market Committee’s September meeting showed the central bank could begin tapering its asset-purchase program as soon as mid-November. September’s consumer price index (CPI) rose by a greater-than-expected 0.4% from the previous month and 5.4% year over year.

At the close, the Dow declined by 0.53 points, a fractional loss, to 34,377, while the S&P 500 rose 0.31% to 4,363 and the Nasdaq gained 0.73% to 14,571.

“Equity markets appear to have shaken off their caution of recent weeks and are moving higher in unison this morning,” said Chris Beauchamp, chief market analyst at IG.

“Yesterday’s strong US CPI print and this morning’s robust Chinese PPI figure have not dented investor enthusiasm for stocks after US earnings season got off to a good start from JPMorgan.

“The earnings call provided plenty of reasons to be cheerful, with the bank noting that the overall US recovery was intact and credit demand was still strong.”

Meanwhile, the Footsie was little moved at 7,195.

10.55am: Domino’s Pizza (NYSE:DPZ) to hire 8,000 staff ahead of Christmas crunch

The FTSE 100 was firmly in the green in the late morning, still up 53 points to 7,194.

Domino’s Pizza (NYSE:DPZ) Group PLC is looking to hire 8,000 new employees ahead of the key Christmas period.

The fast-food chain expects labour shortages and higher food costs to continue into the new year, but stressed it will deliver results according to expectations.

“There are only so many variations you can have on a pizza topping that product innovation doesn’t come easy, so it’s down to promotional deals to capture customers’ interest. Domino’s can push up prices, but its pizzas have always been quite expensive versus the competition, so there is a risk that households look elsewhere. And that’s a big risk when you think the overall cost of living is shooting up,” said Russ Mould, investment director at AJ Bell.

“If your energy bill is racing upwards and the weekly food shop is starting to become a lot more expensive, an easy way to save money is to cut back on treats like Domino’s. Therefore, life could get a lot tougher for the business in the coming months.”

Shares dipped 1% to 382p.

9.50am: Pure Planet and Colorado Energy become latest energy suppliers to fold

The FTSE 100 build on its gains in mid-morning, rising 52 points to 7,194.

Pure Planet and Colorado Energy had a much worse morning after confirming they have stopped trading.

They have become the latest energy suppliers to have collapse due to the soaring gas prices in the UK.

Pure Planet supplies gas and electricity to 235,000 domestic customers, while Colorado Energy serves another 15,000 homes.

Under Ofgem’s safety measures, customers’ energy supply will continue and funds that domestic customers have paid into their accounts will be protected if they are in credit.

The regulator will soon appoint other energy suppliers to pick up the service.

Pure Planet noted that it was one of only two Which? Recommended Providers and it was on track to deliver its first profits at the end of this financial year.

“The rules prevented us from covering our costs,” its founders commented.

“We are being forced to sell energy at prices way below the true cost. That’s wiped out those forecast profits and turned them into a thumping great loss, with even more risk on top. While we appreciate the price cap is a way to protect consumers; there is no policy designed equally to protect suppliers.”

8.50am: Miners on the rise

The FTSE 100 opened in green territory as it shrugged off inflation concerns as expected. London’s leading index jumped 30 points to 7,172 in early trading.

Commodity prices have continued rising, with residential energy suppliers Pure Planet and Colorado Energy confirming their collapse.

Oil prices have advanced yet again, with Brent Crude up 0.69% this morning to be on track to close at a three-year high. That comes in spite of OPEC’s monthly oil market report revising down their forecast for world oil demand this year.

European natural gas prices were up 9% after paring back some of the losses from last week.

Back to the FTSE 100, miners were the stars of the show, with Anglo American PLC (LSE:AAL) rising 3% while Glencore PLC (LSE:GLEN), Antofagasta plc and Rio Tinto PLC (LSE:RIO) all adding 2%.

In the FTSE 250, DiscoverIE Group plc was up by 5% after outperforming expectations in the first half of the year, while recruiter Hays PLC (LSE:HAS) advanced 3% after posting growth across all its markets.

6.40am: FTSE 100 to shrug off inflation concerns and move higher

FTSE 100 is set to open higher in spite of inflation warning signs flashing everywhere.

Financial spread betters had London’s blue-chip index up by around 32 points a couple of hours before trading gets underway,

The index closed 11 points higher at 7.141 on Wednesday after a good day for housebuilders on Barratt’s bullish AGM update, but the threat of higher prices will again dominate the headlines.

Britain’s biggest chicken supplier Ranjit Singh Boparan, the owner of Bernard Matthews and 2 Sisters Food Group, has warned that the prices will have to rise by 10% and said shoppers in future would be looking at ‘a different world’.

That already seems to be happening in some places, with consumer price inflation in China hitting 10.7% in September, its highest for 25 years while US consumer prices rose by 5.4%.

Today it is the turn of US factory gate or PPI numbers where the impact of rises in the costs of transport, energy and components are expected to show through more forcefully. The consensus is for a rise to an annual rate of around 8.7%.

Minutes for the last Federal Reserve meeting yesterday reflected its growing concerns about inflation and stated the need to stop pumping money into the US economy sooner rather than later.

Markets responded by bringing forward expectations of a US rate rise to September next year.

In the UK, inflation will figure heavily in the company updates today.

Hays is one of the UK’s leading recruiters, so should give an informed insight into how the jobs market is faring.

“Hot” was how one of its rivals described it recently.

RioTinto also updates (10.30 pm UK time) and while the price of iron ore has tumbled recently, it has started to turn up again and any comment on how it sees future trends will be keenly watched especially given the size of the dividends it is projected to pay out over the next three years.

Brokers have predicted Rio might pay a cumulative US$52bn, which equates to a third of its market value.

6.50am: Early Markets – Asia / Australia

Stocks in the Asia-Pacific region were higher on Thursday even as China’s producer inflation for September surged 10.7% as compared with a year ago.

The Shanghai Composite gained 0.06% while markets in Hong Kong are closed for a holiday.

In Japan, the Nikkei 225 jumped 1.35% and South Korea’s Kospi gained 1.09%.

Australia’s S&P/ASX200 rose 0.54% to 7311.7 as the country’s labour force data for September showed employment fell 138,000 vs 110,000 expected.

Full-time jobs were up 26,700 and part-time jobs down 164,700, while the unemployment rate rose to 4.6% vs 4.8% expected.



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