FTSE 100 stays in a rut; house purchases rocket in September

  • London benchmark down 33 points
  • US weekly jobless claims fall
  • RELX higher after third-quarter update

17:05pm: FTSE 100 ends lower, US stocks mixed midday

The FTSE 100 finished down on the day, off 33 points, or 0.5%, to 7,190, as miners and home builders weighed.

“While higher rates should do little to help the housebuilders, the financials look well placed to take advantage of higher growth and improved margins,” IG senior market analyst Joshua Mahony said in a statement.

“With markets widely expecting the November rate rise to be the first of many, the UK banking sector finally looking more attractive,” Mahony added.

Notable movers included Unilever, which rose as much as 2.3% after the consumer goods giant revealed a better-than-expected 3Q sales forecast and maintained its full-year profit margin outlook.

15.25: RELX defies the weaker trend

US markets opened in the red with the Dow shedding 92 points (0.3%) at 35,515 and the S&P 500 dipping a point (0.0%) to 4,536.

US weekly jobs claims fell to 290,000 from 296,000, which was a bit below the consensus forecast of 297,000.

Meanwhile, in the US, leading shares remain in the doldrums with a few notable exceptions such as RELX PLC (LSE:REL), the media and tech giant.

Shares in RELX rose 1.3% after it revealed underlying revenue grew by 6% year-on-year in the first nine months of 2021.

The FTSE 100 was down 15 points (0.4%) at 7,198.

14.15: Bitcoin goes ballistic

“The FOMO [fear of missing out] effect is once again rippling through the crypto world, bouncing the price of Bitcoin near all-time highs,” said Susannah Streeter at Hargreaves Lansdown.

“It gained $2,000 dollars in just two hours earlier today as it surged back up towards yesterday’s record level above $66,930.

“Speculators are fearful of missing out on future price gains, amid expectation that the green light given this week to the Bitcoin futures ETF in the US will swing open the saloon doors to more entrants into the crypto Wild West. The move does seem to have added more legitimacy to Bitcoin, despite the fact that trading in futures contracts and speculating where the price will go next may be even more risky and expensive than trading right now in cryptocurrency on an exchange.

“Given that the UK’s Financial Conduct Authority banned crypto EFTs as of January this year, it’s unlikely we will see any moves in the UK any time soon,” Streeter opined.

That being said, the Financial Times reports that investors are yanking funds from gold, the normal hedge against uncertainty, and putting them into cryptocurrencies.

The news agency Bloomberg reckons more than US$10bn has been withdrawn from the biggest gold exchange-traded fund (ETF) this year.

“Over the last couple of years cryptocurrencies have become mainstream investments thanks to their strong upwards trajectory, with many choosing these over traditional assets,” said analysts at forexsuggest.com.

Gold is still king of the jungle with US$11.3trn invested in it but Bitcoin is coming up fast on the rails, occupying 11th position in the companies, crypto and commodities by market cap, with funds to the tune of US$814.5bn.

Forexsuggest.com projects that in four years’ time, Bitcoin will be up to number five (US$5.1trn) with Ethereum, another cryptocurrency, in sixth on US$4.1bn.

Back in the reassuringly dull world of equities, the FTSE 100 was down 31 points (0.4%) at 7,192.

12.35: UK manufacturers hobbled by component shortages

UK manufacturing output volumes in the three months to the end of October rose at a similar rate to the three months to the end of September, according to the CBI.

The bosses’ lobbying group said the total said manufacturers expect output growth to pick up substantially in the next three months.

The total orders balance – the percentage of respondents reporting an increase in orders minus the percentage reporting a fall declined to +9 in October, from +22 in September, below the consensus, +17.

“The CBI’s total orders balance probably overstates the severity of the slowdown in the manufacturing sector, as it is not seasonally adjusted and it has fallen by an average of six points in the previous 44 Octobers. Even so, our seasonally adjusted version fell to +15 in October–its lowest level since April–from +22 in September. The balance still is a long way above its 44-year average, -19, but it recently has greatly overstated the level of manufacturing output. This is partly because manufacturers are asked to compare orders to ‘normal levels’, and their assessment of normal changes over time,” explained Samuel Tombs, the chief UK economist with Pantheon Macroeconomics.

“In addition, component shortages have prevented many manufacturers from fulfilling orders. These shortages are still worsening; nearly two-thirds of manufacturers reported that the availability of materials and components likely would limit output in Q4, the highest share since January 1975,” he added.

The FTSE 100 was down 37 points (0.5%) at 7,186.

12.05: US stocks set for a dull start

US stocks are expected to open lower after a rally that saw the blue-chip Dow Jones Industrial Average scaling a new record ran out of steam as third-quarter earnings continue to come in higher than anticipated.

Futures for the Dow Jones declined 0.29% in Thursday pre-market trading, while the broader S&P 500 index fell 0.24% and those for the tech-heavy Nasdaq 100 shed 0.14%.

In London, blue-chips are similarly bleurgh, with the FTSE 100 down 38 points (0.5%) at 7,185.

Consumer goods leviathans Reckitt Benckiser Group PLC (LSE:RKT, ETR:3RB) and Unilever PLC (LSE:ULVR) are defying the trend, however, after the latter released an encouraging trading update.

“Unilever investors will hope today marks the start of a recovery after months of declines of late, and a generally unimpressive performance over the past year. If it can continue to increase prices without much of a hit to sales, as today’s figures seem to indicate, then a way of out the mire seems possible. In a growing economy, with consumers beginning to see higher wages, even a relatively staid firm like Unilever should benefit. Of course, a look at the longer-term, which shows a tripling of the share price since 2009, shows that we are probably just going through a tough period, which should reverse in due course,” said Chris Beauchamp at IG Group.

Unilever was up 2.5% at 3,914p and Reckitt was 2.9% firmer in sympathy.

11.20: Property transactions rocket as stamp duty giveaway ends

UK monthly property transactions rose to a record September level as buyers rushed to take advantage of the Chancellor’s generosity on stamp duty.

The provisional seasonally adjusted estimate of UK residential transactions in September 2021 is 160,950, 68.4% higher than September 2020 and 67.5% higher than August 2021, the government reported.

The numbers were still below the peaks seen in March when the Chancellor decided that the roaring house fire could do with another few logs on it and delayed the ending of the stamp duty holiday.

Transactions were still below June, as well, when the stamp duty holiday had been substantially reduced.

“The fact we saw a surge at all shows the psychological power of the tax break. For those who had been locked in an incredibly frustrating housing market for months, and may have initially been aiming for one of the earlier deadlines, this was a final chance to at least get a small saving on the painful and expensive process of buying a house,” said Sarah Coles at Hargreaves Lansdown.

Property transactions

“We expect to see sales slow from this point, reflecting the fact that agents reported a drop in buyer interest in August and a levelling off in September. We’ve also seen six successive months of drops in the number of properties coming to the market, so even if there were plenty of keen buyers, the property drought would keep a lid on sales,” she added.

The FTSE 100 was down 23 points (0.3%) at 7,200 but the mid-cap FTSE 250 was in positive territory – just – with an 18 point (0.1%) gain at 22,985, led by Renishaw PLC (LSE:RSW), the provider of manufacturing technologies, analytical instruments and medical devices.

Renishaw shares advanced 5.1% to 4,878p, after an upbeat fiscal full-year trading update.

AJ Bell PLC (LSE:AJB), up 3.2% at 332.6p, was also on the rise after its year-end trading update. Total customer numbers increased by 30% from a year earlier to 382,754, with total net inflows in the year up 52% to GBP6.4 billion (FY20: GBP4.2 billion).

9.30: Miners drag down the Footsie

Miners are acting as a drag on the Footsie this morning.

The FTSE 100 was down 27 points at 7,195, with Rio Tinto PLC (LSE:RIO), Anglo American PLC (LSE:AAL) and BHP Group leading the retreat.

“It is a weaker start to trade out of the gates for the FTSE 100, breaking below support at 7,200 with basic resources and travel & leisure leading the declines,” said Victoria Scholar at interactive investor.

“The S&P 500 is a whisper away from record highs, logging its sixth consecutive day of gains, thanks to strong earnings reports, signalling that corporate America is in relative control of the global supply chain concerns and inflationary pressures. For the Fed watchers, Cleveland Fed President Loretta Mester reinforced the difference between tapering and hiking in an interview with CNBC, signalling that winding down asset purchases should begin ‘soon’ but that the Fed is not planning to lift-off from rock-bottom rates anytime soon,” she added.

This morning the Office for National Statistics (ONS) revealed the public sector net debt excluding public sector banks was GBP2,219bn at the end of September.

8:30: FTSE 100 lower, Barclays hit by profit-taking

The FTSE 100 opened on the back-foot as expected, down around 31 points or 0.43% at 7,191 in early dealing.

Barclays PLC (LSE:BARC) would’ve hoped for a better market for its best ever set of third-quarter results, which revealed GBP2bn of profit as its investment bank arm boomed.

The bank’s shares meanwhile started close to 1% lower, changing hands at 196.58p, with analysts noting that expectations were already high among investors and suggested the share’s move lower was ‘profit taking’.

Consumer brands firm Unilever PLC (LSE:ULVR) was meanwhile in positive territory as its third-quarter numbers proved to be resilient, with sales up 2.5% and margins seen to be holding ‘broadly level’ for the full year despite elevated cost pressures.

“Unilever is managing its way through,” noted Hargreaves Lansdown fund manager Steve Clayton. “The group has been raising prices to defend its margins against a panoply of higher costs. It is encouraging to see the group able to push these through but at some cost to sales volumes in the quarter.”

Clayton added the minor rally in the ULVR shares reflects relief that rising prices hadn’t forced bigger reductions in volume.

Elsewhere, in crypto markets, the price of Bitcoin and Ethereum remained buoyant after Wednesday’s record high.

A Bitcoin is this morning priced at around US$65,147, up 1.7%, which puts the cryptocurrency’s total worth at around US$1.22 trillion. Ethereum, meanwhile, played a little catch up advancing 8.2% to US$4,166 (putting the second-largest crypto’s total value at around US$490mln).

6:45: FTSE 100 seen lower ahead of open

The FTSE 100 is seen on the backfoot ahead of Thursday’s open with sentiments detached from the positivity seen on the other side of the Atlantic.

CFD firm IG Markets has London’s blue-chip benchmark trading down around 36 points, making the price 7,187 to 7,189 with just over an hour to go until the open.

It comes amidst tightening scrutiny over national and household finances, and, the prospecting of higher price inflation in the coming periods, even whilst company results have largely been robust.

“By and large many companies have been reporting decent numbers and have been able to pass on the increase in costs, to their customers, without a significant impact on their sales growth numbers, or their margins,” CMC analyst Michael Hewson said in a note.

“While this is certainly encouraging there is no guarantee it can continue given that the over the next quarter costs will have increased further given the continued rise in raw materials and energy prices, and other supply chain disruptions.

The analyst added: “For now, that doesn’t appear to be worrying US investors with the Dow posting a new record intraday high, and the S&P500 coming to within touching distance of doing the same thing. This US exuberance isn’t translating into today’s European open which looks set to be weaker one.”

On Wall Street, last night, the Dow Jones closed around 152 points or 0.43% to finish the session at 35,609.

The S&P 500 meanwhile gained 0.37% to finish the session at 4,536 and the Nasdaq was ever so slightly lower, closing at 15,121. The small-cap focussed Russell 2,000 was in higher ground, marked up 0.6% at 2,289.

In Asia, Japan’s Nikkei fell 462 points or 1.58% at 28,794 whilst Hong Kong’s Hang Seng shed 1% to 25,877. The Shanghai Composite meanwhile gained slightly, to trade at around 3,593, up 0.17%.

Around the markets

The pound: US$1.3810, down 0.1%

Gold price: US$1,783 per ounce, up 0.1%

Silver: US$24.29 per ounce, down 0.02%

Brent crude: US$85 per barrel, up 0.6%

WTI: US$83.34 per barrel

Bitcoin: US$65,015, up 1.9%

Ethereum: US$4,185, up 8.6%


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