- FTSE 100 rises 14 points to 7,205
- US stocks lower midday on tech sector weakness
- Sainsbury’s lower after ending talks over sale of its bank
5:05pm: FTSE 100 ends higher, US stocks lower midday
The FTSE 100 finished the week on a positive note, gaining 25 points, or 0.3%, to 7,215, as miners advanced on easing China property market concerns.
“The FTSE 100 has shaken off much of the negativity of earlier in the week, and is putting its best foot forward in a bid to surpass recent highs,” IG chief market analyst Chris Beauchamp said in a statement.
2.45pm: US stocks open mixed
US indices have got off to a mixed start, with the Dow Jones average higher and the S&P 500 little changed.
The Dow Jones was up 101 points (0.3%) at 31,704 and the S&P 500 was down less than a point at 4,549. The tech-heavy Nasdaq Composite was off 75 points (0.5%) at 15,141.
Shares of Intel retreated more than 10% following a weaker-than-expected sales report. The semiconductor company blamed an industry-wide chip shortage for its revenue miss.
Social media stocks also dropped after Snap said its advertising business declined due to Apple’s privacy changes. Snap shares sunk more than 20%. Facebook and Twitter pulled back 4% and 2%, respectively.
Back in Blighty, the FTSE 100 was 33 points to the good at 7,223.
Sterling is down one-eighth of a cent against the US dollar after this morning’s purchasing manager’s indices, which is offering some support for the FTSE 100 but which plays less well with the FTSE 250, which is down 5 points (0.0%) at 22,912.
Sainsbury’s says it’s keeping its bank after expressions of interest from buyers didn’t match the level of value it reckons it will have from keeping it. Analysts had reckoned selling the bank would have made it a simpler takeover target for a buyout firm pic.twitter.com/loHBEMIQqE
— Ashley Armstrong (@AArmstrong_says) October 22, 2021
The supermarket revealed last November it had received some enquiries about buying the bank but said today that while the expressions of interest were worth exploring, they did not offer better value for shareholders than retaining Sainsbury’s Bank.
1.30pm: UK PMIs buck the trend thanks to services rebound
Economists have been picking over the bones of this morning’s Purchasing Managers Indices (PMIs), including those from the UK.
There was a rebound in services in the UK, which went against the trend in the Eurozone, said Holger Schmieding at Berenberg.
“The UK’s composite output index rose from 54.9 in September to a three-month high of 56.8 in October, well above the consensus (and our) forecast of 54.0. While the manufacturing output index declined to 50.6 in October from 52.7 in September as a result of increased energy prices, and labour and component shortages, the services activity index surged to 58.0 from 55.4 in September,” Schmieding reported.
“While Markit highlights the removal of pandemic-related restrictions as the reason for ‘buoyant business and consumer spending’, we would not place too much emphasis on this argument. All major remaining domestic restrictions had been in England lifted since ‘Freedom Day’ on 19 July. All in all, consumer behaviour apparently normalised further in October, possibly helped the removal of many travel-related restrictions,” he added.
Martin Beck, the senior economic advisor to the EY ITEM Club, said supply frictions continued to hold back activity and contributed to cost pressures staying historically high.
“After the PMIs had consistently fallen since late spring, October’s flash indices bucked what has been a gloomy air surrounding the economy and signalled activity picking up steam again,” Beck said.
“However, the details of the survey suggested that growth is increasingly services-heavy. The manufacturing output index was only just above the 50 ‘no-change’ mark, with the overall PMI benefitting from lengthier supplier lead times. And October’s survey gave a strong signal that growth continues to be held back by supply failing to keep up with demand. Companies cited supply-chain disruption and shortages of raw material and staff. These pressures contributed to input and output prices both rising at record paces.
“Supply constraints should ease as consumer demand rotates back from goods towards services and market forces aid in bringing demand and supply into balance but there is little sign of any abatement yet – for example, October’s CBI industrial survey showed concerns about supply shortages escalating to levels not seen since the 1970s. So, the economy looks to be facing a more difficult and sluggish period ahead,” Beck opined.
The FTSE 100 was up 41 points (0.6%) at 7,232.
12.20pm: Gold shrugs off bitcoin mania
Gold has been knocked recently by suggestions its traditional role as an inflation hedge might be under threat from bitcoin.
JP Morgan made the point a couple of week’s ago, “When it comes to hedges against inflation, Bitcoin is looking more and more like the new gold,” said the bank.
The launch of the Bito bitcoin futures ETF this week has also become among the biggest ever, outstripping the first-ever GOLD ETF issued by Gold Bullion Securities some twenty years ago
Gold investors though have seen all this before and on commodity markets, gold prices rose 0.7% in Friday trading even with the crypto mania elsewhere.
Walid Koudmani, XTB market analyst commented: “While gold has experienced some significant volatility in recent times with the price fluctuating within a $40 range, the latest pullback of the US Dollar has favoured the precious metal and helped it recover.
“Gold is once again approaching the upper limit of the recent trading range as moods in markets remain uncertain after mixed European PMI’s and ahead of US data.
“While the price is up almost 1% from yesterday’s low, the $1800 area acted as a resistance in the past and could be an important level to keep an eye on moving forward, particularly if the situation in stock markets were to change.
FTSE 100 meanwhile is picking up a serious tailwind and was up 43 at 7,233.
11.45AM: US stocks tipped to open lower
FTSE 100 is having an increasingly good day and had notched up a gain of 38 at 7,228 at lunchtime even with the prospect of a dull start on Wall Street.
US stocks are expected to ease back at the end of a busy week as investors eye further corporate earnings and US manufacturing and services purchasing managers indexes (PMI) for October.
Futures for the blue-chip Dow Jones Industrial Average were flat, but those for the broader S&P 500 edged down 0.1% after the index posted a seven-day winning streak and ended at a record close on Thursday. Contracts for the tech-laden Nasdaq-100 futures fell 0.5%.
Stocks have risen in recent days on the back of strong corporate earnings, shaking off concerns about inflation and supply-chain problems that threaten the post-coronavirus pandemic economic recovery.
American Express and Honeywell International are among companies set to report earnings ahead of the opening bell on Friday. Nearly nine out of 10 US companies that have reported have beaten Wall Street expectations so far this earnings season.
The latest US manufacturing and services PMIs, due at 9.45am ET, are expected to show little change from September. Eurozone manufacturing activity largely held up in October, although service sector activity was weaker than economists had forecast, as shown in PMIs reported earlier on Friday.
11:20AM: JD Sports buoyed by UBS upgrade, Crete acquisition
FTSE 100, up 30 at 7,220, continued in good heart heading towards the afternoon buoyed by largely by miners.
More on JD Sports, which continues to hit all the right notes with investors and was rising smartly today.
The latest piece of news was the acquisition of an 80% stake in Cosmos Sport, a Crete-based sports retailer, but an upgrade from UBS also added some zip to the share price.
Cosmos has 60 stores in Greece and Cyprus. The core fascia is Cosmos, which has a sporting goods/sports fashion offer, with a further 19 Sneaker 10 stores, which sell a more premium footwear offer.
No financial details were released but the business should turn over EUR80m this year and make single-digit EBITDA (underlying profits) said Peel Hunt.
Similar deals have been struck at up to 10 times underlying profits said the broker, adding “This is bang in line with JD Sports Fashion’s strategy, as Cosmos is market leader in Greece, and this could open the door to other territories too.
“No change to forecasts or TP, but JD Sports Fashion remains firmly on the front foot,” it added.
Separately, UBS upgraded its rating to buy, from neutral, and its target price to 1,250p.
“New analysis suggests a more positive view on the key short and long term debates for JD Sports. Following the recent sector de-rating, we upgrade to Buy, said analysts.
Shares rose 2.5% to 1,065p.
9.40am: Miners do much of the heavy lifting
Trading updates from Footsie constituents have done the index few favours but the index remains in positive territory.
The FTSE 100 was up 29 points (0.4%) at 7,219 with miners doing much of the heavy lifting.
JD Sports leapt 2.8% to 1,068.5p after it acquired 80% of Cosmos Sport, which operates 57 stores in Greece and three in Cyprus.
Going the other way were London Stock Exchange Group, which was down 4.3% at 7,738p after its underwhelming third-quarter update and Intercontinental Hotels Group PLC (LSE:IHG), which was 2.5% lower after its trading updare failed to please.
“Domestic holidays, particularly in the US, saw international hotel giant IHG deliver a reasonably healthy set of third-quarter numbers. True there is some way to go before the group reaches the heights it achieved in 2019, but given the travel restrictions that continue to affect many markets this is a pretty good start.
“The group is notable for having stayed profitable throughout the pandemic, no mean feat in the travel industry; however, it is still taking the opportunity to rebalance its estate, exiting poorer performing hotels. That means the group has actually stood still on room numbers over the last 12 months – which is something of a rarity in a company which believes there is considerably more opportunity for consolidation in its core US and Chinese markets,” said Nicholas Hyett at Hargreaves Lansdown.
8.35am: Fuel frenzy fails to prevent fall in retail sales
The FTSE 100 has opened on the front foot despite weaker-than-expected retail sales figures.
London’s index of heavyweight shares was up 29 points (0.4%) at 7,218.
Retail sales volumes fell by 0.2% in September from August following an upwardly revised 0.6% fall in August. Retail sales bolumes have now fallen five months in a row, representing the longest losing streak since 1996.
UK retail sales fell for the fifth consecutive month in September (-0.2%m/m), the longest unbroken run of declining sales since at least 1988 (as far back as the current series goes). Sales should rebound in October (early Xmas pres buying), but the outlook beyond then looks poor pic.twitter.com/UUY4BqyyTs
— Samuel Tombs (@samueltombs) October 22, 2021
Non-food stores reported a fall of 1.4% in sales volumes, because of falls in household goods stores (negative 9.3%), such as furniture and lighting stores, and other non-food stores (negative 1.7%) such as sports equipment stores, the Office for National Statistics (ONS) said.
Automotive fuel sales volumes rose by 2.9% in September 2021 as demand towards the end of September increased sales.
Food store sales volumes rose by 0.6% in September.
Despite the relaxation of COVID-19 restrictions in summer 2021, in-store retail sales remain subdued; the proportion of retail sales online rose to 28.1% in September 2021 from 27.9% in August, substantially higher than the 19.7% in February 2020 before the pandemic, the ONS said.
“As suggested by this morning’s UK economic data, growth momentum in the UK continues to fade,” Daiwa Capital Markets said, in response to the weaker-than-expected retail sales data.
“Overall, there was a marked decline in the volume of total sales over the third quarter as a whole, by a whopping 3.9%Q/Q in Q3 (-4.9%Q/Q when excluding auto fuels). Admittedly, this followed growth of almost 12%Q/Q in Q2, and the September level was still more than 4% higher than before the pandemic. Meanwhile, significant price increases saw the retail sales deflator rise to an elevated 3.4%Y/Y. Nevertheless, the value of retail sales still fell for the fourth month in the past five, dropping 0.2%M/M in September to be down a chunky 2.3%Q/Q in Q3,” Daiwa added.
The exchange boasted of a strong performance across all divisions driving a 7.6% growth in total income and gross profit growth of 7.3% but traders were more concerned with slowing year-on-year growth in the fourth quarter.
6.30am: The Footsie expected to open modestly higher
UK blue-chips are set to open firmer on balance ahead of today’ retail sales data.
Spread betting quotes indicate the FTSE 100 will open around 24 points higher in the area of 7,214.
“The last few months haven’t been great ones for retail sales growth, with three of the last four months showing quite sharp falls in consumer spending. Since the 9.2% rise we saw in April we’ve seen declines of -1.3%, -2.8% and -0.9%, with only a pitiful gain of 0.2% in June,” said CMC’s Michael Hewson.
“As we look towards today’s September numbers, we should be well overdue a big rebound, notwithstanding UK consumers sucking petrol station forecourts dry due to misplaced concerns about fuel shortages, and where demand is likely to remain fairly high for some time to come, as drivers keep their fuel tanks at higher-than-average levels than normal. Expectations are for a gain of 0.3% excluding fuel and 0.6% including fuel, though one can’t help thinking that the fuel number is a little on the conservative side,” Hewson said.
Leading US equities were mostly firmer yesterday although you would not have known it from the performance of the Dow Jones 30-share average, which dipped 6 points to 35,603. The S&P 500, however, climbed 14 points to 4,550.
Asian markets have generally been buoyant this morning with Japan’s Nikkei 225 88 points to the good at 28,797 and the Hang Seng 115 points heavier at 26,133.
It looks like the Bitcoin market has calmed down a bit with a US$428 rise – small beer in the cryptocurrency markets – to US$63,136. Having said that, the crypto crowd seems to have moved on to Ethereum, which is up US$58.61 at US$4,150.
The Holiday Inn and Crowne Plaza owner reported a steady recovery in US and Chinese domestic travel in the first half of 2021 and with airlines reporting improving European travel trends over the summer, the positive trends may have continued into the third quarter.
Around the markets
- Sterling: US$1.3804, up 0.1 cents
- Gilt: 1.205%, up 5.58 basis points
- Gold: US$1,787.16, up US$5.20
- Oil: US$84.14 a barrel, down 47 cents
- Bitcoin: US$62,977, up US$277
6.50am: Early Markets – Asia / Australia
Stocks in the Asia-Pacific region were mixed on Friday following media reports that embattled developer China Evergrande Group is set to pay off a coupon payment on a dollar-denominated bond.
China’s Shanghai Composite fell 0.20% while Hong Kong’s Hang Seng index gained 0.14%
In Japan, the Nikkei 225 rose 0.23% but South Korea’s Kospi dipped 0.17%.
Australia’s S&P/ASX200 closed unchanged at 7,415, managing to finish ahead for the third straight week.