- FTSE 100 down 14 points
- Astra boosted by Vietnam vaccine deal
- BP lower after update
5:05pm: FTSE 100 lags as iron ore decline drive miners lower
The UK’s blue-chip index lagged at the close Tuesday to finish at 7,275 points, a loss of 0.19% on the day.
While US markets are hitting record highs, weakness in the mining sector has sparked a move lower for the FTSE 100. Looking ahead, the prospect of monetary tightening from the Fed and Bank of England have done little to dampen market sentiment, IG’s senior market analyst Joshua Mahoney wrote in a note.
“US markets have carried on where they left off, with the S&P 500 and Nasdaq both hitting fresh record highs after the open,” Mahoney said. “The FTSE 100 has lagged its European and US peers, with sliding iron ore prices driving mining stocks lower. Chinese output cuts in response to power shortages bring a reduction in demand for iron ore, which comes at the detriment of FTSE listed miners.”
3.52pm: Leading shares recover some ground
A bright start on Wall Street has pulled the UK blue chip index off its lows.
After dipping to 7240, the FTSE 100 is now down just 10.93 points or 0.15% at 7277.69.
The Dow Jones Industrial Average is up 120 points or 0.33%, the S&P 500 has climbed 0.37% and the Nasdaq Composite is 0.24% better.
With US markets hitting new heights, the UK’s leading index has managed to recover from disappointing results from the likes of Standard Chartered PLC (LSE:STAN) – down 8.46% – and Flutter Entertainment PLC (LSE:FLTR) – 6.3% lower.
Michael Hewson at CMC Markets said: “While positive numbers are generally greeted with equanimity, misses or downgrades tend to get brutally punished, as Flutter Entertainment and Standard Chartered have found out to their cost today.”
Miners have also been undermining the market during the day, as iron ore prices hit one year lows on concerns about future demand from China.
Defensive stocks are among the risers, with AstraZeneca PLC (LSE:AZN) leading the way, Its shares are up 2.46%, helped by news that Vietnam’s VNVC has signed a new contract to buy 25mln new doses of its Oxford vaccine. That brings the total number of doses ordered to 55mln.
Astra is also benefiting from positive results from rival Pfizer, which raised its sales forecasts for its COVID-19 jab.
The FTSE 250 mid-cap index, down at 23,142 at one point, is now off just 0.13% at 23,181.
3.07pm: Pound slips as investors bet on whether rates will rise or be held
Sterling has slipped as investors try to weigh up whether the Bank of England will indeed raise interest rates on Thursday.
Opinion seems to be pretty split, with Bank watchers uncertain whether the hawks or doves on the monetary policy committee will have the upper hand.
That uncertainty has seen the pound dip 0.19% to $1.3628.
Craig Erlam, senior market analyst at Oanda, said: “The market appears split on whether [the Bank of England] will move this week, with either no change or a 15 basis point hike the likely outcome. While I’m probably in the latter camp, I wouldn’t be surprised if they even opt for 25 to give the tightening process a kick start.
“There is the argument that they should wait until December to see what impact the end of the furlough scheme and benefits top-up, higher energy prices, COVID-19 etc will have on the economy. This makes sense, except for the fact that the MPC wanting to raise rates is an inflation play, not a reflection of our booming economy. Whether they act this week or next month makes little difference.”
2.53pm: Darktrace dips ahead of lock-up expiry
Darktrace PLC (LSE:DARK) is heading lower again.
The cybersecurity firm, which joined the FTSE 100 a few days ago, has been falling this week ahead of the expiry of a lock-up period on Wednesday blocking key investors from selling their shares.
And with early backers including high profile billionaire Mike Lynch shortly able to sell, the shares are down 5.58% today.
(Lynch, it may be remembered, is currently appealing against extradition to the US over events surrounding the sale of his Autonomy business to Hewlett-Packard in 2011, and denies any wrong doing.)
2.22pm: US markets open higher
US markets have made a positive start and added to their record close, as traders await the outcome of a key Fed policy meeting starting today and due to unveil its decisions on Wednesday.
In early deals in New York, the Dow Jones Industrial Average added 50 points or 0.14% to 35,963.95, while the S&P 500 gained 11 points to stand at 4,625.
The tech-heavy Nasdaq index rose 21 points or 0.14% to 15,616.
The gains after all three benchmarks hit new heights on Monday as investors shrugged off worries over coronavirus (COVID-19), inflation and global supply chain issues.
Also closely watched this week will be Friday’s non-farm payroll report for October.
Back in the UK, the FTSE 100 is unmoved by the positivity from Wall Street and is down 32.19 points or 0.44% at 7256.43.
12.39pm: BP adds to hefty payouts for investors.
Shares in BP PLC (LSE:BP.) may have declined following its latest update – they are currently down 2.31%.
But the company has at least added to the hefty payouts to investors handed out by major companies.
AJ Bell investment director Russ Mould said: “BP’s shares are on the slide thanks to a messy set of third-quarter numbers, marred, just like those of Shell, by accounting losses linked to hedging oil and gas prices but the pledge to return another US$1.25bn to shareholders via buybacks and US$bn a quarter in dividends shows that Big Oil still has some financial clout – even if that is not necessarily the message chief executive Bernard Looney will be looking to put out as the COP26 summit takes place in Glasgow.”
The promised buyback, due to be completed ahead of next February’s full year figures, takes the total buyback bonanza from 21 FTSE 100 companies to GBP18bn, said Mould.
This is on top of the GBP78bn which analysts believe the top companies will pay out in ordinary dividends this year.
Still, at the moment, the weakness in BP as well as Standard Chartered and Flutter following their figures, means the leading index is down 37.98 points or 0.52% at 7250.64.
11.53am: Eurozone factories hit by supply chain woes
Eurozone manufacturing fell back to an eight month low in October, as supply chain issues continued to cause problems for businesses.
The final reading of the IHS Markit Eurozone Manufacturing PMI dipped to 58.3 in October, from the initial estimate of 58.5 and down from 58.6 in September. This marked the slowest improvement in manufacturing sector conditions since February.
And a shortage of containers and staff helped push prices higher, just as central banks are getting more and more nervous about inflationary pressures.
Chris Williamson, chief business economist at IHS Markit which compiles the data, said: “Eurozone manufacturers reported a worsening of the supply chain situation in October, which curbed production growth sharply during the month.
“Average delivery times for raw materials lengthened at a rate exceeded only twice in almost a quarter of a century of survey data as companies reported demand once again running ahead of supply for a wide variety of inputs and components.
“Production constraints at suppliers were reported alongside a growing list of logistical issues. These include a lack of shipping containers and inadequate freight capacity, port congestion, driver shortages and broader transport delays linked mainly to the pandemic
“These shortages have led to the weakest rise in factory output since the recovery began in July of last year, and also pushed inflationary pressures to new survey highs, raising further questions about just how transitory the recent spike in inflation will be.”
11.39am: US markets pause for breath
US stocks are expected to open virtually flat after the major indices closed at new records, driven by better-than-expected corporate earnings and as investors turn their attention to the US Federal Reserve‘s two-day policy meeting.
Futures for the Dow Jones Industrial Average edged up 0.04% in Tuesday pre-market trading, while the broader S&P 500 index dipped 0.01% and those for the tech-heavy Nasdaq 100 eased back 0.17%.
US stocks finished the first day of November in positive territory following the S&P 500’s best-performing month in nearly a year. At the close, the Dow was up 94 points to 35,914, while the S&P 500 gained 8 points at 4,614 and the Nasdaq advanced 98 points, or 0.6%, to 15,596.
“Nothing gets in the way of the equity bulls: not chip shortages, nor labour shortages, or the energy crisis, or the pandemic, not even the fact that the Federal Reserve is just about to announce scaling back its massive bond purchases program in order to contain the rising inflation,” commented Ipek Ozkardeskaya, senior analyst at Swissquote.
“The bulls continue pushing the equity rally to fresh records. The S&P500 and Nasdaq both renewed records on Monday’s session, whereas the major headline on Bloomberg this morning was that ‘the supply chain crisis risks taking the global economy down with it. Still, investors prefer seeing the glass half full: we have a strong earnings season, 80% of the S&P500 companies that announced earnings so far, beat expectations.”
The Fed is expected to announce its plans to start tapering bond purchases when it wraps up its two-day Federal Open Market Committee Meeting tomorrow.
“That’s a well digested and a broadly priced in decision,” Ozkardeskaya added. “It is not even a decision, it will simply be a confirmation.”
Back in the UK, the FTSE 100 is now down 42.29 points or 0.58% at 7246.33, not far off its low for the day
10.52am: Brief period of consolidation?
It is really no surprise the market is pausing for breath after recent rallies, especially with the prospect of cental banks either tapering their bond buying or even raising rates.
Chris Beauchamp, chief market analyst at IG said: “Global growth stocks have taken a knock this morning after their recent strong run, but aside from a couple of result-related falls it seems like we just have a brief period of consolidation for equities.
“November, a strong month on average anyway, got off to a decent start yesterday as equities resumed their bullish form of October.
“With the Australian central bank stepping towards a more hawkish view (or at least, less dovish) and forecasts of a rate increase there being brought forward, attention has been shifted towards central banks, as we gear up for a tapering announcement from the Fed and as possible rate hike from the BoE this week.
“This does mark quite the sea change from the dominant policy backdrop of the last 18 months, but of course is a signal that things are moving on from the emergency phase, as growth recovers and inflation picks up a touch.”
10.21am: Builders gain ground
Housebuilders are among the day’s gainers, as investors seem to have decided that any interest rate rise would be so minor it would not derail the booming UK housing market.
So called defensive stocks are also providing some support for the market.
10.08am: Market off worst levels
Leading shares are still in decline, but at least they are off their worst levels.
The FTSE 100 is currently down 36.11 points or 0.5% at 7252.51, having earlier slipped to 7242.
Investors are nervous about the prospects for central banks easing off from their support for the global economy at their latest meetings.
Meanwhile results from major companies today – BP, Flutter Entertainment, and Standard Chartered – have all led to falls in their share prices.
9.32am: THG falls on report of investor share sale
THG Group, aka the Hut Group, continues to come under pressure.
Its shares are down 6.07% following reports a major shareholder, BlackRock (NYSE:BLK), is looking to sell a chunk of its stake.
Russ Mould, investment director at AJ Bell, said: “For a while THG was a stock market darling with investors clambering to own the stock in the belief it would play a key role in helping product manufacturers sell direct to consumers. Now it is losing fans at an incredibly rapid rate.
“The shares peaked at nearly 800p at the start of the year, and today they briefly traded below 200p amid chatter that BlackRock (NYSE:BLK) is trying to dump a block of shares…
“The backlash against THG seems to centre on the fact that people bought into the hype without paying attention to valuation. Now that difficult questions are being asked about costs and more, particularly if the business is broken up into three as per the suggestion from THG, investors aren’t getting the answers they want – or they are not liking what they see.”
9.00am: Mining shares slide
Flutter Entertainment PLC (LSE:FLTR) continues to lead the fallers in the UK blue chip index, down 7.55%
But it is not the only business to see a slump after its results.
Standard Chartered PLC (LSE:STAN) is down 5.67% despite beating forecasts with its third quarter figures. But comments about a quarter on quarter dip in the final three months of the year appear to have given investors the excuse to take some profits. The company also has exposure to the Chinese real estate market, where the problems at property developer Evergrande have been causing concerns about the sector
Elsewhere mining companies are also weighing on the index, on worries that any interest rate rises from central banks could stymie the global economic recovery and hit demand for commodities.
Overall the FTSE 100 continues to decline, down 41.82 points or 0.57% at 7246.80.
8.35am: Flutter investors flustered by poor sporting results
The FTSE 100 succumbed to a mild case of vertigo after closing yesterday at its highest level since the start of the pandemic.
The index of UK blue-chips dropped 32 points in early Tuesday trade to 7,256.73 with the retreat of the mining sector helping accentuate the negative following a drop in iron ore futures, which hit a one-year low.
The top faller, however, was Flutter Entertainment PLC (LSE:FLTR), down 6.7% after the gambling group grumbled in its latest update about being hit by a spate of unfavourable sporting results and the suspension of operations in the Netherlands.
Investors in BP PLC (LSE:BP.) were little moved by the oil major’s decision to increase the amount of its cash it plans to return to them.
Perhaps their minds were on the long-term sustainability of the business, particularly with the COP26 climate conference currently taking place in Glasgow.
“The oil majors have long recognised the need to provide renewable energy on a multi-decade view as opposed to the ultimately finite resource on which these companies were founded,” said Richard Hunter, head of markets at Interactive Investor.
“For BP, this is partially driven by a move towards low carbon alternatives, although the cost of such a fundamental shift is a huge commitment over time.”
6.50 am: Footise called lower
The FTSE 100 has been tipped to take a step back a day after hitting its highest level since before the pandemic, though results from BP, Standard Chartered and Flutter Entertainment could change the tone of the session.
London’s blue-chip equity benchmark was predicted to fall around 17 points, according to spread-betters on the IG platform, following its 51-point gain to 7,288.62 at the start of the week.
Overnight, US stocks mostly moseyed higher, with the tech-fuelled Nasdaq leading the way with a 0.6% gain, while the Dow Jones was up 0.3% and the S&P 500 rose 0.2%.
“With 80% of companies in the S&P500 so far beating expectations on earnings, concerns about rising prices impacting company profit margins are for now being set aside, with consumers seemingly being able to absorb their impact,” said market analyst Michael Hewson at CMC Markets.
“Whether this trend can continue is obviously a moot point, with central banks seemingly intent on starting the withdrawal process of some of their stimulus measures, however for now the path of least resistance would appear to be for further gains for stock markets, as long as central banks don’t overplay their hand.”
After interest rate rises in Norway and New Zealand in recent weeks, plus tapering of quantitative easing in Canada, Australia’s central bank did not follow suit this morning, only scrapping its government bond yield target and saying that the conditions for any rate rise could well take some time.
Around the markets
- Pound down 0.1% to US$1.3641
- Oil up 0.5% to US$85.14
- Gold up 0.1% to US$1,794.06
- Bitcoin up 1.6% to $61,728.66
Significant announcements expected on Tuesday 2 November:
Interims: FD Technologies PLC
Finals: Oncimmune Holdings PLC (AIM:ONC), Up Global Sourcing Holdings PLC
AGMs: JP Morgan Mid Cap Investment Trust PLC, Murray Income Trust plc (LSE:MUT)
6.50am: Early Markets – Asia / Australia
Asia-Pacific shares were mostly lower on Tuesday as Australia’s central bank kept its cash rate target unchanged.
However, the Reserve Bank of Australia (RBA) decided to stop its target of 10 basis points for the April 2024 Australian Government Bond.
RBA Governor Philip Lowe said: “The decision to discontinue the yield target reflects the improvement in the economy and the earlier-than-expected progress towards the inflation target.”
Australia’s S&P/ASX200 dropped 0.63% to 7,324 on Tuesday’s trade.
In Japan, the Nikkei 225 fell 0.43% while South Korea’s Kospi surged 1.20%.
China’s Shanghai Composite slumped 1.18% and Hong Kong’s Hang Seng index slipped 0.10%