FTSE 100 edges lower as UK business confidence drops, but Wall Street continues good run

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  • FTSE 100 finishes up 4 points
  • Miners fall back
  • Avast boosted by deal update

5.00pm: FTSE rebounds at the close


The UK’s main index regained some ground on Monday afternoon to finish in positive territory.


The FTSE 100 added 4 points by the closing bell to finish at 7,352 points, a 0.05% gain on the day.


“A mixed European session has carried through into the US, with the Nasdaq lagging behind thanks to another dour day for Tesla shareholders,” IG senior market analyst Josh Mahoney wrote.


“Comments from ECB governor Lagarde highlighted the ongoing dovishness in the face of inflationary pressures, with their first rate hike still slated for 2023. While the pound had been hit hard in the wake of the November rate decision, we are seeing EURGBP reverse lower as traders consider how far the BoE might have moved by the time Lagarde & co finally pull the trigger.”


3.58pm: FTSE 250 outperforms blue chip index


The drift continues, with leading shares remaining rooted in negative territory.


The FTSE 100 is down 11.89 points or 0.16% at 7336.02, although US markets are mostly moving ahead.


The Dow Jones Industrial Average is up 0.31% and the S&P 500 has added 0.12%. But the Nasdaq Composite is the exception and has slipped 0.13%.


Mining shares are under pressure on weaker metal prices, with Antofagasta PLC (LSE:ANTO) falling 2.42%, Glencore PLC (LSE:GLEN) down 2.04% and Anglo American PLC (LSE:AAL) losing 1.99%.


The biggest faller is B&M European Value Retail SA (LSE:BME), down 3.17% after downgrades from Goldman Sachs (NYSE:GS) and RBC.


Heading higher is Avast PLC (LSE:AVST), up 7.27% as its effective takeover by NortonLifeLock came closer.


The mid-cap FTSE 250 continues to outperform the blue chip index.


It has climbed 0.26%, helped by positive updates from CMC Markets PLC (LSE:CMCX), up 7.92%, and Cineworld Group PLC (LSE:CINE), which has added 6.9%.


3.31pm: Bank governor uneasy about UK inflation situation


Bank of England governor Andrew Bailey says he is uneasy about the current inflation situation in the UK.


At its last meeting the Bank elected to confound expectations by not raising interest rates from their record lows despite signs of growing pricing pressures.


The Bank’s inflation target is 2% and it is currently 3.1%. It could hit 5% by April, the Bank admitted.


Now Bailey has told a select committee of MPs: “I am very uneasy about the inflation situation. It is not of course where we want it to be, above target.”


He said it was a close call for him to vote to leave rates on hold, and admitted the UK economy faced weaker growth on the one hand and rising inflation on the other.


His comments are likely to lead to renewed speculation that the Bank will lift rates at its last meeting of the year in December.


2.58pm: US investors cautious but positive


US markets have opened higher as investors await a slew of retail sales data this week, which will act as gauge for consumer sentiment.


In early deals in New York, the Dow Jones Industrial Average added around 113 points to stand at 36,213, while the broader-based S&P 500 gained over 11 points at 4,694.


The tech-heavy Nasdaq Composite advanced over 47 points at 15,908.


Retail sales data from the US, China, UK and Canada are all expected this week, and Fawad Razaqzada, Market Analyst at ThinkMarkets, said this will mean seeing how “surging energy prices and global supply chain issues have impacted consumer spending, and what this might mean for the markets”.


“We already know US consumer sentiment hit a 10-year low, according to a University of Michigan’s closely-watched survey that was released at the back end of last week,” he said.


“With sentiment downbeat among consumers, this might be reflected in lower levels of spending in the months. We will get to see the latest retail sales data for the month of October from the US, as well as some of the other largest economies in the world. Meanwhile we will have earnings from top US retailers such as Walmart, Target and Home Depot to provide an alternative snapshot of the health of the US consumer,” he added.


Back in the UK, the FTSE 100 is back in the red, down 10.59 points or 0.14% at 7337.32.


2.06pm: B&M leads the FTSE 100 fallers


Leading shares have edged into positive territory but it is nothing to get excited about.


The FTSE 100 is up 0.44 points at 7348.35 as Monday continues to see the market drifting.


Avast PLC (LSE:AVST) remains the biggest gainer, up 6.94% as the effective takeover of the anti-virus business by NortonLifeLock cleared a US regulatory hurdle.


But discout retailer B&M European Value Retail SA (LSE:BME) is leading the fallers, down 3.5% at 578.4p after a couple of downgrades.


Goldman Sachs (NYSE:GS) cut its rating from neutral to sell, while RBC moved from sector perform to underperform.


The analysts are worried about higher costs and supply chain problems hitting the company’s earnings.


12.48pm: Burberry share price recovery continues


Results from luxury goods group Burberry Group PLC (LSE:BRBY) were not very well received last week.


But the shares had recovered from their lows by Friday- helped by a positive update from peer Richemont – and they are up again today in a down market, adding 1.81% to 1971p.


Analysts at UBS said they remained cautious about the company’s turnaround but added: “With the shares now trading at a historical high discount to peers we are neutral.”


They also lifted their price target from 1800p to 1845p.


Meanwhile the FTSE 100 has failed to perk up much, down 8.59 points or 0.12% at 7339.32.


11.54am: US markets forecast to open higher


US stocks are expected to start the new trading positively on Monday, extending Friday’s rally even though last week overall showed a modest loss, snapping a five-week winning streak.


Futures for the Dow Jones Industrial Average were up 0.3% on Monday, while those for the broader S&P 500 and tech-laden Nasdaq-100 both rose 0.2%.


On Friday the Dow gained 0.6%, the S&P 500 rose 0.4%, and the Nasdaq Composite added 0.2%.


Worries over rising inflation and when the Federal Reserve might start to hike interest rates have weighed on markets recently, though major indexes are still close to record highs.


The positive mood has been helped by companies broadily beating analysts forecasts during the current reporting season.


In pre-market trading, Dollar Tree was higher after The Wall Street Journal reported Friday that activist investor Mantle Ridge has a stake of at least $1.8 billion in the discount retailer and plans to push it to act to boost its share price.


Higher inflation has also suppressed the returns on government bonds recently, with the yield on the benchmark 10-year Treasury note slipping to 1.546% from 1.583%.


Back in the UK, and the FTSE 100 continues to flag, now down 12.8 points or 0.17% at 7335.11.


11.28am: Mid-cap index outperforms FTSE 100


Leading shares are still in the doldrums, with the FTSE100 down 9.07 points at 7338.84.


But the FTSE 250 has managed to be a bit more upbeat, adding 70.06 points or 0.3% to 23,627.58.


The mid-cap index is being helped by a positive response to results from Cineworld Group PLC (LSE:CINE), up 11.26% and the leading riser, and CMC Markets PLC (LSE:CMCX). 5.79% better.


10.33am: UK business confidence falls


Market sentiment has not been helped by a downbeat business survey.


UK business confidence has fallen to its lowest level this year, amid concerns among businesses about supply challenges and inflationary pressures, according to the latest Accenture/ IHS Markit UK Business Outlook.



More than half of UK private sector firms (56%) expect an increase in business activity during the year ahead, compared to 11% that forecast a decline. The resulting net balance of +45% is a sharp fall from the highs recorded in both June (+58%) and February (+57%) earlier this year.



The good news is that despite this sharp fall from the spring and summer, confidence remains higher than seen throughout much of the last five years and UK businesses are more confident than those in every other European country apart from Ireland.


Even so the FTSE 100 has drifted lower and is now down 5.96 points at 7341.6.


10.15am: UK market loses its impetus


Well so far the excitement has never really started.


The FTSE 100 is now virtually flat after an uninspiring start, up just 0.78 points at 7348.69.


AJ Bell investment director Russ Mould said: “The FTSE 100 made a tepid start to the week on Monday despite some positive economic news from China..


“A lot of the noises from the world’s second largest economy have been negative of late so the better-than-expected data on industrial output and retail sales understandably earned some applause from Asian markets.


“The next big economic release comes on Wednesday in the form of UK inflation figures which could reignite investors’ concerns about rising prices.


“The London market was bolstered by the news Royal Dutch Shell is casting off its dual-share structure but unlike BHP and Unilever is not threatening divorce and has instead committed itself to the UK and remaining in the FTSE 100 index.”


Apart from Shell and Avast, Royal Mail PLC (LSE:RMG) is another riser, up 2.68% at 445.3p ahead of its results on Thursday.




9.25am: Leading shares see a turnaround


After an initial dip, leading shares are now edging higher.


The FTSE 100 is up 7.67 points or 0.1% at 7355.58 but the mood remains cautious.


Royal Dutch Shell PLC (A shares) (LSE:RDSA) continues to provide support, up 2.19%, while Royal Dutch Shell PLC (LSE:RDSB) has added 1.7%.


The oil giant plans to simplify its two classes of share into one and unify its tax residence in the UK. This means that under Dutch rules it can no longer be called “Royal”.


So Shell PLC it will become.


Laura Hoy, equity analyst at Hargreaves Lansdown, said: “Aside from the fact that the shares they hold will no longer come with a ‘Royal’ designation, this new alignment won’t change much for investors. The long-term growth story for Shell still rests heavily on the oil price


“For now, buoyant oil prices are keeping the group’s cash coffers topped up, which has had a positive impact on debt and given the group the means to boost shareholder returns. However, with the inevitable shift to more sustainable energy picking up steam we suspect the need to invest in greener operations will keep a lid on what the group can pass on to shareholders.”


8.33am: Avast leads FTSE 100 risers


Cyber security firm Avast PLC (LSE:AVST) is the biggest riser in the leading index, as its effective takeover by NortonLifeLock came a step closer.


A US regulatory hurdle has been cleared as of last Friday, and the deal now needs to be approved by Avast’s shareholders on 18 November.


Avast has added 5.76% to 591p.


8.25am: Cautious start to trading


Leading shares have made a cautious start ahead of a reasonably busy week in terms of corporate news and economic data, including the UK consumer price index and retail sales.


With inflation worries still close to the surface, the FTSE 100 has dipped 2.16 points to 7345.75.


There are also some geopolitical concerns, not least the outcome of the virtual meeting between US President Biden and Chinese President Xi later today.


Closer to home, speculation continues about whether the UK could cause further confrontation with the European Union by triggering Article 16 of the Northern Ireland Protocol, even if tensions have eased a little in the last few days.


Investors will also be watching for any indication about potential new leadership at the US central bank.


Jim Reid at Deutsche Bank said: “The main focus for investors will be the speculation about who might be the next Fed Chair, particularly in light of the news out last week that both incumbent Fed Chair [Jerome] Powell and Governor Brainard had been interviewed for the position.


“Powell’s current four-year term comes to an end in February, and whoever’s nominated would require senate confirmation for another term. At this point 4, 8 and 12 years ago, the announcement of who’d be nominated had already been made, but we still don’t have a date for when we might get the news. However, it may not be too far away, with President Biden saying in Glasgow on November 2 that it would be “fairly quickly”.


Back with the FTSE 100 and Royal Dutch Shell PLC (A shares) (LSE:RDSA) is up 0.82% as the oil giant makes plans to simplify its complicated share structure.


AstraZeneca PLC (LSE:AZN), which fell sharply on Friday following its results, has recovered 1.19%.


6.50am: Quiet open expected as traders take stock


The FTSE 100 looks set for a quiet start to the trading week, mirroring Asia’s main markets.


There were two rare pieces of upbeat economic news from China earlier – industrial output and retails sales beat market expectations. However, this was counterbalanced by a fall in new home prices.


After a record week for the US, French and German markets, it appears Monday will be used by traders to take stock.


And of course, the threat of rising prices – and the knock-on impact on monetary policy – will continue to be a hot topic for debate this week, as it has been for months now.


“As we look towards another week the inflation genie has so far been the dog that hasn’t barked, however, the volume over the apparent lack of urgency to rising inflation risks from central banks has been getting louder in the past few weeks,” said Michael Hewson of CMC Markets.


“While those who are saying that central banks can’t do much about supply chain disruptions and shortages of products, and as such should look through the sharp rises in prices, are undoubtedly correct in some part, that view entirely misses the very real point that monetary policy could well be exacerbating some of this upward pressure in prices.


“As such, there is scope for central banks to move monetary policy off their current emergency settings without it causing too much disruption.


“For the moment, the two sides of the argument appear to be split between benign neglect, and a sharp tightening of policy to head off inflation risk when it comes to policy settings. There is a middle ground and central bankers need to get off their collective backsides and take it.”


Looking ahead, it is expected to be a busy week for blue-chip news with updates from Royal Mail, Vodafone, British Land, Imperial Brands and SSE expected.


On the market


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6.50am: Early Markets – Asia / Australia


Asia-Pacific shares were mostly higher on Monday as retail sales in China gained 4.9% year-on-year in October, higher than the 3.5% lift predicted in a Reuters poll.


The country’s industrial output for the month also rose 3.5% as compared with a year ago, above expectations for a 3% increase.


China’s Shanghai Composite slipped 0.18% despite the positive news while Hong Kong’s Hang Seng index rose 0.04%


In Japan, the Nikkei 225 gained 0.55% and South Korea’s Kospi surged 1.07%.


Australia’s S&P/ASX200 lifted 0.36% to 7,470.1 points, with energy stocks the only sector finishing significantly lower.


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