FTSE 100 slips back, but Wall Street higher as retail sales and industrial production beat forecasts

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  • FTSE 100 down 25 points
  • Vodafone on the rise
  • AstraZeneca leads fallers

5:05pm: FTSE 100 ends lower, US stocks up midday

The FTSE 100 finished the day on a down note, falling 25 points, or 0.3%, to 7,327, as data showed employers in Britain hired 160,000 additional workers in October, increasing the odds of a December interest rate increase.

“While the MPC will likely continue to preach the transitory nature of current price rises, tomorrow’s release will make an uncomfortable reading,” Equiti Capital economist Stuart Cole said.

“Taken in conjunction with today’s strong employment data, a release in line with expectations tomorrow will see market sentiment firm towards a rate rise in December,” Cole added.

Notable movers included Vodafone, which gained more than 3% after the company raised its forecast for this year’s free cash flow and reported 6.5% growth in adjusted core earnings in the first half.

3.50pm: UK market in negative territory

Leading shares have lost any spark they might have had earlier, as investors weigh up the prospects of a UK interest rate rise following the better than expected employment figures.

The FTSE 100, which had climbed to 7368, is now down 26.06 points or 0.35% at 7325.80.

The pound has strengthened against the dollar on the suggestion of higher rates, which has left the overseas earners in the leading index flagging.

AstraZeneca PLC (LSE:AZN) is down 4.44% – perhaps partly due to Pfizer saying it would let generic drug makers produce cheap versions of its new COVID-19 pill for lower income nations – and GlaxoSmithKline PLC (LSE:GSK) has lost 1.81%.

Cyber security group Darktrace PLC (LSE:DARK) has continued its recent volatile form, falling 4.31%.

But Vodafone Group PLC (LSE:VOD) is the day’s biggest riser, up 5.24% after its results.

It is closed followed by Land Securities Group PLC (LSE:LAND). which has added 4.51% following its latest update.

Wall Street seems in a more positive frame of mind, with the Dow Jones Industrial Average up 99 points or 0.28%.

The S&P 500 has added 0.2% and the Nasdaq Composite has climbed 0.18%.

And in Europe Germany’s Dax and France’s Cac have both hit new highs.

3.22pm: US industrial production rebounds

More positive US economic news.

US industrial production rose 1.6% in October, higher than the 0.9% increased expected by economists.

That marks a return to growth after a 1.3%fall in September, mainly due to the effects of Hurricane Ida.

Manufacturing output rose by 1.2% as car production – which had been hit by supply problems including a lack of semiconductors – recovered.

2.56pm: US markets move higher

The better than expected US retail sales have given a lift to Wall Street.

The Dow Jones Industrial Average is up 160.63 points or 0.45% at 36,248.08 while the more broadly based S&P 500 has risen 0.32% and the tech-heavy Nasdaq Composite has climbed 0.2%.

There were mixed fortunes for two big retailers following their figures.

Home Depot Inc (NYSE:HD) is up 4.05% as it beat forecasts with third quarter sales up 9.8%, helped by a strong housing market.

But Walmart Inc (NYSE:WMT) fell 1.69% despite sales climbing 4.3% and the company raising its guidance for the third straight quarter.

Back in the UK leading shares have gone into reverse again, with the FTSE 100 down 19.09 points or 0.26% at 7332.77.

1.35pm: US shop sales beat forecasts

US retail sales have come in stronger than expected, giving more fuel to those anticipating an interest rate rise from the Federal Reserve.

They grew by 1.7% in October, compared to forecasts of a 1.3% to 1.5% rise.

The September figure of 0.7% was revised upwards to 0.8%.

12.09pm: Investors await US retail sales

US stocks look set for a cautious start on Tuesday as investors eye key data amid ongoing fears over the impact of higher inflation on the economy.

Futures for the Dow Jones Industrial Average edged up 0.1%, while those for the S&P 500 index and the technology-focused Nasdaq Composite were virtually flat.

Investors are preparing for the Federal Reserve to raise interest rates by next summer to check the growth of consumer price inflation, which is running at a three-decade high.

US retail sales are expected to rise by 1.3% in October, boosted in part by a rebound in auto sales, after a 0.7% increase in the previous month.

But Michael Hewson at CMC Markets said: “While this might chime with how well a lot of US retailers have been doing this past quarter, it is completely at odds with the direction of recent consumer confidence data, which has been weak.

“Given that, there is a decent chance we could see a big miss today.”

October industrial production numbers will also be in focus, having seen a decline in September amid supply-chain disruption.

In the bond market, yields on benchmark 10-year Treasury notes slipped again on Tuesday, but gold prices rose 0.1%, rallying to five-month highs in a sign of growing unease about the inflation outlook.

Meanwhile, cryptocurrencies retreated with Bitcoin losing 5% in value as US president Joe Biden signed the $550 billion infrastructure deal which includes some major tax implications for most retail crypto investors as it would require them to report their holdings.

Walid Koudmani XTB Market analyst commented: “While these factors may frighten some investors and newcomers to the market, some experienced traders will have seen similar sized corrections in the past and could potentially be eyeing opportunities as mainstream adoption of cryptocurrencies and NFT’s continues to move further.

“On the other hand, the extreme volatility that the market is prone to could lead to a potential domino effect if more negative news were to emerge and take prices to new lows.”

Back in the UK and the leading index is close to its high for the day, although that is not saying much.

The FTSE 100 is up 14.04 points or 0.19% at 7365.9.

11.54am: Gas prices jump after Nord Stream move

Wholesale gas prices have jumped after German regulators temporarily suspended the registration process for Russia’s Nord Stream 2 pipeline.

Gas for December delivery to the UK climbed by 9% as the regulator said the consortium behind the project should be registered in Germany to get the go-ahead, not Switzerland as it is now.

The move raised new concerns about a shortage of supply, given Russia has been accused of holding back gas unless Europe approved the pipeline.

11.08am: Brent rise lifts oil shares

Leading shares have edged into positive territory, just about.

The FTSE 100 is now up 5.43 points at 7357.29, having earlier fallen to 7337.

Positive updates from Vodafone, Land Securities and Diageo are helping.

And a 0.52% rise in Brent crude to US$82.48 a barrel has lifted oil shares.

BP PLC (LSE:BP.) is 2.36% better and Royal Dutch Shell PLC (LSE:RDSB) has risen 1.75%.

10.00am: Leading shares in holding pattern

The pound continues to rise in the wake of the latest jobs data, as investors bet on a UK rate rise next month.

Sterling is now up 0.409% at US$1.3463.

In turn that is helping surpress the FTSE 100, especially the overseas earners whose businesses are impacted by a stronger UK currency.

So the blue chip index is down 11.62 points or 0.16% at 7340.24.

AJ Bell investment director Russ Mould said: “The FTSE 100 continues to be stuck in a bit of a holding pattern.

“Holding the index back a bit was strength in the pound, hitting the relative value of its dominant overseas earnings, as stronger than expected unemployment figures suggested Bank of England Governor and ‘unreliable boyfriend’ Andrew Bailey might deliver the promised rate rise in December.”

Cyber security firm Darktrace PLC (LSE:DARK), a volatile market of late, is on the slide again, down 2.81% at 552.5p.

Imperial Brands PLC (LSE:IMB) is 1.28% lower after the tobacco group’s full year figures came in a little better than expected but revealed it was still losing market share.

But Land Securities Group PLC (LSE:LAND) was lifted 2.53%.

The property giant whose shopping centres include Bluewater moved back into profit in the first half, making GBP275mln compared to a loss of GBP835mln a year ago.

The update helped lift rival British Land Company PLC (LSE:BLND) by 2.32%.

And Diageo PLC (LSE:DGE) is up 2.36% after upbeat comments from the drinks group at a capital markets day for investors.

AJ Bell’s Russ Mould said: “Often considered to be a pedestrian company with slow but steady revenue gains each year, Diageo has now announced bold ambitions for a 50% increase in its share of the alcoholic drinks market by 2030.

“Key to achieving this goal is to invest more money in marketing, digital capabilities and staff. Diageo already has a strong reputation for being a dab hand at clever marketing when it comes to Guinness so perhaps it has similar plans to make its other products front of mind for consumers.”

9.10am: Utility shares slide

Leading shares have lost their early gloss, minimal although that was.

The FTSE 100 is now down 14.12 points or 0.19% at 7337.74 as investor caution returns and the rise in the pound dents the overseas earners in the index.

Utility companies are among the fallers, with Severn Trent (LSE:SVT) down 2.45% and United Utilities Group PLC (LSE:UU.) slipping 1.31%.

But Vodafone Group PLC (LSE:VOD) continues to climb and is now the leading riser in the blue chip index, up 5.16%.

Nicholas Hyett, equity analyst at Hargreaves Lansdown, said: “With pandemic restrictions in retreat, Vodafone is starting to show signs of business returning to normal. Handset sales are up as consumers look to update their phones before venturing back into the world, while lucrative roaming fees are back as international travel resumes. While there a whole host of adjustments related to ongoing restructuring muddying the picture, the underlying trend seems to be one of gathering momentum.

8.23am: Rate talk lifts sterling

The pound has climbed in the wake of the unemployment figures.

Sterling is up 0.31% at US$1.345, with the latest jobs data adding to the belief that the Bank of England might bite the bullet and raise interest rates in December after failing to do so this month.

As well as the fall in the headline jobs figure, average earnings figures also declined but still remain high.

Excluding bonuses they grew by 4.9% over the year to July to September, down from 6% previously.

Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said: “The governor of the Bank of England Andrew Bailey says he’s uneasy about rising inflation and the jobs figures are another indicator that there could be a fresh sugar rush of higher wages. Already starting salaries this Autumn are at their highest rate in 24 years but Mr Bailey still appears steadfast in this view that sweeteners for staff will be temporary and that we won’t be returning to the wage spiral of the 1970s.

“But the layers are building up for a sustained increase in prices in the medium term. The supply chain crisis has already spread across the globe, pushing up costs for companies and shows little sign of easing just yet. The pandemic bounce back has buttered up demand for goods, and now potential has grown for higher wages to congeal. The official Labour Force Survey won’t be released until the 16th of December but if the jam sandwich of sticky prices shows little sign of easing, it looks increasingly likely the Bank will raise rates at its meeting two days later.”

Michael Hewson, chief market analyst at CMC Markets UK, said: “If Bank of England governor Andrew Bailey was serious when he said he was looking at UK labour market data for clues as to whether to raise rates, then today’s unemployment data is giving him fewer excuses not to act with a modest rate increase next month.”

Meanwhile the FTSE 100 is barely changed in early trading. The leading index is up just 3.72 points at 7355.58 after its marginal gain on Monday.

But Vodafone Group PLC (LSE:VOD) has climbed 3.89% to 116.87p after it lifted its full year forecasts after a positive first half.

7.53am: UK unemployment rate falls

The UK unemployment rate has come in better than expected for the three months to September.

It fell from 4.5% in the three months to August to 4.3%, compared to a forecast drop to 4.4%

The single month figure for September fell to 3.9%, lower than at the start of the pandemic.

Simon French, chief economist at Panmure Gordon, said he now expects a 15 basis point rise in UK interest rates in December, having previously thought the Bank of England would wait until February.

Record numbers of people started new jobs between July and September this year, as COVID-19 restrictions fully eased and furlough started to unwind, said the Institute for Employment Studies.

Overall 2.2 million people started a new job between July and September but the number of vacancies continued to rise (now reaching 1.2 million) and the number of unemployed people per vacancy has fallen even further, to just 1.3 people.

IES director Tony Wilson said: “We’ve never seen jobs being filled at a faster rate than now.. Yet despite this we’re seeing labour shortages across all parts of the economy and a tighter jobs market than at any time in at least fifty years. All told, we’ve nearly a million workers now missing from the labour market, and their absence is now holding back our recovery and adding to inflation.”

6.50am: Leading shares set for cautious start

The FTSE 100 is expected to struggle to break higher on Tuesday after a disappointing finish on Wall Street overnight.

London’s top stock index is seen rising 0.1% after starting the week with a 4 point rise to 7,351.86, which saw it underperformed the rest of Europe.

US markets opened in positive territory but soon slid lower as US bond yields and the US dollar climbed

“As we look towards today’s European open, we can expect to see a fairly flat open after a similarly subdued Asia session thus far, with most attention on virtual talks which are currently taking place between US President Joe Biden and Chinese President Xi Jinping,” said market analyst Michael Hewson at CMC Markets.

Today’s main macroeconomic data focus is on UK unemployment and US retail sales for October.

The UK unemployment rate has already come down from 5% at the start of this year to 4.5% in August and looks set to fall further to 4.4% later today, while the claimant count rate has fallen from 7.2% in January to 5.2% in September.

Among the company news, results are due from two big disappointments of the Footsie, Vodafone and Imperial Brands, with their shares down 45% and 54% over the past five years.

6.50am: Early Markets – Asia / Australia

Stocks in the Asia-Pacific region were mixed on Tuesday as investors watched for developments from a virtual meeting between U.S. President Joe Biden and Chinese President Xi Jinping.

China’s Shanghai Composite fell 0.30% while Hong Kong’s Hang Seng index surged 1.20%

In Japan, the Nikkei 225 gained 0.11% but South Korea’s Kospi dipped 0.08%.

Australia’s S&P/ASX200 fell 0.67% to 7,420.40 as Reserve Bank of Australia Governor Philip Lowe said that the latest data and forecasts don’t call for an increase in the cash rate in 2022.



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