ADVFN Morning London Market Report: Thursday 31 October 2019

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London open: Stocks slip as Shell, Lloyds results disappoint

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It was shaping up to be a downbeat Halloween session on Thursday, with London stocks in the red following disappointing results from the likes of Shell and Lloyds, as investors mulled the latest policy announcement from the Federal Reserve.

At 0850 GMT, the FTSE 100 was down 0.2% at 7,316.85 as sterling rose 0.3% against the dollar and the euro to 1.2943 and 1.1599, respectively. A stronger pound tends to dent the top-flight index as around 70% of its constituents derive most of their earnings from overseas.

Overnight, the Federal Reserve cut interest rates by 25 basis points, as widely expected, and signalled that it would likely be on hold for a while going forward.

Spreadex analyst Connor Campbell said: “The Fed chair even went as far to say that monetary policy is now in a ‘good place’ after his trio of historic cuts, downplaying the likelihood of any further move lower while also stating the US would need a ‘really significant’ rise in inflation before a hike was considered.”

Market participants were digesting the latest data releases out of China. The final readings of Chinese manufacturing and non-manufacturing PMIs came in at 49.3 and 52.8 respectively, for October, falling short of economists’ expectations of 49.8 and 53.7.

In corporate news, Royal Dutch Shell was the worst performer on the FTSE 100 after it reported a 15% decline in third-quarter earnings, due in part to lower energy prices.

Lloyds Banking Group was also on the back foot as it said third-quarter profits slumped due to a £1.8bn hit from payment protection insurance claims. This was at the top end of the £1.6bn to £1.8bn guidance it gave in September.

Crest Nicholson shares tumbled after it warned on full-year profits, highlighting a “volatile” sales environment in some of its regional businesses in the second half, driven mainly by Brexit-related uncertainty and the economic outlook in the UK. FTSE 100 housebuilding peers Berkeley Group, Taylor Wimpey, Persimmon and Barratt Developments were also weaker.

Go-Ahead, Ashmore, Dunelm and Morgan Advanced Materials all lost ground as their stock went ex-dividend.

On the upside, BT Group ticked higher after saying that profits were flat in the first half, while revenues declined.

British Airways and Iberia parent International Airlines Group managed to eek out tiny gains as its third-quarter operating profit came in as expected at €1.4bn, having been dented by pilot strikes.

 

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