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London open: Stocks nudge lower amid China worries, after Moody’s US warning
London stocks were a touch weaker in early trade on Tuesday as worries about the Chinese economy and elevated interest rates, and a warning from Moody’s over the US credit rating weighed on sentiment.
At 0840 BST, the FTSE 100 was down 0.1% at 7,616.28, but off opening lows.
Moody’s cautioned overnight that a US government shutdown could threaten the country’s triple-A credit rating. The agency said that while a shutdown wouldn’t affect debt service payments, “it would underscore the weakness of US institutional and governance strength relative to other Aaa-rated sovereigns that we have highlighted in recent years”.
China’s economic woes were also in focus after Evergrande shares plunged for the second day in a row, as the real estate groups’ mainland unit missed a debt payment.
The prospect of lingering high interest rates was also causing nervousness among investors.
Susannah Streeter head of money and markets at Hargreaves Lansdown, said: “With little data expected to blow away worries about the impact on high interest rates, concerns are set to linger, holding back gains for stocks.
“Nervousness is setting in about restrictive monetary policy in major economies, particularly the US, reducing appetite for goods and services, as consumers and companies keep their belts tightened.”
In equity markets, luxury fashion brand Burberry, which is particularly exposed to China, was the biggest loser on the FTSE 100.
Close Brothers slid after the merchant bank said profit halved in the second half of the year due to provisions related to Novitas.
Smiths Group nudged lower even as the engineer reported a 20% rise in annual operating profit, driven by volume growth and higher prices, which offset the impact of inflation.
PZ Cussons was a touch lower as the Imperial Leather maker held annual guidance despite a fall in full-year profits as cost inflation and issues at its Nigerian operation continued to weigh.
On the upside, Barclays rallied after an upgrade to ‘overweight’ by Morgan Stanley.
Outside the FTSE 350, fast fashion giant Asos was trading down as it revealed that operating profits for the full year will come in at the bottom end of expectations and free cash flow will be significantly lower than guidance.
Top 10 FTSE 100 Risers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Barclays Plc | +3.22% | +4.94 | 158.58 |
| 2 |  |
Ocado Group Plc | +2.22% | +14.60 | 671.60 |
| 3 |  |
Imperial Brands Plc | +2.07% | +34.00 | 1,673.50 |
| 4 |  |
Crh Plc | +1.69% | +77.00 | 4,640.00 |
| 5 |  |
British Land Company Plc | +1.68% | +5.30 | 321.40 |
| 6 |  |
Aviva Plc | +1.42% | +5.60 | 399.70 |
| 7 |  |
British American Tobacco Plc | +1.33% | +35.00 | 2,657.00 |
| 8 |  |
International Consolidated Airlines Group S.a. | +1.22% | +1.80 | 149.05 |
| 9 |  |
St. James’s Place Plc | +1.19% | +9.80 | 830.20 |
| 10 |  |
3i Group Plc | +1.13% | +23.00 | 2,055.00 |
Top 10 FTSE 100 Fallers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Tui Ag | -3.93% | -17.80 | 434.60 |
| 2 |  |
Sainsbury (j) Plc | -1.63% | -4.40 | 265.00 |
| 3 |  |
Johnson Matthey Plc | -1.58% | -26.00 | 1,620.50 |
| 4 |  |
Halma Plc | -1.34% | -26.00 | 1,919.00 |
| 5 |  |
Berkeley Group Holdings (the) Plc | -1.33% | -56.00 | 4,154.00 |
| 6 |  |
Burberry Group Plc | -1.23% | -23.50 | 1,891.00 |
| 7 |  |
Fresnillo Plc | -1.01% | -5.80 | 566.20 |
| 8 |  |
Whitbread Plc | -1.01% | -36.00 | 3,540.00 |
| 9 |  |
Spirax-sarco Engineering Plc | -0.93% | -88.00 | 9,386.00 |
| 10 |  |
Informa Plc | -0.72% | -5.40 | 745.60 |
US close: Stocks manage small gains as Writers Guild strikes deal
Wall Street showed signs of recovery on Monday after four consecutive losing sessions, with all three major stock indices clinching some gains.
However, the market was still overshadowed by concerns about rising bond yields and the Federal Reserve’s decision to maintain high interest rates.
By the close, the Dow Jones Industrial Average had managed a modest rise of 0.13%, ending the day at 34,006.88.
That was echoed by the S&P 500, which climbed by 0.4% to settle at 4,337.44, and the Nasdaq Composite, which saw a slightly higher jump of 0.45%, closing at 13,271.32.
In currency markets, the dollar was last 0.22% stronger on sterling, trading at 81.88p, while it managed a more significant rise of 0.58% against the euro to 94.41 euro cents.
The greenback also managed an increment of 0.33% against the yen, changing hands at JPY 148.86.
“The new week has picked up where the last one left off … as the Fed’s ‘higher for longer’ rhetoric continues to prompt a flight from risk,” said IG chief market analyst Chris Beauchamp.
“September’s reputation as one of the worst months for stocks will have been bolstered by the last four weeks of trading.
“A fresh climb in yields only adds to the stock market’s woes, as investors come to realise that when Powell says ‘higher for longer’, he really means it.”
Markets look ahead to inflation reading, agreement reached in writer’s strike
In a quiet day for economic news, the spotlight was on the Chicago Fed National Activity Index for August.
The monthly indicator, which evaluates the pulse of economic activity and related inflationary tendencies, reported a dip to -0.16 in August, marking a decrease from the revised figure of +0.07 in July.
As the week progresses, market analysts and investors will shift their attention to impending data on personal consumption expenditures and income, which will be unveiled on Friday.
Elsewhere, a breakthrough in the entertainment industry was announced over the weekend, as union leaders and Hollywood studios tentatively agreed to end the historically-long screenwriters strike, which has spanned almost half a year.
In an official statement, the Writers Guild of America divulged that after five intense days of discussions, both parties reached a provisional three-year contract agreement.
However, the strike would only formally end once the guild’s board and its members nod to the agreement.
The specific details of the contract remained undisclosed.
Equities shift amid Writers Guild news and company controversies
In equities, a positive day was had by Netflix, Amazon, Paramount Global, and AMC Entertainment Holdings.
The gains were attributed to the recent news that the Writers Guild of America reached a tentative agreement with studios to end the prolonged strike.
Netflix experienced an uptick of 1.31%, while Amazon reported an even more significant increase of 1.67%.
Paramount Global also saw a positive change, albeit modest, at 0.16%, while AMC emerged as one of the biggest gainers of the day, soaring by 6.82%.
Aside from the Writers Guild development, Amazon caught attention as it announced an investment in Anthropic.
The tech giant revealed plans to inject up to $4bn into the artificial intelligence (AI) startup, established in 2021, known for creating the ‘Claude AI’ assistant.
However, not all media companies reaped benefits from the writers’ strike resolution, with the Walt Disney Company and Warner Bros Discovery facing declines by the end of trading, dipping by 0.3% and a steeper 3.96%, respectively.
Tyson Foods saw its shares fall 0.98% outside the media realm in response to emerging reports that supply chain contractors affiliated with the company employed migrant children, some as young as 13, in its meat-processing facilities.
Tuesday newspaper round-up: Workplace absences, Nissan, London offices
Stress was one of the biggest contributors to a rise in workplace absences over the past year, according to research that found the number of workers taking sick leave has hit a 10-year high The Chartered Institute of Personnel & Development (CIPD) analysed sickness absence and employee health among 918 organisations representing 6.5 million employees, with 76% of respondents reporting they had taken time off due to stress in the past year. – Guardian
Nissan has vowed to go all-electric in the UK and Europe by 2030 as the car giant’s chief executive said “the world needs to move on” from petrol vehicles. Its commitment to the 2030 deadline comes despite Prime Minister Rishi Sunak last week pushing back a ban on the sale of petrol and diesel cars to 2035. Makoto Uchida reiterated Nissan’s EV timeframe at an announcement in London on Monday, where he unveiled the Japanese manufacturer’s latest battery-powered car design. – Telegraph
The American billionaire Ken Griffin is in talks to help fund a transatlantic takeover bid for The Telegraph led by his fellow hedge fund manager Sir Paul Marshall. Sir Paul, co-founder of the hedge fund Marshall Wace and a joint-owner of GB News, has lined up financial firepower from Mr Griffin ahead of an auction expected to begin within weeks. The discussions are said not to have been finalised and may not lead to a partnership, however. – Telegraph
Offices in London have lost almost a fifth of their value over the past year, much more than blocks in most other European countries. On average, London office values have dropped 17.1 per cent since summer 2022, having fallen in each of the past five quarters, data from BNP Paribas shows. – The Times
The health of Germany’s economy “remains bleak” amid an entrenched downturn in the country’s industrial sector, experts warned after a survey of business activity fell for the fifth month in a row. The German Ifo Institute’s business climate index fell to 85.7 this month, from a revised 85.8 reading in August, as sentiment in Germany’s construction sector slid to its lowest level since 2009. – The Times
