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London open: Stocks fall as investors eye Truss speech, OPEC meeting
London stocks fell in early trade on Wednesday following strong gains in the previous session, as investors eyed prime minister Liz Truss’s keynote speech at the Tory conference and an OPEC+ meeting on supply.
At 0830 BST, the FTSE 100 was down 0.5% at 7,053.89, while sterling was 0.4% weaker versus the dollar at 1.1427.
Oanda market analyst Craig Erlam said: “Stock markets are paring gains after a phenomenal rebound on Monday and Tuesday as two weeks of losses were wiped out in just two sessions.
“It’s been a very impressive relief rally, albeit one aided by a rose-tinted interpretation of certain economic indicators and a terrible plunge in the weeks before. This isn’t the time to get carried away but it is understandable that we’re seeing some relief. It all hangs on whether the data is the start of a weakening trend or just a blip, as with the July inflation drop.”
Investors were also eyeing an OPEC+ meeting on supply following speculation of a large output cut in response to a dimming economic outlook and lower prices.
Erlam said: “Last month’s warning shot of 100,000 barrels per day fell on deaf ears and the alliance may now be prepared to cut by 10 times that, even 20 if some sources are to be believed.
“Adding to the uncertainty is the prospect of a group cut backed up by additional unilateral reductions, which could significantly reduce supply and push prices back towards triple figures. With consumers only just breathing a sigh of relief after being forced to pay record prices at the pump, today’s cut is not going to go down well.”
On home shores, Truss was due to make her keynote speech at the Tory conference in Birmingham between around 10am and midday. She is expected to tell party members that there will be disruption but that her economic plan will “build a better future”.
In equity markets, retailer Tesco edged up despite saying it expects current year profits to be at the lower end of guidance as “significant uncertainties” persisted during the cost-of-living crisis.
The company said it expects full-year retail adjusted operating profit of between £2.4bn and £2.5bn as it said profits fell 65% to £413m in the six months to August 27.
Top 10 FTSE 100 Risers
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Hiscox Ltd | +0.92% | +8.20 | 900.20 |
| 2 |  |
Ferguson Plc | +0.59% | +58.00 | 9,958.00 |
| 3 |  |
Rentokil Initial Plc | +0.53% | +2.60 | 497.40 |
| 4 |  |
Experian Plc | +0.44% | +12.00 | 2,765.00 |
| 5 |  |
Direct Line Insurance Group Plc | +0.38% | +0.75 | 195.70 |
| 6 |  |
Spirax-sarco Engineering Plc | +0.32% | +35.00 | 10,865.00 |
| 7 |  |
Halma Plc | +0.28% | +6.00 | 2,170.00 |
| 8 |  |
Bae Systems Plc | +0.25% | +2.00 | 816.60 |
| 9 |  |
Micro Focus International Plc | +0.12% | +0.60 | 521.00 |
| 10 |  |
Relx Plc | +0.04% | +1.00 | 2,271.00 |
Top 10 FTSE 100 Fallers
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Ocado Group Plc | -4.73% | -24.00 | 483.00 |
| 2 |  |
Sainsbury (j) Plc | -3.57% | -6.45 | 174.15 |
| 3 |  |
Antofagasta Plc | -3.46% | -39.50 | 1,103.50 |
| 4 |  |
Itv Plc | -3.44% | -2.12 | 59.54 |
| 5 |  |
British Land Company Plc | -3.39% | -12.00 | 342.50 |
| 6 |  |
Severn Trent Plc | -3.24% | -79.00 | 2,362.00 |
| 7 |  |
Easyjet Plc | -3.22% | -9.70 | 291.60 |
| 8 |  |
Land Securities Group Plc | -3.21% | -17.00 | 513.00 |
| 9 |  |
Barclays Plc | -3.13% | -4.72 | 146.02 |
| 10 |  |
Segro Plc | -3.08% | -23.20 | 730.80 |
US close: Major indices extend early Q4 relief rally
Wall Street stocks closed higher on Tuesday, extending solid gains recorded in the first session of Q4.
At the close, the Dow Jones Industrial Average was up 2.80% at 30,316.32, while the S&P 500 was 3.06% firmer at 3,790.93 and the Nasdaq Composite saw out the session 3.34% stronger at 11,176.41.
The Dow closed 825.43 points higher on Tuesday, with the blue-chip index continuing to do its best to reclaim some of Q3’s heavy losses yet again.
Optimism over the state of foreign markets has driven the Street’s relief rally thus far, with the US dollar continuing to surge, however broader market trends will likely be directed by decisions from the Federal Reserve as the central bank looks to continue to battle inflation.
The yield on the benchmark ten-year Treasury note fell to roughly 3.618% at the end of trading, down from over 4% at one point during the previous week, while its two-year counterpart was also lower at 4.076%.
On the macro front, factory orders were virtually unchanged in August, dropping less than $100.0m to $548.4bn, according to the Census Bureau.
Elsewhere, the Bureau of Labor Statistics revealed that the number of job openings in the US decreased by 10.1m in August, down from a downwardly revised print of 11.2m in July and short of expectations for a reading of 10.77m.
No major corporate earnings were slated for release on Tuesday.
Wednesday newspaper round-up: Energy price cap, Twitter, GB Group
Liz Truss’s intervention to freeze energy prices for households for two years is expected to cost the government £89bn, according to the first major costing of the policy by the sector’s leading consultancy. The analysis from Cornwall Insight, seen exclusively by the Guardian, shows the prime minister’s plan to tackle the cost of living crisis could cost as much as £140bn in a worst-case scenario. – Guardian
Elon Musk has offered to complete his proposed $44bn (£38bn) acquisition of Twitter in a dramatic U-turn on his decision to walk away from the deal. Lawyers for Musk confirmed in a court filing on Tuesday that the world’s richest man is prepared to push ahead with the transaction on the agreed terms following months of legal drama. – Guardian
Crispin Odey has made returns of almost 200pc so far this year as market turmoil and a slump in the pound boosted gains at his hedge fund. The Tory donor, who was a vocal backer of the Brexit campaign, last week declared that government bonds were “the gift that keeps on giving” after prices plunged. He has previously bet that the pound would slide against the dollar, while also shorting gilts. – Telegraph
The Bank of England chose not to buy any bonds yesterday under its emergency two-week operation to calm gilt markets, turning down offers from traders looking to sell £2.2 billion of debt. Having bought only £22 million of UK government bonds on Monday, the latest lack of intervention suggests that the Bank has so far succeeded in halting a dramatic sell-off without having to spend anywhere near what it had originally set aside. – The Times
Shares in GB Group dropped to a one-month low after the American private equity group GTCR said it would not proceed with a potential takeover bid. The company, one of the world’s biggest providers of fraud prevention software, confirmed that talks with Chicago-based GTCR had ended because an agreement “could not be reached on terms”. – The Times
