Hot Features
Premium
Trade like a pro: Leverage real-time discussions and market-moving ideas to outperform.
London open: Stocks in the red ahead of US inflation data
London stocks fell in early trade on Thursday as investors mulled the latest minutes from the US Federal Reserve and looked ahead to key inflation data from across the pond.
At 0830 BST, the FTSE 100 was down 0.5% at 6,793.43, while sterling was 0.3% lower versus the dollar at 1.1071.
Susannah Streeter, senior investment and market analyst at Hargreaves Lansdown, said: “The realisation that the Federal Reserve is in it for the long haul when it comes to setting and maintaining higher interest rate has sent a fresh wave of worry through financial markets. After a volatile day trading stocks in Wall Street ended lower for the sixth session in a row, sparking falls for equities in Asia and setting up the FTSE 100 for a lower open.
“Closely watched minutes from the Federal Open Market Committee showed once again that inflation is seen as the biggest economic threat, and policymakers believe that moves higher now could prevent a further escalation and even more financial pain in the future. So rates are set to rise further, but there were hints the pace could slow a little, given the rising risk of significant adverse effects on the economy.”
Streeter said that the Fed, like many other central banks, is finding that inflation is an ever-tougher opponent to beat down.
“Producer prices, the cost of producing goods and services, jumped again in September by 0.4%, more sharply than expected and this will feed through to what consumers will have to pay,” she said. “US consumer price snapshot will be out later, which will be closely watched by investors, but it’s the direction of travel for rates is clear, for now the only way is up.”
The US consumer price index for September is due out at 1330 BST.
On home shores, the latest residential market survey from the Royal Institution of Chartered Surveyors showed that house prices rose in September at their slowest pace since early in the coronavirus pandemic and are set to fall further.
The net balance of surveyors reporting that house prices have risen over the last three months fell to +32 in September from +51 in August, coming in below consensus expectations for a reading of +45.
The survey also signalled that homeowners will struggle to make mortgage repayments and repossessions will rise next year amid surging interest rates and falling house prices.
RICS chief economist Simon Rubinsohn said: “For now mortgage arrears and possessions remain at historic lows but they are inevitably going to move upwards over the next year, as pressure on homeowners grows.”
In equity markets, Taylor Wimpey, Tesco and Close Brothers were all lower as they traded without entitlement to the dividend.
Housebuilders more generally were under the cosh, with Barratt and Persimmon also down after the RICS survey and amid concerns about interest rates.
Recruiter Hays was weaker as it hailed a record first quarter but warned that macroeconomic uncertainty had led to a slowdown in some markets.
Paper and packaging group Mondi was the top performer on the FTSE 100 after an upgrade to ‘overweight’ at Morgan Stanley.
Low-cost airline easyJet flew higher after saying it expects to report annual pre-tax losses of £170m to £190m, as it flew 88% of pre-Covid capacity in the fourth quarter.
Ladbrokes owner Entain traded higher as it posted an uptick in third-quarter net gaming revenue and said online gaming revenue for the fourth quarter was expected to rise, thanks in part to the World Cup.
Top 10 FTSE 100 Risers
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Carnival Plc | +3.92% | +21.20 | 561.60 |
| 2 |  |
Lloyds Banking Group Plc | +3.22% | +1.26 | 40.35 |
| 3 |  |
Flutter Entertainment Plc | +2.79% | +280.00 | 10,310.00 |
| 4 |  |
Rolls-royce Holdings Plc | +2.75% | +1.82 | 68.06 |
| 5 |  |
Melrose Industries Plc | +2.53% | +2.42 | 97.96 |
| 6 |  |
Antofagasta Plc | +2.23% | +24.00 | 1,098.50 |
| 7 |  |
Itv Plc | +2.22% | +1.32 | 60.88 |
| 8 |  |
Informa Plc | +2.17% | +11.60 | 546.80 |
| 9 |  |
Barratt Developments Plc | +2.12% | +6.90 | 332.30 |
| 10 |  |
Bp Plc | +2.09% | +9.40 | 458.75 |
Top 10 FTSE 100 Fallers
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Taylor Wimpey Plc | -3.24% | -2.80 | 83.60 |
| 2 |  |
Spirax-sarco Engineering Plc | -2.16% | -225.00 | 10,185.00 |
| 3 |  |
Halma Plc | -2.12% | -44.00 | 2,036.00 |
| 4 |  |
Intertek Group Plc | -1.76% | -64.00 | 3,572.00 |
| 5 |  |
Wpp Plc | -1.63% | -12.00 | 726.00 |
| 6 |  |
Burberry Group Plc | -1.44% | -27.00 | 1,844.00 |
| 7 |  |
Croda International Plc | -1.41% | -92.00 | 6,450.00 |
| 8 |  |
Easyjet Plc | -1.23% | -3.50 | 281.60 |
| 9 |  |
Unilever Plc | -1.18% | -46.50 | 3,886.50 |
| 10 |  |
Severn Trent Plc | -1.17% | -26.00 | 2,187.00 |
US close: Stocks deliver mixed performance ahead of Q3 earnings
Wall Street stocks put on a mixed showing on Tuesday as market participants continued to brace for the rapidly approaching Q3 earnings season.
At the close, the Dow Jones Industrial Average was up 0.12% at 29,239.19, while the S&P 500 was 0.65% weaker at 3,588.84 and the Nasdaq Composite saw out the session 1.10% softer at 10,426.19.
The Dow closed 36.31 points lower on Tuesday, extending losses recorded in the previous.
Market participants digested comments from JPMorgan’s Jamie Dimon throughout the session, after the bank’s chief executive warned that the US looked set to fall into a recession at some point over the next “six to nine months” and cautioned that the S&P 500 may fall as much as another 20%.
Also in focus, the yield on the 30-year US Treasury note climbed to 3.927% on Tuesday, after hitting its highest level in nine years, while the benchmark 10-year note yielded 3.945% and the two-year yield inched higher to 4.295%.
Escalating tensions in Ukraine, rising Covid cases in China, and mounting tensions between Washington and Shanghai also dampened sentiment prior to the opening bell.
On the macro front, the National Federation of Independent Businesses‘ business optimism index rose to a four-month high of 92.1 in September, up from 91.8 in August. However, the NFIB said fewer business owners expect to experience better business conditions over the next six months.
Still to come, consumer inflation expectations fell for a third consecutive month in September, according to the Federal Reserve Bank of New York, dropping from 5.7% in August to 5.4% in September. Consumers now expect prices to rise 0.5% for gas, 6.9% for food, 9.0% for college education and 9.7% for rent.
Thursday newspaper round-up: Housing market, Greensill Capital, housebuilders
Homeowners will struggle to make mortgage repayments and repossessions will rise next year as soaring interest rates and falling prices mark the end of the UK’s 13-year housing market boom, according to a sobering report from the Royal Institution of Chartered Surveyors (RICS). The number of inquiries from potential homebuyers fell for a fifth month in a row in September, while sales fell to the lowest level since May 2020 when the housing market all but ground to a halt during the early stages of the coronavirus pandemic, it said. – Guardian
If the government raises benefits in line with earnings rather than inflation next year, it would drastically cut the incomes of poorer working-age families, while saving less than a tenth of the cost of recent tax cuts, a leading economic thinktank has calculated. Such a change, which would mean a significant real-terms cut given that wages are rising at 5.5% with inflation close to 10%, could see the effective income of some families reduced by up to £1,000 a year, the Resolution Foundation said. – Guardian
The International Monetary Fund (IMF) has told governments to embrace a new era of austerity to tackle stubbornly high inflation, in a move that could boost Liz Truss’s plan to cut benefits to balance the budget. The IMF said it was important that central banks and governments worked closely to ensure borrowing costs and debt levels remained under control. – Telegraph
Administrators of the UK arms of Greensill Capital have recorded nearly £34 million in fees and expenses, new filings reveal, making it one of the priciest insolvency jobs of recent years. Insolvency practitioners from Grant Thornton said that they had incurred £4.4 million of time costs between March and September on Greensill Capital UK, bringing cumulative time costs for the 18 months of the administration to about £23 million. – The Times
Close to £1 billion was knocked off the value of the biggest housebuilders yesterday amid the first signs that demand for homes is falling rapidly. Barratt Developments, which builds more houses in Britain than any other developer, warned that its sales have fallen sharply in recent weeks as mortgage rates have surged. – The Times
