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London open: Stocks rise; BoE said to delay quantitative tightening
London stocks rose in early trade on Tuesday, taking their cue from positive US and Asian sessions, with the mood still upbeat after new chancellor Jeremy Hunt tore up his predecessor’s mini-budget.
At 0835 BST, the FTSE 100 was up 0.8% at 6,974.81, while sterling was 0.2% lower versus the dollar at 1.1332, following a report that the Bank of England will delay quantitative tightening.
According to the Financial Times, the BoE will push back the sale of billions of pounds of government bonds until markets are calmer. The FT said bank officials had made the decision after assessing markets as being “very distressed”.
Victoria Scholar, head of investment at Interactive Investor, said: “The Bank of England could delay its shift to quantitative tightening following its intervention into the bond market to offset the negative market fallout from the mini budget. According to the Financial Times, the central bank is expected to delay unwinding its £838bn quantitative easing programme to beyond next month.
“Given the recent gilt market turmoil and the knock-on impact on pension funds, the Bank of England was forced to intervene with a temporary emergency long-dated bond buying intervention. Although that support has now been removed, the central bank’s mandate to ensure the orderly functioning of financial markets remains, suggesting it would be wise for the Bank of England to hold off at least for now from selling bonds, which could unnecessarily add to selling pressures in an already fragile market, given the financial contagion that a dysfunctional market sell-off would provoke.”
In equity markets, advertising giant WPP racked up solid gains as French peer Publicis lifted its 2022 guidance after a better-than-expected third-quarter performance.
Clay bricks manufacturer Ibstock rallied as it said third-quarter trading was ahead of its expectations, with “robust” demand patterns and a strong operational performance.
Price comparison website Moneysupermarket pushed higher after saying annual core earnings would be at the upper end of expectations as third-quarter trading came in ahead of expectations, driven by customers switching financial products.
On the downside, Rio Tinto slipped after the miner trimmed its full-year production guidance, as the weakening global economic outlook weighed on the third quarter.
Housebuilder Bellway was in the red as it reported a jump in full-year profit amid record revenues and completions, but warned that demand was moderating.
888 Holdings fell after it said group revenues declined 7% year-on-year to £449.0m in the three months ended 30 September, mainly due to enhanced UK online player safety measures and the shuttering of its Dutch operations.
Top 10 FTSE 100 Risers
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Smurfit Kappa Group Plc | +4.90% | +131.00 | 2,806.00 |
| 2 |  |
Wpp Plc | +3.74% | +28.20 | 782.00 |
| 3 |  |
Halma Plc | +3.01% | +61.00 | 2,089.00 |
| 4 |  |
Ashtead Group Plc | +2.97% | +127.00 | 4,396.00 |
| 5 |  |
Spirax-sarco Engineering Plc | +2.84% | +300.00 | 10,865.00 |
| 6 |  |
Prudential Plc | +2.74% | +24.20 | 908.20 |
| 7 |  |
Ferguson Plc | +2.55% | +238.00 | 9,574.00 |
| 8 |  |
United Utilities Group Plc | +2.51% | +22.40 | 914.20 |
| 9 |  |
Crh Plc | +2.26% | +65.50 | 2,963.50 |
| 10 |  |
Barclays Plc | +2.17% | +3.16 | 148.56 |
Top 10 FTSE 100 Fallers
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Barratt Developments Plc | -1.22% | -4.40 | 355.60 |
| 2 |  |
Persimmon Plc | -1.10% | -14.00 | 1,255.50 |
| 3 |  |
Itv Plc | -1.07% | -0.72 | 66.62 |
| 4 |  |
Rio Tinto Plc | -1.06% | -51.00 | 4,769.00 |
| 5 |  |
Centrica Plc | -1.02% | -0.74 | 71.56 |
| 6 |  |
Tesco Plc | -1.02% | -2.10 | 203.60 |
| 7 |  |
Fresnillo Plc | -0.96% | -6.80 | 701.20 |
| 8 |  |
Taylor Wimpey Plc | -0.79% | -0.72 | 90.56 |
| 9 |  |
Berkeley Group Holdings (the) Plc | -0.72% | -25.00 | 3,435.00 |
| 10 |  |
Imperial Brands Plc | -0.70% | -14.00 | 1,993.00 |
US close: Stocks end session higher as Q3 bank earnings continue to roll in
Wall Street stocks were in the green at the end of trading as market participants digested more Q3 earnings reports from major banks.
At the close, the Dow Jones Industrial Average was up 1.86% at 30,185.82, while the S&P 500 advanced 2.65% to 3,677.95 and the Nasdaq Composite saw out the session 3.43% stronger at 10,675.80.
The Dow closed 550.99 points higher on Monday, reclaiming some of the previous session’s heavy losses.
Earnings were again the primary focus of investors on Monday, with banking giant Bank of America posting a drop in year-on-year profits despite witnessing better-than-expected fixed-income trading and improved interest income in Q3, while Bank of New York Mellon shares rose in early trading after reporting that Q3 revenues had risen from $4.25bn to $4.26bn, while earnings per share came to $1.21, up from $1.09 a year earlier and ahead of consensus estimates of $1.08 per share.
Still to come this week, Goldman Sachs, Netflix, Tesla, IBM, Johnson & Johnson, United Airlines, AT&T, Verizon and Procter & Gamble will all report over the next five days.
In other corporate news, Credit Suisse has agreed to pay nearly $500m over claims it misled investors about mortgage-linked investments in the US. The Swiss lender said on Monday that it had agreed to make a one-time payment of $495m after it reached the final settlement with the New Jersey attorney general.
On the macro front, manufacturing activity in the New York area contracted in October for the third month in a row, according to a survey released on Monday. The New York Fed‘s Empire State general business conditions index fell eight points from September to -9.1.
Tuesday newspaper round-up: Eve Sleep, THG, Elliott Management
The business secretary, Jacob Rees-Mogg, has opened talks with Britain’s steelmakers amid concerns that thousands of jobs could be lost from the struggling industry. The government confirmed on Monday it had entered discussions with Tata Steel, owner of the UK’s largest steelworks in Port Talbot, south Wales, and Jingye Group, which bought British Steel out of insolvency in 2020. – Guardian
Bensons for Beds has bought Eve Sleep hours after the online mattress specialist called in administrators, having succumbed to what its chief executive described as an “economic tsunami”. Bensons, which has 166 stores and is owned by the private equity group Alteri Investors, said it had bought the website, brand and other related assets of Eve, including its creative content, in an attempt to widen its appeal to a younger customer. – Guardian
Europe must slash its gas consumption by more than a tenth to prevent the risk of power rationing and widespread blackouts this winter, the global energy watchdog has warned. The International Energy Agency said the Continent and the UK needed to voluntarily reduce gas demand by 13pc in order to remain “safe and secure” if Russia cuts off supplies completely. – Telegraph
SoftBank is offloading its stake in THG, the UK ecommerce group, for about £31 million, bringing to an end a disastrous investment that was once worth about £500 million. The Japanese company is selling its 6.4 per cent holding to THG founder and chief executive Matthew Moulding and Qatar’s sovereign wealth fund for about 39p a share. That is a fraction of the 500p a share at which THG was floated in 2020. It is unclear how much SoftBank paid for the stake, but the company said last year it was worth more than £500 million. – The Times
The American activist hedge fund Elliott Management paid the 106 staff at its British business a combined £137 million last year after the division enjoyed a return to profit. The salary bill for Elliott Advisors (UK) equates to almost £1.3 million a person and is up from the £113.3 million that it paid in total to its employees in 2020, accounts filed at Companies House showed. – The Times
