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London open: Stocks edge down amid political chaos
London stocks edged lower in early trade on Thursday following losses in the US and Asia, and after a day of chaos at Westminster.
At 0830 BST, the FTSE 100 was down 0.4% at 6,899.31, while sterling was flat against the dollar at 1.1219, with Liz Truss’s future as prime minister increasingly uncertain.
On Wednesday, Suella Braverman resigned as home secretary, having breached ministerial rules after sending an official document from her personal email account. On her way out, she took a swipe at the government, accusing it of breaking “key pledges” and failing to reduce immigration.
There was further turmoil during a vote on fracking, after opposition MPs said some Conservatives had been bullied and manhandled into voting with the government.
Victoria Scholar, head of investment at Interactive Investor, said: “European markets have opened lower with the FTSE 100 under pressure amid a slew of corporate updates and UK political instability.
“While bond market stability has been restored at least for now, political instability remains with Prime Minister Liz Truss hanging on by a thread after the sudden resignation of home secretary Suella Braverman.”
In equity markets, housebuilder Berkeley Group was under the cosh after a downgrade to ‘hold’ at Deutsche Bank. The bank said in a note that the housing market is in a state of flux. Mortgage rates have tripled, loans are less available and future re-financings will be painful, it said.
Other housebuilders also lost ground, with Persimmon, Taylor Wimpey and Barratt all down.
Dechra Pharmaceuticals fell as it said it remained on course to meet full-year expectations, despite a slower start to the year.
Homewares retailer Dunelm was also weaker after it reported a fall in first-quarter sales and maintained annual guidance despite a challenging macroeconomic environment.
On the upside, luxury fashion brand Burberry jumped to the top of the FTSE 100 following well-received results from French peer Hermes.
Top 10 FTSE 100 Risers
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Shell Plc | +2.31% | +52.50 | 2,325.50 |
| 2 |  |
Lloyds Banking Group Plc | +2.24% | +0.91 | 41.52 |
| 3 |  |
Bp Plc | +1.79% | +8.15 | 463.40 |
| 4 |  |
Bae Systems Plc | +1.48% | +12.00 | 821.60 |
| 5 |  |
Glencore Plc | +1.37% | +6.50 | 479.50 |
| 6 |  |
Rentokil Initial Plc | +1.02% | +5.20 | 512.60 |
| 7 |  |
Standard Chartered Plc | +0.96% | +5.40 | 565.60 |
| 8 |  |
British American Tobacco Plc | +0.80% | +26.50 | 3,330.00 |
| 9 |  |
Rightmove Plc | +0.78% | +3.60 | 463.80 |
| 10 |  |
Segro Plc | +0.59% | +4.20 | 719.60 |
Top 10 FTSE 100 Fallers
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Itv Plc | -3.84% | -2.60 | 65.08 |
| 2 |  |
International Consolidated Airlines Group S.a. | -2.66% | -3.14 | 114.96 |
| 3 |  |
Carnival Plc | -2.52% | -15.40 | 595.20 |
| 4 |  |
Rolls-royce Holdings Plc | -2.30% | -1.70 | 72.30 |
| 5 |  |
Hikma Pharmaceuticals Plc | -2.27% | -28.00 | 1,205.00 |
| 6 |  |
Bt Group Plc | -2.19% | -2.80 | 124.90 |
| 7 |  |
Auto Trader Group Plc | -2.12% | -11.00 | 506.80 |
| 8 |  |
Bhp Group Limited | -2.07% | -45.00 | 2,129.00 |
| 9 |  |
Astrazeneca Plc | -2.05% | -201.00 | 9,608.00 |
| 10 |  |
Easyjet Plc | -1.98% | -6.50 | 322.00 |
US close: Stocks fall after Beige Book, Netflix surprise
Wall Street stocks snapped a two-day winning streak by the close on Wednesday, even after Netflix posted solid earnings and subscriber growth overnight.
At the close, the Dow Jones Industrial Average was down 0.33% at 30,423.81, as the S&P 500 lost 0.67% to 3,695.16 and the Nasdaq Composite was off 0.85% at 10,680.51.
The Dow closed 99.99 points lower on Wednesday, biting into the gains recorded in Tuesday’s session.
“US markets initially looked as if they were going to open higher, however a sharp surge in yields and a stronger US dollar has taken the edge off, and has seen US stocks open slightly lower, despite a positive market reaction to Netflix, who surprised the markets with a better-than-expected set of third quarter numbers, reversing two successive quarters of negative subscriber growth,” said CMC Markets chief market analyst Michael Hewson.
In economic news, the Federal Reserve’s latest ‘Beige Book’ survey reported “modest” expansion in America’s economy over the last six weeks, although inflation was still “elevated” despite easing in some areas.
“Significant input price increases were reported in a variety of industries, though some declines in commodity, fuel, and freight costs were noted,” the report read.
“Looking ahead, expectations were for price increases to generally moderate.”
Nancy Vanden Houten, lead US economist at Oxford Economics, said the report painted a “mixed picture” of economic activity among the 12 Fed districts.
“While the Beige Book characterised national economic activity as expanding modestly, four districts described activity as flat while two cited declines as higher interest rates, higher inflation and supply disruptions weigh on demand.
“The economic outlook became more pessimistic, with contacts citing soft consumer spending, particularly on discretionary items, and weakness in housing.
“However, travel and tourism activity were bright spots and manufacturing held steady or expanded.”
Elsewhere, US mortgage applications fell for a fourth week in a row in the seven days ended 14 October, down 4.5%, according to the Mortgage Bankers’ Association, as the 30-year mortgage rate hit 6.94% for the first time since 2002.
On another note, housing stats fell 8.1% to an annualised rate of 1.43m in September, according to the Census Bureau, down from a revised 1.56m in August and well and truly shy of market consensus estimates for a print of 1.47m.
Building permits, on the other hand, increased 1.4% month-on-month to an annualised clip of 1.56m last month, beating market consensus expectations of 1.53m.
In the corporate space, Netflix shares surged 13.09% after the streaming behemoth reported quarterly earnings and revenues that beat estimates and strong subscriber growth.
Consumer products giant Procter & Gamble managed gains of 0.93% after it posted an earnings beat, as higher prices helped offset a drop in volumes.
Elsewhere, United Airlines ascended 4.97% after reporting a third-quarter profit of $942.0m, down 8% year-on-year.
Adjusted operating profits came to $2.81 per share, beating analysts’ expectations by $0.53 as travel demand continued to grow throughout the period.
Thursday newspaper round-up: Train fares, Hargreaves Lansdown, postal strikes
Trade from the UK to the EU is down 16% on the levels anticipated had Brexit not happened, a new report has found. Meanwhile trade from the EU to the UK has dropped even further, by 20%, relative to a scenario in which Brexit had not occurred, according to research published on Wednesday by the Economic and Social Research Institute. – Guardian
Tourism and recreation experienced the fastest fall in output of any UK business sector last month, the latest data shows. Output in the sector, which includes pubs, hotels and restaurants, declined at the fastest pace since February 2021, when the UK was last in lockdown, with a tracker score of 36.3 in September, according to the Lloyds Bank UK Recovery Tracker. Any reading below 50 indicates contraction. – Guardian
Train travellers are to escape a double-digit rise in ticket prices linked to soaring inflation, amid fears it would prompt more to abandon the railways. Industry leaders have been told by ministers that a scheduled increase in fares of 12.3pc will not go ahead. The annual increase would have been based on July’s retail prices index (RPI). – Telegraph
A row has broken out between the billionaire co-founder of Hargreaves Lansdown and the FTSE 100 company after he accused the group’s chairwoman of overseeing a “diabolical” performance by the business. Peter Hargreaves, 76, who is the biggest shareholder in the DIY investment platform with a stake of almost 20 per cent, told The Times this evening that he believed Deanna Oppenheimer, 64, should step down from the board of the Bristol-based company. – The Times
Business groups have implored Royal Mail and the Communication Workers Union to negotiate to avert further strike action, which they warned would be a “body blow” to small companies. Royal Mail workers are due to walk out today amid a long-running dispute over pay and working conditions, part of plans for 19 days of strikes this month and next. – The Times
