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London open: Stocks gain as StanChart surges on bid speculation
London stocks rose in early trade on Thursday as investors sifted through corporate news, with Standard Chartered surging ahead on bid speculation.
At 0900 GMT, the FTSE 100 was up 0.6% at 7,932.39.
Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said: “The FTSE 100 powered up in early trade, gaining more ground back towards the record high, as winds of worry over how far interest rates will go are blown away again. The defensive, international nature of the index has provided the seeds of growth, but an improved forecast for the UK economy this week is also adding fresh nutrients.
“There are hopes the forecasts could see fresh confidence emerge from consumers and limit the expected belt-tightening.
“The UK housing market may be in the doldrums, with sales in the deep freeze in January, but investors are still seeing rays of light on the horizon. The RICS survey indicated sharply lower buyer demand, as the painful mortgage hikes fed through following the mini-budget, but with deals coming down as interest rate expectations have lowered, pessimism has eased and housebuilders still have a small spring in their step.”
RICS said in its latest survey that the net balance for house prices softened to -47 from -42 in December.
A balance measures the difference between the percentage of surveyors seeing rises and those reporting falls.
New buyer enquiries also fell, with a net balance of -47 compared to -40 a month previously, the ninth successive negative reading. The new instructions balance came in at -14.
RICS said the market was still adjusting to the higher borrowing costs, after mortgage rates rocketed in the autumn in response to the government’s disastrous mini-budget.
Surveyors did not forecast any short-term improvement. The near-term price expectations measure was -66, while sales were expected to continuing falling in the coming three months, with a balance of -49, although that was a marginal uptick on December’s -54.
Simon Rubinsohn, chief economist at RICS, said: “Although some respondents noted a little more interest in the housing market as the new year got underway, the overall tone of the feedback still remains subdued, which is not altogether surprising given the jump in mortgage rates since the autumn.
“Prices, meanwhile, are now beginning to reflect the shift in balance between demand and supply.
“However, it is questionable how much downside to pricing there is likely to be, given that recent macro-forecasts from the Bank of England and others are now envisaging a less harsh economic environment this year.”
In equity markets, Standard Chartered jumped to the top of the FTSE 100 following a report that First Abu Dhabi Bank is pressing ahead with a potential offer for the bank.
According to Bloomberg, under the code name Silver-Foxtrot, officials at the Abu Dhabi bank are working under the radar on a possible bid once a cooling off period required by UK takeover rules elapses. Sources told Bloomberg that FAB is exploring an all-cash bid of in the range of $30bn to $35bn.
Consumer goods giant Unilever ticked a little higher after it reported better-than-expected sales growth, boosted by higher prices.
Darktrace also gained after the cyber security firm said it had closed its largest deal to date with a critical infrastructure organisation as part of an effort to get ahead of state-sponsored attacks and support digital transformation.
On the downside, Watches of Switzerland tumbled even as it reiterated its full-year guidance and posted a jump in third-quarter revenues amid solid demand, particularly for luxury watches.
Ladbrokes owner Entain slid after rumours of a possible takeover were quashed. Susannah Streeter said: “Speculation that MGM might be ready to make a move were shut down by the company during an analyst call.
“BetMGM, Entain’s joint venture with US-based MGM, has been a shining light for the group that’s expected to start turning a profit over the second half of 2023 and that’s partly why the rumour mills have been whirring.”
British American Tobacco lost ground as it posted a slight increase in full-year revenues thanks to volume growth and price increases in its New Category unit, but said the macroeconomic outlook was expected to remain challenging.
Top 10 FTSE 100 Risers
| Sponsored by Plus500 |
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| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Standard Chartered Plc | +9.67% | +66.60 | 755.40 |
| 2 |  |
Astrazeneca Plc | +4.35% | +468.00 | 11,220.00 |
| 3 |  |
Bp Plc | +1.74% | +9.30 | 542.50 |
| 4 |  |
Bhp Group Limited | +1.69% | +46.50 | 2,798.50 |
| 5 |  |
Dcc Plc | +1.67% | +77.00 | 4,690.00 |
| 6 |  |
Shell Plc | +1.64% | +40.00 | 2,483.00 |
| 7 |  |
Rio Tinto Plc | +1.50% | +91.00 | 6,142.00 |
| 8 |  |
Aviva Plc | +1.38% | +6.10 | 447.00 |
| 9 |  |
Ashtead Group Plc | +1.36% | +76.00 | 5,656.00 |
| 10 |  |
Smiths Group Plc | +1.21% | +21.50 | 1,792.50 |
Top 10 FTSE 100 Fallers
| Sponsored by Plus500 |
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| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
British American Tobacco Plc | -5.63% | -174.00 | 2,917.00 |
| 2 |  |
Imperial Brands Plc | -2.49% | -50.00 | 1,958.00 |
| 3 |  |
United Utilities Group Plc | -1.12% | -12.00 | 1,061.50 |
| 4 |  |
Smurfit Kappa Group Plc | -1.10% | -37.00 | 3,336.00 |
| 5 |  |
Hikma Pharmaceuticals Plc | -0.95% | -16.50 | 1,720.50 |
| 6 |  |
Severn Trent Plc | -0.87% | -25.00 | 2,840.00 |
| 7 |  |
Bt Group Plc | -0.76% | -1.05 | 137.15 |
| 8 |  |
Fresnillo Plc | -0.59% | -4.80 | 815.60 |
| 9 |  |
Segro Plc | -0.58% | -5.00 | 855.80 |
| 10 |  |
Hiscox Ltd | -0.48% | -5.50 | 1,141.50 |
US close: Stocks lower as traders digest earnings and Fed commentary
Wall Street stocks were in the red at the end of trading on Wednesday as market participants digested comments from central bankers and thumbed over more corporate earnings.
At the close, the Dow Jones Industrial Average was down 0.61% at 33,949.01, while the S&P 500 slipped 1.11% to 4,117.86 and the Nasdaq Composite saw out the session 1.68% weaker at 11,910.52.
The Dow closed 207.68 points lower on Wednesday, almost reversing gains recorded in the previous session as investors zeroed in on a speech from Federal Reserve chairman Jerome Powell before the Economic Club of Washington where he reiterating comments that raised hopes that the Fed will soon halt or pivot interest rate hikes.
Traders looked to the central bank yet again on Wednesday, with John Williams, the head of the New York Federal Reserve, saying early in the session that the 5-5.25% peak fed funds rate was still a “very reasonable” goal but added that the Fed still has its work cut out for it in bringing supply and demand into balance
“To me, the important thing is we need a sufficiently restrictive stance, we need to retain a sufficiently restrictive stance of policy, we’re going to need to maintain that for a few years to make sure we get inflation to 2%, then eventually we’ll get interest rates presumably back to more normal levels,” said Williams.
Elsewhere, Board of Governors’ member Christopher Waller stated the big picture was that the US economy was “adjusting well so far” to higher interest rates but highlighted that as inflation remained “quite elevated”, more needs to be done.
“I expect the Fed will need to keep a tight stance of monetary policy for some time to slow activity further in 2023. That is what I believe is needed to bring demand and supply into better alignment and lower inflation toward the Federal Open Market Committee’s 2% target. Some believe that inflation will come down quite quickly this year. That would be a welcome outcome. But I’m not seeing signals of this quick decline in the economic data, and I am prepared for a longer fight to get inflation down to our target,” said Waller.
On the macro front, mortgage applications surged 7.4% in the week ended 3 February, according to the Mortgage Bankers Association of America, rebounding from the previous week’s 9% tumble. Applications for refinancing rose 17.7% and applications for purchases increased 3.1%.
Elsewhere, US wholesale inventories went up just 0.1% to $932.9bn in December, according to the Census Bureau, in line with preliminary estimates but a marked slowdown when compared to the poor month’s 0.9% rise. December’s increase marked the slowest rise sinceJuly 2020, indicating that businesses have scaled down their restocking efforts amid weaker demand and tighter financial conditions.
In the corporate space, Under Armour raised outlook after posting earnings and revenues that beat expectations, Yum! Brands topped expectations thanks to a solid performance by Taco Bell, CVS Health reported strong fourth-quarter results, and Fox delivered increased quarterly advertising revenues on the back of the FIFA World Cup and US midterm elections.
Walt Disney earnings beat estimates as streaming subscription losses came in better than expected, Robinhood revenues rose on the back of higher rates and said it plans to launch a share buyback from Emergent, and Uber beat estimates with its latest quarterly figures, with revenues and profits both growing throughout the period.
Thursday newspaper round-up: Twitter, Disney, Siemens
Twitter users were unable to post instantly on the website for almost an hour, in the latest outage to hit the social media platform since billionaire Elon Musk’s $44bn takeover. From around 10pm GMT on Wednesday, users attempting to tweet were informed by the platform they had hit their daily limit – despite many of them reporting having not tweeted at all that day. – Guardian
Strikes by firefighters have been postponed following an increased pay offer during lengthy talks with employers, it was announced on Thursday. The Fire Brigades Union (FBU) said it had been offered a 7% pay rise backdated to July 2022, and then 5% from July this year. The union had warned of strikes if a previous 5% pay offer was not increased following a huge vote in favour of industrial action. – Guardian
Disney has announced plans to cut 7,000 jobs and $5.5bn in costs after reporting its first ever drop in subscriber numbers. The job cuts represent just over 3pc of Disney’s global workforce of around 220,000. The US media giant lost 2.4m Disney+ subscribers in the final three months of 2022, taking the total to 161.8m. – Telegraph
Europe’s market-leading lorry manufacturer must pay Royal Mail and BT about £20 million as part of a landmark cartel damages ruling that could pave the way for further compensation orders. Competition experts predicted that DAF, a company based in Eindhoven in the Netherlands, will pay Royal Mail alone more than £17 million after the competition appeal tribunal in London ruled that both British companies should be awarded damages. – The Times
Siemens has been fined £1.4 million after pleading guilty to a health and safety offence following the death of Ian Parker, 58, a technician, at one of the company’s facilities in west London. The German multinational, which employs 11,000 staff in the UK, has been sanctioned by the rail safety watchdog after Parker was crushed by a traction motor while conducting maintenance work on Heathrow Express trains at the Old Oak Common depot. – The Times
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