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London open: Stocks nudge up ahead of manufacturing reading
London stocks were just a touch higher in early trade on Tuesday as investors mulled news of Israel’s invasion of Southern Lebanon, and eyed the latest reading on the UK manufacturing sector.
At 0900 BST, the FTSE 100 was up 0.1% at 8,248.75.
Kathleeen Brooks, research director at XTB, said: “Pinch and a punch, first day of the month. After a strong Q3 performance for global shares, European stocks are taking a breather on the first trading day of Q4. The Eurostoxx index is down slightly, while the FTSE 100 is slightly higher. US futures are pointing to a mildly lower open later today.
“The main drivers of markets on Tuesday include comments from the chair of the Federal Reserve, Jerome Powell, and news that Israel has started ground operations in Lebanon.
“The market has not reacted to the latest escalation in tensions between Israel and Hezbollah. This was a well signalled next step, and it has not come as a shock to investors. The oil price is down a touch on Tuesday and Brent crude is trading around $71.30. The gold price is higher on this news and is higher by more than $10 per ounce this morning.
“We continue to think that fears about tensions in the Middle East will mostly play out in the gold market, with a limited impact elsewhere.
“So far, Iran has not retaliated and, as yet this conflict has not become a wider issue across the Middle East. This is why markets have remained mostly immune to the situation. Added to this, oil supply from outside of the US, along with expectations that oil demand will decline in the coming years, is also keeping a lid on oil prices. However, if Iran does retaliate or suggest that it will directly strike back at Israel, we expect the oil price to surge and this could rattle global markets.”
On home shores, the British Retail Consortium-NielsenIQ Shop Price Index showed that prices continued to move into deflation in September, with a year-on-year decline of 0.6%.
That marked a further fall from the 0.3% deflation recorded in August, and was below the three-month average of -0.3%.
The latest figures indicated the sharpest drop in shop prices since August 2021.
Still to come, the S&P Global manufacturing PMI for September is due at 0930 BST.
In equity markets, WPP was the top gainer on the FTSE 100 after consumer goods giant Unilever concluded its global media review and appointed the ad agency’s media services business, Mindshare, in key markets.
Bakery chain Greggs was in the red as it reported a slowdown in sales for the third quarter.
Luxury handbag maker Mulberry fell as it rejected an £83m takeover offer from Mike Ashley’s Frasers Group, saying it failed to recognise the company’s “substantial future potential value”.
Top 10 FTSE 100 Risers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Melrose Industries Plc | +2.85% | +13.00 | 468.70 |
| 2 |  |
Carnival Plc | +2.79% | +34.00 | 1,252.00 |
| 3 |  |
Wpp Plc | +2.52% | +19.20 | 782.40 |
| 4 |  |
Severn Trent Plc | +2.01% | +53.00 | 2,695.00 |
| 5 |  |
Diageo Plc | +1.77% | +46.00 | 2,649.00 |
| 6 |  |
United Utilities Group Plc | +1.63% | +17.00 | 1,062.50 |
| 7 |  |
Croda International Plc | +1.59% | +67.00 | 4,284.00 |
| 8 |  |
Sse Plc | +1.51% | +28.50 | 1,911.50 |
| 9 |  |
Flutter Entertainment Plc | +1.28% | +225.00 | 17,800.00 |
| 10 |  |
Ferguson Enterprises Inc. | +1.22% | +180.00 | 14,880.00 |
Top 10 FTSE 100 Fallers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Aib Group Plc | -4.38% | -19.00 | 415.00 |
| 2 |  |
Wheaton Precious Metals Corp. | -3.96% | -190.00 | 4,610.00 |
| 3 |  |
3i Group Plc | -2.66% | -88.00 | 3,217.00 |
| 4 |  |
Woodside Energy Group Ltd | -1.69% | -22.00 | 1,280.00 |
| 5 |  |
Banco Santander S.a. | -1.57% | -6.00 | 375.50 |
| 6 |  |
Gsk Plc | -1.29% | -19.50 | 1,497.00 |
| 7 |  |
Antofagasta Plc | -1.02% | -20.50 | 1,992.50 |
| 8 |  |
Bt Group Plc | -0.61% | -0.90 | 147.00 |
| 9 |  |
Bp Plc | -0.59% | -2.30 | 389.40 |
| 10 |  |
Jd Sports Fashion Plc | -0.55% | -0.85 | 153.20 |
US close: Stocks stage late rally as Powell discusses future rate cuts
US stocks registered mild gains on Monday after a late rally following comments from Federal Reserve chair Jerome Powell, who indicated that interest-rate cuts would continue – albeit by a reduced amount – in the coming months.
After swinging between gains and losses for most of the session, Wall Street’s three main indices pushed into positive territory in the final hour of trade, with the Dow and S&P 500 both setting new closing highs, breaking records set just last week.
The Dow inched 0.04% higher to 42,330.15, while the S&P 500 rose 0.42% to 5,762.48. The Nasdaq also gained 0.38% to 18,189.17.
Speaking at a conference in Nashville, Powell said the economy was in “solid shape” and “we intend to use our tools to keep it there”. Following a 50-basis point (bp) cut to interest rates two weeks ago, Powell said that two further 25bp cuts would be likely this year, if the economy performs as expected.
“With the Fed teeing up more cuts, the stock market’s rally still has legs, and investors can sleep easy knowing that the Fed is ready to roll out ‘insurance’ cuts as potential risks creep into the economic picture,” said Stephen Innes, managing partner at SPI Asset Management. “And with inflation seemingly under control, market pressure for deeper Fed rate cuts isn’t going anywhere.”
In economic news on Monday, the Chicago Business Barometer purchasing managers’ index (PMI) increased to 46.6 this month, from 46.1 in August, rising for the second straight month. While this beat the consensus forecast of 46.2, the index has remained in negative territory since late last year.
Market movers
US-listed shares in Stellantis tumbled after the Chrysler, Peugeot and Jeep maker became the latest auto manufacturer to scale back vehicle delivery forecasts this year, cutting shipment estimates for North America while citing increased competition from China. The Netherlands-based company said its adjusted operating income margin is now expected to average between 5.5% and 7.0% for the full year, compared with earlier guidance for a double-digit percentage.
Stellantis follows in the footsteps of European peers Aston Martin, Volkswagen, Mercedes-Benz and BMW to issue profit warnings in recent weeks. Wall Street names like General Motors and Ford all fell on Monday.
In contrast, US-listed shares of Chinese EV maker Nio jumped after announcing a RMB13.3bn ($1.9bn) cash injection into the business from its parent company and strategic investors.
Anglo-American cruise giant Carnival was in the red, even after it reported record-breaking financial results for the third quarter, surpassing its earlier guidance and raising its full-year outlook for the third time. The stock has risen by around 35% over the past year, so an element of profit-taking could have been behind Monday’s fall.
Tuesday newspaper round-up: Tips, eBay, business confidence
Unions fear some restaurants and other businesses may slip through the net of new legislation over the fair distribution of tips and service charges that comes into force in Great Britain on Tuesday. The government said the long-planned changes would mean workers would be in line for about £200m that may otherwise have been retained by employers. Under the new rules 100% of tips – by cash or card – and any service charge levied on customers must be passed on to staff working in restaurants, cafes, hotels, hairdressers or taxi firms. – Guardian
Online retailer eBay has scrapped fees for private sellers across almost all of its categories as it attempts to keep fast-growing rivals such as Depop and Vinted at arm’s length. The move means eBay’s UK sellers no longer have to pay transaction fees, except for cars, motorcycles and other vehicles. In April this year, eBay removed fees for private sellers of pre-owned clothes, and the company said it was “now evolving the experience even further”. – Guardian
Families with children will still be worse off than pensioners even after Rachel Reeves’s raid on winter fuel payments, a Left-leaning think tank has claimed. The Resolution Foundation has warned that working-age families are more likely than older people to struggle with their energy bills in the coming months, notwithstanding the Chancellor’s decision to scrap the £300 payment for millions of pensioners. – Telegraph
Confidence among business leaders has drained away in advance of the autumn budget as they weigh up the prospect of higher taxes and stricter employment regulations. The Institute of Directors’ economic confidence index, which measures business leaders’ optimism about the economic climate, registered a decline from -12 in August to -38 in September. The index also recorded a slide in directors’ investment intentions, which have steadily fallen over the summer, from 36 in July to 23 in August, down to -6 in September. – The Times
Anna Anthony is to become the first female boss of a big four professional services firm in the UK after she was selected to take over as the new managing partner of EY. Anthony will start in her new role, leading EY’s business in the UK and Ireland, on January 1. She will succeed Hywel Ball, who is stepping down after being managing partner since 2020. – The Times
