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London open: Stocks gain as sterling hit by Bailey comments
London stocks rose in early trade on Thursday, benefiting from a weaker pound and rate cut hopes, but investors remained cautious overall amid the escalating conflict in the Middle East.
At 0830 BST, the FTSE 100 was up 0.3% at 8,313.45, while sterling was 0.8% lower against the dollar at 1.3169 after Bank of England governor Andrew Bailey told the Guardian that the central bank could become a “bit more aggressive” in cutting interest rates as long as news on inflation continued to be good.
A weaker sterling tends to lift the FTSE 100 index as around 70% of its constituents derive their earnings from abroad. Indeed, the UK index was outperforming its European peers, all of which were weaker, with the benchmark Stoxx 600 index down 0.3%.
Bailey told the Guardian he has been encouraged by the fact that cost of living pressures had not been as persistent as the BoE thought they might be. He said in an interview that if the news on inflation remained positive there was a chance the Bank could become “a bit more activist” in its rate-cutting approach.
Inflation currently stands at 2.2%, which is just above the BoE’s 2% target.
Kathleeen Brooks, research director at XTB, said: “The pound was already selling off before Bailey’s comments, and GBP/USD is down more than 1% so far this week, it is down from $1.34 at the start of this week to below $1.31 this morning.
“It has found decent support at $1.3170, however, this has been a bruising week for the pound, and $1.35 seems like a mountain to climb from here.”
She said that part of the pound’s selloff is due to external factors.
“As geopolitical risks in the Middle East have risen, the US dollar has caught a bid. The currencies that were most extended versus the USD have sold off rapidly, as investors have sought the safety of the USD.
“Hence, the pound and the yen were in the sellers’ sights, as the markets scrambled to buy dollars. The pound is still the best performing currency in the G10 FX space so far this year, thus, if tensions escalate further, then we could see another leg lower for GBP/USD.”
In equity markets, housebuilders were among the top performers, with Persimmon, Barratt, Taylor Wimpey and Vistry all up. The sector was boosted by rate cut hopes and data from Zoopla which showed that house sales rose in September at the fastest rate since the post-lockdown rebound.
Tesco gained as it lifted its annual profit guidance despite a slight slowdown in underlying sales growth in the second quarter.
Due to stronger-than-expected volumes in the first half, which the grocer put down to its ongoing investments in “value, quality and service”, retail adjusted operating profit for the year ending 24 February was now expected to be £2.9bn, up from earlier guidance of at least £2.8bn and higher than last year’s £2.76bn.
Telecom Plus – which trades at Utility Warehouse – also advanced as it backed its full-year guidance and reported a rise in customer numbers.
SSP Group was in the red as it said it expected to deliver a large jump in full-year profits, despite weaker trading in Continental Europe, especially in France where demand during the Olympics was lower than anticipated.
The company, which operates food outlets at train stations and airports, said core profits for the year to September would come in at £350-360m, up from the £280m reported a year earlier and lower than planning assumptions of £375m at the top end.
British Land lost ground after saying it had raised £301m in an equity placing to help fund the acquisition of a portfolio of seven “high quality” retail parks.
Phoenix Group, Smith & Nephew, TBC Bank and Hargreaves Lansdown all fell as they traded without entitlement to the dividend.
Top 10 FTSE 100 Risers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Tesco Plc | +3.13% | +11.10 | 366.00 |
| 2 |  |
Barratt Developments Plc | +2.40% | +11.40 | 486.10 |
| 3 |  |
Taylor Wimpey Plc | +2.30% | +3.75 | 166.85 |
| 4 |  |
Jd Sports Fashion Plc | +2.10% | +2.95 | 143.30 |
| 5 |  |
Banco Santander S.a. | +1.93% | +7.00 | 370.00 |
| 6 |  |
Rolls-royce Holdings Plc | +1.93% | +10.00 | 528.80 |
| 7 |  |
Sse Plc | +1.87% | +35.00 | 1,909.00 |
| 8 |  |
Pershing Square Holdings Ltd | +1.77% | +62.00 | 3,560.00 |
| 9 |  |
Hsbc Holdings Plc | +1.26% | +8.50 | 684.50 |
| 10 |  |
Marks And Spencer Group Plc | +1.19% | +4.40 | 372.80 |
Top 10 FTSE 100 Fallers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Diploma Plc | -3.88% | -172.00 | 4,262.00 |
| 2 |  |
Prudential Plc | -2.00% | -14.40 | 706.00 |
| 3 |  |
Antofagasta Plc | -1.68% | -33.50 | 1,960.00 |
| 4 |  |
Ashtead Group Plc | -1.46% | -84.00 | 5,670.00 |
| 5 |  |
Anglo American Plc | -1.29% | -32.00 | 2,446.00 |
| 6 |  |
Bhp Group Limited | -1.27% | -30.00 | 2,328.00 |
| 7 |  |
Coca-cola Hbc Ag | -1.17% | -32.00 | 2,694.00 |
| 8 |  |
Ferguson Enterprises Inc. | -1.14% | -170.00 | 14,750.00 |
| 9 |  |
South32 Limited | -1.13% | -2.20 | 192.20 |
| 10 |  |
Smurfit Westrock Plc | -1.12% | -41.00 | 3,615.00 |
US close: Stocks register modest gains despite heightened Middle East tensions
Major indices were in the green at the close of trading on Wednesday despite renewed fears of a full-scale ground war in the Middle East.
At the close, the Dow Jones Industrial Average was up 0.09% at 42,196.52, while the S&P 500 advanced 0.01% to 5,709.54 and the Nasdaq Composite saw out the session 0.08% firmer at 17,925.12.
The Dow closed 39.55 points higher on Wednesday, taking a modest bite out of losses recorded in the previous session.
Oil prices were in focus on Wednesday, continuing to climb as worries mounted that conflict was set to spread across the Middle East following Israel’s ground invasion of Lebanon and Iran’s missile attack on Israel led to renewed fears that the region was on course for full-scale regional conflict. International benchmark Brent crude was up 1.48% at $74.65 a barrel, while West Texas Intermediate was trading 1.55% higher at $70.91.
Also drawing an amount of investor attention, private sector employment in the US rose more than expected in September, according to figures released on Wednesday by ADP. Employment increased by 143,000 from August, versus expectations for a 125,000 jump. Meanwhile, August’s gain was revised to 103,000 from 99,000. Small businesses with fewer than 50 employees shed 8,000 jobs, while medium businesses with between 50 and 499 employees added 64,000 jobs and large businesses with more than 500 employees created 86,000 jobs.
Elsewhere on the macro front, US mortgage applications fell by 1.3% week-on-week in the seven days ended 27 September, according to the Mortgage Bankers Association of America, the first drop in more than a month. Applications to refinance a mortgage fell 3% but remained 186% higher than at the same time a year earlier, while applications to purchase a home ticked up 1% week-on-week.
In the corporate space, Nike shares were down after the footwear giant withdraw its full-year guidance, while Tesla shares headed south on the back of delivery numbers that fell short of expectations.
Thursday newspaper round-up: Bank payments, GB News, OpenAI
Sellafield will have to pay almost £400,000 after it pleaded guilty to criminal charges over years of cybersecurity failings at Britain’s most hazardous nuclear site. The vast nuclear waste dump in Cumbria left information that could threaten national security exposed for four years, according to the industry regulator, which brought the charges. It was also found that 75% of its computer servers were vulnerable to cyber-attack. – Guardian
Bank payments can be delayed by an extra three days if lenders suspect consumers are being scammed, as part of a crackdown on booming levels of digital fraud in Britain. Under changes designed to protect consumers against online scams, high street banks are to be handed new powers by the Treasury to delay and investigate payments suspected of being fraudulent. – Guardian
GB News has launched a High Court challenge against Ofcom in a dramatic escalation of its row with the media regulator over impartiality. The High Court has allocated three hours on Thursday morning to an application by GB News against the regulator. Ahead of looming sanctions from Ofcom, it is understood that the broadcaster is applying for “interim relief”, a form of short-term protection during legal proceedings, in a highly unusual move for a broadcaster. – Telegraph
A lack of clarity around Rachel Reeves’s proposed tax rises is scaring off shoppers, the boss of Sainsbury’s has warned. Simon Roberts said customers were holding off on buying big-ticket items amid uncertainty regarding the Budget, which the Chancellor has said will involve “difficult decisions” on tax. He said households needed more information on planned moves, saying they “inevitably are wanting to be clearer about what’s going to happen next”. – Telegraph
OpenAI has raised $6.6 billion in a fundraising round that values the ChatGPT maker at $157 billion, underscoring the scale of investor optimism around artificial intelligence technology. The company, based in San Francisco, said the investment will allow it to redouble its efforts on AI research, increase computing capacity and continue building problem-solving tools. It is one of the largest private investments on record. – The Times
A third of homes currently up for sale are chain-free as landlords and second-home owners look to sell amid fears over possible capital gains tax changes. The number of house sales being agreed is up 25 per cent versus this time last year, with Zoopla, the property search website, saying that rising sales volumes are being supported by new listings coming to market. – The Times
