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London open: Stocks rise on rate-cut hopes after inflation slowdown
UK stocks were putting in solid gains on Wednesday morning after a sharper-than-expected fall in consumer price inflation all but cemented a rate cut at the Bank of England’s next meeting.
The FTSE 100 was trading 0.7% higher at 8,303.15 by 0845 BST, on track to finish at its highest level since 27 September, while the FTSE 250 gained 0.4% to 20,869.40.
“British inflation’s downward trajectory, combined with slowing wage growth, emphasises Bank of England governor Andrew Bailey’s latest comments that the bank will get ‘more aggressive’ on its rate policy,” said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.
The Office for National Statistics said that the annual change in the UK consumer price index (CPI) slowed to just 1.7% last month, down from 2.2% in August. This was well below the 1.9% expected by economists and the first time below the 2% mark since April 2021. The report follows data released on Tuesday which showed that UK earnings growth fell to its lowest level for more than two years.
Looking ahead to next month’s Monetary Policy Committee meeting, Danni Hewson, AJ Bell’s head of financial analysis, said: “A quarter percentage point cut is pretty much nailed on, and expectation of a second rate cut in December has also jumped up today with markets thinking there’s a better than 80% chance we will end the year with rates down at 4.5% [from 5% currently].”
In other news, European markets were mostly lower, with luxury stocks providing a drag as industry bellwether LVMH disappointed with a 3% drop in organic revenues in the third quarter owing to ongoing weakness in China.
Whitbread and Antofagasta rise
Premier Inn owner Whitbread was the high riser of the morning after lifting its half-year dividend by 7% and saying it would buy back an additional £100m in shares, despite a fall in earnings. The company held annual guidance as pre-tax profit for the six months to 29 August fell 22% to £309m on flat revenue of £1.5bn.
Antofagasta was also in favour after the copper mining giant reported a 15% increase in third-quarter production as it maintained expectations for full-year output to hit the lower end of guidance.
Asset manager Ninety One was a heavy faller, dropping 5% after reporting a slight fall in assets under management in its second quarter. AuM totalled £127.4bn by 30 September, up from £123.1bn last year but down from £128.6bn at the end of June.
Airline stocks IAG, easyJet and Wizz Air were all nursing losses, pulling back after strong gains the previous session as oil prices tumbled. Brent was up 0.3% at $74.47 a barrel in morning trade, having dropped more than $3 on Tuesday.
Burberry was weaker as shares in the British luxury brand fell in sympathy with European peer LVMH.
Top 10 FTSE 100 Risers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Whitbread Plc | +4.95% | +152.00 | 3,224.00 |
| 2 |  |
Bp 9% 2nd Prf | +3.95% | +6.00 | 158.00 |
| 3 |  |
Barratt Redrow Plc | +3.07% | +14.50 | 486.50 |
| 4 |  |
Antofagasta Plc | +2.92% | +52.50 | 1,849.00 |
| 5 |  |
Taylor Wimpey Plc | +2.59% | +4.15 | 164.30 |
| 6 |  |
Woodside Energy Group Ltd | +2.25% | +28.00 | 1,274.00 |
| 7 |  |
Severn Trent Plc | +2.06% | +54.00 | 2,676.00 |
| 8 |  |
Ck Infrastructure Holdings Limited | +1.99% | +10.65 | 545.10 |
| 9 |  |
Segro Plc | +1.83% | +15.40 | 857.20 |
| 10 |  |
Intercontinental Hotels Group Plc | +1.80% | +152.00 | 8,576.00 |
Top 10 FTSE 100 Fallers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Bp 8%pf | -3.55% | -5.50 | 149.50 |
| 2 |  |
Rentokil Initial Plc | -3.43% | -12.00 | 338.00 |
| 3 |  |
Admiral Group Plc | -2.95% | -82.00 | 2,694.00 |
| 4 |  |
Mondi Plc | -1.57% | -22.00 | 1,380.00 |
| 5 |  |
Diageo Plc | -0.87% | -22.50 | 2,557.00 |
| 6 |  |
Aviva Plc | -0.69% | -3.30 | 477.60 |
| 7 |  |
Natwest Group Plc | -0.65% | -2.30 | 352.70 |
| 8 |  |
Intertek Group Plc | -0.59% | -30.00 | 5,075.00 |
| 9 |  |
Smith (ds) Plc | -0.34% | -1.60 | 464.40 |
| 10 |  |
Tesco Plc | -0.28% | -1.00 | 355.60 |
US close: Dow retreats from record high as traders digest Q3 earnings
Wall Street stocks were in the red at the close of trading on Tuesday as Q3 earnings season kicked up a gear.
At the close, the Dow Jones Industrial Average was down 0.75% at 42,740.42, while the S&P 500 lost 0.76% to 5,815.26 and the Nasdaq Composite saw out the session 1.01% weaker at 18,315.59.
The Dow closed 324.80 points lower on Tuesday, more than reversing gains recorded in the previous session.
Earnings were Tuesday’s primary focus, with UnitedHealth revealing that medical costs had exceeded Wall Street estimates during Q3, while Johnson & Johnson delivered a Q3 earnings beat and upped its full-year guidance.
As far as banks were concerned, Goldman Sachs reported a 45% quarterly profit jump on a solid investment banking performance, while Bank of America also exceeded profit estimates thanks to stronger-than-expected investment banking, and Citigroup delivered Q3 profits that fell far less than expected.
On the macro front, the New York Federal Reserve‘s Empire State manufacturing index crashed to -11.9 in October, down from a reading of +11.5 in September to surprise economists who were expecting a reading of +3.8. October’s print, which marked the worst reading since May, came as new orders slumped 20 points to -10.2 and shipments dropped 21 points to -2.7.
No major data points were released on Tuesday.
Wednesday newspaper round-up: Water firms, Labour tax raid, Boeing, BMW
The future ownership of the water industry should be decided by a citizens’ assembly to remove decision-making from boardrooms and impose democracy on the sector, a private member’s bill is to argue. Labour MP Clive Lewis, who in the past has called for water to be put back into public ownership, will introduce his bill on the future of water ownership and management later today. – Guardian
The founder of BrewDog has lashed out at plans by Sir Keir Starmer and Rachel Reeves to raise capital gains tax, ahead of an expected stock market listing that would put him in line for a major windfall. James Watt said a large rise in capital gains tax in the Budget on Oct 30 “will destroy entrepreneurial spirit in the UK and in turn severely damage our economy”. – Telegraph
Boeing has filed a registration statement with the US markets regulator that will allow the struggling planemaker to raise up to $25 billion as it faces a continuing strike, production delays and upcoming debt maturities. It was not clear when or how much Boeing will raise via the offering, which is through various debt securities and share classes, but analysts and investors expect the company to raise money before the end of the year. – The Times
British employers have warned that a rise in employer national insurance contributions in the budget could hit hiring and limit pay rises, hurting businesses including pubs, hotels and restaurants. Keir Starmer and the chancellor, Rachel Reeves, have refused to rule out a rise in employer contributions in the budget on 30 October, as part of plans to plug what the government says is a £22bn hole in the public finances left by the previous Conservative government. – Guardian
A European crackdown on petrol cars will trigger a “massive shrinking” of the Continent’s vast automotive industry, the boss of BMW has claimed. Speaking at the Paris Automotive Show, Oliver Zipse warned that new rules leading to a ban on combustion engine vehicles by 2035 would put Europe’s carmakers at a disadvantage compared to their Chinese rivals. His warning came as France revealed it was pushing for “flexibility” on European Union regulations ahead of their introduction next year. – Telegraph
