Hot Features
Premium
Level up your trading with our powerful tools and real-time insights all in one place.
London open: Stocks mixed early on as China fears hit sentiment
The FTSE 100 was struggling for direction in early trading on Monday with mining stocks providing a drag on renewed concerns about demand as China’s property crisis deepened.
London’s benchmark index was more or less flat early on, down just 0.07% at 7,678, as decent gains by banking stocks were offset by falls from the heavyweight mining sector, along with Entain after a disappointing trading update/
Ongoing concerns about China’s property sector were likely dampening optimism on the markets, after struggling Chinese developer China Evergrande cancelling a creditor meeting and scrapped a $35bn debt-restructuring plan, causing shares to drop 19% in Hong Kong. The Hang Seng Index fell 1.7%, but the Shanghai Composite declined just 0.6%.
However, the Nikkei gained 0.9%, outperforming other Asian markets on hopes of stimulus measures in Japan. The Bank of Japan on Friday decided to keep its ultra-loss monetary policy unchanged, saying it would “take additional easing measures without hesitation”.
Meawhile, investors will likely be keeping a close eye on the price of oil again as it climbs further above the $90-a-barrel mark. Brent crude was up 0.7% at $92.63 early on.
“Oil prices are staging gains with hedge funds adding to their bullish bets fuelled by the expectation of ongoing weakness in supplies from Saudi Arabia and Russia,” said Victoria Schloar, head of investment at Interactive Investor. “JPMorgan has warned of an energy super cycle that could push oil prices back above the psychological $100 a barrel resistance level,” Scholar noted.
Monday is set to be a relatively quiet day in terms of economic data, with no major releases other than the IFO business confidence survey in Germany, which beat expectations for September. The expectations and current assessment sub-indices both improved more than expected, while the business climate sub-index was unchanged (analysts had expected a slight fall).
Miners drop, banks gain
Mining stocks dominated the fallers list on the FTSE 100, with Rio Tinto, Antofagasta, Fresnillo, Glencore and Anglo American among the worst performers, as newsflow from China hit share prices. “Anything bad in China typically has a negative knock-on effect to UK-listed diversified mining stocks,” said AJ Bell investment director Russ Mould. “Investors are clearly worried that commodity demand will weaken if China’s economy continues to falter.”
Baking giants like Barclays, Standard Chartered and Natwest were putting in a decent performance early on.
Entain was a big mover, dropping over 5% after the Ladbrokes owner said third-quarter net gaming revenue would be down by by high single-digit percent – worse than previous guidance – driven by adverse sporting results during September, tighter gambling regulation and weaker growth in Australia and Italy.
British insurer Aviva edged lower on the news it had bought AIG’s UK protection business for £460m. AIG Life UK provides a full suite of individual and group protection products, with 1.3 million individual protection customers and 1.4 million group protection members, Aviva said. Aviva’s boss Amanda Blanc said the deal “brings significant strategic and financial benefits” to the company.
GSK rose on the approval of its Arexvy vaccine by Japan’s Ministry of Health, Labour and Welfare. The vaccine, for the prevention of RSV disease in adults aged 60 and above, marks the first RSV vaccine for this age group in Japan.
Top 10 FTSE 100 Risers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Crh Plc | +2.90% | +126.00 | 4,467.00 |
| 2 |  |
Astrazeneca Plc | +1.05% | +116.00 | 11,162.00 |
| 3 |  |
Smurfit Kappa Group Plc | +0.81% | +22.00 | 2,742.00 |
| 4 |  |
Standard Chartered Plc | +0.75% | +5.60 | 755.60 |
| 5 |  |
Bp Plc | +0.51% | +2.70 | 528.40 |
| 6 |  |
Marks And Spencer Group Plc | +0.46% | +1.10 | 238.00 |
| 7 |  |
Melrose Industries Plc | +0.24% | +1.10 | 469.10 |
| 8 |  |
Bae Systems Plc | +0.20% | +2.00 | 1,013.00 |
| 9 |  |
Shell Plc | +0.19% | +5.00 | 2,612.50 |
| 10 |  |
Barclays Plc | +0.14% | +0.22 | 155.54 |
Top 10 FTSE 100 Fallers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Ocado Group Plc | -3.59% | -24.80 | 666.40 |
| 2 |  |
Carnival Plc | -3.50% | -37.00 | 1,020.00 |
| 3 |  |
Flutter Entertainment Plc | -3.46% | -485.00 | 13,535.00 |
| 4 |  |
Antofagasta Plc | -3.13% | -44.50 | 1,377.50 |
| 5 |  |
Rio Tinto Plc | -2.99% | -155.00 | 5,028.00 |
| 6 |  |
Tui Ag | -2.99% | -14.40 | 467.80 |
| 7 |  |
Anglo American Plc | -2.69% | -60.50 | 2,187.50 |
| 8 |  |
Fresnillo Plc | -2.55% | -14.80 | 565.80 |
| 9 |  |
Severn Trent Plc | -2.43% | -59.00 | 2,366.00 |
| 10 |  |
Johnson Matthey Plc | -2.35% | -39.50 | 1,640.50 |
US close: Stocks fall for third straight day in FOMC aftermath
Stocks on Wall Street fell for a third straight day on Friday in the aftermath of the Federal Reserve’s monetary policy meeting after which the central bank indicated that rates will stay elevated for the foreseeable future.
After struggling for direction for most of the session, the Dow Jones Industrial Average dropped into the red by the close, finishing down 0.3% at 33,964, while the S&P 500 fell 0.2% to 4,320 and the Nasdaq slipped 0.1% to 13,212.
US markets had been in retreat mode since Wednesday, after the Federal Open Market Committee suggested that an interest rate hike was probable before the end of the year.
While policymakers kept rates unchanged at the 5.25-5.5% range at this month’s meeting, they predicted that rates would likely stay around the 5% level for the whole of 2024 as they commit to a ‘higher-for-longer’ approach.
In US economic data on Friday, the S&P Global services purchasing managers’ index (PMI) slipped from 50.5 to 50.2 in September, surprising analysts who had expected a rise to 50.6.
The manufacturing PMI came in ahead of forecasts, rising 47.9 to 48.9 (consensus: 48) but still remained below the 50 level that separates growth and contraction.
Digesting the Fed’s comments
“The Fed sees a stronger economy unfolding than it did in its previous economic projections three months ago. Hence, it also believes that it can withstand higher interest rates that, despite progress made on the inflation front, is needed for the final leg of the inflation fight,” explained analyst Bob Schwartz from Capital Economics.
“The ghost of the 1970s still haunts policymakers, who fret that a premature easing of policy could reignite the inflation embers, as was the case 50 years ago.”
The meeting, along with stronger-than-expected jobless claims figures, resulted in a sell-off in government bonds on Thursday, with the yield on a 10-year Treasury surpassing the 4.5% mark for the first time since 2007. Yields pulled back to the 4.45% mark on Friday.
Bank of America analysts, in their latest ‘Flow Show’ report, said a higher-for-longer strategy raises the risks of a hard landing. “We believe ‘lower-for-longer’ rates and yields caused bubble and boom in 2010s and 2020/21,” the bank wrote. “‘Higher-for-longer’ means hard landing risks and [bubble] pops and busts in the first half of 2024.”
Streaming companies in focus
Amazon gave up earlier gains to finish down 0.2% on the news that the online giant was expected to add commercials to its Prime Video streaming service in early 2024 as it attempts to generate more cash.
Sector peers Paramount, Walt Disney and Netflix fell with the Writers Guild of America and The Alliance of Motion Picture and Television Producers back at the negotiating table. The WGA negotiating committee said on Friday that it was meeting again with the AMPTP again at the weekend yet still asked “as many [WGA members] to come out to the picket lines tomorrow”.
ADRs of newly-listed chipmaker Arm Holdings remained under pressure with the shares falling a further 1.6% to $51.32, marginally above the IPO price of $51.
Meanwhile, Fox Corp was down on the news that Rupert Murdoch was stepping down as chairman, with his son Lachlan jumping in to head the ship.
Monday newspaper round-up: NatWest, economic slowdown, EU tariffs, Conduit Pharma, HS2
10% tariff on electric car exports from Europe. Renault’s chief, Luca de Meo, led the calls, saying that if the EU did not take action, then policymakers would simply be “handing a chunk of the market to global manufacturers”, including Chinese companies, which are making significant inroads. – Guardian
A British biopharmaceuticals business has completed a deal to list on the Nasdaq, delivering a further blow to the London Stock Exchange, which has struggled to persuade fast-growing companies to float in the UK. Conduit Pharmaceuticals completed its merger with Murphy Canyon Acquisition Corp, a Nasdaq-listed special purpose acquisition company after the US market closed on Friday. The deal placed a value of $1.2 billion on the business. The new combined company has been named Conduit Pharmaceuticals. – The Times
Gas and electricity suppliers have been accused of profiteering and discrimination by businesses, including Iceland and Burger King. British businesses have raised concerns over the behaviour of gas and electricity companies in submissions to the energy regulator. The sector has come under increasing scrutiny since the energy crisis sent bills spiralling. – Telegraph
It would be “crazy” not to reassess whether the full HS2 rail project remains viable, Grant Shapps has said, amid signs the government could axe the northern leg. After nearly a week of briefings that ministers are preparing to ditch the Birmingham to Manchester section, the defence secretary refused to rule out such a move. – Guardian
