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London open: Stocks flat as investors pause for breath
London stocks were flat in early trade on Wednesday as investors paused for breath after recent losses, with the prospect of higher-for-longer interest rates continuing to weigh on sentiment.
At 0835 BST, the FTSE 100 was steady at 7,627.45. Overnight, stocks on Wall Street slid after weak consumer confidence and home sales data added to concerns about the US economy.
Susannah Streeter, head of money and markets at Hargreaves Lansdown, said: “There may be a small pause for breath on Wall Street after the steepest sell off since March, but sentiment is unlikely to improve markedly signs of deteriorating confidence, while inflation remains off target.
“This week’s data points to weakening optimism about economic prospects, with new home sales in August falling 8.7%, a bigger drop than expected. The Conference Board’s Consumer Confidence Index also marked up a bigger fall in sentiment than expected. The unfortunate collision of disappointing data and stubborn inflation is causing a bout of anxiety which doesn’t look easy to calm. 10-year US Treasury yields have been pushed to the highest levels since 2007 as investors assess the prospects that interest rates will be forced to stay higher for longer, with fewer cuts anticipated next year.”
In equity markets, property developer Land Securities lost ground even as it reported a rise in lettings over the first five months of the financial year as demand for office space held up, despite rising interest rates.
British Land, Derwent London and Great Portland Estates were all knocked lower by rating downgrades at Jefferies.
On the upside, Ithaca Energy surged after the UK oil and gas regulator gave the green light for the development of the Rosebank oil and gas field in the North Sea, in which it has a 20% working interest.
Gambling company Flutter Entertainment was up after saying it had bought a 51% stake in Serbia’s MaxBet for €141m (£123m), with an option to acquire the remaining 49% in 2029 based on performance.
Wizz Air flew higher after an upgrade to ‘hold’ from ‘sell’ at Liberum. “Recent share price weakness has seen our target price hit and left the valuation more reflective of the risks and rewards,” said analyst Gerald Khoo.
Top 10 FTSE 100 Risers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Hikma Pharmaceuticals Plc | +2.31% | +48.00 | 2,128.00 |
| 2 |  |
Ferguson Plc | +2.10% | +270.00 | 13,150.00 |
| 3 |  |
Halma Plc | +1.97% | +37.50 | 1,942.00 |
| 4 |  |
Spirax-sarco Engineering Plc | +1.04% | +96.00 | 9,338.00 |
| 5 |  |
Auto Trader Group Plc | +0.97% | +6.00 | 626.80 |
| 6 |  |
Standard Chartered Plc | +0.87% | +6.60 | 763.00 |
| 7 |  |
Flutter Entertainment Plc | +0.81% | +110.00 | 13,765.00 |
| 8 |  |
Prudential Plc | +0.74% | +6.60 | 892.60 |
| 9 |  |
Barratt Developments Plc | +0.70% | +3.30 | 475.60 |
| 10 |  |
Rentokil Initial Plc | +0.68% | +4.00 | 592.00 |
Top 10 FTSE 100 Fallers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Ocado Group Plc | -4.43% | -30.20 | 651.40 |
| 2 |  |
Centrica Plc | -4.00% | -6.65 | 159.50 |
| 3 |  |
Severn Trent Plc | -1.86% | -44.00 | 2,317.00 |
| 4 |  |
Sainsbury (j) Plc | -1.80% | -4.70 | 257.00 |
| 5 |  |
United Utilities Group Plc | -1.61% | -15.60 | 953.60 |
| 6 |  |
National Grid Plc | -1.60% | -16.10 | 989.40 |
| 7 |  |
Sse Plc | -1.33% | -22.00 | 1,637.50 |
| 8 |  |
British Land Company Plc | -1.32% | -4.30 | 322.50 |
| 9 |  |
Rolls-royce Holdings Plc | -1.27% | -2.80 | 216.90 |
| 10 |  |
Tesco Plc | -1.26% | -3.40 | 266.70 |
US close: Dow tumbles on worst day in six months
Wall Street faced a challenging Tuesday, with major stock indices taking a hit due to rising concerns about hawkish statements from Federal Reserve officials and worries over escalating interest rates.
The Dow Jones Industrial Average fell by 1.14%, ending the day at 33,618.88.
Similarly, the S&P 500 recorded a decline of 1.47%, settling at 4,273.53, while the tech-heavy Nasdaq Composite dropped 1.57% to close at 13,063.61.
On the currency front, the dollar was stable against sterling at 82.25p, while it slipped 0.01% on the euro to 94.58 euro cents.
The greenback also faced a slight dip of 0.05% against the yen, changing hands at JPY 149.00.
“Hawkish commentary by Fed officials mentioning one more rate hike, some $134bn of new government debt sales this week and the risk of a US government shutdown are too much for stock investors,” said IG senior market analyst Axel Rudolph earlier.
“Global equity indices’ slip through key technical support during the seasonally weaker period of the year point to further declines.
“US new home sales have borne the brunt of rapidly rising rates and fall the most in 11 months.”
Mixed economic indicators reflect fluctuating confidence and home sales
In economic news, the Conference Board reported that consumer confidence dwindled to a four-month trough in September, registering at 103.0.
That marked a decrease from its August reading of 108.7, underscoring a potentially wavering sentiment among consumers.
On the housing front, the Commerce Department revealed a dip in new home sales.
When adjusted for seasonal factors, the annual rate for new home sales in August descended by 8.7% to 675,000, falling short of the anticipated 700,000.
Contrastingly, there was an upward tick in other housing indices.
The Federal Housing and Finance Agency reported a 0.8% month-on-month surge in their house price index for July, surpassing the expected 0.5% rise.
The S&P CoreLogic Case-Shiller index, which monitors home prices in the nation’s 20 most significant metropolitan regions, also witnessed a 0.9% monthly growth.
However, the increase was a marginal 0.1% on an annual scale.
Amazon and United Natural Foods drop, EV firms shine
In equities, grocery wholesale firm United Natural Foods suffered a dramatic 27.43% fall in its stock value.
The descent was triggered by the company’s disappointing sales results, which failed to meet analysts’ expectations, as it reported a fourth-quarter loss.
E-commerce behemoth Amazon dropped 4.03% after the Federal Trade Commission, in collaboration with 17 state attorneys, launched a lawsuit against the company, accusing Amazon of monopolistic behaviour.
On the upside, some members of the electric vehicle sector enjoyed a more upbeat day.
Rivian Automotive saw a 5.35% uptick in its stock value after it got a ‘fresh pick’ designation from Baird analyst Ben Kallo.
Fisker meanwhile experienced a 9.6% rise following its announcement that it would achieve a delivery rate of 300 vehicles daily by the end of the year.
Wednesday newspaper round-up: Inheritance tax, FT, Amazon
The number of first-time buyers in the UK has fallen by more than a fifth, while homes in need of renovation are most in demand as buyers look for cheaper properties, in the latest evidence that people are struggling with higher mortgage costs. There were 22% fewer first-time buyers between January and August compared with the same period last year, according to the mortgage lender Halifax. They still accounted for more than half (53%) of all home loans agreed in the first eight months of this year, similar to a year earlier (52%). – Guardian
Scrapping inheritance tax would cost the government almost £15bn a year in lost revenue by 2032, according to analysis by the Institute for Fiscal Studies that follows calls from Tory MPs for the main tax on inherited wealth to be abolished. The thinktank said the latest figures from HMRC showed fewer than 4% of estates paid inheritance tax (IHT) in 2020-21, but the rapid growth in wealth among older individuals meant this number was set to rise to more than 7% over the next decade. – Guardian
The Financial Times is considering scrapping its print newspaper in some countries around the globe as its traditional readership continues to decline. The City broadsheet said it was considering whether to maintain its print edition in various locations amid a “volatile and fragile” market. The company, which shuttered its own UK printworks last year, said a comprehensive review had been carried out in 2022, taking into account factors such as reduction in circulation and the impact on subscribers and advertising. – Telegraph
The US Federal Trade Commission has accused Amazon of wielding monopoly power to inflate prices and stifle innovation in a landmark lawsuit taking aim at Big Tech’s dominance of the internet The claim by the anti-trust watchdog, which was joined by 17 state attorneys general, follows a four-year investigation into complaints that Amazon and other giant tech groups abused their dominance of search, social media and online retailing to become gatekeepers of commerce on the web. – The Times
The developer of ChatGPT, the generative artificial intelligence chatbot, is reportedly talking to investors about a potential share sale that would value the company at between $80 billion and $90 billion. The valuation would be almost triple what the company was worth after a share sale just eight months ago and would make OpenAI one of the most valued start-ups globally, behind Elon Musk’s SpaceX and ByteDance, which owns the social media platform TikTok. – The Times
