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London open: FTSE gains as Kwarteng to bring forward details of debt-cutting plans
London stocks rose in early trade on Tuesday following strong gains on Wall Street and as investors welcomed news that chancellor Kwasi Kwarteng plans to bring forward the publication of his debt-reduction proposals.
At 0825 BST, the FTSE 100 was up 0.7% at 6,958.85, while the pound was 0.4% firmer versus the dollar at 1.1369 – its highest level in two weeks.
On Monday, the chancellor yielded to pressure and announced he would abandon plans to cut the top rate of tax, but gave no indication he would bring forward the publication of the medium-term fiscal plan.
However, on Tuesday it was widely reported that the government had now once again bowed to pressure and will publish the plan later this month, having previously said they would be published at the end of November.
The OBR will also bring forward its forecasts, to be published at the same time. The BBC said Conservative MP Mel Stride, chair of the Treasury Committee, had “pressed the chancellor very hard”.
A statement confirming the move is expected later on Tuesday.
In equity markets, insurer Legal & General jumped to the top of the FTSE 100 after saying its investment arm had no exposure to recent turmoil in the liability-driven investment (LDI) market caused by Kwarteng’s recent mini-budget.
Phoenix Group, Prudential and Aviva also rose.
Elsewhere, high street bakery chain Greggs rallied after it said total sales were up 14.6% over the 13 weeks ended 1 October, putting it on track to meet full-year expectations.
In broker note action, Hargreaves Lansdown was boosted by an upgrade to ‘hold’ at Jefferies, while National Grid was higher after an upgrade to ‘neutral’ at Citi.
Pennon and Severn Trent both advanced after upgrades to ‘outperform’ at RBC Capital Markets.
Top 10 FTSE 100 Risers
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Hargreaves Lansdown Plc | +6.65% | +57.20 | 916.80 |
| 2 |  |
Ocado Group Plc | +5.35% | +24.90 | 490.60 |
| 3 |  |
Whitbread Plc | +5.09% | +118.00 | 2,436.00 |
| 4 |  |
Halma Plc | +4.91% | +101.00 | 2,160.00 |
| 5 |  |
Legal & General Group Plc | +4.78% | +10.60 | 232.50 |
| 6 |  |
Direct Line Insurance Group Plc | +4.58% | +8.50 | 194.00 |
| 7 |  |
Flutter Entertainment Plc | +4.55% | +441.00 | 10,135.00 |
| 8 |  |
Tui Ag | +4.27% | +4.50 | 109.95 |
| 9 |  |
Phoenix Group Holdings Plc | +4.14% | +22.00 | 552.80 |
| 10 |  |
Next Plc | +4.09% | +198.00 | 5,034.00 |
Top 10 FTSE 100 Fallers
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Centrica Plc | -1.78% | -1.28 | 70.78 |
| 2 |  |
Carnival Plc | -0.67% | -3.60 | 535.00 |
| 3 |  |
Sse Plc | -0.54% | -8.50 | 1,564.50 |
| 4 |  |
Shell Plc | -0.37% | -8.50 | 2,291.00 |
| 5 |  |
Shell Plc | -0.00% | -0.00 | 1,894.60 |
| 6 |  |
Just Eat Plc | -0.00% | -0.00 | 861.00 |
| 7 |  |
Nmc Health Plc | -0.00% | -0.00 | 938.40 |
| 8 |  |
Rsa Insurance Group Ld | +0.00% | +0.00 | 684.20 |
| 9 |  |
London Stock Exchange Group Plc | +0.00% | +0.00 | 8,620.00 |
| 10 |  |
Royal Bank Of Scotland Group Plc | +0.00% | +0.00 | 120.90 |
US close: Stocks end session sharply higher
Wall Street stocks closed higher on Monday after major indices wrapped up the third quarter in the red.
At the close, the Dow Jones Industrial Average was up 2.66% at 29,490.89, while the S&P 500 was 2.59% firmer at 3,678.43 and the Nasdaq Composite saw out the session 2.27% stronger at 10,815.43.
The Dow closed 765.38 points higher on Monday, easily reversing losses recorded in the previous session.
After a hellish third quarter, where the Dow Jones shed 6.66%, heightened inflation and the Federal Reserve’s attempts to bring surging prices to a stop, despite what it may do to the US economy, will continue to remain at the forefront of investors’ minds going into Q4.
Also in focus throughout the session, OPEC+ was said to be considering an oil output cut of over 1.0m barrels per day, marking the biggest move taken by the cartel to address weakness in global demand. West Texas Intermediate futures rose 3.21% on the news to trade at $82.04 a barrel.
On the macro front, S&P Global‘s manufacturing PMI was revised higher in September to 52, up from a preliminary reading of 51.8 and above expectations for a print of 51.5.
Elsewhere, the Institute for Supply Management’s manufacturing PMI unexpectedly fell to 50.9 in September, pointing to the slowest growth in factory activity since 2020. The reading was down from 52.8 in August and short of forecasts for a print of 52.2.
Finally, US construction spending decreased 0.70% month-on-month in August, according to the Census Bureau.
No major corporate earnings were released on Monday.
Tuesday newspaper round-up: Christmas shopping, John Lewis, Legal & General
British shoppers are expected to spend £4.4bn less on non-essentials – a fall of 22% – in the run-up to Christmas as a surge in the cost of living puts a squeeze on their spare cash. Almost 60% of shoppers expect to cut back on non-food spending in the so-called “golden quarter”, or last three months of the year when most retailers book the majority of profits, according to research by Retail Economics with retail technology firm Metapack. – Guardian
John Lewis has pledged to have “buy back or take back” schemes operating in every product category by 2025 and to develop more rental and resale options as it steps up efforts to be a more sustainable business. The group, which runs Waitrose supermarkets as well as a string of department stores, will also invest £2m over the next five years to restore and protect nature in Norfolk, a key source of meat, cereal and vegetable products, and in India’s Noyyal and Bhavani river basins, where it sources cotton, under a partnership with the wildlife charity WWF. – Guardian
A prototype nuclear fusion power station will be built at the site of one of the UK’s last coal-burning stations, Jacob Rees-Mogg has announced. In a speech to the Tory party conference, the Business Secretary said the pioneering facility in Nottinghamshire will be “a beacon of bountiful, green energy” and prove the technology’s commercial viability. – Telegraph
Legal & General has made hundreds of millions of pounds selling the pension products that forced the Bank of England into a £65bn bailout last week. The FTSE 100 pensions giant has earned around £80m annually from offering so-called liability-driven investment (LDI) funds to clients in recent years, according to analyst estimates. – Telegraph
Sustainable investment policies are damaging businesses, according to an American activist who is urging Chevron to pump more oil, Apple to ditch a racial equity audit and Disney to avoid politics. Vivek Ramaswamy, a conservative investor, argued that the environmental, social and governance (ESG) agenda, an increasing priority in boardrooms worldwide, is “sucking the lifeblood out of a democracy”. – The Times
