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London open: Housebuilders lead decline after gloomy Persimmon update
London stocks fell in early trade on Tuesday, with housebuilders pacing the decline after a gloomy update from Persimmon, as investors turned their attention to the US mid-term elections.
At 0830 GMT, the FTSE 100 was down 0.6% at 7,258.79.
Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said: “The control of US Congress hangs in the balance today as the mid-term elections are set to take place, but already the markets appear to be pricing in a Republican victory.
“Although the final polls pointed to an increasingly competitive political landscape, worries about the economy are looming large in this campaign, hinting that there could be trouble for Democrats in the Congressional race and in the fight for seats up for grabs in the Senate, especially with Joe Biden remaining unpopular.”
On home shores, industry research showed that retail sales growth slowed in October as the mounting cost-of-living crisis curbed spending.
According to the latest BRC-KPMG Retail Sales Monitor, total sales rose by 1.6% in October, compared to a rise of 2.2% in September. The figure was below both the three-month average of 1.7% and 12-month average of 2.7%.
On a like-for-like basis, sales rose 1.2% year-on-year, compared to a 1.8% rise in September. That was largely in line with the three-month average of growth of 1.2%, and ahead of the 12-month average of 1.0%.
Helen Dickinson, chief executive of the British Retail Consortium, said: “As the cost of living for consumers continued to rise, retail sales slowed in October. With November’s Black Friday sales just around the corner, people look to be delaying spending, particularly on bigger purchases.
“Clothing and footwear, which saw stronger sales this year, declined as the mild weather meant customers held back on buying winter outfits.”
The last three months of the year is crucial for many retailers, as shoppers splash out on festive treats.
But Dickinson warned: “Christmas will come later than last year for many, and may be more gloom than glitter as families focus on making ends meet, particularly as mortgage payments rise.”
In equity markets, housebuilders were the standout losers as Persimmon warned of fewer completions and a hit to margins from falling house prices amid the cost-of-living crisis. The company said cancellation rates had risen to 28% from 21% in the last six weeks after the government’s disastrous mini budget – which saw thousands of mortgage offers pulled from the market – and rising interest rates.
Persimmon slumped more than 8%, while Taylor Wimpey, Berkeley, Barratt Developments, Vistry, Redrow and Bellway also lost ground.
Hilton Foods slid as it warned that full-year profits would be below its expectations due to challenges in the UK seafood business and the wider macroeconomic environment.
Direct Line was also in the red as it posted a decline in gross written premiums, pointing to a challenging market backdrop for the motor and home segments.
On the upside, soft drinks bottler Coca-Cola HBC rallied after it raised full-year earnings guidance as it reported a boost to revenue from rising prices in the third quarter.
Associated British Foods also gained after it reported a jump in full-year sales and profits despite surging input cost inflation, following a bumper performance at its budget fashion brand Primark.
Elsewhere, Hammerson pushed higher after a well-received third-quarter trading update, while Babcock was boosted by an initiation at ‘buy’ by Berenberg.
Top 10 FTSE 100 Risers
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Associated British Foods Plc | +5.15% | +73.50 | 1,502.00 |
| 2 |  |
Coca-cola Hbc Ag | +3.17% | +61.00 | 1,986.50 |
| 3 |  |
Lloyds Banking Group Plc | +2.12% | +0.89 | 42.91 |
| 4 |  |
Easyjet Plc | +2.05% | +7.50 | 373.70 |
| 5 |  |
Barclays Plc | +1.86% | +2.84 | 155.44 |
| 6 |  |
National Grid Plc | +1.44% | +13.80 | 969.60 |
| 7 |  |
Itv Plc | +1.20% | +0.86 | 72.24 |
| 8 |  |
Bt Group Plc | +1.04% | +1.20 | 116.40 |
| 9 |  |
Hikma Pharmaceuticals Plc | +0.99% | +12.50 | 1,270.00 |
| 10 |  |
Centrica Plc | +0.94% | +0.72 | 77.34 |
Top 10 FTSE 100 Fallers
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Persimmon Plc | -7.18% | -95.00 | 1,228.00 |
| 2 |  |
Dcc Plc | -5.81% | -287.00 | 4,657.00 |
| 3 |  |
Admiral Group Plc | -3.85% | -76.50 | 1,908.00 |
| 4 |  |
Taylor Wimpey Plc | -2.88% | -2.78 | 93.70 |
| 5 |  |
Direct Line Insurance Group Plc | -2.63% | -5.25 | 194.15 |
| 6 |  |
Glencore Plc | -2.20% | -11.70 | 520.30 |
| 7 |  |
Ocado Group Plc | -2.20% | -14.80 | 659.40 |
| 8 |  |
Barratt Developments Plc | -2.13% | -8.20 | 377.50 |
| 9 |  |
Berkeley Group Holdings (the) Plc | -2.01% | -72.00 | 3,508.00 |
| 10 |  |
Bp Plc | -1.89% | -9.50 | 492.30 |
US close: Stocks higher ahead of CPI, midterms
Wall Street stocks closed higher on Monday as investors looked ahead to this week’s midterm election and the publication of the all-important consumer price index.
At the close, the Dow Jones Industrial Average was up 1.31% at 32,827.00, while the S&P 500 advanced 0.96% to 3,806.80 and the Nasdaq Composite came out the gate 0.85% firmer at 10,564.52.
The Dow Jones closed 423.78 points higher on Monday, extending gains recorded in the previous session as market participants thumbed over a hotter-than-expected non-farm payrolls report.
Monday’s gains came ahead of Tuesday’s midterm election, which will determine which US party will control Congress, impacting future government spending, while
In addition to this, traders looked forward to Thursday’s CPI report, which will give further insight into the Fed’s efforts to fight inflation, with another hot inflation report likely to convince investors that a pivot away from higher interest rates may be further away than currently thought.
Investors also digested China’s renewed commitment to remain steadfast with its strict Covid-related measures following optimism last week that authorities would change their minds on restrictions that have been dragging down economic growth in the world’s second-largest economy.
On the macro front, total US consumer credit rose $25.0bn in September down from a revised print of $30.2bn a week earlier for a 6.4% seasonally adjusted annual gain. According to the Federal Reserve, revolving credit rose 8.7% in September, while non-revolting credit increased 5.7%.
In the corporate space, Apple stock traded lower at the open after the tech behemoth revealed that iPhone production had been temporarily halted due to Covid-19 restrictions in China, while Palantir Technologies posted Q3 earnings that fell short of estimates.
Activision Blizzard beat earnings per share and revenue estimates with its third-quarter results, Take-Two Interactive stock slumped in extended trading after cutting its full-year guidance, and Lyft shares also headed south after posting disappointing earnings and active rider figures.
Tuesday newspaper round-up: Natural gas pact, inheritance tax, global brands
Germany is keen to talk to Britain about a solidarity pact that would allow Europe’s largest consumers of natural gas to bail each other out if an extreme cold snap were to create shortages this winter, German officials have said. Such an agreement could be mutually beneficial for both London and Berlin, the German civil servant in charge of rationing in the case of a supply crisis told the Guardian in an interview. – Guardian
A slump in the pound has seen US investors put almost $1bn into London commercial property in recent months even as other international investors take flight. American investors spent $929m (£809m) on commercial property such as offices, shops and warehouses in the capital between July and September, according to data compiled by Savills. That was almost double the $479m invested by US businesses in the second quarter. – Telegraph
Jeremy Hunt is set to announce a new tax raid on inheritance as he battles to balance the books at next week’s Autumn Statement. The Chancellor and Rishi Sunak are understood to have agreed to freeze the threshold above which people must pay tax for another two years. – Telegraph
Global corporations including UPS and Manpower were among 18 companies pursued by the UK government for failing to comply with rules governing the treatment of suppliers, a criminal offence punishable by fines. The business department launched proceedings against them for failing to abide by rules related to the reporting of supplier-payment performance, The Times can reveal. They all complied with the rules after the government intervened – but one, part of Europe’s largest veterinary group, took more than three months to do so. – The Times
A leading British fund manager has been increasing its investment in debt issued by UK companies in the belief that the rapid raising of interest rates by central bankers could be nearing its peak and that the risk of borrowers defaulting is already priced into corporate bonds. The yields on UK corporate bonds have risen sharply since the start of this year on the back of the increase in government debt and fears of growing pressure on companies as the economic outlook darkens. – The Times
