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London open: Stocks nudge lower as investors eye rate announcements
London stocks nudged lower in early trade on Monday ahead of a busy week that includes rate announcements from the Bank of England, the US Federal Reserve and the Bank of Japan.
At 0830 BST, the FTSE 100 was down 0.1% at 8,265.45.
Richard Hunter, head of markets at Interactive Investor, said: “Global interest rate decisions take centre stage this week, with the most intriguing meeting likely to come from the Federal Reserve announcement on Wednesday.
“That there will be a cut from the Fed is now without question, but the scale of the reduction remains under intense debate. The current economic data does not necessarily point to anything beyond a 0.25% cut, but traders are now pricing in an equal likelihood of a more aggressive 0.5% move. The dial has moved slightly in anticipating that the Fed could make a statement move as it begins its easing cycle, and such an outcome would certainly allay any concerns of the central bank having fallen behind the curve. Whatever the outcome, the market is still pricing in 1% of cuts in total by the end of this year, which could take some of the sting from Wednesday’s announcement.”
As far as the BoE is concerned, no change to rates is expected following last month’s cut.
“There may be some interest arising from both retail sales and inflation data, however, potentially to throw some light on the MPC’s next move, which is currently not expected to come into force until November at the earliest,” Hunter said.
Investors were mulling industry research released earlier, which showed the UK housing market strengthened in September, as prices ticked higher and the number of agreed sales jumped.
According to the latest house price index from Rightmove, average new seller asking prices rose 0.8% this month, double the long-term average. Year-on-year, prices rose 1.2%.
The national average asking price is now £370,759.
The number of agreed sales also rose in September, jumping 27%, while the amount of new sellers increased by 14% year-on-year.
The average number of available homes for sale per estate agent is now its highest since 2014.
Autumn is traditionally a busy period in the housing market, but Rightmove said it appeared to have started early this year.
Tim Bannister, director of property science, said there had been a “strong rebound in activity from both buyers and sellers compared to the subdued market at this time last year, continuing the momentum from the better-than-expected summer market”.
“The certainty of a new government followed by the first Bank Rate cut in four years invigorated the market, opening a window of opportunity for movers to act,” he added.
However, he also sounded a note of caution: “Windows of opportunity tend to need a momentum of good news to stay open, and there are still uncertainties ahead which would cause some of the current market activity to ease.”
In particular, Rightmove flagged mortgage rates still being high, despite recent falls, and the upcoming Budget on 30 October.
In equity markets, pensions, savings and life insurance provider Phoenix Group fell as it reported a 15% increase in operating profits in the first half and reiterated its medium-term targets for earnings and cash generation.
The company also announced it was pulling the disposal of its SunLife division, which sells financial products to the over-50s, just three months after putting it up for sale given “current uncertainty in the protection market”.
Close Brothers fell after the merchant bank said that chief executive Adrian Sainsbury has taken a temporary medical leave of absence from the business. Group finance director Mike Morgan will assume Sainsbury’s principal responsibilities, supported by chairman Mike Biggs and members of the senior management team.
On the upside, TI Fluid Systems surged after auto parts engineer ABC Technologies confirmed it had made two approaches for the company that were rejected over the past month but said it was still interested in a deal and was “considering its position”.
ABC made an initial proposal of 165p a share on August 22 and a revised 176p-a-share offer on September 4 – a 20.7% premium to TI Fluid’s closing price on September 13.
In response TI Fluid said the bid “significantly undervalued” the company and its prospects.
Playtech also rallied after the gambling technology maker said annual adjusted earnings would be slightly ahead of expectations, driven by its business-to-business (B2B) division.
Top 10 FTSE 100 Risers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Banco Santander S.a. | +3.44% | +12.50 | 375.50 |
| 2 |  |
Marks And Spencer Group Plc | +2.05% | +7.20 | 358.40 |
| 3 |  |
Auto Trader Group Plc | +1.51% | +13.20 | 885.20 |
| 4 |  |
Associated British Foods Plc | +1.19% | +26.00 | 2,215.00 |
| 5 |  |
Tesco Plc | +1.12% | +4.10 | 368.60 |
| 6 |  |
Sainsbury (j) Plc | +1.04% | +3.00 | 292.80 |
| 7 |  |
Smith (ds) Plc | +0.94% | +4.40 | 471.40 |
| 8 |  |
Jd Sports Fashion Plc | +0.91% | +1.35 | 150.25 |
| 9 |  |
Compass Group Plc | +0.86% | +21.00 | 2,457.00 |
| 10 |  |
Intermediate Capital Group Plc | +0.78% | +18.00 | 2,312.00 |
Top 10 FTSE 100 Fallers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Phoenix Group Holdings Plc | -3.12% | -18.00 | 558.50 |
| 2 |  |
Smurfit Westrock Plc | -2.45% | -85.00 | 3,387.00 |
| 3 |  |
Wise Plc | -1.63% | -10.50 | 635.50 |
| 4 |  |
Prudential Plc | -1.54% | -9.60 | 614.40 |
| 5 |  |
Mondi Plc | -1.45% | -20.50 | 1,397.00 |
| 6 |  |
Melrose Industries Plc | -1.36% | -6.50 | 473.00 |
| 7 |  |
Spirax Group Plc | -1.06% | -80.00 | 7,435.00 |
| 8 |  |
Anglo American Plc | -1.02% | -21.50 | 2,083.00 |
| 9 |  |
Woodside Energy Group Ltd | -0.96% | -12.00 | 1,236.00 |
| 10 |  |
Rio Tinto Plc | -0.88% | -42.00 | 4,715.00 |
US close: Stocks extend win streak as markets eye rate cut
US stocks rose again on Friday, capping off an impressive win streak that more or less erased the losses made last week, as investors awaited a widely expected interest-rate cut from the Federal Reserve in the coming days.
The Dow ended 0.7% higher at 41,393.78, finishing 2.6% higher than last Friday; the S&P 500 rose 0.5% to 5,626.02, putting its weekly gain at 4.0%; while the Nasdaq increased 0.7% to 17,683.98, jumping nearly 6% over the past five sessions.
Helping sentiment was data showing that US consumer sentiment improved to its highest level since May. The University of Michigan’s consumer sentiment index came in at 69.0 for September, up from 67.9 a month earlier and ahead of the 68.0 consensus forecast.
“Following data showing that US consumer sentiment is at a four-month high, investors are now looking forward to next week’s probable first US Fed interest rate cut, possibly by as much as 50 basis points,” said Axel Rudolph, senior technical analyst at IG. “It’ll be the first in over four years after holding rates at a 23-year high of 5.25% to 5.5% since last July.”
Investors widely expect the Federal Funds Rate to be reduced by 25 basis points from the current range – where it stayed since July 2023 – when policymakers meet on 17-18 September, with two further cuts likely this year.
However, in remarks made at a forum organised by The Breton Woods Committee, former New York Fed chief William Dudley said he saw a “strong” case for a 50 basis-point reduction. “I know what I’d be pushing for,” Dudley said, according to Bloomberg. As recently as the previous week, Dudley had been anticipating a 25bp cut.
The former central banker also highlighted how “very unusual” it was for there to be this level of uncertainty on the outcome of a Fed meeting this near to the next policy announcement. However, he added that the Fed usually did not like to surprise markets.
Adobe and Oracle
Two prominent names in focus on Friday were software giants Adobe and Oracle following the release of their quarterly earnings after the closing bell on Thursday. Adobe finished down 8% after the Photoshop and InDesign software group underwhelmed with its guidance for the fourth quarter, while Oracle was rising after lifting its medium-term revenue guidance above analysts’ forecasts – though earlier impressive gains were mostly erased by the close.
Boeing slumped nearly 4% as thousands of workers went on strike after voting overwhelmingly to reject a tentative 25% pay rise. More than 30,000 factory workers at the US plane manufacturer have downed tools, halting production of Boeing’s 737 Max.
Drugmaker Moderna was hit by a downgrade by JPMorgan from ‘neutral’ to ‘underweight’, sending shares down 2%.
Monday newspaper round-up: Airport expansion, workplace pensions, ITV
The younger, tormented minister mulling his position before the Labour government granted Heathrow’s third runway in 2009 might have been greatly relieved to know that, 15 years later, not a shovel would have touched the ground. But now, returning to power with a revamped energy and climate brief, Ed Miliband again finds himself in a cabinet which, many in aviation hope, may usher in bigger airports and more flights – as well as enough CO2 emissions to outweigh any new solar farms. – Guardian
Employees as young as 16 should be automatically enroled into workplace pensions and there is a strong case for making their employers pay in even when they do not contribute themselves, according to a leading thinktank. The Institute for Fiscal Studies (IFS) has warned that many current workers are on track for “inadequate retirement incomes”, with between 30% and 40% of private sector workers, 5 to 7 million people, likely to fall short of what is needed for a minimum standard of living. – Guardian
A £1.6bn contract to build three Royal Navy warships has been plunged into crisis as the company hired to assemble them teeters on the brink of administration. Harland & Wolff, the Belfast-based shipyard famous for building the Titanic, is understood to be preparing to file for administration as early as Monday amid concerns it will run out of cash by the end of this month. – Telegraph
ITV has launched an online shopping tool as it attempts to recover revenues lost by a decline in traditional advertising sales. The broadcaster has released a discount code service for online shoppers that will automatically add cost-saving promotions when making internet purchases. ITV will earn commissions when shoppers use the tool, called Kerching, which is available as a downloadable web browser extension. – Telegraph
Rachel Reeves has been warned that “significant action” is needed to stabilise the public finances in a report that calls for an overhaul of the fiscal regime, including scrapping stamp duty and reining in the pension triple lock. The Organisation for Economic Co-operation and Development said that the government faced “mounting spending pressures” stemming from higher health, pension and climate change costs. – The Times
A former high court judge leading a review into a £1 billion banking fraud has been warned that her inquiry risks losing the trust of victims after it emerged it is still receiving evidence in its eighth year. Dame Linda Dobbs, who is reviewing whether Lloyds Banking Group covered up a scam at HBOS, which it rescued in 2009, has been told that the protracted nature of the exercise risks benefiting alleged perpetrators and exacerbating the suffering of victims. – The Times
