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London open: Stocks rally ahead of Fed meeting; Kingfisher surges
London stocks rallied in early trade on Tuesday following a flat close in the previous session, as investors eyed the start of the Federal Reserve’s two-day policy meeting and an expected rate cut.
At 0825 BST, the FTSE 100 was up 0.7% at 8,337.02.
Derren Nathan, head of equity research at Hargreaves Lansdown, said: “After an indecisive start to the week the FTSE was expected to open around 0.75% today. This followed a mixed day across the pond where falls in the share prices of Apple and Nvidia offset broad based strength in other sectors.
“While markets remain certain of a rate cut at tomorrow’s Fed meeting, the jury is still broadly split as to whether the reduction will be a quarter point or a half point. US Bond yields were largely flat yesterday suggesting little change in opinion. There will be a few final pieces of the jigsaw for policy makers to digest later today, including US retail sales and industrial production.”
In equity markets, B&Q and Castorama owner Kingfisher surged to the top of the FTSE 100 after it lifted the lower end of full-year profit guidance as it posted interim results in line with expectations.
The company now expects adjusted pre-tax profit of £510m to £550m, up from £490m to £550m. Pre-tax profit for the six months to 31 July rose 2.3% to £324m.
Gambling technology firm Playtech was in the black again after agreeing to sell its Italian business, Snaitech, to Flutter Entertainment for €2.3bn in cash.
Auction Technology rose sharply after an upgrade to ‘overweight’ from ‘neutral’ at JPMorgan Cazenove, which said the shares are overly discounting earnings risk into 2025.
On the downside, Essentra tanked as it warned that full-year adjusted operating profit would be below market expectations, pinning the blame on softer market conditions in Europe and a slower-than-expected rate of recovery in the Americas region.
THG was also down after the e-commerce firm confirmed it was “actively undertaking detailed work” to review potential structures to facilitate the demerger of its technology services arm, THG Ingenuity.
Top 10 FTSE 100 Risers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Kingfisher Plc | +6.48% | +18.80 | 309.10 |
| 2 |  |
Banco Santander S.a. | +3.95% | +14.50 | 381.50 |
| 3 |  |
Smurfit Westrock Plc | +3.16% | +109.00 | 3,554.00 |
| 4 |  |
Jd Sports Fashion Plc | +3.01% | +4.65 | 158.95 |
| 5 |  |
Prudential Plc | +2.41% | +14.80 | 629.80 |
| 6 |  |
Pershing Square Holdings Ltd | +2.32% | +82.00 | 3,618.00 |
| 7 |  |
Smith (ds) Plc | +2.18% | +10.20 | 478.00 |
| 8 |  |
Diageo Plc | +2.13% | +52.50 | 2,518.50 |
| 9 |  |
Barclays Plc | +2.08% | +4.60 | 225.60 |
| 10 |  |
Intermediate Capital Group Plc | +2.07% | +48.00 | 2,370.00 |
Top 10 FTSE 100 Fallers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
British American Tobacco Plc | -0.44% | -13.00 | 2,957.00 |
| 2 |  |
Gen.acc.8se.pf | -0.35% | -0.50 | 142.00 |
| 3 |  |
Smith & Nephew Plc | -0.29% | -3.50 | 1,186.50 |
| 4 |  |
Unilever Plc | -0.22% | -11.00 | 4,939.00 |
| 5 |  |
Segro Plc | -0.20% | -1.80 | 902.60 |
| 6 |  |
Woodside Energy Group Ltd | -0.16% | -2.00 | 1,234.00 |
| 7 |  |
Ricoh Co Ltd | -0.00% | -0.00 | 981.88 |
| 8 |  |
Lloyds Grp Dr A | -0.00% | -0.00 | 109.50 |
| 9 |  |
Lloyds Grp Dr A | -0.00% | -0.00 | 108.00 |
| 10 |  |
Gen.acc.7se.pf | -0.00% | -0.00 | 127.00 |
US close: Dow hits new record, but markets subdued ahead of Fed
Stocks put in a mixed performance on Monday, with the Nasdaq falling into the red but the Dow reaching a new all-time high, though gains were modest as investors adopted a cautious approach ahead of a pivotal Federal Reserve meeting on Wednesday.
The Dow Jones Industrial Average rose 0.6% to a new closing high of 41,622.08, surpassing the previous record of 41,563.08 reached on 30 August. A late rally saw the S&P 500 eke out a 0.1% gain after trading in the red for most of the session, but the Nasdaq fell 0.5%.
The subdued session follows some impressive gains made last week, with the S&P 500 and Nasdaq surging 4% and 6%, respectively, after five consecutive positive sessions.
While an easing of monetary policy has been widely expected for some time, the jury’s still out on the size of potential rate cut when the Fed’s two-day policy meeting concludes this week, with investors divided between a 25 basis-point (bp) and 50bp reduction in the Federal Funds Rate.
“The Fed is expected to twist but there is a degree of uncertainty here […], as investors ponder how deep that first cut might be,” said AJ Bell’s head of financial analysis Danni Hewson.
“Odds of a 50bp slice have improved since last week, with an undercurrent of nervousness about the strength of the US economy still rippling through markets.”
The only major economic data of the day was the NY Empire State manufacturing index, which jumped more than expected, with business activity in the area rising for the first time in nearly a year on the back of a climb in new orders and a big increase in shipments. The headline general business conditions index rose 16 points to 11.5, from -4.7 in August, beating the -3.9 reading predicted by economists.
Apple takes a dive
Apple shares fell 3% on reports that preorders for the iPhone 16 Pro were down on the first weekend of sales compared with the previous model – especially in China. In a research note, Barclays pointed to a “softer start […] due to weakening consumer spend, macro pressure and competition”.
Shares in Bausch & Lomb surged 14% amid speculation that the North American contact lens and eye care products supplier is exploring a potential sale. According to the Financial Times, Bausch & Lomb has hired advisers to test the waters with potential buyers as it looks to separate itself from its heavily indebted parent company, Bausch Health, whose shares also leapt 11%.
Aluminium producer Alcoa was also a high riser, jumping 6%, after announcing the sale of its 25.1% stake in Saudi miner Ma’aden for $1.1bn.
Semiconductor giant Intel gained 6% on the back of weekend reports that it might receive $3.5bn in federal grants to produce chips for the Pentagon.
Tuesday newspaper round-up: Airbus, Boden, Amazon
Alison Rose, the former chief executive of NatWest, has taken a job as an adviser to one of the UK’s top law firms as she tries to return to the City after a career-damaging row with Nigel Farage last year. Rose is joining Mishcon de Reya as a diversity and inclusion adviser, a role that will involve mentoring some of the firm’s partners. She will also work closely with the equity, diversity and inclusion committee at the firm, which is known for having represented Diana, Princess of Wales during her divorce. – Guardian
The online gambling company Sky Betting & Gaming has been reprimanded by the data regulator for unlawfully sharing customers’ information with advertising companies that could then target those users with personalised marketing. The Information Commissioner’s Office (ICO) said it had investigated Bonne Terre Ltd, trading as Sky Betting & Gaming, after a complaint by the campaign group Clean Up Gambling. – Guardian
Airbus is preparing to revive plans for a new helicopter factory in the UK as part of its attempt to secure a £1bn contract from the Ministry of Defence (MoD). The manufacturing giant has indicated it could proceed with the plant after reversing its decision to pull out of the bidding to replace the RAF’s Puma helicopter fleet last month. At the time of its withdrawal, Airbus said the terms of the MoD’s tender weren’t sufficiently attractive for it to proceed. – Telegraph
“I made a series of mistakes and felt like a fool,” the boss of Boden has admitted after his preppy British fashion brand sank further into the red last year. Losses at the London-based clothing and lifestyle retailer widened to £9.4 million in the 12 months to the end of December, compared with a loss of £3.9 million in the previous year. – The Times
Amazon employees have been told to return to working from the office five days a week from the start of next year, as the giant online retailer reverses a host of pandemic-era policies. Hot-desking will be scrapped in offices which were previously designed to have allocated desks for individuals. Layers of management will be removed to cut back on unnecessary meetings. – The Times
