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London open: Stocks fall ahead of Budget; StanChart bucks trend
London stocks fell in early trade on Wednesday as jitters crept in ahead of the Autumn Budget, with tax rises and spending cuts on the cards.
At 0820 GMT, the FTSE 100 was down 0.5% at 8,180.73, with Chancellor Rachel Reeves due to deliver the first Labour Budget in 14 years after Prime Minister’s Questions.
Susannah Streeter, head of money and markets at Hargreaves Lansdown, said: “UK investors are braced for a shovel of tax hikes to fill a yawning black hole in the UK government’s finances. There is speculation that Rachel Reeves will try to find ways to raise revenue and cut spending to cover a shortfall of up to £40 billion. What seems certain is that low earners will escape any tax hikes, with yesterday’s announcement of an increase in the minimum wage, indicating the priorities for the government.
“Prime Minister Keir Starmer has promised the payslips of working people will be protected, so there’s an expectation that employers may bear the brunt of tax rises, most likely through increases in National Insurance.
“Investors with equity holdings may also be targeted through a higher capital gains tax or the ending of inheritance tax relief on small cap firms, quoted on AIM. There are concerns that this may be counter-productive to the government’s aim to stimulate investment in UK assets. Retail investors are enthusiastic participants in the London stock market, and CGT tax nudges also risk disincentivising investment, which could make it harder for UK-listed firms to grow. But Ms Reeves is likely to railroad such criticism with initiatives for a bazooka of investment spending to boost UK growth.
“The details of how debt rules will be changed to enable the government to borrow more without breaking its self-imposed borrowing limits are set to be announced. This strategy has been widely trailed to avoid a temperamental attitude from bond investors breaking out, and so far, it appears to have done the trick, although institutions financing government borrowing will keep a keen eye trained on what the swelling investment budget will be spent on.
“While housebuilders, construction firms and companies providing the backbone for renewable energy are likely to benefit from increased investment spending, businesses in the gambling sector have been steeling themselves for fresh duty hikes. An increase in remote gaming duty is looking likely and although it will pile fresh pressure on companies already facing stricter regulation aimed at limiting problem gambling, it’s unlikely to be a huge game changer for the industry.”
In equity markets, Standard Chartered was the standout gainer on the FTSE 100 as it lifted its full-year guidance after a record performance in its wealth division helped third-quarter profits beat expectations.
Glencore advanced after a third-quarter production update.
Next also rallied as the retailer boosted its guidance for both the crucial fourth quarter and the full year, after the recent cold snap caused sales to surge.
Aston Martin was in the black as the car maker backed its full-year outlook and reported a smaller-than-expected loss for the third quarter
GSK fell as the drug maker’s third-quarter sales missed expectations, while Bridgepoint slumped as Citi downgraded the shares to ‘neutral’ following an 80% increase in the share price over the past year.
Top 10 FTSE 100 Risers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Standard Chartered Plc | +3.38% | +29.60 | 906.00 |
| 2 |  |
Glencore Plc | +1.64% | +6.65 | 411.25 |
| 3 |  |
Next Plc | +1.64% | +165.00 | 10,235.00 |
| 4 |  |
Marks And Spencer Group Plc | +1.51% | +5.70 | 382.10 |
| 5 |  |
Admiral Group Plc | +1.28% | +33.00 | 2,604.00 |
| 6 |  |
Flutter Entertainment Plc | +1.11% | +190.00 | 17,365.00 |
| 7 |  |
Barclays Plc | +1.05% | +2.50 | 241.30 |
| 8 |  |
Barratt Redrow Plc | +0.93% | +4.40 | 476.60 |
| 9 |  |
Associated British Foods Plc | +0.87% | +20.00 | 2,309.00 |
| 10 |  |
International Consolidated Airlines Group S.a. | +0.76% | +1.60 | 211.30 |
Top 10 FTSE 100 Fallers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Banco Santander S.a. | -3.42% | -13.00 | 367.00 |
| 2 |  |
Gsk Plc | -3.27% | -47.50 | 1,404.00 |
| 3 |  |
Anglo American Plc | -2.74% | -68.00 | 2,415.00 |
| 4 |  |
Bp 9% 2nd Prf | -2.17% | -3.50 | 157.50 |
| 5 |  |
Diageo Plc | -1.79% | -45.00 | 2,471.50 |
| 6 |  |
Bae Systems Plc | -1.76% | -22.50 | 1,257.00 |
| 7 |  |
Prudential Plc | -1.60% | -10.40 | 638.60 |
| 8 |  |
Bp Plc | -1.46% | -5.55 | 373.70 |
| 9 |  |
Woodside Energy Group Ltd | -1.33% | -16.00 | 1,186.00 |
| 10 |  |
Smith (ds) Plc | -1.20% | -5.60 | 461.40 |
US close: Markets mixed before tech earnings, but Nasdaq hits new high
US stock markets finished mixed on Tuesday as investors kept a lid on risk appetite amid a barrage of corporate earnings and economic data, though the Nasdaq still managed to push ahead to a new high.
The Dow finished 0.4% lower at 42,233.05, while the S&P 500 rose 0.2% to 5,832.92, while the Nasdaq gained 0.8% to 18,712.75, topping its previous record of 18,647.45 reached on 10 July.
While plenty of earnings were released during the session, tech stocks were in focus with five of the Magnificent Seven stocks all due to report this week. Google parent Alphabet is up first with results due out after Tuesday’s closing bell.
“Generally speaking, if these companies show strong results, it could give investors a big boost of confidence in tech spending – both for everyday consumers and businesses. It would be a sign that tech is holding steady, even with the current economic challenges,” said AvaTrade’s chief market analyst, Kate Leaman.
“Solid growth in cloud services and a rebound in digital ads would especially lift spirits in the industry, likely giving tech stocks a nice lift in the near term.”
Blue chips Snap, Reddit and Advanced Micro Devices were also in focus ahead of their quarterly numbers due out after the close.
Economic data barrage
On the macro front, preliminary numbers from the Commerce Department revealed that the US trade deficit had widened 14.9% to a two-and-a-half-year high of $108.2bn in September.
Wholesale inventories fell by 1% month-on-month in September, according to the Census Bureau, down to $905.0bn, following a revised 0.2% increase in August. Durable goods inventories declined by 0.2%, while non-durable goods stocks rebounded by 0.2%.
The Conference Board’s consumer confidence index increased to 108.7 in October, up from 99.2 in September, with the present situation index increasing by 14.2 points to 138.0 and the expectations index rising 6.3 points to 891.
September’s JOLTS job report revealed the number of job openings in the US had fallen by 418,000 to 7.44m last month, according to the Bureau of Labor Statistics, down from a revised print of 7.86m in August and short of analysts’ expectations of 7.99m.
Finally, S&P CoreLogic/Case-Shiller said that US home prices increased by 4.2% in August, down from the 4.8% gain seen in July as higher interest rates curbed growth.
Market movers
McDonald’s finished lower despite third-quarter earnings surpassing Wall Street expectations, as sentiment was weighed down by international challenges. US comparable sales rose 0.3%, but overall same-store sales fell 1.5% as international operated markets saw sales fall 2.1%.
Pfizer also underwhelmed despite a bullish update, in which it lifted full-year guidance after third-quarter numbers beat Wall Street expectations. The firm raised its full-year revenue target to between $61bn and $64bn, from $59.5bn to $62.5bn, following a 31% jump in third-quarter revenues.
Shares in Ford tanked 8% on the news that more than 1,000 workers will go on strike on Wednesday in a long-running dispute over pay and contract changes. Union Unite said on Tuesday that Ford has failed to offer its administrative workers a permanent pay increase. Instead, the car maker has offered many of its office workers a one-off payment for 2024 and wants to impose 100% performance related pay from 2025 for all staff.
Miami-based cruise operator Royal Caribbean rose after it reported adjusted third-quarter earnings per share of $5.20, surpassing analyst expectations of $5.04, while Vans and North Face owner VF Corporation surged 27% after smashing forecasts with its second-quarter profits.
Wednesday newspaper round-up: Starbucks, Santander, Alphabet
Starbucks office workers will risk losing their jobs if they fail to comply with the company’s hybrid work requirement that employees are in the office three times a week. According to the Wall Street Journal an internal message sent to employees warns that an “accountability process” will start in January 2025. Consequences for non-compliance are “up to, and including, separation”, according to the company message. – Guardian
Santander is cutting more than 1,400 jobs across its UK business this year as part of its efforts to reduce costs. The Spanish bank’s chief executive officer, Hector Grisi, confirmed the cuts as its UK division delayed publication of its latest financial results to consider the impact of an influential court ruling linked to commission on car finance. Grisi told a press conference on Tuesday that the company would cut 1,425 jobs in the UK as it automated more of its operations. It is understood that the redundancies are largely completed and will be done by the end of the year. – Guardian
Rachel Reeves’s feared inheritance tax (IHT) raid has triggered a surge in investors racing to sell funds which own UK companies listed on the stock market. Investors pulled nearly £300m from funds specialising in small UK companies last month – almost a four-fold increase on the £80m withdrawn in August, according to Morningstar Direct. Mid-sized UK stocks also suffered from Budget uncertainty, with funds reporting outflows for the first time since March. – Telegraph
Alphabet, the parent company of Google, beat Wall Street’s profit and revenue expectations as artificial intelligence technology continues to drives growth in cloud computing sales and search engine advertising. Sundar Pichai, Alphabet’s chief executive, hailed the “extraordinary” momentum across the business as the company reported a 33.6 per cent increase in third-quarter net profit to $26.3 billion, outpacing Wall Street estimates of $22.9 billion. – The Times
Rolls-Royce, a frontrunner in the race to deliver Britain’s first mini nuclear power plants, has sold a 20 per cent stake in its business developing the nascent technology. The Czech power company CEZ is understood to have paid millions of pounds for the stake in Rolls-Royce SMR as part of a joint push by the companies to deploy small modular reactors (SMRs). The utility has placed an order for units producing three gigawatts of electricity in the Czech Republic. – The Times
