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London open: FTSE falls again after Budget; Shell results in focus
London stocks fell in early trade on Thursday as investors sifted through a raft of corporate releases and continued to mull the implications of the Budget.
At 0825 GMT, the FTSE 100 was down 0.5% at 8,119.25, having closed on Wednesday at its worst level since early August after chancellor Rachel Reeves delivered the first Labour Budget in 14 years.
Matt Britzman, senior equity analyst at Hargreaves Lansdown, said the Budget had failed “to ignite the market flame”.
“Gilt yields will be watched closely after reaching five-month highs in the aftermath of the Budget,” he said.
“Investors are re-assessing where UK interest rates might end up, given that the investment plan for growth is likely to add inflationary pressures into the economy.”
Away from home, the latest data out of China showed that manufacturing activity expanded in October for the first time since April.
According to figures released earlier by the National Bureau of Statistics, the official purchasing managers’ index rose to 50.1 from 49.8 in September, beating expectations for a reading of 49.9.
A reading below 50.0 indicates contraction, while a reading above signals expansion.
The sub-index for production printed at 52.0 for October, while the new orders index came in at 50.0.
The index for raw materials inventory was 48.2, remaining in contraction territory, while the employment index was 48.4.
Meanwhile, the non-manufacturing PMI rose to 50.2 in October from 50.0 in September.
Lynn Song, chief economist, Greater China, at ING, said: “The 50.1 level is the smallest possible expansion for the PMI but nonetheless bucks expectations for continued contraction, and is a positive sign that the small bounce back of industrial production that we saw in September could continue.”
The latest policy announcement from the Bank of Japan was also in focus, as it kept its benchmark policy rate unchanged at 0.25%, as widely expected.
In equity markets, Coca-Cola HBC was the standout performer on the FTSE 100 as it upgraded its full-year outlook following a “strong” performance in the first nine months of the year.
Energy major Shell gained as it posted a dip in third-quarter profits, weighed down by lower oil prices, although the decline was less steep than feared.
Adjusted earnings before interest, tax, depreciation and amortisation fell 5% on the second quarter, to $16.01bn, while adjusted earnings – Shell’s definition of net profit – declined 4% to $6.03bn.
That was notably better than the $5.36bn expected by analysts, however.
On the downside, Smith & Nephew tanked as it slashed its full-year sales guidance after weaker-than-expected trading in China.
Kainos tumbled as the IT services company said full-year revenues would be “moderately below” current market consensus. It said its Digital Services and Workday Services divisions continue to be affected by the macroeconomic environment and related delays in client decision-making.
Spectris was also firmly in the red after saying it expects to deliver full-year adjusted operating profit of around £200m, which is below consensus expectations.
Haleon lost ground as it reported a 0.6% decline in reported revenue for the third quarter.
Online grocery retailer Ocado Group nudged lower as it confirmed speculation that it is appointing former Microsoft exec Adam Warby to replace chair Rick Haythornthwaite, who announced his resignation six months ago.
Warby, who is currently the chair of Nasdaq-listed executive search and management consultancy Heidrick & Struggles International, will join the company on 1 December.
Top 10 FTSE 100 Risers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Smurfit Westrock Plc | +1.59% | +60.00 | 3,839.00 |
| 2 |  |
Coca-cola Hbc Ag | +1.50% | +40.00 | 2,708.00 |
| 3 |  |
Aib Group Plc | +1.25% | +5.00 | 406.50 |
| 4 |  |
Anglo American Plc | +1.19% | +28.50 | 2,414.00 |
| 5 |  |
Carnival Plc | +0.98% | +15.00 | 1,539.00 |
| 6 |  |
Shell Plc | +0.96% | +24.00 | 2,514.50 |
| 7 |  |
Coca-cola Europacific Partners Plc | +0.84% | +50.00 | 6,000.00 |
| 8 |  |
Lloyds Banking Group Plc | +0.82% | +0.44 | 54.10 |
| 9 |  |
Hsbc Holdings Plc | +0.78% | +5.50 | 711.70 |
| 10 |  |
Natwest Group Plc | +0.71% | +2.60 | 370.30 |
Top 10 FTSE 100 Fallers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Smith & Nephew Plc | -13.02% | -143.00 | 955.00 |
| 2 |  |
Next Plc | -3.41% | -347.00 | 9,838.00 |
| 3 |  |
Reckitt Benckiser Group Plc | -2.82% | -134.00 | 4,625.00 |
| 4 |  |
Barratt Redrow Plc | -2.64% | -12.40 | 458.00 |
| 5 |  |
Jd Sports Fashion Plc | -2.48% | -3.15 | 123.90 |
| 6 |  |
Haleon Plc | -2.44% | -9.10 | 364.30 |
| 7 |  |
Whitbread Plc | -2.27% | -72.00 | 3,103.00 |
| 8 |  |
Diploma Plc | -2.03% | -88.00 | 4,250.00 |
| 9 |  |
Marks And Spencer Group Plc | -1.87% | -7.10 | 371.70 |
| 10 |  |
Gsk Plc | -1.85% | -26.00 | 1,381.00 |
US close: Stocks lower following preliminary GDP reading
Wall Street stocks were in the red at the close of trading on Wednesday as market participants digested Q3 earnings and a preliminary Q3 GDP reading.
At the close, the Dow Jones Industrial Average was down 0.22% at 42,141.54, while the S&P 500 lost 0.33% to 5,813.67 and the Nasdaq Composite saw out the session 0.56% weaker at 18,607.93.
The Dow closed 91.51 points lower on Wednesday, extending losses recorded in the previous session.
Wednesday’s primary focus was Q3 earnings from Meta Platforms, which fell short of user growth expectations and warned of a jump in AI spending in FY25, and Microsoft, which told investors that a boom in AI had fuelled double-digit growth in its cloud business.
Elsewhere, Eli Lilly shares headed south after sales of its obesity drug fell well and truly short of expectations, and trade bellwether Caterpillar was in the red after posting weaker-than-expected earnings.
Wednesday’s other key headline was news that America’s economy expanded at a steady clip during the third quarter on the back of robust consumer outlays. According to preliminary figures from the Department of Commerce, in seasonally adjusted terms the country’s gross domestic product grew at an annual rate of 2.8%. That was only a tad less than the 3.0% clip observed over the three months ending in June and economists’ forecasts calling for growth of 2.9%. Household consumption increased by 3.7%, led by a 6% jump in spending on goods, investment in non-residential equipment, meanwhile, jumped by 11.1% and government spending rose by 5% on the back of a 14.9% surge in defence outlays.
Elsewhere on the macro front, private sector hiring picked up in October notwithstanding hurricane recovery efforts, according to consultancy ADP, which reported a 233,000 rise in private sector payrolls, following a print of 159,000 for the month before and beating economists’ forecasts for a reading of 233,000.
In other data news, US mortgage applications eased by 0.1% week-on-week in the seven days ended 25 October, according to the Mortgage Bankers Association, the lowest reading since July. Applications to refinance a mortgage fell by 6%, offsetting a 5% increase in applications to purchase a home.
Finally, pending home sales increased by 2.6% year-on-year in September, according to the National Association of Realtors, the first increase since March and the fastest since May 2021.
Thursday newspaper round-up: Lloyds Banking Group, Microsoft, car finance crisis
The former cryptocurrency executive Nishad Singh, who once shared a $35m Bahamas penthouse with the FTX founder, Sam Bankman-Fried, was spared prison time by a judge on Wednesday for his role in the theft by his imprisoned former boss of about $8bn in customer funds from the now bankrupt exchange. The United States district judge Lewis Kaplan imposed the sentence during a hearing in Manhattan federal court. – Guardian
Lloyds Banking Group has scrapped commission payments across its £15bn motor finance arm after a landmark ruling on car loan misselling, as industry and Treasury officials hold urgent talks amid fears of contagion across the wider financial sector. The moves follow last week’s court of appeal judgment, which agreed that consumers could not have consented to loans that involved “secret” commission payments to brokers and car dealers. – Guardian
Microsoft’s costly investment in artificial intelligence technology is paying off, with quarterly sales surpassing Wall Street expectations to grow 16 per cent to $65.6 billion. Revenue from Microsoft’s Azure cloud computing business, a significant source of growth in recent years, rose 33 per cent in the fiscal first quarter, ahead of estimates of 32 per cent. – The Times
One of the most senior former regulators in Britain has blamed the Financial Conduct Authority for the crisis shaking the motor finance industry, saying the lack of clarity in its rulebook was to blame. Sir Howard Davies, the former chairman of the FCA’s predecessor body, the Financial Services Authority, said he was disappointed by the role of the FCA, adding that the crisis “has caused a lot of anxiety”. – The Times
Former business secretary Lord Mandelson has resigned from the board of a start-up bank founded by a Labour Party donor. In a boardroom clear-out, The Bank of London said Lord Mandelson, Wade Davis and Anthony Watson, the group’s founder, had all stepped down as directors. The bank’s chairman, Carlyle Group chief executive Harvey Schwartz, will also leave. – Telegraph
