- FTSE 100 down 34 points
- Gold, silver hit highs
- Fresnillo leads risers
4.06pm: FTSE and pound both fall
The FTSE 100 and the pound both fell around 0.4% today.
Declines on the Footsie index were across many sectors, with 16 of the top 20 largest companies in the red.
Top fallers included easyJet, JD Sports, Entain, Prudential and Rightmove.
Silver miners Fresnillo topped the leaderboard, up 6%, with gold miner Endeavour up 0.9%.
The GBP fell 0.44% versus the dollar to $1.2988.
Analyst Razan Hilal at City Index said that, following the drop in the UK inflation rate last week, attention is turning to upcoming data, including Thursday’s UK flash PMIs and BoE governor Andrew Bailey's speeches at the IMF meetings on Tuesday and Thursday.
Ahead of the monetary policy committee meeting on 7 November, markets appear to have already priced in at least one more rate cut from the BoE this year, and Hilal said further movements will likely be driven by Bailey’s statements this week.
"Meanwhile, the US Dollar Index and EURUSD are showing signs of momentum exhaustion, suggesting a possible reversal, which could support a bullish continuation for the pound."
3.17pm: Worker's rights bill to benefit wider economy
The new government's workers’ rights bill will have not only a positive impact on workers in low-paid, insecure work but also benefit businesses and the wider economy, according to a report from the Department for Business and Trade.
Benefits to the economy include a reduction in stress, depression and anxiety, to which 17.1 million working days or £5 billion of output was lost in the 2022/3 tax year, the report said, as well as "better job satisfaction, as well as improved wellbeing and health, which could be amount to billions of pounds a year".
A "significant" benefit is expected to be seen for businesses that have previously been 'undercut' when trying to do the right thing, as well as benefitting from a more productive workforce, though the DBT said the monetary impact of these factors is difficult to quantify.
The impact assessment states costs to business will represent less than 1.5% on total employment costs across the economy, mostly which will be transferred to workers and so provide a wider boost in terms of economic and social gains.
"For businesses who rely on flexible contracts or low-paid employment these changes could be more disruptive, at least in the short run, but we deem risks to hiring intentions and employment to be relatively low."
2.56pm: US stocks little moved at open
Wall Street has got off to a mixed start, though the moves are moderate so far.
The S&P 500 has dropped less than 0.04% while the Dow Jones is down 0.15%, but the Nasdaq is up almost 0.1%.
Boeing, NVIDIA and Uber are among the top risers in the S&P, up 4.9%, 1.7% and 1.3% respectively.
Back in London, the FTSE 100 is trying to break back into the green, with two taps at the door so far that have taken the index 2 points higher before dropping flat again.
2.32pm: Why are European markets down today?
Europe has followed the lead of Asian markets in falling on Monday, says market analyst Joshua Mahony at Scope Markets, with equities "taking on an indecisive theme despite a welcome set of rate cuts" from China's central bank, which lowered two key interest rate by 25 basis points.
"While the rate cut on the 1-year product will reduce the cost of borrowing on short-term loans for businesses and consumers, the decision to also reduce the 5-year LPR will look to ease costs for mortgages in a bid to prop up the ailing real estate sector," Mahony said.
"Coming in the wake of Friday’s surprisingly strong data deluge that saw industrial production, retail sales, and unemployment rate all improve, today’s fresh stimulative effort from the PBoC seeks to further build on the notion that the economy and market have bottomed out."
Nonetheless, this "seemed to split opinion" as the gains seen in Shanghai and Shenzhen were offset by a big fall for the Hang Seng index.
Neil Wilson at Finalto felt stocks were "mixed", despite the falls in German producer prices fell.
Oil edging up from a three-week low helped FTSE heavyweights Shell and BP, whilst gold boosted precious metals miners.
Others are saying markets are down due to ongoing concerns over tensions in the Middle East, as Israel continued its offensive against Iran-backed Hizbollah.
2.21pm: Rates to be cut to 3% or 3.75% depending on Budget
Like Goldman, Deutsche Bank has also shifted its prediction on Bank of England cuts.
It now sees a two-stage rate cutting cycle, with the first envisaging the MPC to reduce the bank rate sequentially over the next few months, down from 5% currently to 3.75% by next May.
For Stage 2, chief UK economist Sanjay Raja expects the MPC to move to a quarterly pace of rate cuts all the way down to 3%.
"The risk of 50bps rate cuts has risen in recent weeks, but the conditions for 'forceful' rate cuts have yet to be met, and the window for any outsized rate cuts likely to be small," he said.
Importantly, Raja and his team still see risks skewed to higher terminal rate, ie the rate that the cutting cycle ends, especially if chancellor Rachel Reeves outlines looser fiscal policy in the autumn Budget.
This would see the MPC potentially pausing following Stage 1 of the easing cycle, around 3.75%.
2.02pm: Reporting season so far
So far in European reporting season, with quarterly EPS growth looking like turning positive for the first time since early last year, Citi equity strategists said in a note this morning.
"However, forecasts have been consistently revised down in past months," they added, led by cyclical stocks.
"More downward revisions are likely, but net downgrades have become so severe they may now be sending a contrarian buy signal on the 6- 12m horizon."
As for US earnings season, an estimated 75% of those companies which have reported so far have beaten expectations, says Richard Hunter at Interactive Investor, highlighting Netflix and Procter & Gamble as among those beating expectations, although fellow Dow Jones constituent American Express fell by more than 3% after missing estimates.
The general enthusiasm meant that the three main US indices last week posted their sixth consecutive weekly gains.
"In addition, the easing monetary policy backdrop has also seen interest in the mid and small-cap sectors, with lower interest rates potentially boosting those smaller companies which rely more on borrowing to grow their businesses," Hunter says.
"At these levels and with valuations becoming increasingly rich, the chances of a pullback increase.
"Quite apart from the impending election which carries its own set of uncertainties, the earnings season is still in its early stages which leaves the door open for potential disappointments."
This week, the high tempo continues with US updates expected from the likes of General Motors, AT&T, Boeing, Coca-Cola, IBM and Tesla.
1.45pm: Goldman Sachs forecasts UK interest will fall to 2.75% next year
Goldman Sachs analysts have laid down expectations for base interest in the UK to fall to 2.75% over the next year.
This would see the Bank of England consecutively cut base interest from 5.00% over its next nine monetary policy committee (MPC) meetings, taking the rate below the 3.50% anticipated by money markets for a year’s time.
The fall in borrowing costs would follow the recent rapidly falling inflation and "dovish" MPC commentary of late, with BoE governor Andrew Bailey having signalled earlier this month that rate-setters could become "more aggressive" in winding down the base rate.
Inflation figures for September then showed the consumer price index had subsided to 1.7%, below the MPC's 2.0% target.
Goldman's thoughts were similar to the those of some other big banks made last week, including Barclays.
1.25pm: Silver rallies to highest since 2012 - because of Trump?
Silver prices have also continued to gain, in line with gold, rallying to the highest level in almost 12 years.
At US$34.02 per ounce, silver added 1.1% over the day and surpassed the mark for the first time since November 2012.
This coincided with gold’s climb to as high as US$1,738 an ounce on Monday, after repeatedly breaking its own record over the morning, fuelled by uncertainty around the US election most recently.
“A surge in precious metals does not necessarily adhere to the script that equity markets are currently following,” AJ Bell analyst Russ Mould said.
“For the moment, inflation is cooling, economies are growing and rate cuts from central banks massively outnumber steps to tighten monetary policy.
“But, some investors are looking for haven assets all the same. Perhaps they continue to fret over levels of government debt, especially in the US where neither presidential candidate is making much effort to address the issue of the ballooning deficit.”
12.39pm: Dow Jones, S&P 500 to fall after hitting latest records
Wall Street looked on course for a negative start to the week, with the Dow Jones and S&P 500 seen falling after notching up their latest records on Friday.
Futures had the Dow Jones down 0.2% and the S&P 500 off 0.3% ahead of Monday’s opening bell, with the Nasdaq also seen 0.6% lower.
This would come after the S&P 500 and Dow Jones notched up a sixth-straight week of gains and both closed out Friday at record highs.
Third quarter earnings season is set to bring updates from the likes of Boeing Co (NYSE:BA, ETR:BCO), General Motors Company (NYSE:GM), Tesla Inc (NASDAQ:TSLA) and Amazon.com Inc (NASDAQ:AMZN) this week.
Finalto analyst Neil Wilson noted earnings season so far had provided “sufficient juice for the bulls” as companies were “generally beating a low bar”.
This was despite expected volatility as November’s presidential election drew closer, he said, as growing odds of a victory for Donald Trump further fuelled the likes of gold, sending the yellow metal to a fresh record high of US$2,738 on Monday.
“If we’re not really getting the kind of confirmation that the market is worth this elevated price, you know, then we could end up seeing a digestion of gains come fairly soon,” CFRA Research chief investment strategist Sam Stovall added.
12.16pm: Ocado eyes former Microsoft executive for chairman role
Ocado Group PLC (LSE:OCDO) is reportedly lining up ex-Microsoft Corp executive Adam Warby as its next chairman, according to Sky News.
Warby’s appointment, which would see him succeed Rick Haythornthwaite at the online grocery technology could be announced as early as next month, Sky said.
This would come after Haythornthwaite was appointed as chairman of NatWest Group PLC (LSE:NWG).
Warby currently chairs Swiss-based SoftwareONE and has held roles at the likes of IBM and Microsoft, including as chief executive of Avanade, a joint venture between the latter and Accenture.
Shares in Ocado slipped 0.3% on Monday.
11.37am: Gold sets new high of US$2,737
Gold has continued to gain on Monday morning, leaving the yellow metal at a record high once again.
Having set a record of US$2,733 earlier on, spot prices showed the yellow metal as high as US$2,737 later in the morning.
AJ Bell analyst Russ Mould noted uncertainty around next month’s US presidential election had provided the latest boost for gold, as betting markets swung in favour of victory for Donald Trump.
“Gold typically attracts investors’ attention when they are looking for a store of value during uncertain times,” Mould said.
“Trump winning the US presidential election would raise the risk of a trade war and his provocative nature could lead to heightened uncertainty on the markets.
“Owning gold is essentially an insurance policy against unknowns.”
11.24am: Intertek leads fallers as FTSE 100 heads into red
London’s blue chips gave up gains on Monday morning to fall 2 points below the mark to 8,355.
Intertek Group PLC (LSE:ITRK) led the decline after a downgrade by RBC analysts sent shares in the product testing company down 3.2%.
RBC noted Intertek had reached a fair valuation and downgraded its rating from an ‘outperform’ to a ‘sector perform’ as a result… Read more
Ladbrokes owner Entain PLC (LSE:ENT) also sat among the day’s losers as shares fell back slightly after gaining on Friday following a third-quarter trading update.
Fresnillo PLC (LSE:FRES) remained Monday’s biggest riser in the meantime as gold continued to gain, while Shell PLC (LSE:SHEL, NYSE:SHEL) and BP PLC (LSE:BP.) shares also picked up as oil prices headed higher.
10.53am: Saudi Aramco boss signals bullish stance on China
Saudi Aramco boss Amin Nasser has signalled the oil giant is bullish on China, alongside oil demand, after the country’s latest measures to stimulate its struggling economy.
“We see more demand for jet fuel and naphtha especially for crude-to-chemical projects,” Nasser said on Monday on the sidelines of the Singapore International Energy Week conference.
This comes after the People’s Bank of China (PBoC) pushed ahead with respective 25 basis point cuts on one and five-year loan prime rates on Monday as part of measures to stimulate its economy.
“Coming in the wake of Friday’s surprisingly strong data deluge that saw industrial production, retail sales, and unemployment rate all improve, today’s fresh stimulative effort from the PBoC seeks to further build on the notion that the economy and market have bottomed out,” Scope Markets analyst Joshua Mahony commented.
Nasser’s bullish comments also come as oil prices have come under pressure in recent weeks, as fears over surplus supply ahead offset concerns around tensions in the Middle East.
Benchmark Brent crude ticked up 1.2% to US$74.06 a barrel on Monday, after having sat at almost US$78 early last week.
10.12am: Consumer confidence improves as Budget fears moderate
Consumer sentiment has improved in October as concerns around this month’s Autumn Budget are said to have moderated.
S&P Global reported on Monday that its Consumer Sentiment Index increased to 47.3 over the month, from September’s 46.0.
This marked the second-highest reading in over three years, as strong labour market conditions in part boosted sentiment, S&P said.
Fears over the likes of a string of tax hikes in the October 30 Budget had hit sentiment in September, with S&P noting these had moderated more recently.
Confidence over household finances was also said to have improved, as easing inflation was met with robust wage growth.
“Consumer confidence is showing signs of reviving again after being hit by gloomy talk surrounding the Budget,” S&P economist Maryam Baluch commented.
“Confidence is being supported first and foremost by the strong labour market, with the survey showing both job security and income from employment improving.
“An easing of inflation worries, combined with expectations of a further lowering of interest rates, has also helped allay worries over the cost of living.”
Though households remained cautious over spending, attitudes towards major purchases had improved, Baluch added, in a “further sign of better things to come”.
9.34am: VW Finance hit with £5.4mln fine over customer treatment
Volkswagen Group (XETRA:VOW) has been slapped with a fine from Britain’s financial watchdog over its treatment of customers in financial difficulty.
The Financial Conduct Authority (FCA) said on Monday that Volkswagen Financial Services (UK) Ltd would have to pay £5.4 million over unfair treatment of such customers.
VW had also agreed to pay £21.5 million in redress to roughly 110,000 customers over failing to provide tailored support based on individual circumstances between 2017 and 2023.
“This meant that, in some cases, Volkswagen Finance took cars away from vulnerable customers without considering other options,” the FCA said.
“This risked people being put in a worse position, particularly if they relied on their car to travel to work.”
9.09am: Fresnillo leads FTSE 100 higher
Fresnillo PLC (LSE:FRES) led risers on the FTSE 100 on Monday morning as continued gains for gold and new Chinese economic measures buoyed miners.
Shares in Fresnillo jumped 3.2% on Monday morning, while Glencore PLC (LSE:GLEN) and Anglo American PLC (LSE:AAL) also sat among the day’s early risers.
This followed a continued climb for spot gold to another record of US$2,733 and coincided with cuts to one and five-year loan prime rates in China under efforts to stimulate the world’s second-largest economy.
Housebuilders Barratt Redrow PLC (LSE:BTRW) and Vistry Group PLC (LSE:VTY) also gained as trading got underway, following news new sales and buyer demand had jumped across the property market in October.
Overall, the FTSE 100 ticked up 23 points to 8,382.
8.54am: Gold hits another record
Gold remained inflated above the US$2,700 an ounce mark on Monday morning and hit yet another record high.
Having surpassed the mark for the first time on Friday, the spot price of the yellow metal climbed further as this week’s trading got underway, gaining 0.2% to reach US$2,727.
A peak at US$2,733 earlier on in the morning had seen gold hit another record, leaving gains for the year at almost 38% so far.
Tensions in the Middle East have buoyed the price of gold, with ever-growing attention on November’s US presidential election providing upward pressure most recently.
“It is hard to see this dynamic changing substantially over the next couple of weeks,” ING Think economists commented.
8.19am: China cuts lending rates as stimulate measures continue
China has cut benchmark lending rates in its latest effort to stimulate growth across the world’s struggling second-largest economy.
One and five-year loan prime rates were lowered by 25 basis points respectively on Monday by the People’s Bank of China, following a reduction in July.
This took the one-year rate, which acts as a reference for consumer and business loans, from 3.35% to 3.10%.
The mortgage-determining five-year rate fell by 3.85% to 3.6% in the meantime, with the bank’s governor, Pan Gongsheng, having signalled the cuts last week.
These cuts follow measures announced in September by the People’s Bank of China to reduce banks’ reserve requirement ratios and the benchmark seven-day reverse repo rate, reflecting China’s most aggressive stimulus since the pandemic.
“Sure, the rate cut wasn’t a shocker, but the market is banking on the idea that the combined impact of all these recent measures could at least stem the economic bleeding,” SPI Asset Management partner Stephen Innes commented.
7.59am: Hollywood Bowl sees expectation-beating profit on record revenue
Hollywood Bowl Group PLC (LSE:BOWL) has unveiled record revenues for the year, leaving it on course to beat earnings expectations.
Revenue climbed by 7.2% to £230.4 million over the year to September, Hollywood Bowl said on Monday, leaving pre-tax earnings on course to exceed £65 million.
This would be above company-compiled consensus expectations of £64.1 million, Hollywood Bowl noted.
“We are pleased with our full-year performance, both financially and operationally,” chief executive Stephen Burns commented.
“We have delivered further profitable growth, demonstrating the success of our proven, customer-led strategy”... Read more
7.37am: House price growth slows ahead of Budget
House price growth slowed in October as the number of properties on the market jumped and the upcoming Autumn Budget loomed, Rightmove has reported.
Prices climbed by 0.3% over the month to an average of £371,958, the property portal reported on Monday.
This was against the 0.8% growth seen in September and also below the average 1.3% increase usually seen over the course of October.
It came as the number of available properties on the market jumped by 12% year over year, but affordability pressures remained and “pre-Budget jitters” appeared to hit.
“We’re not seeing activity slow down, but some estate agents report that some movers are now waiting for Budget clarity and anticipated cheaper mortgage rates,” Rightmove director Tim Bannister commented.
Year on year, agreed sales were up by 29% as the market continued to recover, while the number of people contacting estate agents about homes for sale increased by 17%.
“Despite a Budget-shaped cloud on the horizon, the big picture still looks positive for the market heading into 2025,” Bannister added.
“Market activity remains strong, despite affordability pressures on movers.
“Once we have more certainty about the contents of the Budget, hopefully followed by speedy second and third bank rate cuts, we could see another surge in market optimism like we had in the summer.”
7.15am: FTSE 100 seen lower
Futures had the FTSE 100 kicking off the week with a 9-point decline on Monday morning, adding to a fall seen over the course of Friday.
Houesbuilders had been among those to weigh on the index late on in the week, following reports stamp duty exemptions would be ended in the upcoming Budget.
The index had racked up a 104-point gain over the course of last week, with attention in the coming days set to be on the likes of UK public borrowing, consumer confidence and business optimism figures as the October 30 Budget draws closer.
Britain’s housing sector is also in focus once again on Monday with news house prices rose at a slower rate in October than is typically seen this time of year.
Overnight, Asian stocks were mixed as the latest interest rate cuts by the People’s Bank of China came into force as part of efforts to stimulate the world’s struggling second-largest economy.