- FTSE 100 down 5 points
- AstraZeneca plummets
- Melrose leads risers
3.59pm: FTSE 100 lower as US election result looms
London’s blue chips headed for a decline on Tuesday as Schroders PLC (LSE:SDR) and AstraZeneca PLC (LSE:AZN) weighed while traders awaited the result of the knife edge US election.
The FTSE 100 was down 5 points at 8,178 in late trading, as Schroders led fallers with a 13% drop and heavyweight AstraZeneca fell over 8%.
Schroders had unveiled a £2.3 billion outflow for the third quarter earlier in the day, while AstraZeneca’s drop came as investors mulled early data from its prospective weight loss drugs.
Among risers, 3I Group PLC led with a 4.7% gain, followed by Melrose Industries PLC (LSE:MRO, OTC:MLSPF) on consensus-beating free cash flow forecasts from Citi analysts.
Associated British Foods PLC (LSE:ABF) jumped over 3% after unveiling a hiked dividend and new £500 million share buyback on the back of a spike in full-year profit.
Water firms United Utilities Group PLC (LSE:UU.) and Severn Trent PLC (LSE:SVT) also sat among risers on comments from Citi and JPMorgan analysts… Read more
Elsewhere, the pound jumped 0.46% against the dollar to US$1.3017 as traders braced for news on whether Kamala Harris or Donald Trump would be the next US president.
3.35pm: AstraZeneca value plummets by £15bn
AstraZeneca PLC (LSE:AZN)'s value fell by £15 billion on Tuesday as shares plummeted following the release of early data on its weight loss drug portfolio.
Shares fell by 8.6% on Tuesday, taking the pharmaceutical firm’s market capitalisation from £171.2 billion to £156.2 billion.
This comes after AstraZeneca released data on the likes of its AZD5004 drug candidate on Monday, which Deutsche analysts labelled as "underwhelming"... Read more
2.56pm: Wall Street opens higher on US election day
Wall Street opened in a positive mood on Tuesday as Americans headed to the polls to vote in the knife-edge US election.
The Nasdaq jumped 0.6% as trading got underway, while the S&P 500 climbed by 0.4% and the Dow Jones added 0.1%.
Polls still failed to split Kamala Harris and Donald Trump as voting got underway on Tuesday, leaving fears over a delayed outcome.
“We think that financial markets are pricing for a Trump victory,” XTB analyst Kathleen Brooks noted.
“Thus, a win for Harris could lead to a short-term sell-off in the dollar, gold and potentially in US stocks.
“This could also boost global equities, as Harris is seen to be less tempted to slap tariffs on imports.”
Bond yields remained inflated at 4.32% on 10-year treasuries as trading kicked off in New York, while the dollar sank further to £0.7683, taking the greenback’s decline for the day to 0.45%.
2.24pm: Rolls-Royce, BAE Systems risk hit if Trump wins US election - analyst
Rolls-Royce Holdings PLC (LSE:RR.) and BAE Systems PLC (LSE:BA.) are among firms most likely to feel the effects if Donald Trump wins the US presidential election.
The duo sit as the most exposed to the US market, XTB analyst Kathleen Brooks noted on Tuesday, leaving them vulnerable to likely isolationist measures under a Trump presidency.
“We think a win for the former president could have a long-term impact on global financial markets due to his plans for tariffs,” she said.
“A US system of import tariffs would reorder global trade flows and hurt global growth.”
Trump has pledged to stick a universal tariff of 10% on all imports, alongside 100% on imported vehicles and 60% on Chinese goods.
Brooks noted energy firms were also at risk were Trump to win given exposure to global growth trends, alongside car makers such as Jaguar Land Rover.
“In 2022, the Land Rover Defender was the most popular car exported to the US,” Brooks said, with tariffs likely to leave the company struggling to find a replacement market.
“The US is the UK’s largest export market. 25% of all manufactured UK exports went to the US in 2023, which totalled more than £56 billion. Thus, it is important to the UK export industry to maintain strong links with the US.”
1.14pm: Primark owner signals higher taxes could see investment channelled out of UK
Higher taxes on businesses could see Primark's owner shift investment away from the UK, its boss has signalled.
George Weston, chief executive of Primark owner Associated British Foods PLC (LSE:ABF) (ABF), said Tuesday that the company was facing a surge in costs after last month’s Budget.
“It's quite clear to me that this is a Budget where the weight of the tax rises are falling on business [...] particularly on the high street,” he told the PA news agency.
“We’re an international business as well, we have choices about where we will invest.”
Chancellor Rachel Reeves hiked employer national insurance contributions to 15% on salaries above £5,000 in the Budget, from 13.8% on those higher than £9,100 previously.
Weston said this was set to increase ABF’s national insurance bill by “tens of millions”.
“We undoubtedly have significant increases in costs that we are facing,” he added.
ABF had reported a 43% spike in pre-tax profit to £1.92 billion for the year-earlier on Tuesday, as revenue climbed 2% to £20.01 billion.
Sales at Primark were said to have climbed by 6%, with ABF also recording growth across “key” markets in the US, France, Spain, Italy and Central and Eastern Europe.
12.41pm: Wall Street to inch higher as US election voting begins
Wall Street appeared in a positive mood as US election day arrived on Tuesday and traders awaited whether Kamala Harris or Donald Trump would be named president.
Futures had the Nasdaq up 0.3% ahead of Tuesday’s opening bell, while the S&P 500 and Dow Jones were seen 0.2% and 0.1% higher respectively.
Each had dropped on Monday as the election loomed, with polls on Tuesday still pointing to a neck-and-neck race for the White House as voting opened.
Bonds faced a sell off on Tuesday morning as eyes turned to the election, with the yield on US 10-year treasuries climbing three basis points to 4.32%.
The dollar lost further ground in the meantime, falling by 0.25% to £0.7699.
“As has been made abundantly clear, the polls are so close that it’s impossible to say that one candidate has an advantage,” Trade Nation analyst David Morrison commented.
“The worst outcome will be if there’s a delay in calling the result. Typically, it’s clear who’s won by Tuesday night or Wednesday morning.
“That’s the case ahead of every election, but it’s also worth noting that longer-term risk indicators are flat.
“This means that neither candidate is seen as a market risk, even though it’s likely that we see some sharp moves overnight, particularly if early exit polls subsequently prove inaccurate.”
12.23pm: AstraZeneca weighs on index
AstraZeneca PLC (LSE:AZN) shares tumbled 3.2% on Tuesday, weighing on the FTSE 100 into the early afternoon.
This placed the heavyweight pharmaceutical firm among the day’s biggest losers, behind only Schroders PLC (LSE:SDR) which fell almost 14% after unveiling a £2.3 billion net outflow in third-quarter results… Read more
AstraZeneca had revealed early data for its prospective weight loss drug at the ObesityWeek 2024 meeting in San Antonio, Texas on Monday.
Deutsche Bank reiterated a ‘sell’ rating following the update, noting the GLP-1 data “was somewhat underwhelming”.
Lead drug AZD5004 had shown weight loss with no serious side effects over four weeks in type two diabetes patients, though gastrointestinal toxicities became increasingly common at higher doses.
“Most key details are missing so it's hard to say much at present, though the few initial details lead towards being neutral,” Deutsche said.
11.56am: Melrose leads FTSE 100 higher after repeated backing from Citi
Melrose Industries PLC (LSE:MRO, OTC:MLSPF) surged to the top of the FTSE 100’s risers on Tuesday after Citi analysts doubled down on backing for the aerospace manufacturer.
Citi noted a recent update from Melrose on its risk and revenue-sharing partnerships (RRSP) was “key” to understanding the company’s cash and profitability.
Melrose had provided an explainer on such partnerships with aircraft engine makers, which are paid based on flight times, late last month.
Some 17 of Melrose’s 19 deals were now cash-generating, the company said at the time, relating to the likes of engine mounts and cases.
Citi estimated Melrose’s free cash flow could sit in the region of £450 million to £550 million come 2028 on the back of the update, against consensus for £320 million to £420 million.
This would give a valuation of £6 to £8 for the shares, Citi added, reflecting a near-30% upside on Monday’s close at the low-end.
“We remain high conviction in the buy case given the trough multiple and the strong mid-term cash outlook,” Citi said.
Shares climbed 3.6% to 491.30p on Tuesday
11.32am: AJ Bell accentuates ASOS positives
Online fashion retailer ASOS PLC (LSE:ASC) underdelivered in today’s full-year results, but AJ Bell’s investment director Russ Mould highlighted several positives tucked away in the figures.
A lack of another profit warning drew “some comfort”, said Mould, as did ASOS’ improved debt profile thanks to a debt refinancing and the Topshop disposal.
Yet the results failed to energise the market, with shares tumbling 8% today.
“Lower debt means less risk and less risk can mean a higher share price, all other things being equal, but the muted response to ASOS’ full-year results suggests investors think there is much work still to be done at the fast-fashion retailer, even as excess inventory is whittled away, cash released and borrowings cut,” said Mould.
He added: “ASOS shares trade at their lowest mark since 2009 thanks to wider worries about competition and consumer confidence, as well as the retailer’s own specific challenges and debate over the role of fast fashion in wardrobes and wider society, as some shoppers switch to Vinted, Depop and eBay to consume less and do so in a more curated way.”
10.42am: Service sector growth slows to 11-month low
Britain's service sector grew at its slowest pace for 11 months in October as employment across the industry also fell for the first time this year, S&P Global has reported.
S&P’s purchasing managers index (PMI) fell to 52.0 last month from 52.4 in September, reflecting the slowest uptick in output levels since November 2023.
Heightened uncertainty ahead of last week’s Budget was said to have delayed spending decisions, while some firms cited growing geopolitical tensions, S&P noted.
“The wait for clarity on government policy ahead of the Autumn Budget was widely reported to have weighed,” S&P economics director Tim Moore said.
“Broader geopolitical concerns and forthcoming US elections also added to a sense of wait-and-see on business investment decisions in October.”
S&P also reported staffing numbers across the sector fell for the first time since December 2023, while higher salaries pushed up input costs at the fastest pace in three months.
Export sales bucked the wider slowdown though, growing at the fastest rate since March 2023 and driven in part by strong demand across the European Union.
9.44am: EV sales higher but new car registrations sink
New car sales fell in October as only the electric vehicles segment enjoyed higher registrations on extensive discounting, industry body SMMT has reported.
Total sales fell by 6% to 144,288 over the month, as registrations of hybrids, petrol and diesel models all dropped.
EV sales surged by 24.5% to 29,802, though SMMT warned this followed “unsustainable discounting” as manufacturers attempted to meet government-mandated targets.
Manufacturers run the risk of fines if EVs don’t account for 22% of sales in 2024 under the UK’s zero-emission vehicle mandate.
One in five battery electric models were now retailing for less than the average price of a petrol or diesel car as a result, SMMT said.
However, October’s jump in sales still left EV’s market share short of the required 22%, at 18.1%.
“Massive manufacturer investment in model choice and market support is helping make the UK the second largest EV market in Europe,” SMMT chief executive Mike Hawes said.
“EVs already work for many people and businesses, but to shift the entire market at the pace demanded requires significant intervention on incentives, infrastructure and regulation.”
9.23am: Bonds under pressure as US election arrives
Bonds have been hit on Tuesday morning as traders brace for the conclusion of the knife edge US election.
Yields on 10-year US treasuries, which move inversely to prices, climbed by as much as three basis points to 4.32% early on.
UK 10-year gilt yields climbed by three basis points to 4.49% in the meantime.
“An air of uncertainty persisted in currencies and bonds as investors awaited the outcome of the United States' presidential election,” Tickmill Group partner Patrick Munnelly said.
Bonds had rallied on Monday as polls indicated Kamala Harris was inching ahead of Donald Trump in the race for the White House.
However, with polls still pointing to a knife edge result on Tuesday, Munnelly added yields had been rising as Trump's chances of victory recovered.
9.00am: Vodafone-Three tie up closer to green light
Vodafone PLC and Three’s proposed £15 billion merger moved closer to being cleared on Tuesday as the UK’s competition watchdog signalled remedies could see the tie-up approved.
A Remedies Working Paper was published on Tuesday, the Competitions and Markets Authority (CMA) said.
“It provisionally finds that a legally binding commitment to undertake the network integration and investment programme proposed by Vodafone and Three would significantly improve the quality of the merged company’s mobile network, boosting competition between mobile network operators in the long term and benefiting millions of people who rely on mobile services,” a statement added.
The regulator had previously signalled the deal could hurt competition and drive up consumer bills.
Three and Vodafone welcomed the CMA’s findings, noting these provided a “path to final clearance”.
“The merger is a once-in-a-generation opportunity to transform the UK’s digital infrastructure – which lags significantly behind its European peers – and for more than 50 million UK customers to benefit,” they said.
Vodafone climbed 1.6% on Tuesday.
8.48am: Boeing strike finally ends as workers back pay offer
Boeing Co (NYSE:BA, ETR:BCO) workers have voted in favour of the company’s latest pay offer, bringing an end to a seven-week-long strike which has slashed production of its bestselling 737 jets.
The new contract grants a 38% pay increase over four years, along with a one-time bonus of $12,000 and improvements to retirement benefits.
The International Association of Machinists and Aerospace Workers reported that 59% of members supported the offer, allowing workers to return between November 6-12... Read more
Shares ticked up 0.6% in pre-market trading.
8.32am: Schroders leads fallers after unveiling £2.3bn outflow
Schroders PLC (LSE:SDR) fell over 13% to lead the FTSE 100’s fallers on Tuesday after posting a £2.3 billion outflow for the third quarter.
Investors pulled £700 million from the fund manager over the quarter, as outflows from Schroders’ solutions and institutional wings offset private market and mutual fund inflows.
Assets under management hit a record £777.4 billion, though this was not enough to reassure investors as shares fell 13.04% early on.
Elsewhere on the FTSE 100, Severn Trent PLC (LSE:SVT) and United Utilities Group PLC (LSE:UU.) led risers, followed by Primark owner ABF with a 2.4% gain after results earlier on.
8.16am: ASOS drops as sales slump
ASOS PLC (LSE:ASC) fell over 3% early on Tuesday after unveiling a 16% drop in sales to £2.9 billion for the year.
Losses before tax surged by 80% to £126 million in the meantime as adjusted earnings fell 36% to £80.1 million.
For chief executive José Antonio Ramos Calamonte, the year was about reducing stock overhang… Read more
Shares fell 4.3% to 360p following the results.
8.03am: Retail sales growth slows in ‘disappointing’ October
Retail sales growth slowed in October against a year earlier as the likes of uncertainty around the Budget and concerns over higher energy bills weighed.
Total sales across the sector climbed by 0.6% last month against 2.6% in October 2023, the British Retail Consortium (BRC)-KPMG monitor showed on Tuesday.
This came as sales of food products climbed by 2.9%, compared to 7.9% last October, and fell among non-food goods by 0.1% after a 1% drop a year earlier.
“After a good start to autumn, October’s sales growth was disappointing,” BRC head Helen Dickinson said.
A later half-term week this year depressed figures, she noted, leaving November likely to see a boost.
“Uncertainty during the run-up to the Budget, coupled with rising energy bills, also spooked some consumers,” Dickinson added.
Separate figures from Barclays showed essential spending fell by 2.2% in October and at the fastest pace since April 2020, while supermarket transactions dipped 0.8%.
Entertainment spending jumped by 13.5% in the meantime, though, as Brits continued to prioritise, according to Barclays retail head Karen Johnson.
7.45am: Primark owner hikes dividend as profit jumps
Associated British Foods PLC (LSE:ABF) has unveiled a 90p per share dividend and new £500 million buyback after a jump in full-year profit.
A total 90p per share dividend was declared in full-year results on Tuesday, against 60p in 2023, incorporating a special reward of 27p.
This followed a 43% jump in pre-tax profit to £1.92 billion as revenue ticked up 2% to £20.01 billion and group adjusted margins widened from 7.7% to 10.0%.
“We delivered a substantial improvement in profitability, excellent cash generation and strong returns as a result of consistent, multi-year investment and a return to some normality in our markets and supply chains,” chief executive George Weston said.
Retail revenue climbed by 5% to £9.45 billion, aided by a 6% increase in sales at Primark and growth across ABF’s European markets.
“Our low-cost model is as strong as ever,” Weston continued, “this is underpinned by a step up in investment in strategic initiatives across digital, product and brand.
“Significant white space for new stores remains across Europe and the US, which we expect to help drive sustainable growth over the medium and long term”... Read more
7.11am: Stocks seen just above the mark
Futures had the FTSE 100 edging 3 points higher on Tuesday morning as traders braced for the culmination of the knife edge US election.
London’s blue-chip index had surged throughout Monday but largely gave up gains to sit 7 points higher come the close of play.
Wall Street faced a tougher day in the meantime, with the Dow Jones, S&P 500 and Nasdaq all falling on Monday.
Asia markets were broadly in a positive mood overnight, as India’s Nifty Fifty was among the few to fall.
Back in London, attention on Tuesday turns to trading updates from Primark owner Associated British Foods PLC (LSE:ABF) and ASOS PLC (LSE:ASC).