FTSE 100 closes in black
Royal Mail advances
Miners embrace China easing move
FTSE 100 closed the day in positive territory on Tuesday as a rise in Wall Street bolstered sentiment and Royal Mail Group (LON:RMG) was top riser.
The UK blue-chip benchmark finished around four points higher at 7,237.
The more UK company focused FTSE 250 however, shed around 96 points to close at 19,549.
On Wall Street, the Dow Jones Industrial Average is up 41 points at the time of writing, while in the currency markets, sterling is up 0.47% against the Euro and up 0.39% against the US dollar.
"The FTSE managed to sustain the high note it opened on throughout most of the day despite briefly being spooked by the US markets when Wall Street opened," said Fiona Cincotta, at City Index.
"A mixed bag of gainers dominated London trading, some more obvious than others. Miners and oil firms drew strength from higher commodity prices and banks, retailers and insurers had a chance to rally during a lull in negative news."
Top Footsie gainer though was Royal Mail Group (LON:RMG), which added 4.31% to 353p, bouncing back from recent plunges.
The top loser was Paddy Power Betfair, down 5% at 6,175p, as it noted that the Irish Government in its 2019 Budget revealed that it is increasing the rate of betting duty payable, with effect from the beginnimng of next year.
4pm
The FTSE 100 swung higher in Tuesday's late afternoon trade, with gains for Royal Mail and mining shares giving the benchmark a chance avoid a fourth straight loss.
The blue-chips gauge rose 3 points to 7,236, recovering from an intraday low of 7,184.28 that threatened to leave the index below 7,200 for the first time since mid-April.
Mining stocks were among session gainers after the People’s Bank of China cut the reserve requirement ratio for banks on Monday, said IG.
“To a large degree the decision to cut the reserve ratio highlights a fear that the trade war could continue for some time yet. However, for the miners, a dramatic increase in the amount of cash available for banks to loan out will drive investment, in turn benefitting companies whose product is demanded in times of growth,” said Joshua Mahony, market analyst at IG.
Shares of copper and nickel producer Anglo American PLC (LON:AAL) bulked up by 2.7% to 1,690p, copper miner Antofagasta PLC (LON:ANTO) rose 1.9% to 829p, and Glencore PLC (LON:GLEN) rose 1.9% to 327p.
“Over the long term, the mining sector looks a good buy, yet much of the short-term volatility will be dictated by affairs in China and the pathway of US trade negotiations,” Mahony added.
Also on the upside, Royal Mail PLC (LON:RM) shares gained 1.9% to 3,443p in spite of ratings downgrades from HSBC and RBC Capital Markets in the wake of the parcel company’s profit warning last week.
READ: Royal Mail gets a duffing over from two more brokers
Schroders PLC (LON:SDR) picked up 2.3% to trade at 3,044p as Berenberg upgraded the asset management firm which is in talks with Lloyds Banking Group PLC (LON:LLOY) about a possible wealth management tie-up.
Read: Berenberg analysts like the look of a possible Schroders-Lloyds tie-up
3:15pm: Industrial weigh on FTSE 100
FTSE 100 down 30 points
Industrials fall
US indexes mixed
Stocks in the UK remained in negative territory Tuesday afternoon, with industrial shares under pressure.
The FTSE 100 was down 30 points, or 0.4%, at 7,203, but the benchmark could close below 7,200 for the first time since April 16.
Industrial shares were among the biggest decliners in London trade in the wake of the International Monetary Fund’s decision to cut in its global growth forecast for the first time in two years.
On the large-cap index, packaging producer Smurfitt Kappa PLC (LON:SKG) dropped 4.6% to 2,728p, and pest control services provider Rentokil Initial (LON:RTO) lost 3.9% to 313p. Product testing company Intertek Group PLC (LON:ITRK) shed 3% to 4,500p.
A jump in US Treasury yields and the prospect of higher borrowing costs have also served as a headwind for equity markets. The Dow Jones Industrial Average was down 0.1% in early New York trade. But the S&P 500 and the Nasdaq managed to edge up.
"For corporates, higher rates push up the cost of capital for everyone, but represent an even more substantial threat to smaller, more leveraged, companies. Higher rates also put pressure on price-to-earnings multiples as investors use higher discount rates to value stocks," said Joe Amato, chief investment officer of equities at Neuberger Berman.
"Stronger earnings can overcome the impact of higher rates. However, with the tax policy and other fiscal stimuli due to fade through the first quarter of 2019, it is likely earnings will grow at a slower rate in 2019 than we have seen in 2018," Amato said. "We also need to watch closely how the US dollar reacts to higher yields. The prospect of an even stronger dollar is not good for non-US markets, particularly emerging economies."
In other FTSE 100 moves, Sage Group PLC (LON:SGE) fell after a downgrade by Barclays of the software maker to “underweight” from “neutral”.
1:05pm: Stocks stay red
FTSE 100 down 35 points
US 10-yr yield climbs
Wall Street may open lower
UK stocks struggled in early afternoon trade Tuesday as U.S. stock futures were under pressure on the prospect of higher interest rates.
The FTSE 100 fell 35 points, or 0.5%, to 7,198, on course for a fourth straight decline. That run has pushed the index to a six-month low. Futures on the Dow Jones Industrial indicate the benchmark will lose 151 points when trading begins. S&P 500 futures declined 0.6% as did the Nasdaq-100.
Investors appear set to feel the pinch from another rise in the US 10-year Treasury yield, which on Tuesday climbed above 3.25% for the first time since 2011. Recent US economic data has spurred speculation the Federal Reserve will raise interest rates faster than anticipated. Yields rise when bond prices fall.
The rise in Treasury yields “offers a challenge to share prices, as investors switch from worrying about the US economy cooling to concerns that it could run too hot,” said Russ Mould, investment director at AJ Bell.
11:45am: Footsie switches into the red
British blue-chips were losing steam in late morning trade Tuesday while a reading of retail sales disappointed some investors.
The FTSE 100 fell 27 points, or 0.4%, to 7,207, giving up a modest gain notched earlier in the session.
Retail stocks were mixed after the British Retail Consortium said monthly UK total retail sales grew at the slowest pace since April, by 0.7% in September. On a like-for-like basis, retail sales fell by 0.2% from the year-ago period, when they rose 1.9%.
“These figures lay bare the difficult operating environment for the retail industry. After a challenging August, constrained consumer spending in September has resulted in the weakest sales growth for five months,” said Helen Dickson, Chief Executive of the British Retail Consortium, in a statement.
Among retail stocks, supermarket chain J Sainsbury PLC (LON:SBRY) fell 0.3% to 312.75p, department store chain Marks & Spencer Group PLC (LON:MKS) edged up 0.1% at 286p, and DIY chain operator Kingfisher PLC (LON:KGF) rose 0.7% to 251.55p.
Analysts at Shore Capital said: "All in all we see this data-point as rather mellow for British retailing although we would rather judge matters after the October scores are in, noting that September 2017 was quite good for the rag-trade in particular whilst October was very warm and so tough."
In other moves, Direct Line Insurance Group PLC (LON:DLG) rose 1.1% to 326p following a Deutsche Bank ratings upgrade to “buy” from “hold” in part on the broker’s valuation assessment.
Coca-Cola HBC AG (LON:CCH) dropped 3.7% to 2,292p, leading price decliners.
10:15am: CBI wants budget boost for businesses
The UK government should bolster business investment by £3.5bn to help British businesses against the impact of Brexit, according to the Confederation of Business Industry, or CBI.
The body outlined a number of proposals they hope UK Chancellor Philip Hammond will incorporate into his budget, which he will unveil later this month.
Carolyn Fairbairn, CBI Director-General, said: “As we near the end of Brexit negotiations, the world’s gaze is fixed on these shores. This Budget is a pivotal moment and chance to showcase the UK as an open, collaborative and confident nation."
The CBI is calling for Hammond to increase the Annual Investment Allowance to £500,000 for two years, from the current amount of £200,000. The allowance gives businesses the opportunity to pay less tax when it buys assets such as equipment.
The government should also review the business rates model in 2019/20, focusing on investing in digital, new technologies and energy efficiency.
The CBI said its package of proposals costs roughly £1.5bn in 2019/20, and £2bn in 2020/21. Those amounts account for less than 0.2% of official forecasts for government spending, the group said.
“With skills shortages, uncertainty and the squeeze in incomes on the rise, this couldn’t be a more critical time to plug the drain on the UK’s productivity and deliver prosperity that is shared by workforces and communities across the country," said Fairbairn.
The International Monetary Fund on Monday said the UK government should boost public spending to cushion the UK economy as the country nears leaving the European Union.
Hammond will address parliament with his budget on October 29.
In mid-morning trade, the FTSE 100 was up 2 points at 7,235.
9am: Stocks barely gain at the open
UK blue chips found little traction as trading began Tuesday after the index dropped to a multi-month low in the prior session.
The FTSE 100 rose 2 points to 7,253, barely moving after Monday’s slide of 85 points, or 1.2%, that pushed the index to a six-month low.
“Rising U.S. and global interest rates, a stronger U.S. dollar, slowing economic activity, and of course, tense U.S.-China relations have all attributed to the nervous market environment,” said Hussein Sayed, chief markets strategist at FXTM.
But Tuesday’s early winners on the benchmark included miners, with Anglo American PLC (LON:AAL) up 1.8% at 1,676p, and Randgold Resources (LON:RRS) higher by 1.7% at 5,380p.
However, WPP PLC (LON:WPP) shares fell 1.1% to 1,097p after the world’s largest advertising agency lost its role as the Ford Motor Co.’s (NYSE:F) global creative lead.
On the mid-cap FTSE 250 index, Greggs PLC (LON:GRG) shares jumped 7.3% to 1,079p after the bakery chain said total sales rose 7.3% in the third quarter, saying its new focaccia-style pizzas proved popular this summer.
6:30 am: Footsie eyes small rise at the open
The FTSE 100 looks set to push into positive territory – but only just – with the index of blue-chip stocks predicted to rise eight points to 7,241.33.
This after an 85 point decline Monday and mixed sessions in Asia and on Wall Street following the International Monetary Fund downgraded world growth forecasts amid growing trade tensions.
Tech stocks in the US were hit by the IMF update and news of Google’s data breach, which prompted a third day of heavy losses for the NASDAQ index.
Chinese stocks firm
Chinese stocks firmed Tuesday after losing 4.3% on the opening session of the week – a fall prompted by worries American tariffs are starting to hit home.
“With the Chinese market no longer in free fall attention turned to the yuan, which China allowed to slip past a key level versus the dollar,” said Jasper Lawler of London Capital Group.
“With the Chinese economy under pressure and trade tensions still riding high a devaluation from the Chinese towards the seven level wouldn’t be that surprising.”
Traders are expecting another quiet day with the corporate news schedule led by baker Greggs (LON:GRG), which has a trading update.
Around the markets
- Pound worth US$1.31
- Gold changing hands for US$1,194.40 an ounce, up US$5.80
- Brent Crude costs US$84.30 a barrel, up 46 cents
Business News
Financial Times
IMF urges UK to lift spending after hard Brexit - Fund’s view runs counter to Hammond’s as Budget and key EU meetings loom
Google shuts down social network after data issue - tech giant facing privacy crisis after deciding not to reveal problem at Google+
Ofwat accused of putting investors ahead of consumers - MPs add to pressure on water industry’s regulator
Hammond eyes tax swoop to meet Budget promises - May’s health, fuel and housing pledges mean ‘nothing is off the table’
Times
Sales plunge forces Jaguar Land Rover to shut factory for two weeks
Wall Street is donating more to Democratic election candidates than to Republicans
Marks & Spencer has poached Tesco’s commercial director in the latest shake-up of its food business. George Wright has been hired from Britain’s biggest grocer as part of an attempt to “modernise” its food division
Daily Telegraph
Businesses call for tougher climate change laws to boost UK PLC
Sales are fizzing at UK fine wine investment company Cult Wines, which was co-founded by 2012 Apprentice finalist Tom Gearing
Film and television tax reliefs have hit record levels, delivering a multibillion-pound boost to the country’s booming screen industry
Guardian
Sharp slowdown in consumer spending cools UK retail sales
The CBI has demanded that Philip Hammond use the budget to prepare companies for a post-Brexit future with a £2bn package of measures to bolster investment, raise skills and ease the burden of business rates
Britain’s big accountancy firms could be banned from earning lucrative consultancy fees at businesses they audit following a series of scandals that have rocked the sector
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