FTSE 100 index closes up 95 points at 7,034
Budget does little to inspire markets
Sterling slides to monthly low against the dollar during Chancellor speech
5.00pm: Budget provokes little market reaction as gains slip back to double digits
The FTSE 100 ended higher on Monday as the market from the previous week's volatility while US stocks started off strongly as the rebound reached across the Atlantic.
At the close, the UK blue-chip index was up 95.3 points, or 1.3% at 7,034, taking it back above 7,000 after last week’s slump.
The mood was similarly positive on Wall Street, with the Dow Jones Industrial Average up 120 points at 24,809, while the S&P 500 rose 19 points at 2,677 however the Nasdaq slipped into negative territory by lunchtime and was down 10 points at 7,157.
However, the FTSE 100 missed out on a triple-digit gain as it slipped back during the Budget announcement from the UK Chancellor Philip Hammond.
Joshua Mahony, market analyst at IG, said that while the upgraded growth forecasts from the Office for Budget Responsibility (OBR) seemed like good news, with an expectation of below 2% growth throughout the next five years, it was clear that “economic optimism is somewhat lacking until we receive clarity over Brexit”.
The muted attitude was echoed in the currency markets, with the pound slipping to a monthly low against the dollar at US$1.28.
There was little specific corporate reaction to the UK Budget, although housebuilders and estate agency groups got a boost from the Chancellor’s moves to continue to prop up the property market, with FTSE 100-listed construction firm Persimmon PLC (LON:PSN) adding 2.2% at 2,234p, while FTSE 250-listed estate agents Foxtons PLC (LON:FOXT) gained 5% at 49.35p.
There was little movement from drinks groups and pUBS operators from the freezing in duty for beer and spirits, but tobacco giants got a knock after the Chancellor continued to penalise smokers with duty hikes, with British American Tobacco plc (LON:BATS) down 1.9% at 3,549p and Imperial Brands PLC (LON:IMD) off 0.4% at 2,687p.
Among the movers in London, HSBC Holdings PLC (LON:HSBA) finished up 5.2% at 636.8p after it reported a 28% increase in pre-tax profit for the third quarter as the benefits of lower costs and the bank’s push into Asia paid off.
Reported pre-tax profit rose to US$5.9bn in the three months to September 30 from US$4.6bn a year ago, beating analysts’ expectations of U$5.6bn.
Adjusted pre-tax profit, excluding exceptional items and the impact of foreign exchange, increased 16% to US$6.2bn from US$5.3bn last year.
3.00pm: PM spokesman says spending commitments will be funded regardless of Brexit deal
A spokesman for UK Prime Minister Theresa May has said that the government’s funding commitments to be set out in today’s budget will be funded regardless of whether a Brexit deal is secured with the EU before March.
The statement comes at odds with comments made by the Chancellor Philip Hammond on Sunday that a no-deal Brexit could result in a new budget to deal with the potential economic fallout of such a scenario.
The FTSE 100 was up 114 points at 7,054 ahead of the budget speech, while the pound was at US$1.281 against the dollar.
2.00pm: US opens higher as markets rebound from volatile week
Markets in the US started off strongly on Monday as the main indices sought to bounce back from a volatile performance last week.
The Dow Jones Industrial Average was up 290 points at 24,987 shortly after the open, while the S&P 500 was up 31 points at 2,702 and the Nasdaq was up 111 points at 7,278.
Despite the strong start, Wall Street is still on track for its worst month in over eight years as the US-China trade war and signs of slowing growth weigh on sentiment.
12.36pm: Wall Street set for positive start as traders ready for bounceback
US markets are expected to open in the green on Monday morning as investors bounced back from heavy losses last week.
Analysts said concerns around domestic and global growth prospects, as well as worries that US corporate earnings could have already peaked, have led to the weakness throughout October.
However, with a majority of companies beating their own expectations over earnings season, there is now speculation that the guidance could have undercut performance potential.
There could be support for US auto stocks today following news that China will be cutting its tax on most cars in half.
Meanwhile, the FTSE 100 was up 142 points at 7,081.
11.53am: FTSE 100 continues upswing into lunchtime
As lunchtime approached, the FTSE 100 showed little sign of slowing down as it posted gains of over 100 points.
A number of blue-chip stocks, including HSBC and Shire have helped the index post the impressive showing, rising 5.9% to 641p and 2.9% to 4,529p respectively in late-morning trading.
The positive performance continued despite news that Angela Merkel would not run for re-election as head of the CDU party in December, a move signalling that her time at the top of German politics is coming to close.
Craig Erlam, senior market analyst at OANDA, said that the relatively muted market reaction was indicative of the position Merkel now finds herself.
"In years gone by, this would have been seen as a major political casualty but in the current environment of rising populism, Merkel’s handling of the refugee crisis – no matter how admirable – is now harming her party," Erlam said.
However, the end of the trading session will still be holding the attention of many as UK Chancellor Philip Hammond delivers the budget at 3.30pm, with the pound hovering around a one-month low against the dollar in anticipation.
The FTSE 100 was up 129 points at 7,069.
10.27am: Merkel says she will step down as chair of CDU following election bruising
German Chancellor Angela Merkel has said she will not run for re-election as chair of the CDU party after serving in the post since 2000.
The move followed heavy losses for the CDU in regional elections, most recently in the state of Hesse where its vote share dropped by over 10% and raised concerns over the stability of its governing coalition with the centre-left SPD party.
However, Merkel said she would still like to remain Chancellor, a departure from her previous position as seeing both positions linked to each other, meaning that she would only remain Chancellor if she was party leader.
The German Chancellor Angela Merkel says she will give up her party's leadership after 18 years, the clearest sign yet that she is preparing to leave office https://t.co/zcX9AMjC3m
— New York Times World (@nytimesworld) 29 October 2018
Joshua Mahony, market analyst at IG, said that Merkel's decision had "shaken confidence in the region", and while her departure may not have any negative consequences, it added an element of uncertainty that could hold back confidence in the euro in the fourth quarter.
On the currency markets, the pound was up 0.19% at €1.126 against the Euro, while the FTSE 100 was up 92 points at 7,032.
-- Adds analyst comment --
10.08am: UK consumer lending slows to crawl in September on weak car sales
New data from the Bank of England (BoE) has shown that UK consumers borrowed money at the lowest rate in three years, driven mainly by a fall in new car sales.
The data showed that unsecured consumer lending growth slowed to 7.7% in the year to September, down from 8.2% in August, its weakest pace since June 2015.
In the three months to September, credit growth was up just 5.5% on an annualised basis, its slowest since January 2014.
The BoE said the drop reflected a sharp drop in car finance as a knock-on effect from weak car sales in September, usually a key month for the industry due to a twice-yearly change in licence plate numbers.
The data is also likely to raise concerns regarding the strength of the UK economy as Chancellor Philip Hammond prepares to deliver the last pre-Brexit budget later today.
The FTSE 100 however, seemed little phased and continued its upward trend, up 91 points at 7,031.
9.15am: Shire boost
Japanese pharma giant Takeda has proposed the sale of a treatment currently under development by FTSE 100 firm Shire PLC (LON:SHP) in order to gain clearance for a multi-billion dollar merger.
Takeda said it had proposed divesting Shire’s SMP647 compound, which is currently in Phase III clinical trials, amid concerns around an overlap with its own drug Entyvio.
The issue was not expected to delay the deal, and investors seemed unfazed, with Shire shares up 2.2% at 4,499p.
Meanwhile, the FTSE 100 was continuing its positive start, up 54 points at 6,994.
8.40am: FTSE 100 jumps 44 points as HSBC gives the index a helping hand
The FTSE 100 opened the week on the front foot, climbing 44 points to 6,983.73, following a boost from one of the index’s mainstays.
Better-than-expected quarterly figures from HSBC (LON:HSBA), the Footsie’s second largest company, boosted shares in the bank almost 5% and gave a helping hand to the blue-chips benchmark in the process.
“The tone has changed for the better at HSBC, where a renewed focus on Asia is beginning to bear fruit,” said Richard Hunter, stocks guru at Interactive Investor.
“Revenue growth in an Asian region which contributed 83% of reported pre-tax profit is central to the bank’s current ambitions.”
It was a rough morning for investors in Just Eat (LON:JE.), with shares in the takeaway deliver group down 4.5%.
The only source of negativity was a Peel Hunt's downgrade to ‘sell’ – though it’s fair to say the broker isn’t known for moving the top stocks (its speciality is the small- and mid-caps).
With the market moving higher, the precious metals stocks, a haven in times of volatility, gave up some of the gains made in recent days.
Randgold Resources (LON:RRS) and Fresnillo (LON:FRES) fell 2.6% and 1.7% respectively.
Proactive news headlines:
Concepta’s PLC (LON:CPT) myLotus product range has received CE-Mark certification, enabling its sale in the UK market. The healthcare firm said the products, which allow women to self-test their fertility levels, would be launched through its new eCommerce platform to service initial demand.
ANGLE PLC (LON:AGL, OTCQX:ANPCY) said its device for detecting the early signs of cancer had shown promise harvesting fetal cells. Parsortix appeared to score well against existing methods of non-invasive prenatal testing (NIPT).
Energy storage and clean fuel company ITM Power (LON:ITM) expects another year of “significant financial progress” as the move towards alternative fuels for vehicles gathers pace. The AIM-quoted firm’s pipeline has grown by almost £4mln to £34.3mln since August’s full-year results, with £27.6mln of that under contract.
I3 Energy PLC (LON:I3E) is to submit an enlarged field development plan (FDP) to the UK Oil & Gas Authority for two North Sea blocks. Based on the company’s mapping and analysis, the previous mid-case stock tank oil-initially-in-place (STOIIP) estimate of 237mln barrels pertaining to the company’s wholly-owned UK North Sea blocks 13/23d and 13/23c has been revised to 314mln barrels.
Horizonte Minerals PLC (LON:HZM) has revealed the results of a feasibility study at the Araguaia nickel project in Brazil's Pará State. The study shows that over a 28-year mine life, Araguaia will generate US$1.6bn in cash flows, with the potential to go even beyond that.
The new chief financial officer of Tissue Regenix Group PLC (LON:TRX) has joined regenerative medical devices company a month earlier than expected. Gareth Jones’ appointment was first unveiled back in July and he was originally scheduled to take up his new role at the end of November.
Redx Pharma PLC (LON:REDX) has confirmed its chief executive, Lisa Anson, has been elected to senior industry role. From the start of 2019, she will serve as a director of the UK BioIndustry Association for a three-year term.
Berkeley Energia Ltd. (LON:BKY) has been advised by the Nuclear Safety Council in Spain that it was not the source of the widely circulated media reports that the government was intending to deny the permits for the Salamanca mine.
88 Energy Limited (LON:88E) raised AS$3.64mln via its recent rights issue. In all, the company received acceptances in respect of 202.3mln shares via the core element of the rights issue, while a further 593.59mln shares were snapped up by shareholders who took advantage of the “shortfall shares” offer, which enabled them, essentially, to acquire more shares over and above the basic right issue offer. The company also issued a report today that summarised activities in the third quarter of 2019. Highlights included the large upgrade to the portfolio at Project Icewine, the execution of definitive agreements for farm-in to the Western Blocks and solid progress in the process of 3D seismic data on the Yukon acreage.
Solo Oil PLC (LON:SOLO), the natural resources investment company focused on acquiring and developing a diverse global non-operated portfolio of strategic oil and gas assets, has announced the appointment of Strand Hanson Limited as its nominated & financial adviser with immediate effect.
Ariana Resources PLC (LON:ARS), the exploration and development company operating in Turkey, has released a corporate video following a site visit for analysts, investors and journalists to the company's Kiziltepe Mine in western Turkey, announced on 3 October 2018. The corporate video is now available on the company's website.
IronRidge Resources Limited (LON:IRR) has said it is attending The inaugural African Focus Day at IMARC 2018 today, supported by the Australian African Chamber of Commerce, from 9am to 5:30pm (AEDT time) at Room 219, Level 2, Melbourne Convention Centre, Melbourne Australia. The group said the presentation can be viewed on the Investor Relations section of the company's website or via the following clicking link: http: //www.rns-pdf.londonstockexchange.com/rns/5000F_1-2018-10-29.pdf
Touchstone Exploration Inc. (LON:TXP) (TSX:TXP), the oil and gas exploration and production company active in the Republic of Trinidad and Tobago, will be holding a live online investor presentation and Q&A session for investors on Wednesday 31 October at 7pm. To join the session, the company said investors should use the following link: https://vtm.clickmeeting.com/touchstone-exploration
6.45am: Quiet start predicted
The FTSE 100 index is expected to make a cautious start to the new week following falls by volatile US and Asian markets and ahead of a busy five days for corporate news and macro pointers, with the UK Budget to be the main focus on Monday.
Spread betting firm IG expects the blue-chip index to edge around 1 point lower at 6,938, having shed 65.54 points on Friday, although that was well above earlier hefty lows.
US stocks also finished off their lows on Friday but the Dow Jones Industrial Average still dropped 296 points to close at 24,688 as tech stocks sold off heavily in the face of earnings disappointments from internet giants Amazon Inc.(NASDAQ:AMZN) and Google owner Alphabet Inc. (NASDAQ:GOOGL).
Asia shares were lower today, with Chinese markets deep in the red on fresh signs of cooling in the world’s second-biggest economy and as US stock futures turned down again.
Chinese data over the weekend underscored worries of a cooling economy as profit growth at its industrial firms slowed for the fifth consecutive month in September as sales of raw materials and manufactured goods ebbed.
Austerity end in UK Budget?
On currency markets, the pound was fairly flat against both the dollar and the euro as investors awaited Chancellor Philip Hammond’s latest Budget, due to be delivered at 3.30pm, with the key focus on whether he will usher in the "end of austerity" that the prime minister has promised to deliver.
The UK government has faced calls to raise spending for the public sector, including more funding for the NHS, but with Brexit looming large, it has had to tread cautiously.
However, the chancellor is understood to have received good news from the Office for Budget Responsibility (OBR), which cut borrowing forecasts until 2022.
Some of the policies that are expected to be included in this year’s Budget include no rise in fuel duty for a ninth consecutive year, a tax crackdown on technology giants and getting rid of a loophole that allows private schools to avoid having to charge VAT because they are registered as charities.
HSBC numbers banked on
It will be pretty hectic in the coming week for big blue-chip results, notably from the heavyweight oils, banks and drug sectors, with global lending giant HSBC PLC (LON:HSBA) the first up on Monday.
Following mostly positive quarterly updates from Lloyds Banking Group PLC (LON:LLOY), Royal Bank of Scotland Group PLC (LON:RBS) and Barclays PLC last week, although it has a big presence on the UK high street, HSBC’s Asia business was a focus for investors amid the risk of a further slowdown in China’s economy.
However, HSBC renewed push to rein in costs and boost its business in Asia helped the lender post a better-than-expected 28% rise in third-quarter pre-tax profit to US$5.9bn, up from US$4.6bn a year earlier.
The bank saw its expenses in the third quarter fall 2.4% from the preceding three months, reversing the trend of the last couple of quarters, with quarterly reported revenue up 6.3% year-on-year to US$13.8bn.
UBS had estimated the bank reporting total income of US$13.05bn, up from US$13.03bn last year, with pre-tax profit forecast to rise to US$5.64bn, up from US$5.44bn a year ago.
Significant announcements expected on Monday October 29:
UK Budget
Trading update: HSBC PLC (Q3) (LON:HSBA)
Finals: Lok’n Store Group PLC (LON:LOK), Wey Education PLC (LON:WEY)
Economic data: Nationwide house price index; US personal income and spending
Around the markets:
- Sterling: US$1.2831, unchanged
- Gold: US$1,232,50 an ounce, unchanged
- Brent crude: US$77.26 a barrel, down 0.4%
City Headlines:
- HSBC reins in costs to post 28% jump in third-quarter profit, beating forecasts – Reuters
- IBM to acquire software company Red Hat for US$34bn – Reuters
- Thai billionaire and owner of Leicester City Football Club, Vichai Srivaddhanaprabha, died in a helicopter crash outside the Premier League club’s home ground – Financial Times
- Philip Jansen, the new chief executive of BT, participated in a notorious “wheeze” that was used by sports stars, celebrities and financiers to illegally avoid paying £700mln in tax – Daily Telegraph
- Baillie Gifford, the Scottish fund manager that owns nearly 8% of Tesla, has said that it would be willing to plough more cash into the electric car maker, despite the controversy surrounding its founder – The Times
- Ryanair investors are mounting pressure on the airline to bring in fresh leadership as they call for its chairman, David Bonderman, to stand down after more than 20 years – The Guardian
- Land Securities, which owns Trinity Leeds and Gunwharf Quays in Portsmouth, is drawing up plans to build flats above and around its shopping centres in an attempt to counteract the pressure on retail property valuations – The Times
- Patisserie Valerie is facing calls for a boardroom clear-out, with potential buyers also circling the embattled café chain – Daily Mail
- The stationery chain Paperchase has recorded loss of £6.3mln, compared with a profit of £613,000 the year before and its earnings have halved after fewer people visited its British shops – Daily Telegraph
- EY partners are in for a pay rise after the firm posted record revenues; EY’s 680 British partners received an average £693,000 each in the year to June 30, £15,000 more than last year – The Times
- AJ Bell’s staff will share a £2mln windfall when the “DIY” investment giant goes public later this year – Sunday Telegraph
- Pret A Manger to shell out nearly $1 million to settle claims that it underpaid staff in its New York sandwich bars – Sunday Times