- FTSE 100 closes 51 points higher
- Reached new post-pandemic high above 7,300 earlier
- Dow Jones passed 36,000 level early on
5.10pm Footsie in fine fettle
The FTSE 100 index made a bullish start to the new week, hitting a new coronavirus pandemic high at one stage before easing back from that peak as Wall Street also hit new records and then retreated a tad.
Investors are set for a busy week to come of central bank meetings and ending with US October jobs data.
At the close, the UK blue-chip index was 51.05 points, or 0.7% higher at 7,288.62, below the day’s peak of 7,303.89 but well above the session low of 7,237.57.
On Wall Street around London’s close, the Dow Jones Industrials Average was 92 points, or 0.3% higher at 35,912, easing back from new peaks above 36,000, with the broader S&P 500 index ahead 0.1%, while the tech-laden Nasdaq Composite gained 0.5%.
Danni Hewson, AJ Bell financial analyst, commented: “Markets have surged into November with both vim and vigour and over on Wall Street the Dow Jones popped briefly above the magic 36,000 points mark for the first time. Investors on both sides of the pond seem to have been settled by the latest crop of company earnings which haven’t been particularly impacted by supply chain disruptions – yet! But just take a look at the latest data tracking US factory activity and it’s clear the issues haven’t evaporated, they’ve just taken a little while to work through the system, rather like the supplies themselves.
“Central banks still have a careful balancing act to maintain as they seek to calm fears that rising prices aren’t just a flash in the pan. There is still mileage in the transitory argument, but not much and close attention will be paid to every word, every pause, every look that passes between those responsible for keeping inflation at just the right temperature for growth.
“In London BT topped the FTSE 100 risers with investors tantalised by talk of a potential takeover from French billionaire Patrick Drahi and at the other end of the scale housebuilders slid down as investors weigh up the impact of higher lending costs. Today has felt a bit like the party before the hangover with a new pandemic closing high for the FTSE 100.”
3.25pm: Oil prices recover ahead of OPEC+ meeting
The Footsie was heading for a green close as it jumped 55 points to 7,293 in the late afternoon.
Even though everyone is focused on climate issues at COP26, oil prices are recovering over expectations of strong demand after a wobble last week.
Brent crude futures were up 1.5% to US$84.94 a barrel on Monday afternoon, ahead of the OPEC+ meeting on Thursday.
Craig Erlam, senior market analyst at OANDA, noted that this indicate the market is still quite bullish.
“It was always likely that dips were going to attract interest but to be so close to last weeks highs already is quite impressive. Especially coming on the back of reports that China has released gasoline and diesel reserves in a bid to keep regions well supplied and prices stable. Not to mention the softer PMI data over the weekend that pointed to ongoing challenges for the economy,” he said.
“It seems quite clear that traders are not expecting any action from OPEC+ this week considering their conclusions last month and comments since. The group is clearly perfectly happy with price levels and don't consider them the economic risk that other countries, like the US, do. This weeks meeting will likely be swift and consistent with the last, we stay the course.”
2.15pm: US stocks start trading day on front foot
The Footsie was on the rise in the afternoon as US benchmark indices started higher, as had been expected.
The Dow Jones Industrial Average added over 100 points at 35,920 to reach a new record in early deals in New York, while the S&P 500 gained around 11 points at 4,616.
The technology company heavy Nasdaq Composite added over 22 points at 15,521. London's leading index jumped 45 points to 7,283.
Last month was dominated by quarterly earnings, which showed solid results and share prices rising. Reportedly, around half of S&P 500 companies have now posted results, with over 80% of them beating Wall Street earnings estimates.
As well as any potentially stock market-stimulating news from the global climate conference in Glasgow (COP26), investors this week will be eyeing a Federal Reserve policy meeting, starting tomorrow and going into Wednesday for detail on when the US central bank will start easing back on stimulus measures.
The Fed is generally expected to announce that it will begin to unwind its US$120 billion in monthly bond purchases and stop it completely by mid-2022.
Traders will also be looking for any more comment on the state of US inflation.
1.25pm: Boris Johnson says COP26 ‘critical’ summit to take action
FTSE 100 stayed put after lunchtime, up 31 points to 7,268.
Prime Minister Boris Johnson spoke on the first day of the COP26 climate summit, which he deemed “critical” for taking action on the environment.
World leaders have arrived in Glasgow today to agree on solutions against the rising temperatures.
Johnson told the BBC they need to move from "aspiration to action" as the world is at "one minute to midnight".
Boris Johnson will warn COP26 delegates today that time is running out to tackle climate change.
But researcher Matthew Lesh says: "We get this absurd, apocalyptic rhetoric every year at these conferences where it's always 'one minute to midnight'."@JuliaHB1 | @matthewlesh pic.twitter.com/Icrsmo1FWW
— talkRADIO (@talkRADIO) November 1, 2021
12.20pm: Heinz launches Christmas dinner in a can
The FTSE 100 pared its gains at lunchtime, though it was still up 25 points to 7,263.
Worried about festive supplies? Heinz has launched a ‘Christmas Dinner Soup’ in a can that has already sold out.
It contains turkey, stuffing, chunky potatoes, brussels sprouts and even pigs in blankets all floating in a soup that can be microwaved or heated up on the hobs.
The group only made 500 cans this year, but it might ramp up production for Christmas 2022 if people like it, The Guardian reported. From the looks of things, it might as well become a festive staple.
I must not be well. Im awake at stupid O’clock ordering Christmas Dinner Soup from @HeinzUK. It does sound nice so it’s on its way. Wish me luck pic.twitter.com/XZgGWCh1tm
— Aaron Bradbury Coffey ????????️???? (@AaronEarlyYears) November 1, 2021
11.30am: US stocks set for green open
US stocks are expected to start November on the front foot but investors are likely to be wary in a week full of event risk, including the Federal Reserve’s rate-setting meeting and October employment numbers.
Futures for the Dow Jones Industrial Average rose 0.43% in Monday pre-market trading, while the broader S&P 500 index gained 0.42% and those for the tech-heavy Nasdaq 100 added 0.87%.
Fed chair Jerome Powell is expected to announce a tapering in quantitative easing when the Federal Open Market Committee wraps up its meeting on Wednesday. That falls between Tuesday’s meeting of the Reserve Bank of Australia and Thursday’s Bank of England announcement.
"It’s strange to have a likely Fed taper announcement on Wednesday be third billing for the week but the BoE on Thursday might be the next most important meeting as it’s still a finely judged call as to whether they hike this week or not," commented Jim Reid, a strategist at Deutsche Bank.
"In line with recent guidance, DB expect that the Fed will announce monthly reductions of $10bn and $5bn of Treasury and MBS purchases, respectively. With the first cut to purchases coming mid-November, this will bring the latest round of QE to a conclusion in June 2022."
"After a meaningful rebound in bond yields since August, from 1.2% to 1.7% for US 10-year, the curve flattened again most recently. US 10-year is down 15bp from the highs reached on 21st October, while 2-year is up 10bp. This could be interpreted as the market moving towards pricing in a policy mistake. In our view, while there could be some degree of 'travel and arrive', we would not expect any flattening to last," analysts at JP Morgan commented.
US non-farm payrolls for October are due for release on Friday.
Meanwhile, London's main index rose 32 points to 7,270.
10.30am: UK manufacturing still suffers supply chain pressures
The FTSE 100 was firmly in the green in the late morning, up 38 points to 7,275.
The latest UK manufacturing PMI reading showed a slowdown in upturn at the start of the fourth quarter, as output growth was constrained by rising supply chain disruption, staff shortages and declining intakes of new export work.
The figure rose to 57.8 in October, from 57.1 in September, marginally above the consensus and the flash estimate, 57.7, surveyor IHS Markit said.
“The PMI continues to give a misleadingly upbeat steer on the state of the recovery in the manufacturing sector, because counterintuitively it is boosted by long waits for components,” commented Samuel Tombs, chief UK economist at Pantheon Macroeconomics.
“The suppliers’ delivery times index, which is inverted for the PMI calculation, fell to 18.3 in October, from 19.3 in September, signalling that supply chain disruptions have worsened,” he added.
“UK manufacturers still are failing to benefit much from the strong recovery in global goods trade, due to Brexit… Looking ahead, rapid increases in prices—the output index leapt to a record high in October—threaten to subdue demand. The huge work backlogs that have accumulated over the last six months, however, will keep manufacturers busy through the winter, even if demand fades. Accordingly, we continue to expect manufacturing output to hover about 2% below its January 2020 level over the next six months.”
9.30am: BT top riser after cost-cutting progress speculation
The FTSE 100 continued its ascent in mid-morning, up 38 points to 7,275.
BT Group PLC (LSE:BT.A) added 3% to 143.5p on the back of speculation it will announce strong progress on its cost-cutting programme, which should see at least 13,000 job cuts, on Thursday’s update.
The Telegraph reported on Saturday that chief executive Philip Jansen is to say that the £1bn savings target by March 2023 will be achieved at least a year early.
The FTSE 100 telecoms giant is threatened by a potential acquisition bid by French billionaire Patrick Drahi, founder of broadband challenger Altice.
Under City rules, Drahi cannot bid until December because he built a 12% earlier this year though he stated there were no takeover plans.
8.25am: Barclays in retreat as CEO stands down
Spurred on by Asia’s early positive start and Wall Street’s record close, the FTSE 100 opened the trading week firmly in the green.
With much of the action taking place towards the middle and back end of the week (we are talking about the Fed and Bank of England interest rate calls, as well as US payroll data), trading volumes are expected to reasonably light.
“Earnings strength is continuing to keep the inflationary and tapering bears at bay, shaking off the historic trend of October being a troublesome month for markets,” said Richard Hunter, head of markets at Interactive Investor.
The morning’s big blue-chip loser was Barclays (LON:BARC) with the stock 2.5% lower after the departure of the bank’s chief executive Jes Staley. His departure follows an investigation by the City watchdog over his links Jeffrey Epstein.
Staley has said he will contest the preliminary findings of the inquiry carried out by the Financial Conduct Authority (FCA) and the Prudential Regulation Authority.
An upgrade to ‘outperform’ by France’s BNP Paribas lifted shares in Lloyds Banking Group by 1.5%. BT, another favourite of rank-and-file private investors, was also well bid early on as it rose 1.4%.
6.50 am: FTSE 100 called higher
The FTSE 100 look set to make a positive start proceedings following Friday’s record close on Wall Street and Asia’s strong open to the new trading week.
Japan’s re-election of prime minister Fumio Kishida with a single-party majority for his Liberal Democratic Party added some solidity to the region and sent the Nikkei 225 soaring 744 points or 2.55%.
There are worries over the health of the world’s second-largest economy as China's official services and manufacturing data surprisingly undershot expectations.
That said Caixin Purchasing Managers Index reading painted a slightly more positive picture – and settled some early nerves.
Michael Hewson, analyst at CMC Markets, is surprised China’s recent wobbles, coupled with wider worries over inflation and supply chain disruption, haven’t bled into the markets.
“Company results have thus far been fairly positive, and particularly encouragingly we’ve seen companies have been able to pass on price rises to consumers without any hint of demand destruction,” he added.
“One big reason for this consumer resilience is likely to have been that the large governmental fiscal responses have proved to be a decent buffer for consumer balance sheets, as prices rise.
“Whether that remains to be the case is open to question, however, the fact that unemployment is almost back close to levels it was pre-pandemic is welcome news for governments who were concerned about the widespread damage the pandemic might have done to the jobs market.”
Looking ahead, economists will be closely scrutinising the output from meetings of the US Federal Reserve and Bank of England later this week for signs of a change in tack in monetary policy, analysts said.
On the corporate front, we have updates this week from grocer Sainsbury, bank Standard Chartered, clothier Next, British Airways owner IAG and oil giant BP.
Around the market
- Pound US$1.3675 (flat)
- Bitcoin US$60,446.66 (-1.45%)
- Gold (NYSE:GLD) US$1,786.50 (+0.15%)
- Brent crude US$83.48 (-0.29%)
6.50am: Early Markets - Asia / Australia
Stocks in the Asia-Pacific region were mixed on Monday with Japanese shares surging after the country’s ruling Liberal Democratic Party held on to its single-party majority in Sunday’s parliamentary election.
The Nikkei 225 jumped 2.61% while South Korea’s Kospi rose 0.28%.
China’s Shanghai Composite slipped 0.04% and Hong Kong’s Hang Seng index slumped 0.94%
Australia’s S&P/ASX200 gained 0.64% to 7,370.80 as Commonwealth Bank inked a partnership with the CSIRO to develop a roadmap to help financial services companies manage and reduce climate change risks.