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London open: Stocks flat ahead of expected ECB rate cut
London stocks were flat in early trade on Thursday as investors eyed an expected rate cut by the European Central Bank.
At 0830 BST, the FTSE 100 was steady at 8,326.32.
Kathleen Brooks, research director at XTB, said: “There are two key events today, the ECB meeting and this evening’s Netflix results. Both events are highly anticipated, and the market has big expectations: the ECB will cut rates and signal a new more dovish phase, while Netflix is set to announce a stellar quarter of earnings growth and news about future revenue streams.
“We don’t think that the market is wrong to assume that the ECB will turn super dovish, or that Netflix will kick off the start of tech earnings season in style, however, we do think that there is no room for error. The market has fully priced in just over two 25bp rate cuts from the ECB by the end of the year, and there are another 4.5 cuts priced in after that. Bloomberg’s ECB Speak index has fallen to one of its lowest levels, which suggests that ECB officials are now more dovish than they were during the peak of the pandemic.
“This also suggests that ECB officials are singing from the same hymn sheet, as the typically hawkish German ECB members also shift to a dovish stance. This compares to the Fed, although Fed members have generally spoken in more dovish tones, they are hovering somewhere around neutral. This fits with the switch from expecting a 50bp rate cut at the November Fed meeting to expecting a 25bp rate cut.”
The ECB rate announcement is due at 1315 BST.
In equity markets, pest control services group Rentokil Initial surged as it held on to full-year guidance following a profit warning last month, reporting a steady third quarter with revenues unchanged year-on-year at £1.38bn.
Gambling and gaming group Entain rallied as it boosted its full-year outlook after third-quarter numbers came in ahead of expectations.
St James’s Place gained as it said funds under management reached a record £184.4bn in the three quarters to September end, up from £158.6bn a year earlier, boosted by an improving macroeconomic environment.
It was also an improvement on the second quarter, when FUM reached £181.9bn.
Chemring was in the black as it said its performance remained in line with analyst expectations, supported by a robust order intake of £638m and an order book of £1.1bn as of 30 September.
Outside the FTSE 350, N Brown rocketed after agreeing to be taken private by a company owned by Joshua Alliance – whose family has been involved with the group since the 1960s – in a £191m deal.
On the downside, miners fell in tandem with copper prices, with Antofagasta, Rio Tinto and Glencore all down.
Paper and packaging group Mondi tumbled as it said that underlying core profit fell in the third quarter in “muted” trade, mainly due to more planned maintenance shuts.
Investment management firm Man Group was also weaker as it said assets under management fell to $174.9bn as at 30 September, from $178.2bn as at 30 June.
Top 10 FTSE 100 Risers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Rentokil Initial Plc | +8.68% | +29.60 | 370.70 |
| 2 |  |
Anglo American Plc | +2.99% | +67.50 | 2,328.00 |
| 3 |  |
Informa Plc | +2.72% | +22.00 | 831.20 |
| 4 |  |
South32 Limited | +2.06% | +3.90 | 193.10 |
| 5 |  |
Barclays Plc | +1.94% | +4.60 | 241.65 |
| 6 |  |
Melrose Industries Plc | +1.92% | +8.30 | 439.80 |
| 7 |  |
Flutter Entertainment Plc | +1.75% | +305.00 | 17,735.00 |
| 8 |  |
Rolls-royce Holdings Plc | +1.43% | +8.00 | 568.00 |
| 9 |  |
Intermediate Capital Group Plc | +1.42% | +30.00 | 2,138.00 |
| 10 |  |
Banco Santander S.a. | +1.30% | +5.00 | 389.00 |
Top 10 FTSE 100 Fallers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Mondi Plc | -6.73% | -93.50 | 1,296.50 |
| 2 |  |
Bhp Group Limited | -2.64% | -59.00 | 2,178.00 |
| 3 |  |
Smurfit Westrock Plc | -2.64% | -90.00 | 3,323.00 |
| 4 |  |
Antofagasta Plc | -2.31% | -42.00 | 1,777.50 |
| 5 |  |
Vodafone Group Plc | -2.13% | -1.62 | 74.48 |
| 6 |  |
Whitbread Plc | -1.78% | -58.00 | 3,200.00 |
| 7 |  |
Rio Tinto Plc | -1.68% | -84.50 | 4,954.50 |
| 8 |  |
Smith (ds) Plc | -1.62% | -7.60 | 460.80 |
| 9 |  |
United Utilities Group Plc | -1.31% | -14.50 | 1,091.50 |
| 10 |  |
Bunzl Plc | -1.10% | -40.00 | 3,594.00 |
US close: Morgan Stanley leads markets higher, Dow hits new record
US equity markets rallied into the close on Wednesday with the Dow hitting a fresh record high as more forecast-beating earnings in the banking sector offset weakness among tech stocks.
The Dow finished 0.8% higher at 43,077.70, settling marginally higher than Monday’s all-time high of 43,065.22. Meanwhile, the S&P 500 rose 0.5% while the Nasdaq edged 0.3% higher.
Morgan Stanley was making headlines after topping Street forecasts with third-quarter earnings, thanks to a better-than-expected investment banking performance. The bank was following in the footsteps of other economic bellwethers to impress with recent results, including Goldman Sachs, Bank of America and JPMorgan.
On the macro front, US mortgage applications fell by 17% in the week ended 11 October, according to the Mortgage Bankers Association of America, extending the prior week’s 5.1% drop. Applications to refinance a mortgage plummeted 26%, while those to purchase a home were down 7% on the week.
In other news, the cost in the US of goods purchased overseas undershot economists’ forecasts last month as the fuel prices plummeted. According to the US Department of Labor, the seasonally adjusted import price index dropped by 0.4% in September, after a 0.3% decline in August, coming in below the expected 0.1% decline.
Market movers
Shares in Morgan Stanley jumped nearly 7% after the banking giant posted a 32% jump in third-quarter earnings to $3.2bn . Chief executive Ted Pick said the company had a “strong third quarter in a constructive environment across our global footprint”. Sector peers Goldman Sachs, JPMorgan and Bank of America were also performing well.
Abbott Laboratories also gained after lifting its full-year profit guidance on the back of solid medical device sales. Third-quarter sales topped analysts’ estimates, rising 8.2% on an organic basis to $10.6bn.
United Airlines saw shares surge 12% after third-quarter earnings and sales beat market forecasts, as it unveiled a $1.5bn share buyback.
Meanwhile, biotech firm Novavax was a heavy faller, dropping 19% after the FDA paused the company’s trial of its flu-Covid combination vaccine due to safety concerns.
Big-name tech stocks were trading broadly lower, including Apple, Alphabet, Microsoft and Amazon.com.
Thursday newspaper round-up: Tesco, Post Office, Amazon, Stellantis
Tesco has struck a deal to buy enough solar power to run 144 of its large supermarkets, buying almost two-thirds of the entire electricity output from the Cleve Hill solar park in Kent. The £450m solar park is being built on farmland near Faversham by Quinbrook Infrastructure Partners, a London-based firm that invests in renewable and low-carbon energy in the US, UK and Australia. – Guardian
Post Office executives changed data on the Horizon IT systems used by post office operators without their knowledge as recently as last year, the public inquiry into the scandal has heard. The inquiry was shown a letter from Calum Greenhow, the chief executive of the National Federation of Subpostmasters (NFSP) and a post office operator for 22 years, to the Post Office raising the issue in May last year. – Guardian
Amazon has become the latest tech giant to embrace mini-nuclear reactors as the online retailer seeks to power a growing fleet of electric trucks and data centres. The American group, founded by Jeff Bezos, said on Wednesday it had led a $500m (£380m) funding round in small modular reactor (SMR) technology being developed by Maryland-based X-energy. It is also backing two SMR projects in the states of Virginia and Washington. – Telegraph
The crisis at Stellantis, the parent group of Vauxhall, has been laid bare as the multinational automotive group revealed that deliveries have crashed 20 per cent compared with a year ago. Shipments around the world by Stellantis brands in the three months to the end of September fell 279,000 to 1.14 million compared with the same period in 2023. The collapse in business was most acutely seen in North America where shipments dived 36 per cent, down 171,000 vehicles to 299,000, as it admitted problems managing the energy transition. – The Times
The UK’s decision to leave the European Union was a “disaster” that has cost the Square Mile almost 40,000 jobs, according to the lord mayor of the City of London. The estimate by Michael Mainelli, who represents the Square Mile in his role as the 695th lord mayor, will fuel the debate over the true extent to which Britain’s financial services sector has been harmed by Brexit. – The Times
