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London open: Stocks gain as miners rally on PBOC cuts
London stocks rose in early trade on Monday, with miners pacing the gains as investors mulled the latest move by the People’s Bank of China and UK house price data.
At 0840 BST, the FTSE 100 was up 0.3% at 8,385.07.
Earlier, the PBOC cut its two benchmark lending rates by 25 basis points.
The one-year and five-year loan prime rates were reduced from 3.35% and 3.85% to 3.10% and 3.6%, respectively, in line with market expectations.
Susannah Streeter, head of money and markets at Hargreaves Lansdown, said: “The FTSE 100 has started the week on a positive foot, helped by the extra stimulus being thrown at China’s economy. Miners were among the gainers in early trade after the People’s Bank of China cut key lending rates. Burberry has also gained ground amid hopes that cheaper loans for consumers might stimulate demand for luxury goods.
“The one-year and five-year loan prime rate have been slashed by 25 basis points. These benchmarks are used to price consumer loans and mortgages, and the idea is that the move will encourage lending and spending and help mend the ailing property market. There are also hints from authorities that there may be further cuts to the amount banks need to hold in reserve, to try and boost lending further.
“With the taps of support being turned on more fully there is renewed hope that this approach of throwing the kitchen sink at the problem will help the economy reach growth targets. But there are still expectations that further fiscal stimulus will be needed, with tax tinkering expected to put more money into consumers’ pockets. The positive start for the FTSE follows a fresh surge of enthusiasm for US stocks on Friday, with the S&P 500 surging to new heights, with corporate earnings, particularly from financials lifting sentiment.”
Investors were also mulling the latest house price index from Rightmove, which showed the number of homes being put up for sale surged in October, holding back selling prices.
The number of available homes for sale was up 12% year-on-year, the highest per estate agent since 2014.
Underlying buyer demand also remained strong, with the number of people contacting agents spiking 17%, despite uncertainty around the forthcoming Budget.
But it meant that house price growth was curtailed and the national average asking price edged up just 0.3% to £371,958. Rightmove said that the “muted” autumn bounce was well below average growth for October of 1.3%.
“With a greater choice of properties to consider, buyers are making use of their increased negotiating power, helping to keep price rises subdued,” it noted.
The number of sales being agreed surged 29% as the market rebounded strongly from quieter conditions a year previously.
Tim Bannister, director of property science at Rightmove, said: “With the ball in the buyer’s court and the pick of a big crop to choose from, sellers need to be pricing competitively to find a buyer, particularly with affordability still very stretched.
“We’re not seeing activity slow down, but some estate agents report that some movers are now waiting for Budget clarity and anticipated cheaper mortgage rates later this year.”
The Bank of England, which ramped up interest rates to tackle surging inflation, cut the cost of borrowing in August for the first time in four years.
Rates were then left on hold in September, but another 25 basis point reduction is widely expected at the Monetary Policy Committee’s next meeting in November. Some believe a further cut will then follow shortly afterwards, in December.
Rightmove said that the 2025 outlook for the housing market remained positive, although it acknowledged ongoing affordability pressures.
In equity markets, gold miners shone as the price of the yellow metal a hit a new record. Fresnillo, Endeavour and Hochschild all rose as uncertainty over the US election and tensions in the Middle East drove investors to safe haven assets.
Streeter said: “Israel’s continuing bombardment of Lebanon and Gaza is adding to the risk of overspill into wider conflict in the region. The uncertain outcome of the US presidential election is also likely to be playing on minds and leading to more defensive positioning.”
Miners were also in the black as copper prices pushed up after the Chinese rate cuts, with Antofagasta, Glencore and Anglo American all higher.
FirstGroup advanced as it announced the acquisition of Anderson Travel, a coach operator providing contracted school, private hire, mini coach and tour services in and around London, for an undisclosed sum.
Intertek was knocked lower by a downgrade to ‘sector perform’ from ‘outperform’ at RBC Capital Markets. It said Intertek has performed well versus the wider sector year to date and now trades at what it deems to be fair value, taking into account recent FX movements, and a less certain outlook for FY25.
Top 10 FTSE 100 Risers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Wheaton Precious Metals Corp. | +3.93% | +195.00 | 5,160.00 |
| 2 |  |
Woodside Energy Group Ltd | +2.09% | +26.00 | 1,272.00 |
| 3 |  |
Bp Plc | +1.90% | +7.60 | 407.20 |
| 4 |  |
Smith (ds) Plc | +1.52% | +6.80 | 453.80 |
| 5 |  |
Glencore Plc | +1.20% | +4.90 | 413.60 |
| 6 |  |
Smurfit Westrock Plc | +1.19% | +40.00 | 3,406.00 |
| 7 |  |
Shell Plc | +1.12% | +28.50 | 2,565.00 |
| 8 |  |
Antofagasta Plc | +1.09% | +20.00 | 1,849.00 |
| 9 |  |
Barratt Redrow Plc | +1.00% | +4.90 | 493.00 |
| 10 |  |
Reckitt Benckiser Group Plc | +0.98% | +47.00 | 4,823.00 |
Top 10 FTSE 100 Fallers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Intertek Group Plc | -2.60% | -133.00 | 4,982.00 |
| 2 |  |
Severn Trent Plc | -1.40% | -38.00 | 2,676.00 |
| 3 |  |
South32 Limited | -1.36% | -2.60 | 188.80 |
| 4 |  |
United Utilities Group Plc | -1.33% | -14.50 | 1,072.50 |
| 5 |  |
Investec Plc | -1.31% | -8.00 | 602.50 |
| 6 |  |
Bp 9% 2nd Prf | -1.25% | -2.00 | 158.00 |
| 7 |  |
Aib Group Plc | -1.19% | -5.00 | 413.50 |
| 8 |  |
Prudential Plc | -0.80% | -5.40 | 668.00 |
| 9 |  |
Coca-cola Hbc Ag | -0.78% | -22.00 | 2,808.00 |
| 10 |  |
Tesco Plc | -0.75% | -2.70 | 359.10 |
US close: Dow, S&P 500 set new records as earnings impress
US stocks rose slightly on Friday but gains were enough to lift both the S&P 500 and Dow to new record highs, as investors digested a barrage of corporate earnings, including a bumper set of results from streaming giant Netflix.
The Dow gained 0.09% to a new peak of 43,275.91, marking its third straight day setting a new closing high, while the S&P 500 rose 0.40% to 5,864.67, marginally topping last week’s record of 5,859.85. Meanwhile, the Nasdaq gained 0.63% to 18,489.55.
According to Dow Jones, approximately four fifths of the S&P 500 that has reported third-quarter results have surpassed consensus estimates, including the majority of the nation’s biggest banks.
Chris Beauchamp, chief market analyst at IG, said Netflix’s earnings “bolster[ed] the overall market mood”. Beauchamp said: “When all else fails, tech earnings can usually be relied upon to deliver good news. Somehow, Netflix continues to find new subscribers, and while the pace of new subscriber growth has slowed markedly, it still beat expectations, which is of course the most important thing in earnings reports.”
On the macro front, US housing starts slipped 0.5% month-on-month to a reading of 1.35m in September, according to the Census Bureau, in line with market expectations. Meanwhile, building permits fell by a more-than-expected 2.9% to 1.42m in September, missing forecasts for a reading of 1.46m.
Investors were also digesting economic data from China, where annual GDP growth slowed to 4.6% in the third quarter from 4.7% in the second, though narrowly above forecasts for growth of 4.5%. Chinese retail sales also had risen 3.2% year-on-year in September, an above-forecast improvement on August’s 2.1% increase, while industrial production strengthened 5.4%, up from 4.5%.
Netflix impresses the market
Netflix shares jumped 11% after third-quarter earnings beat Wall Street estimates on both the top and bottom lines. However, it was the company’s memberships from its ad-tier subscriptions that really impressed, rising 35% over the second quarter and accounting for more than half of sign-ups in regions where it was available.
Healthcare tech group Intuitive Surgical was also a high riser, surging 10% after comfortable beating earnings estimates in the third quarter.
Credit card group American Express beat third-quarter profits expectations on the back of more disciplined cost control, but missed estimates with revenues of $16.64bn, slightly short of the $16.67bn expected.
Consumer goods giant Procter & Gamble managed to finish flat despite the news that first-quarter sales had fallen short of expectations despite the group hiking prices.
Aerostructures manufacturer Spirit AeroSystems was lower after revealing plans to furlough roughly 700 workers as a strike by Boeing machinists entered its sixth week. Spirit said its temporary, 21-day furloughs, which will affect approximately 5% of the company’s US workforce.
US-listed shares of Chinese companies like JD.com, NetEast and Baidu finished with decent gains, tracking Chinese markets higher following Friday’s economic data barrage.
Monday newspaper round-up: Water companies, Sky, Microsoft
Almost half of the UK workforce lack access to workplace health support including winter flu vaccinations and checks for cardiovascular diseases, a report has found. The analysis, by the Royal Society for Public Health (RSPH), looked at data from the Department for Work and Pensions and the Department for Business, Energy and Industrial Strategy (DBEIS) and found that more than 10 million UK workers lack access to services including basic health checks, vaccinations, and smoking or weight loss support, provided by their employer. – Guardian
Bonuses for water company bosses in England and Wales rose to £9.1m this year despite record sewage discharges into rivers and seas. More than a third of that total comprised bonuses at Severn Trent, which was fined £2m this year for “reckless” pollution but lifted its bonuses to £3.36m. Thames Water almost doubled its payouts to executives, from £746,000 in 2021-22 to £1.3m in 2023-24, despite its CEO quitting halfway through the year. – Guardian
Sky has reported a £750m loss after the Qatar World Cup pushed up broadcasting costs and the company wrote down more than £1bn on its operations in Italy and Germany. The British broadcaster, which is owned by the US telecoms and media giant Comcast, doubled its operating losses as it shifts from its traditional satellite model to broadcasting channels over internet streaming. – Telegraph
Microsoft has signed a five-year product agreement with the British government as the Labour administration deepens its ties with the giant technology group, whose UK chief executive has just been appointed to lead an influential new industrial body. Microsoft and the Crown Commercial Service, the UK’s biggest public procurement organisation, have agreed a memorandum of understanding giving public sector organisations access to Microsoft’s portfolio of AI-powered products and services. – The Times
The hospitality industry has warned of a £900 million hit in the spring unless the chancellor reforms business rates in the budget. Bosses of some of the UK’s biggest pubs and high street venues said that without government action the tax would quadruple when business rates relief ends on March 31, costing the sector an additional £914 million. – The Times
