• FTSE 100 closes 19 points firmer
  • Mining shares provide support
  • US blue-chips weak ahead of Thanksgiving break

4.50pm: Footsie finds gains

The FTSE 100 closed higher on Wednesday, in spite of mixed progress on Wall Street ahead of the Thanksgiving break, with London supported by strength in mining stocks.

At the close, the UK blue-chip index was 19.63 points, or 0.3% higher at 7,286.32, below the session peak of 7,307.89, but above the day’s low of 7,245.98.

On Wall Street around London’s close, the Dow Jones Industrials Average was down 105 points, or 0.3% at 35,708, while the broader S&P 500 index slipped 0.02%. But the tech-laden Nasdaq Composite rallied 0.2%.

Chris Beauchamp, chief market analyst at IG, commented: “The FTSE 100 has swung from a loss to a gain during the course of the day and US markets are clawing back some of their opening losses as investors look forward to the Thanksgiving holiday. A sharp drop in initial claims has provided the fundamental reason for optimism, helping to alleviate some of the worries about global growth that seemed to dominate the first two sessions of the week.

“Crucially we have seen a number of the weakest stocks in the US start to stabilise, with names like Paypal and Twitter either holding their ground or beginning to edge higher. Bank stocks are still under pressure, holding back the market from making a better move to the upside, but with heavyweight Boeing also holding up well the outlook appears to be brightening for US equities.”

He added: “In London, it is a similar story – energy, mining and bank stocks are making headway, lifting the FTSE 100 from its doldrums of the morning session and once again seeing the UK market outperform its peers on the continent, where Covid fears continue to hit risk appetite. Headlines about a lockdown in Germany sent EUR/USD to its lowest level in nearly a year and a half, helping to provide some small measure of support for European equities. As yet the usual late-November bounce in stocks has yet to really materialise, however.”

4.00pm: UK market shrugs off US decline

It’s been, if not exactly a rollercoaster ride for the market, than at least one of the bumpier attractions at Peppa Pig World.

After several dips and rises, the FTSE 100 is currently up 14.36 points or 0.2% at 7281.05, shrugging off weakness on Wall Street after the raft of US data.

Intertek Group Plc (LSE:ITRK) remains the top riser, up 5.7% following its latest update

Commodity companies are also stronger, with Rio Tinto PLC (LSE:RIO) rising 2.07% and BHP Group PLC (LSE:BHP) 1.9% better.

Land Securities Group PLC (LSE:LAND) has added 1.47% following reports it is in talks to buy a 25% stake in the Bluewater Shopping Centre in Kent from Landlease in a GBP200m deal. According to Property Week, any deal would lift Landsec’s stake to 55% giving it majority control.

But Johnson Matthey PLC (LSE:JMAT) is down 1.47% in reaction to its results, while gaming groups are lower as a group of MPs and peer called for action to curb gambling.

Entain PLC (LSE:ENT) is down 3.79% and Flutter Entertainment PLC (LSE:FLTR) has fallen 2.22%.

Elsewhere the poor German business confidence figures and worries about further lockdowns in Europe have sent the euro to its lowest level against the dollar for nearly a year and a half.

3.15pm: More US data ahead of Thanksgiving holiday

There is also a fairly strong US consumer confidence survey.

3.11pm: Key inflation indicator heads higher

A key inflation indicator for the US Federal Reserve has come in pretty much as expected.

The Personal Consumption Expenditures price index was 5% year on year in October, compared to 4.4% in September and just below forecasts of 5.1%.

The core measure was exactly in line with forecasts at 4.1%, up from 3.6%.

The figures are likely to reaffirm the belief the Fed will raise rates before too long.

2.55pm: US markets open lower

US shares started firmly in the red as investors digested the raft of economic data, and higher bond yields continue to pressure tech stocks.

In New York, the Dow Jones Industrial Average shed around 211 points to stand at 35,602. The S&P 500 fell 27 points at 4,662.

The tech-laden Nasdaq plunged over 152 points at 15,622.

As a reminder, initial jobless claims for last week came in at 199,000, which was the lowest level in more than 50 years, suggesting the bounce-back in the economy.

US gross domestic product (GDP) growth for the third quarter was also revised up slightly to 2.1%.

Orders for US durable goods (those supposed to last over three years such as cars and white goods) in October this year fell 0.5% after economists had forecast a 0.3% increase, But that decline was put down to fewer orders, unsurprisingly, for passenger planes.

But the FTSE 100 has turned around again, and is now up 7.16 points or 0.09% at 7273.85.

1.57pm: Investors cautious after data dump

The US data has pushed the futures market lower.

The Dow Jones Industrial Average is now expected to open 158 points lower or 0.44%, with the S&P 500 registering a similar decline. The Nasdaq Composite is now indicated down 0.55%

And the FTSE 100 has fallen back into negative territory, down 15.41 points or 0.21% at 7251.28.

1.39pm: US GDP grows, jobless claims fall to lowest since 1969, durable goods disappoint

A slightly mixed picture from the latest US data.

The US economy grew in the third quarter but by slightly less than expected.

The country’s GDP rose by 2.1% on an annualised basis between July and September, compared to forecasts of a 2.2% increase.

Meanwhile weekly jobless claims were much lower than analysts had predicted.

The number of Americans seeking unemployment benefits fell last week to 199,000, down from 268,000. A fall to 260,000 was forecast.

This is the lowest figure since – amazingly November 15 1969 – when it was 197,000.

And the trade deficit in goods fell back in October.

But durable goods orders fell by more than last month and contrary to the expected increase.

Naeem Aslam, chief market analyst at Avatrade, said: “We had a slew of economic numbers today…One thing is clear, that durable goods order number isn’t great and it shows weakness, and perhaps, no hawkish stance from the Fed. This particular factor has pushed the gold price off its lows of the day.

“But overall, we believe economic conditions are only improving, especially, the US weekly jobless claims, and this is a strong reason for the Fed to hike interest rates next year. “

12.32pm: US GDP and inflation indicators set to rise

Here’s Michael Hewson, chief market analyst at CMC Markets UK, on the tsunami of US data coming up:

“The latest revision of US Q3 GDP .. is expected to see a modest upward adjustment to 2.2%, from 2%.

“The recent headline CPI and PPI numbers also weren’t good news for the Federal Reserve’s transitory inflation narrative, which they used to justify their decision to start slowing their bond buying program. There are increasingly strident voices urging the central bank to taper faster than the current $15bn a month which started this month. If today’s core personal consumer expenditures similarly surge to 31-year highs in the same way that the recent headline CPI numbers did earlier this month we can expect these voices to get louder.

“In September the PCE Deflator hit a 30 year high of 4.4%, and is expected to move above 5% in October, while the core deflator pushed up to 3.6%, and is expected to edge even higher above 4%, and levels last seen in 1990.

“The recent better than expected retail sales figures for October should translate into a similarly positive uplift to today’s personal spending numbers which are expected to show a rise of 1%, while personal income is expected to recover from a 1% decline in September, with a 0.2% uplift.

“Weekly jobless claims are expected to come down to 260,000 from 268,000.”

12.04pm: US investors await flood of data

US stocks are expected to open lower ahead of a slew of data releases due for release before the Thanksgiving holiday and as tech stocks continue to come under pressure due to a quicker move to interest rate hikes after it emerged that Jerome Powell would remain as Fed chair.

Futures for the Dow Jones Industrial Average declined 0.28% in Wednesday pre-market trading, while the broader S&P 500 index shed 0.19% and those for the tech-heavy Nasdaq 100 fell 0.16%.

US stocks closed mixed on Tuesday as the Nasdaq fell for the second-straight day, dropping 0.5% to 15,775.

The Dow Jones Industrial Average increased by195 points, or 0.55%, to 35,814 and the S&P 500 rose 0.17% to 4,691.

Among the US data on the way are weekly initial jobless claims, the second estimate of third quarter GDP, October’s personal income and personal spending and the preliminary October readings for durable goods orders.

“Last but by no means least, of course, the minutes of the FOMC’s 3 November meeting are also due,” commented Daiwa Capital Markets head of economic research.

“With upside surprises in the latest inflation figures, solid employment data and signs of an acceleration in economic growth this quarter, a number of Fed Governors – including Clarida and Waller – last week suggested that a faster pace of tapering will likely be up for discussion at the next FOMC meeting in December.

“So the minutes will be watched closely for detail on last month’s debate on the tapering policy and, not least, the room for manoeuvre and burden of proof required to accelerate.”

11.57am: Travel worries hit airline shares

Airline shares have come under pressure on fears that growing infection numbers in Europe will hit demand for flying once more.

British Airways owner International Consolidated Airlines Group (LSE:IAG) is down 1.8%, easyJet plc (LSE:EZJ) is 2.02% lower and Wizz Air Holdings (AIM:WIZZ) has lost 0.88%.

Aero engine maker Rolls-Royce Holdings PLC (LSE:RR.) has also fallen, down 1.9%.

Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said: ”The dip in early trading among airline stocks has intensified…as fears about soaring infections in Europe take hold. Rolls Royce was also dragged lower as it is highly sensitive to the fortunes of the airline industry, given that its core business of making and servicing engines for long-haul aircraft is based on the number of hours its engines are in the air.

“Their descent comes amid warnings from the World Health Organisation that there could be an additional 700 thousand new deaths in the region, taking the total to 2.2 million by March. This has caused fresh turbulence for airline companies, which had glimpsed light through the clouds as bookings, especially on lucrative transatlantic routes were expected to bounce back in the Spring. But there are now concerns that surging infections and lockdowns will depress the confidence of the travelling public…

“Adding to the fragility are warnings from a parliamentary committee that new swathes of red tape could tie up journeys from the UK to Europe next year due to new border management systems coming into force.

“Fortunes haven’t been helped by the oil price staying stubbornly high, with the benchmark Brent Crude above $82 a barrel, despite the co-ordinated release led by the US of strategic oil reserves.”

But the sector’s decline has not stopped the FTSE 100 from heading back into postive territory.

The leading index is now up 7.79 points or 0.11% at 7274.48.

Intertek Group Plc (LSE:ITRK) is still leading the way, up 6.71% following the testing group’s postive update.

Housebuilders are also in demand, with Barratt Developments PLC (LSE:BDEV) 2.08% better, Persimmon PLC (LSE:PSN) putting on 2.02% and Taylor Wimpey PLC (LSE:TW.) climbing 1.9%.

11.11am: Mixed picture for UK manufacturers

UK manufacturing is seeing record order books but supply issues continue to hamper firms, according to the latest monthly CBI Industrial Trends survey.

Total order books in November rose to their strongest level on record (since 1977), showing a positive balance of +26% compared to +9% in October.

Output growth in the three months to November remained firm, increasing at a similarly above-average pace to October and September 2021. 12 out of 17 sectors saw output increase, with headline growth being driven largely by the food, drink & tobacco, electronic engineering, and chemicals sub-sectors. Manufacturers expect output growth to accelerate in the next three months.

But stock adequacy for finished goods worsened to its weakest on record (since April 1977). Meanwhile, expectations for output price growth in the coming quarter were at their strongest since May 1977.

Anna Leach, CBI Deputy chief economist, said: “It’s good to see strong order books and output growth in the manufacturing sector holding up as we head into winter. Output growth has been steady for three months now and remains quicker than its long-run average.

“But intense supply side challenges continue to put pressure on firms’ capacity to meet demand. Alongside record order books, stock adequacy was the weakest on record in November and manufacturers are increasingly having to pass on significant cost increases to customers.”

The news has done little for the FTSE 100, which is down 7.17 points at 7259.

10.54am: United Utilities sees profits rise

The early enthusiasm has now worn off to such a degree that the leading index has slipped into the red.

The FTSE 100 is now down 2.21 points at 7264.48 but oil companies continue to benefit from the strength of the crude price.

BP PLC (LSE:BP.) is 0.93% better and Royal Dutch Shell PLC (A shares) (LSE:RDSA) has risen 0.17%.

United Utilities Group PLC (LSE:UU.) has edged up 0.47% as half year revenues rose 4.2% to GBP932.3mln and operating profits climbed 4.5%.

Laura Hoy, equity analyst at Hargreaves Lansdown, said: “The return to the office meant United Utilities saw overall consumption rise. While fewer people at home meant residential revenue was down, it remained above pre-pandemic levels suggesting this hybrid-homeworking environment will be a net positive for UU.

“However, inflation took a bite out of profits in more ways than one. The group saw core costs rise and is expecting this trend to continue through to the full year. More concerning was an increase in net finance costs. A portion of United Utilities’ debt is linked to inflation, and the sharp increase in consumer prices this year meant it rose substantially. This burden together with a one-time tax charge meant the group’s bottom line was in the red.

“This isn’t necessarily a long-term trend to worry about. If inflation does ease as many are predicting, this should be a blip on the radar. And in any case the group’s revenues should be inflation linked. However if this new level is sustained it will chip away at United Utilities’ balance sheet.”

10.08am: FTSE 100 starts to flag

Much of the early enthusiasm in the market has worn off.

The FTSE 100 is still ahead of the game, up 6.44 points or 0.08% at 7273.13. But it is well off its peak of 7307.

Gaming groups Entain PLC (LSE:ENT) and Flutter Entertainment PLC (LSE:FLTR) are among the fallers, down 2.41% and 1.77% respectively.

Cyber security firm Darktrace PLC (LSE:DARK) – in danger of losing its place in the leading index – is down another 2.05% despite an upbeat statement for its annual meeting.

And Johnson Matthey PLC (LSE:JMAT) is now down 1.79% as investors give further consideration to its latest update.

9.58am: German business confidence declines

German business confidence has fallen to a seven month low.

The business climate index from the Ifo Institute fell from 97.7 points in October to 96.5 points in November.

This is below expectations of a figure of 96.7 and the lowest level since April.

Ifo said: “Supply bottlenecks and the fourth wave of the coronavirus are challenging German companies.”

9.05am: BP and Shell boosted by further rise in crude price

The co-ordinated effort on Tuesday led by the US to release oil reserves and put a cap on recent crude price rises has not exactly gone according to plan.

Victoria Scholar, head ofiInvestment at interactive investor said, “President Biden’s efforts to curtail the recent oil market rally by increasing supply to the market has in fact had the opposite effect. After mobilising emergency reserves, Brent saw its biggest percentage gain since August, rallying by over 3%.

“Biden’s decision to release 50 million barrels from December was sharply below expectations and certainly does not go far enough to address the imbalance between demand and supply. The shortfall in supply has lifted Brent for the fourth consecutive session, rallying by more than 6% to push above resistance at $80 and is potentially on track to test the October highs once again around $85 a barrel.”

Another factor is of course Opec, which may well decide not to go ahead with plans to raise output in December, following the release of reserves.

So crude is up again, with Brent 0.74% better at US$82.92 a barrel and West Texas Intermediate, the US benchmark, up 0.76% at US$79.1.

In turn that has lifted oil company shares even further, with BP PLC (LSE:BP.) 1.86% better and Royal Dutch Shell PLC (A shares) (LSE:RDSA) rising 1.26%.

Other commodity companies are also benefitting and giving support to the market, with BHP Group PLC (LSE:BHP) up 2.32%, Anglo American PLC (LSE:AAL) adding 1.42% and Rio Tinto PLC (LSE:RIO) rising 1.29%.

Overall the FTSE 100 is still in a positive mood, up 34.29 points or 0.47% at 7300.49.

8.32am: Runners and riders for FTSE 100 reshuffle

The latest FTSE 100 reshuffle is due next week and Richard Hunter, head of markets at interactive investor, has been looking at the possible outcomes.

He said: “A couple of near misses should be accompanied by some rather more likely moves.

Royal Mail PLC (LSE:RMG), which had been teetering on the edge of relegation, seems to be safe following the positive share price reaction to its recent half-year numbers. Marks and Spencer Group PLC (LSE:MKS) looks to have missed out on promotion this time despite its own strong set of half-year results, which included another upgrade to full-year guidance and subsequent bid speculation.

Darktrace PLC (LSE:DARK) looks likely to relinquish its place in the premier index after an extremely short stay. The company was promoted in October following the delisting of William Morrison after its takeover by Clayton, Dubilier & Rice. The shares subsequently came under pressure following some broker downgrades and private equity share stake sales.

“FTSE100 stalwart Johnson Matthey PLC (LSE:JMAT)also looks likely for the chop after the share price suffered following the company’s surprise announcement that it would be pulling out of the fast-growing battery materials sector on the grounds of insufficient returns. Its further guidance on full-year numbers was also at the bottom of the range and its fate seems to have been sealed with a share price decline of 19% over the last month..

“The replacements are currently likely to be the distributor of industrial and electronic products, Electrocomponents PLC (LSE:ECM), which has had a strong run of late on the back of strong revenue and profit growth. The shares have risen by 18% over the last three months. Also in the frame for promotion is Dechra Pharmaceuticals PLC (LSE:DPH), a company with particular focus on veterinary products. Shares have risen by over 50% in the last year following strong growth partly driven by outperforming trading in the US market.”

8.27am: UK investors in positive mood

Leading shares have opened higher despite a mixed performance on Wall Street and a continuing fall in the Nasdaq Composite as investors switch from technology stocks to companies likely to benefit from recovery.

The recent weakness of tech shares has correlated with a rise in US bond yields, which accelarated following the nomination of Jerome Powell to remain as chair of the Federal Reserve.

This indicated to investors that the Fed’s gradual move towards a more hawkish stance would continue and interest rates were on their way up before too long.

This has been hitting tech companies whose high valuations are based on future growth and cash flow.

So with the FTSE 100 rather light on tech, the UK blue chip index is not really feeling the fallout of the weakness in the Nasdaq.

In early trading it is up 39.17 points or 0.54% at 7305.86..

Ironically one company which would count as tech, Intertek Group Plc (LSE:ITRK), is the biggest riser so far, up 4.15% after the testing company reported a 6.7% rise in revenues during the last four months and said it was on track for positive annual growth.

Elsewhere Johnson Matthey PLC (LSE:JMAT) – which recently surprised the market with plans to exit its battery business – has unveiled a GBP200mln share buyback programme and the sale of its advanced glass technologies division.

Its shares – which slumped on the battery news – have edged up 0.33%.

6.50am: UK market set for positive start

The FTSE 100 is set to start Wednesday on the front foot, albeit only slightly.

CFD firm IG Markets sees London’s blue-chip benchmark about 15 points higher, making the price 7,286 to 7,289 with just over an hour to go until the open.

A tentative start for London equities comes as volumes will ease up across global markets as the United States clocks off tomorrow for the Thanksgiving holiday.

“Today will see a tsunami of [US] economic announcements, as well as positioning tidying ahead of the weekend, culminating in the release of the latest Fed minutes,” said Michael Hewson, analyst at CMC Markets.

“While the minutes aren’t likely to deliver too much in the way of surprises they could act as a decent insight into the deliberations of the FOMC into the decision-making process when it came to deciding the amount of the initial taper.

“While the initial reduction of asset purchases was widely expected … it will be interesting to find out how many FOMC members wanted to go faster.”

Ahead of the low-key end to the week, equity markets were all over the place.

Wall Street saw the Dow Jones close Tuesday at 35,813, up 194 points or 0.55%, whilst the S&P 500 edged only a sliver higher to finish at 4,690. The Nasdaq dripped 0.5% lower, to 15,775, whilst the small-cap Russell 2,000 index lost 0.15% to end the session at 2,327.

Around the markets

The pound: US$1.3380, up 0.01%

Gold: US$1,794 per ounce, up 0.23%

Silver: US$23.62 per ounce, down 0.16%

Brent crude: US$82.54 per barrel, up 3.5%

WTI crude: US$78.86 per barrel, up 2.7%

Bitcoin: US$56,426, up 0.14%

Ethereum: US$4,243, up 2.65%

6.50am: Early Markets – Asia / Australia

Asia-Pacific shares were mixed on Wednesday as New Zealand’s central bank raised its cash rate by 25 basis points to 0.75%.

New Zealand’s second consecutive rate hike comes as it continues to reduce the monetary stimulus to maintain price stability.

China’s Shanghai Composite gained 0.14% and Hong Kong’s Hang Seng index rose 0.60%,

The Nikkei in Japan slumped 1.6% while South Korea’s Kospi slipped 0.08%.

Australia’s S&P/ASX200 closed 0.15% lower at 7399.4 points as declines in tech, materials, and industrials more than offset the energy sector’s gains.


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