London close: Stocks higher after flurry of corporate updates

London’s financial markets showed resilience on Monday, finishing with gains as investors assessed corporate results and awaited significant central bank policy updates.

The FTSE 100 index advanced by 0.5% to reach 7,327.39 points, while the FTSE 250 outperformed, adding 0.9% to attain 17,017.59 points by the end of trading.

In the currency market, sterling was last up 0.2% on the dollar to trade at $1.2146, while it weakened 0.15% against the euro to change hands at €1.1457.

“We’ve seen a positive start to the week for markets in Europe despite Israel taking early steps to push into Gaza,” said CMC Markets chief market analyst Michael Hewson.

“The limited and incremental nature of the incursions thus far appears to be helping assuage concerns that the escalations might prompt another front opening on Israel’s northern border with Lebanon and Hezbollah.

“A slide in gold and crude oil prices also feeds into this dialling down of some of the concerns that we saw at the end of last week.”

Hewson said the gains felt somewhat fragile, however, with the DAX struggling to hang onto its gains after the German economy slipped into contraction in the third quarter and prices in October slipped into deflation month-on-month.

“The main drags on the FTSE 100 have been energy due to the slide in oil prices, although we could be seeing some profit taking on BP and Shell ahead of their third-quarter numbers later this week.

“We are also seeing the banks continuing to struggle on the back of concern over weakening net interest margins, and a difficult economic outlook.”

Mortgage approvals decline as house prices fall in much of UK

In economic news, UK mortgage approvals saw a decline in September, hitting their lowest level since January, according to data from the Bank of England.

Net mortgage approvals for house purchases dropped to 43,300 from August’s figure of 45,400, falling short of economists’ expectations of 44,500.

Similarly, approvals for remortgaging also decreased, falling from 25,100 in August to 20,600, marking the lowest level since January 1999.

Individual net borrowing for mortgage debt followed suit, falling from £1.1bn in August to £0.9bn in September, reaching its lowest point since April.

Andrew Wishart, senior property economist at Capital Economics, said the drop in mortgage approvals “reflects the second spike in the average advertised mortgage rate to 5.9% in July with the usual two-month lag”.

“Given the drop back in mortgage rates since September, it probably marked the trough.

“Net mortgage lending also turned negative again as the slump in approvals in recent months fed through to lower mortgage advances (funds being distributed),” he added.

House prices meanwhile declined across roughly 80% of the country this year, as reported by property portal Zoopla, as rising borrowing costs and income constraints dampened demand.

All markets in London and the south and east of England experienced price falls, along with more than half of those in the rest of England and Wales.

Scotland was a relative exception, with just under two-fifths of its markets recording price falls.

Weaker demand has resulted in a slowdown in house price growth, dropping from a 9.2% increase a year ago to a 1.1% decline in 2023, marking the sharpest year-on-year drop in price growth since 2009.

Despite that, the scale of price falls has remained “modest,” staying below 5% in all markets, and the number of UK house sales was projected to decrease by nearly 25% for the year, reaching 1.0 million.

“House prices have proven more resilient than many expected over the last year in response to higher mortgage rates,” said Zoopla’s Richard Donnell.

“However, almost a quarter fewer people will move home due to greater uncertainty and less buying power.

“Modest house price falls over 2023 mean it’s going to take longer for housing affordability to reset to a level where more people start to move home again.”

In the eurozone, economic sentiment, as measured by the Economic Sentiment Indicator (ESI), experienced a slight decline this month, according to data from the European Commission.

The ESI fell by 0.1 points to 93.3 in October, compared to a revised 93.4 in September.

That marked the sixth consecutive monthly decline in the ESI, in line with consensus estimates.

Meanwhile, the German economy’s performance in the third quarter proved to be better than expected, as revealed by figures from the federal statistics office, Destatis.

Gross domestic product (GDP) contracted by 0.1% in the third quarter, following a revised 0.1% increase in the second quarter.

Initial estimates had indicated no growth in the second quarter, leading to surprise among economists forecasting a more significant contraction of 0.3%.

Airtel and Ascential jump, HSBC slips on third-quarter numbers

On London’s equity markets, Airtel Africa surged 4.92% following a positive half-year revenue report and an optimistic outlook for improved EBITDA margins in 2024 compared to the prior year.

Education publisher Pearson experienced a 2.98% increase in its stock price.

Despite a slowdown in revenue growth during the third quarter, Pearson lifted its profit guidance for the full year by £20m.

Ascential saw a remarkable upward movement of 25.6% after announcing the sale of its digital commerce and product design business, WGSN, for a combined total of £1.4bn.

The deal would see the sale of the digital commerce business to Omnicom for approximately £741m and of WGSN to Apax Partners for up to £700m.

Mike Ashley’s Frasers Group managed a modest 0.63% increase after the announcement that it had sold the Missguided fast-fashion brand to Shein for an undisclosed sum.

Frasers Group also hinted at potential future collaborations with the Chinese e-commerce giant.

Rightmove rallied 1.07% after Berenberg upgraded its shares from ‘hold’ to ‘buy.’

The upgrade came after a selloff triggered by the OnTheMarket-CoStar deal announcement.

Berenberg suggested that the market’s reaction to the deal had been overdone.

On the downside, HSBC Holdings saw a slight decline of 0.13% after announcing third-quarter profits that fell slightly short of consensus expectations.

Pre-tax profit for the quarter reached $7.7bn, compared to $3.2bn in the same period last year, missing consensus estimates of $8.1bn.

HSBC also unveiled a $3bn share buyback.

AJ Bell experienced a more substantial decline of 3.49% after a downgrade by Citi, which shifted its rating from ‘buy’ to ‘neutral.’

Citi said it awaited a more favourable entry point for the stock before recommending further investment.

Reporting by Josh White for Sharecast.com.

Market Movers

FTSE 100 (UKX) 7,327.39 0.50%
FTSE 250 (MCX) 17,017.59 0.90%
techMARK (TASX) 3,997.09 1.14%

FTSE 100 - Risers

Airtel Africa (AAF) 114.90p 4.64%
St James's Place (STJ) 641.60p 3.75%
Pearson (PSON) 946.20p 2.94%
Prudential (PRU) 861.80p 2.21%
M&G (MNG) 197.20p 2.18%
Diageo (DGE) 3,087.00p 2.05%
Auto Trader Group (AUTO) 613.80p 2.03%
Smith (DS) (SMDS) 281.70p 1.99%
Imperial Brands (IMB) 1,763.00p 1.97%
British American Tobacco (BATS) 2,449.50p 1.94%

FTSE 100 - Fallers

Ocado Group (OCDO) 461.40p -4.16%
HSBC Holdings (HSBA) 587.30p -2.28%
NATWEST GROUP (NWG) 178.15p -2.12%
3i Group (III) 1,943.00p -1.30%
Tesco (TSCO) 270.00p -0.88%
BP (BP.) 526.70p -0.72%
Ashtead Group (AHT) 4,687.00p -0.53%
Shell (SHEL) 2,687.00p -0.50%
National Grid (NG.) 976.40p -0.49%
Smurfit Kappa Group (CDI) (SKG) 2,640.00p -0.45%

FTSE 250 - Risers

Ascential (ASCL) 265.00p 22.91%
CAB Payments Holdings (CABP) 54.70p 15.04%
Digital 9 Infrastructure NPV (DGI9) 44.80p 11.44%
Foresight Group Holdings Limited NPV (FSG) 358.00p 8.48%
Wizz Air Holdings (WIZZ) 1,623.00p 4.71%
Bank of Georgia Group (BGEO) 3,335.00p 4.71%
TBC Bank Group (TBCG) 2,730.00p 4.20%
Jupiter Fund Management (JUP) 78.70p 4.17%
PZ Cussons (PZC) 131.20p 3.80%
Keller Group (KLR) 769.00p 3.78%

FTSE 250 - Fallers

NextEnergy Solar Fund Limited Red (NESF) 78.40p -4.97%
CLS Holdings (CLI) 85.30p -3.72%
Jlen Environmental Assets Group Limited NPV (JLEN) 87.50p -2.67%
Diversified Energy Company (DEC) 67.75p -2.45%
Paragon Banking Group (PAG) 450.60p -2.43%
Ceres Power Holdings (CWR) 191.40p -2.35%
W.A.G Payment Solutions (WPS) 91.00p -2.13%
AJ Bell (AJB) 252.60p -2.09%
The Renewables Infrastructure Group Limited (TRIG) 102.40p -1.92%
Genuit Group (GEN) 267.50p -1.29%