London close: Stocks mixed, NatWest drags banks lower

London’s financial markets put in a mixed performance on Friday as investors reacted to crucial US inflation data and NatWest’s disappointing financial results.

The core personal consumption expenditure (PCE) price index, excluding food and energy, showed a slight dip annually, aligning with market expectations.

At the close, the FTSE 100 index was down 0.86% at 7,291.28 points, while the FTSE 250 managed gains of 0.5% to 16,866.23.

On the currency front, sterling was last 0.12% stronger on the dollar to trade at $1.2143, while it weakened 0.04% against the euro to change hands at €1.1478.

“It’s been another difficult week for European equity markets with most of the weakness being driven by disappointment over earnings as well as guidance downgrades, amidst concern over the outlook for demand as we head into the final quarter of this year,” said Michael Hewson at CMC Markets.

“The DAX has struggled to rally after sinking to 7-month lows on Monday of this week, while the FTSE 100 has slipped to 2-month lows this afternoon as companies that warn on profits get punished hard, along with their peers.

“This is no better illustrated by this week’s biggest losers on the UK benchmark with NatWest, Barclays, Standard Chartered all lower by more than 10% along with consumer goods giant Reckitt Benckiser.”

Inflation cools slightly in the US, UK high street sales bounce

In economic news, inflation in the United States showed a slight easing in September, based on fresh data from the Commerce Department.

The core personal consumption expenditure (PCE) price index, which excludes food and energy, increased by 3.7% annually, down from the previous month’s 3.8%.

That aligned with market expectations.

On a monthly basis, the core PCE index saw a 0.3% rise, a notable uptick from August’s 0.1%, but in line with expectations.

At the same time, the headline PCE price index remained steady at 3.4% annually, consistent with analysts’ forecasts.

Notably, consumer spending witnessed a robust increase of 0.7% in September, surpassing the prior month’s 0.4% growth, although analysts had anticipated a more modest 0.5% increase.

Oxford Economics said the decline “reflects the stickiness of core services inflation, which is still too strong to be consistent with inflation falling back to the Fed’s 2% target”.

On home shores, UK high street sales saw a modest resurgence last week following three consecutive weeks of declines.

According to the BDO high street sales tracker, like-for-like sales posted a 0.97% increase in the week ended 22 October, compared to a flat base of 0.27% during the same week last year.

The rebound came on the heels of substantial year-on-year sales declines in the preceding weeks, including a 5.98% drop and consecutive declines of 6.54% and 4.93%.

Online sales saw notable growth, with a 2.04% annual increase, while in-store sales declined by 1.04%.

Unfavourable weather conditions across the UK contributed to a 1.6% decrease in total footfall, with high streets experiencing a 3.3% decline and shopping centres seeing 1.6% fewer visitors.

However, retail parks bucked the trend with a 2.1% increase in footfall.

NatWest tumbles on results, analyst upgrade lifts Trainline

On London’s equity markets, NatWest Group plummeted 11.13% following the release of third-quarter results, which Matt Britzman, equity analyst at Hargreaves Lansdown, described as “largely disappointing.”

Notably, the net interest margin dipped below 3%, and the overall outlook was downgraded.

There was a silver lining as deposit levels increased, indicating NatWest’s ability to attract customers seeking higher rates.

However, Britzman pointed out that the business model was less profitable than non-interest and low-interest current accounts.

“Add in mortgage headwinds as highly profitable business written over the pandemic rolls off, and that’s caused the hit to net interest margin,” he said.

Lloyds Banking Group, Barclays, and Standard Chartered also experienced declines in their stock prices, with Lloyds down by 2.84%, Barclays by 2.3% and Standard Chartered by 2.37%.

Standard Chartered had already suffered its own challenging third-quarter results on Thursday.

Elsewhere, consumer goods giant Reckitt Benckiser faced a 2.22% drop after Berenberg downgraded its shares from ‘buy’ to ‘hold’, citing difficulty identifying a catalyst for the company’s growth.

On the upside, Trainline jumped 8.65% after receiving an ‘overweight’ upgrade from JPMorgan.

Digital 9 Infrastructure also made significant gains, rising 10.14% after it said it was considering divesting its entire stake in Verne Global.

Rentokil Initial bounced back from a recent downturn with a 3.59% increase in its share price.

The company faced challenges last week when it warned of a “marginally below” performance in North America due to “near-term market uncertainty.”

Reporting by Josh White for Sharecast.com.

Market Movers

FTSE 100 (UKX) 7,291.28 -0.86%
FTSE 250 (MCX) 16,866.23 0.50%
techMARK (TASX) 3,951.85 -0.28%

FTSE 100 - Risers

Rentokil Initial (RTO) 421.00p 3.59%
Fresnillo (FRES) 549.60p 2.96%
Mondi (MNDI) 1,308.50p 2.31%
RS Group (RS1) 677.40p 2.30%
Flutter Entertainment (CDI) (FLTR) 12,780.00p 1.75%
Vodafone Group (VOD) 76.10p 1.72%
SEGRO (SGRO) 690.80p 1.71%
Prudential (PRU) 843.20p 1.64%
Taylor Wimpey (TW.) 108.95p 1.63%
Antofagasta (ANTO) 1,374.00p 1.63%

FTSE 100 - Fallers

NATWEST GROUP (NWG) 182.00p -11.56%
Lloyds Banking Group (LLOY) 39.75p -3.44%
Weir Group (WEIR) 1,678.00p -3.11%
Intertek Group (ITRK) 3,794.00p -3.00%
GSK (GSK) 1,433.20p -2.79%
Diageo (DGE) 3,025.00p -2.72%
CRH (CDI) (CRH) 4,320.00p -2.66%
AstraZeneca (AZN) 10,124.00p -2.58%
Reckitt Benckiser Group (RKT) 5,452.00p -2.54%
Standard Chartered (STAN) 610.60p -2.34%

FTSE 250 - Risers

Digital 9 Infrastructure NPV (DGI9) 40.20p 10.14%
Trainline (TRN) 253.20p 9.52%
Mobico Group (MCG) 62.00p 4.64%
OSB Group (OSB) 295.60p 4.53%
4Imprint Group (FOUR) 4,900.00p 4.14%
Hammerson (HMSO) 21.64p 3.54%
Ceres Power Holdings (CWR) 196.00p 3.32%
Essentra (ESNT) 148.20p 3.20%
Energean (ENOG) 832.50p 3.03%
IWG (IWG) 131.80p 2.89%

FTSE 250 - Fallers

CAB Payments Holdings (CABP) 47.55p -8.56%
Foresight Group Holdings Limited NPV (FSG) 335.00p -3.51%
Drax Group (DRX) 428.90p -2.32%
Virgin Money UK (VMUK) 146.25p -2.24%
Tate & Lyle (TATE) 614.50p -2.23%
Bellevue Healthcare Trust (Red) (BBH) 122.00p -2.09%
Worldwide Healthcare Trust (WWH) 288.00p -1.87%
C&C Group (CDI) (CCR) 132.00p -1.79%
Bakkavor Group (BAKK) 84.40p -1.63%
Darktrace (DARK) 341.80p -1.58%