London close: Stocks rise ahead of US Fed policy decision

London’s stock market finished in positive territory on Wednesday, with investors keeping a keen eye on the upcoming policy announcement from the US Federal Reserve.

The FTSE 100 index closed the day with a gain of 0.28%, reaching 7,342.43 points, while the FTSE 250 recorded a more substantial increase of 0.6% to 17,185.89.

In currency markets, sterling was last down 0.26% on the dollar, trading at $1.2122, while it strengthened 0.15% against the euro to change hands at €1.1507.

“Weakness in bond yields this afternoon has given traders the opening to drive stocks higher as they await the latest Fed decision,” said IG chief market analyst Chris Beauchamp.

“The move to shorter-term debt by the US has helped to drive down yields, taking some of the pressure off stocks which have suffered thanks to the attractions of higher bond yields.

“Of course the rally’s immediate future depends on what Powell says later, but for now the buyers are in control.”

UK construction still contracting, house prices rise

In economic news, the UK’s construction sector faced ongoing challenges in October, as highlighted by fresh survey results.

The S&P Global/CIPS manufacturing purchasing managers’ index (PMI) for the month registered at 44.8 - a marginal improvement from September’s 44.3 but falling short of both consensus expectations and the earlier flash estimate of 45.2.

Its output component also declined to 44.3 from the previous month’s 44.6, marking the longest stretch of contraction since the financial crisis.

Respondents cited lower new orders and employment, coupled with reduced business optimism, reaching a 10-month low.

Of those surveyed, 54% expected output to increase in the coming year, while 36% predicted stagnation.

“The UK manufacturing downturn continued at the start of the final quarter of the year, meaning the factor sector remains a weight dragging on an economy already skirting with recession,” said Rob Dobson, director at S&P Global Market Intelligence.

“Production volumes contracted for the eighth consecutive month, the longest sequence of continual decline since 2008-2009, as weak demand at home and overseas led to a further retrenchment of new order intakes.”

Elsewhere, UK house prices saw an unexpected uptick in October, driven by limited supply.

Lender Nationwide reported a 0.9% increase in house prices compared to a 0.1% rise in September, exceeding the projected 0.4% decline.

Year-on-year, house prices were down by 3.3% in October following a 5.3% drop in September, with the average home price now standing at £259,423.

Nationwide chief economist Robert Gardner said that, nevertheless, housing market activity has remained “extremely weak”, with just 43,300 mortgages approved for house purchase in September, around 30% below the monthly average prevailing in 2019.

“This is not surprising as affordability remains stretched,” he said.

“Market interest rates, which underpin mortgage pricing, have moderated somewhat, but they are still well above the lows prevailing in 2021.

“The uptick in house prices in October most likely reflects the fact that the supply of properties on the market is constrained.”

Across the Atlantic, the US job market presented a mixed picture for October, with the closely-watched ADP employment report indicating that private employers added 113,000 jobs, below consensus estimates of 150,000.

That followed September’s creation of 89,000 jobs, the slowest growth rate since January 2021.

Additionally, annual pay for individuals in the same job increased by just 5.7% year-on-year, marking the slowest pace of growth since October 2021.

Meanwhile, wage increases for job changers stood at 8.4%, the smallest increase since July 2021.

The US Bureau of Labor Statistics meanwhile released data indicating minimal change in job openings for September.

The Job Openings and Labor Turnover Summary (JOLTS) report showed 9.55 million job openings on the last business day of September, slightly up from a revised 9.50 million in August and surpassing the consensus forecast of 9.25 million.

At the same time, the job openings rate remained unchanged at 5.7%.

In the US manufacturing sector, conditions showed signs of stabilising in October, according to a fresh survey.

The S&P Global manufacturing PMI reached 50.0, up from 49.8 in September and in line with the flash estimate.

That was the highest level since April and signified expansion as it was just on the 50-point mark.

Notably, new sales at goods producers increased, with new orders rising for the first time in six months at the fastest pace since September 2022.

However, the Institute for Supply Management’s manufacturing PMI revealed an unexpected contraction in the US manufacturing sector for October.

The index declined to 46.7 from 49.0 in September, marking the 12th consecutive month below the 50.0 mark that separates contraction from expansion.

The new orders index declined to 45.5 from 49.2 the previous month, while the production index dropped to 50.4 from 52.5.

Finally on data, China’s manufacturing industry experienced a contraction in October, marking the first decline in three months, according to the Caixin-sponsored PMI.

The manufacturing PMI fell to 49.5 in October from 50.6 in September, defying analysts’ expectations of an increase to 50.8.

Retailers rise, Aston Martin tumbles on third-quarter loss

On London’s equity markets, Next and Marks & Spencer showed strong performance, with Next leading the way, gaining 4.42%.

Next’s boost in full-year guidance, driven by better-than-expected third-quarter trading, garnered investor enthusiasm, while Marks & Spencer closed 3.55% higher.

Smurfit Kappa Group experienced a more modest increase of 0.6% after the packaging company reported a further decline in sales during the third quarter but noted a stabilisation in box demand.

Meanwhile, TP Icap Group rose by 4.2%, rebounding from previous losses incurred after a trading statement.

On the downside, Aston Martin Lagonda Global Holdings faced a significant setback, with its stock falling by 11.49%.

The luxury carmaker posted a wider-than-expected third-quarter loss and downgraded its volume outlook, citing delays in the ramp-up of the DB12 model.

Mining engineering company Weir Group also registered a decline of 0.47% as it maintained its guidance for “strong growth” this year despite a slip in orders during the third quarter.

GSK, despite initially gaining, reversed course with a 2.21% decline.

The pharmaceutical giant had raised its full-year profit outlook, projecting higher turnover and adjusted operating profit growth.

Adjusted earnings per share were also expected to increase, driven by this upward revision.

Chemicals company Croda International faced a 1.08% drop in its stock price, possibly influenced by Estee Lauder - which Croda supplies - lowering its full-year forecasts.

Estee Lauder cited a slower-than-expected recovery in China as one of the contributing factors.

In broker note action, BP experienced a 1.51% decline after being downgraded from ‘neutral’ to ‘underweight’ by JPMorgan, while Great Portland Estates rose 1.05% despite a downgrade from ‘neutral’ to ‘sell’ by Citi.

Reporting by Josh White for Sharecast.com.

Market Movers

FTSE 100 (UKX) 7,342.43 0.28%
FTSE 250 (MCX) 17,185.89 0.60%
techMARK (TASX) 4,033.07 0.35%

FTSE 100 - Risers

Next (NXT) 7,132.00p 3.60%
Airtel Africa (AAF) 117.20p 3.44%
Marks & Spencer Group (MKS) 224.00p 3.32%
Melrose Industries (MRO) 482.50p 3.32%
Centrica (CNA) 162.30p 3.18%
3i Group (III) 1,988.00p 2.77%
Unite Group (UTG) 891.50p 2.65%
CRH (CDI) (CRH) 4,535.00p 2.58%
Associated British Foods (ABF) 2,078.00p 2.57%
Flutter Entertainment (CDI) (FLTR) 13,215.00p 2.40%

FTSE 100 - Fallers

Standard Chartered (STAN) 611.60p -2.92%
Antofagasta (ANTO) 1,313.00p -2.38%
GSK (GSK) 1,423.00p -2.36%
Endeavour Mining (EDV) 1,664.00p -2.12%
Fresnillo (FRES) 544.00p -1.77%
Barclays (BARC) 129.34p -1.72%
BP (BP.) 494.40p -1.63%
BT Group (BT.A) 111.10p -1.46%
Croda International (CRDA) 4,317.00p -1.39%
IMI (IMI) 1,445.00p -1.37%

FTSE 250 - Risers

JTC (JTC) 670.00p 4.93%
Cranswick (CWK) 3,626.00p 3.78%
TBC Bank Group (TBCG) 2,785.00p 3.72%
Grainger (GRI) 235.80p 3.69%
Essentra (ESNT) 154.00p 3.63%
AJ Bell (AJB) 262.20p 3.55%
TP Icap Group (TCAP) 162.60p 3.50%
Crest Nicholson Holdings (CRST) 165.60p 3.50%
NCC Group (NCC) 110.20p 3.38%
Workspace Group (WKP) 498.00p 3.28%

FTSE 250 - Fallers

Aston Martin Lagonda Global Holdings (AML) 197.40p -8.91%
Liontrust Asset Management (LIO) 530.50p -5.10%
OSB Group (OSB) 288.40p -3.80%
Harbour Energy (HBR) 245.40p -3.31%
Spirent Communications (SPT) 94.25p -3.08%
FDM Group (Holdings) (FDM) 423.50p -2.98%
Close Brothers Group (CBG) 776.50p -2.57%
Inchcape (INCH) 649.00p -2.55%
Jlen Environmental Assets Group Limited NPV (JLEN) 84.00p -2.44%
NB Private Equity Partners Ltd. (NBPE) 1,538.00p -2.16%