London open: FTSE falls again after Budget; Shell results in focus

London stocks fell in early trade on Thursday as investors sifted through a raft of corporate releases and continued to mull the implications of the Budget.

At 0825 GMT, the FTSE 100 was down 0.5% at 8,119.25, having closed on Wednesday at its worst level since early August after chancellor Rachel Reeves delivered the first Labour Budget in 14 years.

Matt Britzman, senior equity analyst at Hargreaves Lansdown, said the Budget had failed "to ignite the market flame".

"Gilt yields will be watched closely after reaching five-month highs in the aftermath of the Budget," he said.

"Investors are re-assessing where UK interest rates might end up, given that the investment plan for growth is likely to add inflationary pressures into the economy."

Away from home, the latest data out of China showed that manufacturing activity expanded in October for the first time since April.

According to figures released earlier by the National Bureau of Statistics, the official purchasing managers’ index rose to 50.1 from 49.8 in September, beating expectations for a reading of 49.9.

A reading below 50.0 indicates contraction, while a reading above signals expansion.

The sub-index for production printed at 52.0 for October, while the new orders index came in at 50.0.

The index for raw materials inventory was 48.2, remaining in contraction territory, while the employment index was 48.4.

Meanwhile, the non-manufacturing PMI rose to 50.2 in October from 50.0 in September.

Lynn Song, chief economist, Greater China, at ING, said: "The 50.1 level is the smallest possible expansion for the PMI but nonetheless bucks expectations for continued contraction, and is a positive sign that the small bounce back of industrial production that we saw in September could continue."

The latest policy announcement from the Bank of Japan was also in focus, as it kept its benchmark policy rate unchanged at 0.25%, as widely expected.

In equity markets, Coca-Cola HBC was the standout performer on the FTSE 100 as it upgraded its full-year outlook following a "strong" performance in the first nine months of the year.

Energy major Shell gained as it posted a dip in third-quarter profits, weighed down by lower oil prices, although the decline was less steep than feared.

Adjusted earnings before interest, tax, depreciation and amortisation fell 5% on the second quarter, to $16.01bn, while adjusted earnings - Shell’s definition of net profit - declined 4% to $6.03bn.

That was notably better than the $5.36bn expected by analysts, however.

On the downside, Smith & Nephew tanked as it slashed its full-year sales guidance after weaker-than-expected trading in China.

Kainos tumbled as the IT services company said full-year revenues would be "moderately below" current market consensus. It said its Digital Services and Workday Services divisions continue to be affected by the macroeconomic environment and related delays in client decision-making.

Spectris was also firmly in the red after saying it expects to deliver full-year adjusted operating profit of around £200m, which is below consensus expectations.

Haleon lost ground as it reported a 0.6% decline in reported revenue for the third quarter.

Online grocery retailer Ocado Group nudged lower as it confirmed speculation that it is appointing former Microsoft exec Adam Warby to replace chair Rick Haythornthwaite, who announced his resignation six months ago.

Warby, who is currently the chair of Nasdaq-listed executive search and management consultancy Heidrick & Struggles International, will join the company on 1 December.

Market Movers

FTSE 100 (UKX) 8,119.25 -0.49%
FTSE 250 (MCX) 20,602.97 -0.44%
techMARK (TASX) 4,628.39 -1.44%

FTSE 100 - Risers

Coca-Cola HBC AG (CDI) (CCH) 2,732.00p 2.40%
Smurfit Westrock (DI) (SWR) 3,839.00p 1.59%
Shell (SHEL) 2,524.50p 1.37%
HSBC Holdings (HSBA) 714.40p 1.16%
Anglo American (AAL) 2,401.00p 0.65%
Smith (DS) (SMDS) 478.20p 0.17%
NATWEST GROUP (NWG) 367.90p 0.05%
International Consolidated Airlines Group SA (CDI) (IAG) 211.00p 0.05%
Lloyds Banking Group (LLOY) 53.66p 0.00%
RELX FINANCE BV 3.375% GTD NTS 20/03/33 (BW73) 99.72p 0.00%

FTSE 100 - Fallers

Smith & Nephew (SN.) 986.80p -10.13%
Diageo (DGE) 2,407.00p -1.76%
GSK (GSK) 1,382.50p -1.74%
Scottish Mortgage Inv Trust (SMT) 858.40p -1.74%
Whitbread (WTB) 3,125.00p -1.57%
Rolls-Royce Holdings (RR.) 547.00p -1.48%
Haleon (HLN) 368.30p -1.37%
Taylor Wimpey (TW.) 154.75p -1.31%
Reckitt Benckiser Group (RKT) 4,697.00p -1.30%
Rentokil Initial (RTO) 378.50p -1.28%

FTSE 250 - Risers

Supermarket Income Reit (SUPR) 74.10p 3.35%
Essentra (ESNT) 152.60p 2.42%
Bakkavor Group (BAKK) 158.50p 1.93%
Barr (A.G.) (BAG) 644.00p 1.58%
Empiric Student Property (ESP) 96.50p 1.47%
TBC Bank Group (TBCG) 2,660.00p 1.14%
Burberry Group (BRBY) 768.00p 1.03%
PureTech Health (PRTC) 157.60p 1.03%
OSB Group (OSB) 370.80p 0.98%
Fidelity Emerging Markets Limited Ptg NPV (FEML) 681.70p 0.98%

FTSE 250 - Fallers

Kainos Group (KNOS) 779.00p -8.89%
Spectris (SXS) 2,412.00p -6.29%
Senior (SNR) 130.20p -3.84%
Bridgepoint Group (Reg S) (BPT) 312.40p -3.16%
W.A.G Payment Solutions (WPS) 75.20p -3.09%
AO World (AO.) 108.20p -2.87%
Dunelm Group (DNLM) 1,129.00p -2.84%
Dr. Martens (DOCS) 53.80p -2.54%
Telecom Plus (TEP) 1,680.00p -2.33%
Spirent Communications (SPT) 166.20p -2.18%