London open: Stocks flat but banks rally

London stocks were steady in early trade on Monday ahead of a busy week that includes rate announcements from the US Federal Reserve and the Bank of England.

At 0825 GMT, the FTSE 100 was flat at 7,047.70.

Richard Hunter, head of markets at Interactive Investor, said: "Asian markets were flat to negative following some further local issues as well as the impending threat of a global economic recession. China’s factory activity fell unexpectedly in October to suggest contraction, with the ongoing zero-tolerance policy towards Covid-19 continuing to hamper any thoughts of recovery. At the same time, an embattled consumer and a faltering property sector have given little cause for immediate optimism in the region.

"In economic terms, the Bank of England interest rate decision on Thursday is likely to take centre stage. Muddied by some emergency measures which were brought on by the ill-conceived government announcements of the ‘fiscal event’, the Bank needs to return to its knitting with measures designed to contain inflationary pressures. This could even result in an aggressive hike of 0.75%, despite a clearly lagging economy which could already be in recessionary territory."

On the macro front, net lending, consumer credit and mortgage approvals data for September are all due at 0930 GMT.

In equity markets, banks were on the rise following a report the government had denied suggestions it is considering a windfall tax on the sector as one means of closing the budget hole.

According to The Times, Prime Minister Rishi Sunak and Chancellor Jeremey Hunt played down the notion that they were looking at new taxes on banks. It was understood that Hunt is likely to cut the current 8% surcharge for financial institutions to 3%, which would mean that if the corporate tax rate goes up to 25%, banks will face a 28% tax rate.

NatWest, Lloyds and Barclays all gained. NatWest was also recovering from heavy losses last week on the back of results.

British Gas owner Centrica surged after an upgrade to ‘buy’ at Jefferies, while Drax powered ahead after the same upgrade. Centrica was also boosted after Citi reiterated its ‘buy’ rating on the shares.

International Distribution Services shot higher after strikes planned by Royal Mail workers over the next two weeks were called off.

EasyJet flew higher following a report that BA and Iberia owner IAG is renewing plans to consolidate the sector. According to The Times, speculation is mounting that IAG could look to buy smaller rivals such as easyJet or Portugal's TAP.

On the downside, Harbour Energy fell following a report that the windfall tax on energy companies could be raised to 30% and extended by three years. According to The Times, under options being considered by Jeremy Hunt, the energy profit levy would increase by up to five percentage points.

Bodycote slumped after saying it had appointed Ben Fidler as chief financial officer, succeeding Dominique Yates who announced his intention to retire earlier this year. Fidler is currently the deputy CFO of Rolls-Royce, a position he has held since January 2021.

Market Movers

FTSE 100 (UKX) 7,047.70 0.00%
FTSE 250 (MCX) 17,911.32 -0.03%
techMARK (TASX) 4,242.05 0.16%

FTSE 100 - Risers

Centrica (CNA) 76.16p 3.77%
NATWEST GROUP (NWG) 231.50p 2.76%
Lloyds Banking Group (LLOY) 42.04p 1.82%
Reckitt Benckiser Group (RKT) 5,802.00p 1.80%
BT Group (BT.A) 128.90p 1.54%
Prudential (PRU) 807.40p 1.35%
Barclays (BARC) 147.98p 1.16%
Scottish Mortgage Inv Trust (SMT) 726.60p 1.11%
Pershing Square Holdings Ltd NPV (PSH) 2,805.00p 1.08%
Haleon (HLN) 272.30p 1.06%

FTSE 100 - Fallers

Harbour Energy (HBR) 362.40p -2.38%
Shell (SHEL) 2,373.50p -1.45%
Berkeley Group Holdings (The) (BKG) 3,483.00p -1.36%
Antofagasta (ANTO) 1,170.50p -1.35%
Intermediate Capital Group (ICP) 1,035.00p -1.24%
Taylor Wimpey (TW.) 94.36p -1.20%
Anglo American (AAL) 2,593.50p -1.05%
Barratt Developments (BDEV) 375.10p -1.03%
Glencore (GLEN) 489.30p -0.93%
Unite Group (UTG) 896.00p -0.89%

FTSE 250 - Risers

International Distributions Services (IDS) 206.60p 5.16%
easyJet (EZJ) 340.00p 3.35%
4Imprint Group (FOUR) 3,520.00p 3.11%
Drax Group (DRX) 521.50p 2.93%
Impax Environmental Markets (IEM) 418.50p 2.07%
Lancashire Holdings Limited (LRE) 493.60p 1.98%
OSB Group (OSB) 407.00p 1.90%
Abrdn (ABDN) 157.20p 1.87%
Discoverie Group (DSCV) 784.00p 1.55%
FirstGroup (FGP) 103.50p 1.55%

FTSE 250 - Fallers

Hammerson (HMSO) 19.11p -2.52%
Vistry Group (VTY) 592.00p -2.32%
Network International Holdings (NETW) 323.20p -2.27%
Computacenter (CCC) 1,788.00p -2.24%
Softcat (SCT) 1,150.00p -2.09%
Wood Group (John) (WG.) 138.10p -1.96%
UK Commercial Property Reit Limited (UKCM) 60.10p -1.96%
Countryside Partnerships (CSP) 207.60p -1.80%
Bodycote (BOY) 500.00p -1.57%
Tullow Oil (TLW) 39.68p -1.50%