Josh White Sharecast News

31 Oct, 2023 17:34

London close: Stocks finish mixed, Rolls-Royce jumps on upgrade

Rolls-Royce HoldingsSharecast graphic / Josh White

Rolls-Royce Holdings

540.80p

17:14 21/11/24

2.77%

14.60p

London’s stock markets saw a mixed performance on Tuesday, with Rolls-Royce recording solid gains after a rating upgrade, while BP fell on disappointing third-quarter numbers.

Electronic & Electrical Equipment

9,762.44

16:49 21/11/24

2.91%

276.10

Vodafone Group

68.88p

16:51 21/11/24

-3.31%

-2.36p

The FTSE 100 index ended the day with a slight decline of 0.08%, closing at 7,321.72 points, while the FTSE 250 gained 0.38% to finish at 17,083.05.

In currency markets, sterling was last down 0.2% on the dollar, trading at $1.2146, while it strengthened 0.18% against the euro to change hands at €1.1485.

“It has been a cautious day in London - BP’s results have cast a pall over the entire session, halting the bounce in its tracks,” said IG chief market analyst Chris Beauchamp.

“7,300 has been the place for bargain hunters to go shopping in recent months, but the macro environment continues to look difficult.

“Investors aren’t short of reasons to put money into bonds and safe havens, and any signs of an escalation in the Middle East could drive more risk-off movements.”

UK shop price inflation falls, eurozone economy unexpectedly contracts

In economic news, shop price inflation in the UK saw a notable decline to reach its lowest point since August last year.

According to data from the British Retail Consortium-NielsenIQ shop price index, annual inflation dropped to 5.2% in October from 6.2% in September, marking the fifth consecutive month of deceleration.

Notably, food inflation also eased, falling to 8.8% from 9.9% in September, making for the sixth consecutive month of slowing, reaching its lowest level since July 2022.

Fresh food inflation slowed to 8.3% in October, while ambient food inflation eased to 9.5%.

Furthermore, non-food inflation fell from 4.4% to 3.4%, its lowest point since September 2022.

“Imported goods saw higher levels of inflation due to a weaker pound, still-high producer costs and emerging trade frictions, while prices for some domestically produced foods, such as fruit, were lower compared to last month,” said BRC chief executive Helen Dickinson.

“Prices of children’s and baby clothing also fell as retailers continued to support families as the colder weather descended.

“Retailers have been battling to keep prices down for their customers in the face of rising transport costs, high interest rates and other input costs.”

On the continent, the eurozone economy unexpectedly contracted in the third quarter.

Official figures from Eurostat revealed that the region’s gross domestic product (GDP) fell by 0.1%, in contrast to a 0.1% expansion in the second quarter.

That was worse than expected, with analysts attributing it primarily to a contraction in Germany - the only big four European economy to experience an economic downturn in the third quarter.

Consumer price inflation in the eurozone meanwhile slowed to its lowest level in two years this month, raising hopes of potential monetary policy adjustments by the European Central Bank (ECB) next year.

Eurostat data showed a 2.9% annual increase in the single-currency consumer price index (CPI) for October, down significantly from the 4.3% recorded in September, primarily due to energy price deflation and easing food price inflation.

In Germany, retail sales unexpectedly declined in September, capping off a weak third quarter for the country’s economy.

Government figures revealed a 0.8% decrease in sales - although it improved from August’s 1.2% decline, it fell short of analysts’ expectations, which had anticipated a 0.5% increase.

Across the Atlantic, house prices in the US reached a record high in August, according to data from S&P Dow Jones Indices.

However, the recent rise in mortgage rates was expected to exert downward pressure on prices in the coming year.

The S&P CoreLogic Case-Shiller home price index showed a 2.6% year-on-year increase in August, following a 1% rise in July.

Additionally, monthly gains were observed for the seventh consecutive month since prices hit their low point in January 2023.

Elsewhere, the Chicago Business Barometer declined unexpectedly in October, marking the 14th consecutive month of contracting activity.

The ISM-Chicago purchasing managers’ index inched lower to 44.0 from 44.1 in September, contrary to economists’ expectations of a slight uptick to 45.0.

Finally, looking at US consumer sentiment, October saw a drop in confidence as the Conference Board’s index fell to 102.6 from a revised 104.3 in September.

The present situation index and the expectations index decreased, with the latter falling below 80, a historical indicator of a potential recession within a year.

Rolls-Royce paces gains, BP falls on weak quarter

On London’s equity markets, Rolls-Royce Holdings jumped 6.39% following an upgrade by Barclays from ‘equalweight’ to ‘overweight.’

The upgrade emphasised a significant buying opportunity as Rolls-Royce shares had recently de-rated by approximately 10% over the past month.

Spectris added 3.33% after the precision instrumentation and controls company expressed optimism as it anticipated full-year profits to be at the upper end of expectations, citing strong sales growth and margin improvements in the third quarter.

Cab Payments Holdings leapt 11.88%, following a decline last week when the payment processing company warned about its full-year revenues.

The warning was put down to changing market conditions in crucial currency corridors and ongoing uncertainties surrounding the Nigerian naira.

Elementis increased 4.63% by the close after it affirmed its full-year outlook and described the third quarter as “resilient” despite challenging market conditions, with revenue holding steady compared to the first and second quarters.

On the downside, BP declined 4.49% after reporting a third-quarter underlying replacement cost profit of $3.3bn.

While that was an improvement from the second quarter, it fell significantly short of the $8.2bn recorded in the same period last year and missed forecasts of $4bn.

TP Icap Group slumped 5.52% following a trading statement, while InterContinental Hotels Group faced downward pressure after being downgraded from ‘neutral’ to ‘underweight’ by JPMorgan Cazenove.

IG Group Holdings saw a slight dip of 0.63% after earlier gains.

The online trading platform had announced plans to reduce its global workforce by approximately 10% as part of cost-cutting and business streamlining efforts, expected to yield annual cost savings of £50m.

Vodafone Group closed down 1.39% after it announced an agreement to sell its Spanish business to Zegona Communications for up to €5bn.

Additionally, Vodafone said it would provide certain services to Vodafone Spain under a separate agreement for an annual service charge of around €110m.

Reporting by Josh White for Sharecast.com.

Market Movers

FTSE 100 (UKX) 7,321.72 -0.08%
FTSE 250 (MCX) 17,083.05 0.38%
techMARK (TASX) 4,018.84 0.54%

FTSE 100 - Risers

Rolls-Royce Holdings (RR.) 215.40p 6.63%
SEGRO (SGRO) 712.80p 2.80%
Kingfisher (KGF) 209.80p 2.69%
Croda International (CRDA) 4,378.00p 2.60%
Experian (EXPN) 2,491.00p 2.30%
Unite Group (UTG) 868.50p 2.06%
Associated British Foods (ABF) 2,025.00p 1.99%
Weir Group (WEIR) 1,702.50p 1.88%
Entain (ENT) 930.40p 1.82%
Smurfit Kappa Group (CDI) (SKG) 2,684.00p 1.67%