London close: Stocks finish positive as BT paces gains
London stocks managed a positive finish on Monday as investors digested the latest reading on the UK manufacturing sector, with BT higher after confirming it had hit its cost savings target early.
The FTSE 100 ended the session up 0.71% at 7,288.62, and the FTSE 250 was 0.45% firmer at 23,211.22.
Sterling was in the red, meanwhile, last reading down 0.17% on the dollar at $1.3659, and losing 0.48% on the euro to change hands at €1.1784.
“It’s been a positive start to the week and the month for markets in Europe, with the momentum from Friday’s record finish in the US, and a decent Asia session, carrying over into the new week,” said CMC Markets chief market analyst Michael Hewson.
“The FTSE 100 has continued to drive high towards the 7,300-level marking a new 20 month high in the process.”
On the economic front, the slowdown in UK manufacturing growth eased a little in October, but the sector continued to be weighed down by supply chain issues, according to the latest IHS Markit/CIPS manufacturing purchasing managers’ index.
The PMI ticked up to 57.8 from 57.1 in September, rising for the first time in five months and coming in a touch ahead of the initial estimate of 57.7.
A reading above 50.0 signals expansion, while a reading below indicates contraction.
Still, the survey found that manufacturing output rose only marginally and at the slowest pace for eight months.
Companies reported that supply chain delays alongside shortages of raw materials, staff and certain skills had contributed to slower output growth.
“Strained global supply chains are disrupting production schedules, while staff shortages and declining intakes of new export work are also stymieing the upturn,” said Rob Dobson, director at IHS Markit.
“This low growth environment is occurring in tandem with a severe upshot in inflationary pressures, with manufacturers reporting both a near-record increase in input costs and record rise in selling prices.”
Retail footfall jumped last week, meanwhile, as UK shoppers made the most of the half term school holiday.
According to retail consultancy Springboard, footfall across all UK retail destinations rose 11.1% in the seven days starting 24 October compared to the preceding week.
It was the highest gain since the 11.6% increase seen in the week preceding the late May bank holiday.
Shopping centres recorded the biggest increase in footfall, up 15.2%, followed by high streets, ahead 12.1%, and retail parks, where footfall was 4.7% higher.
“The October school half term holiday delivered a noticeable boost to footfall,” said Diane Wehrle, insights director at Springboard.
“All types of high street benefited, but consumers clearly took the opportunity to travel further afield as the increase in footfall in coastal towns, historic towns, central London and regional cities were at least twice that in market towns.”
Finally, the Office for Budget Responsibility (OBR) said Chancellor Rishi Sunak faced a “wild ride” to cut his deficit under new rules announced at last week’s Budget.
Speaking to the cross-party Treasury Select Committee, the OBR said inflation was expected to fall within six-to-12 months, but the number of people leaving the workforce could keep it higher.
OBR chairman Richard Hughes suggested the Treasury may struggle to hit its new deficit targets to balance the budget by 2024-2025, especially if interest rates rise, and would be in for a “wild ride”.
“The headroom he set aside to reach those targets is the second-lowest headroom that any chancellor has had when setting fiscal rules,” he said.
In equity markets, BT jumped 4.39% after the telecoms group confirmed it had delivered on its £1bn of gross annualised cost savings 18 months ahead of its March 2023 target.
IAG ascended 1.77% after it said British Airways had agreed a £1bn five-year credit facility.
On the downside, Barclays fell 0.69% as it said chief executive Jes Staley was standing down with immediate effect after a probe by UK financial regulators into his links with convicted sex offender Jeffrey Epstein.
“Staley will be contesting the findings of the probe and in the meantime his replacement has already been announced, suggesting that contingency measures had already been put in place,” said Richard Hunter, head of markets at Interactive Investor.
“Even so, the inevitable disruption will be an unwelcome side show to Barclays’ recently strengthening recovery."
Land Securities reversed earlier gains to close down 0.09% after it agreed to buy property regeneration company U&I Group in a £190m deal.
Housebuilders were also under pressure amid the prospect of increased mortgage costs, with Barratt Developments down 2.9%, Taylor Wimpey losing 2.56%, Persimmon off 2.02%, Berkeley falling 2.25%, Vistry retreating 2.3%, and Bellway 2.05% lower.
“Thursday’s Bank of England rate decision represents one of the most important events of the week for traders, with markets signalling a 57% chance that we will see the first rate rise since 2018,” said IG market analyst Joshua Mahony.
“However, it is the longer-term outlook which holds particular interest for the housebuilders, with traders seeing a 59% chance that rates will top 1% by June 2022.
“While the removal of all stamp duty holiday benefits has thrown caution to the wind for investors, the prospect of a significant jump in interest rates is going to do little to help bolster support for the housebuilding stocks.”
Cybersecurity firm Darktrace was under the cosh again, losing 15.08% ahead of the end of a freeze on insiders selling shares.
Market Movers
FTSE 100 (UKX) 7,288.62 0.71%
FTSE 250 (MCX) 23,211.22 0.45%
techMARK (TASX) 4,593.06 0.92%
FTSE 100 - Risers
BT Group (BT.A) 145.00p 4.39%
Next (NXT) 8,184.00p 2.74%
Fresnillo (FRES) 889.00p 2.57%
Pearson (PSON) 617.00p 2.42%
GlaxoSmithKline (GSK) 1,544.40p 2.37%
Intertek Group (ITRK) 5,032.00p 2.27%
Standard Chartered (STAN) 505.80p 2.20%
Royal Mail (RMG) 430.00p 2.16%
Smith & Nephew (SN.) 1,284.00p 1.99%
M&G (MNG) 203.70p 1.95%
FTSE 100 - Fallers
Darktrace (DARK) 681.50p -15.08%
Barratt Developments (BDEV) 643.80p -2.90%
Ocado Group (OCDO) 1,756.00p -2.66%
Taylor Wimpey (TW.) 150.60p -2.56%
Berkeley Group Holdings (The) (BKG) 4,256.00p -2.25%
Persimmon (PSN) 2,666.00p -2.02%
Sainsbury (J) (SBRY) 296.10p -1.57%
Aveva Group (AVV) 3,525.00p -0.84%
Royal Dutch Shell 'B' (RDSB) 1,672.20p -0.76%
Barclays (BARC) 200.65p -0.69%
FTSE 250 - Risers
Hochschild Mining (HOC) 151.10p 5.96%
Micro Focus International (MCRO) 375.80p 5.35%
Cineworld Group (CINE) 64.12p 4.77%
Carnival (CCL) 1,528.80p 4.00%
XP Power Ltd. (DI) (XPP) 5,420.00p 3.63%
Edinburgh Worldwide Inv Trust (EWI) 328.50p 3.60%
Harbour Energy (HBR) 363.40p 3.41%
HGCapital Trust (HGT) 399.00p 3.37%
Clarkson (CKN) 4,120.00p 3.13%
Bytes Technology Group (BYIT) 550.00p 3.00%
FTSE 250 - Fallers
Petropavlovsk (POG) 22.86p -4.45%
AO World (AO.) 141.10p -3.55%
Tritax Eurobox (GBP) (EBOX) 109.80p -2.84%
Baltic Classifieds Group (BCG) 211.00p -2.76%
Spirent Communications (SPT) 281.20p -2.36%
Vistry Group (VTY) 1,193.00p -2.30%
Plus500 Ltd (DI) (PLUS) 1,281.50p -2.28%
Kainos Group (KNOS) 1,936.00p -2.17%
Bellway (BWY) 3,245.00p -2.05%
LXI Reit (LXI) 144.20p -1.77%