London close: Stocks manage modest gains as bond yields retreat

The FTSE 100 closed up 0.53% to 7,451.54, while the FTSE 250 enjoyed a slightly higher uptick, up 0.61% at 17,599.98.

In currency markets, sterling was last up 0.27% on the dollar to trade at $1.2168, while it inched ahead by a modest 0.05% against the euro to change hands at €1.1558.

“European markets have enjoyed a modest rebound in the wake of a strong session in Asia markets, as yields give back some of the gains seen so far this week, in a continuation of the seesaw, yields up, stocks down, yields down, stocks up narrative, that has characterised this week’s trading activity,” said CMC Markets chief market analyst Michael Hewson.

“The FTSE 100 is managing to outperform despite the sharp fall in oil prices, dragging on BP and Shell but helping consumer discretionary with airlines enjoying a solid session, led by easyJet, Wizz Air and British Airways owner IAG.

“The pullback in yields from yesterday’s highs could also be a consequence of the sharp fall we’ve seen in energy prices, and the worst one-day fall in oil prices since September last year, which took them back to levels last seen at the end of August and wiped out all of September’s gains in the space of four days.”

Construction sector contracts, new car registrations grow in September

In economic news, the UK construction sector contracted in September, with the S&P Global/CIPS UK construction purchasing managers’ index (PMI) plummeting to 45.0, compared to August’s 50.8, marking its first fall below the neutral 50.0 benchmark since June.

The residential sector was the hardest hit, with figures dwindling from 40.7 to 38.1, attributed to reductions in housebuilding projects amid escalating borrowing costs and declining demand.

Meanwhile, the civil engineering and commercial building sub-sectors also experienced declines, dropping to 45.7 and 47.7, respectively.

Amidst the third decrease in new business orders within the past four months, the sector mirrored the feeblest expectations for the upcoming year thus far in 2023.

“A rapid decline in house building activity acted as a major drag on workloads, with construction companies widely commenting on cutbacks to new residential development projects in the wake of sluggish demand and rising borrowing costs,” said Tim Moore, economics director at S&P Global Market Intelligence.

“Concerns about the domestic economic outlook also dampened client spending, which contributed to the fastest reduction in commercial building since January 2021.”

Conversely, the UK automotive industry showcased growth, with car registrations experiencing a year-on-year increase in September.

The uptick failed, however, to rival pre-pandemic averages.

Private new car registrations increased by 5.8% to 122,900 from 2022’s 116,300, yet fell short of the 2015 to 2019 average of 196,300.

Despite an aggregate 21% surge in total registrations to 272,600, including business and fleet vehicles, the figure remained significantly beneath the pre-pandemic average.

Petrol and battery-powered vehicle registrations increased by 15% and 18.9%, respectively, while diesel registrations experienced a 4.2% contraction.

On the continent, the HCOB eurozone construction PMI settled at 43.6 in September, a modest rise from August’s 43.4 but persistently beneath the crucial 50-point level, marking a 17-month streak of contraction.

New business sales saw their steepest fall in over three years, providing a sombre outlook for the sector.

German exports in August, meanwhile, unexpectedly shrank by 1.2% to €127.9bn, intensifying concerns regarding a potential recession in the third quarter.

Concurrently, imports reduced slightly by 0.4% to €111.4bn, contravening expectations of a 0.5% augment.

The trade surplus for the month was recorded at €16.6bn, a diminution from July’s upwardly revised €17.7bn.

Across the Atlantic, US unemployment claims exhibited marginal fluctuations, maintaining relatively low levels in the latest week.

In seasonally adjusted terms, initial unemployment claims saw a slight augmentation by 2,000 in the week concluding on 30th September, totalling 207,000 - a figure slightly below economists’ projections of 210,000.

Observers anticipated potential elevations in the weeks ahead, tethered to a surge in layoff announcements in August.

Imperial Brands in the green, ex-divs prove a drag

On London’s equity markets, Imperial Brands gained 3.89% after announcing a further £1.1bn share buyback and expressing confidence in meeting its annual forecasts.

Abrdn ascended 2.41%, spurred by an uplifting upgrade to ‘buy’ at Panmure.

Volution Group surged 9.15% following an optimistic full-year revenue and profit report, which credited solid demand for its ventilation products.

Royal Mail owner International Distributions Services marked a 7.28% rise after Goldman Sachs boosted its share price target from 341p to 369p.

Ukraine-focussed iron ore miner Ferrexpo also enjoyed a 7.25% elevation, attributed to a surge in third-quarter output amidst persistent challenges in the region.

Spirent Communications, recovering from a previous tumble, saw a 4.33% rise, while IAG added 2.38% after its subsidiary British Airways reportedly edged closer to finalising a long-term pay deal with its pilots, expected to mitigate strike threats until at least 2027.

On the downside, Weir Group, Bank of Georgia Group and Hays saw their shares decrease by 0.72%, 2.7%, and 3.21%, respectively, as they traded ex-dividend.

The most staggering dip was from Metro Bank Holdings, plummeting 28.51% after it said it was considering several refinancing options in light of recent reports.

The bank acknowledged pondering over a myriad of strategies, including potential equity issuance, debt issuance, refinancing, and asset sales, albeit a concrete decision has yet to be made.

It followed a near 50% plunge in its share price recently and an ongoing bid to enhance its capital resources, especially concerning the £350m in senior non-preferred notes due in October 2025.

According to the Financial Times, Metro Bank was looking at a possible raise of up to £600m.

Reporting by Josh White for Sharecast.com.

Market Movers

FTSE 100 (UKX) 7,451.54 0.53%
FTSE 250 (MCX) 17,599.98 0.61%
techMARK (TASX) 4,077.64 -0.11%

FTSE 100 - Risers

Imperial Brands (IMB) 1,642.00p 3.92%
Tesco (TSCO) 280.40p 3.58%
International Consolidated Airlines Group SA (CDI) (IAG) 155.10p 2.55%
Frasers Group (FRAS) 805.50p 2.29%
Centrica (CNA) 150.35p 2.17%
Barratt Developments (BDEV) 418.60p 2.07%
Hikma Pharmaceuticals (HIK) 2,063.00p 1.93%
B&M European Value Retail S.A. (DI) (BME) 560.60p 1.85%
British American Tobacco (BATS) 2,508.50p 1.83%
Unite Group (UTG) 895.50p 1.65%

FTSE 100 - Fallers

JD Sports Fashion (JD.) 140.00p -2.98%
Anglo American (AAL) 2,108.50p -1.54%
Fresnillo (FRES) 513.00p -1.42%
Weir Group (WEIR) 1,822.50p -1.11%
Barclays (BARC) 152.52p -0.88%
Haleon (HLN) 336.25p -0.86%
Glencore (GLEN) 439.85p -0.78%
Smith & Nephew (SN.) 965.20p -0.76%
NATWEST GROUP (NWG) 222.50p -0.76%
Lloyds Banking Group (LLOY) 42.17p -0.68%

FTSE 250 - Risers

Volution Group (FAN) 365.00p 8.44%
International Distributions Services (IDS) 258.60p 7.04%
Diversified Energy Company (DEC) 71.65p 6.78%
Ferrexpo (FXPO) 75.60p 6.40%
Apax Global Alpha Limited (APAX) 163.00p 6.00%
Grainger (GRI) 238.20p 4.66%
Genus (GNS) 2,110.00p 4.56%
W.A.G Payment Solutions (WPS) 96.00p 4.12%
Spirent Communications (SPT) 93.80p 4.11%
Lancashire Holdings Limited (LRE) 577.00p 3.96%

FTSE 250 - Fallers

Aston Martin Lagonda Global Holdings (AML) 244.40p -7.56%
Oxford Instruments (OXIG) 1,976.00p -3.84%
Jupiter Fund Management (JUP) 87.35p -3.69%
Hays (HAS) 102.40p -3.31%
Bank of Georgia Group (BGEO) 3,405.00p -3.13%
Playtech (PTEC) 405.00p -3.11%
Bluefield Solar Income Fund Limited (BSIF) 113.40p -2.91%
Bodycote (BOY) 605.00p -2.58%
Morgan Sindall Group (MGNS) 1,906.00p -2.36%
Helios Towers (HTWS) 72.30p -2.30%