London close: Stocks sink after three days of gains

The downward trend was partly driven by luxury fashion brand Burberry, which issued a sales warning that weighed on investor sentiment.

By the end of trading, the FTSE 100 was down 1.01% at 7,410.97 points, while the FTSE 250 index saw a steeper decline of 1.74% to 18,351.48 points.

In currency markets, sterling was last up 0.01% on the dollar to last trade at $1.2417, while it weakened 0.01% against the euro, changing hands at €1.1445.

“The bounce in stocks has slowed dramatically, though the reasons to buy keep coming through,” said IG chief market analyst Chris Beauchamp.

“First it was CPI, then retail sales and PPI, and now comes a fresh fall in oil prices and yields, the two chief bugbears of stocks in recent months.

“Jobless claims rose to their highest level since mid-August, another sign of a cooling in the US economy, and a further brick in the wall of expectations that the Fed is now on pause for the foreseeable future.”

Beauchamp added that a host of heavyweight dividend payments put the FTSE 100 on the back foot on Thursday, with sentiment continuing to sour following Burberry’s numbers.

“The downturn in luxury spending is not exactly applicable to most stocks in the index, but where luxury spending goes, other spending is sure to follow, putting pressure on the index’s other retail names - a point underlined by Walmart’s numbers today in the US.”

US economic news in focus as jobless claims surge

In economic news, unemployment claims in the US surged during the week ended 11 November, marking the highest level in nearly three months.

The Labor Department reported an increase of 13,000 in initial unemployment claims, reaching 231,000.

That figure surpassed expectations, which had projected a reading of 220,000.

Additionally, continuing claims rose by 18,000 to 1.86 million in the preceding week, hitting their highest level in nearly two years and exceeding market forecasts of 1.84 million.

The prior week’s level was revised upwards by 1,000 to 218,000, while the four-week moving average, designed to smooth out week-to-week fluctuations, stood at 220,250, reflecting an increase of 7,750 from the previous week’s revised average.

“Initial jobless claims are still at levels consistent with relatively few layoffs, but they are creeping higher, rising to a three-month high in the week ending 11 November,” said Nancy Vanden Houten at Oxford Economics.

“Meanwhile, continued claims continued their upward march in the week ended 4 November, rising to the highest level in nearly a year.

“The upturn in continued claims suggests that unemployed individuals are finding it more difficult to find new jobs, which would be consistent with a slower pace of hiring.”

Vanden Houten said the claims data were consistent with a job market that was cooling enough to keep rate hikes off the table but too strong to make rate cuts a consideration any time soon.

“The Fed is surely encouraged by recent inflation data but needs to see a further slowdown in the labour market and wage growth to be persuaded that inflation is on a sustainable path back to 2%.

“We expect that scenario to evolve only gradually and don’t expect the first rate cut until September of next year.”

Meanwhile, industrial production in the US experienced a larger-than-anticipated decline in October, according to data from the Federal Reserve.

The output contracted by 0.6%, starkly contrasting the revised 0.1% increase observed in September.

Initial estimates for September predicted a 0.3% gain.

The decline in October was primarily attributed to strikes in the auto manufacturing sector, which resulted in a 0.7% reduction in manufacturing output.

The strikes, led by the United Auto Workers (UAW) at General Motors, Ford, and Stellantis-owned Chrysler factories, persisted from mid-September until the end of October.

Excluding motor vehicles and parts from the equation, manufacturing output would have registered a modest 0.1% increase.

Kieran Clancy from Pantheon Macroeconomics said the end of the UAW strikes means manufacturing output will “likely mean-revert in November”.

“That said, the underlying trend is still more or less flat and is unlikely to improve substantially in the near term.

“Capital spending intentions are no longer falling sharply but remain depressed, and the external boost to activity implied by China’s manufacturing PMIs looks limited.”

Burberry slides, Hotel Chocolat rockets on Mars deal

On London’s equity markets, Burberry Group saw a sharp decline of 9.78% following a warning from the fashion brand that the slowdown in luxury demand was impacting current trading and could potentially affect full-year sales.

Additionally, the company reported a substantial deceleration in sales growth during the first half of the year.

Lancashire Holdings lost 8.09% as it traded without entitlement to the dividend.

B&M European Value Retail faced a 2.94% decline, influenced by JPMorgan’s reaffirmed ‘underweight’ rating on the shares.

Great Portland Estates experienced a downturn of 4.31%, having reported robust leasing activity in its first half, exceeding estimated rental values (ERV) by 13.4%, but noting that its portfolio value had fallen by more than 10%.

The decline in valuation, primarily driven by yield, was partially offset by a 1.8% increase in estimated rental values (ERVs).

Babcock International Group lost 4.68% despite Bank of America Merrill Lynch reiterating its ‘buy’ rating on the stock following “solid” first-half results.

The bank cited attractive valuation, margin expansion, and cap allocation optionality as reasons for its positive outlook.

Insurer Aviva reversed earlier gains to close down 0.17%, having initially risen after reiterating its full-year targets, driven by a jump in premiums during the third quarter.

Melrose Industries also gave back gains from earlier in the session, finishing the day down 0.6%.

Its earlier gains resulted from an upward revision of its full-year profit outlook, as the company highlighted more robust aftermarket demand and pricing.

On the upside, Halma was ahead by 3.23% after it reported record first-half profit and revenue and expressed confidence in achieving full-year 2024 adjusted pre-tax profit in line with analyst expectations.

Premier Foods saw a 1.29% increase after the owner of brands like Mr Kipling and Bisto boosted its full-year profit expectations following a “strong” first-half performance.

Outside the FTSE 350, Hotel Chocolat Group skyrocketed 161.15% after it agreed to be acquired by US food giant Mars in a £534m deal.

Reporting by Josh White for Sharecast.com.

Market Movers

FTSE 100 (UKX) 7,410.97 -1.01%
FTSE 250 (MCX) 18,351.48 -1.74%
techMARK (TASX) 4,055.83 -0.95%

FTSE 100 - Risers

Halma (HLMA) 2,028.00p 3.18%
National Grid (NG.) 1,010.00p 2.10%
Endeavour Mining (EDV) 1,714.00p 1.60%
Centrica (CNA) 149.30p 1.15%
SSE (SSE) 1,773.50p 1.14%
Pershing Square Holdings Ltd NPV (PSH) 3,096.00p 1.04%
Relx plc (REL) 2,947.00p 0.96%
AstraZeneca (AZN) 10,166.00p 0.75%
Vodafone Group (VOD) 73.22p 0.73%
Experian (EXPN) 2,904.00p 0.73%

FTSE 100 - Fallers

Burberry Group (BRBY) 1,550.00p -11.15%
Ocado Group (OCDO) 559.40p -6.17%
Hargreaves Lansdown (HL.) 710.00p -5.84%
Smith (DS) (SMDS) 286.40p -4.21%
Smurfit Kappa Group (CDI) (SKG) 2,746.00p -3.92%
JD Sports Fashion (JD.) 137.10p -3.42%
Mondi (MNDI) 1,386.50p -3.35%
B&M European Value Retail S.A. (DI) (BME) 534.00p -3.20%
Whitbread (WTB) 3,304.00p -3.10%
Shell (SHEL) 2,555.50p -3.04%

FTSE 250 - Risers

FDM Group (Holdings) (FDM) 400.00p 4.44%
CAB Payments Holdings (CABP) 63.50p 3.08%
Foresight Solar Fund Limited (FSFL) 97.80p 2.41%
Ninety One (N91) 176.30p 2.14%
Bakkavor Group (BAKK) 89.20p 1.83%
Kainos Group (KNOS) 999.50p 1.73%
IP Group (IPO) 51.10p 1.19%
Chemring Group (CHG) 303.50p 1.17%
Apax Global Alpha Limited (APAX) 167.80p 1.08%
Centamin (DI) (CEY) 89.45p 1.02%

FTSE 250 - Fallers

QinetiQ Group (QQ.) 320.80p -8.50%
Lancashire Holdings Limited (LRE) 619.00p -8.09%
Harbour Energy (HBR) 223.90p -7.36%
Babcock International Group (BAB) 395.20p -6.13%
Wetherspoon (J.D.) (JDW) 696.50p -5.88%
Watches of Switzerland Group (WOSG) 580.50p -5.55%
Great Portland Estates (GPE) 421.40p -5.35%
Ceres Power Holdings (CWR) 205.40p -5.35%
Aston Martin Lagonda Global Holdings (AML) 212.40p -5.26%
Close Brothers Group (CBG) 748.00p -5.20%