London close: Stocks slip ahead of US tech earnings, UK Budget

dl city of london river thames the shard tower bridge financial district southbank winter night dark cold unsplash — Sharecast / Liam Seskis via Unsplash

HSBC Holdings

760.80p

17:09 20/12/24

-0.56%

-4.30p

London stocks closed in the red on Tuesday, amid mixed corporate earnings and investor caution ahead of big US tech results and the UK’s Budget announcement.

TBC Bank Group

3,095.00p

16:40 20/12/24

0.65%

20.00p

The FTSE 100 index ended the session down 0.8%, settling at 8,219.61 points, while the FTSE 250 slipped 1.02% to close at 20,622.79 points.

In currency markets, sterling was last up 0.22% on the dollar to trade at $1.3000, as it gained 0.28% against the euro, changing hands at €1.2031.

“Stock markets were mixed on Tuesday amid weaker-than-expected US job openings and disappointing third quarter earnings,” said IG senior analyst Axel Rudolph.

“US stock indices were mixed on Tuesday but their European counterparts traded in negative territory as investors were reacting to recent data and earnings results.

“US job openings at their lowest level in over three years, house prices rising the least in ten months and the goods trade deficit rising to over two-year highs dampened investors spirits, as did corporate earnings.”

Rudolph noted that McDonald's experienced a larger-than-anticipated decline in global sales due to reduced customer demand, with earnings from Alphabet due later in the day, Meta and Microsoft on Wednesday, and Amazon and Apple on Thursday.

“De-escalation hopes in the Middle East and easing fears of supply disruptions provoked further weakness in the price of natural gas which fell by 9% and crude oil, down 6%, on Monday.

“Gold and silver prices resumed their ascents and near their respective record and 12-year highs.”

UK shop prices fall as retailers look to Budget

In economic news, the British Retail Consortium called on the UK chancellor to adopt measures to keep retail prices down, as data for October revealed an acceleration in shop price deflation.

The BRC/NielsenIQ Shop Price Index showed that prices were down 0.8% year-on-year, compared to a 0.6% decline in September, marking the third consecutive month of deflation and the steepest drop since August 2021.

Non-food prices fell by 2.1% as retailers offered discounts on items such as electronics and DIY products amid a housing market rebound, while food price inflation eased to 1.9%, driven by seasonal promotions that helped bring fresh food inflation down to 1.0% from 1.5%.

“Households will welcome the continued easing of price inflation, but this downward trajectory is vulnerable to ongoing geopolitical tensions, the impact of climate change on food supplies, and costs from planned and trailed government regulation," said BRC chief executive Helen Dickinson.

“Retail is already paying more than its fair share of taxes compared to other industries. The chancellor using tomorrow’s Budget to introduce a retail rates corrector, a 20% downwards adjustment, to the business rates bills of all retail properties will allow retailers to continue to offer the best possible prices to customers while also opening shops, protecting jobs and unlocking investment.”

In the UK housing market, mortgage approvals reached a high not seen since the mini-budget in September 2022.

The Bank of England reported that net approvals rose to 65,600 in September, surprising analysts who had anticipated 65,000.

Remortgage approvals also climbed to 30,800, reflecting a gradually stabilising market after the turmoil following last year’s mini-budget.

“Demand picked up during the summer months as rates fell - that momentum continued into September and throughout October, despite a slight uptick in [mortgage] rates,” said Stephen Perkins, managing director of broker Yellow Brick Mortgages.

“Right now, it feels like the entire country is holding its breath and hoping to avoid a Truss-style catastrophe in the Budget.

“Once the Budget is behind us and the near-inevitable base rate reduction in early November comes, it should be a strong end to the year, which will fuel a more resurgent property market during 2025.”

On the continent, German consumer confidence looked set to improve slightly, with the GfK/Nuremberg Institute projecting a 2.7-point rise in November’s consumer climate index to -18.3 - the highest since April 2022.

Despite the uptick, sentiment remained subdued amid broader economic challenges.

Earlier in the day, China was reported to be considering issuing over CNY 10trn (£1.07trn) in additional debt to support its struggling economy.

Reuters said the National People's Congress was expected to approve a fiscal package on 8 November that included CNY 6trn in sovereign bonds over three years, aimed at alleviating local government debt burdens, alongside up to CNY 4trn in special-purpose bonds for land and property investments.

HSBC jumps on buyback, BP in the red

On London’s equity markets, HSBC Holdings gained 3.92% after announcing a $3bn share buyback and surpassed profit expectations for the third quarter.

The bank posted a 10% increase in pre-tax profit, reaching $8.5bn, above analysts' projections of $7.6bn.

Revenue rose 5% to $17bn, bolstered by strong performance in wealth and investment banking amid market volatility, though net interest income fell due to higher liability expenses and other financial adjustments.

Educational publisher Pearson also saw gains, climbing 4.34% after affirming its full-year outlook on the back of a 4% increase in third-quarter sales.

Core assessment and qualifications drove growth with a 6% rise, while the workforce skills segment and virtual learning both showed steady improvements, enhancing Pearson's overall position in the market.

Specialty chemicals company Elementis inched up by 0.29%, after an improved third-quarter performance across its business segments.

Hargreaves Lansdown added a modest 0.09% as it reported £157.3bn in assets under administration, with growth attributed to positive market movements and net new business.

Georgian banks TBC Bank and Bank of Georgia rebounded, up 3.29% and 3.6% respectively, after declines on Monday following election results in Georgia.

On the downside, BP dropped 4.97% after it reported a quarterly profit decline due to weaker refining margins and a challenging oil trading environment.

The energy major’s underlying replacement cost profit fell to $2.3bn, down from $2.8bn in the previous quarter and $3.3bn a year earlier, though higher gas realisations offered partial support.

Irish drinks group C&C fell 4.21%, impacted by a rainy summer that led to lower revenues in the first half of the fiscal year.

Despite a 3% revenue drop to €861.4m, the group saw a 29% rise in underlying operating profits due to efficiency gains, helping to offset market pressures.

Wealth manager St James’s Place declined 2.76% after Bank of America Merrill Lynch downgraded the stock from ‘buy’ to ‘neutral’.

Reporting by Josh White for Sharecast.com.

Market Movers

FTSE 100 (UKX) 8,219.61 -0.80%
FTSE 250 (MCX) 20,622.79 -1.02%
techMARK (TASX) 4,705.21 -0.82%

FTSE 100 - Risers

Pearson (PSON) 1,118.00p 4.34%
Fresnillo (FRES) 778.50p 3.39%
HSBC Holdings (HSBA) 713.70p 3.12%
Rentokil Initial (RTO) 386.90p 1.66%
Standard Chartered (STAN) 876.40p 1.22%
Rio Tinto (RIO) 5,131.00p 1.06%
WPP (WPP) 837.60p 0.84%
Anglo American (AAL) 2,483.00p 0.81%
Antofagasta (ANTO) 1,815.00p 0.44%
Vistry Group (VTY) 958.00p 0.16%