Disappointing GDP figures in China have set a downbeat tone as investors embark on a busy week that is also set to feature UK inflation figures and a flurry of earnings updates.
The FTSE 100 index finished on Friday at its highest level in 19 months, but traded lower after China's 4.9% expansion came in short of expectations.
Shares in Hut Group business THG surged 8% after founder and chief executive Matt Moulding gave up his “golden share” in a move easing governance concerns and paving the way for FTSE 100 index membership.
FTSE 100 Live Monday
China GDP disappoints
Brent crude nears $86
FTSE 100 eases from 19-month high
FTSE closes lower after Chinese GDP miss shakes stocks
17:08 , Oscar Williams-Grut
The FTSE 100 has closed down 30 points, or 0.4%, at 7203. Stocks fell across Europe after a miss for Chinese GDP overnight. Slower than expected growth in the world’s second biggest economy has stoked fears about the secondary effects on economies and companies that export to China.
The top stores in the market today:
• The markets are now pricing in a rate rise next month after Bank of England governor Andrew Bailey dropped strong hints about action to curb inflation in an online event on Sunday
• THG has closed 20% higher after chief executive Matt Moulding said he would give up his golden share and the company announced a review of governance
• Bitcoin is close to record high levels on anticipation of the first bitcoin ETF starting to trade in the US
That’s all from us today. Join us again on the blog tomorrow.
China GDP disappoints
07:35 , Graeme Evans
The FTSE 100 index finished last week above 7,200 for the first time since February 2020, but concerns over the strength of China's economy mean investors are braced for a weaker session today.
China's economy expanded by 4.9% year-on-year in the third quarter, which compares with growth of 7.9% in the previous three months and market forecasts as high as 5.2%.
Power shortages leading to factory shutdowns, supply chain issues and the impact of regulatory crackdowns on various industries were among factors blamed for the country's weakest performance since the same quarter a year ago.
Michael Hewson, of CMC Markets, said: “At the beginning of this year, it was widely expected that the Chinese economy would see annual GDP growth of around 6%, a number at the time which was thought to be somewhat on the pessimistic side.
“As it turns out this now looks a little too optimistic, given the sharp slowdown we’ve seen in this morning’s Q3 numbers.”
Oil prices have continued to rise, meanwhile, after Brent crude lifted 1% to a fresh three-year high of $85.73 a barrel. The prospect of increased international air travel and the ongoing switch to oil from expensive natural gas continues to boost demand.
The price of bitcoin remains at near record levels amid speculation that US regulators will this week give the go-ahead for two futures-based exchange-trade funds linked to digital currencies.
Bitcoin jumped 7.5% on Friday and was up another 2.5% at $62,311 today, close to the all-time high of just under $65,000.
“Growthflation, not stagflation”
07:45 , Graeme Evans
The corporate calendar for this week features updates from blue-chip stocks Barclays, Unilever and Rentokil Initial, as well as 78 companies in the S&P 500 on Wall Street.
Deutsche Bank's research analyst Jim Reid said the early trends from the US earnings season had been positive after 18 out of 19 companies beat expectations.
He said: “So much for inflation squeezing margins. My view remains that we’re still seeing “growthflation” and not “stagflation”, particularly in the US even if there are obvious risks to growth. For now, there is still a buffer before we should get really worried.”
On the back of the decent earnings, the S&P 500 had its best week since July last week and is now only less than 1.5% off its record high from early September. The FTSE 100 index added 2% last week and finished above 7,200 for the first time since February 2020.
Bank ready to act
08:04 , Graeme Evans
Inflation figures for September, due to be published on Wednesday, are expected to show the headline CPI benchmark inching up to 3.3% year-on-year.
Clothing, furniture and car prices are likely to have kept the monthly figure elevated, with seasonal and non-seasonal food prices also rising. October's overall inflation rate is likely to be even higher due to the increase in Ofgem's energy price cap.
The price pressures and fears that inflation will remain above target for longer than expected mean that Bank of England policymakers could increase interest rates before the end of the year.
Governor Andrew Bailey repeated on Sunday that the Bank is ready to act if there's a risk to medium-term inflation expectations.
The pound has been strengthened in recent days by the prospect of tighter monetary policy, with sterling at 1.37 versus the US dollar.
LondonMetric beefs up estate size in the capital
08:12 , Joanna Bourke
LondonMetric Property, the FTSE 250 warehousing landlord, is looking to capitalise on high demand for logistics space in the capital, with two purchases totalling £20.2 million.
The firm, led by Andrew Jones, said it has bought ‘last mile logistics assets’ in Fulham and Tottenham.
The properties collectively total 44,000 square feet and have been acquired with vacant possession. The new owner plans to refurbish them at a cost of £1.4 million.
Read more HERE.
THG boss Matt Moulding gives up golden share
08:15 , Oscar Williams-Grut
THG’s founder and chief executive Matthew Moulding has confirmed plans to give up his ‘golden share’ in the business following a bruising week that saw its share price fall 35% in a day.
THG confirmed in a statement to the market that Moulding would give up his golden share, which allows him to block any takeover of the business.
The company said the changes are part of a move to gain a premium listing on the London Stock Exchange. Moulding’s golden share blocks a premium listing under current rules, meaning THG cannot be included in the FTSE indexes.
Miners offer support
08:33 , Graeme Evans
The FTSE 100 index slipped 10 points to 7223.98, although the decline would have been much greater without the support of mining and energy stocks.
With Brent crude now at $85.69 a barrel for its highest level since October 2018, shares in BP and Royal Dutch Shell added about 0.5%.
And despite the weak economic data from China, BHP Group and Glencore both lifted more than 1% at the top of the FTSE 100 risers board.
British Airways owner IAG and Burberry were the top fallers after their shares declined by about 2%.
The FTSE 250 index was broadly unchanged at 22,989.49.
Bitcoin nears record high on ETF anticipation
09:44 , Oscar Williams-Grut
Bitcoin continues to climb higher and is now inches away from a new all-time high.
The world’s biggest cryptocurrency was up 2.7% at $62,479 at 8.20am in London on Monday. Bitcoin reached an all-time high of $64,863 in April.
Bitcoin has risen 50% in just the last three weeks. Much of the rally has had little obvious spur but the price has gained momentum in recent days from reports that a bitcoin ETF could be close to being approved.
City bets on imminent interest rate rise
09:54 , Simon English
CITY traders today firmed up their bets that UK interest rates will rise faster than previously thought in the face of soaring inflation, wage demands and supply chain problems.
Until very recently economists and others in the City were pricing in a rise in rates from historic lows of 0.1% in the first quarter of next year, at the earliest.
They now think rates will have to rise before the end of the year, and expect them to hit 1% by September next year.
09:59 , Simon Freeman
The former boss of Gucci has been appointed to spearhead designer clothes seller END's expansion under its new private equity owner.
Patrizio di Marco, who worked for Dolce & Gabbana after leaving the Italian fashion house in 2014, will take over as chair later this year.
END was set up by university friends Christiaan Ashworth and John Parker, who poured in £40,000 savings to open the first shop in Newcastle in 2005.
It now operates primarily online and has partnerships with more than 500 brands including Givenchy, Valentino and di Marco's former company, Gucci, selling to 100 countries.
The firm, which has a flagship branch in Soho, was bought by the US buy-out giant Carlyle earlier this year for £750 million.
Ashworth, who remains co-CEO, said: "Patrizio brings a wealth of experience within the luxury, fashion and business world and with a proven track record of helping grow companies will be a great asset."
Carlyle will be hoping di Marco can repeat the trick pulled off at luxury brand Golden Goose, a previous acquisition which increased 450% in value under his chairmanship.
Matalan joins list of retailers pointing to supply chain woes
10:06 , Joanna Bourke
The firm, which sells online and from its 228 stores in the UK, gave the update alongside revealing revenues improved to £264.7 million in the second quarter from £258 million a year earlier.
Steve Johnson, executive chairman, cautioned: “Over the last few months we have been feeling the impact of disruption within the inbound product supply chain, delaying the flow of stock into the UK and adding extra costs into the process. We are working closely with suppliers and partners to manage and mitigate the effects of this.”
Read more HERE.
Oil strength continues
10:40 , Graeme Evans
The momentum behind oil prices showed no signs of slowing today, even as China's problems with power shortages were laid bare in disappointing GDP figures.
China expanded 4.9% year-on-year, well below the 7.9% of the previous quarter and short of forecasts as high as 5.2%, after disruptions ranging from regional factory outages to Beijing's recent wave of regulatory crackdowns.
Having opened at a 19-month high after its best week since April, the FTSE 100 index declined 17.37 points to 7216.85 amid weakness among several Asia-focused stocks. Fallers included Burberry, which declined 27.5p to 1845p, while Prudential lost 12.5p to 1442p.
But the FTSE 100 decline would have been much greater without heavyweight commodity firms benefiting from the latest rise in prices. Despite the weaker China growth, Brent crude added 0.5% to a fresh three-year high at over $85 a barrel as traders bet on a further demand boost through the resumption of international air travel.
BP and Royal Dutch Shell shares both added 0.5% while there was support from the wider commodities sector after gains of more than 1% for miners including Glencore and BHP. Silver miner Fresnillo was the biggest FTSE 100 riser as broker UBS removed its “sell” recommendation, triggering a 2% or 20.2p gain to 865.8p.
Bitcoin's upward price momentum also resumed today after a weekend in which the price briefly went below $60,000. The cryptocurrency gained more than 5% to $62,100 at one point and is back within sight of April's record high amid speculation that US regulators will give the go-ahead for two futures-based exchange-trade funds linked to digital currencies.
The FTSE 250 index was 19.90 points lower at 22,964.56, with National Express among the fallers after the coach operator was given an extended deadline of mid-November to seal its takeover of Stagecoach. National Express shares fell 6p to 230.2p.
Playtech surges on takeover approach
11:00 , Oscar Williams-Grut
Playtech has become the latest London-listed gambling company to be targeted for a takeover, as operators rush to build scale and break into the US market.
Aristocrat’s offer is its fourth bid for Playtech but the first to be made public. The Australian company initially made an unsolicited approach in April.
The deal comes as gambling companies rush to take advantage of the de-regulating gambling market in the United States, which is forecast to become one of the biggest betting and gaming markets in the world.
Deichmann boosts UK shoe stores estate
11:36 , Joanna Bourke
The UK arm of the family-run business, which is headquartered in Germany, said seven new shops were opened last year, bringing its store numbers here to 116.
Read more HERE.
Facebook to create 10,000 new jobs in the EU
12:19 , Oscar Williams-Grut
Conspicuously absent was any mention of the UK. Facebook employs more than 2,700 people in the UK, with a major office in Euston.
The Standard recently reported Facebook had signed on to take another 310,000 sq ft in the area. A source close to the company said the UK remained an important market for Facebook.
Rio pledge faces new test
12:33 , Simon Freeman
Rio Tinto’s pledge to learn the lessons from the destruction of sacred Aboriginal shelters faces a major test as opposition builds to an vast new US operation.
Native American leaders refused to meet CEO Jakob Stausholm on his first visit to the FTSE 100 miner’s Resolution Copper project near Phoenix, Arizona, citing religious concerns over a land-swap deal.
The project, in partnership with fellow mining giant BHP, would satisfy 25% of projected US copper demand for 40 years, but the San Carlos Apache tribe has said the resulting two-mile wide crater would swallow a sacred site.
The row grew as Rio pledged to better understand “priorities and concerns, minimise our impacts and responsibly manage Indigenous cultural heritage” in response to a report into the Juukan Gorge scandal in Western Australia published today.
Officials said Rio’s actions in May 2020 were “inexcusable and an affront… but perhaps the tragedy may at least be a catalyst for change.”
Stausholm said “We know this will take time and there will be challenges ahead, but we are focused on improving our engagement with Indigenous Peoples and our host communities to better understand their priorities and concerns, minimise our impacts, and responsibly manage Indigenous cultural heritage in and around our operations.”
FTSE lower in afternoon trade
14:24 , Oscar Williams-Grut
The FTSE 100 is down 44 points, or 0.6%, at 7189 this afternoon. The index is being weighed down by weak Chinese GDP numbers overnight, which has sparked fears about a global slowdown.
Russ Mould, investment director at AJ Bell, says: “The problems facing the Chinese economy are familiar ones of supply chain issues and power shortages.”
Move quick on mortgage deals -- brokers
14:53 , Simon English
Home owners looking to re-mortgage should get their skates on. That’s the message from mortgage brokers surveying the latest signs of market movement, and the latest remarks from Bank of England governor Andrew Bailey.
EG Group scraps £750m purchase of Asda forecourt business
16:25 , Joanna Bourke
The brothers behind the £6.8 billion takeover of Asda will not proceed with a planned separate £750 million deal to buy the grocer’s forecourt business.
EG Group is owned by the Issa brothers and private equity firm TDR Capital, who both last year unveiled a deal to buy a majority stake in grocer Asda from Walmart.
Read more HERE.