London stocks closed below the waterline on Friday, after sentiment got off on the wrong foot following disappointing earnings from Apple and Amazon in the US overnight.0
The FTSE 100 ended the session down 0.16% at 7,237.57, and the FTSE 250 was 0.4% weaker at 23,106.61.
Sterling was in a mixed state, last trading 0.78% weaker against the dollar at $1.3682, while it strengthened 0.43% on the euro to €1.1857.
“European markets are on the back foot as a jump in eurozone inflation highlights the growing pressure that could build on the ECB,” said IG senior market analyst Joshua Mahony.
“In the US, Apple and Amazon earnings have helped drive markets lower.
“However, oil and gas stocks remain in favour after multi-year highs for ExxonMobil and Chevron profits.”
On the economic front, Britons continued to display caution last month as they added to their stash of excess savings, although the opposite was true of corporates, according to the latest money and credit data from the Bank of England.
Households’ total liquid assets, defined as their deposits with banks and building societies, grew by £9.4bn in September, which was down from £9.9bn during the previous month but ahead of an average net flow of £8.9bn between April and August 2021.
According to Samuel Tombs, chief UK economist at Pantheon Macroeconomics, that saw households’ excess savings – the additional amount saved since the pandemic began over the previous £4.8B monthly average – rise to 8.7% of 2020 GDP.
“Households remained unwilling in September to draw on the savings they have accumulated since the pandemic began, underlining the downside risks to the OBR’s new forecasts, which assume a period of below-normal saving next year,” Tombs said.
On the high street, empty UK stores remained at a record high in the third quarter but vacancies did not rise for the first time in more than three years as independent retailers revived, according to an industry survey.
The vacancy rate was 14.5%, the same as the second quarter and 1.3 points higher than a year earlier, the British Retail Consortium said.
Shopping centre vacancies stayed at 19.4% from three months earlier and high street vacancies were also unchanged at 14.5%.
Vacancies at retail parks dipped to 11.3% from 11.5% as brands opened stores out of town and to support online operations.
Looking at the energy crisis, it emerged earlier in the day that the government was apparently accelerating contingency plans for the collapse of energy supplier Bulb.
According to Sky News, ministers and officials, along with industry regulator Ofgem, believed that Bulb could collapse as soon as next week amid diminishing expectations of a rescue deal.
Sky cited industry sources as saying that talks with a small number of potential buyers were ongoing, but that others had pulled out in recent days.
They said that while a solvent rescue remains a possibility, it was highly unlikely that Bulb could survive through November without new funding.
“Our discussions with multiple parties to secure additional funding continue to make good progress and we’re encouraged by the drop in wholesale energy prices,” Sky quoted a Bulb spokesperson as saying.
In equities, NatWest Group slumped 4.45% despite reporting a surge in third-quarter profits as it released £242m set aside to cover bad loans during the Covid crisis.
The bank said operating pre-tax profits rose to £1.07bn from £355m a year ago, but lower than the £1.5bn in the second quarter.
“Having seen decent numbers from Lloyds and Barclays, expectations were high for NatWest Group’s Q3 numbers today,” said CMC Markets analyst Michael Hewson.
“NatWest’s share price has been a notable outperformer so far this year, its shares up over 35%, and at 20-month highs, so the bar was quite high for today’s third quarter numbers, and quite frankly the market reaction has been a little underwhelming.”
Medical equipment maker Smith & Nephew was 2.6% weaker after US peer Stryker cautioned that staffing issues and rising Covid cases were holding back a recovery in medical procedures.
Miniature wargames manufacturer Games Workshop sank 7.7% after Jefferies cut its estimates to reflect freight and foreign exchange challenges.
On the upside, medical products company ConvaTec rallied 8.03% after it said full-year organic revenue growth was set to be towards the upper end of its guidance range after an in-line third-quarter, which saw sales slow from the second quarter.
Banks – aside from NatWest – were doing well, with Lloyds up 1.29%, Barclays adding 1.49% and Standard Chartered 1.31% firmer.
Cybersecurity firm Darktrace was finally in the green, closing up 2.95% after sliding in recent sessions, following Peel Hunt’s initiation of coverage at ‘sell’ on Monday.
Market Movers
FTSE 100 (UKX) 7,237.57 -0.16%
FTSE 250 (MCX) 23,106.61 -0.40%
techMARK (TASX) 4,550.98 -0.52%
FTSE 100 – Risers
ITV (ITV) 107.65p 3.26%
Darktrace (DARK) 803.50p 2.95%
Glencore (GLEN) 365.25p 1.63%
Barclays (BARC) 202.25p 1.49%
Standard Chartered (STAN) 494.90p 1.31%
Lloyds Banking Group (LLOY) 50.22p 1.29%
Pershing Square Holdings Ltd NPV (PSH) 2,940.00p 1.20%
WPP (WPP) 1,058.50p 1.15%
Kingfisher (KGF) 336.10p 1.12%
International Consolidated Airlines Group SA (CDI) (IAG) 163.80p 1.05%
FTSE 100 – Fallers
NATWEST GROUP PLC ORD 100P (NWG) 221.10p -4.45%
Smith & Nephew (SN.) 1,255.00p -2.60%
Polymetal International (POLY) 1,356.50p -2.52%
SSE (SSE) 1,647.50p -2.29%
SEGRO (SGRO) 1,300.50p -2.08%
Royal Dutch Shell ‘A’ (RDSA) 1,681.00p -1.88%
Whitbread (WTB) 3,263.00p -1.68%
Flutter Entertainment (CDI) (FLTR) 13,795.00p -1.50%
British American Tobacco (BATS) 2,551.50p -1.47%
Rightmove (RMV) 691.40p -1.45%
FTSE 250 – Risers
Convatec Group (CTEC) 213.80p 8.03%
ICG Enterprise Trust (ICGT) 1,244.00p 2.97%
Auction Technology Group (ATG) 1,414.00p 2.91%
Synthomer (SYNT) 506.50p 2.49%
TI Fluid Systems (TIFS) 263.00p 2.31%
Investec (INVP) 331.80p 2.25%
Oxford Biomedica (OXB) 1,522.00p 2.15%
Chrysalis Investments Limited NPV (CHRY) 251.00p 2.03%
Hill & Smith Holdings (HILS) 1,834.00p 1.89%
Aston Martin Lagonda Global Holdings (AML) 1,708.00p 1.73%
FTSE 250 – Fallers
Games Workshop Group (GAW) 9,645.00p -7.70%
CLS Holdings (CLI) 224.00p -4.27%
Network International Holdings (NETW) 323.20p -4.21%
Hochschild Mining (HOC) 142.60p -3.84%
CMC Markets (CMCX) 253.00p -3.63%
TP Icap Group (TCAP) 155.58p -3.62%
Centamin (DI) (CEY) 94.18p -2.72%
Greggs (GRG) 3,055.00p -2.68%
National Express Group (NEX) 228.60p -2.64%
Tritax Eurobox (GBP) (EBOX) 113.20p -2.59%
