London close: Stocks finish higher ahead of Fed minutes
By Josh White
Date: Wednesday 23 Nov 2022
(Sharecast News) - London stocks managed a positive close on Wednesday, even after fresh data added to consternation over the state of the UK manufacturing sector, as investors awaited the release of the latest meeting minutes from the US Federal Reserve.
The FTSE 100 ended the session up 0.17% at 7,465.24, and the FTSE 250 added 0.4% to 19,500.50.
Sterling was also in the green, and was last up 1.49% on the dollar at $1.2063, as it strengthened 0.94% against the euro to trade at €1.1644.
"Having got off to an initially positive start, with the FTSE 100 getting to within touching distance of 7,500, it's been a fairly lacklustre session as investors weigh up the release of tonight's FOMC minutes against a backdrop of a weakening economic outlook, after PMIs all pointed to further economic weakness in the fourth quarter," said CMC Markets chief market analyst Michael Hewson.
"It also tees up the possibility that this might lead central banks to hold back from hiking as aggressively as previously thought."
On the economic front, the UK economy continued to struggle in November according to a closely-watched survey, as the cost of living crisis weighed heavily.
The latest S&P Global/CIPS UK PMI composite output index came in at 48.3, broadly unchanged on October's 48.2, but above the consensus for around 47.5.
Within that, the manufacturing output index nudged only marginally higher at 45.4, from last month's 45.0, while manufacturing PMI was unchanged at 46.2.
The services PMI business activity index was also unchanged, at 48.8.
A reading above 50.0 indicates growth, while a reading below it indicates contraction.
New orders fell at the sharpest pace for almost two years, as squeezed client budgets hit demand in both manufacturing and services.
Business expectations for going forward did improve, however, coming off October's 30-month low.
Respondents remained concerned about recession and the increasingly difficult economic conditions, but there were fewer comments about domestic political uncertainty.
"A further steep fall in business activity in November adds to growing signs that the UK is in recession," said Chris Williamson, chief business economist at S&P Global Market Intelligence.
"If pandemic lockdown months are excluded, the PMI for the fourth quarter so far is signalling the steepest economic contraction since the height of the global financial crisis in the first quarter of 2009.
"While the recent change of government has resulted in improved business confidence, the business mood remains among the gloomiest seen over the past quarter century."
On the continent, a flash reading of S&P Global's eurozone manufacturing purchasing managers' index increased to 47.3 in November from 46.4 in October, above market forecasts for a reading of 46.
The flash reading pointed to a fifth straight monthly drop in factory activity, with the rate of production decline easing but still sitting at the second-higher level recorded over the 10 years, excluding the height of the Covid-19 pandemic.
S&P Global said the steepest downturn was seen in chemical and plastics, with notably steep declines also recorded in basic resources, while new orders declined at a smaller rate, backlogs of work continued to fall and payroll growth also remained subdued.
Across the pond, Americans lined up for unemployment benefits at an accelerated clip last week, with first-time claims easily beating expectations.
According to the Labor Department, new claims for unemployment benefits rose by 17,000 to 240,000 in the week ended 19 November, the highest level seen since August and easily exceeding expectations for a reading of 225,000.
On a seasonally unadjusted basis, initial claims soared by 47,909, while the four-week moving average, which aims to strip out week-to-week volatility, rose by 5,500 to 226,750.
Orders for goods made to last more than three years meanwhile expanded more quickly than expected last month in the US.
According to the US Department of Commerce, durable goods orders rose at a month-on-month pace of 1.0% in October to reach $277.4bn, above expectations for a 0.4% improvement.
Elsewhere, consumer confidence stateside worsened by a bit less than expected in November as inflation expectations dipped, with the University of Michigan's consumer confidence index declining to 56.8 in November, above consensus expectations for 55.5 but down from October's 59.9.
It was still, however, better than the preliminary reading of 54.7 published about a fortnight ago.
Finally on data, economic activity in the US slowed more quickly than expected last month, with S&P Global's composite PMI for manufacturing and services activity falling to 46.3 in November for a three-month low, from 48.2 in October.
The services PMI, meanwhile, fell to 46.1 from 47.8, against expectations for 48.0, while that for manufacturing slid to 47.6 from 50.4, with forecasts having been for 50.0.
In interest rate action, New Zealand's central bank delivered its biggest-ever hike earlier in the global day as it tightened policy for the eighth consecutive time.
The Reserve Bank of New Zealand tacked 75 basis points onto its official cash rate in its scheduled decision, taking it to 4.25%.
It had slashed the rate to a record low of 0.25% at the beginning of the Covid-19 pandemic in March 2020, from 1%, and then progressively raised it in each of its last eight scheduled policy decisions since October 2021.
The rate was now at its highest level since January 2009, when the RBNZ cut the official cash rate to 3.5% from 5%, in the wake of the 2008 global financial crisis.
On London's equity markets, miners were in the green with Glencore up 3.19%, Anglo American adding 1.51% and Antofagasta ahead 0.97%.
Glencore was also lifted by an upgrade to 'outperform' by analysts at Bernstein.
Drinks maker Britvic fizzed 2.02% higher after it posted a rise in full-year profit and revenue, hailing growth in both the retail and hospitality channels, which benefited from good weather over the summer and no lockdown restrictions.
Rotork advanced 3.42% after it reported a jump in revenues for the four months to 30 October and backed its full-year profit expectations.
United Utilities Group reversed earlier losses to close up 2.18%, even after it said that half-year earnings dipped as a result of surging inflation and the long dry summer.
Premier Inn owner Whitbread was 3.15% firmer by the close, despite JPMorgan cutting its price target on the shares.
Electronics maker DiscoverIE Group jumped 4.86% after interim profits more than doubled.
Revenue for the six months ended 30 September rose 26% to £219.7m, while pre-tax profit came in at £14.8m from £6.4m a year earlier, and rose 46% to £23.5m on an underlying basis.
On the downside, International Distribution Services lost 2.54% after members of the CWU union rejected a "best and final offer" pitched by its Royal Mail operation.
According to the Evening Standard, the latest offer from the company included "extensive improvements" made during the latest round of negotiations with the Communication Workers Union (CWU).
It included a pay rise offer of up to 9% over 18 months, the development of a profit sharing scheme for employees, and improving its voluntary redundancy offer terms.
However, the union firmly rejected the offer during the afternoon, meaning 115,000 of its members will be striking for 48 hours on Thursday and Friday.
Elsewhere, Pets at Home Group fell 4.67% after it backed its full-year profit guidance but reported a drop in interim profit as energy and freight costs rose.
Industrial thread maker Coats slipped 0.73% even after it posted a rise in revenues and held full-year guidance, despite strengthening forex headwinds.
SSE was in the red by 0.2% after RBC Capital Markets upgraded the stock to 'outperform' from 'sector perform'.
"We now have clarity on windfall taxes, and think investors should now refocus on SSE's attractive business mix and long-term growth prospects aligned to the energy transition," it said.
Home REIT shares slid 3.83% in response to a recent report published by a Delaware-based short-selling firm.
The company, which funds the acquisition and creation of properties across the UK that are dedicated to providing accommodation to the homeless, said the report was published without any engagement with the board, investment advisor, or wider advisory team.
Reporting by Josh White for Sharecast.com. Additional reporting by Michele Maatouk, Frank Prenesti, Abigail Townsend, Iain Gilbert and Alexander Bueso.
Market Movers
FTSE 100 (UKX) 7,465.24 0.17%
FTSE 250 (MCX) 19,500.50 0.40%
techMARK (TASX) 4,414.84 -0.10%
FTSE 100 - Risers
Hargreaves Lansdown (HL.) 845.00p 4.53%
Ocado Group (OCDO) 659.20p 4.44%
Frasers Group (FRAS) 886.00p 3.99%
Intermediate Capital Group (ICP) 1,196.50p 3.41%
Rolls-Royce Holdings (RR.) 88.19p 3.40%
B&M European Value Retail S.A. (DI) (BME) 414.00p 3.27%
Glencore (GLEN) 530.30p 2.99%
Whitbread (WTB) 2,612.00p 2.88%
St James's Place (STJ) 1,180.00p 2.74%
Associated British Foods (ABF) 1,560.00p 2.63%
FTSE 100 - Fallers
Harbour Energy (HBR) 312.30p -2.59%
GSK (GSK) 1,384.00p -1.82%
Scottish Mortgage Inv Trust (SMT) 761.80p -1.19%
Shell (SHEL) 2,356.50p -1.09%
Intertek Group (ITRK) 3,860.00p -1.08%
BP (BP.) 483.10p -1.00%
AstraZeneca (AZN) 10,996.00p -0.79%
Dechra Pharmaceuticals (DPH) 2,718.00p -0.66%
Pearson (PSON) 981.40p -0.59%
Haleon (HLN) 286.60p -0.49%
FTSE 250 - Risers
Aston Martin Lagonda Global Holdings (AML) 130.30p 6.85%
Wizz Air Holdings (WIZZ) 2,122.00p 5.47%
Discoverie Group (DSCV) 914.00p 4.94%
Rotork (ROR) 298.20p 4.41%
TBC Bank Group (TBCG) 2,140.00p 3.88%
Jupiter Fund Management (JUP) 125.10p 3.65%
Watches of Switzerland Group (WOSG) 1,033.00p 3.56%
Moonpig Group (MOON) 170.80p 3.52%
Johnson Matthey (JMAT) 2,103.00p 3.44%
Genuit Group (GEN) 320.00p 3.39%
FTSE 250 - Fallers
Home Reit (HOME) 62.20p -19.64%
Pets at Home Group (PETS) 288.60p -5.07%
Babcock International Group (BAB) 298.20p -3.56%
Bridgepoint Group (Reg S) (BPT) 201.80p -3.54%
Warehouse Reit (WHR) 110.80p -3.48%
Petrofac Ltd. (PFC) 102.70p -3.11%
Vietnam Enterprise Investments (DI) (VEIL) 521.00p -2.80%
Dr. Martens (DOCS) 284.60p -2.67%
International Distributions Services (IDS) 238.20p -2.46%
Supermarket Income Reit (SUPR) 104.00p -2.35%
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