London pre-open: Stocks seen down again; Shell in focus
By Michele Maatouk
Date: Thursday 31 Oct 2024
(Sharecast News) - London stocks looked set for further losses on Thursday, having ended firmly in the red a day earlier after Labour's first Budget in 14 years.
The FTSE 100 was called to open around 25 points lower.
Ipek Ozkardeskaya, senior analyst at Swissquote Bank, said: "The announcement went as smoothly as it possibly could - given the amplitude of the bad news. Reeves said that the country will raise taxes by £40bn pounds to boost spending on public services. The UK also announced earlier that they would boost gilt sales by almost £20bn this fiscal year. But the spending would be less than expected by the market.
"That brilliant management of expectations helped traders keep their nerves together. The UK's 10-year yield spiked to 4.40% but the selloff in sterling remained contained as the Bank of England's (BoE) hopes of seeing further inflation easing in the UK went up in smoke as increased spending pressures are now knocking on the door."
Investors will be mulling the latest data out of China, which showed that manufacturing activity expanded in October for the first time in six months.
According to figures released earlier by the National Bureau of Statistics, the official purchasing managers' index rose to 50.1 from 49.8 in September, beating expectations for a reading of 49.9.
A reading below 50.0 indicates contraction, while a reading above signals expansion.
The sub-index for production printed at 52.0 for October, while the new orders index came in at 50.0.
The index for raw materials inventory was 48.2, remaining in contraction territory, while the employment index was 48.4.
Meanwhile, the non-manufacturing PMI rose to 50.2 in October from 50.0 in September.
In corporate news, energy major Shell posted a dip in third-quarter profits, weighed down by lower oil prices, although the decline was less steep than feared.
Adjusted earnings before interest, tax, depreciation and amortisation fell 5% on the second quarter, to $16.01bn, while adjusted earnings - Shell's definition of net profit - declined 4% to $6.03bn.
That was notably better than the $5.36bn expected by analysts, however.
Haleon reported a 6.1% organic revenue increase in its third quarter, with balanced growth in price and volume/mix, driven by strong sales of power brands like Sensodyne and Advil across all regions.
The FTSE 100 consumer products group said its adjusted operating profit margin rose to 23%, supported by gross margin expansion and cost efficiencies, despite foreign exchange and the impact of acquisitions.
It also completed key divestments, raising around £0.8bn, and had returned over £1bn to shareholders through buybacks and dividends in the year-to-date.
Online grocery retailer Ocado Group confirmed speculation that it is appointing former Microsoft exec Adam Warby to replace chair Rick Haythornthwaite, who announced his resignation six months ago.
Warby, who is currently the chair of Nasdaq-listed executive search and management consultancy Heidrick & Struggles International, will join the company on 1 December.
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