FTSE 100 falls 32 points
Travel stocks tumble
US stocks mixed midday
5:05pm: FTSE 100 ends lower, US stocks mixed midday
The FTSE 100 finished the day on a down note, falling 32 points, or 0.5%, to 7,224, as coronavirus (COVID-19) lockdown concerns outweighed better-than-expected retail sales data.
“Austria’s lockdown decision has revived the spectre of weaker economic growth, and as a result global stocks are generally lower on the final day of the week,” IG chief market analyst Chris Beauchamp said.
As well, lower yields hit financial stocks such as Barclays, Lloyds and HSBC.
Other notable decliners included Kingfisher PLC (LSE:KGF), which eased more than 4% after the home improvement retailer reported a 2.4% fall in its same-store sales during the three months ending October 31.
4:03pm: FTSE heading for a lower close
The Footsie was heading into the weekend on a distinctly downbeat note with the lockdown in Austria spooking travel and hospitality stocks.
Contract caterer Compass is the worst performer ahead of its final results next week but airlines and hotel owners such as IAG and Whitbread are not far behind.
Kingfisher is also unloved after its update this morning left investors underwhelmed.
"European markets are mostly down in unison, as investors look to take profits on indices like the Dax and CAC, which both hit highs just yesterday, while the Channel is no barrier to losses on the FTSE 100, which has fallen further to put a resoundingly poor finish on an already dismal weak for the premier UK index," said Chris Beauchamp at IG.
"Oil prices and commodity prices have taken their toll, but lower yields have resulted in a hit to financial stocks too, taking around 2% off Barclays, Lloyds and HSBC"
Half an hour from the close, the FTSE 100 was down 34 at 7,221.
3.22pm: Possibility of a US Covid wave?
The possibility of the winter seeing another wave of coronavirus infections is a significant downside risk to economic activity over the next few months, says Paul Ashworth of Capital Economics in a note published this afternoon.
He noted that the colder weather has already triggered a big resurgence in infection rates in Europe and, with US vaccination rates generally lower, "there is a risk of a seasonal surge in the Midwest and Northeast".
He went on: "We wouldn’t expect a winter COVID wave to trigger the types of restrictions on activity now being implemented in countries like Germany and Austria, particularly not when new therapeutics should further reduce the mortality rate.
"But we would nevertheless expect such a wave to weigh on consumer spending on high-contact and travel services. Workplace outbreaks could also compound supply chain problems.
"Our baseline GDP forecasts don’t explicitly allow for such a wave, but it is one of the key reasons why we are happy to be below consensus on the near-term growth outlook and why we doubt that the Fed will accelerate the pace of its QE taper in the next few months, opening the door to an earlier interest rate hike next year."
3:03pm: Dow Jones slips and Nasdaq climbs
The Dow Jones plunged almost 200 points or 0.55% to 35,670, while the broader S&P 500 fell at the open but has now climbed into positive territory, four points and the Nasdaq Composite has gained 0.65%.
Main blue-chip fallers stateside are Dow, Goldman Sachs (NYSE:GS), American Express and Boeing as the Dow Jones heads for its second consecutive negative week.
The S&P 500 and the tech-heavy Nasdaq Composite are headed for slight gains though, up 0.5% and 0.8% on the week, respectively.
The FTSE meanwhile has stumbled again, down 28 points at 7,228.18.
2.20pm: Booster boost
US markets could get a boost from news that medical regulators are opening up Covid vaccine booster shots for all adults ahead of Christmas.
Pfizer and Moderna announced that the US Food and Drug Administration’s decision, though the green light is still needed from the Centers for Disease Control and Prevention.
This is potentially good news for transatlantic travel, and has seen BA-owner IAG's (International Consolidated Airlines Group (LSE:IAG)) losses reduced to a mere 3%.
The FTSE has also cut its losses, now 19 points to 7237.
"While it is possible that US investors might come to the rescue and buy the dip, given that the weekend is approaching," said market analysts Fawad Razaqzada at ThinkMarkets, "I doubt many people will be in a rush to increase their risk exposures.
"Indeed, there is risk of gaps at the open next week should the Covid situation deteriorate, and more lockdown measures are introduced elsewhere."
1.17pm: Pound up, euro down
Currency markets are roiling today, though the falling pound is not providing a big help to the Footsie, which is down 53 points or 0.7% at just under 7,202.
Sterling is down 0.6% against the dollar at 1.3422 but up against the euro to its highest point since February 2020.
The single currency has just sunk to a new 16-month low against the dollar, down 1% to just below $1.126 for the first time since July last year.
The euro is being hit by the same lockdown worries that are hitting travel stocks.
Among the falling airlines is Ryanair PLC, which earlier today booked its departure from the London Stock Exchange next month, with Dublin to be its primary listing, with ADRs listed on NASDAQ.
After Shell’s decision to pivot to a sole London listed was chalked up as a Brexit win, today's decision from Ryanair to drop its LSE is "likely to be characterised as a Brexit loss in some quarters, coming after restrictions were introduced on UK investors buying its shares at the start of the year", said Russ Mould at AJ Bell.
“Ryanair is desperate to be majority EU-owned in order to retain full licensing and flight rights in the bloc following the UK’s exit from the EU.
Elsewhere, there was a strong half-year report from Nationwide Building Society, with
interim profits more than doubling to £853mln as strong demand for mortgages boosted lending.
Commenting on the outlook for the housing market and interest rates, Nationwide boss Joe Garner said: "It is unclear how the economy will respond to the winding down of government support, and how long it will take for bottlenecks in global supply chains and domestic capacity constraints to ease. If the jobs market weakens post-furlough, it is likely to have a knock-on effect on the housing market, especially as inflation is likely to remain high in the coming quarters, eating into households' disposable income."
Among the FTSE's riser is Royal Mail PLC (LSE:RMG), which is up 3% today and almost 14% for the week after its surprise windfall yesterday.
12.11pm: FTSE flops to four-week low
The FTSE is falling more sharply now, down 50 points or 0.7% to just over 7,205, around its lowest in over 4 weeks, with travel-related companies the big weight around the index's neck.
Its sibling the FTSE 250 is down 130 points or 0.5% to 23,446, though this is similar to levels seen earlier this week.
Across the pond, Wal Street looks set for a mixed start, hampered by the same worries over rising coronavirus cases.
Futures for the Dow Jones Industrial Average futures are down 0.4%, with those for the S&P 500 0.2% lower. The tech-powered Nasdaq-100 is heading for a 0.3% rise, the market predicts.
COVID-19 cases are also rising in the US, according to data from Johns Hopkins University.
US stocks have been choppy this week, affected by concerns about inflation and likely future interest rate hikes, partly offset by strong corporate earnings reports and retail sales data that showed consumers were still spending.
Among companies on the earnings slate on Friday are sportswear retailer Foot Locker, which is due to release numbers ahead of the opening bell.
Intuit, the financial software firm, is expected to open higher, having climbed in after-hours trading on Thursday after raising its full-year guidance.
In the absence of any economic data, investors are going to be paying close attention to today’s potential announcement from US President Joe Biden on his nomination for head of the Federal Reserve to possibly replace Jerome Powell.
Walid Koudmani, market analyst at XTB, said: "The Fed has played a key role in supporting the markets during the post-pandemic recovery with its extensive quantitative easing program and record low interest rates, but today’s decision may cause some nervousness as replacing the chairman of the US central bank could add to the unpredictability the markets are facing nowadays.
"While President Biden may wait till after market close to make his announcement, in an attempt to not shake up markets before the weekend, the fact remains that such a significant change at high levels of leadership could have far reaching implications for monetary and fiscal policy moving forward."
11.17am: Fear of more lockdowns
Confirmation that a Covid lockdown will start in Austria next week has sent European markets all into the red, with the prospect of lockdown in Germany wiping out earlier gains and forcing the country's stock markets down almost 1%, with the euro falling too.
"While fatalities remains well below the peak, they are accelerating and the government is clearly keen to arrest it before the situation potentially becomes much worse," notes market analyst Craig Erlam at Oanda.
"With Germany seeing a similar trend, the question now becomes whether the region's largest economy will follow the same path."
With Austrian cases surging over 400% in the last month alone, it stands out as a particularly bad case compared to many of their European peers, however.
"The situation is not quite so severe in other countries like France, Italy and Spain but that could change in the coming weeks, as we saw around the same time last year," said Erlam.
"High vaccination rates mean the link between case numbers and fatalities is far lower but the former is rising at a remarkable rate which is clearly making it very hard to ignore."
Over at IG, Joshua Mahony says: "With Covid cases turning upwards across the likes of Germany, France, and Portugal, there is a fear that today’s announcement is indicative of where other European nations could find themselves in 2-3 weeks' time."
As he notes, energy markets have taken a hit off the back of the Austrian lockdown announcement, with the demand outlook "undoubtedly worth adjusting if we see a fresh bout of lockdowns".
Brent crude futures are down almost 2% at US$79.66 but Henry Hub natural gas prices are up slightly.
10.52am: Austria lockdown spooks markets
London's blue-chip index has dived into the red with airlines and other travel-related stocks dragging it down amid news of new Covid lockdowns in Europe.
British Airways owner IAG (LSE:IAG) is down 4%, with engine maker Rolls-Royce Holdings PLC (LSE:RR.) and hotels groups Whitbread (Whitbread PLC (LSE:WTB)) and InterContinental (Intercontinental Hotels Group PLC (LSE:IHG)) also among the big fallers.
On the FTSE 250, the travel related declines are seen at SSP Group (SSP Group plc (LSE:SSPG)), easyJet (easyJet plc (LSE:EZJ)), TUI (TUI AG (LSE:TUI)), Wizz Air (LSE:WIZZ), Carnival (Carnival PLC (LSE:CCL)), Restaurant Group (Restaurant Group PLC (LSE:RTN)), Mitchells & Butlers (LSE:MAB) (Mitchells & Butlers (LSE:MAB)), JD Wetherspoon (JD Wetherspoon Plc (LSE:JDW)), Rank Group (LSE:RNK) (Rank Group (LSE:RNK)) and Cineworld (Cineworld Group PLC (LSE:CINE)).
This seems to be linked to Austria going into a lockdown of at least ten days from Monday, and will make vaccinations mandatory across society from February next year.
Germany could also be heading a similar way, with some regions propoising local lockdowns.
Reuters reporting the country's health minister saying at a news conference in Berlin “we are in a national emergency.” He says the country is in talks to buy experimental antiviral pills “with Pfizer, with Merck, also with all the others ... all those who have promising medicines”.
Airline investors are obviously concerned these sorts of actions will spread to other popular holiday locations.
The FTSE is down 17 points to 7,239.
9.36am: Ocado leads FTSE gains
The Footsie is back up to its early highs now as Ocado Group PLC (LSE:OCDO) has surged to the top of the riser list.
Ocado shares are up over 6% on the back of speculation that Marks and Spencer Group PLC (LSE:MKS) is looking to buy out the whole of the pair’s 50-50 UK retail joint venture.
"Could happen, seems like a natural evolution to ultimately split the two businesses once the international deals actually start delivering some free cash," said market analyst Neil Wilson at Markets.com.
He added that overall there was "not a lot of real thrust in the market, rather a bit of chopping around the cycle/record highs. Path of least resistance is upwards for the US market with real rates providing only one option in stocks."
As well as the trio of upbeat ONS updates, today’s mood in the City is also being improved by a better than feared GFK consumer confidence index, which rose to -14 in November from -17 in October, the first rise in four months alongside the first improvement in five months for the retail data.
Consumers seemed concerned about the jump in inflation and the prospect of higher interest rates, though there was a jump in the 'major purchase intentions' ahead of Black Friday, with Gfk's Joe Staton saying: "Is this a sign that shoppers are ready to bounce back, after last year’s cancelled family gatherings, with a Christmas splurge in coming weeks?
"That’s how it looks but consumers also know that when the festivities are over it’s going to be a tough year in 2022".
9.33am: Best foot forward
The FTSE 100 has started with its best foot forward, as predicted, helped by gains for the big miners and a rebound in UK retail data.
London's blue-chip index sprinted 31 points higher in the first few minutes of trading before quickly losing steam and half those gains, to jog on at 7,271.39, a rise of 15 points or 0.21% for the day so far.
B&Q and Screwfix owner Kingfisher PLC (LSE:KGF) is the big faller as its third-quarter update showed a
2.4% fall in like-for-like sales against a tough comparative period, with investors seemingly unimpressed by the 15% growth on a two-year basis and full year profit guidance lifted towards the higher end of a previously given range.
For the retail sector overall, the Office for National Statistics revealed a 0.8% month-on-month rise in retail sales volumes for October, with 4.2% jump in non-food sales more than offsetting a 6.4% fall in fuel sales.
The ONS also made two further announcements, one showing a further improvement in the UK's public finances and the other being news that more staff have now headed back to the office, with half of businesses saying their workforces had returned to their normal place of work up from a third in early September.
Commenting on today’s retail sales figures, ONS chief economist Grant Fitzner said: “After five months of no growth, retail sales picked up in October. Although sales overall are above pre-pandemic levels, it remains a mixed picture.
“Clothing, department stores and toy shop sales reported a boost this month, with clothing stores reaching their highest level since the start of the pandemic, with some retailers suggesting that early Christmas shopping helped to bolster trade.
“Fuel sales fell sharply on the month, as they returned to more typical levels following September’s increase. Food and online sales also fell, although they remain above pre-pandemic levels.”
6.30am: Gains predicted
London’s index of leading shares is set to recoup the bulk of yesterday’s losses ahead of today’s retail sales figures.
Spread betting quotes point to the FTSE 100 index advancing 32 points at the outset to 7,288.
US stocks were all over the shop yesterday with the Dow Jones down 60 points at 35,871 while the S&P 500 advanced 16 points to advance to a record high of 4,705.
Asian markets have been similarly varied, with Tokyo’s Nikkei 225 161 points to the good at 29,759 and Hong Kong’s Hang Seng off 314 points at 25,006.
“As we look towards today's October retail sales numbers, you’d like to think that perhaps there might be some early signs of a pickup as we start Q4. Having come off five months of weak numbers there is the potential for a pickup in spending,” suggested CMC’s Michael Hewson.
“With reports of supply chain disruptions being reported globally for several weeks now, amongst warnings to shop early for Christmas we could start to see retail sales numbers in the lead-up to Black Friday and the Christmas period start to experience a pull-forward effect. We’ve already seen that this week with US retail sales and there’s no reason to suppose it can’t happen here as well.
“Expectations are for a rise of 0.5%, although it wouldn’t surprise to see a higher number given the warnings about ordering early to avoid disappointment,” he added.
UK public sector borrowing data for October are also due to be released, with the figures sure to be hit by the end of the government’s furlough schemes.
Economists expect government borrowing to drop to £12.4bn in October from £21bn in September to £12.4bn in October.
On the corporate front, DIY retailer Kingfisher is set to report on whether it is still doing well now that lockdown has ended (for now).
The retailer has said already that it expects to see a 3.7% drop in like-for-like sales in the second half, not as bad as the 5-15% decline it had previously indicated, and still an increase of 9-13% compared to two years ago.
Full-year adjusted pre-tax profit will be £910-950mln, up from £786mln last year and £544mln in 2019.
Elsewhere, logistics group Wincanton is another that has been at the heart of the recent problems of HGV driver shortages.
Earlier this week, the group picked up a new contract with Primark, but how it is coping with rising costs of fuel and getting and keeping drivers and other staff might overshadow that.
Around the markets
- Sterling: US$1.3489, down 0.09 cents
- Gilt: 0.928%, down 4.06 basis points
- Gold: US$1,863.00 an ounce
- Brent crude: US$81.88 a barrel, up 64 cents
- Bitcoin: US$56,428, down US$1,155
- Ethereum: US$4,079, down US$57
6.50am: Early Markets - Asia / Australia
Stocks in the Asia-Pacific region were mostly higher on Friday as Australian casino group Crown Resorts received a takeover offer from US giant Blackstone, valuing Crown at A$8.5 billion.
China’s Shanghai Composite surged 1.09% while Hong Kong’s Hang Seng index slumped 1.34%
In Japan, the Nikkei 225 rose 0.53% and South Korea’s Kospi gained 0.86%.
Australia’s S&P/ASX200 lifted 0.23% to close at 7,396.50 points with health, consumer staples and the energy sector leading the gains.
Source : https://www.proactiveinvestors.co.uk/companies/news/966758/ftse-100-tumbles-on-european-lockdown-concerns-us-stocks-heading-for-mixed-start-966758.html3697