Proactive Investors -
- FTSE 100 down 46 points
- Government borrowing up pre-Budget
- HSBC splits UK and Asian businesses
1.38pm: Fresnillo leads risers again as gold holds near record
Fresnillo PLC (LSE:LON:FRES) enjoyed a second day as the FTSE 100’s biggest riser on Tuesday, having been boosted on the back of climbing gold and silver prices.
Shares in the Mexican precious metals miner ticked up a further 3.6% on Tuesday, after Fresnillo also led risers on the FTSE 100 on Monday.
This came as gold held within reach of its latest record on Tuesday at US$2,736 an ounce following a surge to as high as US$2,740 on Monday afternoon.
Silver also built on gains through Tuesday, having surpassed the US$34 an ounce mark for the first time in almost 12 years on Monday, climbing by a further 0.8% to US$34.52.
“Gold is considered the ultimate inflation hedge, and part of the reason for gold’s push higher is that investors see more inflation risks on the horizon,” XTB analyst Kathleen Brooks said.
This includes as US growth expands and China continues with efforts to stimulate its economy, but also as the presidential election across the Atlantic looms.
“Donald Trump is rapidly catching up with Kamala Harris in the polls ahead of next month’s US Presidential election,” Brooks added.
“According to the non-partisan Committee for a Responsible Federal Budget, Trump’s economic plans could add $7.5 trillion to the national debt.This compares with $3.5 trillion for Kamala Harris.
“Thus, the prospect of a massive fiscal expansion in the US is adding to inflation fears and to concerns about the sustainability of US debt.”
12.48pm: Pound hits lowest level against dollar in two months
Sterling stooped to its lowest level versus the dollar in two months on Tuesday as changing expectations for rate cuts from the Federal Reserve and Bank of England weighed.
Having dropped as low as US$1.2967 early on, the pound hit its lowest since August 19.
A slight resurgence brought the pound to US$1.2981 come Tuesday afternoon, though this still marked a 0.3% decline for the day.
It comes as money markets price in several base rate cuts by the Bank of England over the remainder of this year, as expectations for Federal Reserve reductions are scaled back.
Expectations are currently for a 98% chance of a 25 basis point cut by the former next month.
Markets are pricing in an 11% chance of the Federal Reserve not cutting rates at all in November meanwhile, against just 2% last week.
12.32pm: S&P 500, Dow Jones to fall further from records in negative start on Wall Street
Wall Street was braced for a negative start on Tuesday as the S&P 500 and Dow Jones looked on course to fall further from record closes seen late last week.
Futures had the S&P 500 down 0.5% and the Dow Jones off 0.4% ahead of the opening bell, after both fell throughout the day on Monday after closing at all-time highs last Friday.
The Nasdaq looked set to also drop by 0.5% ahead of the open, as Tuesday brought the latest string of third-quarter updates from companies.
General Motors (NYSE:GM) Co’s figures showed per-share earnings surpassed expectations at US$2.68 on the back of a 10.5% increase in revenue to US$48.8 billion, sending shares higher in pre-market trading.
3M Co (NYSE:NYSE:MMM) shares also climbed ahead of the open after the industrial conglomerate raised its full-year profit forecast to between US$7.20 and US$7.30 a share on expectation-beating results.
Tobacco firm Philip Morris International Inc (NYSE:NYSE:PM, ETR:4I1) climbed in pre-market trading too, as third-quarter figures showed higher than anticipated revenue and earnings of US$9.9 billion and US$1.91 per share respectively.
XTB analyst Kathleen Brooks noted “doubt” over future rate cuts from the Federal Reserve had been among factors weighing on markets this week.
“The market is currently pricing in an 11% chance of no rate cut next month,” she said.
“Although this may seem small, it was almost unthinkable a week ago, when there was a mere 2% chance of no rate cut [...] thus, the prospect of a pause from the Fed is a possibility.”
12.09pm: Savings rates fall to lowest level in over a year
Average savings rates across the UK have hit their lowest level in over a year as lenders anticipate further cuts to base interest by the Bank of England.
Average one-year fixed rate bonds in October offered the lowest since June 2023 at 4.31%, according to Moneyfacts.
Longer-term fixed bonds rates had fallen to the lowest level since March 2023 in the meantime, the comparison site added, averaging 3.93%.
Average rates on notice and easy access accounts were also said to have hit their lowest since October last year, at 4.21% and 3.07% respectively.
It comes despite an increase in average mortgage rates over every day of last week, including at the likes of NatWest Group PLC (LON:NWG), Barclays (LON:BARC) PLC and Lloyds Banking Group (LON:LLOY) PLC’s Halifax... Read more
11.12am: Inheritance tax receipts increase ahead of Budget tweaks
Government income from taxes grew over the first six months of the fiscal year, as inheritance recipets picked up ahead of anticipated changes in next week's Budget.
Total gross tax receipts sat at £406.3 billion between April and September, marking an £11.1 billion increase year on year.
This included growth from the likes of income, capital gains and business taxes, alongside stamp duty, VAT and national insurance contributions, HMRC said.
Inheritance tax receipts also increased, by £400 million to £4.3 billion, as speculation has built recently over hikes in next week’s Autumn Budget.
HMRC noted the increase had come after recent growth in asset values and previous government decisions to hold the tax-free threshold at £325,000 to 2028.
Rumours have swirled that chancellor Rachel Reeves will tweak inheritance tax rules in the October 30 Budget as she grapples to fill a £22 billion “black hole” in public finances... Read more
9.48am: Paddington producer eyes £6.7bn float in London
Canal+, the company behind the Paddington films, is said to be eyeing a £6.7 billion valuation through an upcoming float on the London Stock Exchange.
This would make Canal+, which owns Paddington producer StudioCanal, the largest debutant to the exchange for the year, with the float expected in December, according to The Telegraph.
Sources indicated the firm was set to be valued between €6bn and €8bn (£6.7 billion) through the listing, which would come as part of a spinout from parent company Vivendi (EPA:VIV).
It would also come as London has grappled with a lack of new listings this year.
Respective £540 million and £400 million floats by Raspberry Pi (LON:RPI) and Applied Nutrition have marked the highlights for London, with Canal+’s set to see it large enough to list on the FTSE 100 and mark the biggest for the City since 2022.
9.28am: Tax rises beyond government manifesto pledges ‘likely’ - analyst
A rise in government borrowing in September means ministers may have to introduce tax hikes outside of those already signalled, analysts say.
ONS figures on Tuesday showed public borrowing had hit its third highest level on record for September last month, after climbing year on year to £16.6 billion.
EY ITEM Club noted this meant borrowing over the first six months of the fiscal year was £6.7 billion higher than the Office for Budget Responsibility had forecast in March’s Budget.
Borrowing was set to overshoot estimates over the coming months too, EY ITEM Club said citing Treasury analysts, on “recent public sector pay settlements and non-labour cost overruns across a range of government departments”.
Chancellor Rachel Reeves faced a challenging fiscal situation ahead of next week’s Autumn Budget on October 30 as a result, analysts added.
“It looks increasingly likely that the government will have to use the Autumn Budget to offset at least some of the additional current spending with tax rises beyond those set out in its pre-election manifesto,” EY ITEM Club said.
“Beyond that, the exact course of fiscal policy remains uncertain, with any further potential changes in tax or spending plans a two-sided risk to the outlook.”
9.08am: IHG leads index lower
Intercontinental Hotels Group PLC (LSE:LON:IHG) led losers on the FTSE 100 on Tuesday as the index dropped 35 points to 8,283 early on.
Shares in the Holiday Inn owner fell 1.8% after it reported an increase in global revenue per available room over the third quarter, but signalled a slump in China.
Admiral Group (LON:ADML) PLC and BT Group PLC (LSE:LON:BT.A) were also among the early fallers on Tuesday, while Fresnillo PLC (LSE:FRES) topped risers for a second day running.
This came after gold repeatedly hit records on Monday, climbing as high as US$2,740 an ounce, with the spot price of the yellow metal hovering around US$2,732 on Tuesday.
8.55am: Water bills to be hiked by more than first thought
Water bills across the UK are reportedly set to be hiked by more than originally expected over the coming years.
According to the BBC, regulator Ofwat is set to allow water companies to increase bills by more than the 21% initially suggested for the five years to 2030.
Ofwat had signalled the increase in July, which would equate to an average £19 increase per year over its latest regulatory period.
However, the BBC reported Ofwat was considering allowing water companies to charge even more to reflect higher financing costs, with the latest regulatory period set to also see firms required to pump investment into network upgrades.
A new independent advisory commission is also set to be announced on Wednesday to oversee a “proper reset” of the industry, the report said.
8.40am: HSBC breaks up UK and Asian businesses
HSBC Holdings PLC (LSE:LON:HSBA) has unveiled plans to split into four businesses, including by separating its UK and Asian wings.
Europe's largest bank said on Tuesday it will now operate through four businesses: Hong Kong, UK, corporate & institutional banking, and international wealth & premier banking.
It comes against the backdrop of growing geopolitical tensions between China and the west and marks the first major overhaul by new chief executive Georges Elhedery.
“The new structure will result in a simpler, more dynamic, and agile organisation as we focus on executing against our strategic priorities, which remain unchanged,” he said.
“By making these changes, we can better focus on increasing leadership and market share in those businesses which have clear competitive advantage and the greatest opportunities to grow.”
Plans were also announced to slim down its group executive committee and appoint current risk head Pam Kaur as new chief financial officer… Read more
8.26am: Wickes climbs as revenue picks up
Wickes Group PLC (LSE:LON:WIX) has reported an increase in revenue over the third quarter as trading within its design and installation business was said to have stabilised.
Group revenue increased by 2.1% to £391.3 million over the three months to September, Wickes reported on Tuesday, or by 0.4% on a like-for-like basis.
Retail revenue ticked up 4.7% to £312.1 million during the quarter, but fell 7.1% to £79.2 million across Wickes’ design and installation business.
This followed a 17.3% decline in revenue for the installation wing over the first quarter and a 16.7% decrease in the second.
Shares climbed 0.7% on Tuesday.
8.04am: Mulberry bats off Frasers bid
Mulberry Group (AIM:LON:MUL) has rejected a takeover bid by Sports Direct-owner Frasers Group (LON:FRAS) PLC.
Frasers, which currently owns more than a third of Mulberry’s shares, has made numerous attempts to engage with Mulberry on a 150p-per-share offer and has expressed frustration over Mulberry’s lack of engagement.
Mulberry finally addressed the advances today, calling the offer, which values Mulberry at £83 million, “untenable”... Read more
7.56am: Government borrowing third highest on record in September pre-Budget
Government borrowing increased in September ahead of the upcoming Autumn Budget to the third highest figure for the month on record.
Borrowing increased by £2.1 billion against September last year to £16.6 billion, the Office for National Statistics reported on Tuesday.
This marked the highest figure for September since records began in 1993 and was above the Office for Budget Responsibility’s forecast for £15.1 billion.
Central government receipts, from the likes of taxes, increased by £3.3 billion to £80.7 billion over the month.
Expenditure climbed by £5.5 billion to £93.7 billion in the meantime, as debt interest costs grew, alongside spending on the likes of goods and services due to pay rises and inflation.
“With just over a week to go before the UK budget, it lays bare the dire state of the UK’s finances and borrowing this year is on track to surge above forecasts,” XTB analyst Kathleen Brooks commented.
She highlighted tax receipts had been broadly stable in the months running up to the October 30 Budget, while interest payments and expenditure had been trending lower.
“However, the UK’s public finances are never a pretty read, and today’s data highlights the complicated plight the Chancellor faces next week.”
7.42am: IHG grows revenues but pressure remains in China
Intercontinental Hotels Group PLC (LSE:IHG) (IHG) has reported an increase in revenue per available room over the third quarter despite ongoing pressure in China.
Global revenue per available room climbed by 1.5% over the quarter, the Holiday Inn owner reported on Tuesday.
This was as the figure ticked up by 1.7% in the Americas and 4.9% across Europe, the Middle East and Africa.
Revenue per available room in China slumped by 10.3% however, which IHG attributed to “unusually strong” comparatives from a year ago when there was a resurgence in domestic travel... Read more
7.13am: Stocks seen lower
Futures had London’s blue chips falling a further 40 points to 8,326 ahead of Tuesday’s open, following a 40-point decline on Monday.
A 4.2% gain by Fresnillo PLC (LSE:FRES) on the back of a new record for gold and silver's highest price in over a decade had failed to offset declines from a string of blue caps in London on Monday.
Overnight, Asian markets largely dipped into the red as investors continued to mull over cuts to benchmark lending rates from the People’s Bank of China earlier in the week.
Back in London, attention turns to a trading update from Holiday Inn owner Intercontinental Hotels Group PLC (LSE:IHG) and public borrowing figures on Tuesday.