8.18am: FTSE 100 weaker at the open
FTSE 100 fell in early trading as investors digested a hefty batch of results in the UK and the US where shares in tech giants Alphabet (NASDAQ:GOOGL) and Microsoft (NASDAQ:MSFT) fell in after hours trading after their results pointed to a slowing economy.
At 8.15am in London, the lead index had slipped 17 points to 6,997, while the broader FTSE 250 fell 45 points to 17,787.
On a busy day of results shares in Barclays PLC (LON:BARC) rose slightly as it reported better than expected quarter three pre-tax profits of £2bn although it increased provisions for bad debts to £0.4bn.
John Moore, senior investment manager at RBC Brewin Dolphin, said: “Barclays has delivered a strong set of results, benefitting from the performance of its fixed income division, market volatility, and an increasing net interest margin.”
Moore commented: “Looking ahead, the uncertain economic backdrop will likely put a brake on some of Barclays markets, particularly at its credit cards and investment banking divisions, with the outlook for corporate action – such as capital raises – more difficult.”
He concluded “Barclays remains the best positioned of the major UK banks with a more diversified income stream – but there are still challenges ahead.”
But Reckiit Benckiser Group PLC saw its shares fall despite posting above forecast quarter three revenue growth of 7.4%, driven by price increases, as the company, whose products include Dettol and Strepsils said that sales volumes had fallen 4.6%.
The pound held firm after a strong rally yesterday, trading up 0.08% against the US dollar at $1.1479.
Rishi Sunak will make his first appearance in Parliament today as prime minister at Prime Minister’s Questions with speculation that the fiscal statement, due on 31 October, will be delayed. Talks with the chancellor, Jeremy Hunt, are due to take place today.
7.51am: Reckitt Q3 revenue growth tops forecasts but sales volumes fall
Reckitt Benckiser PLC reported third-quarter like-for-like revenue growth of 7.4% to £3.735bn, ahead of City forecasts of 6.1%, helped by price increases as fewer people bought its goods.
The company, whose products include Dettol and Strepsils throat sweets also tightened its guidance for full year revenue growth to between 6%-8% versus its previous estimate of an increase of 5%-8%.
Sales volumes fell 4.6%, it said, although excluding Lysol sales, which were boosted by Covid-19 this time last year, they declined 1%.
Prices for the company's products rose 12% in the quarter, Reckitt said.
Nicandro Durante, chief executive officer, said: “We have an excellent portfolio of trusted, market-leading brands in high margin, high-growth categories and a strong culture of ownership and delivery.”
“My priority is firmly focussed on continuing to execute on our strategic path, to deliver sustainable mid-single digit growth, and mid-20s adjusted operating margins by the mid-2020s."
7.47am: US dollar cools off, opening up gains for Sterling and euro
The US dollar has cooled off over the past 24 hours, primarily driven by soft economic data.
US house prices, for instance, rose 11.9%- the least since December 2020.
Manufacturing data also came in cooler than expected, as did consumer confidence figures.
A cooler dollar means the possibility of looser fiscal policy emerging from the Federal Reserve next Tuesday.
It’s good news for the rest of the G10 set too.
The pound is at its strongest position in three weeks, with the GBP/USD pair changing hands at US$1.146.
Softer US economic data led to a spike in the GBP/USD pair – Source: capital.com
The euro also spiked to three-week highs of US$0.997, raising hopes of a material return to parity.
Both the Australian and Canadian dollars gained on USD too, while the USD/JPY pair fell below the 148 yen price point.
The euro fell back against the pound by nearly 100 pips from yesterday’s high of 87.5p, though has managed to correct itself around the 86.9p price point.
Volatility is expected for the EUR/GBP pair during today’s session.
7.40am: Fiscal statement could be delayed
Prime minister Rishi Sunak is considering delaying Monday's fiscal statement, as the decision on whether it would be revealed on the scheduled date of October 31 remains up in the air.
The statement could also potentially be pushed back by a couple of days so it is presented before November 3, when the Bank of England is set to announce its plans for further interest rate hikes.
Sunak is expected to meet with chancellor Jeremy Hunt today to discuss his proposals to increase taxes and squeeze public spending.
7.22am: Barclays Q3 pre-tax profits hit £2bn but bad debts rise
Barclays PLC (LON:BARC) reported third quarter pre-tax profits of £2bn, better than expected, driven by a 17% increase in income at its UK business.
Attributable profit of £1.5bn compared to £1.4bn last year while return on total equity (ROTE) improved to 12.5% from 11.4%.
The FTSE-100 listed lender said group income rose 9% to £6.0bn which included a £0.5bn charge related to the over-issuance of securities.
Bad debt provisions were £0.4bn, up from £0.1bn last year reflecting the “deteriorating macroeconomic forecast” but the banking giant said business failures remain below historical levels.
Total group operating expenses were £3.6bn, unchanged from last year, which includes a provision reduction of £0.5bn in relation to the over-issuance of securities (Q321: £0.1bn charge).
The bank’s common equity Tier 1 ratio of 13.8% in line with the bank’s targeted range of 13-14%.
Barclays said it was targeting a RoTE of greater than 10% in 2022.
Costs for the full year are expected to remain at previous guidance of £16.7bn with a reduction in litigation charges offset by forex headwinds.
C S Venkatakrishnan, group chief executive, said: "We delivered another quarter of strong returns, and achieved income growth in each of our three businesses1, with a 17% increase in Group income.”
“We are ready to provide support for customers and clients facing an uncertain economic environment and higher cost pressures.”
7.00am: FTSE 100 seen slightly lower
FTSE 100 set to open lower this morning after falls after shares in Alphabet (NASDAQ:GOOGL) and Microsoft (NASDAQ:MSFT) were sold off in after-hours business in the US taking the shine off another strong day for US markets.
Spread betting companies are calling London’s blue chip index down by around 19 points..
US markets forged ahead once more driven by falling Treasury yields and hopes that the aggressive rate rising stance of the Federal Reserve might soften in light of a series of soft US economic data.
At the close the Dow Jones Industrial Average was up 338 points at 31,837, the S&P 500 advanced 62 points to 3,859 and the Nasdaq Composite rose 247 poiints to 11,199.
Investors are also awaiting confirmation that the fiscal statement will still take place on 31 October with speculation that it may be delayed.
The banking reporting season continues with Barclays PLC (LSE:BARC) the latest high street lender to report numbers today as well.
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