London’s blue chips faded after a bright start to trade in the red at midday on Thursday, ahead of US inflation data later in the session.
The FTSE 100 had made a positive start, before some pre-US data nerves kicked in.
The more tepid trade in Europe came despite equities in China ending the day in the green on supportive measures from the nation’s central bank. The Shanghai Composite rose 1.3%, off its session high, however. The Hang Seng in Hong Kong closed up 3.0%, though also off its best level for the day.
‘Is the renewed rally in Chinese shares a dead cat bounce or the real deal? That’s the key question investors will be asking after stocks resumed their upward path after a big pullback yesterday,’ AJ Bell analyst Russ Mould commented.
‘The market is eagerly awaiting a briefing from China’s finance officials this weekend with the hope they will unveil big fiscal stimulus to go alongside measures already announced to get the economy moving faster.’
The FTSE 100 index traded down 7.91 points, 0.1%, at 8,235.83. The FTSE 250 slipped 63.88 points, 0.3%, at 20,758.50, and the AIM All-Share down 2.18 points, 0.3%, at 734.48.
The Cboe UK 100 was down 0.1% at 824.58, the Cboe UK 250 down 0.3% at 18,234.90, and the Cboe Small Companies was flat at 16,600.09.
In European equities, the CAC 40 in Paris was down 0.2% and Frankfurt’s DAX 40 was flat.
Against the dollar, the pound fell slightly to $1.3073 early Thursday afternoon, from $1.3080 at the time of the London equities close on Wednesday. The euro slipped to $1.0935 from $1.0948. Versus the yen, the dollar faded to JP¥148.85 from JP¥149.23.
Thursday’s economic calendar has a US inflation reading at 1330 BST. According to consensus cited by FXStreet, the data is expected to show the rate of consumer price inflation eased to 2.3% last month, from 2.5% in August.
Scope Markets analyst Joshua Mahony commented: ‘Markets continue to watch out for fresh signs over the potential trajectory of US rates, with the FOMC minutes serving to highlight the openness to another 50bp cut in November. While some members did signal the potential for a 25bp move, it seems that many had expected to maintain the stimulative push established in September. Nonetheless, with the bank remaining data dependent, the strength of the latest jobs report will have undoubtedly eased concerns that the US economy is heading towards a recession.
‘Today brings a fresh focus on US inflation, with the recent surge in energy pushing inflation expectations higher. On this occasion markets are looking for a fresh decline that could take headline CPI to 2.3%. Nonetheless, the record highs seen for US markets does highlight a confidence that we can maintain the sweet spot of low inflation and a relatively strong US economy.’
Stocks in New York are called to open lower. The Dow Jones Industrial Average is called down 0.1%, and the S&P 500 and Nasdaq Composite down 0.2%.
UK Chancellor Rachel Reeves may need to raise up to £25 billion from tax increases if she wants to keep spending rising with national income, the Institute for Fiscal Studies estimated in a report.
The report, funded by the Nuffield Foundation and using economic forecasting by Citi, analysed the challenges facing the chancellor.
In a scenario modelled by Citi, the report concluded that if there are no cuts to spending outside of public services, Reeves would need a tax rise of £16 billion to remain on course to balance the budget in 2028-29.
This would be on top of the £9 billion tax rise from measures set out in Labour’s manifesto – adding up to almost £25 billion in total.
The budget is announced on October 30.
Berenberg analyst Andrew Wishart commented: ‘Overall, fiscal policy will still tighten, but more gradually than in current plans, with most of the heavy lifting done by the existing freeze of income tax thresholds. Therefore, the budget is likely to support our view that GDP growth will come in above consensus in 2025 and 2026. With the economy operating close to capacity, we expect this to cause inflation to remain sticky.’
In London, GSK shares rose 5.2%. It said Wednesday it agreed to pay up to $2.2 billion to settle the vast majority of cases linked to its heartburn medicine Zantac.
In a statement, the London-based pharmaceuticals firm said that it had reached agreements with 10 plaintiff firms representing around 80,000 people who had brought product liability cases against it in state courts, 93% of all claimants. GSK did not accept any liability.
GSK said the participating plaintiff firms are unanimously recommending to their clients that they accept the terms of the settlement, which is expected to be fully implemented by the end of the first half of 2025. Terms of the agreements are confidential.
Tritax EuroBox added 2.3% after it backed a new takeover bid, this time from private equity firm Brookfield. It withdrew its recommendation for an offer from Segro. Segro shares fell 0.4%.
Toronto-based Brookfield will pay 69.0 pence in cash for Tritax Eurobox, a 6% premium to the implied 65.1p value of the Segro offer, based on the latter’s closing price on Wednesday, according to Brookfield and Tritax.
The Brookfield bid values the equity of London-based Tritax EuroBox at £557 million on a fully-diluted basis. The enterprise value, including debt, is £1.10 billion.
At the time that the offer by London-based Segro was agreed in early-September, that offer valued Tritax EuroBox’s equity at £552 million and implied a £1.10 billion enterprise value.
Under the Segro offer, investors in distribution centre investor Tritax EuroBox would have received 0.0765 of a new Segro for every one held in Tritax EuroBox.
However, the Brookfield bid is a cash offer. Tritax EuroBox noted ‘the scope for the implied value of the Segro offer to increase or decrease between now and completion, as compared to a fixed cash amount from Brookfield’.
‘While the deliverability of the two offers is now similar, a cash offer from Brookfield would provide increased certainty for Tritax EuroBox shareholders as compared to continued market risk between now and completion for the Segro offer,’ Tritax EuroBox said.
Segro responded on Thursday by saying that its offer would enable Tritax shareholders to retain exposure to the European industrial and logistics sector ‘at this point in the cycle, in the largest and most liquid real estate investment trust in Europe, or realise their position for cash given the significant liquidity in Segro’s shares.’
Segro added that it will make a further announcement if appropriate.
Liontrust Asset Management fell 3.6%. The asset manager reported investor enthusiasm has been damped by pre-UK budget uncertainty, largely stemming from doubt around possible ‘changes to taxation and reliefs’.
‘This has contributed to another quarter of net outflows as the challenging environment for active managers has continued for longer than anticipated,’ Chief Executive Officer John Ions said.
Nonetheless, net outflows eased up to £1.14 billion in the second quarter ended September 30, from £1.58 billion a year prior.
Assets under management and administration fell to £25.96 billion on September 30, from £27.04 billion a quarter earlier.
An ounce of gold rose to $2,617.29 early Thursday afternoon, from $2,613.66 at the time of the London equities close on Wednesday. A barrel of Brent fetched $77.54, up from $76.54.
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