The FTSE 100 ended higher on Tuesday, taking heart from positive data for the US private sector ahead of eagerly awaited third-quarter results from some of the largest US technology companies.
The FTSE 100 index closed up 14.87 points, 0.2%, at 7,389.70. The FTSE 250 ended down 64.89 points, 0.4%, at 16,994.10, and the AIM All-Share closed down 1.96 points, 0.3%, at 678.45.
The Cboe UK 100 ended up 0.2% at 737.16, the Cboe UK 250 closed down 0.5% at 14,738.75, and the Cboe Small Companies ended down 0.2% at 12,692.94.
In European equities, the CAC 40 in Paris ended up 0.6%, while the DAX 40 in Frankfurt ended up 0.5%.
The US private sector saw moderate expansion in October, following largely stagnant output in September and August, according to the latest flash estimate from S&P Global.
The headline S&P Global US purchasing managers’ index rose to 51.0 in October, from 50.2 in September. Rising above the 50.0 no-change mark, it signalled a modest up-tick in business activity in the month.
S&P Global said the upturn was supported by expansions in activity for manufacturers and service providers alike. It noted that demand conditions for manufacturers improved for the first time since April, while service providers witnessed a slower drop in new orders.
The flash US manufacturing PMI stood at 50.0 in October, up fractionally from 49.8 in September. The flash US services business activity index stood at 50.9, up from 50.1 last month.
Both flash estimates were better than expected by markets. The sectors had been expected to remain in contraction territory, according to FXStreet-cited consensus.
The dollar gained ground in the wake of the print.
The pound was quoted at $1.2163 at the London equities close on Tuesday in London, lower compared to $1.2226 on Monday. The euro stood at $1.0588, lower against $1.0639. Against the yen, the dollar was trading at JP¥149.90, higher compared to JP¥149.79.
Stocks in New York were higher at the London equities close, with the DJIA up 0.6%, the S&P 500 index up 0.6%, and the Nasdaq Composite up 0.7%.
Coca-Cola was up 2.6% in New York at the London close.
The Atlanta, Georgia-based soft drink maker said revenue in the three months to September 29 increased 8.0% on-year to $11.95 billion from $11.06 billion. Net income was 9.2% higher at $3.08 billion from $2.82 billion.
Coca-Cola now expects organic revenue growth between 10% and 11% in 2023, having previously predicted a rise between 8% and 9%. It now expects comparable currency neutral earnings per share growth of 13% to 14%, lifted from its previous growth range of 9% to 11%.
Investors also reacted to signs of a cooling UK economy in the latest PMI data.
The S&P Global/CIPS flash UK flash composite PMI rose slightly to 48.6 points in October from 48.5 in September. However, sitting below the 50.0 no change mark, the latest reading suggests the private sector remains in decline.
Looking ahead, S&P said concerns about the outlook for business and consumer spending meant that output growth expectations for the year ahead were the lowest since December 2022.
‘Observers will take some comfort from the fact that PMIs do not account for the whole economy, although last week’s lacklustre retail sales figures (which are excluded from PMIs) are not especially encouraging,’ said Handelsbanken analyst Daniel Mahoney.
The unemployment rate for the period for June to August was estimated at 4.2%. This was a 0.2 percentage point increase compared with the period from March to May, the the Office for National Statistics said.
The ONS explained that the figures are an ‘alternative series of estimates’, due to ‘increased uncertainty’ around the Labour Force Survey estimates.
Last month, the ONS said unemployment stood at 4.3% in the three months ended July.
In the FTSE 100, Rio Tinto was the top performer, rising 3.5%, after Barclays raised its rating for the London-based mining company to ’overweight’ from ’equal weight’.
AstraZeneca was the second-best performer, rising 3.4% and building on Monday’s gains from its Enhertu treatment being approved by the European Commission to treat adult lung cancer patients.
On Tuesday, the Cambridge-based pharmaceutical firm said the US health watchdog has approved a review for its FluMist Quadrivalent self-administered flu vaccine.
The US Food & Drug Administration accepted the drugmaker’s supplemental biologics licence application for the needle-free nasal spray. It expects a regulatory decision on the product during the first quarter of 2024. If approved then, FluMist is expected to be available in the US for the 2024/2025 flu season.
If the product is reviewed, it will be the first flu vaccine available to be self-administered, ‘adding an additional option to be vaccinated against influenza’.
Barclays was the second-worst performing FTSE 100 stock, losing 6.5%.
For the quarter that ended September 30, the bank’s total income rose 5.2% on-year to £6.26 billion from £5.95 billion a year prior. However, the figure fell short of the £6.29 billion company-compiled consensus.
Barclays reported pretax profit of £1.89 billion for the quarter, down 4.3% on-year from £1.97 billion. However, it beat the company-compiled market consensus of £1.77 billion.
Looking ahead, Barclays backed its annual return on tangible equity forecast of ‘greater than 10%’.
However, it trimmed UK net interest margin guidance. It now expects this to land around ‘3.05% to 3.10% in 2023’.
In a negative read-across, rival banks NatWest and Lloyds Banking were down 1.9% and 1.4%, respectively.
Bunzl lost 4.0% after the distribution firm said revenue in the third-quarter of the year declined by 4.8% at constant exchange rates.
Bunzl put the revenue fall to a ‘continued decline in Covid-19 related product sales’ and a lesser benefit from inflation. It also said there was a ‘wider post-pandemic related normalisation trends which drove expected volume weakness’.
In the FTSE 250, CAB Payments was by far the worst performer, with its shares plunging 72%.
The cross-border payments and foreign exchange firm now expects annual revenue to be ‘at least’ 20% ahead of the £109.4 million achieved in 2022. This is about 17% below its previous guidance, however.
It expects the ‘majority of any revenue impact’ will hit its bottom line but will be seeking opportunities to lessen the impact on its bottom line.
Softcat was the second-worst FTSE 250 performer, falling 12%. This was despite reporting ‘another record year’, the IT infrastructure and services provider said.
It reported a pretax profit of £141.9 million for the year ended July 31, up 4.2% from £136.1 million the year prior. Revenue dropped 8.6% to £985.3 million from £1.08 billion.
The decline was primarily driven by its Hardware segment, which saw revenue drop 24% year-on-year to £610.6 million. Meanwhile, revenue for its Software and Services segments grew 26% and 43%, respectively.
Elsewhere in London, FD Technologies lost 33% after the County Down, Northern Ireland-based group said it swung to a pretax loss of £4.5 million in the six months that ended August 31 from a profit of £1.1 million a year earlier.
Revenue fell to £142.5 million from £147.4 million, while it said it expects financial 2024 revenue in the range of £285 million to £295 million, from £296.0 million a year earlier.
Brent oil was lower at $86.37 a barrel at the London equities close on Tuesday from $91.05 late Monday. Gold was lower at $1,963.03 from $1,977.60.
In Wednesday’s UK corporate calendar, a slew of trading statements are released, including by Fresnillo, Ibstock, Lloyds Banking and Reckitt Benckiser.
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