Stocks in London ended Tuesday in the red, weighed down by some pre-budget uncertainty, while indices on Wall Street were mixed following US economic data, ahead of earnings from Alphabet.
The FTSE 100 index closed down 66.01 points, or 0.8%, at 8,219.61. The FTSE 250 ended down 212.31 points, or 1.0%, at 20,622.79, and the AIM All-Share closed down 5.31 points, or 0.7%, at 715.79.
The Cboe UK 100 ended down 0.8% at 823.24, the Cboe UK 250 closed down 1.2% at 18,167.02, and the Cboe Small Companies ended down 95.95 points, 0.6%, at 16,629.38.
In European equities on Tuesday, the CAC 40 in Paris ended down 0.6%, while the DAX 40 in Frankfurt ended 0.3% lower.
Taxes, spending and borrowing are set to increase in the UK as Chancellor Rachel Reeves pledges to ‘reset’ the economy and invest in the ‘foundations of future growth’.
Reeves will deliver the budget statement to Parliament around 1230 GMT on Wednesday, after Prime Minister’s Questions.
Tax increases worth around £25 to £30 billion are forecast with changes to national insurance likely to be the main revenue raiser.
Reeves has insisted that the government will not raise increase income tax, VAT and national insurance contributions for ‘working people.’
However, reports suggest Reeves will increase employers’ national insurance contributions by up to two percentage points and lower the threshold at which companies start paying NICs. This could be partly offset by an increase in small employer relief.
This could raise as much as £20 billion, economists estimate.
Other taxes thought to be under the microscope include capital gains tax, inheritance tax, fuel duty, betting duties, a windfall tax on banks, and stamp duty. The freeze on income tax thresholds is also expected to be extended.
Concerns that changes to capital gains tax rules will extend to share dealings put pressure on online trading platforms, CMC Markets, down 5.3%, and IG, down 3.3%.
The pound was quoted at $1.2991 at the London equities close on Tuesday, up compared to $1.2978 at the close on Monday.
The euro stood at $1.0795 at the European equities close Tuesday, down against $1.0815 at the same time on Monday. Against the yen, the dollar was trading at JP¥153.56, up compared to JP¥153.29 late Monday.
Stocks in New York were mixed at the London equities close, with the DJIA down 0.2%, the S&P 500 index up 0.1%, and the Nasdaq Composite up 0.5%.
US data delivered mixed news with job vacancies falling but consumer confidence rising. Investors also have one eye on earnings from Alphabet, after the closing bell.
US consumer confidence recorded its largest monthly gain in over three-and-a-half years in October, but remains stuck below pre-pandemic levels, according to a survey published Tuesday, a week before the US presidential election.
The Conference Board’s consumer confidence index jumped sharply to 108.7 in October, up from a revised 99.2 last month.
This was sharply above market expectations, according to Briefing.com, and provides Democratic Vice President Kamala Harris with some good economic news ahead of next week’s presidential election, in which she faces former Republican president Donald Trump.
But there was not such upbeat news on the jobs market, ahead of nonfarm payrolls figures on Friday.
There were 7.4 million job vacancies in September, falling from a downwardly revised 7.9 million in August, the labour department said on Tuesday.
It was the lowest reading since February 2021. Economists, who consider job openings to be a proxy for labour demand, had been expecting 8 million openings.
ING said the figures were a surprise ‘albeit for different reasons’.
Job openings fell below even the ‘most pessimistic’ prediction while consumer confidence beat the ‘most optimistic projection and leaves sentiment at its strongest since January’.
‘Consumer confidence rebounded in October, but job vacancies surprisingly fell at a time when worker sentiment surrounding the jobs market is already weakening. If workers are increasingly concerned about job security this may run the risk that they start changing their spending behaviour, justifying ongoing gradual interest rate cuts from the Fed,’ the broker added.
In London, HSBC shares rose 3.1%. It reported an increase in third-quarter profit and announced a buyback.
Pretax profit rose 9.9% on-year to $8.48 billion in the third quarter from $7.71 billion, beating consensus of $7.60 billion.
Revenue improved 5.2% to $17.00 billion from $16.16 billion.
HSBC said it intends to kick off a new $3 billion share buyback, after wrapping up one of the same size last week. It plans to complete this new buyback by the time it announces annual results.
HSBC left its annual outlook unchanged.
BP lost 5.0%, however. It announced a new buyback and left its expectation of $14 billion in repurchases for next year unchanged for now, though it announced it plans to review ‘elements of our financial guidance’.
The prospect of that buyback outlook being revised hit the oil major’s shares.
BP said: ‘Our previous guidance for at least $14 billion of share buybacks through 2025 at market conditions around BP’s fourth quarter 2023 results and subject to maintaining a strong investment grade credit rating, is currently unchanged, although as part of the update to our medium term plans in February 2025, we intend to review elements of our financial guidance, including our expectations for 2025 share buybacks.’
BP announced a $1.75 billion share buyback for the quarter, as part of its commitment for $3.5 billion for the second half of the year.
The London-based oil major said replacement cost profit for the third quarter that ended September 30 was $1.11 billion, falling 70% from $3.65 billion last year. Underlying RC profit fell 31% to $2.27 billion from $3.29 billion, but topped the company-compiled market consensus for $2.05 billion in the quarter.
Among London-listed mid-caps, St James’s Place fell 2.8%. Bank of America cut the stock to ’neutral’ from ’buy’.
‘With the shares having doubled from their lows earlier this year, we downgrade to neutral from buy. St James’s Place is in great shape for the longer term, but we think it may pause for breath after a great run,’ BofA said.
Brent oil was quoted at $71.11 a barrel at the London equities close on Tuesday, down from $71.38 late Monday.
Gold was quoted at $2,765.34 an ounce at the London equities close Tuesday, up against $2,740.80 at the close on Monday.
In Wednesday’s UK corporate calendar, pharmaceuticals firm GSK and Asia-focused lender Standard Chartered report third quarter results.
The economic calendar for Wednesday has the UK budget at 1230 GMT, US retail sales and GDP data also at 1230 GMT and ADP private payrolls figures at 1215 GMT.
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