Heavyweight shares increase FTSE 100, home builders underneath stress
The FTSE 100 index is 31.94 factors increased at 7662.57, with AstraZeneca and BP among the many heavyweight shares providing assist to London’s prime flight. Shell, which closed at a document excessive final night time, additionally placed on one other 19.5p at 2770p.
The restructuring plans of Rolls-Royce lifted its shares by 3.8p to 217.3p, whereas GKN Aerospace proprietor Melrose Industries improved 6.6p to 485.1p.
Other blue-chip risers included St James’s Place after the UK’s largest wealth supervisor unveiled particulars of a brand new charging construction alongside a 3rd quarter update. Shares rose 17.2p to 689.4p, having initially been in damaging territory.
Housebuilders got here underneath stress on the again of immediately’s annual outcomes by Bellway, with Taylor Wimpey and Barratt Developments each down by greater than 1%. FTSE 250-listed Bellway dropped 40p to 2122p.
London’s second-tier index improved 33.70 factors to 17,553.09. Risers included Moneysupermarket.com, which added 10p to 255p after its efficiency benefited from continued excessive ranges of switching exercise in automotive and home insurance coverage.
Slower wage progress boosts hope rates of interest have peaked
Economists consider that the cooling wage progress will additional dissuade the Bank of England’s Monetary Policy Committee from any rate of interest rises. Markets now value in a lower than one-in-four likelihood of one other hike when the MPC meets subsequent on 2 November, and consider it’s extra seemingly than not that charges have already peaked.
Thomas Pugh, economist at main audit, tax and consulting agency RSM UK, mentioned: ‘The slowing in pay growth in August suggests that the MPC will keep interest rates unchanged again at its meeting next month.
‘However, there are obvious concerns about the reliability of the ONS’ measures of labour market tightness and pay progress. The response fee to the ONS labour drive survey has fallen sharply for the reason that pandemic when researchers stopped going door to door to assemble responses. Indeed, the response fee at present stands at 14.6 per cent, down from about 40 per cent in 2019. What’s extra, the ONS has discovered that the folks almost definitely to reply a telephone name from an unknown quantity throughout the day are those that aren’t working, closely skewing the survey pattern in the direction of the unemployed and inactive.
‘That said, the ONS remains confident in its previous estimates of the labour market, suggesting that the recent large jump in the unemployment rate isn’t only a statistical mirage and the labour market actually is cooling, however it’ll add to the uncertainty going through the Bank of England. An MPC which is much less assured within the knowledge could resolve to err on the facet of warning although, which could make additional rate of interest hikes extra seemingly.
Ashley Webb, UK economist at Capital Economics, mentioned: “Cooling labour market conditions appeared to start feeding through into an easing in wage growth in August. That supports our view that interest rates have peaked at 5.25%. But as we suspect wage growth will fall only slowly, interest rates will probably stay at their peak until late in 2024.”
Market snapshot as FTSE 100 opens increased
The FTSE 100 is increased this morning as barely slower-than-expected wage progress has elevated hopes that rates of interest have peaked.
Take a have a look at our full market snapshot
Housing market slowdown means Bellway to slash building by over 30% in 2024
Bellway, the FTSE 250 developer, gave recent perception into the extent of the slowdown within the UK’s housing market immediately, with plans to chop the variety of homes constructed subsequent yr by 31%.
The Newcastle-based agency mentioned it’ll full “around 7,500 homes in 2024, down from a “near-record” of 10,945 this yr, which it known as “a material reduction in volume” attributable to a “reduced order book and prevailing lower reservation rates.”
Higher mortgage prices after 14 consecutive rate of interest hikes from the Bank of England took the bottom cost of borrowing as much as 5.25% have been reverberating rounds the trade, hitting first time patrons notably laborious and slowing gross sales charges throughout the market.
Bellway additionally mentioned immediately it anticipated the typical promoting value of its properties to drop in 2024 – to £295,000 from £310,306 this yr, a drop of almost 5%.
For the monetary yr to the top of July, Bellway reported a 3.7% drop in income of £3.4 billion and an 18% fall in revenue earlier than tax of £532.6 million.
Rio Tinto boss hails “strong progress”
Rio Tinto shares have closed 1% increased in Sydney after the iron ore large delivered its manufacturing update for the third quarter.
It mentioned shipments from its Pilbara iron ore operations in western Australia rose 1% to 83.9 million tonnes because it continues to focus on a efficiency for the yr within the higher half of the unique 320 to 335 million tonnes vary.
Chief government Jakob Stausholm additionally reported “good headway” ramping up the Oyu Tolgoi high-grade underground copper mine in Mongolia, whereas Rio’s Kitimat aluminium smelter returned to full manufacturing.
He additionally highlighted agreements for a number one position in recycled aluminium in North America and a three way partnership with Codelco to probe for copper in Chile.
Stausholm informed buyers: ““We are making strong progress towards building the Rio Tinto of the future, striking a balance between disciplined performance in evolving market conditions, investing to generate valuable long-term growth and delivering attractive shareholder returns.”
Chancellor hails actual pay progress
The Chancellor of Exchequer, Jeremy Hunt, highlighted theat wage progress got here in forward of inflation, that means that actual pay is rising.
He mentioned: “It’s excellent news that inflation is falling and actual wages are rising, so folks have extra money of their pockets. To hold this progress, we should persist with our plan to halve inflation.”
However his counterpart on the opposition benches Rachel Reeves mentioned: “Thirteen years of Conservative economic failure has left working people worse off, with low growth, low pay and high taxes.
“Working people saw pay rise faster under the last Labour government. But, with the Conservatives we have seen a decade of stagnant wage growth.
“Labour’s plan to grow the economy will boost wages, create good jobs and get Britain’s future back.”
Rolls-Royce to chop 2,000 to 2,500 jobs
Rolls-Royce has introduced plans to chop between 2,000 and a couple of,500 jobs throughout its world operations as a part of its long-term transformation underneath chief government Tufan Erginbilgic.
The FTSE 100 engineer, which employs 42,000 folks, mentioned the adjustments would “remove duplication and deliver cost efficiencies”.
Its restructuring plans will carry its Engineering Technology & Safety unit “together as a single team across the group”. It will likely be “responsible for product safety, engineering standards, process, methods and tools,” Rolls-Royce mentioned, and “enable engineering talent and technology to be used more effectively across the business.” It will likely be led by Simon Burr, at present the director of product evelopment and expertise, in its Civil Aerospace division.
Rolls-Royce additionally mentioned Grazia Vittadini, chief expertise officer, will likely be leaving t in April 2024.
The plans additionally embody a group-wide “procurement and supplier management organisation” to consolidate spending.
Tufan Erginbilgic mentioned : “This is another step on our multi-year transformation journey to build a high performing, competitive, resilient and growing Rolls-Royce,” including:
“We are building a Rolls-Royce that is fit for the future. That means a more streamlined and efficient organisation that will deliver for our customers, partners and shareholders.”
Strong features for US and Asia markets, FTSE 100 seen flat
The S&P 500 index superior by greater than 1% yesterday, with buyers in an optimistic temper forward of this week’s outcomes by the likes of Tesla and Netflix.
Shares in tech giants Amazon and Meta Platforms have been 2% increased because the tech-focused Nasdaq Composite improved 1.2% by final night time’s shut.
Asia markets mirrored Wall Street’s efficiency as Hong Kong’s Hang Seng index rose by 0.7% in afternoon buying and selling and the Nikkei 225 rallied by 1%.
The FTSE 100 index yesterday lifted by 0.4% or 31.03 factors to 7630.63, however CMC Markets expects an unchanged efficiency at immediately’s opening bell.
On commodity markets, Brent Crude stood at slightly below $90 a barrel this morning as provide fears brought on by the Middle East battle underpin costs.
UK pay grows by one other 8.1%
Avergae pay within the UK together with bonuses grew by 8.1% from June to August, barely beneath expectations.
When bonuses are excluded, pay was up by 7.8%, in keeping with expectations.
Recap: Yesterday’s prime tales
Good morning. Here’s a abstract of our prime headlines from yesterday:
