08.15: The Footsie was lower in early trading reflecting caution ahead of the latest UK growth figures, although banks were a surprising bright spot after results from Barclays and troubled German peer Deutsche Bank both beat forecasts.
In opening deals, the FTSE 100 index was down 23.0 points at 6,935.1, having closed 59.55 points lower yesterday as the oil price slumped below $50 a barrel amid reports an Opec production freeze deal was in trouble.
However, Brent crude recovered above that level in early London trade today, adding 0.3 per cent at $50.15 a barrel.
Uncertain: US stocks ended mixed overnight, with the Dow Jones finishing modestly higher, but other key indices falling as disappointing earnings from technology giant Apple dragged
Overnight on Wall Street, US stocks ended mixed, with the Dow Jones finishing modestly higher, but other key indices falling as disappointing earnings from technology giant Apple dragged.
Meanwhile Asian shares today extended recent losses. Adding to an already subdued mood, profit growth in China’s industrial firms slowed in September from the previous month’s rapid pace as several sectors showed weak activity, suggesting the world’s second-biggest economy remains underpowered.
On currency markets, the pound was cautious ahead of the UK GDP data, the first growth reading fully after June’s Brexit vote. Against the dollar, sterling lost 0.2 per cent at $1.2214, and it also fell 0.2 per cent versus the euro to €1.1202.
Naeem Aslam, Chief Market Analyst at Think Markets UK Ltd, said: ‘Today all eyes will be on one important data which will attract a lot of attention among traders. What investors will like to know is how good the economy has fared in comparison to doom mongers predictions.’
He added: ‘The forecast for UK Q3 GDP number is for 0.3 per cent but we think that the final number has the ability to print a better number.’
But he continued: ‘Although, the headline number will bring a lot of volatility in the market, but it is important to peel the layers off and read what the data is actually telling you.
‘Traders need to keep in mind that the UK’s economy is mainly dependent on the service sector and this represents a large portion of country’s economy. Industrial production and construction output is likely to show some weakness and may subtract 0.16 per cent from the GDP growth. The services index should be able to pull the weight and make a net positive contribution.’
Think Market’s Aslam also noted: ‘The earning season remains in the full swing and investors are paying attention to Deutsche bank’s quarterly result. Investors are pleasantly surprised that the bank has returned to profit and produced a number which is much better than analysts forecast. This is all due to ongoing efforts of the current management which is cutting the mass to bring the bank in a better position.’
He added: ‘Barclays lately has been under massive pressure, however, it has posted a number today which is shining. Fixed income is the area where the bank has performed very well and the company’s profit has surged nearly 35 per cent. This is going to aid the argument that the bank should not cut its investment and trading arm as this is the space which has saved the day for the bank.’
Stocks in focus in London include:
BARCLAYS – The bank has set aside an extra £600million to meet compensation claims for mis-selling of payment protection insurance as it unveiled statutory pretax profits up 35 per cent to £837 million for the third quarter.
LLOYDS BANKING GROUP: The UK government has reduced its stake in Lloyds to just below 9 per cent, its first sale since the relaunch of a trading plan that was shelved almost a year ago because of market turbulence.
BT GROUP – Britain’s biggest broadband provider has met market expectations with a 1 per cent rise in second quarter earnings, helped by price rises and strong demand for faster fibre connections, keeping it on track for its full year targets.
DEBENHAMS – Britain’s second-largest department store group said annual profit inched up 0.5 per cent as it struggled to grow in a tough retail environment in 2016.
HENDERSON – The London-based fund manager said its third quarter assets under management rose 6 per cent, buoyed by positive market moves and currency gains after a slide in the value of sterling.
MONEYSUPERMARKET.COM – The price comparison website said it has appointed Mark Lewis, retail director of John Lewis, as its chief executive officer.
TECHNOLOGY – Software company Misys has said it will not proceed with its plans to list on the London stock market at this time, adding to a run of aborted listing attempts in recent weeks.
UK company news scheduled today includes:
Trading updates: Barclays, BT Group (Q2), Henderson Group, RELX Group, Kaz Minerals, DS Smith, Inchcape, Alumasc Group
Finals: Debenhams, Redefine International
Interims: Bloomsbury Publishing, Stobart Group, Avocet Mining (Q3), C&C Group (Q2), BBVA (TSB)
Ex-dividends to knock 3.62 points off FTSE 100 (Barratt Developments, ITV, Provident Financial, Unilever, Wolseley)
Economic news scheduled today includes:
Preliminary estimate of UK third quarter GDP at 9.30am
CBI UK distributive trades survey at 11am:
US weekly jobless at 1.30pm
US durable goods orders at 1.30pm
US pending home sales at 3pm