5th Nov 2024 09:15
(Alliance News) - Stock prices in London opened mostly higher on Tuesday, following news of faster growth from China but amid a busy week of US election results and interest rate decisions.
"The prediction...I have absolutely no idea who is going to win [the US presidency]. I have high conviction in this view," quipped Deutsche Bank's Jim Reid.
Reid added that "under a divided government scenario, we're less likely to see fiscal stimulus, so that's better news for Treasuries, and with less fiscal stimulus we're more likely to get rate cuts from the Fed".
The FTSE 100 index opened up 17.16 points, 0.2%, at 8,201.40. The FTSE 250 was up 69.58 points, 0.3%, at 20,530.87, and the AIM All-Share was up 1.15 points, 0.2%, at 736.52.
On the FTSE 100, AB Foods was up 2.6%.
It declared dividends totalling 90.0 pence for financial 2024, up 50% from 60.0p the prior year. Pretax profit rose 43% to GBP1.92 billion, while revenue rose 2% to GBP20.07 billion while Primark revenue rose 5% to GBP9.45 billion.
AB Foods said Primark is targeting mid-single-digit percentage sales growth this year, although it expects reduced prices to temporarily hurt its Sugar unit before profitability recovers in financial 2026.
The Cboe UK 100 was up 0.1% at 821.98, the Cboe UK 250 was up 0.3% at 18,125.10, and the Cboe Small Companies was down 0.3% at 16,321.91.
As well as UK composite PMI data out today, investors will also be closely analysing comments from Bank of England Governor Andrew Bailey, ahead of the interest rate call - not to mention that of the US Federal Reserve - this week.
"Of all weeks that of a knife-edge US election isn't the easiest to formulate UK rates market views ahead of a BoE meeting," Lloyds ruminated. "Outright directional views could well be dominated by the fate of the 'Trump trade' as UK markets take their lead from US dynamics...Never will Rachel Reeves have been more relieved to see a sub-consensus US employment report last Friday, after Wednesday and Thursday’s gilt market reactions sent yields rising and effectively eroded the narrow headroom she had given herself against her own new fiscal rule.
"In that case it might be cleaner to try and assess the impact of UK rates market developments this week against EUR rates markets. Both should arguably impacted by the US election news by similar amounts, meaning the relative performance of the UK either way is more likely to reflect the outcome of the BoE rate decision and future policy guidance."
In European equities on Tuesday, the CAC 40 in Paris was up 2.7%, while the DAX 40 in Frankfurt was down 0.1%.
The pound was quoted at USD1.2982 early on Tuesday in London, higher compared to USD1.2972 at the equities close on Monday.
The euro stood at USD1.0892, against USD1.0889. Against the yen, the dollar was trading at JPY152.21, up from JPY151.94.
"With an exceptionally close US election upon us, plus the outcome likely to deliver a binary impact on currency markets, the FX options market is trading at a respectful level of volatility," remarked ING analysts. "In absolute terms, USD/JPY trades on the highest one-week volatility in the G10 space near 19%. These are close to levels seen during the height of the carry trade unwind in early August this year."
In Asia on Tuesday, the Nikkei 225 index in Tokyo was down 1.1%. In China, the Shanghai Composite was up 2.3%, while the Hang Seng index in Hong Kong was up 2.0%. The S&P/ASX 200 in Sydney closed down 0.4%.
China's service economy climbed at a faster rate in October, with employers hiring more staff, survey data published by S&P Global showed.
The seasonally adjusted headline Caixin China general services business activity index rose to 52.0 points in October from 50.3 in September. Moving further above the neutral 50-point mark separating growth from contraction, it indicates activity growth accelerated. The reading easily beat the FXStreet-cited market consensus of 50.5 for October.
Wang Zhe, senior economist at Caixin Insight Group said: "Market optimism improved. The gauge for future activity expectations rebounded by nearly 3 points to reach a five-month high. Businesses expressed confidence in macroeconomic conditions in the near term."
In the US on Monday, Wall Street ended lower, with the Dow Jones Industrial Average down 0.6%, and the S&P 500 and Nasdaq Composite down 0.3%.
On the presidential election, Rabobank commented: "We have a house view that Donald Trump will win...and implement his policy of universal tariffs.
"We view this as inflationary over the long-run, and inflationary inside the United States in the short run, but for medium-sized opening trading economies like Australia there could be a short-run disinflationary shock as goods that would normally find their way to US consumers are suddenly dumped in markets where access remains favourable."
Brent oil was quoted at USD75.05 a barrel early in London on Tuesday, up from USD74.70 late Monday.
Gold was quoted at USD2,740.79 an ounce, higher against USD2,735.26.
Still to come on Tuesday's economic calendar, US releases include composite PMI and trade balance data.
By Emma Curzon, Alliance News reporter
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