FTSE 100 held back by weak oil after bright start

The FTSE 100 made a solid start to the trading week on Monday as the Chancellor pledged continued fiscal restraint and gains in mining stocks offset falls in oil majors.

The FTSE 100 Index closed up 15.01 points, 0.2%, at 9,299.84.

It had earlier traded as high as 9,354.61, close to the all-time intra-day record of 9,357.51.

The FTSE 250 ended 185.00 points higher, 0.9%, at 21,866.48, and the AIM All-Share ended up 2.65 points, 0.3%, at 780.18.

Chancellor Rachel Reeves told the Labour party conference that she would keep control of the public finances and would “not take risks with the trust placed in us by the British people”.

But she acknowledged that her choices had been made “harder” by international events and the “long-term damage” done to the economy.

Before her speech, Ms Reeves told the BBC: “It’s very important that we maintain those commitments to economic stability because we rely on people to buy Government debt to be able to finance the things that we’re doing as a country.”

She told the conference: “In the months ahead we will face further tests, with the choices to come made all the harder by harsh global headwinds and the long-term damage done to our economy, which is becoming ever clearer.”

Kathleen Brooks, research director at XTB, said Ms Reeves has “managed to placate the markets while hammering home her fiscal stability message to a restless Labour Party”.

Ms Brooks said the speech suggests that the Chancellor wants to “maintain fiscal credibility, and she will not go mad on public spending at the upcoming Budget”.

“This could ease some concerns in the bond market,” she suggested, and leave room for further gains in UK gilts, and downside in gilt yields, if Ms Reeves can deliver a “credible Budget”.

“However, we continue to think that the political and economic risk premium embedded into UK gilts will not evaporate completely in the coming weeks,” Ms Brooks added.

On Monday, the yield on the UK 10-year bond narrowed to 4.70% from 4.75% on Friday.

In economic data, UK mortgage approvals were in line with expectations last month, numbers from the Bank of England showed.

The central bank said mortgage approvals totalled 64,680 in August, down slightly from 65,161 in July, but fractionally ahead of the FXStreet cited consensus of 64,500.

The average interest rate on newly drawn mortgages fell for the sixth month in succession to 4.26% in August, from 4.28% in July.

The pound was quoted higher at 1.3432 dollars at the time of the London equity market close on Monday compared with 1.3399 dollars on Friday. The euro stood at 1.1731 dollars, higher against 1.1692 dollars. Against the yen, the dollar was trading at 148.57 yen, lower compared with 149.51 yen.

The yield on the US 10-year Treasury was quoted at 4.14%, trimmed from 4.18% on Friday. The yield on the US 30-year Treasury stood at 4.71%, narrowed from 4.75%.

In European equities on Monday, the CAC 40 in Paris closed up 0.3%, and the DAX 40 in Frankfurt ended little changed.

Stocks in New York were mixed at the time of the London close. The Dow Jones Industrial Average was down 0.1%, the S&P 500 index was 0.3% higher, while the Nasdaq Composite was up 0.6%.

Tech stocks led the risers in New York as markets continued to downplay a possible US government shutdown.

Morgan Stanley estimates a shutdown will trim 10 basis points off US GDP for each week.

“The longer the shutdown, the greater the risk that government contract payments get deferred increasing the economic impact,” the bank added.

It could also delay the publication of economic data, Morgan Stanley said.

Electronic Arts jumped 4.9%, after rising 15% on Friday, after being taken private, in a 55 billion dollar deal, by a consortium including Donald Trump’s son-in-law Jared Kushner.

On the FTSE 100, GSK rose 2.3% after announcing that chief commercial officer Luke Miels will take over as chief executive from Emma Walmsley, who is stepping down from the start of next year.

The pharmaceutical firm said Ms Walmsley, who has been chief executive since April 2017, believes it is the “right moment for new leadership”.

Pharmaceuticals peer AstraZeneca climbed 0.9% as it announced plans to upgrade its US listing but keep its London trading and UK headquarters.

The Cambridge-based company said it plans to harmonise its share listing structure but will continue to be listed, have its headquarters and be tax resident in the UK.

It will retain its FTSE 100 status.

Recent reports had suggested the FTSE 100-listed company could quit London and have its main listing on Wall Street.

Insurer Admiral rose 3.6% as Jefferies upgraded to “buy” from “hold”.

The broker thinks market sentiment has “never been further detached” from Admiral’s fundamentals.

Jefferies noted Admiral has a track record of outgrowing the market, and thinks the debate now is not “if earnings will grow, but by how much”.

Mining stocks remained in demand, with Antofagasta up 5.3%, Glencore up 1.7% and Anglo American up 2.2%.

But a drop in the oil price put the skids under BP, down 2.5%, and Shell, down 1.4%.

Brent oil fell to 67.81 dollars a barrel on Monday from 70.64 dollars late on Friday.

But gold continued its record-breaking run, hitting 3,828.66 dollars an ounce on Monday, up against 3,775.97 dollars on Friday.

On the FTSE 250, Ocado fell 4.1% after its key US customer Kroger expanded its relationship with delivery firm DoorDash.

Earlier this month, Ocado shares took a hit when Kroger made comments about doing more deliveries itself and said it was reviewing some of its automated facilities, that use Ocado’s technology.

The biggest risers on the FTSE 100 were Antofagasta, up 141 pence at 2,807p, JD Sports, up 4.02p at 93.02p, Admiral, up 116p at 3,314p, Berkeley, up 128p at 3,810p and ConvaTec, up 5.4p at 230.6p.

The biggest fallers on the FTSE 100 were Coca-Cola HBC, down 138p at 3,480p, BP, down 10.9p at 434.6p, Rolls Royce, down 19p at 1,163.5p, Shell, down 37.5p at 2,696p and BT Group, down 2.25p at 193.35p.

Tuesday’s global economic calendar has UK GDP figures, inflation prints in Germany, France and Italy plus the Chicago PMI and house price data in the US.

Tuesday’s UK corporate calendar sees full-year results from merchant bank Close Brothers, and half-year results from retailer Card Factory and Irn-Bru maker AG Barr.

Contributed by Alliance News