Stocks struggle despite manufacturing improvement

The FTSE 100 made a subdued start to the week on Monday, despite some brighter news on manufacturing, weighed by heavy falls in Vodafone after a downgrade by UBS.

The FTSE 100 index closed down 15.88 points, 0.2%, at 9,701.37.

The FTSE 250 ended 62.08 points lower, 0.3%, at 22,108.89, and the AIM All-Share declined just 0.36 of a point at 772.02.

UK manufacturing output expanded for the first time in a year in October, survey results from S&P Global showed, despite ongoing weakness in both domestic and overseas markets.

The manufacturing purchasing managers’ index (PMI) rose to 49.7 points in October from 46.2 in September, remaining slightly below the 50-point neutral mark.

It marginally outperformed the flash reading of 49.6 points.

“The October PMI survey shows UK manufacturing production rising for the first time in a year, which is a positive in itself. However, there are real concerns that the bounce could prove short-lived,” said Rob Dobson, director at S&P Global Market Intelligence.

Elliott Jordan-Doak, senior UK economist at Pantheon Macroeconomics, explained that a good chunk of the jump in the PMI in October reflects the resumption of car production following the Jaguar Land Rover cyberattack, noting that JLR stopped all work between August 31 and October 7, and the cyber attack reportedly affected 5,000 UK businesses.

He continues to think activity will struggle in the coming months as tariff ructions continue to hit global trade.

The pound was quoted at 1.3146 US dollars at the time of the London equities close on Monday, higher compared to 1.3135 dollars on Friday.

The euro stood at 1.1531 dollars, down slightly against 1.1536 dollars. Against the Japanese yen, the dollar was trading higher at 154.14 yen, compared to 154.06 yen.

In European equities on Monday, the CAC 40 in Paris closed down 0.2%, while the DAX 40 in Frankfurt ended 0.7% higher.

Stocks in New York were mixed at around the time of the London close. The Dow Jones Industrial Average was down 0.4%, the S&P 500 index up 0.1%, and the Nasdaq Composite up 0.5%.

Shares of Amazon, which soared on Friday following earnings, jumped another 3.8% after ChatGPT-maker OpenAI signed a 38 billion US dollar (£28.9 billion) deal with its Amazon Web Services cloud computing arm.

The yield on the US 10-year Treasury was at 4.12%, stretched from 4.09% on Friday. The yield on the US 30-year Treasury was quoted at 4.70%, widening from 4.66%.

Limiting enthusiasm on Wall Street, there was mixed data on the manufacturing sector and the ongoing federal government shutdown.

The ISM manufacturing PMI index fell to 48.7% in October from 49.1% in September, signalling a faster pace of contraction and marking the eighth consecutive month of decline after a brief, two-month rebound.

But in contrast, the S&P Global US manufacturing purchasing managers’ index rose to 52.5 points in October from 52.0 in September, exceeding the earlier flash estimate of 52.2 and marking the third consecutive month of expansion in factory activity.

On London’s FTSE 100, Vodafone fell 5.2% as UBS downgraded to “sell” from “neutral”, highlighting risks to consensus forecasts from competitive threats in Germany and Spain.

Convatec dropped 2.2% after the Centres for Medicare & Medicaid Services (CMS) confirmed payment plans for skin substitutes in the US.

The CMS has been looking at proposals to reduce Medicare spending on skin substitutes, noting that spending has had “unprecedented growth”.

Convatec said the decision represents an estimated headwind in 2026 of about 1% to 2% of group revenue, unchanged from guidance given at its first half results, through lower sales of its wound treatment product, InnovaMatrix.

WPP dipped another 4.4%, extending last week’s woes which followed a profit warning. Shares in the advertising agency have fallen 24% in the last five days alone and 67% in the last 12 months.

Faring better, airlines easyJet and International Consolidated Airlines, the owner of British Airways, were up 1.3% and 2.3% respectively after good results from peer Ryanair.

Dublin-based Ryanair said pre-tax profit in the first half ended September 30 increased 40% to 2.89 billion euros (£2.53 billion) from 2.07 billion (£1.82 billion) euros. Revenue rose 13% to 9.82 billion euros (£8.61 billion) from 8.69 billion euros (£7.62 billion). Net profit increased 42% to 2.54 billion euros (£2.23 billion) from 1.79 billion euros (£1.57 billion).

BP gained 0.9% after announcing the 1.5 billion US dollar (£1.1 billion) sale of non-controlling interests in the Permian and Eagle Ford midstream assets of bpx Energy to private investor Sixth Street.

Bpx, BP’s US onshore oil and gas business, will remain operator of all the assets.

The London-based oil and gas company said the deal delivers a “material contribution” towards its target of 20 billion US dollars (£15.2 billion) of disposals by the end of 2027.

On completion, bpx’s interest in the Permian midstream assets will move to 51% from 100%, while bpx’s stake in Eagle Ford will fall to 25% from 75%.

Brent oil was quoted higher at 65.08 US dollars a barrel at the time of the London equities close on Monday, from 64.45 dollars late on Friday.

On Sunday, the Organisation of the Petroleum Exporting Countries and its allies, known collectively as OPEC+, agreed to raise output by 137,000 barrels per day in December and to pause increases in the first quarter of next year.

ING’s Head of Commodities Research, Warren Patterson, said the OPEC+ decision appears to be an acknowledgment of the large surplus that the market faces, particularly early next year.

Gold was quoted higher at 3,997.03 US dollars an ounce against 3,982.25 dollars.

The biggest risers on the FTSE 100 were: Airtel Africa, up 16.2 pence at 292.8p; Games Workshop, up 490.0p at 16,420.0p; British American Tobacco, up 104.0p at 4,008.0p; IAG, up 9.7p at 427.6p; and M&G, up 5.1p at 268.4p.

The biggest fallers on the FTSE 100 were: Vodafone, down 4.78p at 87.36p; WPP, down 12.6p at 274.9p; JD Sports Fashion, down 3.1p at 90.08p; Coca-Cola Europacific Partners, down 210.0p at 6,600.0p; and Anglo American, down 76.0p at 2,799.0p.

Tuesday’s global economic calendar has the Reserve Bank of Australia interest rate decision overnight, the manufacturing PMI in Japan and unemployment figures in Spain.

Tuesday’s UK corporate calendar has full-year results from Primark owner Associated British Foods and a third quarter trading statement from oil major BP.

Contributed by Alliance News