FTSE 100 live: London ends week deep in the red on back of Israel-Gaza war, borrowing and retail figures
London’s FTSE 100 ended the week deep in the red following disappointing retail figures and falling but still very high, public borrowing stats.
The capital’s premier bluechip index was 1.31 per cent down by the close, at 7,401.30, while the FTSE 250, which is more aligned with the domestic market, dropped to 0.9 per cent, to 17,058.15.
Among the biggest fallers on the FTSE 100 was the Intercontinental Hotels, down 4.32 per cent, after it reported a big slowdown in its third quarter trading this morning. It also announced the appointment of Sir Ron Kalifa as non-executive director.
Mobico, the company which runs National Express, saw its shares up by more than seven per cent, while the biggest faller on the FTSE 250 was Rentokil Initial, which was down more than five per cent.
“The FTSE 100 is on track to end the week nearly two per cent lower, the result of a challenging period for investors worried about war in the Middle East, interest rates potentially staying higher for longer and mixed messages from large corporates in the US,” says Russ Mould, investment director at AJ Bell.
On InterContinental Hotels Mould said “Hotels are in rude health as demand is strong which enables operators to push up room rates. InterContinental has been busy buying back shares and it looks as if shareholders will get an update next February on future plans to spend surplus cash.
“However, the key sticking point for investors is the rate of growth for revenue per available room, which slowed in the third quarter versus the first-half period.”
This morning, London woke up to disappointing retail figures from the Office for National Statistics, as an unseasonably warm September impacted clothes sales.
In particular, total non-food sales volumes in department and clothing stores dipped by 1.9 per cent, following a slight rise of 0.3 per cent the prior month.
Aled Patchett, head of retail and consumer goods at Lloyds Bank, said: “Falling sales suggest that, despite inflation waning on essentials like food, consumers remain cautious with their monthly household budgets.”
Meanwhile, fresh figures from the ONS showed the government borrowed £14.3bn last month, down £1.6bn on the same period last year, but still as the sixth-highest September figure since the records began in 1993.
The latest figures are unlikely to change his mind despite being relatively benign compared to recent spending totals.
Later in the day, Bank of England governor Andrew Bailey told the Belfast Telegraph he predicted inflation to drop, after it paused its interest rate hiking cycle.
Before the open, analysts expected stocks to fall amid ongoing uncertainty in the Middle East, with investors sticking to commodities such as safe-haven asset gold, priced at £1,635, near a month-high.
This comes as Israel is engaged in a war with Gaza’s ruling Hamas, after the group killed 1,400 Israelis on 7 October, sparking a war. Investors have been concerned about the conflict spreading more widely across the region, which could impact oil producers such as Saudi Arabia, Iran, and gulf nations.
Richard Hunter, head of markets at Interactive Investor, said: “Markets remain unsteady and investors undecided, as rising Middle Eastern tensions and bond yields threaten to undermine any thoughts of an immediate rally.
“The end of the week could prove to be similarly awkward, with many traders unwilling to take new positions ahead of a weekend when hostilities could yet worsen. At the same time, investors were left somewhat bemused by comments from Federal Reserve Chair Powell, who seemed to oscillate between implying no further rate hikes in the immediate future, yet leaving the door open for future rises should circumstances dictate.
“Given the recent pressure on markets, investors had been hoping for final confirmation that the hiking cycle was over, and as such were disappointed by the comments.
U.S. President Joe Biden asked Americans to spend billions more dollars to help Israel fight Hamas while Israel’s defence chief told his troops to be ready to go into the Gaza Strip to destroy the Palestinian militant group.
Yesterday Rishi Sunak met Israel’s prime minister and president, saying he wanted them “to win”.
British arms suppliers such as BAE Systems have seen their share price increase by 0.67 per cent in the last month off the back of the war, with it rising by 1.25 per cent after this open this morning. Babcock’s shares in the last month are up almost two per cent.