London close: Stocks red amid mixed US midterm results

London stocks closed in the red on Wednesday as control of the US Congress remained on a knife-edge following Tuesday’s midterm elections, and after a raft of corporate updates earlier.

The FTSE 100 ended the session down 0.14% at 7,296.25, and the FTSE 250 was off 0.26% at 18,649.00.

Sterling was also in negative territory, and was last down 1.33% on the dollar at $1.1390, as it weakened 0.95% against the euro to change hands at €1.1352.

“With the elections in the US still not providing a clear direction for investors, a quietly cautious atmosphere prevails in stocks,” said IG chief market analyst Chris Beauchamp.

“In London the risers and fallers are relatively evenly-balanced, keeping the FTSE 100 close to its recent highs, but with the all-important US inflation reading still to come this week most traders are opting not to push their luck too far.”

Beauchamp noted that on Wall Street, indices were weaker after recent gains, and without many earnings to drive them they were also hunkering down ahead of the CPI reading on Thursday.

“After the busy weeks of October and early November both the buyers and sellers are generally exhausted.”

Eyes were firmly across the pond during the afternoon as it still looked as if either the Democrats or the Republicans could end up with a majority in either house of Congress.

At last count, each party had 48 out of 100 seats in the Senate, after 35 of them were up for election in Tuesday’s vote.

US Senators serve six-year terms, with about a third of the seats up for grabs in the two-yearly elections.

All 435 seats in the House of Representatives were in play in Tuesday’s vote, and at last count the Democrats had secured 187 of them while the Republicans had 202.

Either party would need 218 seats to have a majority, with a Republican majority likely to cause a serious slowdown in legislative progress and headaches for Democratic president Joe Biden’s administration.

“The failure of the ‘red surge’ to really materialise has left Wall Street rather adrift,” said AJ Bell financial analyst Danni Hewson.

“What do the results mean for Joe Biden’s future plans? Exactly what will the shape of those decision-making houses look like once the dust settles, and what does it mean for regulatory changes and spending plans?

“What’s clear is if tomorrow’s inflation figures surprise on the upside there will be no wiggle room for US central bankers, rates will keep rising and the storm investors are weathering will rage for a little longer than is comfortable.”

In economic news, China’s factory gate prices fell into negative territory in October according to official data, while consumer inflation softened as rolling lockdowns and weakening global demand weighed heavily.

According to the National Bureau of Statistics, the producer price index fell 1.3% year-on-year, reversing a 0.9% gain in September and the lowest since December 2020.

It was, however, marginally better than consensus expectations for a 1.5% decline.

Consumer price inflation, meanwhile, fell to 2.1% from 2.8% in September, below expectations for around 2.4%.

Core CPI, which strips out more volatile elements, was unchanged at 0.6% year-on-year.

“In a global economy suffering from high inflation, China’s CPI disinflationary trend is symptomatic of weak domestic demand and labour market slack, which in turn are rooted in the property sector’s malaise and the unswerving adherence to zero-Covid policy,” said Duncan Wrigley at Pantheon Macroeconomics.

"We think CPI will continue to slow, as the impact of weak domestic demand and the influence of slowing cost-push energy inflation outweigh the sharp increase in pork prices.

"The move into producer goods deflation was led by a 6.7% drop in mining PPI, down from 3.5% in September, reflecting weaker energy prices and upstream demand from heavy industries and property construction.”

On London’s equity markets, JD Wetherspoon slumped 6.31% after the pub chain posted a rise in sales as it continued to recover from pandemic restrictions, but said it had seen a slight slowdown in October and highlighted "significantly higher" costs.

FirstGroup slid 9.92% after the passenger transport operator’s first-half numbers missed expectations, while ITV retreated 4.32% after the broadcaster reported a rise in sales for the first nine months of the year, as its production arm offset a fall in television advertising revenue.

Food and clothing retailer Marks and Spencer fell 3.37% after saying it expected a material contraction in demand over the next 18 months, as it reported a drop in interim profit, but backed its customers to be more resilient than market assumptions.

Aviva was down 1.75% even after it posted a 10% rise in third-quarter gross written premiums and backed its dividend and capital returns guidance.

Vodafone Group was 2.01% weaker after saying it had agreed a joint venture deal with infrastructure fund manager Global Infrastructure Partners (GIP) and private equity firm KKR to hold its 81.7% stake in Vantage Towers, valuing the business at €16.2bn.

Flutter Entertainment slid 2.72% despite boosting its forecasts for annual US revenues after a strong third quarter.

On the upside, engineer Smiths Group gained 3.54% after it backed its full-year expectations and said growth had accelerated in the first quarter.

Taylor Wimpey reversed earlier losses to close up 2.11%, after the housebuilder reported a fall in its sales rate alongside a spike in cancellations as the mounting cost-of-living crisis dented demand.

Insurer Admiral Group was in the black by 2.95%, having fallen a day earlier after results from peer Direct Line.

Associated British Foods was ahead 3.5%, rising for the second day in a row after reporting a jump in full-year sales and profits on Tuesday, despite surging input cost inflation, following a bumper performance at its budget fashion brand Primark.

Reporting by Josh White for Sharecast.com. Additional reporting by Michele Maatouk, Frank Prenesti and Abigail Townsend.

Market Movers

FTSE 100 (UKX) 7,296.25 -0.14%
FTSE 250 (MCX) 18,649.00 -0.26%
techMARK (TASX) 4,321.98 0.17%

FTSE 100 - Risers

Smiths Group (SMIN) 1,608.00p 3.54%
Associated British Foods (ABF) 1,509.00p 3.50%
Admiral Group (ADM) 1,986.50p 2.95%
Haleon (HLN) 286.25p 2.89%
RS Group (RS1) 910.00p 2.72%
Persimmon (PSN) 1,281.50p 2.19%
Taylor Wimpey (TW.) 97.66p 2.11%
Berkeley Group Holdings (The) (BKG) 3,621.00p 2.06%
Fresnillo (FRES) 821.40p 1.78%
SSE (SSE) 1,616.50p 1.77%

FTSE 100 - Fallers

Ocado Group (OCDO) 668.40p -5.00%
Informa (INF) 550.60p -3.74%
Harbour Energy (HBR) 376.10p -3.32%
Glencore (GLEN) 510.40p -2.73%
Flutter Entertainment (CDI) (FLTR) 11,465.00p -2.72%
Shell (SHEL) 2,383.50p -2.24%
Vodafone Group (VOD) 104.10p -2.01%
Smurfit Kappa Group (CDI) (SKG) 2,976.00p -1.85%
Aviva (AV.) 426.30p -1.75%
Entain (ENT) 1,304.50p -1.51%

FTSE 250 - Risers

Hochschild Mining (HOC) 62.25p 6.50%
Ferrexpo (FXPO) 129.50p 4.35%
BBGI Global Infrastructure S.A. NPV (DI) (BBGI) 157.60p 4.10%
Telecom Plus (TEP) 2,245.00p 3.22%
Beazley (BEZ) 661.00p 2.56%
Hilton Food Group (HFG) 550.00p 2.23%
Moneysupermarket.com Group (MONY) 186.40p 2.19%
Redrow (RDW) 448.00p 1.96%
Genus (GNS) 3,002.00p 1.76%
Bellway (BWY) 1,970.00p 1.70%

FTSE 250 - Fallers

FirstGroup (FGP) 96.30p -9.92%
Wetherspoon (J.D.) (JDW) 457.40p -6.31%
Petrofac Ltd. (PFC) 114.50p -5.76%
ITV (ITV) 70.00p -4.32%
IP Group (IPO) 67.65p -4.24%
SSP Group (SSPG) 205.20p -3.89%
Mitchells & Butlers (MAB) 135.00p -3.85%
Essentra (ESNT) 224.50p -3.65%
888 Holdings (DI) (888) 99.70p -3.48%
TI Fluid Systems (TIFS) 130.40p -3.41%