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FTSE 100 heading for worst week since August, as UK 30-year borrowing costs hit 25-year high – business live | Business

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FTSE 100 on track for worst week since August

Britain’s stock market is on track for its worst week in two months, as geopolitical fears grip investors.

The FTSE 100 index has fallen by 90 points so far today, or -1.2%, to 7,409 points – its third hefty points fall in a row. Mining giant Anglo American (-4.2%) is leading the fallers, followed by grocery technology group Ocado (-3.7%).

That takes the blue-chip index down to its lowest level since 4 October, leaving it on track for its lowest closing level since late August.

So far this week, the FTSE 100 index has fallen by 2.5%, its 5th worst week of 2023, and the biggest one-week fall since mid-August.

The FTSE 100 share index Photograph: Refinitiv

The Israel-Hamas war, deadlock on US Capitol Hill over the choice of a speaker and the selloff in the US bond market are all worrying the markets.

Bob Savage, head of markets strategy and insights at BNY Mellon, says the fear of trouble in politics, war and weather are colliding to take risk off the table:

Risk off as US rates, ongoing fear of Israel/Hamas, lack of US House leadership, higher oil, higher gold and little relief in global bonds leave many dreading the weekend and the fear of worse headlines.

Key events

FT: Avanti to cut services on some of UK’s busiest intercity routes before Christmas

There could be further pain for rail passengers in the run-up to Christmas.

The Financial Times is reporting that Avanti West Coast is cutting the number of trains running on some of the UK’s busiest intercity lines in the run-up to Christmas.

The FT says:

Avanti plans to cut some services on its routes from London to Manchester, Birmingham and North Wales from December 9, including cutting trains between London and Manchester by a third on Saturdays, according to people familiar with the matter.

Avanti blames staff shortages, but the plan is likely to cause anger – coming just a month after the company won a long-term contract to keep running intercity services on the west coast main line.

Susannah Streeter, head of money and markets at Hargreaves Lansdown, agrees that it’s been a dismal session as geo-political worries swirl,

‘’It’s turning out to be a dismal session with a rising pressure cooker of concern about the impact of high interest rates and geo-political turmoil.

As painful borrowing costs weigh down on households, UK consumer confidence has taken a big knock and sharply slowing sales in September signal a deep downturn for retail.

The pound has been sideswiped by the bleaker prospects for the UK, falling to five-month lows against the euro.

Investor sentiment in Europe today has been “sour”, reports Michael Hewson, chief market analyst at CMC Markets UK.

He explains:

European markets have continued to look soft, finishing a negative week very much on the back foot with the DAX sliding below its October lows to its lowest levels since March, as concerns grow that the war between Israel and Hamas morphs into a wider conflict.

The FTSE100 has had an abysmal last 3 days seeing a peak to trough move of over 275 points from this week’s highs, or a decline of over 3%, and is closing in on its October lows below 7,400. The FTSE250 has fared little better sliding to one-year lows.

Reports of attacks on US bases in Iraq and Syria overnight increased concerns that the US could get drawn into the conflict more than it already is, if it strikes back at those who are attacking Israel, or more crucially hits back at those who are attacking its own assets.

Today’s declines have been broad based and sector wide with tech and basic resources acting as the main drags, while haven plays like gold, and the Swiss franc have continued to make gains.

There was encouraging news on inflation from Germany this morning.

Prices charged by German industrial producers slumped by 14.7% year-on-year in September, the largest annual decline since data started being collected in 1949.

The drop in wholesale price was mainly due to lower energy prices compared to a year ago, while intermediate goods (used to make final products for sale) were also cheaper than in September 2022.

FTSE 250 at one-year low

The UK’s FTSE 250 index, which contains medium-sized companies, has dropped to a new one-year low today.

The FTSE 250 is down 0.9%, adding to losses earlier this week.

The index, which is seen as a gauge of the UK economy, has lost almost 10% so far this year.

Wall Street has opened a little lower, with the S&P 500 index down 0.18%.

Oil, meanwhile, is on track for its second weekly gain in a row – driven by fears of escalating conflict in the Middle East.

Commerzbank analysts wrote in a note on Friday:

“Signs that an Israeli ground offensive in the Gaza Strip is imminent have been pushing oil prices up significantly since yesterday. A barrel of Brent now costs $93 again. So far, however, the supply situation on the market has not changed.”

FTSE 100 on track for worst week since August

Britain’s stock market is on track for its worst week in two months, as geopolitical fears grip investors.

The FTSE 100 index has fallen by 90 points so far today, or -1.2%, to 7,409 points – its third hefty points fall in a row. Mining giant Anglo American (-4.2%) is leading the fallers, followed by grocery technology group Ocado (-3.7%).

That takes the blue-chip index down to its lowest level since 4 October, leaving it on track for its lowest closing level since late August.

So far this week, the FTSE 100 index has fallen by 2.5%, its 5th worst week of 2023, and the biggest one-week fall since mid-August.

The FTSE 100 share index
The FTSE 100 share index Photograph: Refinitiv

The Israel-Hamas war, deadlock on US Capitol Hill over the choice of a speaker and the selloff in the US bond market are all worrying the markets.

Bob Savage, head of markets strategy and insights at BNY Mellon, says the fear of trouble in politics, war and weather are colliding to take risk off the table:

Risk off as US rates, ongoing fear of Israel/Hamas, lack of US House leadership, higher oil, higher gold and little relief in global bonds leave many dreading the weekend and the fear of worse headlines.

Knight Frank: “Stubborn inflation means subdued autumn for UK housing market”

For the second year running, the seasonal autumn bounce has failed to materialise in the UK housing market this year, warns estate agents Knight Frank.

They say that the UK’s stubborn inflation rate means the housing market will see a “subdued autumn”.

That would follow the slowdown last autumn, when the mini-budget drove up mortgage costs.

But next spring may produce a seasonal bounce in activity if inflation appears tamed.

A chart of UK housing activity
Photograph: Knight Frank

Tom Bill, head of UK residential research at Knight Frank, warns that the conflict in the Middle East could exacerbate the situation with an inflationary rise in the oil price, adding:

In the UK, it is the strength of the Jobs market and wage growth that is driving underlying inflation. Ordinarily, a strong jobs market supports housing transactions, just not when it’s keeping mortgage costs so high.

So, what will fix it this time? Rishi Sunak’s departure may be closer following two poor by-election results last week, but more relief will only come once buyers and sellers accept that rates have settled at their new normal and house prices reflect that. With the Bank of England fighting a prolonged battle with inflation, nobody is ready to announce “job done” quite yet. However, after 14 consecutive rises followed by a pause last month, we must be in the endgame, which means next spring will be an important moment.

The pound has dropped to its weakest level against the euro in five months today, after September’s weak retail sales.

Sterling fell to €1.1433 against the single currency, with the slide in UK consumer confidence also weighing on the currency.




FTSE 100 on track for worst week since August

Britain’s stock market is on track for its worst week in two months, as geopolitical fears grip investors.

The FTSE 100 index has fallen by 90 points so far today, or -1.2%, to 7,409 points – its third hefty points fall in a row. Mining giant Anglo American (-4.2%) is leading the fallers, followed by grocery technology group Ocado (-3.7%).

That takes the blue-chip index down to its lowest level since 4 October, leaving it on track for its lowest closing level since late August.

So far this week, the FTSE 100 index has fallen by 2.5%, its 5th worst week of 2023, and the biggest one-week fall since mid-August.

The FTSE 100 share index
The FTSE 100 share index Photograph: Refinitiv

The Israel-Hamas war, deadlock on US Capitol Hill over the choice of a speaker and the selloff in the US bond market are all worrying the markets.

Bob Savage, head of markets strategy and insights at BNY Mellon, says the fear of trouble in politics, war and weather are colliding to take risk off the table:

Risk off as US rates, ongoing fear of Israel/Hamas, lack of US House leadership, higher oil, higher gold and little relief in global bonds leave many dreading the weekend and the fear of worse headlines.

Key events

FT: Avanti to cut services on some of UK’s busiest intercity routes before Christmas

There could be further pain for rail passengers in the run-up to Christmas.

The Financial Times is reporting that Avanti West Coast is cutting the number of trains running on some of the UK’s busiest intercity lines in the run-up to Christmas.

The FT says:

Avanti plans to cut some services on its routes from London to Manchester, Birmingham and North Wales from December 9, including cutting trains between London and Manchester by a third on Saturdays, according to people familiar with the matter.

Avanti blames staff shortages, but the plan is likely to cause anger – coming just a month after the company won a long-term contract to keep running intercity services on the west coast main line.

Susannah Streeter, head of money and markets at Hargreaves Lansdown, agrees that it’s been a dismal session as geo-political worries swirl,

‘’It’s turning out to be a dismal session with a rising pressure cooker of concern about the impact of high interest rates and geo-political turmoil.

As painful borrowing costs weigh down on households, UK consumer confidence has taken a big knock and sharply slowing sales in September signal a deep downturn for retail.

The pound has been sideswiped by the bleaker prospects for the UK, falling to five-month lows against the euro.

Investor sentiment in Europe today has been “sour”, reports Michael Hewson, chief market analyst at CMC Markets UK.

He explains:

European markets have continued to look soft, finishing a negative week very much on the back foot with the DAX sliding below its October lows to its lowest levels since March, as concerns grow that the war between Israel and Hamas morphs into a wider conflict.

The FTSE100 has had an abysmal last 3 days seeing a peak to trough move of over 275 points from this week’s highs, or a decline of over 3%, and is closing in on its October lows below 7,400. The FTSE250 has fared little better sliding to one-year lows.

Reports of attacks on US bases in Iraq and Syria overnight increased concerns that the US could get drawn into the conflict more than it already is, if it strikes back at those who are attacking Israel, or more crucially hits back at those who are attacking its own assets.

Today’s declines have been broad based and sector wide with tech and basic resources acting as the main drags, while haven plays like gold, and the Swiss franc have continued to make gains.

There was encouraging news on inflation from Germany this morning.

Prices charged by German industrial producers slumped by 14.7% year-on-year in September, the largest annual decline since data started being collected in 1949.

The drop in wholesale price was mainly due to lower energy prices compared to a year ago, while intermediate goods (used to make final products for sale) were also cheaper than in September 2022.

FTSE 250 at one-year low

The UK’s FTSE 250 index, which contains medium-sized companies, has dropped to a new one-year low today.

The FTSE 250 is down 0.9%, adding to losses earlier this week.

The index, which is seen as a gauge of the UK economy, has lost almost 10% so far this year.

Wall Street has opened a little lower, with the S&P 500 index down 0.18%.

Oil, meanwhile, is on track for its second weekly gain in a row – driven by fears of escalating conflict in the Middle East.

Commerzbank analysts wrote in a note on Friday:

“Signs that an Israeli ground offensive in the Gaza Strip is imminent have been pushing oil prices up significantly since yesterday. A barrel of Brent now costs $93 again. So far, however, the supply situation on the market has not changed.”

FTSE 100 on track for worst week since August

Britain’s stock market is on track for its worst week in two months, as geopolitical fears grip investors.

The FTSE 100 index has fallen by 90 points so far today, or -1.2%, to 7,409 points – its third hefty points fall in a row. Mining giant Anglo American (-4.2%) is leading the fallers, followed by grocery technology group Ocado (-3.7%).

That takes the blue-chip index down to its lowest level since 4 October, leaving it on track for its lowest closing level since late August.

So far this week, the FTSE 100 index has fallen by 2.5%, its 5th worst week of 2023, and the biggest one-week fall since mid-August.

The FTSE 100 share index
The FTSE 100 share index Photograph: Refinitiv

The Israel-Hamas war, deadlock on US Capitol Hill over the choice of a speaker and the selloff in the US bond market are all worrying the markets.

Bob Savage, head of markets strategy and insights at BNY Mellon, says the fear of trouble in politics, war and weather are colliding to take risk off the table:

Risk off as US rates, ongoing fear of Israel/Hamas, lack of US House leadership, higher oil, higher gold and little relief in global bonds leave many dreading the weekend and the fear of worse headlines.

Knight Frank: “Stubborn inflation means subdued autumn for UK housing market”

For the second year running, the seasonal autumn bounce has failed to materialise in the UK housing market this year, warns estate agents Knight Frank.

They say that the UK’s stubborn inflation rate means the housing market will see a “subdued autumn”.

That would follow the slowdown last autumn, when the mini-budget drove up mortgage costs.

But next spring may produce a seasonal bounce in activity if inflation appears tamed.

A chart of UK housing activity
Photograph: Knight Frank

Tom Bill, head of UK residential research at Knight Frank, warns that the conflict in the Middle East could exacerbate the situation with an inflationary rise in the oil price, adding:

In the UK, it is the strength of the Jobs market and wage growth that is driving underlying inflation. Ordinarily, a strong jobs market supports housing transactions, just not when it’s keeping mortgage costs so high.

So, what will fix it this time? Rishi Sunak’s departure may be closer following two poor by-election results last week, but more relief will only come once buyers and sellers accept that rates have settled at their new normal and house prices reflect that. With the Bank of England fighting a prolonged battle with inflation, nobody is ready to announce “job done” quite yet. However, after 14 consecutive rises followed by a pause last month, we must be in the endgame, which means next spring will be an important moment.

The pound has dropped to its weakest level against the euro in five months today, after September’s weak retail sales.

Sterling fell to €1.1433 against the single currency, with the slide in UK consumer confidence also weighing on the currency.

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