Stock markets: FTSE 100 dips on inflation, NGG profit up
14:00, 18 November 2021
UK stocks dipped lower Thursday morning, with the FTSE 100 index dropping, on investors concern about rising inflation. UK data showed inflation reached a 10-year high in October. This may mean the Bank of England could become the first central bank in the world to raise rates in December, after central banks brought rates down to historic lows last year.
European stocks on the other hand, were more buoyant, with the Euro Stoxx 50 gaining slightly, backed by auto stocks, such as Germany’s Daimler and general investment sentiment shrugging off concerns of economic slowdown.
Overnight in Asia, Hong Kong’s Hang Seng index also dropped.
In the US, the S&P 500 opened higher but moved lower in early trading.
What’s interesting today: National Grid announced better-than-expected earnings, as their Norwegian power link improved the group’s outlook. Nvidia shares also rallied after the designer of graphic processing units reported strong third quarter earnings, with Royal Mail also pledging to return c.£400m to its investors after its profits increased.
Stocks chart – Credit: TradingViewWhy are UK stocks down today?
Continuing impact of high inflation: UK stocks are still recovering from the effects of yesterday's inflation data, which showed UK inflation reached a 10-year high in October.
- What this means: Global markets have seen inflation touch multi-year highs recently, especially in the UK and Europe. Continuing high inflation may force the Bank of England to become the first major central bank in the world to raise interest rates in December, after it, along with the US Federal Reserve and the European Central Bank had earlier on agreed to keep rates steady for the time being. This will result in a contractionary monetary policy, which will greatly reduce the supply of money in the economy, and raise borrowing costs everywhere.
Increasing Covid-19 cases: With the number of increasing Covid-19 cases, a number of European states, such as Austria, have already closed their borders and announced fresh restrictions.
What is your sentiment on UK100?
- What this means: The number of fresh cases is a cause of concern for investors as they may mean new lockdown measures and tighter restrictions for the economy, which will adversely impact already struggling businesses which have still not fully recovered from the first phase of lockdowns. This is more likely as winter approaches and vaccination programs still have a way to go.
Stock markets: key highlights
- The FTSE 100 index was down by 0.19% to touch 7277.5 points
- The Euro Stoxx 50 index on the other hand inched up 0.07% to reach 4404.1 points
- Germany’s DAX index also edged up 0.08% to reach 16264.7 points
- France’s CAC 40 index rose 0.21% to reach 7172.1 points
- Transportation and consumer durables led the market, whereas health technology and retail lagged behind
- The US S&P 500 futures is flat at 4,683.81
Market sentiment
- The CBOE Volatility Index, or VIX, a measure of expected fluctuations in US stocks, rose to 17.72
- The US dollar index also fell to $95.80
- The US 10-year bond yield index followed suit to inch lower to 1.604%
Top stock gainers: UK and Europe
- In the UK, the top stock gainers are Royal Mail, Persimmon and Berkeley Group Holdings
- Royal Mail gave back c.£400mn to its investors after the coronavirus pandemic provided a boost to parcels
- Persimmon shares rallied after it bid for 665 new homes
- Berkeley Group Holdings shares increased after it boosted investor confidence in its ability to manage debt well
- In Europe, the best performing companies were Schneider Electric, Daimler and ASML NV
- Schneider Electric shares rallied after its People Analytics division proved to be profitable
- Daimler shares did well following the company successfully delivering 300 all-electric new trucks
- ASML NV shares gained following the company’s pledge with South Korea to increase cooperation in the semiconductor space
Top stock losers: UK and Europe
- On the FTSE 100, the worst performing companies were GlaxoSmithKline, Polymetal International and Ocado Group
- GlaxoSmithKline shares suffered after a recent Mail on Sunday report speculated that the world's largest vaccine company by revenue may be interested in bidding for autoimmune drug company Aurinia Pharmaceuticals
- Polymetal International shares have been struggling to recover after the precious metals mining group posted lower-than-expected earnings for the third quarter
- Ocado Group found its shares dropping after the online grocery solutions and logistics business announced that it would start providing cashback in Bitcoin
- On the Euro Stoxx 50, the top losers were Airbus, Adidas and LVMH Moet Hennessy Louis Vuitton
- Airbus shares inched lower after reports surfaced of Etihad Airways yet to conform some orders
- Adidas shares dropped after their new Manchester United jersey was revealed to have been leaked before release
- Louis Vuitton shares edged lower as the luxury goods group announced that it would be making some strategy changes and increasing their travel retail presence in China
Stocks news: what you need to know today
- Metro Bank shares dropped as Carlyle leaves takeover talks
- Tombola gets bought by Flutter Entertainment for $402 mn
- UK markets have a subdued outlook as inflation soars
- Evolution Mining sees stocks gain as the company purchases new gold mine
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