London open: Stocks edge lower as US earnings disappoint

(Sharecast News) - London stocks were a touch weaker in early trade on Friday after results from US technology giants failed to impress.
At 0900 GMT, the FTSE 100 was down 0.2% at 5,569.39, with markets on course for their worst week since the selloff in March.

CMC Markets analyst Michael Hewson said: "US markets finished on a much more positive note yesterday on optimism that last night's waterfall of tech earnings after the bell would help continue a stabilisation in sentiment, after what has been a brutal week for equity markets in general.

"This proved to be a false hope, despite some by and large fairly decent numbers. Amazon for example blew the doors in terms of profits, making more money in the first nine months of the year, than the whole of 2019, while also adding over 400,000 jobs since the beginning of 2020.

"Investors weren't impressed however as the shares were sold off after hours over some disappointment over its estimate for operating income in Q4.

"This comes across as nit-picking somewhat, given Amazon estimates for Q4 sales, were even higher than their record breaking Q3, but nonetheless we've seen tech stocks in Asia also rollover after Apple sales of iPhones fell short in their Q4 numbers."

Spreadex anlayst Connor Campbell said one of the question marks over the FTSE at the moment is whether or not it has priced in the potential for a nationwide lockdown, "something it feels like the country is creeping towards as the Conservative's piecemeal approach fails to stem the growth of the virus".

"That, as well as how much it is considering next Thursday's Bank of England meeting, and the potential stimulus boost that will come with it."

Investors were digesting the latest survey from Nationwide, which showed that annual house price growth hit a five-year high in October but activity looks set to slow.

Annual house price growth came in at 5.8%, up from 5.0% in September and reaching its highest level since January 2015, with the stamp duty cut lending a hand. In July, Chancellor Rishi Sunak lifted the threshold at which buyers start to pay stamp duty from £125,000 to £500,000.

On the month, house prices rose 0.8% in October, down from 0.9% growth the month before.

Nationwide's chief economist, Robert Gardner, said that data suggests the economic recovery has lost momentum in recent months, while labour market conditions also weakened, with the unemployment rate rising to 4.5% in the three months to August compared to an average of 3.8% in 2019.

"The outlook remains highly uncertain and will depend heavily on how the pandemic and the measures to contain it evolve as well as the efficacy of policy measures implemented to limit the damage to the wider economy," he said. "Behavioural shifts as a result of Covid-19 may provide support for housing market activity, while the stamp duty holiday will continue to provide a near term boost by bringing purchases forward.

"However, activity is likely to slow in the coming quarters, perhaps sharply, if the labour market weakens as most analysts expect, especially once the stamp duty holiday expires at the end of March."

In equity markets, Glencore was in the red after it posted a drop in year-to-date production for most its commodities and cut its full-year production guidance for coal.

On the upside, taxpayer-owned bank NatWest was a high riser after it reported better-than-expected third-quarter profits and made lower bad debt provisions relating to the coronavirus pandemic. The bank posted a £355m pre-tax profit for the three months to September 30, compared to estimates of £75m, while bad loan provisions came in at £254m, compared to the £628m forecast.

Royal Dutch Shell was boosted by an upgrade to 'equalweight' at Barclays.

Pan-African fuel retailer and distributor Vivo Energy rallied after saying it will pay its previously-withdraw 2019 dividend as it reported an improvement in third-quarter volumes amid an easing of coronavirus restrictions.

Market Movers

FTSE 100 (UKX) 5,569.39 -0.22%
FTSE 250 (MCX) 17,125.52 -0.30%
techMARK (TASX) 3,576.12 -0.14%

FTSE 100 - Risers

NATWEST GROUP PLC ORD 100P (NWG) 123.40p 5.34%
Standard Chartered (STAN) 362.80p 5.16%
BT Group (BT.A) 101.15p 2.05%
International Consolidated Airlines Group SA (CDI) (IAG) 92.84p 1.93%
WPP (WPP) 610.80p 1.83%
Persimmon (PSN) 2,347.00p 1.43%
Ashtead Group (AHT) 2,816.00p 1.37%
Barclays (BARC) 106.06p 1.34%
Royal Dutch Shell 'A' (RDSA) 944.60p 1.28%
Royal Dutch Shell 'B' (RDSB) 908.30p 1.11%

FTSE 100 - Fallers

Rolls-Royce Holdings (RR.) 69.60p -3.87%
BHP Group (BHP) 1,466.40p -1.62%
Ocado Group (OCDO) 2,314.00p -1.53%
Unilever (ULVR) 4,399.00p -1.43%
Polymetal International (POLY) 1,641.50p -1.38%
Next (NXT) 5,890.00p -1.34%
Glencore (GLEN) 153.44p -1.32%
London Stock Exchange Group (LSE) 8,286.00p -1.29%
Coca-Cola HBC AG (CDI) (CCH) 1,748.00p -1.19%
Compass Group (CPG) 1,056.50p -1.12%

FTSE 250 - Risers

Vivo Energy (VVO) 74.50p 3.91%
Ninety One (N91) 203.80p 2.93%
Essentra (ESNT) 240.20p 2.65%
Cineworld Group (CINE) 26.60p 2.50%
Renishaw (RSW) 5,600.00p 2.10%
Diversified Gas & Oil (DGOC) 112.40p 1.81%
Virgin Money UK (VMUK) 91.86p 1.75%
SSP Group (SSPG) 180.90p 1.69%
Chemring Group (CHG) 261.50p 1.55%
ICG Enterprise Trust (ICGT) 812.00p 1.50%

FTSE 250 - Fallers

Convatec Group (CTEC) 180.50p -3.94%
Petropavlovsk (POG) 26.40p -3.83%
4Imprint Group (FOUR) 2,070.00p -2.59%
Frasers Group (FRAS) 367.40p -2.49%
Kainos Group (KNOS) 1,186.00p -2.47%
PureTech Health (PRTC) 248.00p -2.17%
Pets at Home Group (PETS) 381.20p -2.16%
Softcat (SCT) 1,112.00p -2.03%
Investec (INVP) 144.05p -2.01%
Allianz Technology Trust (ATT) 2,520.00p -1.95%