Derren Nathan, head of equity research, Hargreaves Lansdown: “The FTSE 100 is down at the open, looking weaker than early futures prices had anticipated. Investors are choosing to take a negative view of the double-edged sword that is GDP. The initial readout was worse than expected with output shrinking 0.1% in September compared to forecasts of a flat outcome. Production was the most notable brake on growth, impacted by the cyber-attack on Jaguar Land Rover, one of the costliest in UK history, and driving a 28.6% fall in production from the motor industry. There were however some more encouraging signs in construction and services which each grew by 0.2%.
Overall, however growth in the quarter was just 0.1%, with no growth at all on a per head basis. Today’s figures provide further support for a further rate cut next month with markets now pricing in over an 80% chance of a quarter point drop. However, the weak growth backdrop will do little to alleviate more structural concerns about UK productivity and provides little wiggle room for giveaways in this month’s Budget.
The uncertainty around the Budget is weighing heavy on the housing market, with the RICS UK Residential Survey showing a 24% drop in new buyer enquiries in October, with pricing pressure also building. London, the South East and East Anglia are looking particularly exposed. Against this backdrop housebuilder Persimmon’s third quarter statement can be taken as a win, with forward sales up 15% and 2025 guidance unmoved.
The 43-day US government shut down, the longest in history is over. US futures are pointing up with Wall Street expected to build on yesterday’s gains aftera strong day for financials. Chipmaker AMD was the notable tech riser of the day as CEO Lisa Su came out with projections of 35% revenue growth over the next three-five years in the face of ‘insatiable’ demand for AI. Scale wise AMD is unlikely to rain on NVIDIA’s parade, but its ambitious product roadmap has been well received, and the opportunity is big enough for it to retain a seat at the table.
Brent Crude oil prices have extended yesterday’s sharp decline and with barrels being traded for around $62.7 a piece after OPEC did an about turn on earlier forecasts of a deficit in 2026. The US Energy Information Administration (EIA) also raised its domestic output forecast for next year. All eyes now turn to EIA inventory figures due today which are forecast to show a 1.1 billion barrel increase.”
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