Markets report: Banking stocks help FTSE 100 shrug off services sector weakness
London ended the week on a high after two straight sessions of gains as Brexit talks continue. Rises came despite the FTSE 100 losing steam after a morning rally, as a gauge of private sector growth hit a four-month low.
The UK purchasing managers’ index dropped to 52.9 from 56.5 in September, below expectations of 54. A reading above 50 indicates expansion.
October’s rate of expansion “reflected a much weaker contribution from the service economy”, due to the impact of restrictions on the hospitality sector and spending, said IHS Markit, which gathered the data.
Sterling fell against the US dollar on the news, but still ended the week up at $1.3024 after hitting its highest level in six weeks on Wednesday over mounting optimism that an EU deal will be done.
The FTSE 100 added 1.3pc, to 5,860, led by banks. Lenders got a lift as Barclays jumped 7pc after expectation-beating results. Lloyds and HSBC added 5pc and Standard Chartered rose 4.2pc.
Barclays marked the start of the third-quarter earnings season for London-listed lenders, with its blue-chip peers to release results next week.
The FTSE 100 was led by Rolls-Royce as the engine maker signed a new deal with the Ministry of Defence. Its shares jumped 7.4pc to 244p.
InterContinental Hotels was one of the few fallers, down 1.5pc to £42.01, after analysts sounded caution over its future trading. The Holiday Inn owner posted a recovery in comparable revenue per available room – a key sector metric – for the third quarter, at minus 53.4pc compared to minus 75pc in the second quarter. Occupancy rose to 44pc from 25pc, even as 199 hotels – or 3pc of its estate – remained closed.
It warned its performance was varying by region and the future looked uncertain. Chief executive Keith Barr said: “A full industry recovery will take time and uncertainty remains regarding the potential for further improvement in the short term.”
Redburn’s Alex Brignall noted cancellations “stepped up significantly” in August and September, a sign of cracks emerging.
London Stock Exchange Group shed 1pc to £84.38 as slightly lower third-quarter revenues of £524m came in line with expectations.
The bourse operator said it had shown a “resilient” performance over the three months to the end of September, despite “challenging market conditions” and that it was making “good progress” on its planned acquisition of financial data giant Refinitiv.
Referring to its agreement to sell Italy’s stock exchange to rival Euronext as part of efforts to get the Refinitiv deal past regulators, LSE group added: “We believe the proposed divestment of the Borsa Italiana group will significantly contribute to addressing EC concerns".
