Business

London stocks fall after UK budget announcement

Wall Street tumbles after warnings from Microsoft and Meta Platforms about escalating AI costs

Traders working on the New York Stock Exchange floor. Photograph: Spencer Platt/Getty Images
Traders working on the New York Stock Exchange floor. Photograph: Spencer Platt/Getty Images
Fiona Keeley
Thu Oct 31 2024 - 20:09

The Iseq was down by 0.48 per cent on Thursday. It comes as stocks in the UK fell, with investors absorbing the details of the UK budget announced on Wednesday.

Dublin

From a banking perspective, AIB rose 1.37 per cent to €4.89 on Thursday. Meanwhile, Bank of Ireland fell by 0.33 per cent to €8.46. Dalata Hotels rose 1.42 per cent to €4.28. Among the food stocks, Glanbia dropped 2.18 per cent to €15.25 and Kerry Group fell 1.93 per cent to €91.50.

Ryanair rose marginally by 0.23 per cent to €17.59. Kingspan dropped by 0.19 per cent to €80.65. From a home builders perspective, Glenveagh rose by 1.27 per cent to €1.60.

London

The UK’s main stock indexes fell to a near three-month low on Thursday as investors scaled back bets of rate cuts from the Bank of England (BoE) following Britain’s new big-spending budget plans, which have revived worries about inflation.

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The blue-chip FTSE 100 dropped 0.6 per cent, while the domestically focused FTSE 250 fell 1.5 per cent. Both the indexes touched their weakest level since August 8th and looked set for monthly losses.

Rate-sensitive homebuilder stocks tumbled about 6 per cent as British short-term borrowing costs jumped.

New finance minister Rachel Reeves announced the biggest tax increases in three decades in her first budget on Wednesday, saying she needed to spend heavily to repair the country’s public services.

Britain’s independent budget forecaster said her plans would boost the size of the world’s sixth-largest economy in the short run but raise inflation too, prompting investors to rein in bets that the BoE will reduce rates rapidly over the next year.

Traders still stuck to bets that the central bank will cut rates on November 7th by a quarter of a percentage point.

British medical equipment maker Smith and Nephew tumbled 12.5 per cent, falling the most among FTSE 100 components, after it cut its annual underlying revenue growth forecast.

Europe

Europe’s Stoxx 600 slumped over 1 per cent on Thursday, notching the steepest monthly decline in a year, dragged down by bleak corporate earnings and as investors await more clarity on macroeconomic conditions and the US election outcome.

The pan-European main stock index closed 1.2 per cent lower, falling to its lowest level since mid-August, with the retail sector leading an overall market decline with a 4 per cent slide.

The Stoxx 600 notched a monthly decline of 3.4 per cent, with the technology and real estate sectors bearing the brunt of a sell-off this month.

France’s main Cac 40 index was the top monthly laggard among its regional peers.

Some caution also emerged after a higher-than-expected rise in eurozone inflation in October and scope for a further pickup in coming months, bolstering the case for caution in European Central Bank monetary policy easing. This follows a 25 bps interest-rate cut this month.

New York

Wall Street tumbled on Thursday, after warnings from Microsoft and Meta Platforms about escalating AI costs curtailed enthusiasm for megacap stocks, which have driven the market rally this year.

Shares of Facebook-owner Meta Platforms dropped 4 per cent, while Microsoft fell 5.6 per cent, despite both companies beating earnings estimates in results reported after the bell on Wednesday.

The yield on the benchmark 10-year Treasury note also rose, past 4.3 per cent, further pressuring equities.

Meanwhile, the Personal Consumption Expenditures price index, the Federal Reserve’s preferred inflation metric, rose 0.2 per cent in September, in line with economists’ expectation. However, the core figure was 2.7 per cent year over year, slightly higher than the 2.6 per cent forecast, while consumer spending increased a little more than expected.

After the data, traders stuck to bets for a 0.25 per cent reduction in the Fed’s November meeting.

Microsoft and Meta both said their capital expenses were growing due to AI investments, which could impact profitability, even as investors look for quick returns on the billions already poured in. Additional reporting: agencies

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