FTSE 100 closes up 0.06%
House-builders on the run after March mortgage lending plunges year-on-year
Sterling's strength crushes Ashtead
FTSE 100 was the comeback kid today on Thursday and crept into positive territory for the close.
The UK benchmark closed around four points ahead at 7,118. Benchmark indices in France and German were also higher.
In the US, the Dow Jones was flying - up over 140 points at the time of writing as traders appeared to be brushing off any potentially worrying world issues around.
Joshua Mahony, at IG Index, said: "It's often said that markets do not like uncertainty, yet the rise we have seen in the pound in the wake of Theresa May’s spectacular election u-turn suggests traders are largely taking this one in their stride for now.
"Despite the impending French election and heightened aggression between the US and North Korea, it is clear that markets largely see these threats as fleeting and superficial."
On Footsie, financial stocks did well. St James Place (LON: STJ) was the biggest gainer, up 1.89% to $1,078p.
1pm...FTSE 100 in positive territory
It’s only by half a point, but the FTSE 100 was surprisingly in positive territory in the lunchtime session.
That was despite the house builders being in the dog-house, with Barratt Developments PLC (LON:BDEV) off 2.3%, Persimmon PLC (LON:PSN) down 1.4% and Taylor Wimpey PLC (LON:TW.) sliding 1.1% after mortgage lending in March plunged year-on-year.
The Council of Mortgage Lending reported gross mortgage lending in March was up 19.4% month-on-month but down 18.7% on March 2016.
March’s CML gross mortgage data does little to change our suspicion that the housing market is being affected by the increasing squeeze on consumers and their concerns over the outlook.
“We believe markedly weakening consumer fundamentals, likely mounting caution over making major spending decisions, and elevated house price-to-earnings ratios will weigh down on housing market activity and house prices over the coming months; however, a shortage of supply is putting a floor under prices,” opined Howard Archer, the chief UK & European Economist at IHS Markit.
“We share the CML’s view that June’s General Election is unlikely to materially affect the housing market,” Dr Archer added, but the share price reaction in the house-building sector, not to mention DIY retailer Kingfisher PLC’s (LON:KGF) 2.1% setback, suggests the market is concerned.
10.40 ... Sterling drifts lower with dollar earners out of favour
The FTSE 100 remained stuck in neutral as the pound continued to rise in expectation of an increased Conservative majority after the general election.
Considering around two-thirds of the top-share index’s constituents were in the red, the FTSE 100 was doing well to be only 12 points lower at 7,103.
The Anglo-Dutch consumer goods giant recently had a scare when US plastic cheese maker Kraft Heinz Co (NASDAQ:KHC) made a bid approach, so the divi hike was probably made with a view to keeping shareholders sweet.
Ashtead’s shares were 4.3% lower, making it the worst blue-chip performer.
09.02 ... FTSE 100 off to a subdued start
The FTSE 100 opened its account Thursday in negative territory – but only just as the index of blue-chip shares fell six points to 7,108.53.
The plant hire firm Ashtead (LON:AHT), a big dollar earner, was the Footsie’s biggest casualty with a 4.3% fall as pound strengthened against the US currency.
Shares in Ortac Resources (LON:OTC) zoomed ahead 40% after it confirmed plans to form a joint-venture to develop the company’s Slovakian gold mine.
The election hangover looks likely to linger with the FTSE 100 called 18 points lower to 7,096.36, putting it in negative territory for the year to date.
The recent rally in the pound after Theresa May made her surprise call to the polls is now only part of the story behind the markdown of blue-chip index, which has been bested by the resurgent mid-caps, analysts said.
“Recent weakness in commodity prices has also weighed on the Footsie, along with a fall in global bond yields which has hurt financial services stocks, both of which don’t have as big a weighting on the FTSE 250,” said Michael Hewson at CMC Markets.
In Asia, stocks were, broadly, in positive territory, while Wall Street was mixed, with the tech-heavy NASDAQ up with the Dow Jones and broader-based S&P 500 ending Wednesday lower.
- Pound worth US$1.2819.
- Gold worth US$1,280.30, down US$3.10.
- Brent crude US$53.17 a barrel, up 24 cents.
- Mark Zuckerberg confirms Facebook is working on mind-reading technology – Telegraph.
- The UK dominates the European financial technology industry, with figures showing it boasts more billion-dollar fintech companies than the rest of the continent put together – Telegraph.
- Alphabet, the owner of Google, has teamed up with two leading academic institutions to collect health data on more than 10,000 people to help medical researchers unearth clues that can predict disease – FT.
- Oil dropped more than US$2 a barrel after data showed an unexpected rise in US gasoline stockpiles for the first time since February and U.S. crude production hit its highest level since mid-2015 – FT.
- A record amount of money flowed into BlackRock’s exchange traded funds business iShares in the first quarter, but revenues fell short of expectations, as the industry undergoes a price war – FT.
- The International Monetary Fund has warned that Brexit’s unpredictable outcome poses a risk to global financial stability at a time when it is already challenged by heavily-indebted US corporations, China’s credit bubble and weak European banks – Guardian.
- The government has agreed a £2.3bn sale of the Green Investment Bank to the Australian bank Macquarie, according to the Guardian citing sources close to the process.