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Footsie ends the week in profit as US stocks extend rally

Concerns over "the Donald" appear to be easing, and investors took the opportunity to return to equity markets
City
US stocks were higher for a second straight session today, extending the recovery after having slumped on Wednesday
  • FTSE 100 up 34 points, ensuring it finishes the week in the blue

  • Pound stays above US$1.30

  • Miners , house builders in demand 

  • Nyota enjoys rare day in the sun as it dumps Aussie listing

So far as we know, Donald Trump has not gone “off piste” today, enabling investors to continue their cautious return to equities.

The FTSE 100 index closed at 7,471, up 34 points on the day and 36 points on the week.

Miners did much of the heavy lifting, as commodity prices hardened.  

Outside of the FTSE 350 Nyota Minerals (LON:NYO) enjoyed a rare day at the top of the leader board, rising by a third after it applied to drop its listing on the ASX. Only about 14% of the shareholder base is now based down under.  

3.20pm: US stocks advances helped Footsie higher

The FTSE 100 index pushed back up towards session highs in late afternoon trading, bolstered by opening gains in New York as a lack of fresh news on Washington scandals provided some relief at the end of a volatile week.

Around 3.20pm, the UK blue chip index was ahead 40 points at 7,477, just below the day’s afternoon high of 7,480.28, but below the fresh all-time high of 7,533.70 hit on Wednesday.

US stocks were higher for a second straight session early on today, extending the recovery after having slumped on Wednesday on worries that a scandal over Russian interference in last November’s US election might see President Donald Trump impeached.

In the first hour of trading in New York, the Dow Jones Industrials was up another 98 points at 20,761, while the broader S&P 500 gained 15 points and the tech-laden Nasdaq composite rose nearly 38 points.

Naeem Aslam, chief market analyst at Think Markets UK Ltd, said: “The Trump-Russia saga has eased off and there are signs emerging that a resolution could be in the sight soon and traders can finally start to focus on things which matter the most for them.

“However, it is important to keep in mind that Trump’s arbitrary nature could spark a brand new scandal while he is on his first international tour in a place where sensitive issues matter the most.

“The US president would visit Saudi Arabia and Israel and at the same time, we also have elections taking place over in Iran today.”

The Footsie held firm despite sterling finding further gains today, with the UK currency holding above the US$1.30 level versus the dollar which was recaptured for the first time in almost 8 months yesterday.

In late afternoon trading, the pound was up 0.6% at US$1.3019 versus the greenback, although against the euro, sterling was 0.2% lower at €1.1637.

Housebulders featured among the top blue chip gainers, with Persimmon PLC (LON:PSN) up 0.8% at 2,441p and Taylor Wimpey PLC (LON:TW.) ahead 0.9% at 200.3p after Theresa May pledged to build 1.5mln new homes by 2022 in the Conservative party manifesto unveiled on Thursday.

Advances by heavyweight miners also underpinned the FTSE 100’s gains, with Anglo American PLC (LON:AAL) the top performer, adding 2.6% at 1,094.5p, while Rio Tinto PLC (LON:RIO) took on 1.6% at 3,152p, and Glencore PLC (LON:GLEN) gained 1.5% at 295.4p.,

Precious metals miner Fresnillo PLC (LON:FRES) also remained in demand, ahead 1.4% at 1,603p as  the price of gold held firm, with many investors rushing into the safe haven asset to protect against the political turbulence in the US.

Away from the blue chips, a number of junior oilers got a boost after Europa Oil & Gas (Holdings) PLC (LON:EOG) told investors the Wressle project in Lincolnshire has cleared a major regulatory milestone with the Environment Agency issuing a variation to the project’s mining waste permit.

READ: Wressle clears major regulatory hurdle

Europa owns a 30% stake in Wressle - though it has agreed to sell 10% to Upland Resources – with partners Egdon Resources Ltd (LON:EDR), Celtique Energy and Union Jack Oil PLC (LON:UJO) owning 25%, 30% and 15% respectively.

Union Jack shares saw the biggest boost, up 11.5% to 0.14p, while Egdon gained 7.6% at 8.88p, although Europa itself slipped 1.7% lower to 7.38p.

2.30pm: Weaker pound brings tourist boost

North Americans visitors to Britain surged at the start of this year as tourists took advantage of the weak pound,  official data showed on Friday.

The Office for National Statistics said that some 8.1mln people visited Britain in the first quarter of this year, up from 7.5mln in the same quarter last year, a 7% increase,

It said the number of North American tourists visiting Britain totalled 760,000 in the three months to March, up 17% compared with a year ago.

Howard Archer, chief UK and European economist at IHS Markit, said: "The (data) indicate that the sharply weakened pound is encouraging more visits to the UK from abroad and more spend by visitors,"

"This is especially true of North America, which ties in with the pound's fall being most pronounced against the US  dollar."

The pound tumbled against the dollar after the June 23 vote to leave the European Union, instantly making Britain a cheaper place to visit.

Sterling has recovered slightly since, however, and recaptured the US$1.30 level against the dollar for the first time in almost 8 months yesterday.

In mid-afternoon trading, sterling was holding above that level, having dipped back below it earlier, up 0.6% at US$1.3019. But against the euro, the pound was 0.2% lower at €1.1637.

On the equity market in London, around 2.30pm, the FTSE 100 index was up about 26 points at 7,463, still below the day’s peak of 7,479.44.

1.15pm: US recovery to continue

With US stocks seen carrying over yesterday’s rally, the FTSE 100 index held firm in early afternoon trading, but it did ease off sessions highs as a fresh boost for sterling versus the dollar weighed on some exporters

Around 1.15pm, the UK blue chip index was 27 points higher at 7,463, but off the day’s peak of 7,479.44 and well below the fresh all-time peak of 7,533.70 hit on Wednesday.

On currency markets, the pound held above US$1.30 level versus the dollar which was recaptured for the first time in almost 8 months yesterday, gaining 0.6% at US$1.3016. But against the euro, sterling remained 0.1% lower at €1.1641.

US stock index futures indicated that Wall Street will post a second straight positive session on Friday helped by a dearth of dramatic news out of Washington, with US stocks having slumped on Wednesday  amid worries that a scandal over Russian interference in last November’s US election could see President Donald Trump impeached.

Craig Erlam senior market analyst  at Oanda, said: “Wednesday’s sell-off in equity markets got many people worried about whether the political circus in the US was finally starting to take its toll on investor appetite at the near-record levels.

“What we’ve seen since though would clearly suggest otherwise and instead indicate that the moves two days ago were nothing more than a combination of the usual Trump distraction combined with technical levels giving way.”

In London, Smiths Group PLC  (LON:SMIN) was a big FTSE 100 faller, down 3.4% at 1,573p on news the X-ray machine group’s chief financial officer, Chris O'Shea has resigned in order to "pursue his career outside the group".

Non-executive Director Bill Seeger, previously finance director of engineering group GKN PLC.(LON:GKN), has been appointed Smith’s interim CFO with immediate effect.

Otherwise broker comment was a big focus in the absence of much other corporate news.

Experian PLC (LON:EXPN) shares fell 1.9% to 1,629p after Jefferies International cut its rating for the credit checking agency to ‘hold’ from ‘buy, lowered its target price and slashed its earnings forecast, citing a slowdown in US credit and uncertainty in Brazil.

READ: Experian slumps after Jefferies downgrades

Meanwhile catalytic convertor group Johnson Matthey PLC (LON:JMAT) shed 1.8%. at 3,024p as Swiss broker UBS chopped its rating to ‘sell’ from ‘neutral’ as it slashed its earnings forecasts to reflect the impact of electric vehicles on the firm’s business.

And blue chip real estate developers Land Securities PLC (LON:LAND), down 0.6% at 1,086p, and British Land PLC (LON:BLND), off 0.3% at 636.5p, were both blighted by comments from JPMorgan Cazenove, which downgraded its ratings for both to ‘neutral’ from ‘overweight’.

The US bank said the downgrades in part reflected a bearish Summer 2017 Deloitte Crane Survey.

On the second line,  tour operator Thomas Cook Group PLC (LON:TCG) was a big FTSE 250 faller, shedding 3.9% at 91.5p as Barclays Capital downgraded its stance on valuation grounds, with the stock having almost reached its unchanged 100p target price.

The bank’s analysts pulled its rating back to ‘equal-weight’ from ‘overweight’ having upgraded the stock at the end of November on the view that TCG's valuation was attractive.

11.30am: Robust CBI manufacturing report

Manufacturing order books improved and output growth accelerated in the three months to May, according to the CBI’s latest Industrial Trends Survey.

The survey of 432 manufacturers reported that total order books were the highest since February 2015, broadly matching the strong levels seen earlier this year.

Output growth picked up pace, seeing the fastest rise since December 2013, underpinned by the mechanical engineering and chemicals sectors.

But pricing pressures also remain strong, with manufacturers continuing to expect a sharp rise in average selling prices.

Rain Newton-Smith, the CBI’s chief economist, said: “The summer sun has come out early for Britain’s manufacturers. Robust demand at both home and abroad is reflected in strong order books, and output is picking up the pace.

“On the other side of the coin though, we have mounting cost pressures and expectations for factory-gate price rises are running high.”

The news added to a trio of upbeat UK economic data released earlier this week, including above-forecast inflation, unemployment and retail sales.

The FTSE 100 index remained higher in late morning trade, adding 33 points 7,469, albeit easing off the day’s peak of 7,479.44 and staying below the 7,500 level which was breached for the first time ever earlier this week.

On currency markets, sterling just held above US$1.30 level versus the dollar which was recaptured for the first time in almost 8 months yesterday, adding 0.5% at US$1.3003. Against the euro, however, the pound eased 0.1% lower to €1.1647.

10.30am: Gains extended

The Footsie pushed higher in mid-morning trading, extending its rally after yesterday’s retreat from the record highs posted earlier in the week, even though sterling also advanced again.

Around 10.30am, the FTSE 100 index was up 39 points higher at 7,475, just off the session peak of 7,479.44 but well below the fresh all-time peak of 7,533.70 hit on Wednesday.

On currency markets, the pound pushed back above the US$1.30 level versus the dollar which was breached for the first time in almost 8 months yesterday, gaining 0.6% at US$1.3015. Against the euro, sterling ticked up 0.1% at €1.1667.

Connor Campbell, financial analyst at Spreadex, said: “With no fresh news regarding the Trump-Russia scandal the European indices could catch their breath this Friday, clawing back some of their recent losses in the process.”

 He added: “Unlike Tuesday to Thursday, which saw a parade of heavy-hitting UK data, this morning’s economic calendar is rather barren.

“That leaves investors free to mull over Trump’s various misdeeds, and whether or not they want to get back on board a set of Western indices that, in the grand scheme of things, haven’t travelled too far from their highs. “

Among the blue chip gainers, equipment hire firm Ashtead Group PLC (LON:AHT) added 1.6% at 1,567p, bouncing higher following sharp falls over the past few sessions on worries the scandals engulfing US President Donald Trump could curtail his infrastructure spending plans.

Drugmaker Shire Plc (LON:SHP) was also a riser, up 1.3% to 4,879p extending the gains made after it published positive results of a trial of a treatment for angioedema, or swelling under the skin.

Shire’s gains came despite HSBC downgrading its rating for the pharma group to ‘reduce' from ‘hold’, although the bank also raised its target price to 4,550p from 4,450p.

Away from the blue chips, newspaper publisher Johnston Press plc (LON:JPR) was a good early gainer, adding 6.8% at 15.75p as the group reported growth in digital advertising revenue and said trading for the current year will be in line with market expectations.

But shares in Revolution Bars Group PLC (LON:RBG) shed a third of its value, dropping 33% to 136p after the bar and restaurant chain said adjusted underlying earnings would miss expectations this year.

READ: Revolution Bars blames new sites as it lowers full-year guidance

Revolution blamed the five new Revolucion de Cubas it has opened in the past year or so, saying that although underlying sales are on track, the bars are taking longer to reach full profitability than originally anticipated.

8.45am: Rebound relief

The FTSE 100 bounced higher in early trading, recovering after yesterday’s falls following an overnight rally on Wall Street as worries over a possible impeachment of US president Donald Trump abated.

Around 8.45am, the UK blue chip index was 28 points higher at 7,464, but remained well below the fresh all-time peak of 7,533.70 hit earlier in the week – the first time it had breached the 7,500 level.

After over a 350 point slide on Wednesday amid worries over the Trump/Russia scandal, the Dow Jones rebounded 56 points higher overnight although the dollar remained very volatile.

On currency markets today, the pound rallied 0.2% higher to US$1.2974, but stayed below the US$1.30 levels breached for the first time in almost 8 months yesterday following some strong UK retail sales data.  Against the euro, sterling was fairly flat at €1.1651.

David Morrison, senior market strategist at SpreadCo., said: "There’s a general feeling of relief that the US-led sell-off didn’t accelerate last night. Instead, all the major US stock indices managed to post modest gains despite earlier weakness.

“It may be too soon to sound the all-clear but so far investors are doing exactly what they’ve done for the past eight years: using any significant pull-back in equity markets as a buying opportunity.

“But what will be of interest is to see if this bounce-back has the strength and conviction to push the indices back up towards or beyond recent record highs.”

There was little corporate news to provide much direction  today, although Hikma Pharmaceuticals PLC (LON:HIK) was the biggest FTSE 100 faller, dropping 5.4% to 1,608p after the generic drugs manufacturer  confirmed a cut to its full year revenue guidance as it expects further delays to the approval of its generic version of GlaxoSmithKline plc’s (LON:GSK) asthma drug, Advair.

Broker comment provided the main focus for blue chips, with a raft of downgrades in ratings having an impact, notably for Johnson Matthey PLC (LON:JMAT), Experian PLC (LON:EXPN), British Land PLC (LON:BLND), Land Securities PLC (LON:LAND), and Antofagasta PLC (LON:ANTO).

7.00am: Rally seen

The FTSE 100 is expected to open 31 points higher as Wall Street rebounded from its biggest sell-off in more than eight months on uncertainty over Donald Trump’s administration.

Reports that the US President had asked former FBI director James Comey to end an investigation into National Security Advisor during an Oval Office visit in February sparked speculation that obstruction of justice charges might be laid against him. The news prompted dramatic falls in the US market on Wednesday.  

It was another day of twists and turns from the White House yesterday with the Trump government triggering the process to renegotiate the North American Free Trade Agreement (NAFTA).

Turning to today’s agenda, it is thin on the ground in terms of company news with the only noteworthy releases being trading statements from Hikma Pharmaceuticals (LON:HIK) and Close Brothers. There are no major economic data due. 

Proactive news headlines:

Iodine producer Iofina plc (LON:IOF) managed to increase revenues and remain profitable last year, despite it being a difficult period for the industry as a whole. For the 12 months to 31 December 2016, the AIM-quoted group generated revenues of US$22.5mln, a year-on-year rise of 11% (2015: US$20.3mln) as it sold a record 474.2mln tonnes of IOflo iodine.

SDX Energy Inc (LON:SDX, CVE:SDX) boss Paul Welch highlighted that the start of 2017 has been a busy period, with “great strides” made across its portfolio. Welch noted that the start of the year brought good momentum, and added that the company looks forward to capitalising on the opportunities ahead.

Stratex International plc (LON:STI) has committed to the next round of exploration in Egypt planned by its joint venture Thani Stratex Resources (TSR). TSR is raising US$1mln of which Stratex will put up US$390,000 to give it a stake in the venture of 30.1%.

Shares in FairFX Group Plc (LON:FFX) nudged higher on Friday morning after the multicurrency payments provider partnered up with easyCurrency – the online forex boutique owned by Sir Stelios Haji-Ioannou. Under the terms of the agreement, FairFX will offer currency cards, cash and international payments services to easyGroup customers through easyCurrency.com.

Solo Oil PLC (LON:SOLO) has agreed new terms to acquire an additional 10% stake in Helium One which is developing a strategically significant helium project in Tanzania. The oil and gas investment company added Helium One to its Tanzania portfolio earlier this year, acquiring a 20% interest, and agreeing an option for another 10%.

Condor Gold PLC (LON:CNR) is making significant progress in Nicaragua, it told investors, posting full year results. The focus is on proving its La India acreage in Nicaragua is part of a sizeable mining district. In keeping with a firm at this stage, the loss for the year to end December was around £7.6mln against a loss of around £3mln for 2015.

Europa Oil & Gas (Holdings) Plc (LON:EOG) told investors the Wressle project has cleared a major regulatory milestone with the Environment Agency issuing a variation to the project’s mining waste permit. It supports the new planning application for the project, which was submitted last month.

Gfinity Plc (LON:GFIN) has confirmed the timeline for its high profile new eSports tournament, the Gfinity Elite Series, which takes place this summer. The Elite Series league will be made up of eight professional eSports teams, though through the ‘challenger series’ and ‘Elite series draft’ amateur gamers can qualify to play for the leading teams.

Plexus Holdings PLC (LON:POS) has received a first order for its patented oilfield wellheads from Akers BP, the company formed through the merger of BP and Det Norske’s Norwegian assets. The order, worth around £700,000, is for surface exploration wellhead equipment for the Hyrokkin and Nordfjellet standard pressure exploration wells, offshore Norway.

Seeing Machines Limited  (LON:SEE) has been selected by the ACT state government in Australia to lead what is being billed as the world’s first automated vehicle trial focused on the driver. The research project, CAN Drive, will use Seeing Machines' driver monitoring technology to gather data on up to forty drivers in Canberra in ACT (Australian Capital State), who will be monitored while driving level-three automated vehicles.  

Business headlines:

  • Businesses hoping for a smooth Brexit, deregulation, and a flexible labour market attacked the Conservative manifesto both for its policies and its tone.
  • “This is not a pro-business manifesto,” said one senior business leader, reports the FT.
  • Theresa May has unveiled an array of new measures targeting Britain’s boardrooms in a manifesto launch that signals her determination to intervene more in business.
  • The Prime Minister said her “mainstream” programme for government would give workers more power and protection, curb excess and deliver long-term prosperity, writes the Telegraph.
  • And British companies will be protected from foreign buyers who do not have their best interests at heart under proposals contained in the Conservative manifesto, the paper reports.
  • Donald Trump has denied urging James Comey, former head of the Federal Bureau of Investigation, to halt a probe into Michael Flynn, his first national security adviser, reports the FT.
  • Retail sales staged a surprise revival in April as shoppers shrugged off growing concerns about rising inflation and a slowing economy, the Times reports.
  • Vulture hedge fund Elliott Management is seeking to strip hundreds of millions from the carcass of Lehman Brothers in a legal battle over its debts.
  • It was one of several investors to snap up Lehman’s debt after the bank’s 2008 collapse, the Mail reports.

Commodities/currencies:

  • Gold: down US$3 at US$1,350
  • Crude (WTI): Up at US$0.42 at US$50.08
  • £/$: 1.2946 – pound higher

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