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FTSE 100 closes lower after up and down day

Last updated: 22:44 18 Jul 2017 BST, First published: 14:30 18 Jul 2017 BST

Trader with multiple screens
  • FTSE 100  closes almost 14 down

  • FTSE 250 closes up almost 93

  • IG Group bolsters the FTSE 250 after sparkling full-year results

FTSE 100 had a bumpy ride on the day and closed almost 14 points down at 7,390.

European indices were lower and US benchmarks, except the tech heavy Nasdaq are seeing red.

The FTSE 250 went the other direction, however, adding over 92 points on the day to stand at 19,613.

David Madden, at CMC Markets, said the Footsie started negatively due to the powerful pound, then quickly swung into positive territory due to the softer than anticipated inflation data.

"The gains did not last as the heavy-weight sectors like banking and mining turned south, pulling the equity benchmark with it," he added.

Barclays (LON:BARC) fell 1.91% to 205.05p as second quarter results from Goldman Sachs across the pond weighed.

The US titan group saw a 40% drop in revenue from its bond business during what was a challenging three months.

Credit checker Experian PLC (LON:EXPN) was the FTSE 100’s worst performer, declining over 2% to 1,532p after a trading update this morning.

On the winning front on Footsie, security firm G4S (LON:GFS) was top dog, up 3.43% to 341.10p.

Royal Mail Group plc (LON:RMG) also rose over 3% to 411.10p as it posted a 1% increase in quarterly revenue, supported by growth in parcel deliveries and a better-than-expected decline in letters.

Total letter revenue in the UK fell 4% and volumes dropped 6% in the first quarter to 25 June, but the postal operator said this could have been worse without the boost from general election mailings.

3.30pm - Half hearted effort..

Heading into the final half hour of trading, the FTSE 100 was making a half-hearted effort to wipe clean its losses.

The index was down 9 at 7,395, with Barclays PLC (LON:BARC), down 1.8%, the biggest faller and G4S PLC (LON:GFS), up 3.3%, the biggest gainer.

The FTSE 250 was up 83 at 19,604, bolstered by the sparkling performance of IG Group Holdings PLC (LON:IG), the spread betting group, after its results this morning.

IG’s shares were up 14%.

2.30pm ... Soft start on Wall Street weakens sentiment in UK

Wall Street opened lower with the S&P 500 down 5 at 2,454.

Meanwhile, the FTSE 100 slipped further into the red – down 18 at 7,386.

The FTSE 250 remained comfortably in positive territory, up 87 at 19,607.

Credit checking outfit Experian PLC (LON:EXPN) was the FTSE 100’s worst performer, declining 33p to 1,531p after a trading update this morning.

“Experian has had a solid start, and look well set for the remainder of the year and beyond with 4% underlying growth in Q1 expected to continue at around that level,” noted Steve Clayton, who is manager of the Hargreaves Lansdown Select Funds.

“Credit Services marches on, with growth in credit pre-screening reports highlighted, reflecting a solid lending environment for the group’s core US banking customers. The best growth though comes in their value-added services of Decision Analytics and Marketing Services, where they help banks and retailers to identify and reach  target customers, and to understand the credit risks and opportunities they present. The weak area at the moment is Consumer Services, especially in the UK,” he added.

“With strong exposure to the US, the group looks well set to continue its long track record of growth and we remain happy with our position in the stock,” Clayton said.

1.15pm ... ITV and Hiscox retreat on broker comment

It’s not been a day for broker notes moving the share prices of FTSE 350 companies.

Broadcaster ITV plc (LON:ITV) was down 0.4% in a flat market after HSBC trimmed its price target from 215p to 200p.

FTSE 250 constituent Hiscox Ltd (LON:HSX) was harder hit, despite Peel Hunt increasing its price target from 840p to 980p, though the recommendation remains “reduce”.

The shares fell 18p to 1,346p, with sentiment not helped by Credit Suisse downgrading from ‘outperform’ to ‘neutral’.

Its price target for the Bermuda-based insurance company rose to 1,305p from 1,180p.

The FTSE 100 was just about keeping in credit, up 4 (0.1%) at 7,408, while the FTSE 250 was making a better fist of things up at 19,607, up 86 points, or 0.4%.

12.15pm ... FTSE 100 up a couple of points; Wall Street looks set to be similarly lethargic

It was back to square one for Footsie ahead of what is expected to be a subdued opening on Wall Street.

The Dow Jones was expected to open maybe three or four points up from last night’s close of 21,630, while the broader-based S&P 500 was tipped to open its account a point above last night’s close of 2,459.

Back in Blighty, the top-share index was a couple of points in credit at 7,406. The mid-cap index was up 66 at 19,586.

Away from the FTSE 350, the ever-volatile shares of water treatment technology firm HaloSource Inc (LON:HALO) put on an impressive spurt, rising 55% to 2.125p on a supply agreement.

The supply agreement with Chematek provides the Italian speciality chemicals firm with exclusive manufacturing rights for HaloSource's proprietary lead reduction media.

10.45am ... Footsie rises as sterling slips

The FTSE 100 was trading close to its intra-day high, having been given an unexpected boost in the form of a dip in the inflation rate.

The FTSE 100 was up 8 at 7,412, having previously been as low as 7,358, when the big dollar earners among the index’s constituents were getting the elbow as a result of the strength of sterling against the greenback.

All of that changed when the consumer price index data came out, as the smart money is now on the Bank of England holding off for a bit longer on the inevitable interest rate rise.

British Land Company PLC (LON:BLND) was the top blue-chip riser after it announced a £300mln share buyback.

Of course, in dollar terms, that buy-back amount is now a lot less impressive …

Shares in British Land were up 3.2%.

The mid-cap measure, the FTSE 250, was up 44 at 19,565, with comeback stock Carillion, up 12%, leading the way.

Dairy Crest Group PLC (LON:DCG), somewhat like cream, rose towards the top of the FTSE 250 churn, after it revealed its outlook for the year remained unchanged, despite cream prices fattening up.

Higher cream prices put pressure on margins of its butter business; in response, the company has cut back on promotional activity for Country Life, which has led to lower sales but better margins.

10.00am ... Quick change act for Footsie as inflation data sends sterling tumbling

Well, well … the FTSE 100 and FTSE 250 have both moved into the black following the release of inflation figures.

The FTSE 100 was up 13 at 7,417 and the FTSE 250 was up 78 at 19,598.

Confounding economists’ expectations, the UK inflation rate fell to 2.6% in June from 2.7% in May.

The decline lessens the likelihood of an interest rate rise, and that, in turn, has reduced the appeal of sterling in the foreign exchange markets.

Having been half a cent up against the greenback earlier this morning, and acting as a crimp on the prospects of the high proportion of dollar earners in the FTSE 100, sterling is now down a quarter of a cent against the US dollar.

“The number this morning had significant meaning due to the discussion recently around possible rate hikes in the UK. At the last MPC meeting the committee voted 5-2 for keeping rates on hold, with two dissenters, the most since 2011,” noted James Hughes, the chief market analyst at foreign exchange trading platform operator GKFX.

“There are two points to this, however; firstly, in my opinion, the rates should never have been cut in the aftermath to of the EU referendum back in June last year. Secondly, we must look at a number of factors: high inflation readings are currently being combined with stagnant wage growth, and record high household debt. For me the mistake was made previously and moving rates now would only force many into tough situations on debt repayments,” Hughes wrote, while humming “If I ruled the world” to himself.

“The UK CPI reading has shown that inflation is still high when compared to the likes of the Eurozone and the US, and remains a problem. With Brexit negotiations continuing the government wants to see the best possible standards for the electorate, and high inflation, and low wages are not the ideal situation,” he added.

 

Good call!

8.30am ... Sterling's strength hits Footsie's big dollar earners

Having received a boost from sterling’s weakness yesterday, blue-chips were suffering from the US dollar’s softness this morning.

The pound was up almost half a cent against the greenback this morning, which may be good news for those about to jet off to Florida but is a kick in the shins for the Footsie’s plethora of big dollar earners.

With miners and airlines in particular off to a weak start, the FTSE 100 was down 23 at 7,381.

Rio Tinto PLC (LON:RIO) was the hardest hit of the miners, shedding 1.6% at 3,415.5p after releasing second quarter production numbers.

At the other end of the Footsie leader board Royal Mail PLC (LON:RMG) was up 3.4% after its fiscal first quarter trading update.

Prime Minister Theresa May might have had a disastrous General Election, but the letters, parcels and junk mail delivery firm came out of it a winner.

READ Royal Mail offsets decline in letter revenue with growth in parcels in first quarter

“Parcels up, letters down: a neat summation of the progress of Royal Mail over the last decade or more and one that continues today in its trading update for the three months to June 25th,” said Neil Wilson at ETX Capital.

“UKPIL revenues were down 1%, flattered by a 3% gain in parcel revenues that offset a 4% fall in letter revenues at home, which would have been even worse had it not been for better than expected earnings thanks to the General Election. Volumes showed an even starker picture - parcels climbed 5% while letters slid 6%,” he added.

Nicholas Hyett, an equity analyst at stockbrokers  Hargreaves Lansdown, said: “Royal Mail has emerged as the one clear winner of last month’s general election, with political mailings helping to slow the inexorable decline in UK letter volumes. UK parcels also looks like it’s turning a corner with steady volume growth, albeit at lower prices than previously.”

The mid-cap FTSE 250 was down 25 at 19,495. It too was weighed down by miners and airlines; Wizz Air Holdings PLC (LON:WIZZ), for instance, was off 2.2%.

Infrastructure group Carillion PLC (LON:CLLN) remained on the comeback trail after yesterday’s news of contract wins on the HS2 rail link, advancing 8.1%, while spread betting firm IG Group Holdings PLC (LON:IGG) rose 5.4% on the back of full-year results.

Proactive News Headlines:

Organic growth, a currency boost and full contribution from recent acquisition Link Healthcare helped Clinigen Group PLC (LON:CLIN) increase gross profits rose by 22% in the year to June. Shaun Chilton, Clinigen’s chief executive said it had been an excellent year for all three of its divisions, clinical trial services, unlicensed medicines and commercial medicines.

Allergy Therapeutics plc (LON:AGY) will report sales well ahead of market forecasts after strong organic growth combined with a hefty currency boost.  Revenues for the year to June will be £64.1mln (2016:£48.5mln), comprising 15% annual growth stripping out the foreign exchange effect and 32% on an actual basis. BP in January.

Cello Group plc (LON:CLL) has bolted-on pharmaceutical product consultancy Advantage Healthcare to its US operation. Founded 20 years ago, Advantage specialises in critical analysis and insights on new drug products.

dotdigital Group PLC (LON:DOTD) has reported strong growth in full-year revenues and says it expects its underlying earnings (EBITDA) to be in line with expectations. In a pre-close season trading update ahead of full-year results, the email and marketing software-as-a-service (SaaS) group said its overall revenues have grown by 19% organically to approximately £32.0mln, up from  £26.9mln a year earlier.

Alliance Pharma plc (LON:APH) has said its overall trading in the first half has been in line with the board's expectations, with sales over the period showing a solid increase.

Kin Group Plc (LON:KIN) has requested the suspension of trading in its shares on AIM from today as it continues discussions to raise additional funding after Belastock Capital LP said it will not now proceed with the release of three further tranches of its Convertible Loan Note financing.

Motif Bio Plc (LON:MTFB) has amended the terms of its consultancy agreement with Amphion Innovations Plc's (LON:AMP) Robert Bertoldi, increasing his fee from US$75k to US$125k p.a. to better reflect his time commitment to Motif.

Harry Potter publisher Bloomsbury Publishing PLC (LON:BMY) saw revenues rise 13% year-on-year on a constant currency basis in the first quarter of its financial year. It expects trading for the full-year will be in line with expectations.

Midatech Pharma Plc (LON:MTPH) told investors to expect a 37% increase in first half gross revenue as its US business continued to grow strongly. In an update ahead of interim results, the company said total gross revenue of £5.2mln is anticipated when it reports on the six months ended June 30, that compares to £3.8mln in the comparative period of 2016.

As 88 Energy Ltd’s (LON:88E) Icewine-2 well programme is undergoing a six-week hiatus the explorer is now undertaking an analysis to determine what the findings to date mean for the chance of success in the HRZ shale play.

Africa-focused DekelOil Public Limited (LON:DKL) told investors it has seen a 22.1% increase in product sales, with the palm oil producer bringing in €18.8mln in the first six months of 2017. In a production update, coming ahead of interim results, the company said that the increase in sales income was primarily due to better global crude palm oil prices as well as its own improved storage capacity which in turn helped improve local pricing terms.

Ortac Resources Ltd (LON:OTC) told investors it has restarted mining activities in Slovakia after a small-scale underground mining permit was re-issued last month. Now that mining is underway, the company said it has fulfilled the conditions required by the authorities in order for it to preserve the company’s right to exploit the Šturec ore deposit located in the Kremnica Mining License Area for a minimum period of three years.

Petropavlovsk PLC (LON:POG) has announced the resignation of founder and chief executive Pavel Maslovskiy. It follows the recent ousting of chairman Peter Hambro at the company's AGM. The company also announced a half-year production increase.

Hummingbird Resources PLC (LON:HUM) remains on track to pour first gold from the Yanfolila gold project in Mali by the end of this year. Construction is now more than 50% complete. BP in April.

Horizonte Minerals Plc (LON:HZM) has submitted environmental plans for its Araguaia nickel project in Brazil.

ECR Minerals PLC (LON:ECR) has acquired new exploration ground in Victoria. The company has also completed 592 metres of RC drilling at its Bailieston project and is now awaiting results.

Premier African Minerals Limited (LON:PREM) has increased its stake in privately-held Circum Minerals, the owner of a sizeable African potash project. The consideration is to be paid in PREM shares, issued at 0.4p. Simultaneously, PREM has also uncovered six new pegmatites at its Zulu lithium project worthy of further exploration.

Abzena plc (LON:ABZA) has signed a licence agreement with Telix Pharmaceuticals Limited, granting it an exclusive worldwide, royalty bearing, sub-licensable licence to the AIM-listed firm’s prostate-specific membrane antigen ('PSMA) antibodies in the field of radio-immunoconjugation. The agreement has the potential, subject to successful development, to deliver in excess of US$65mln in licence fees and milestone payments to Abzena.

IXICO Plc (LON:IXI) is today holding an Expert Symposium on the impact and future of imaging and digital biomarkers in Alzheimer's disease.  The digital technologies company serving neuroscience said the symposium is set to coincide with the Alzheimer's Association International Conference (AAIC) in London.

Action Hotels PLC (LON:AHCG) has said Andrew Lindley, who was appointed finance director of the operator of branded three and four-star hotels in the Middle East and Australia on June 1, has been appointed to the group’s board with immediate effect.

Base Resources Limited (LON:BSE) said it has repaid in full the US$20mln unsecured debt facility provided by one of its major shareholders, Taurus Funds Management with a final payment of US$11.8mln. The group noted that the  repayment of the Taurus Facility continues the rapid debt reduction achieved on the back of the strong operational performance of the Kwale Mineral Sands Operations. 

Preview - weak start expected

The Footsie is forecast to start weaker again today, after falls overnight from US and Asian markets, with trading likely to be cautious ahead of the UK inflation numbers.

Spread betting firm CMC Markets expects the FTSE 100 index to open around 15 points lower at 7,389, having shed 25.74 points yesterday.
 
Overnight on Wall Street, the Dow Jones Industrials ended around 8 points lower, and Asian markets slipped back today as the passage of President Trump's key healthcare bill looked precarious, and investors thought the Federal Reserve will be more cautious about raising interest rates.
 
The main focus today will be on the latest UK inflation data which is forecast to show the consumer price index having remaining at 2.9%, the highest level since June 2013, putting pressure on the Bank of England to consider interest rate hikes.
 
Think-tank the NIESR expects UK inflation to hit 4% at some stage in 2017, and while the Bank of England is less aggressive, seeing the peak at just under 3%, it has warned of how inflation could start to crimp the consumer spending which has done so much to power the UK economy over the past few years.

Royal Mail failing to deliver

On the corporate front, investors will be keen to see what Royal Mail Group PLC (LON:RMG) can deliver in a trading update on Tuesday, with the postal firm having been losing market share in parcel deliveries amid rising competition.
 
The FTSE 100-listed firm has become increasingly reliant on revenue from its parcels division as the advance of the internet means fewer people are sending letters.
 
But fierce rivalry from the likes of Hermes and Yodel has put pressure on the parcels business. Adding to the competition, Amazon has also built its own network to deliver products it sells.

READ: Royal Mail's annual earnings to decline as it loses market share in parcels, Liberum warns

In a recent note, Liberum analyst Gerald Khoo said: “We still believe Royal Mail will continue to lose market share in Parcels, with weaker exposure to the fastest growing segments”
 
He added: “Our concerns on productivity have risen, with parcel trends a headwind and past success driving toughening comparatives.”
 
Meanwhile global miner Rio Tinto PLC (LON:RIO) released an operational review overnight in Australia in which it cut its forecasts for iron ore shipments in 2017 by up to 10 months tonnes due to bad weather and rail line modernisation works.

Significant events expected on Tuesday July 18:

Operational review: Rio Tinto PLC (LON:RIO)
 
Trading updates: Alliance Pharma PLC (LON:APH), British Land Company PLC (LON:BLND), Clinigen Group PLC (LON:CLIN), DotDigital Group PLC (LON:DOTD), EMIS Group PLC (LON:EMIS), Experian PLC (LON:EXPN), Royal Mail Group PLC (LON:RMG), Safestyle UK PLC (LON:SFE)
 
Finals: Casleton Technology PLC (LON: CTP); Ideagen PLC (LON:IDEA), IG Group Holdings PLC (LON:IGG), NCC Group PLC (LON:NCC)
 
Interims: Synectics PLC (LON:SNX)
 
Economics: UK June inflation numbers

Around the markets:

  • Sterling: US$1.3087,  up 0.3%
  • Gold: US$1,236.20 an ounce, up 0.3%
  • Brent crude: US$46.09 a barrel, up 0.2%

City Headlines:

  • Bringing Carolyn McCall on board could cost ITV £2.5mln – Financial Times
  • BT’s Openreach checks £1.5 billion Carillion deal – City AM
  • The largest shareholder in Hornby has avoided having to carry out a full takeover of the model train maker. – The Times
  • AB Foods’ Primark retail chain recalls men’s flip flops over cancer-causing chemical fears – The Times
  • Co-op Bank turns to former Shawbrook finance Director in bid to reverse fortunes – Daily Telegraph
  • Karren Brady to chair firm that owns Philip Green’s Arcadia group – The Guardian
  • Poundland delays ‘copycat’ Twin Peaks chocolate bar amid fury from Toblerone – The Times
  • Tesla adds James Murdoch to board after investors ramp up pressure – Daily Telegraph
  • Netflix subscriber surge pushes stock to all-time high – Daily Telegraph
  • Nelson Peltz launches bid for Procter & Gamble board seat – Financial Times
  • BNP Paribas bill for forex breaches rises to US$600mln – Financial Times
  • Hacked dating site Ashley Madison agrees to pay $11m to US-based users – The Guardian
  • Cyber attacks could cause economic loss on par with natural disasters – The Times
  • Cambridge’s technology sector has helped it to overtake Milton Keynes as Britain’s fastest-growing city economy – The Times
  • Boris Becker ‘lost his £100 million fortune investing in Nigerian oil firms that plunged in value’ – Daily Mail
  • Discount rate cut blamed for motor insurance costs rocketing at fastest rate on record – City AM
 

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