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FTSE 100 closes up but optimism not "particularly high"

FTSE 100 ended in positive territory, having been lower earlier,..
Bear market
The bulls are currently winning the world's most lethargic wrestling match
  • FTSE 100 closes up 9.31, FTSE 250 ahead by 109

  • Technology small-caps Mobile Streams and Servision hammered

  • Mid-caps SSP, Synchona and Stagecoach advance on news flow

  • US markets mixed

 

FTSE 100 ended in positive territory, having been lower earlier, with builders group CRH (LON:CRH) the biggest gainer.

The UK blue-chip benchmark closed 9.31 higher at 7,322, while the more UK company focused FTSE 250 gained a lot of ground, finishing 109 points higher at 19,678.

"European equity markets are largely in positive territory going into the close today, but weak volatility has led to narrow trading ranges. The positive moves that stock markets have made in the recent weeks are being slowly built upon, but optimism isn’t particularly high," said David Madden, an analyst at CMC Markets.

It comes on a day when BoE governor spoke at an event to mark 20 years of independence for the UK central bank, but made no real hints on any future interest rate rises.

Prime Minister Theresa May reiterated in her speech her commitment to be tough on public spending.

On FTSE 100 the biggest gainer was CRH, which added 2.92% to 2,784p.

On the losing front, Land Securities Group (LON:LAND) dropped over 6.4% to stand at 968p.

 

3.45pm - Back in positive directory 

After drifting into the red over lunch, the Footsie rallied and heading into the last half hour of trading was back in positive territory.

The FTSE 100 was up 6 at 7,320, mirroring the mixed showing on Wall Street, where the Dow Jones was up 9 at 22,349 but the S&P 500 was more or less unchanged at 2,506.

Among the small caps, technology companies had a tough time of it with app developer Mobile Streams Plc (LON:MOS) down 44% and security cameras outfit Servision Plc (LON:SEV) a third lower after trading updates.

As a result of worsening trading conditions in Argentina and India, Mobile Streams expects both revenue and earnings for the current financial year to be materially lower than market expectations.

Servision saw a loss before tax for the first half of the year of £1.22mln, versus a loss the previous year of £1.02mln.

“The third quarter has been broadly similar to last year; however, given the larger number of opportunities in the pipeline, we are hopeful that the fourth quarter could show an improvement,” said Gidon Tahan, who is both chairman and chief executive of Servision.

1.30pm: Stocks drift lower ahead of expected soft opening on Wall Street

Shortly before noon the FTSE 100 went into a dive from which it started pulling out pretty much bang on noon.

At around 1pm the FTSE 100 index was down 16 at 7,297, some 8 points above its intra-day low.

Investors in London did not take much notice of Wall Street’s advanced yesterday but expectations of a lower start stateside today seem to have drained what little confidence there was in London.

Commentators have been picking the bones out of a speech by Bank of England governor Mark Carney at a conference to celebrate 20 years since Gordon Brown gave operational independence to the central bank.

Carney stuck by his view that Brexit will be bad for the UK economy in the medium term.

“Even though monetary policy cannot prevent the weaker real income growth likely to accompany the transition to new trading arrangements with the EU, it can influence how this hit to incomes is distributed between job losses and price rises,” he said.

Carney supported the idea of operational independence for the central bank, but he conceded the Bank of England’s influence was largely restricted to contributing to “delivering price and financial stability”.

“It cannot solve broader societal challenges," he said at the City of London's Fishmongers' Hall.

"This bears emphasising, because in recent years a host of issues has been laid at the door of the Bank of England from housing affordability to poor productivity.

"Calls for the Bank to solve these challenges ignore the Bank’s carefully defined objectives, and they confuse independence with omnipotence."

While the blue-chip scene was moribund, there were plenty of fast-moving stocks among small caps.

Vitesse Media PLC (LON:VIS) saw its market value rise by a third as the Bank of New York Mellon Trust was revealed as a 7.74% stakeholder in the company.

Elsewhere, the embarrassing accounting error revealed a couple of weeks ago by DX (Group) PLC (LON:DX.) has been forgotten, thanks to a big contract win.

The logistics outfit has bagged a deal with Scandinavian furniture giant IKEA to provide a bespoke logistics solution for customer deliveries. The contract is for an initial three years and takes the total value of the company's contracted logistics work for IKEA to roughly £19mln per annum, which coincidentally is roughly the current market capitalisation of DX after this morning’s 33% rise.

10.45am: The Footsie trades sideways

As has been its wont for most of this week, the Footsie spent the morning trading sideways.

The FTSE 100 was up 7 at 7,321, with insurers and oils going well.

The mid-cap FTSE 250 was a bit more energetic, rising 33 to 19,603, with SSP Group PLC (LON:SSPG) leading the way with a 6% rise.

SSP, which operates food and beverage outlets in travel locations, said like-for-like sales growth in the fourth quarter of its financial year had been “good”, at around +3% year-on-year.

“Some of this upside is from temporary sites in Chicago which will close in for remodelling in 2018 but nevertheless … illustrates the significant structural growth in the sector,” said Liberum Securities, as it reiterated its ‘buy’ recommendation and forecast more upgrades to come.

Fellow mid-cap Syncona Ltd (LON:SYNC) was wanted after it announced that Nightstar Therapeutics, one of its portfolio companies, has revealed the pricing for its forthcoming listing on Nasdaq.

When it floats, it will be the first Syncona-founded company to become a public company. More importantly, the pricing triggered an increase in Syncona’s 43% stake of £49.5mln over the last published valuation; that’s worth 7.5p a share – Syncona’s shares rose 4.2p to 179p.

Results from trains and buses group Stagecoach Group PLC (LON:SGC) got a warm reception, sending the shares 2.1% higher to 167.8p.

Gerald Khoo at Liberum Securities remained slightly sceptical.

“The improvement in revenue trends at almost all divisions was encouraging. For the most part, we see this as evidence of trading not getting any worse, rather than a clear recovery. Nonetheless, there may be reason to believe that the worst has passed,” Khoo said.

Liberum has a price target of 155p on Stagecoach, making the shares a ‘hold’.

10.00am: Blue-chips edge higher, though trading updates from TUI and IMPs disappoint

London’s blue-chips were mixed, despite a strong showing on Wall Street yesterday after President Trump unveiled his tax proposals.

The FTSE 100 crawled 8 points higher to 7,320, weighed down by a little under one point by ex-div stocks Hargreaves Lansdown PLC (LON:HL.), Intertek Group PLC (LON:ITRK), Wm. Morrison Supermarkets PLC (LON:MRW), Smurfitt Kappa Group PLC (LON:SKG) and Worldpay Group PLC (LON:WPG).

Also stunting Footsie’s growth was cigarette maker Imperial Brands PLC (LON:IMG), which was down 2.4% following a trading statement.

“By simplifying the brand portfolio Imperial is able to cut costs and channel more investment behind its strongest brands. This investment has led to a stronger second half performance with market share gains in most priority markets and continued outperformance of Growth Brands,” noted Charlie Huggins, manager of the Hargreaves Lansdown UK Income Shares Fund.

“While Imperial’s strategy remains eminently sensible, the external environment remains very challenging, with regulatory headwinds intensifying and the shift to Next Generation Products accelerating,” he added.

The trading update from travel group TUI AG (LON:TUI) also got a lukewarm reception, though perhaps one should expect that at this stage of the holiday season.

The shares dipped 1% to 1,252p after the company said the recent hurricanes had caused some operational difficulties, but should not have much of an effect on full-year numbers.

“The summer season has seen 97% of packages sold with the group’s hotels and cruise operations doing well. This was particularly impressive given the company increased capacity during the current year. Travel destinations that proved to be popular during the period were Greece, Bulgaria and Italy, along with some long haul destinations, a theme which we have seen with other tour operators,” said Helai Miah, an investment research analyst at The Share Centre.

Shares in Land Securities PLC (LON:LAND) were marked 5.8% lower as the allotment and issue of the B Shares relating to its return of capital occurs today.

Open: Drab start with all eyes on Threadneedle Street 

The price action in London reflected the weather in the capital’s Square Mile – drab, with the FTSE 100 drifting 11 points lower to 7,302.06.

All eyes will be on Threadneedle Street later with Prime Minister Theresa May joining Governor Mark Carney to celebrate two decades of independence for the Bank of England.

Will we get a hint to future interest rates? Unlikely, analysts say. But expect some plenty of rhetoric from Carney defending the role of the Bank in setting borrowing costs in order to nudge inflation towards a target of 2%.

That feat (hitting the inflation target) is one the Governor and his team have singularly failed to achieve in recent months.

Barclays (LON:BARC) led the Footsie as it played catch-up with other banking stocks, which were in demand Wednesday.

Moving down to the FTSE 250, Balfour Beatty (LON:BBY) rose 6% after a Peel Hunt upgrade, while investors hung up on TalkTalk (LON:TALK) tumbled 5% after a downgrade by Credit Suisse.

Proactive news headlines:

Ergomed PLC (LON:ERGO) is to pay up to €5.7mln to acquire Dutch-based PSR Group BV, a niche contract research organisation (CRO) specialising in orphan drug development, and is launching a £2.9mln placing to part-fund the deal. The company said the placing will be conducted via an accelerated bookbuild and will see the firm issue around 1.757 mln new ordinary shares at a price of 165p each.

IXICO PLC (LON:IXI) has signed a new contract, worth US$690,000 over a two and a half year term, with an unnamed customer for its technology enabled imaging services. The AIM-listed digital technologies company focused on neuroscience said the contract is for a Phase II clinical trial evaluating the safety and tolerability of a novel treatment for patients with Huntington's disease.

Hummingbird Resources (LON:HUM) has signed a deal for a potential earn-in to a 50% interest in the Kobada Gold Project in Mali owned by African Gold Group Inc (AGG) and plans an initial investment of C$3.6mln for a near 10% initial stake in the group.

Jubilee Platinum PLC (LON:JLP) has moved to assure shareholders that news of the voluntary business rescue of Hernic Ferrochrome Proprietary Limited to facilitate a restructuring of some its business activities has “no current effect” on Jubilee's operations at Hernic in South Africa.

Greencoat UK Wind PLC (LON:UKW) has announced a new programme of share issuance of up to 500mln new shares to be conducted over the next 12 months through a number of tranches. The renewable infrastructure fund group said the proceeds of the programme will be used to pay down the company's Facility Agreement, enabling it to “pursue further attractive investment opportunities”.

Harvest Minerals Limited (LON:HMI) has issued a bullish half year update as it moves forward with plans to market its fertiliser replacement KPfertil in Brazil. “Looking ahead, we remain committed to developing our business and believe that the stars are lining up for us,” said Brian McMaster, executive chairman.

Africa-focused forestry and agriculture group Obtala Limited (LON:OBT) expects July’s Woodbois acquisition to provide a major boost to forestry revenues going forward. “The WoodBois acquisition provides a significant kicker to the step change in revenues that we expect to deliver in 2017,” said Miles Pelham, chairman.

Construction of Ormonde Mining PLC's (LON:ORM) Barruecopardo tungsten mine in Spain is making good progress and on track for commissioning in the third quarter of 2018, the junior reported. Half-year results showed a net loss of €132,000 in the six months to June, with sales of €375,000.

Kin Group PLC (LON:KIN) has said it needs current debts of approximately £2.27mln to be capitalised ahead of a possible placing. To facilitate this, Kin is exploring the possibility of seeking a creditors' voluntary arrangement (CVA), which will need the approval of at least 75% of the company's unsecured creditors.

Cabot Energy PLC (LON:CAB) is on track for production of between 800-1,000 barrels per day from Canada by the end of 2017. Keith Bush, chief executive, said a 23 well workover programme had boosted Canadian production to 600-700 barrels gross daily while sidetrack and completions should add a further 200-250 barrels. Civita, in Italy, meanwhile, is producing the equivalent of 130 barrels per day.

Underlying losses more than halved at lighting solutions provider PhotonStar LED Group PLC (LON:PSL) as it cut costs in reaction to tightening market conditions.

Evotec AG has taken a minority stake at a cost of €15mln in Exscientia, a portfolio company of Frontier IP Group PLC (LON:FIPP). Exscientia is a pioneer of artificial intelligence in drug discovery. The cash injection will enable Exscientia to accelerate growth.

Having refilled the coffers with a successful fund-raising in June, the focus now at Netscientific PLC (LON:NSCI) will be on guiding its portfolio companies towards commercialisation.

Fox Marble Holdings PLC (LON:FOX) is poised to receive a 5% stake in US natural stone importer and distributor, Pristine Stone, in return for which Pristine Stone will be granted priority rights to sell Fox Marble material in the USA.

Midatech Pharma PLC (LON:MTPH, NASDAQ:MTP) has unveiled plans to raise up to £8mln to fund the development of three key projects with “value inflexion points” in the next 18 months.  A total of £6mln is expected to come via a share placing and up to a further £2mln through an open offer of stock to existing investors.

Allergy Therapeutics PLC's (LON:AGY) preliminary results charted a period of strong financial and operational progress with the company predicting further progress on all fronts this year. Operating profits (pre-research and development expenditure) rose 72% in the 12 months to June 30 on revenues of £64.1mln, up 32%. The latter figure did benefit from a boost from the weak pound. Even so, at constant currencies top-line growth was a solid 15%.

Investors were rewarded following the strong financial showing of Clinigen Group PLC (LON:CLIN), the speciality pharma business. The full-year payout will grow in line with earnings per share, which advanced 25% in the 12 months to June 30. Investors will get 5p a share.

Graphene specialist Directa Plus PLC (LON:DCTA) expects a “much stronger” second half following on from the commercial progress made in the opening six months of the year.  Revenues in the six months to 30 June fell to €0.3mln (H1 2016: €0.4mln) due to a reduction in volume of sales into the bicycle tyre market, but Directa expects to double that figure in the second half.

Internet of Things (IoT) enabler Telit Communications PLC (LON:TCM) has reassured investors that the underlying business remains strong despite recent off-field issues. Telit endured a difficult summer, with its former chief executive Oozi Cats the subject of an internal investigation into alleged historical indictments.

Stratex International PLC (LON:STI) has extended the deadline for completing its controversial takeover of Crusader Resources Limited (ASX:CAS) to 28 February 2018. Chief executive Marcus Englebrecht wants to acquire Crusader primarily because of its Borborema gold asset in Brazil, which he thinks could be moved into production quickly and generate US$30mln in cash per year.

Shares in ValiRx PLC (LON:VAL) opened higher on Thursday after the biotech firm announced it had completed the dosing stage of the Phase II clinical trial of its novel cancer treatment drug VAL401 The process of final data collection, regulatory submissions for trial completion and finally for data analysis, is now underway, ValiRx added.

AIM-quoted gold explorer Katoro Gold PLC (LON:KAT) has submitted the mining licence application for its Imweru project three months ahead of schedule. The application was submitted to the Tanzanian Ministry of Energy and Minerals on Monday after it made “rapid progress” with the execution of its resource development programme.

Aminex PLC's (LON:AEX) progress in Tanzania was marked in the group’s interim results which show a turn into profitability supported by production from the Kiliwani North gas project. Investors, meanwhile, have been focussed on the more impactful Ntorya project where a successful appraisal well has set the company up for production growth.

Victoria Oil & Gas PLC (LON:VOG) interim results have revealed an 11.4% increase in output at the Logbaba gas project, in Cameroon, in what has been described as a “very productive” period. Logbaba yielded average gross production of 14.6mln cubic feet per day over the six months to June 30, and a total of 2.3bn cubic feet of gas was sold in the period.

Jersey Oil & Gas PLC (LON:JOG) chief executive Andrew Benitz told investors that the company is in a strong position to pursue its production focussed acquisition strategy, regardless of the outcome of StatOil’s exploration efforts at Verbier. The AIM-quoted firm, in its interim results, highlighted that its cash position will stand at around £1.8mln once Statoil completes sidetrack drilling at the Verbier project, where the Norwegian group is looking to salvage value in an unsuccessful exploration well.

Lekoil Limited (LON:LEK) confirmed it has continued to increase output from the Otakikpo field, which was brought online in February and has now produced some 1mln barrels of crude. In its interim results statement the company said Otakikpo was producing 6,000 bopd at the end of June, but, that the rate has since increased further to 7,000 bopd.

Green Dragon Gas Ltd (LON:GDG) boss Randeep Grewal struck a positive tone as the company released what is seen as a significant set of financial results. "We are pleased to announce a positive set of results for the first half of 2017. It is the first time in almost a decade that we report as a pure upstream company,” the GDG chief executive said.

Kibo Mining PLC (AIM:KIBO) announced that all subscribers to the convertible loan notes that it issued on 27 September 2017 have elected to convert the notes to Kibo shares at a price of 0.05p each. Kibo's CEO Louis Coetzee said: "This is a clear display of reiterated support towards the Company and the direction it is heading. I believe that the parties involved see Kibo as a long-term investment that will add value, not only to their own investment portfolios, but also to all the shareholders."

Horizonte Minerals PLC (LON:HZM (TSX:HZM) said it has launched a rural literacy development programme in schools located close to its 100%-owned Araguaia nickel project in Brazil, part of its recent social investment activities. Additionally, the nickel development company said, it has implemented a sexual health campaign as part of an ongoing public health programme in the Municipality of Conceição do Araguaia, which is the largest community around the project area.

6.45am: Footsie on the front foot?

London’s FTSE 100 is expected to start Thursday on the front foot, following US equities higher.

Wall Street stocks were boosted on Wednesday by promises from President Donald Trump for a new tax regime, including a 15 percentage point reduction in corporate tax, down to 20% from 35%, and a simplification of tax brackets (he proposes there’ll be three levels, not seven – 12%, 25% and 35%).

Stocks pushed higher and the S&P marked its latest new high, before closing up 0.4% at 2,507.

The Dow Jones gained 0.25% to finish Wednesday at 22,340 and the Nasdaq rose more than 1% to close at 6,453.

“There is certainly potential for a lot to go wrong between now and the end of the year, given the unpredictability of the President, but investors are now once again starting to price back in some of what was being priced in at the beginning of the year,” said Michael Hewson, analyst at CMC Markets.

Meanwhile, in Asia, Japan’s Nikkei advanced around 0.6% to 20,387 while Hong Kong’s Hang Seng dripped back 0.24% to 27,581.The Shanghai Composite also pulled back, down 0.17% at 3,339.

In Australia, the ASX 200 added 0.12% to 5,671.

Back in London, CFD and spreadbetting firm IG Markets sees the FTSE 100 rising around 8 points as it is calling the blue-chip benchmark at 7,317 to 7,321 just over an hour before Thursday’s open.

Thursday's Agenda

Trading update: TUI AG (LON:TIU), RPC Group PLC (LON:RPC), 3i Infrastructure PLC (LON:3IN)

Finals: Allergy Therapeutics  PLC (LON:AGY), Clinigen Group PLC (LON:CLIN), Hansard Global PLC (LON:HSD), Inland Homes PLC (LON:INL), Produce Investments PLC (LON:PIL)

Interims: Carillion PLC (LON:CLLN); Air Partner PLC (LON:AIR), ECSC Group PLC (LON:ECSC), Frontier Smart Technologies Group Limited (LON:FST), Harvey Nash Group PLC (LON:HVN), Microsaic  Systems PLC (LON:MSYS), Midatech Pharma PLC (LON:MTPH), Netscientific PLC (LON:NSCI), Tissue Regenix Group PLC (LON:TRX)

Ex-dividends to clip 0.7 points off FTSE 100:  Hargreaves Lansdown PLC (LON:HL.), Intertek Group PLC (LON:ITRK), Wm. Morrison Supermarkets PLC (LON:MRW), Smurfitt Kappa Group PLC (LON:SKG), Worldpay Group PLC (LON:WPG)

Economic data: US final third quarter GDP; US weekly jobless claims

Headlines

Bank of England chief economist says rate hike would be 'good news' - Telegraph

Paddy Power angers rivals with call to slash gaming stake - The Times

Britain's easyJet aims for electric short-haul flights - Reuters

Woman claiming pet allergy dragged off Southwest flight - USA TODAY

Uber Closes Xchange Leasing After Losing $9000 Per Car – Fortune

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