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FTSE 100 closes lower as UK political uncertainty mounts

Only one blue chip has registered a gain in excess of 1% today - AstraZeneca
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UK Prime Minister Theresa May is under pressure
  • FTSE 100 closes down over 17 at 7,415

  • Nisa members approve Co-op takeover offer

  • Defence stocks battered by bearish Ultra Electronics update

  • Sterling weaker

 

FTSE 100 closed in the red on Monday as European indices lagged as political uncertainty and worries over Brexit persist.

The UK benchmark closed down around 17 points at 7,415, while FTSE 250 lagged 232 points at 19,787.

In the currency markets, the pound was down 0.40% against the Euro at the time of writing, and shed 0.56% against the US dollar.

A newspaper report at the weekend suggested that as many as 40 Conservative MPs  agreed to signe a leter of no confidence in UK Prime Minister Theresa May.

On Footsie the biggest loser was support services giant Babcock International Group PLC (LON:BAB), which dropped 7.32% to 753p after a bearish trading update from army equipment manufacturer Ultra Electronics PLC (LON:ULE) on the FTSE 250 hot rivals in similar markets.

Ultra blamed a “difficult” UK market as it said full-year numbers would miss expectations.

Top riser was cruise operator Carnival (LON:CCL), which added 1.71% to 4,947p  on no news although the price of Brent crude dropped 0.64% to US$63.52 a barrel.

 

3.50pm…Serco slumps as it withdraws Middle East Light Rail bids

Shares in Serco Group PLC (LON:SRP) slumped late on Monday after the support services firm said it had withdrawn its bids for several Middle East rail contracts.

The contracts would have been worth around £2.5bn had the company won them, but Serco said the tendering process was taking too long and as a result it had decided to focus efforts elsewhere.

It didn’t totally close the door on re-entering the process though, saying that the bids will no longer be part of the next pipeline update “unless the situation were to change”.

Shares fell 6.9% to 100p late on Monday.

 

3.45pm...May: 'Business can thrive post-Brexit'

 

3.40pm...Not many blue chip risers today

The weaker pound helped to boost the blue chips on the FTSE 100 early on Monday morning, although those gains were soon reversed as defence stocks weighed heavily.

A bearish trading update from army equipment manufacturer Ultra Electronics PLC (LON:ULE) on the FTSE 250 hit its bigger rivals pretty hard.

Ultra Electronics updates weighs heavy

Ultra blamed a “difficult” UK market as it said full-year numbers would miss expectations. It added that “mounting pressures” in the funding of UK defence projects had resulted in the Ministry of Defence “pausing, cancelling or delaying numerous programmes”.

Babcock International Group PLC (LON:BAB) (down 7.7% to 749.8p) was the worst hit as investors considered the warning to be industry-wide as opposed to company specific.

BAE Systems PLC (LON:BA.) (down 3.2% to 538.5p.) and Rolls-Royce Holdings PLC (LON:RR.) (down 2.1% to 909p.) also headed south.

With those three nursing sizeable losses, the FTSE 100 is down 0.2% or 16.9 points to 7,415.9 shortly before close.

Drinks bottler and distributor Coca Cola HBC AG (LON:CCH) also saw its shares go flat after a bearish research note from heavyweight broker JP Morgan.

Analysts at JPM lowered their price target to £26 (from £28) and also downgraded their rating from ‘overweight’ to ‘neutral’, claiming that the share price was fully priced up at the moment.

They also raised concerns about the potential benefits of acquiring Coca Cola Beverages Africa (the African version of CCH), saying that earnings accretion for any deal “could be lower than previously expected”. Shares fell 4.1% to £24.79.

Only AstraZeneca with 1+% gain today

There weren’t many stocks keeping the Footsie from falling too far, but AstraZeneca PLC (LON:AZN) was one of that handful.

The drugs giant has seen its share price slide lower over the past week or two so investors took Friday’s close – a one-month low – as a good chance to get back into the stock.

Shares gained 1.3% throughout the day to £49.32. You know it’s been a bad day when only one stock has added more than 1% to its value. 

 

2.45pm...Wall Street opens lower on tax reform concerns

As expected, Wall Street opened lower amid growing uncertainty over a US tax reform deal.

The Dow Jones fell 0.3% or 63 points 23,359 shortly after the opening bell, while the broader S&P 500 also fell 0.3% or 8.2 points to 2,576.1.

The tech-heavy Nasdaq was off by just over 0.3% or 22 points to 6,727.5.

 

2.30pm…Bookmaker Ladbrokes Coral ‘would be most affected by any regulatory changes’

Shares in Ladbrokes Coral Group PLC (LON:LCL) dipped on Monday after the bookmaker reported a 2% rise in net revenues in the third quarter, driven by strong growth in the European and digital divisions, with the UK retail business posting a slight decline.

Speaking of retail, Hargreaves Lansdown equity analyst George Salmon reckons the government’s upcoming regulatory review on fixed-odds betting terminals could have a big impact on Ladbrokes – more so than other UK bookies.

“These machines, sometimes referred to as the crack cocaine of gambling, are responsible for significant in-shop revenue,” said Salmon.

“While we’ll need to wait until the New Year to find out what the new limits and regulations look like, proposals to cut the maximum stake cut from £100 to just £2 are still in the mix.

“With over 3,500 shops across the country, Ladbrokes Coral has more riding on the outcome than any other major bookie.”

Shares are down 2.4% to 133.6p on Monday afternoon.

 

2pm...Leicester City owners ‘being sued for £323mln’

The owners of Leicester City Football Club are reportedly being sued for £323mln over money owed to the Thai government.

According to Reuters, a lawsuit has been filed against King Power International, accusing it of failing to pay the Thai government 14bn baht (£323mln) from the operation of a duty-free franchise it was awarded in 2006.

At a hearing on Monday, the Central Criminal Court in Bangkok accepted the case and said it would now hear from witnesses in February next year.

The action against King Power, owned by multibillionaire Vichai Srivaddhanaprabha and his family, was initially filed in July.

 

1.10pm…US stocks to open on back foot

Since the middle of last week the US markets have stumbled somewhat and that trend looks set to continue on Monday morning over in New York with all three of the major indices set to open on the back foot.

Spread bet firms see the Dow Jones opening 72 points in the red at 23,350, while the broader S&P 500 is expected to kick off the week 6.8 points lower at 2,575.6.

As for the tech-heavy Nasdaq, that index is forecast to drop 17 points at the opening bell to 6,290.5. 

 

1pm...Footsie reverses early gains

The FTSE 100 has reversed the gains made earlier this morning and is currently down 0.2%, or 14.1 points, to 7,418.9.

AstraZeneca PLC (LON:AZN) is still the index’s biggest riser as investors take interest once again following last week’s little stumble.

Even the drugs giant has given up some of its early gains though and currently finds itself up 1.8% to £49.57.

Defence stocks have taken a battering as the markets moved into afternoon trading here in London.

Defence stocks hammered

Babcock International Group PLC (LON:BAB) (down 6.6% to 758.9p), BAE Systems PLC (LON:BA.) (down 2.8% to 540.5p.) and Rolls-Royce Holdings PLC (LON:RR.) (down 2.3% to 126.4p.) all headed south following a less-than-impressive from FTSE 250 rival Ultra Electronics PLC (LON:ULE).

Ultra blamed a “difficult” UK market as it said full-year numbers would miss expectations. It added that “mounting pressures” in the funding of UK defence projects had resulted in the Ministry of Defence “pausing, cancelling or delaying numerous programmes”.

That profit warning and bearish outlook meant Ultra was the top faller on the second tier, down 20.6% to £12.11.

Also having a rough time of it was Coca Cola HBC AG (LON:CCH), which shed 4.1% to £24.80 after a downgrade from JP Morgan.

The heavyweight broker moved the stock to ‘neutral’ from ‘overweight’ and lowered its price target to £26, saying that it likes the business but thinks it is fully-valued at the moment.

Analysts also raised concerns about the potential benefits of acquiring Coca Cola Beverages Africa (the African version of CCH), saying that earnings accretion for any deal “could be lower than previously expected”.

 

12.30pm…Nisa members vote through Co-op takeover offer

Nisa Retail members have voted in favour of the Co-op Group’s £137.5mln offer to buy the wholesaler and convenience stores business.

It said members voted 75.79% in favour and 24.21% against Co-op’s offer.

“We are delighted that our members have chosen in such significant numbers to vote in favour of Co-op’s offer,” said Nisa chairman Peter Hartley.

"We as a board are firm in our belief that a combination with the Co-op is in the best interests of Nisa’s members.

"The convenience store environment is changing rapidly, and is unrecognisable from that which existed when Nisa was founded more than 40 years ago. Co-op will add buying power and product range to our offering, while respecting our culture of independence.”

 

11.45am …’Expect more sterling volatility’

The reported 40-strong rebellion Theresa May is facing from her own MPs is hanging above the pound, which is down 0.7% against the euro to €1.123, and 0.8% versus the dollar to US$1.309.

“Investors are rightly exercising caution on sterling given the risks with regards to the Brexit process,” says ETX Capital analyst Neil Wilson.

“With the EU preparing for talks to collapse, the stakes are getting higher. Britain has less than two weeks to come up with answers for the EU or we face a potential no-deal scenario."

He adds: “If the market decides the UK cannot meet the EU’s demands in time it could send the pound sharply lower, perhaps to US$1.25 or below before the deadline is reached. As we approach Barnier’s deadline implied volatility levels may rise further and this may see sterling squeezed.”

 

11.30am ... Bitcoin plunges again

The price of Bitcoin has fallen for the second session in a row and is down 29% today to as low as US$5,605.

It had hit an all-time high of US$7,800 last Wednesday but investors seem to have turned their attention to rival cryptocurrencies, with Bitcoin Cash jumping by around 20% since Friday.

 

11.15am ... Uber strikes multibillion-dollar investment deal with SoftBank

The long-anticipated SoftBank investment into Uber has moved closer after the taxi-hailing app confirmed it had struck a deal with a consortium led by the Japanese tech investor and Dragoneer.

The size of the potential investment hasn’t been officially disclosed but reports in recent weeks have suggested it could be up to US$10bn.

Uber said the money would be used to fuel its global expansion as it prepares to go public at some point in the coming years.

Some commentators have called the agreement a ‘peace deal’, with major shareholder Benchmark Capital having agreed to drop its lawsuit against former chief executive Travis Kalanick if it goes ahead.

 

11.05am ... Taylor Wimpey sees sales rate rise in H2; all eyes on Budget

Housebuilder Taylor Wimpey PLC (LON:TW.) has said it traded “strongly” in the second half of its financial year with sales rates edging higher as the UK property market remains “positive”.

ETX Capital analyst Neil Wilson reckons investors will be more concerned with what Phillip Hammond has to say in next week’s Autumn Statement though.

READ: Taylor Wimpey reports 'strong' second half but order book down on last year

“Investors will be less concerned about current trading conditions than what the chancellor has up his sleeve in the Budget next week,” said Wilson this morning.

“Certainly some more support for homebuilders is on the cards given the nation’s housing shortage and pressure on the government to act to help younger voters.

“However the prospect of anything radical being unleashed is small as the government is not keen on upsetting core Tory heartlands by, for instance, allowing green belt development.

“Further demand-side help is a given – Help to Buy enhancement/extensions - but it remains to be seen whether the government is really willing to tackle the supply-side.”

 

10.45am ... Bet365 boss paid herself £217mln last year

The billionaire founder and boss of gambling firm Bet365 Denise Coates paid herself a whopping £217mln last year.

Her company, which she started from a Portakabin in a Stoke car park back in 2000, recorded a £525mln profit from a record £47bn worth of bets last year.

The 50-year-old is now the best-paid boss in Britain, dwarfing previous titleholder and WPP PLC (LON:WPP) boss Martin Sorrell on £48mln.

Coates’ pay-out has come in for some stick from gambling charities which have pointed out that the industry as a whole donated just £8mln to gambling treatment charities.

Mike Dixon, the chief executive of the charity Addaction, tweeted: “It cannot be right that the CEO of a betting company is paid 22 times more than the whole industry ‘donates’ to treatment."

 

10.20am ... Hot start for Footsie

The FTSE 100 has got off to a hot start this Monday morning, with the weak pound helping to boost the blue chip index.

Reports over the weekend that 40 Conservative MPs have agreed to sign a letter of no confidence in Theresa May have made investors skittish, with the added uncertainty at an already precarious time weighing on sterling.

Pound down versus euro and dollar

As a result, the pound is down 0.7% against the euro to €1.123, while it has also lost 0.9% versus the dollar to take it to US$1.308.

With almost three-quarters of FTSE 100 firms’ earnings generated in foreign currencies, a weaker sterling helps to bolster their numbers when translated back into pounds.

In morning trade, the FTSE 100 is 13.5 points to 7,446.5.

After a bad week or two in which it saw more than £3 wiped from its share price, AstraZeneca PLC (LON:AZN) was back in favour with traders, up 2.1% to £49.71 to make it the index’s top riser.

Also making strides this morning was gold miner Fresnillo PLC (LON:FRES) which jumped 1.1% to £13.12 as it took advantage of the slightly higher price of the yellow metal.

Royal Dutch Shell PLC’s (LON:RDSB) move to offload another hefty chunk of its stake in Australian oiler Woodside Petroleum has gone down well with the markets.

Its shares are up 1.1% to £24.84 after it raised US$1.7bn after it decided to sell almost two-thirds of its interest in Woodside.

Coca Cola HBC hit by downgrade

Leading the fallers was drinks bottler and distributor Coca Cola HBC AG (LON:CCH) which lost its fizz after analysts at JP Morgan struck a bearish note with their latest comments.

The heavyweight broker downgraded to 'neutral' from 'overweight', saying it liked CCH as a company but that the “improved fundamentals are likely priced in” now.

The analysts also suspect that accretion for a deal for Coca Cola Beverages Africa “could be lower than previously expected”. Shares have dived 5% to £24.57 on the back of the downgrade.

A less-than-impressive trading update from FTSE 250 security and defence group Ultra Electronics Holdings PLC (LON:ULE) is weighing on BAE Systems PLC (LON:BA.).

Ultra said profits and sales would miss expectations this year as “mounting pressures in the funding of UK defence programmes” has resulted in the Ministry of Defence pausing, cancelling or delaying numerous programmes.”

BAE shares are down 2.3% to 543.5p on the read-across.

 

8.45am ...Tory revolt weighs on sterling

The back bench revolt faced by Prime Minister Theresa May amid Brexit negotiations appears to have unsettled sterling.

However the knock-on impact for the stock market appeared to be a positive one with the FTSE 100 led higher by the stocks sensitive to and likely to be buoyed by the weak pound.

In early trade, the index of blue-chip shares was up almost 30 points at 7,462.84.

Payments firm WorldPay (LON:WPG) led the Footsie, followed by the main London-listed miners.

Builder Taylor Wimpey’s (LON:TW.) upbeat trading statement boosted shares, up by a quarter in the year to date, by a further 1% in morning trade.

“Help to Buy, low mortgage rates and low unemployment is an ideal set of conditions and homebuilders are profiting,” said Neil Wilson, markets commentator at ETX Capital.

“Although the Bank of England raised rates, market expectations have pushed back forecasts for future hikes and policy remains highly accommodative.”

Leading the losers’ list was Coca Cola HBC (LON:CCH) after a downgrade to ‘neutral’ from ‘overweight’ by the heavyweight broker JP Morgan Cazenove.

The change of view, which also came with a price target cut to £26 a share from £28, wiped 2.6% from the value of the Coke bottler and distributor.

Stepping down a division, Ultra Electronics (LON:ULE), already hit by delays to a planned takeover, slumped 17% in the wake of a trading update that warned the UK’s Ministry of Defence was “pausing, cancelling, or delaying numerous programmes”.

6.45am ... best foot forward

The FTSE 100 looks set to begin the week on the front foot, advancing 19 points to 7,451.99 and cancelling out some of the loss posted on Friday.

Overnight in Asia, the main markets were mixed with the Nikkei 225 off 1.2%, and the ASX down 0.2%. The Hang Seng and Shanghai Composite were up respectively 0.3% and 0.6%.

Back here in the UK, it is expected to be another busy week for corporate news, particularly in the house building sector.

We have reports from Taylor Wimpey (Monday), Bovis (Tuesday) and Barratt (Wednesday) alongside updates from Vodafone (Tuesday), TalkTalk (Wednesday) and Royal Mail (Thursday).

  • Pound worth US$1.3132
  • Gold worth US$1,277.10 an ounce, up US$2.90
  • Brent crude selling for US$63.54 a barrel, up 2 cents

Proactive news headlines

Caledonia Mining Corporation PLC (LON:CMCL) generated revenues of US$18mln during the third quarter of 2017 from operations at the Blanket gold mine in Zimbabwe. Pre-tax profits rang in at US$6.2mln, as costs fell and production rose.

Richland Resources Limited (LON:RLD) booked sales of US$388,000 during October, as sapphire prices continued to be depressed. However, the company now says it notes signs of recovery in the market. Its next major sale is planned for December. 

Scotgold Resources Limited (LON:SGZ) is raising £2.65 mln via a rights issue fully underwritten by largest shareholder Nat Le Roux. Shareholders will be offered two shares at 25p for every three held, plus a warrant exercisable at 40p for every five shares held. The money raised will be used to press ahead with the next stage of development work at the Cononish gold mine in Scotland. 

Mobile payments group Bango PLC (LON:BGO) has extended its carrier billing availability for Amazon customers in Japan. Earlier this year the company launched direct carrier billing (DCB) for Amazon shoppers, but now Prime members can pay for their subscriptions using the service as well. 

Newmark Security PLC’s (LON:NWT) Grosvenor Technology subsidiary has entered into new ongoing supply agreements with WorkForce Software to provide its IT51 Linux-based workforce management terminal. 

AIM-listed biopharma Amryt Pharma PLC (LON:AMYT) has signed an exclusive distribution agreement with Saudi Arabian firm Faisal Musaed El Seif Saudi Pharmaceutical Company which covers its Lojuxta and AP101 drugs.

Fertility specialist Concepta PLC (LON:CPT) said it had conditionally raised £2mln in an over-subscribed share placing and announced the formal sign-off on a £600,000 Chinese deal. The stock was sold at 7p – a modest discount to Friday’s close – and the proceeds will be used to fund its expansion in the People’s Republic, though some of the cash will be invested in new product development. 

Horizonte Minerals PLC (LON:HZM) ended its latest quarter with cash of £4mln as two more major steps at its Araguaia nickel project development in Brazil were completed. Last week, the mine plan for the 28-year operation was submitted after approval of the final exploration reports. 

Eco Atlantic Oil & Gas Ltd (LON:ECO) revealed it has raised £8.46mln of new capital and added Africa Oil Corp to its shareholder register. Africa Oil Corp, an explorer that’s seen significant recent success with new discoveries, has subscribed for a 19.77% stake in the company, taking 29.2mln new Eco shares priced at 29p.

Chaarat Gold Holdings Ltd (LON:CGH) said it has appointed Gordon Wylie and Dorian Nicol as non-executive directors to the board with immediate effect.  The new directors bring more than 40 years mining experience to the board and will assist the management team, led by chief executive Robert Benbow, in the development of the Chaarat Gold Project.

Highlands Natural Resources PLC (LON:HNR) has revealed flow test results from the recently drilled Wildhorse and Powell wells at the East Denver project, with the two tests yielding a total rate of 637 barrels of oil equivalent per day. The measurements were taken for the 24-hour period ended 12pm on November 10, and the company highlighted that oil and gas production volumes and fluid percentages have been rising steadily. 

Canadian Overseas Petroleum Limited (LON:COPL) continues to work towards an appraisal drilling programme at the OPL 226 project offshore Nigeria where work is slated for early 2018. The company said in a third quarter update that it is working with investment banks to source funds for the proposed programme and it has held talks with potential contractors and suppliers for the anticipated programme. 

Nick Warrell, the chief operating officer of Sula Iron & Gold PLC (LON:SULA), has stepped down from the board with immediate effect. 

PhotonStar LED Group PLC (LON:PSL), the British designer and manufacturer of smart LED lighting solutions, has awarded a total of 4,350,000 options to acquire ordinary shares of 1 pence each in the company to its employees and an adviser who provides professional services to the group.

SDX Energy Inc (LON:SDX, TSE:SDX) has announced its latest new discovery, with the KSR-15 well at the Sebou project, onshore Morocco, unearthing gas across four intervals. KSR-15 was drilled to a depth of 1,774 metres and encountered total net conventional gas pay of some 17.2 metres. 

Business Headlines

Financial Times

RBR Capital Advisers, the activist hedge fund that called for a break-up of Credit Suisse, has stepped up demands for more aggressive cost-cutting at the bank, potentially backed by another round of capital raising, after meeting its chief executive.

The catastrophes have wiped more than US$35bn from insurers’ profits, according to a Financial Times analysis of third quarter results that have laid bare the scale of the damage.

UK chipmaker Graphcore has raised US$50mln from Sequoia Capital, one of Silicon Valley’s top venture capital firms, as the start-up angles to become Britain’s biggest maker of artificial intelligence hardware.

Times

Investors will seek more information about Prudential’s merger of its British business with M&G, its fund manager, when it gives a strategy update on Thursday.

Denise Coates, the billionaire Founder of Bet365, was paid almost £200mln by the gambling company in the last financial year, making her one of the best-paid company Bosses in Britain.

Daily Telegraph

Telegraph investigation forces online giant to overhaul treatment of drivers: Amazon is demanding that one of its main grocery delivery partners radically changes how it treats its workers after The Telegraph uncovered a punitive regime that left many drivers earning less than the minimum wage.

A multibillion-dollar investment in Uber by Japanese tech giant SoftBank was set to be signed last night following weeks of delays, after former chief executive Travis Kalanick and a combatant shareholder made peace.

The long-running battle over the Stolichnaya vodka brand will come to a head this week as a court in the Netherlands prepares to rule on its European ownership.

Ex-Asda Boss Andy Clarke joins food tech start-up Spoon Guru.

The EU is preparing to fine Google over its multi-billion dollar advertising empire as a high-profile investigation into its Android operating system is pushed back to next year.

The Guardian

Co-op takeover of Nisa faces resistance before crunch shareholder vote.

Fairtrade Kenyan roses project audited amid corruption fears.

The Chancellor, Philip Hammond, is to receive some crucial evidence about the health of the U.K. economy this week as he puts the finishing touches to one of the most difficult budgets in recent times.

Daily Mail

Crisis-hit Lonmin may make a cash call on shareholders to survive slump in platinum prices and profits.

Founder of office fitters Morgan Sindall believes the best is yet to come from the company with annual turnover of £2.5bn.

Tesco is being sued by ex-boss it sacked over accounts scandal: Former Tesco commercial Director Kevin Grace, sacked over a £246mln accounting scandal, is suing the firm for more than £600,000.

Independent

UK shopper footfall drops by largest margin since last year’s Brexit referendum.


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