FTSE 100 closes down a tad at 7,414
Tesco-Booker merger getes green light from CMA, prompting share rise
Inflation holds steady at 3% in October
FTSE 100 closed in negative territory as big cap miners kept a lid on the UK benchmark closing to the good.
The index finished down just 0.76 of a point, or 0.01%, at 7,414.42.
The FTSE 250 though went the other way despite the Brexit tensions, rounding off the afternoon session, up over 58 points at 19,846.
It came after economic data from China – the world’s biggest commodities consumer – showed that industrial production growth slowed in October, hitting metals prices.
Meanwhile, the biggest riser on Footsie was Tesco plc (LON: TSCO), which shot up 6.24% to 188.05p after its £3.7bn takeover of Booker Group PLC (LON:BOK) was provisionally approved by competition regulators.
FTSE 100 slips into red
With less than an hour left in the trading day, the FTSE 100 has fallen into negative territory having kept its head above water for all of the session until now.
The index is currently down 12.1 points to 7,403.1, with all of the blue chip miners showing red.
Metals prices fall on weak Chinese data
Economic data from China – the world’s biggest commodities consumer – showed that industrial production growth slowed in October which weighed on metals prices.
Glencore PLC (LON:GLEN) (down 2.9% to 353.2p), Anglo American PLC (LON:AAL) (down 2.8% to £14.55), Rio Tinto PLC (LON:RIO) (down 2.4% to £36.10) and BHP Billiton plc (LON:BLT) (down 2.4% to £13.89) all headed sharply lower.
Those four took up spots 2-5 on the FTSE 100 fallers list, with broadcaster ITV PLC (LON:ITV) taking the wooden spoon on Tuesday.
The company has lost 2.6% today to trade at 150p, largely on renewed fears about advertising spending – ITV’s biggest income streams.
Ad revenues declined by 4% in the third-quarter, worse than the -3.5% analysts had expected, with Brexit and general economic uncertainties playing on companies’ minds.
Limiting the damage today has been Tesco PLC (LON:TSCO) which has jumped a whopping 6.5% to 188.5p after its £3.7bn takeover of Booker Group PLC (LON:BOK) was provisionally approved by competition regulators.
2.50pm...Wall Street stocks open lower
Over in the States, US stocks kicked off Tuesday trading on the red as had been expected.
The Dow Jones opened 96 points, or 0.4%, lower at 23,344, with General Electric top of the fallers for the second day running, while the S&P 500 lost 8.8 points, or 0.3%, to 2,576.1 at the opening bell.
The tech-heavy Nasdaq also lost ground at the open on Tuesday, shedding 0.5%, or 34.5 points, to 6,723.1.
2.40pm…Bombardier lands new plane order
The letter of intent also includes the option for EgyptAir to buy up to another 12 Cseries which, if exercised, would increase the total value of the deal to almost US$2.2bn.
Bombardier employs 4,000 people in Belfast, with about 1,000 making C-Series wings.
2.15pm…Shire heads higher on broker ‘buy’ note
The ‘buy’ call was made on valuation grounds with the stock having fallen 21% since the start of June.
Liberum says the risk of a new Shire competitor in the haemophilia market has now been baked into the company’s valuation as has the prospect of management making further big and potentially tricky acquisitions.
“With the stock now below £35, we believe almost the entire value of hemophilia has been discounted from the shares,” Liberum said in a note to clients.
“Furthermore, there are welcome signs that management could re-orient from away from M&A to cash returns as it looks at strategic options for neuroscience.”
It has moved its recommendation to ‘buy’ from ‘hold’, while its price target is £42 a share.
1.25pm…US stocks to open lower for third session in a row
US stocks are set to open in the red for the third session in a row, albeit the initial losses are expected to be far from huge.
Spread bet firms see the Dow Jones opening 32 points lower at 23,410 and the broader S&P 500 5.5 points in the red at 2,579.1.
12.40pm...FTSE pares gains as miners, ITV weigh heavy
Tesco PLC (LON:TSCO) is still the shining light on the FTSE 100 after it got word from the Competition and Markets Authority this morning that its £3.7bn takeover of wholesaler Booker Group PLC (LON:BOK) has provisionally been given the thumbs up. Shares have surged 5.7% to 187.1p on the back of the announcement.
Fellow supermarket giant J Sainsbury plc (LON:SBRY) also headed higher after the latest Kantar Worldpanel data showed it registered the highest sales growth (2.6%) of any of the ‘Big Four’ in the last three months. Shares are currently up 1.2% to 230p.
Housebuilders boosted by bullish Bovis update
All of those stocks, coupled with a slight weakness pound which is slightly down against the euro and dollar following the inflation figures, have kept the FTSE 100’s head just above the water.
Miners down on weak Chinese data
Traders have been pulling their money out of the broadcaster on renewed fears over advertising spending – ITV’s biggest profit generator.
Ad revenues declined by 4% in the third-quarter, worse than the -3.5% analysts had expected, with Brexit and general economic uncertainties playing on companies’ minds. Shares are down 2.7% tp 149.9p.
A couple of heavyweight miners are also nursing losses as metals slide on Chinese economic data that came in just below expectations.
Growth in retail sales, industrial production and investments all slowed in October amid a government crackdown on polluting industries and a slowdown in credit expansion.
12pm...Belvoir gets a boost for its merger offer with The Property Franchise Group
Amati Global Investors, Livingbridge and Hargreave Hale, which speak for owners of 12.31% of TPFG, said they support in principle the two firms engaging in discussions around the possible merger offer.
Lettings agent Belvoir made a cash and share approach to TPFG in October worth 130.5p per share or £33.7mln in total.
TPFG’s board rejected the offer and has refused even to talk about a deal.
In its latest statement at the start of the month, Belvoir said it was disappointed with the stance of the TPFG board and urged the directors to consider the merits of a deal.
The combination would create a UK property franchise group with some 683 outlets and 108,000 tenanted managed properties and cement a more robust market position for the enlarged group.
Belvoir needs board support as the TPFG’s directors speak for 49.3% of the shares.
11.40am...Grocery inflation hits four-year high as discounters march on
Grocery inflation rose to 3.4% in the three months ended 5 November – its highest level for four years – according to the latest Kantar Worldpanel data.
“With the average shop currently costing £18.26, consumers are now paying an extra 62 pence each time and over the course of a year it could add £143.70 to a typical family’s grocery bill,” said Kantar’s head of retail and consumer insight Fraser McKevitt.
The data also showed that the relentless rise of the German discounters shows no sign of stopping, with Lidl the UK’s fastest growing supermarket for the fifth consecutive period, with sales up 15.1%.
Lidl now has a 5.1% share of the UK grocery market, while rival Aldi has a 6.7% share having seen sales rise by 13.1% in the 12 week period.
Their rapid growth compares to sales growth of just 2.6% at J Sainsbury plc (LON:SBRY); 2.3% at Tesco PLC (LON:TSCO); 2.1% at WM Morrisons PLC (LON:MRW); and 1.5% at Asda. All of the ‘Big Four’ saw their market shares fall slightly.
11.10am…Could Tesco shareholders derail Booker merger?
“Tesco has cleared a major hurdle in its proposed merger with Booker, though the competition regulator can expect a postbag full of angry letters from convenience shop owners before it comes to a final decision next month,” said Hargeaves Lansdown’s Laith Khalaf.
“The fly in the ointment could yet be Tesco shareholders, with some influential players still not backing the merger.
“It remains to be seen if there’s a silent majority out there who will give the deal the nod, or whether the vocal critics of the proposals are reflective of wider discontent amongst the ranks of Tesco investors.
“The concern is that Tesco is trying to run before it can walk, and that a big merger like this could blow its nascent recovery off course. That worry is compounded by a tough consumer environment, changing shopping habits and fierce levels of industry competition.”
11am...Solo Oil boss discusses US$5mln convertible debt funding deal
10.55am…'London will still be the financial capital of the world'
Businessman and former New York mayor reckons London will still be the financial capital of Europe after the UK formally departs from the European Union.
Speaking to the BBC, Bloomberg praised the city’s infrastructure, culture and (perhaps surprisingly) transport system, saying it unmatched by other European city.
"It has the things the finance industry needs. It is English speaking, it is family friendly, it has a lot of culture so that you can attract these people here because, remember, if your family won't live here, you can't take a job here, so here has got to be attractive."
"It is a city with the best transportation and communication and scale and it is already here, so it’s hard to see that going away."
Bloomberg added: “New York is the financial centre of the United States. London is the financial centre of Europe. It's going to stay that way for a long time."
10.40…Sterling slips to three-week low against euro
Sterling slipped to a three week low against the euro on Tuesday after UK inflation data came in slightly weaker than what analysts had expected.
The consumer price index held steady at 3% in October, although most commentators were looking for something nearer to 3.2%.
According to the latest data from barchart.com, the pound is down 0.6% to against the euro to €1.117 while it has also lost 0.2% versus the dollar to US$1.309.
The fall in sterling helped to push the internationally-focused FTSE 100 slightly higher to 7,427.
10.25am…Worst of inflation behind us?
"The recent surge in price pressures has primarily due to the depreciation of the sterling since last year’s EU referendum, which has increased the cost of imported goods and services, but today’s numbers will add to the sense that the worst of this impact has already passed,” said IHS Markit chief business economist Chris Williamson.
“Data on company costs, which tend to change ahead of changes in consumer prices, are already shown signs of having peaked earlier in the year.”
10.15am…’Netflix and Amazon putting pressure on ITV ad revenues’
“Despite the steady rise of the Studios business, ITV remains highly dependent on selling its advertising space,” said Hargreaves Lansdown analyst George Salmon.
“Ad spending tends to rise and fall with the economic tide, and with concerns over Brexit and the UK economy high up on the agenda in many boardrooms, we’re in a bit of a lull at the moment.
“In normal circumstances this wouldn’t be a great issue, however one has to wonder whether changes to how and when we watch content mean ITV will no longer be top dog when confidence comes back. ITV’s own interactive services are growing, but bigger rivals like Netflix and Amazon are putting the pressure on in a big way.”
The FTSE 100 has got off to bright start on a dreary Tuesday Morning here in London, with the UK’s biggest supermarket chain Tesco PLC (LON:TSCO) and telecoms giant Vodafone PLC (LON:VOD) leading the way.
Meanwhile Vodafone advanced by 5% to 226.9p as it raised its full-year guidance after reporting an increase in first half profits.
Drugmaker Shire Plc (LON:SHP) was also in demand after City broker Liberum upgraded to ‘buy’ from ‘hold’, noting that the recent fall in the shares meant they were now “finally too cheap” to ignore. The share price zipped 1.5% higher to £35.51.
Those three risers, along with a number of other smaller gainers, helped the FTSE 100 add 10.1 points or 0.14% to 7,425.3.
Advertising revenues in the third quarter declined by 4% which was significantly better than the 8% drop-off seen in the first half. Analysts however had hoped for something closer to -3.5%.
That ad revenues remain under pressure was weighing on advertising and PR giant WPP PLC (LON:WPP), which is down 1.6% to £12.66.
9.30am...Inflation unchanged at 3%
The UK consumer price index, a key measure of inflation, held steady at 3% in October, according to the Office for National Statistics.
Commentators had thought it could head up to 3.2% but rising food prices were offset by falling fuel and furniture prices.
"Inflation remains at a five-year high with rising food prices offset by a fall in the cost of fuel,” said ONS head of inflation Mike Prestwood.
"The rise in the cost of raw materials and goods leaving factories both slowed, with crude oil and petroleum prices both increasing less than at this time last year."
8.30am...Footsie kicks off on front foot
The FTSE 100 defied the early, slightly pessimistic predictions to open the session in positive territory – adding around 17 points at the start to trade at 7,431.95.
The big news of the morning will come in the form of inflation data that is almost certain to show the consumer price index has pushed through 3% - a full percentage point above the Bank of England’s ceiling.
It will be interesting to see what Bank Governor Mark Carney writes in mitigation in his official letter of explanation to the Chancellor.
It was a case of ‘deal done’ of Tesco (LON:TSCO), whose £3.7bn takeover of the Booker (LON:BOK) cash and carry group was given the regulatory green light. Stock in Britain’s largest grocer advanced 2.4% on the news.
A surprise improvement in advertising revenues drove stock ITV (LON:ITV) 3% higher in early trade.
Among the fallers was clothes chain Next (LON:NXT), which was downgraded to sell by the influential retail team at Goldman Sachs (more on this later).
6.32am...subdued start predicted
The FTSE 100 is set to make a subdued start to proceedings with the index of blue-chip shares expected to open eight points lower at 7,407.18.
The lack of dynamism over recent trading days may be reflective of a growing caution among the trading community with the index of blue-chip shares making slow retreat from record territory, experts said.
“It could just be that in the absence of further catalysts to go higher and valuations already quite rich that momentum has started to turn and it is time to lock in some profits as we head towards the end of the year,” explained Michael Hewson, analysts at CMC Markets.
Inflation data later is expected to see the consumer price index push through 3%, which will prompt a letter form Bank of England Governor Mark Carney to the Chancellor explaining why the number has crept above its 2% ceiling.
Overnight, Wall Street finished in positive territory – but only just – while trade on Asia’s main markets can best be described as muted.
- Pound worth US$1.3106
- Gold down US$2.20 an ounce at US$1,276.20
- Brent crude down 20 cents a barrel at US$62.96
Proactive news headlines
Directa Plus Plc (LON:DCTA) said its Graphene Plus (G+) membrane and G+ printed fabrics have received international certification from Complife Italia, certifying that the material do not cause any irritation to human skin.
IronRidge Resources Limited (LON:IRR) has signed off the joint venture with Gail Exploration for a gold prospect in the Ivory Coast. Originally agreed this time last year, Ironridge will have access to a granted licence covering 385 sq km.
Orosur Mining PLC (LON:OMI) has hit high grade gold at its Anzá project in Colombia. Three holes of a 15,000 metre programme have been drilled to date, with highlights including 5.47 grams gold per tonne over 4.63 metres. The mineralisation remains open along strike and at depth.
Avation PLC (LON:AVAP) has appointed a new vice president of marketing. He is Karl Ryan, who has aircraft leasing experience and is a graduate from the world famous General Electric training programme. Based in Dublin, Ryan will spearhead the firm’s marketing efforts in Europe, the Middle East and the Americas.
Metal Tiger PLC (LON:MTR) has drawn attention to recent high quality drill results reported by joint venture partner MOD Resources at the T3 copper project in Botswana. The mineralisation looks to extend further than was previously thought, and further work is being undertaken to investigate the potential. Six drill rigs are now on site.
appScatter Group PLC (LON:APPS) is set to formally launch its b2b platform on 22 November - on time and on budget.
Akers Biosciences Inc (LON:AKR; NASDAQ:AKER) expects sales of its BreathScan alcohol detector to “ramp up” in the coming months after its UK distributor Accutest secured a “major new channel partner” in Today’s Wholesale Services Group. Today’s Wholesale Services is a subsidiary of Today’s Group, the largest independent buying group of its kind in the UK with buying power exceeding £5.7bn a year.
Tharisa PLC (JSE:THA, LON:THS) said headline earnings per share for the year to the end of September are likely to be between 21 and 23 cents, up from six cents the year before, thanks to the increase in the chrome concentrate price.
Belvoir Lettings PLC (LON:BLV) has received a boost for its offer to merge with The Property Franchise Group (LON:TPFG) with three fund managers suggesting talks. Amati Global Investors, Livingbridge and Hargreave Hale, which speak for owners of 12.31% of TPFG, said they support in principle the two firms engaging in discussions around the possible merger offer.
Touchstone Exploration Inc (LON:TXP, TSE:TXP) has reported third quarter results boosted by increase in production and oil prices. The company generated some US$1.387mln, compared with US$438,000 for the preceding quarter and US$1.56mln in the same period of last year.
Solo Oil PLC (LON:AIM) has unveiled a new US$5mln convertible debt funding deal with institutional investor Riverfort Global Capital. Riverfort is providing an initial US$1.5mln and the timings of further draw-downs at the company’s sole election.
Telephony specialist Adept Telecom PLC (LON:ADT) confirmed another meaty dividend hike as interim profits jumped by 36%. The group is following a ‘buy and build’ strategy and contributions from OurIT (six months) and Atomwide (two months) helped revenues match earnings with a 36% rise to £22.6mln.
Ariana Resources plc (LON:AAU) has completed its latest round of exploration across the Hot Gold Corridor within its wholly-owned Salinbas gold project, already known to contain one million ounces of gold. The Hot Gold Corridor is named after the four million ounce Hot Maden gold-copper deposit, located approximately 4 km south.
Sareum Holdings Plc (LON:SAR) has raised £700,000 through a share placement to support drug development programmes and supply working capital.
The specialist cancer drug discovery and development company placed 100 million new ordinary shares of 0.025p each at a price of 0.7p per share.
Diagnostics specialist genedrive plc (LON:GDR) has extended the “commercial reach” of its relationship with Sysmex Corp, inking a distribution deal with the Japanese group’s Asia-Pacific arm. Under the agreement, Sysmex will be responsible for sales, marketing and customer support for the CE-marked Genedrive HCV ID Kit and platform in the region.
Mick Davis leads contenders to become next Rio Tinto chairman.
Anheuser Busch InBev is hoping to stem the fall in US beer sales by appointing a new head for North America, its most important market, in a move announced on Monday by the world’s biggest brewer.
Uber’s US rival Lyft is expanding outside of its home market, taking the competition between the two companies into a new arena at a time when both ride-hailing companies are in separate fundraising talks.
Broadcom ‘encouraged’ by Qualcomm shareholder reaction to US$130bn offer.
Npower owner Innogy suffers €480mln impairment on UK retail unit.
Abu Dhabi’s state oil company to list shares in fuel distribution arm. Mick Davis leads contenders to become next Rio Tinto chairman.
Ineos Boss buys Swiss football club Lausanne-Sport.
Google faces a new regulatory battle on an unexpected front after the chief prosecutor of an American state launched an investigation into its business practices, saying that he would not allow the state’s consumers and companies to be “exploited by industry giants”.
A key shareholder in Hurricane Energy has called for the company’s chief executive to be replaced, heaping pressure on the group after a boardroom row prompted the resignation of its chairman last week.
Channel 4 has teamed up with three European commercial broadcasters to book pan-European advertising campaigns, allowing it to take on digital ad giants Facebook and Google for the first time.
Theme park operator Euro Disney has forecast that it is on track to make a full recovery by 2021 following the terrorist attacks in France over the past two years.
Most of the UK’s biggest supermarket chains are falling short on measures to reduce the use of antibiotics in the production of the meat and animal products they sell, campaigners have warned, with potentially harmful impacts on human health.
The average pay packet in Britain in five years’ time will still be more than £20 lower than it was before the start of the financial crisis as the biggest squeeze on wages since the end of the Napoleonic Wars extends well into a second decade, a leading thinktank has warned.
The owners of Britain’s largest water companies used offshore tax havens as they loaded up the firms with £24 bn of debt. Thames Water, Anglian, Southern and Yorkshire Water – which jointly supply almost 30 million people – are billions of pounds in the red and paid no corporation tax last year.
Uber IPO on the cards? Japanese tech firm SoftBank to buy billion dollar stake and pave way for a stock market float.