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FTSE 100 closes slightly higher, boosted by builders and a stronger pound on the back of political uncertainty in Germany

Last updated: 17:30 20 Nov 2017 GMT, First published: 06:39 20 Nov 2017 GMT

Outdoor Christmas market in Europe

 

  • Equities in recovery mode after German shock

  • FTSE 100 closes slightly higher after gloomy start

  • Barclays, Unilever and Thomas Cook among rising blue-chips

  • Feedback PLC boosted as lung technology get EU greenlight

  • Housebuilders Barrat Developments PLC, Persimmon PLC and Taylor Wimpey PLC up ahead of the Budget

 

The FTSE 100 closed slightly higher on Monday, boosted by the political developments in Germany and the stronger pound as well as UK housebuilders. There are reports that German President Frank-Walter Steinmeier is expected to issue a statement in the next few hours. 

Although it is not clear what will be announced after Chancellor Angela Merkel failed to put together a coalition government, there are growing fears she may not complete her fourth term as leader. There are concerns that a minority government may take over and push the odds for new general election.

 

 

And the pound started to shine after Chancellor Philip Hammond indicated that the UK may be prepared to hike the payment for the EU divorce. 

And closer to home, housebuilders, Barratt Developments PLC (LON:BDEV), Persimmon (LON:PSN) and Taylor Wimpey PLC (LON:TW. all edged higher, on expectations that Chancellor Philip Hammond is set to unveil plans to build 300,000 new homes a year, as well as a cut to stamp duty for first-time house buyers - all favourable terms for the construction industry.

IG Joshua Mahony said: "The FTSE 100 is being boosted by the house builders, with Wednesday's budget expected to be dominated by the government’s attempts to fix a housing market that has too few new houses being built.

"With Labour holding the vote for younger parts of the country, Wednesday’s budget is likely to focus on getting more first time buyers onto the property ladder. This focus on the housing sector should see the government ensure a ramp up in the number of houses being built each year."

Barclays (LON:BARC) closed up 2.03% to 188.75p. 

Barrat Developments gained 0.96% at 633p while Taylor WImpey was up 0.36% at 197.30p and Persimmon PLC was up 0.30% at 2,684p.

Mediclinic International Plc (LON:MDC) was down 3.1% at 538.50p after the company said it is abandoning plans to make an offer to buy Spire Healthcare Group PLC (LON:SPI) which also fell 8.42% to 247p 

 

3:30pm: FTSE 100 holds positive as pound gets boost from German chaos

London’s FTSE 100 was up by about 12 point, 0.17%, near its highest level for the day as Monday’s trading session moved into its final hour.

At 3:30pm the benchmark stood at 7,391.

3:15pm: Germans give shoppers a sterling boost as Christmas markets beckon

Everyone loves a German Christmas market, and the new political uncertainty may be a sterling gift for consumers this festive season.

As the pound received a boost from the weakened Euro, online foreign exchange trader UFX highlighted that Germany could be without a government for a period of weeks.

“After a number of strong months for the euro, including a summer where we saw the single currency reach parity with the pound, now may be the perfect time for UK holidaymakers heading to the continent for Christmas to cash in their pounds,” Dennis de Jong, UFX managing director,

“However, ECB chief, Mario Draghi, was in a more bullish mood during his recent speech, reasserting the solid and broad economic expansion across the eurozone, alongside his hopes that the euro would soon rally to the cause.”

City Index analyst Kathleen Brooks, however, reckons any comparative improvement in sterling could be short lived given that the UK budget is due on Wednesday – in fact she reckons “only a fiscal miracle’ could boost the pound at this stage.

“With bleak prospects for the UK’s economic outlook and the OBR set to downgrade the UK’s productivity forecasts it would take a large fiscal expansion to boost the pound in the aftermath of this Budget,” Brooks said in a note.

“With the Chancellor expected to stick firmly to the deficit-cutting strategy of his predecessor, there is no room to go on a borrowing binge to boost investment and growth.

“Thus the UK’s economy could be left floundering without a government lifeline from this Budget, which is ultimately negative for the pound. GBP/USD is approaching the top of its recent range at 1.3350 – the high from early October, as we lead up to this Budget.

“If, as we believe, the budget is negative for the pound from a growth perspective, then investors and traders could sell the pound on rallies later this week.”

2:30pm: Which? says watch out on Black Friday

Naivety could dent shopper’s wallets later this week, that’s the suggestion of Which?

The consumer group has issued a warned about over hyped ‘Black Friday’ sales and has published a series of recommendations to help shopper avoid being ripped off.

In an attempt to dispell the once-a-year bargain basement myth, Which? said more than half of the 2016 Black Friday deals were actually the same price or cheaper at other times in the year.

Which? reckons around £2.6bn will be spent in the UK on Black Friday deals this year,

2pm – Cash for clichés and bookie shortens odds on Gove for PM

Ahead of Wednesday’s budget speech one online bookmaker expects chancellor Philip Hammond will deliver a ‘silver bullet’ – but don’t get carried away, the bet is merely that he will literally speak the cliché rather than actually than find a one-shot solution to economic uncertainty.

At 4/6 Betway makes Hammond odds-on to say there’s no silver bullet … meanwhile punters can get even odds on the chancellor using the saying “magic money tree” but in the bookie’s buzzword bingo “an end to austerity” has a much wider price of 10/1.

Betway, meanwhile, in a separate book, has narrowed its price on Michael Gove becoming the next prime minister, with the price now 12/1 from 25/1.

1:30pm: Wall Street benchmark set to start lower

Wall Street benchmarks are pointing lower ahead of Monday’s open in New York, with the Dow Jones and S&P 500 both in red ahead of opening bell.

Early attentions will be on Alibaba Group which has seemingly followed Amazon’s lead into the bricks and mortar grocery business – with Jack Ma’s ecommerce firm buying up a stake in Chinese hypermarket operator Sun Art Retail Group, paying US$2bn for a 36% position.

In other US headlines, Qualcomm is reportedly going to get its Japanese competition clearance imminently for its US$38bn deal to acquire NXP Semiconductors, and the European approval is anticipated before the end of this year.

Hewlett Packard Enterprise, Urban Outfitters and Intuit Inc are among the names in the US earnings schedule for Monday.

In London, the FTSE 100 stayed in positive territory, up 5 points or 0.06%, changing hands at 7,385 at around 1:30pm.

11:35am: FTSE 100 turns positive

The FTSE 100 turned positive late into Monday morning as a clutch of blue-chip stocks started moving higher.

Changing hands at 7,385 the benchmark was up 4 point, just 0.07%.

Unilever Group Plc (LON:ULVR), Diageo plc (LON:DGE) and Vodafone Plc (LON:VOD) were among those rising, meanwhile the banks were also higher.

Barclays Plc (LON:BARC) was the leader, up 1.6%, changing hands at 188p. Lloyds Banking Group Plc (LON:LLOY) and Royal Bank of Scotland Plc (LON:RBS) each nudged up around 0.4%.

10:00am: FTSE 100 remains on back-foot as gloomy start continues

Traders still await some stimulus before a change of direction, with London’s FTSE 100 remaining in negative territory by mid-morning.

Shortly after 10:00am the blue-chip benchmark was down 12 points, 0.17%, changing hands at around 7,368.

Europe’s latest political uncertainty came from Germany, where Angela Merkel has failed to secure a working government as coalition negotiations broke off.

Here in the UK, the pending budget (on Wednesday) is likely to see a portion of investors staying on the sidelines in the week’s early dealing.

9:40am: Germany’s ‘significant political upset’ may have limited economic consequence - analyst

“While it remains likely that, one way or the other, Merkel will be able to govern for a fourth term in the end, her position is now potentially at risk,” said Holger Schmieding, analyst at Berenberg.

“For Germany, this is a significant political upset.”

Further coalition negotiations are expected, but, ultimately Germany may have to call another election, but, Schmieding, in a note, added that the unexpected German twist may only have limited economic consequences.

“The economy is in such good shape with 2.5% growth, strong business confidence, full employment and a fiscal surplus that few major decisions need to be taken for the time being. Businesses will not curtail investment growth by much, growth can rumble even in a political limbo.”

More broadly, he reckon this new domestic matter may be a distraction to some European Union business, as the Germans will be “too pre-occupied” – so, one might presume it will mean further Brexit related stalling.

8:55am : FTSE 100 off to a slow start; Thomas Cook one of the few bright spots

The FTSE 100 was reflective of a rather damp and grey morning in the Square Mile, opening down 29 points at 7,352.09 with the market picking up where it left off on Friday.

The depressant to sentiment emanated from Germany and was off the political variety with Angela Merkel struggling to knit together a coalition government.

Here in the UK the corporate headlines were grabbed by British Gas’ decision to axe its controversial and sometimes punitive standard variable rate for bill payers coming off deals.

It may have been politically and commercially expedient, but the concession did little for shares in the utility’s owner, Centrica (LON:CAN), which marked time in the first hour of trade.

easyJet (LON:EZJ) was up 1.3% ahead of results, while on the FTSE 250 Thomas Cook (LON:TCG) got off to a strong start as HSBC initiated coverage ahead of a key update from the tour operator.

The bank reckons the holiday giant’s recovery “more to give”. It rates the shares ‘buy’ and values the stock at 140p.

Thomas Cook was flying high at 117.2p, up 5.3%.

6.40am....Asia sets the tone 

The FTSE 100 is set to open its weekly account down nine points at 7371.68, taking its cue from Asia’s main markets, which were stuck in reverse gear.

Fears over faltering Chinese growth allied to Wall Street’s retreat on Friday left the Nikkei 225 and Shanghai Composite each down around 0.5%, while the Hang Seng was flat.   

Angela Merkel’s inability to knit together a coalition government in Germany will weigh on sentiment, analysts said, and has already begun to drag down the Euro.

Back here in the UK, the big scheduled news of the week emanates from the Palace of Westminster in the form of Wednesday’s Budget statement.

READ: Our comprehensive Budget preview

Based on the weekend chatter, Spreadsheet Phil (Chancellor Philip Hammond) looks set to unveil ambitious plans on housebuilding aimed at wooing the millennials.

Within the Square Mile, investors and traders are braced for a reasonably busy week for corporate news lead by easyJet (LON:EZJ), Compass (LON:CPG) and United Utilities (LON:UU.).

  • Pound worth US$1.3207
  • Gold down 39 cents at US$1,291.4 per ounce
  • Brent crude off 11 cents at US$62.61

Proactive news headlines

Sunrise Resources Plc (LON:SRES) revealed that soil sampling has revealed that copper sulphide mineralisation related to pegmatites and quartz veins is evident at surface in numerous showings along a strike length of nearly 1,600 metres at the Junction project in Nevada. 

The vanadium joint venture of Bushveld Minerals Limited (LON:BMN), Vametco Alloys, has delivered strong third quarter results, helped by improved vanadium prices. Bushveld acquired its 45% interest in Vametco in April. 

Haydale Graphene Industries PLC (LON:HAYD) has filed a new patent application in the UK for its PATit anti-counterfeiting technology, which uses proprietary software codes and a specialty graphene-based, transparent conductive ink.

Wishbone Gold PLC (LON:WSBN) and D-Beta One have modified the equity sharing agreement announced on 18 August 2017, doubling the number of monthly repayments from 10 to 20. 

Savannah Resources Plc (LON:SAV) has completed construction of a pilot plant that will undertake bulk sampling at the Mutamba mineral sands project in Mozambique. The results from the tests will be used to underpin plans for larger scale production. 

Specialist medical imaging group Feedback plc (LON:FDBK) has finally received a CE mark for its TexRAD Lung technology. The company had previously expected the CE mark by the end of May but this date was pushed back after it came up with several enhancements that have improved the performance of TexRAD Lung. 

Hummingbird Resources PLC (LON:HUM) remains on track for first gold production at Yanfolila by the end of this year. Testing of the ball mill is now complete, the water supply is in place, and the commissioning of the carbon-in-leach circuit is now underway. 

Silence Therapeutics PLC (LON:SLN) has served its defence in the legal actions initiated against it by Alnylam Pharmaceuticals Inc (NASDAQ:ALNY) and The Medicines Company

Jubilee Platinum PLC (LON:JLP) delivered revenue growth in October as platinum production at the Hernic mine continued to ramp up. Revenue from the South Africa project rose 18% to £760,000 compared to a month ago on the back of a 22% month-on-month gain in production to 1,427 ounces of platinum (PGM). 

SDX Energy Plc (LON:SDX) has told investors that the ongoing development drilling programme in Morocco continues to deliver results ahead of the company’s own expectations. The North Africa focussed oil and gas firm, in a stock market statement, confirmed that the KSR-14  well has measured an average production rate of 6.4mln cubic feet of gas per day during testing, and will remain on production for an extended period. 

Shanta Gold (LON:SHG) has boosted its identified gold in Tanzania to more than 2mln ounces with a first published resource at the Singida prospect. Singida, in the centre of the country, now has an Australian standard JORC resource of 728,000oz stemming from 12.3mt at a grade of 1.84 g/t. The cut-off grade was 1.0 g/t. 

Chaarat Gold Holdings Limited (LON:CGH)  has completed its 2017 exploration programme at Tulkubash with 60% more metres drilled than originally expected. As a result, the indicative length of the proposed open pit has doubled to 2,200 metres as the current Tulkubash pit now connects with other previously drilled satellite pits. 

Sound Energy PLC (LON:SOU) told investors that a survey of its acreage in Eastern Morocco has now been completed. The explorer conduction both airborne full tensor gravity gradiometry (FTG) and magnetic data acquisition programmes, with contractor AustinBridgeporth flying some 26,700 kilometres to cover a 22,800 Square kilometre area including the Tendrara field and the Matarka and Anoual exploration areas. 

BOS GLOBAL Holdings’s (LON:BOS) directors have agreed to stand down, but only if former chief executive Michael Travia also ends his attempt to be reinstated. 

 

Higher metal prices helped Rambler Metals and Mining PLC (LON:RMM CVE:RAB) increase revenues in its latest quarter. Rises in the price of both copper and gold more than offset a drop in production of both metals. 

Business Headlines

Financial Times

ConocoPhillips, the largest US exploration and production company, has ruled out investing in projects that need an oil price of US$50.00 or higher to make a profit.

Wood Group, the oilfield services group newly enlarged by its £2.2bn of Amec Foster Wheeler, is bracing for a showdown with shareholders over a proposed 25% pay increase for its chief executive.

Amedeo, a Dublin-based aircraft-leasing company, plans to offer airline-style services for hire using a fleet of Airbus A380 superjumbos in a bid to breathe new life into the struggling passenger jet programme.

Alibaba’s Taobao buys stake in Sun Art Retail for US$2.9bn.

Times

Camelot is expected to appoint Nigel Railton as chief executive of its UK operations tomorrow when it announces the conclusions of a strategic review aimed at returning the National Lottery operator to growth.

Wizz Air, the carrier responsible for opening up routes for eastern European migrant workers to Britain and building UK trade links with countries behind the former Iron Curtain, is to increase its presence in the London aviation market significantly.

Boku, an American company that allows people to pay for digital goods and services by charging the cost to their mobile phone bills, will become the latest in a wave of fintech companies seeking to go mainstream when it is admitted to trading on the London Stock Exchange’s AIM market today.

Daily Telegraph

The Government looks to have given a rival bid to develop Heathrow’s third runway a lift after stating for the first time it welcomed competition in the construction of the nation’s airports.

Toshiba plans to sell U.S. nuclear division Westinghouse and raise £4bn.

Guardian

Britain’s aerospace exporters will warn parliament on Monday of a crippling £1.5bn-a-year headwind if Ministers fail to agree urgent new customs and regulatory deals with the EU.

Philip Hammond dismisses NHS chief’s call for £4 billion emergency cash injection.

Britain successfully lobbied Brazil on behalf of BP and Shell to address the oil giants’ concerns over Brazilian taxation, environmental regulation and rules on using local firms, government documents reveal.

Daily Mail

Care home operator Four Seasons faces administration as its main lender and private equity owner clash.

Profits at iPhone microchip designer ARM Holdings plunge as former chief says he regrets Japan sale.

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