FTSE 100 down 3.90 at 7,496.51
Dixons Carphone up after announcing record Black Friday sales
UK wage growth numbers fail to excite
The Footsie finally gave up the fight and closed in the red, after tethering between slight losses and gains through the day. The FTSE 100 index closed down 0.05% or 3.90 points at 7,496.51. It traded narrowly between 7,511 and 7,493.
The more UK company focused FTSE 250 also edged lower, down 0.06% at 20,061.40. Elsewhere, in Europe, the German DAX also lost 0.44%, while the CAC 40 also eased 0.51%.
While the market was chewing on mixed UK jobs data, focus was mainly on the Federal Reserve as it awaits the latest US monetary policy cues.
The UK wage growth still was well short of inflation and to make matters worse, the number of people claiming unemployment benefit hit a five-month high. There were also 56,000 fewer people in work between August and October, the largest drop since spring 2015, and bigger than market expectations.
Slightly positive news however was that the average weekly earnings for the three months to October were 2.5% higher year-on-year. However, for October alone, the annualised month-on-month growth fell to 1.1%.
FTSE 100 HOLDS ON TO MEAGRE GAIN IN LAST HALF HOUR
Heading into the last half hour of trading, the FTSE 100 was holding on to its meagre gains.
The Footsie was up 4 at 7,504, with supermarkets to the fore.
The price target for the house-builder was cranked up to 4,214p from 3,958p.
In other broker action Goldman Sachs downgraded bookie Ladbrokes Coral Group PLC (LON:LCL) to ‘neutral’ from ‘buy’ while sportswear flogger Sports Direct International PLC (LON:SPD) was moved by Jefferies to ‘under-perform’ from ‘hold’, even as it increased its price target to 290p from 265p.
3.00pm: The Footsie limps back into positive territory
The Footsie limped back into positive territory after a strong start by Wall Street.
Stateside, the Dow was up 80 at 24,586 and the S&P 500 was 5 points firmer at 2,669.
In Blighty, the FTSE 100 was 6 points to the good at 7,506.
Defensive favourites Centrica PLC (LON:CNA) and Severn Trent PLC (LON:SVT) were out of favour, shedding around 1.5%, while travel firm TUI AG (LON:TUI) was 13p lower at 1,396p after releasing full-year results.
Reaction to the results was originally favourable, after the company said it saw strong bookings for its European destinations, although demand for cruises in the Caribbean remains subdued following the hurricane season.
1.00pm: The Footsie dips below 7,500
The Footsie dipped below last night’s closing level during lunchtime trading, ahead of the start of trading in New York.
US indices were expected to open mixed, with the S&P seen shedding a point or so after rising 4 points yesterday to close at 2,664, and the Dow Jones 30-share expected to open at around 24,521, after rising 119 points yesterday to finish at 24,505.
The FTSE 100 slipped below the 7,500 level to 7,499, down a couple of points.
With not much happening among the big caps, it was left to the small-caps to provide some volatility.
Document management software specialist IDOX plc (LON:IDOX) lost more than a quarter of its value after it identified a small number of revenue items that it does not consider should have been recognised in the full-year released last month.
The effect is to reduce underlying earnings, or EBITDA, to roughly £20mln from the £23mln reported last month.
In happier news, Microsaic Systems plc (LON:MSYS) soared 258% to 3.4p as it signed a research agreement extending its collaboration with a long-standing global partner in the scale-up and manufacture of biopharmaceutical drugs.
11.45am: FTSE 100 little changed; FTSE 250 resumes yesterday's retreat
Heading towards high noon, and so far as the FTSE 100 was concerned, the whole morning might as well not have taken place.
The top-share index was up a point at 7,502, as investors continue to wait on the Federal Reserve, which is set to make an announcement about interest rates later today.
The FTSE 250, which retreated yesterday, was in reverse gear gain today, shedding 32 points at 20,041.
The former was up 7.0% as it said it would take action to reduce its cost base, as it grumbled about smartphone users not falling for the upgrade ploy as readily as they used to.
“Most important on the positive side are fruits of Dixon Carphone’s efforts to tighten cash management. These included reduced capex, but also low hanging fruit that really ought to have been grabbed earlier—improved stock management and even switched timing of working capital allocation,” wrote Ken Odeluga at spread betting outfit City Index.
“The outcome is half-year free cash flow of £169m, against £69m at the same point a year before. Cash flow has been a lingering concern since the group’s formation three years ago,” he added.
Serco rose 5.8% to 100.9p after it raised profits guidance for the year. The construction contractor said order intake during the year has been strong at £3.0bn, representing a book-to-bill ratio of over 100% for the first time since 2012.
The company has signed a definitive agreement to buy a large part of Carillion’s UK healthcare facilities management business that will boost its order book.
10.45am: Snoozefest continues
Traders were searching for the fast-forward button, with markets exceptionally quiet ahead of the US central bank’s interest rate decision.
The FTSE 100 was up 3 points at 7,503, having traded within a narrow band ranging from 7,493 and 7,506 this morning.
Analysts continued to pick over the unemployment figures, hoping to find something in them to spark a trading idea.
“Pay growth is picking up a little, but rising inflation means that many people won’t feel the benefit yet,” noted Matthew Percival, head of employment at bosses’ pressure group, the CBI.
“Raising productivity is key to turning this around. Progress from business and government on the Industrial Strategy must help to raise living standards across all parts of the UK,” he added.
James Smith, the economist covering developed markets – Britain still is one, apparently – at ING, wondered what the numbers mean for UK interest rates.
“Well, policymakers signalled back in November that they'd be fairly comfortable with hiking again in 2018 - particularly if a transition deal can be swiftly agreed in the new year. That means we could feasibly see another rate rise in the first half of 2018, but with the economy struggling to get back up to speed and a number of Brexit 'ifs' still to be resolved, it's still far from guaranteed,” Smith said.
Samuel Tombs, the chief UK economist at Pantheon Macroeconomics, said it was a weak report that would strengthen the hands of the doves on the Monetary Policy Committee who want to delay the next rate hike.
“The unemployment rate was stable only because the workforce also contacted by 0.2%. In addition, temporary employment rose by 3K, and the proportion of temporary workers that could not find a permanent role jumped to 28.0% in the three months to October, from 26.7% in the previous three months,” he noted.
There was very little in terms of blue-chip corporate news flow this morning to inject vitality into the market.
The UK unemployment rate for August to October 2017 remained at 4.3%. This is down from 4.8% from the previous year, and is the joint lowest rate since 1975: https://t.co/yBGyWFrAdw pic.twitter.com/4xsiaRlcwU— ONS (@ONS) December 13, 2017
The group said it is confident of another year of good earnings growth at constant currency. The Reynolds America integration is on track, with the acquired businesses said to be performing strongly.
9.45am: Nothing in the UK unemployment figures to shift the market's focus from today's Fed announcement
UK unemployment fell 182,000 from a year earlier to 1.43mln in the three months to October.
There were 8.86mln people aged from 16 to 64 who were economically inactive (not working and not seeking or available to work), 115,000 more than for May to July 2017 but 56,000 fewer than for a year earlier.
The unemployment rate was 4.3%, down from 4.8% for a year earlier and the joint lowest since 1975.
“Employment stayed close to its record high and while up on a year ago, declined compared with the previous three months. Unemployment also fell, but there was a rise in the number of people who were neither working nor looking for a job. Meanwhile, the number of vacancies continues to grow, reaching a new record high,” observed Matt Hughes, a statistician at the Office for National Statistics.
“There has been a slight pick-up in pay growth in cash terms, which means that although earnings are still growing less than inflation, the gap has narrowed,” he added.
The figures had little impact on sterling, and as a weaker sterling is generally good for Footsie stocks, they also had little impact on the FTSE 100, which was more or less unchanged on the day.
Drugs firm Shire Plc (LON:SHP) was down 0.9% at 3,728.5p, giving back some of yesterday’s gains after it revealed its new formulation of ONCASPAR, for patients with acute lymphoblastic leukaemia, had received marketing authorisation in Europe.
Open: Stuck in the starting grid
The FTSE 100 marked time, rising just two points to 7,502.40, as London’s trading community kept their powder dry ahead of the US Federal Reserve meeting kicking off later Wednesday.
A quarter point rise in base rates has already been factored into the market, according to Jasper Lawler, analyst at London Capital Group.
“Investors will be paying more attention to how the Fed views the US economy in 2018 and therefore what the path of interest rate rises could look like,” he explained.
“Given that it is Janet Yellen’s final session as chair, forward guidance could come up disappointingly short.”
Profit-taking affected a buoyant Ashtead (LON:AHT) in the wake of Tuesday’s update. Up 26% in the year to date, shares in the plant hire giant were marked down 3.4% early on, weighed as well by a downgrade in rating from Citigroup on valuation grounds.
Annual results from the Anglo-German tour operator TUI (LON:TUI) were met with relief rather than celebration as the stock advanced 1.2% in opening deals.
Proactive news headlines:
Europa Oil & Gas Holdings PLC (LON:EOG) has identified the potential for more than 2.5 trillion cubic feet of gas in its exploration area, in the Slyne basin, adjacent to Ireland’s Corrib field. Corrib is Ireland’s largest producing offshore gas field, with significant infrastructure to shore, and the AIM quoted explorer is assessing the nearby area for new discoveries.
Ortac Resources Ltd (LON:OTC) has increased its stake in Casa Mining to 84.7% from roughly 45% at the time it announced its offer last month. To date, Ortac has issued 66.55mln shares to Casa shareholders, and potentially another 33.45mln could be issued if it ends up with 100% of Casa.
Savannah Resources Plc (LON:SAV) has found some of the highest grades of lithium oxide ever seen in Europe from its latest drilling programme in Portugal. Significant intersections of lithium mineralisation were crossed from a shallow drilling programme at Mina do Barroso, which Savannah now describes as outstanding deposit.
Bacanora Minerals Ltd’s (LON:BCN) Sonora project in Mexico can become one of the world’s foremost lithium deposits said chief executive Peter Secker after a definitive feasibility study valued it at US$1.25bn. The study confirmed the favourable operating costs for a 35,000 tonnes per annum battery grade lithium carbonate operation, he said.
Keywords Studios PLC (LON:KWS), the technical services provider to the global video games industry, is on the acquisition trail again – this time in Eastern Europe. It has acquired Sperasoft Inc and Sperasoft Studio LLC for US$27mln from the founders, all of whom will remain with the business.
BATM Advanced Communications Ltd’s (LON:BVC) software development sUBSidiary, Telco Systems, has partnered up with Tokyo firm Trend Micro to launch a cybersecurity solution for deployment across virtual networks.
Chariot Oil & Gas Limited (LON:CHAR) confirmed it is working to take advantage of the current historically low costs for deep-water well drilling, as it advances towards an expected March 2018 spud for the Rabat Deep exploration well offshore Morocco. “Having previously taken advantage of the low seismic acquisition rates, Chariot is now focusing on the supply and demand dynamics of the deepwater drilling rig market..
Curzon Energy Plc (LON:CZN) has updated on its operations at the Coos Bay coal bed methane project, in Oregon, where clean-out works have now been completed for three of five wells in the programme. Work has now begun on the fourth well and it is expected that the fifth will be complete in the coming weeks. Thereafter, it is anticipated that each of the wells will be put on production testing.
Interim results from India-focused generator OPG Power Ventures PLC (LON:OPG) confirmed what the market had been primed to expect: that a strong operational performance had been offset by higher seaborne coal prices. It is said its designation as a ‘captive’ producer of electricity to the industrial sector in Gujarat ‘reaffirms’ the company’s business model there and should strengthen its cash flow.
Stratex International plc (LON:STI) said the resource statement from Thani Stratex Resources for the Anbat gold project in Egypt has been tweaked after being released to the market prematurely. That said, the inferred mineral resource remains unchanged at 209,000 ounces at 1.11 grams per tonne. The material change to the original resource estimate relates to the conceptual pit optimisation. The revised statement can be viewed here.
Anglo Pacific Group plc (LON:APF) (TSX:APY), the London and Toronto listed royalty company, has announce that Canaccord Genuity has been appointed as its Joint Corporate Broker with immediate effect. Canaccord will work alongside the company's other brokers, BMO Capital Markets and Peel Hunt.
6.45am: Slow start predicted
The Footsie is seen edging lower on Wednesday following mixed showings overnight on Wall Street and in Asia with all eyes on the last Federal Reserve meeting of 2017 and interest rate hike expectations.
Spread betting firm IG expects the FTSE 100 index to open down around 5 points at 7,495, having gained 46.93 points on Tuesday.
Overnight on Wall Street the Dow Jones jumped over 118 points higher to 24,504, but other US indexes were more cautious and US stock futures fell back after-hours on some political uncertainty for President Trump.
That came after the Republican party's majority in the Senate was cut to two by the narrow victory of Democratic party candidate Doug Jones in Alabama.
On currency markets, sterling held fairly steady versus both the dollar and the euro as traders awaited another big batch of UK economic data, with the latest unemployment and average numbers to be released hot on the heels of yesterday’s above-forecast inflation reading.
Interest rates matters predominant
The increase in the UK consumer price index to 3.1% for November put some pressure on the Bank of England to contemplate another UK interest rate hike, although few commentators expect tomorrow’s BoE Monetary Policy Committee meeting to sanction another move so soon after last month’s 25 basis point increase.
The main interest rate focus today, however, will be on the Fed, which is widely-anticipated to hike interest rates again as the US economy continues to grow, unemployment falls and inflation inches closer towards the 2% target.
In minutes from the Fed’s November meeting, policymakers said another increase in the US central bank’s target range would probably be needed “in the near term” provided the economy remains on track, though they warned that inflation may remain below target for longer than expected.
“The FOMC will almost certainly hike by 25 basis points at the upcoming December meeting,” according to analysts at UBS.
“Minutes for the November meeting and recent Fedspeak show growing concern about inflation among FOMC participants, but not enough to stay their hand at this meeting.”
Strategy update eyed from TUI after hurricanes
On the corporate front, full-year results from TUI AG (LON:TUI) on Wednesday should see the travel giant make good on its pledge to increase full-year underlying earnings (EBITDA) by at least 10%, despite the impact of hurricanes on its Caribbean and Florida operations.
In a trading update at the end of September, the FTSE 100 listed company said its hotel and cruise brands had continued to perform very well.
Meanwhile a tough first half has already been flagged up by FTSE 250 listed electricals retailer Dixons Carphone Plc (LON:DC.) along with its profit warning in August, especially given the timing of one-off gains last year for comparatives.
In a recent note, UBS said it is forecasting the FTSE 250 listed firm to report first half pre-tax profit of £67mln, down over 50% year-on-year, with weaker Phone 8 sales likely to have depressed Dixons Carphone’s second quarter sales.
The analysts pointed out, however, that sales over the Black Friday, Christmas and Boxing Day Sale peak periods remain significant swing factors, and investors will be very keen to hear how current trading is going.
That’s because fellow housebuilder Berkeley Holdings PLC (LON:BKG) last week upped its profits forecasts for the five years to April 2021, while a recent “breakthrough” in talks between the UK government and the EU has calmed fears of a hard Brexit.
Significant events expected on Wednesday December 13:
Finals: TUI PLC (LON:TUI)
Economic data: UK employment, average earnings; US FOMC interest rate decision;; US CPI inflation
Around the markets:
- Sterling: US$1.333.83, down 0.1%
- Gold: US$1,245.90 an ounce, down O.3%
- Brent crude: US$57.51 a barrel, up 0.7%
- Disney to make £45bn bid for Fox this week: Murdoch family could get a 5% stake in US giant – Daily Mail
- York becomes third UK city to ban Uber – Daily Telegraph
- Cineworld faces shareholder revolt over £3bn takeover of US rival Regal – Daily Mail
- Glencore says it is “best placed” for the electric vehicle revolution – City AM
- Ryanair faces potential strikes in core markets – Financial Times
- Balfour Beatty confident it has laid ground for firm recovery – The Times
- Facebook to stop booking ad sales through Irish HQ – Financial Times
- Toshiba and Western Digital settle legal dispute – Financial Times
- Canada takes aim at Boeing over Bombardier tariff row – Daily Telegraph
- Russia’s Novatek will spend as much as US$47.6bn by 2030 on liquid natural gas projects in the Arctic - Financial Times
- ING launches artificial intelligence bond trading tool Katana – Financial Times
- S&P Global informs staff of post-Brexit jobs shift – Financial Times
- Sberbank and Alibaba abandon joint venture talks – Financial Times
- RAC warns petrol could rise by 3p per litre before Christmas as wholesale gas prices hit highest level for six year – The Independent
- Bitcoin warning: US financial watchdogs warn investors cannot be protected – Daily Express