logo-loader

FTSE 100 closes at new high as banks bolster the premier index

Last updated: 17:55 10 Jan 2018 GMT, First published: 06:45 10 Jan 2018 GMT

London
  • FTSE 100 closes at new high

  • RBS gains on Morgan Stanley upgrade

  • Taylor Wimpey shares decline after trading update

  • UK manufacturing data surprises to the upside

 

FTSE 100 closed at a new record high on Wednesday, bolstered by the banking sector, and a weaker pound.

The UK's top tier index closed the day over 17 points ahead at 7,748 with RBS (LON:RBS) the biggest gainer, up 4.60% to 293.40p after an upgrade from Morgan Stanley to 'overweight'.

HSBC (LON:HSBA) was the second biggest riser, up 3.81% to 795.50p.

It comes as the UK Chancellor Philip Hammond and Brexit secretary David Davis are on a mission to Germany to promote their cause on the UK withdrawal from the bloc.

They are reportedly calling on Germany to help with a deal that would protect Britain's key financial services industry.

The more domestic company focused FTSE 250 closed lower today, down more than 114 points at 20,760, while in the currency markets, sterling was down 0.45% against the Euro and down 0.18% against the US dollar.

Top laggard on Footsie was housebuilder Taylor Wimpey (LON:TW.), which shed 4.16% to 200.20p, after it reported a fall in its order book and lower-than-expected margins for the year.

 

3.55pm: EIA reports drop in weekly crude inventories 

Oil prices edged higher after data revealed a bigger-than-expected weekly drop in US crude inventories, easing worries about a global supply glut.

The Energy Information Administration said crude oil inventories fell by 4.9 million barrels last week from the previous week to 419.5 million barrels. Analysts had expected a decline of 3.7 million barrels.

Brent crude prices rose 0.17% to US$68.94 per barrel and West Texas Intermediate increased 0.50% to US$63.28 per barrel. 

3.40pm: Ex-BHS owner accuses pension regulator of 'hostile' act

Dominic Chappell, the former owner of collapsed BHS, has accused the pension regulator a "hostile and deliberate" act by launching an investigation just days after he bought the business.

Chappell bought BHS for £1 from Sir Philip Green in 2015 but the retailer collapsed in in 2016 under his ownership, leading to the loss of 11,000 jobs and a £571mln pension deficit.

The Pensions Regulator claims Chappell failed to provide information three times about the company’s pension schemes. He denies the charges.

Chappell was handed a request to provide information to the regulator 16 days after he took over the retailer, the Brighton Magistrates' Court heard.

"We found it an outrageous act that was served when we had given the pension regulator every courtesy,” Chappell told the court.

"It was a hostile and deliberate act and it fundamentally affected our business."

3.10pm: UK economy grew 0.6% in fourth quarter, says NIESR

UK gross domestic product rose 0.6% in the final quarter of 2017 following a 0.4% increase in the previous three months, according to the latest estimates from the National Institute of Economic and Social Research.

The thinktank said the recovery has been driven by a pick-up in manufacturing and service sectors thanks to a weaker pound and a buoyant global economy.

Amit Kara, Niesr’s head of UK macroeconomic forecasting,said: “In November, we had forecast final quarter GDP growth at 0.5% and as such, today’s revised estimate suggests that activity has strengthened by more than we had previously anticipated.”

NIESR expects interest rates will by raised by 0.25 points to 0.75% in May with further hikes every six months until mid 2021. 

2.30pm: US stocks in the red 

US stocks opened lower following reports that China is considering cutting or halting its purchaes of US Treasuries. 

The Dow Jones Industrial Average shed 66 points to 25,318, the S&P 500 lost 8 points to 2,743 and the Nasdaq fell 28 points to 7,134. 

Bloomberg reported that China has found that US bonds were becoming less attractive and that trade tensions with the country could provide a reason to stop buying US government paper.

The yield for the 10-year benchmark note rose 3.1 basis points to 2.59%.

On the company front, Kodak shares doulbed in value after saying it would begin a major blockchain initiative. 

Lennar shares fell after reporting weaker-than-expected fourth quarter profit.

The dollar weakened against a bag of currencies.

In economic data, the US import price index rose 0.1% in December following a 0.8% increase a month earlier and missing forecasts for a 0.4% gain. The export price index dropped 0.1% against expectations of 0.3% growth and after a 0.5% rise in November.

Still to come, US wholesale inventories data and official weekly crude oil inventories figures. 

1.50pm: Energy price cap could be in place by Christmas

The government’s plan to cap gas and electricity tariffs for households could be in place by Christmas, said regulator Ofgem.

The cap will be imposed on the so-called Standard Variable Tariffs, the most common form of tariffs used by millions of Britons that are more expensive than fixed deals.

Ofgem chief executive Dermot Nolan apologised for not acting quickly enough to help households get off the most expensive tariffs or impose price protections for them.

He said he will not receive his £15,000 bonus this year following pressure from MPs who accused him of being a passive bystander.

"We could have done better, and should have done better, for vulnerable customers," he told MPs on the Business and Energy Committee.

12.40pm: Carphone Warehouse fined for failures to led to data breach

Carphone Warehouse PLC (LON:DC.) has been fined £400,000 by the Information Commissioner’s Officer for failures leading up to a data breach in 2015.  

The ICO found there were a “number of distinct and significant inadequacies in the security arrangements” of Carphone Warehouse.

 It said it was particularly concerning that a number of  inadequacies related to basic, commonplace measures.

The breach saw a hacker access the personal data of more than three million customers and 1,000 employees, including credit card details, names, addresses and phone numbers.

“A company as large, well-resourced and established as Carphone Warehouse should have been actively assessing its data security systems, and ensuring systems were robust and not vulnerable to such attacks,” the Information Commissioner Elizabeth Denham said.

“Carphone Warehouse should be at the top of its game when it comes to cybersecurity, and it is concerning that the systemic failures we found related to rudimentary, commonplace measures.”

12.00pm: London stocks slightly higher in midday trading

In lunchtime trading, the FTSE 100 was little changed at 7,731.

Bank stocks rallied as bond yields rose, meaning higher returns for lenders.

Royal Bank of Scotland shares were also boosted by a Morgan Stanley upgrade.

Oil stocks were higher after US crude prices reach their highest level since 2014, on the back of OPEC-led production cuts.

West Texas Intermediate crude increased to US$63.57, the highest since 9 December, 2014.

Brent crude was trading at its highest level since May 2015 at US$69.29 per barrel.

Taylor Wimpey continued to lead housebuilding shares lower after reporting a fall in its order book and lower-than-expected margins for the year.

Meanwhile, UK economic data was mixed with manufacturing output beating expectations but Britain’s trade deficit rising more than forecast.

The pound recovered against the dollar to rise 0.12% to US$1.3556 after the manufacturing figures.

However, against the euro, sterling fell 0.51% to €1.1285 on hopes of progress in the German coalition talks.

Across the pond, US futures fell following reports China is considering cutting or halting its purchases of US Treasuries.

“If the reports turn out to be true and China no longer sees Treasuries as an attractive option, the repercussions could be significant as the country is one of the biggest holders of US debt,” said Oanda’s Craig Erlam.

“A significant change in policy could put considerable upside pressure on US yields, the result of which would be an effective tightening for the US.”

Dow Jones Industrial Average futures fell by 116 points to 25,257, S&P 500 futures dropped 10 points to 2,741 and the Nasdaq declined 35 points to 6,651.

11.20am: FTSE 100 pulls back from all-time highs

The FTSE 100 is struggling to find direction as investors weigh mixed economic UK data.

Following gains earlier in the session, the London index fell momentarily and is now flat at 7,731 points.

“The UK FTSE saw fresh highs this morning thanks to positive performances for banks (particularly HSBC, RBS and STAN after research notes) and oilers Shell & BP (Crude prices three-year highs), although these early gains are being pared as losses for defensives and miners overpower,” said Henry Croft at Accendo Markets.

David Morrison, senior market strategist at GKFX, said there was no single piece of news behind the FTSE’s sudden retreat but a surge in the Japanese yen is a noteworthy development.

“The yen has surged higher this week ever since investors became aware of a reduction in the Bank of Japan’s balance sheet in December – the first decline since 2012,” he said.

“This, along with monetary tightening from the US Federal Reserve, may give investors cause to re-evaluate their attitude towards risk assets as central bank stimulus begins to get withdrawn.

“However, this could simply prove to be yet another dip-buying opportunity for yield-hungry investors.”

10.45am: Numis downgrades Taylor Wimpey

Numis has cut its rating on Taylor Wimpey to ‘hold’ from’ add’ after the company's full year trading update revealed a slight drop in the order book and lower-than-expected margins. 

Taylor Wimpey's update shows that demand conditions for new build housing remain robust, but to reflect a slightly lower margin than our forecasts we are reducing 2017 estimates by c.1% and keep 2018 unchanged,” the broker said.

“In our view TW remains attractive from a yield perspective, but we see superior value and growth from the mid-cap housebuilders. We move from Add to Hold, to reflect recent share price strength, the slight fall in the order book and the reduction to 2017 estimates.”

The shares have fallen the most on the FTSE 100 list today, down 3.6% to 201p. 

10.15am: RBS biggest FTSE 100 riser on broker upgrade

Royal Bank of Scotland Group PLC (LON:RBS) is the top riser of the FTSE 100 after Morgan Stanley upgraded the stock to an ‘overweight’ rating from ‘equal-weight’.

Morgan Stanley said: “RBS’s market share wins in retail and resilient asset quality offer better earnings visibility ahead of Brexit, while capital generation will allow buybacks worth 15-20% of its market cap despite rising capital requirements.”

On the downside, Hikma Pharmaceuticals PLC (LON:HIK) slumped after Jefferies cut its rating to ‘underperform’ from ‘hold’ and lowered its target price to 895p from 1,074p.

Jefferies said it believes the market is likely to be disappointed by the pharmaceutical company’s full year outlook and expects write-downs of its Roxane Laboratories drugs business to impact sentiment.

9.30am: UK manufacturing output rises more than expected

UK manufacturing increased more than expected in November, the Office for National Statistics revealed.

Manufacturing output rose 0.4% month-on-month and 3.5% year-on-year against forecasts of 0.3% and 2.8% growth respectively.

“Five straight months of growth in the UK’s manufacturing sector will be a boon to the Prime Minister, as she looks to rebuild confidence after somewhat of a bungled cabinet reshuffle earlier this week," said Dennis de Jong, managing director at UFX.com.

“Despite gloomy trading conditions and the shadow of Brexit looming large, UK goods looked to be on trend towards the end of 2017."

Industrial output grew 0.4% on the month, in line with expectations, and increased 2.5% on the year, ahead of forecasts of 1.8%. 

Construction output rose 0.4% both month-on-month and year-on-year, compared to estimates of 0.7% growth a 1.0% decline, respectively. 

Separately, the ONS showed Britain’s trade in goods deficit rose to £12.2bn in November from £11.7bn in October against forecasts of £10,900.

8.10am: FTSE 100 edges slightly lower

The FTSE 100 had a muted start as investors looked ahead to a slew of UK economic data.

The London index fell 4 points to 7,726 at 8.10am even as the pound fell 0.21% versus the dollar to US$1.3511 and dropped 0.27% against the euro to €1.1312.

UK data today includes industrial and manufacturing production figures, the trade balance and the NIESR’s gross domestic product estimate.

Shares in Taylor Wimpey fell after the housebuilder said its order book shrunk at the end of last year and average selling price growth slowed in 2017.

A negative read-across sent shares in other housebuilders lower, including Barratt Developments, British Land and Bellway.

J Sainsbury rallied after the supermarket raised its full year profit guidance following record sales in the week leading up to Christmas.

Ted Baker shares jumped after maintaining its annual guidance following an increase in retail sales over the Christmas period.

Proactive news headlines:

Fuel cell technology company Ceres Power Holdings PLC (LON:CWR) has signed another joint development agreement with an original equipment manufacturer (OEM). Ceres noted this is the fifth co-development agreement it has signed in less than two years.

Telematics specialist PST Electronics has selected Telit Communications PLC's (LON:TCM) deviceWISE platform to support its plans to scale its Internet of Things suite of solutions into new global markets.

Rainbow Rare Earths Ltd (LON:RBW) has initiated a new round of drilling at the Gakara project in Burundi. If successful, the drill results will be incorporated into a new resource update due later this year. Gakara is already in production, with ramp up continuing.

Amryt Pharma PLC (LON:AMYT) said it has expanded its route to market for its key product Lojux. It has inked an exclusive distribution deal with GryNumber Health covering Central and Eastern Europe. It builds on similar deals in Saudi Arabia and Switzerland.

Background check specialist ClearStar Inc (LON:CLSU) will hit market forecasts this year as revenues continued to rise in the second half. Strong demand for job and employee screening from transport firms, contractors and in education lifted direct services revenue by 21% year-on-year, while the number of active clients here rose by 18%. The number of people screened by ClearStar for direct clients rose by 26% year-on-year.

Tharisa PLC (LON:THS), the platinum group metals (PGM) and chrome producer, said the handover from contractors to its own mine employees at its operation in South Africa’s Bushveld Complex had been concluded successfully. And, judging from the latest production update, in which the company also restated its full-year guidance, the process appears to have gone without a hitch.

W Resources PLC (LON:WRES) told investors it has hired allmineral Aufbereitungstechnik GmbH which will provide design and construction services for the La Parrilla mine’s new concentrator. The concentrator is the third core component of La Parrilla’s plant infrastructure.

Investors in Curzon Energy PLC (LON:CZN) are looking forward to an extensive well to start shortly at the Coos Bay coal bed methane project, in Oregon, United States. Curzon, in a statement , said that a five well workover programme has now been completed and that outcomes have so far “completely correlated” with the pre-programme technical work.

A 50%-owned subsidiary of Bacanora Minerals Ltd (LON:BCN) has acquired 295 hectares of new exploration ground situated within 5 kilometres of the Zinnwald lithium project, also 50%-owned. The new ground covers a previously-mined area called Falkenhain. The thinking is that material from the new ground could help to prolong the life of any project developed at Zinnwald.

Ortac Resources Ltd now owns 87.4% of Casa Mining as shareholders continue to accept its offer to acquire all of Casa shares. Casa shareholders have until May 2018 to accept the offer, but according to Ortac, acceptances are now coming in daily. Casa Mining owns significant gold resources in the Democratic Republic of Congo.

6.45am: FTSE seen opening little changed

On what is set to be another big day for retailers, the FTSE 100 index was expected to open in subdued mood.

After rising 35 points to close at 7,731 yesterday, spread betting quotes pointed to the blue-chip index opening around five points in the red at 7,726, despite a solid showing on Wall Street yesterday.

The Dow Jones racked another triple-digit gain, advancing 103 points to 25,386, while the more broadly-based US benchmark, the S&P 500, was up 3.6 at 2,751.

Heading towards the close of trading, Asian markets were mixed, with the Hang Seng in Hong Kong up 111 at 31,122 while the Nikkei 225 in Tokyo closed at 23,788, down 62.

On the home front, the Christmas trading update season for retailers is getting into full swing, with the likes of Sainsbury's, Ted Baker, Supergroup and Shoezone all reporting.

Morrisons has thrown down the gauntlet to supermarkets and we’ll see whether J Sainsbury PLC picks it up.

Of course, Morrisons and Sainsbury’s operate in different strands of the supermarket spectrum, plus the latter now includes Argos within the group, but even so, Morrisons’ 2.8% year-on-year growth in like-for-like (LFL) sales (excluding fuel) in the 10 weeks to 7 January has set some kind of a benchmark, and one that Sainsbury’s is unlikely to hit, according to Deutsche Bank (DB).

DB is tipping Sainsbury’s will report a 0.4% gain in LFL sales from the year before in the fourth quarter of 2017, having revised this forecast down from its previous prediction of a 1.3% increase.

The German bank reckons the grocery side of the business will show LFL growth of 2%, while clothing sales are predicted to have grown by 5%; general merchandise sales are expected to be flat year-on-year.

On the subject of clothing, mid-cap fashion retailer Ted Baker PLC (LON:TED) weathered the retail storm better than many in 2017, and will reveal today whether it has continued to outperform.

The company posted a 7.3% year-on-year rise in revenue for the 13 weeks to November 11 despite a challenging retail environment.

Significant announcements expected

Trading updates: J Sainsbury PLC (LON:SBRY), Ted Baker PLC (LON:TED), Taylor Wimpey PLC (LON:TW.), Tullow Oil PLC (LON:TLW), Marshalls PLC (LON:MSLH), Pagegroup PLC (LON:PAGE), Quiz PLC (LON:QUIZ)

Finals: Shoe Zone PLC (LON:SHOE)

Interims: Supergroup PLC (LON:SGP)

Economic data: UK trade data; UK industrial production; UK construction output; US wholesale trade

Around the markets

  • Sterling: US$1.3516, down 0.14 cents
  • 10-year gilt: yielding 1.286%
  • Gold: US$1,309.80 an ounce, down US$4.00
  • Brent crude: US$69.16 a barrel, up 34 cents
  • Bitcoin: £10,453, down £202

Business headlines

The Daily Telegraph

Amazon streaming growth hits buffers while Now TV gains viewers: The growth of Amazon’s streaming service has hit a plateau, according to an independent study, putting the second series of its big budget car show The Grand Tour under pressure to spark new interest.

Driverless cars ‘demand overhaul of major cities’, says Ford: Ford has called for major cities to be rebuilt to cope with the rise of driverless cars, taxi apps and booming urban populations, warning that city centres will grind to a halt otherwise.

The smiling giant: Airbus’s Beluga aircraft rolls off the production line: An enlarged version of Airbus SE’s famously bulbous Beluga wing transporter is set to make its début flight in the middle of the year after the first plane rolled off the assembly line.

Fracking firm Cuadrilla to reignite West Sussex plans: Fracking firm Cuadrilla has again been given the green light from West Sussex council to explore the oil and gas reserves near the village of Balcombe, almost five years after bitter summer protests against the plans first erupted.

The Times​

Persimmon boss defiant over £110 million bonus pay: The chief executive of one of Britain’s biggest house-builders has defended a bonus scheme that is set to pay him more than £110 million amid a row that prompted the chairman to resign and sparked condemnation from MPs.

Ineos seeks to overturn fracking ban in Scotland: The petrochemicals giant wants to explore for shale oil and gas near its Grangemouth refinery and claims that the ban on such developments in Scotland is “unlawful”, as well as “financially costly” for the company.

Morrisons reports a bumper Christmas after strong trading: It may or may not have been the best that Wm Morrison had been hoping for, but the supermarket’s range of premium products helped both to lift sales over the Christmas trading period and to boost hopes that the nation’s big grocery chains have overcome a wider squeeze on retailers.

Shell staff held over Singapore diesel theft: Staff at Royal Dutch Shell have been charged with the theft of industrial volumes of diesel from the company’s biggest refinery after raids in Singapore last weekend.

Terry Smith’s £8 million profit share at Fundsmith: The outspoken Founder of London’s most successful fund management firm has taken home an £8 million profit share after turnover at his company doubled in the past year.

The Guardian

World Bank issues warnings on interest rates and inflation: Financial markets are complacent about the risks of sharply higher interest rates that could be triggered by better than expected growth in the global economy this year, the World Bank has warned.

Just Eat 50p surcharge branded a rip-off by customers: The online takeaway company Just Eat has been criticised for introducing a 50p service charge on all payments days before its “rip-off” fee for card transactions was due to be banned.

UK must be ready for rise of electric vehicles, says ABB Chief: The UK should speed up preparations for the rise of electric vehicles, according to the chief executive of ABB, the world’s largest supplier of fast-charging points.

Daily Mail

Preppy clothes are a Christmas hit: Posh brands Fat Face and Joules toast bumper festive sales: Two preppy clothing stores enjoyed bumper Christmas sales as demand for posh outdoor wear soars.

Eurostar appoints boss of delivery firm Yodel as its chief exec: Cross-Channel rail operator Eurostar has appointed the boss of delivery firm Yodel as its chief executive. Mike Cooper will join on 12 March replacing Nicolas Petrovic, who is to become chief executive of engineering and technology company Siemens in France.

Brutal cull of the Glaxo chieftains: New boss axes 50 of her top team in under a year: A ruthless reshuffle at Glaxosmithkline has seen boss Emma Walmsley replace nearly half of her senior executives in less than a year. The radical overhaul of the top tier of Britain’s eighth biggest company has seen Walmsley, 48, replace 50 of the 125 top managers in just 283 days in charge.

Daily Express

‘Three-quarters of world’s mining to suffer major regulation clamp down: China is preparing a major clamp-down on the country’s bitcoin mining amid fears of colossal energy use and financial risk, it has been revealed. A multi-agency task force has instructed provincial Governments to “actively guide” companies to leave the cryptocurrency mining industry, according to a document.

‘Terrorist dream come true’ ISIS using Bitcoin to fund deadly attacks and buy weapons: Terrorists are using anonymous cryptocurrencies to fund their operations and evade detection as they move huge sums of money across international borders, former US Treasury advisor Elizabeth Rosenberg and Centre for a New American Security researcher Edoardo Saravalle have warned.

The Independent

Byron burger chain to radically overhaul its business amid tough trading conditions: Under-pressure burger chain Byron intends to radically overhaul its business and slash the rent on some of its outlets in the face of tough trading conditions.

Aston Martin reportedly considering going public on the stock market: British car maker Aston Martin is reportedly considering going public on the stock exchange in a deal that could value it at up to £5 billion.

Majestic Wines reports rising Christmas sales but warns of ‘very tough’ trading conditions ahead: Majestic Wine increased sales by 4.1% year-on-year in the Christmas period and said it was on track to meet its estimates for the full year despite “very tough” trading conditions ahead.

City A.M.

Pressure mounts on Debenhams as shareholders told to revolt over pay: An influential investor advisory group today told Debenhams’ shareholders to oppose the pay package of the firm’s chief executive Sergio Bucher.

Carluccio’s appoints Goals Soccer Centres boss Mark Jones as CEO: Deli and restaurant chain Carluccio’s has announced that Mark Jones of Goals Soccer Centres is to become its new chief executive.

This software provider to the Met police has been scooped up by a Japanese buyer for £475 million: Northgate Public Services (NPS), a software provider to UK police forces and the NHS, has been bought for £475 million by a Japanese conglomerate.

Financial Times

Kodak jumps on the blockchain bandwagon

Bannon exits Breitbart News after furore over Trump book

M&S eyeing drastic cut in IT bill

Caledonia Mining tackles 2023 challenges with optimism for 2024 as it...

Caledonia Mining Corporation PLC (AIM:CMCL, NYSE-A:CMCL) chief executive Mark Learmonth tells Proactive's Stephen Gunnion the company faced a challenging 2023, primarily due to poor production in the first half of the year at its core asset, the Blanket Mine in Zimbabwe, and an underperformance...

12 minutes ago