FTSE 100 closes higher - just
Pound down versus dollar and euro
Apple leads Wall Street lower
FTSE 100 closed narrowly in positive territory with miners providing support.
The blue-chip benchmark closed almost six points higher at 7,671, while FTSE 250 - the midcap index, lost over 37 points at 20,577.
"Even though underlying commodity prices haven’t been too impressive today, the companies involved in those industries are in demand today," said David Madden, at CMC Markets.
"We have seen multi-year highs being reached in oil and platinum recently, and copper and palladium have been robust too, and this is playing into the natural resources stocks.
"This week will see the release of Chinese manufacturing figures, and it could add volatility to the commodity related stocks as the country is a major consumer of raw materials."
US stocks are under pressure, while, in the currency markets, the pound is down 0.23% against the Euro and down 0.71% against the US dollar.
3.40pm…FTSE 100 runs out of steam
Rather like me, the FTSE 100 seems to have run out of steam as we head towards market close here in London.
The blue chip index had looked as though it would threaten the 7,700 barrier at midday but it has since fallen back.
It is up just 1.2 points, or 0.02%, to 7,666.8 with only 20 minutes or so left in the trading day.
The miners are still the big risers, with Glencore PLC (LON:GLEN) taking top spot – up 2.9% to 413.7p.
That could possibly be due to the uncertainty over the upcoming regulatory review in the sector, as noted by Goldman Sachs last week.
3.05pm...US stocks open lower as expected
As expected, US stocks opened lower on Monday morning thanks to the dollar’s continued rebound.
The Dow Jones is down 0.2% to 26,555.3; the tech-heavy Nasdaq has shed 0.3% to 7,485.8; while the S&P 500 completes the trio, down 0.4% to 2,862.4.
“While the pound overcame its lunchtime wobble against the euro, it had no such luck against the dollar, in large part thanks to a solid inflation data from the US,” said Spreadex analyst Connor Campbell.
“Though, at 0.2%, the latest core PCE price index still leaves the annual rate at 1.5%, below the Federal Reserve’s 2% target, the greenback continued its comeback this Monday.”
He added: The Dow Jones wasn’t too happy with the dollar’s rebound, dipping 60 points when the bell rang on Wall Street. The index has earned a break, however, given that it crossed 26600 to set yet another record high last Friday.”
2.30pm…New easyJet boss opts to cut his own salary
It’s not every day you hear this – particularly among FTSE 100 companies – but new easyJet PLC (LON:EZJ) chief executive Johan Lundgren has voluntarily cut his annual salary.
His pay packet will be reduced to ‘just’ £706,000 from £740,000 so that he earns the same as what former boss Carolyn McCall.
He explained: "At easyJet we are absolutely committed to giving equal pay and equal opportunity for women and men. I want that to apply to everybody at easyJet and to show my personal commitment I have asked the board to reduce my pay to match that of Carolyn's when she was at easyJet.”
When will all this patronising virtue-signalling end? Maybe he was better qualified or negotiated better for his pay package... not everything is about gender. *sighs*— Julia Hartley-Brewer (@JuliaHB1) January 29, 2018
EasyJet chief Johan Lundgren cuts pay to match his female predecessor https://t.co/UcO6l3xUKy
1.20pm…Slow open expected on Wall Street
Dollar weakness has been a key theme of the past few weeks, but it has bounced back today.
In a similar way to how the FTSE reacts to a strong pound, the strengthening greenback is expected to see the US markets open in the red when trading begins on Wall Street in an hour or so.
The Dow Jones is called 35 points lower at 26,576.4; the broader S&P 500 is seen 5.5 points in the red at 2,866.4; while the tech-heavy Nasdaq looks set to begin 15.3 points down at 7,003.6.
“The Dow Jones is set for a slow open, with the futures having the index dip 30 points when the bell rings on Wall Street, taking it back below 26600,” wrote Spreadex analyst Connor Campbell.
“Whether or not that changes may be down to how the dollar reacts to the latest core PCE price index reading; the inflation metric, which is a favourite of the Fed (which meets mid-week) is expected to rise from 0.1% to 0.2%.”
1.10pm….Miners marching on
Ahead of next week’s full-year results, analysts at Numis reckon the market conditions at the end of 2017 were “favourable” which should mean that underlying earnings come in in-line with expectations.
Kevin Fogarty & co are looking for underlying earnings of €1.23bn, driven by “sequential margin improvement” in the final quarter as cost prices have been more than passed on to its customers.
As a result, Numis has hiked its price target for the Irish paper packaging business to £28 (from £26 previously), while keeping its ‘add’ recommendation in place.
The bullish sentiment in the mining industry has continued with the metal diggers once again towards the top of the movers’ leaderboard.
Glencore PLC (LON:GLEN) shares jumped 2.2% to 411p, while there were also strong gains for BHP Billiton plc (LON:BLT) (up 1.5% to £16.05), Anglo American PLC (LON:AAL) (up 1.7% to £17.64) and Antofagasta PLC (LON:ANTO) (up 1.6% to 956.2p).
Diageo loses its fizz after broker downgrades
The company- which owns the Smirnoff and Guinness brands among others – is the top blue chip loser having lost 1.6% to sit at £25.17.
Analysts at Exane BNP Paribas moved their rating to ‘neutral’ from ‘outperform’ and cut their price target by 50p to £27, while RBC Capital Markets also downgraded the stock to ‘neutral’, citing weaker cash conversion compared to peers.
12.45pm…Pound pares recent gains to send FTSE higher
After struggling last week thanks to the rallying pound, the FTSE 100 has kicked off this week on a much better footing, although it was sterling once again dictating the market’s moves.
The currency has been on a good run over the past few weeks thanks to the dollar’s weakness and progress seemingly being made in Brexit negotiations.
It has pared some of those gains on Monday morning though; down 0.6% against the dollar to US$US$1.407, while it has also shed 0.3% versus the euro to €1.136.
That has boosted the footsie as it makes the blue chips’ overseas earnings worth more when translated back into pounds.
Just before 1pm, the index was up 0.2%, or 15.0 points, to 7,680.5.
12.30pm…Superdry founder trousers £18mln
The founder of Superdry PLC (LON:SDRY) has trousered – or should that be ‘jumpered’? – almost £18mln after cashing in a chunk of his shares.
Julian Dunk set up what would become the billion-pound clothes retailer back in 1985 from a market stall in Cheltenham.
After seeing the stock rise by almost a fifth over the past year, he has decided to sell off 1mln shares, or a 1.23% stake in the company, banking £17.8mln in the process.
It’s unlikely he has lost faith in his company though given that he’s still the biggest shareholder with a 25.36% stake.
12.05pm … Brexit blame for weaker pound?
More on sterling now, which is down against most of the world’s top currencies.
The pound has lost 0.5% on the dollar to US$1.407 – giving up almost all of last week’s gains – while it has shed 0.3% against the euro to €1.135.
ETX Capital analyst reckons the drop off could be to do with in-fighting among the Tories.
“The Prime Minister is dealing with the umpteenth swell of dissent over the state of her leadership, while at the same time having to try and quash the latest beef [over Brexit] between her warring ministers,” wrote Wilson.
“Add onto that the Lords constitution committee labeling the EU withdrawal bill as ‘fundamentally flawed’ just one day before the legislation is set to be debated, alongside a warning from EU leaders that the UK is ‘not ready’ to secure a divorce deal, and there was plenty for the previously soaring pound to fret about.”
11.40am … Petra fails to sparkle after profit warning
Petra Diamonds Ltd (LON:PDL) shares are currently enduring their worst session for 17 years after the miner cut its current year production guidance and said earnings are expected to be hit by a stronger South African Rand.
The company now expects production for the year to the end of June to be between 4.6mln and 4.7mln carats, down from its previous forecast of between 4.8mln and 5.0mln carats.
Higher diamond prices should mean that revenue per tonne is broadly the same as last year, although it added that underlying earnings for the year will see a 10-15% impact from the stronger rand on Petra’s dollar-denominated cost base.
Shares are currently down 16.8% to 65.5p.
11.20am … Amazon to create another 400 jobs in Midlands
The tech and ecommerce giant said the new centre would open up a variety of positions including engineers, HR and IT specialists.
Amazon currently operates a network of 16 fulfilment centres across the UK – massive warehouses which primarily handle orders placed by customers.
They have attracted criticism in the past amid allegations of tough working conditions, although Amazon has always refuted such claims.
11am … KPMG audits probed after Carillion’s profit warning
Carillion PLC’s (LON:CLLN) problems were magnified today after the Financial Reporting Council (FRC) said it has decided, following enquiries made since a profit warning in July 2017, to open an investigation in relation to KPMG's audit of the collapsed construction contractor’s financial statements.
In a statement, the FRC said the investigation will cover the years ended 31 December 2014, 2015 and 2016, and additional audit work carried out during 2017.
It added that the investigation will be conducted by the FRC's Enforcement Division, and will consider whether the auditor has breached any relevant requirements, in particular the ethical and technical standards for auditors.
The regulator said several areas of KPMG's work will be examined including the audit of the company's use and disclosure of the going concern basis of accounting, estimates and recognition of revenue on significant contracts, and accounting for pensions.
Reading the independent auditor's report in #Carillion's 2016 report & accounts, I think KPMG may have covered themselves. They did draw attention to Carillion's aggressive P&L accounting and failure to impair goodwill on the balance sheet.— (((Frances Coppola))) (@Frances_Coppola) January 28, 2018
10.45am … Margin pressures hit Bargain Booze owner’s profits
Results for the 26 weeks to 29 October were mixed, with the wholesaler and off-licence stores operator reporting a 9.2% year-on-year increase in revenue to £836.3mln and a 1.7% increase to £23.2mln in adjusted underlying earnings (EBITDA).
But the gross margin ebbed to 12.5% from 12.8% due to an increase in sales to large national account customers in the period, leading to a 1.6% fall in pre-tax profits which came in at £12.3mln.
Shares sank 13.4% to 310p.
10.30am … IKEA founder dies aged 91
Taking a brief pause from the markets, Swedish billionaire and IKEA founder Ingvar Kamprad has died aged 91.
In a statement, the company he founded more than 70 years ago said in a statement that he died peacefully at his home in Smaland, southern Sweden.
IKEA described him as “one of the greatest entrepreneurs of the 20th century”.
It added: “He will be much missed and warmly remembered by his family and Ikea staff all around the world.”
The founder of IKEA and one of the greatest entrepreneurs of the 20th century, Ingvar Kamprad, has passed away at the age of 91. pic.twitter.com/wXVXgPluXF— IKEA UK (@IKEAUK) January 28, 2018
10am ... Pound's weakness boosts footsie
After a strong run last week, sterling has pared some of the gains it made against the dollar last week.
A short while ago, the pound was down 0.3% to US$US$1.410, while it also shed 0.2% versus the euro to €1.137.
That is helping to push the FTSE 100 higher, as it makes the blue chips’ overseas earnings – almost three-quarters of FTSE 100 companies’ total earnings are generated abroad – worth more when translated back into pounds.
At just before 10am, the index was up 0.1%, or 6.9 points, to 7,672.5.
The miners were the main beneficiaries of the currency movements, as well as higher copper prices, and they occupied four of the top five spots on this morning’s leaderboard.
Glencore PLC (LON:GLEN) shares jumped 1.7% to 408.8p, while there were also strong gains for BHP Billiton PLC (LON:BLT) (up 1.1% to £16), Anglo American PLC (LON:AAL) (up 1.5% to £17.60) and Antofagasta PLC (LON:ANTO) (up 1.3% to 953.2p).
Smurfit Kappa Group PLC (LON:SKG) was the top blue-chip riser – up 2.1% to £25.80 – after City broker Numis hiked its price target for the Irish paper packaging company to £28 ahead of next week’s update.
The Smirnoff and Guinness owner fell 1.5% to £25.22 after Exane BNP Paribas moved to ‘neutral’ from ‘outperform’ and cut its price target by 50p to £27, while RBC Capital Markets also downgraded the stock to ‘neutral’, citing weaker cash conversion compared to peers.
8.45am ... FTSE 100 up slightly; KPMG under the spotlight after Carillion's collapse
The FTSE 100 made a tentative but positive start to proceedings, taking its cue from Wall Street’s record close on Friday.
In the first half hour of trading, the index of blue-chips shares mustered an eight-point rise on thin trading volumes to 7,673.76.
The movements on the Footsie were muted with the miners leading the gainers.
Diageo (LON:DGE), by contrast, was marked down 1% after Exane BNP-Paribas and RBC Capital downgraded stock in the Guinness-maker.
Flying a little lower despite a stellar recent run was easyJet, which was down just under 1% after a downgrade from American outfit Bernstein.
According to the Guardian, the FRC will conduct the investigation, which will cover 2014 to 2016, and additional audit work carried out during 2017, “as quickly and thoroughly as possible”.
Proactive news headlines:
Concepta PLC (LON:CPT) shared some impressive results from hospital evaluations of its myLotus fertility product carried in its launch market of China. Women at the Changhai Hospital, Shanghai, and SJZ Reproductive Hospital, Shijiazhuang, took part in ovulation and pregnancy tests.
Rose Petroleum PLC (LON:ROSE) has revealed new analysis of its Paradox basin acreage, in Utah, seeing the potential for some 450mln barrels to be present. Chief executive Matthew Idiens described the initial seismic results as “a watershed moment” for Rose.
Hydrogen power specialist ITM Power (LON:ITM) increased income by 47% and more than doubled the size of its order book in its latest half year. Graham Cooley, chief executive, said the half-year had seen strong and consistent growth in both the refuelling and power-to-gas markets.
Palintest, a subsidiary of Halma PLC (LON:HLMA), is to collaborate with Molendotech, a portfolio company of Frontier IP PLC (LON:FIPP) to develop and commercialise Molendotech’s water quality testing technology.
DP Poland PLC (LON:DPP), the franchise holder for Domino’s pizzas in the central European country, has launched its first national TV ads following another six months of rapid sales growth. Total revenue in 2017 rose by 51% to 58mln PLN (£12.2mln) from 39mlm PLN, with like-for-growth of 17%.
Faron Pharmaceuticals Ltd (LON:FARN) has been granted fast track designation by the US Food & Drug Administration for its lead drug, Traumakine. This accelerated review is designed to get drugs to areas of unmet medical need.
Metal Tiger PLC (LON:MTR) has purchased, on market, 5.75mln shares in Thor Mining PLC (LON:THR) (ASX:THR) at an average price of 3.25p per share. As a result, Metal Tiger’s holding in Thor is now 67.1mln shares, representing 10.87% of the issued share capital.
Diversified Gas & Oil PLC (LON:DGOC), the US-based gas and oil producer with a focus on the Appalachian Basin, said that trading for the year ended 31 December 2017 remains in line with market expectations and prospects for 2018 look very encouraging, with the group evaluating further acquisitions.
Greka Drilling Limited (LON:GDL) boss Randeep Grewal is expecting a materially better 2018, thanks to rising demand for well drilling services in China. "We expect a stronger drilling mandate during 2018. With firm drilling contracts signed with state-owned enterprises, we start 2018 with a materially stronger foundation than last year.”
Jersey Oil & Gas PLC (LON:JOG) has told investors that a follow on to the Verbier discovery well is planned for this summer. The company, in a statement, said that the co-venturers (which are led by project operator Statoil) have now approved a work programme and budget for 2018, and it includes an appraisal of the Verbier oil discovery.
Fox Marble, the AIM-listed company focused on marble quarrying in Kosovo and the Balkans region, announced that it has received the £2mln due in respect of the subscription shares as announced on the 19 January 2018. As previously announced, it is the company's intention to use these funds to retire existing debt of the Company and increase production at the quarries and processing factory
Metminco Ltd (LON:MNC) has submitted a plan of works for the development of its Miraflores gold and silver project in Colombia. The next crucial step will be the completion of an environmental impact assessment. At the end of last year, Metminco established a reserve of 457,000 ounces of gold and 385,000 ounces of silver at Miraflores.
Cabot Energy (LON:CAB) announced that following completion of the recent subscription with High Power Petroleum LLC, announced on 19 December 2017, Petro Mychalkiw has been appointed to the board as a non-executive director.
6.40am: Firmer start predicted
The FTSE 100 is set to kick off on the front foot after a down week, taking its cue from Wall Street, which finished Friday in record territory yet again.
The index of blue chip shares will open 12 points higher at 7,677.54, according to the spread betting firms.
Asia’s main markets traded higher overnight, with financial stocks in demand.
The week’s events are back-end loaded with US Federal Reserve meeting scheduled for Wednesday and Thursday and American jobs data out on Friday.
The Fed is expected to keep its powder dry until March, before hiking borrowing costs further.
Non-farm payrolls, meanwhile, are expected to grow by 190,000.
Worries centre not on the American economy or interest rates, but the slide in the dollar. Expect this to become a preoccupation driving world stock markets if the slide of the greenback continues.
Against a basket of currencies, it has fallen around 4% in the past two weeks.
“This decline picked up speed last week on concerns that the US could be set on a course to a possible trade war with its partners,” said Michael Hewson analyst at CMC Markets.
“These concerns were reinforced at Davos in the wake of comments by the US Treasury secretary as well as his colleague Wilbur Ross, the US Commerce secretary.
“President Trump’s speech on Friday did nothing to increase those concerns, but neither did they assuage them.
“His comments that the US wanted free but “fair” trade suggested that he would not be shy in confronting what he considered unfair trade practices, potentially putting him on a collision course with China, as well as the European Union.”
Back here in Blighty, it is expected to be a slightly quieter week on the corporate news front with a handful of blue-chips reporting, including BT (LON:BT.A), AstraZeneca (LON:AZN) and Royal Dutch Shell (LON:RDSA).
Around the Market:
- The pound is worth US$1.4136
- Brent crude costs US$70.44 a barrel, down 8 cents
- Gold worth US$1,352.10 an ounce, down US$5.10
- Financial Times
- Carillion has been accused of trying to “wriggle out” of its pension obligations for a decade as new evidence given to MPs revealed the collapsed construction group’s pension shortfall near doubled to nearly a billion in three years.
- The UK government’s decision to allow two train companies to walk away from running a rail franchise three years early after racking up losses is to be investigated by the country’s public spending watchdog.
- Almost 60,000 people have signed up so far to sue German carmaker Volkswagen Group over its emissions scandal in what is shaping up to be one of the biggest group actions to come before London’s High Court.
- CK Hutchison, owner of the Three network, has acquired a stake in Silicon Valley start-up Matrixx Software that develops systems designed to help telecoms companies sell digital goods and services.
- Spotify calls the tune with low-cost float - the music streaming service is preparing to become the first company to attempt a “direct listing” on the NYSE. If all goes to plan, it will cut its fees dramatically.
- The owners of small companies who lost their livelihoods in the scandal at HBOS in Reading have asked Thames Valley Police to investigate claims that the scam was covered up.
- Funding Circle, the peer-to-peer lending platform, is planning to raise hundreds of millions of pounds from a float this year partly to finance a marketing blitz in its biggest potential market, the United States.
- Optimism among financial companies deteriorated for the third quarter in a row in the final three months of last year.
- Daily Telegraph
- Shell earnings expected to hit £11 billion after oil prices recover.
- City shareholders hungry for more after pocketing a record £94.4bn in payouts last year will be left with little more than a “hangover” in 2018, a study has found.
- Daily Mail
- Fifty eight of the UK’s largest companies have agreed to try and ensure 30% of their senior leadership teams are women by the end of 2020. Those signed up to the 30% Club campaign group include Vodafone, Sainsbury’s and Tesco.
- French luxury fashion firm Kering in talks to end 50-50 partnership with Stella McCartney.
- Japanese tech giant Softbank mobile eyes £12.7bn dual listing in London and Tokyo.
- British Airways announces £4.5bn revamp amid growing criticism over its budget-style service.