FTSE 100 closes down 43 at 7,490
Manufacturing output slows unexpectedly in January
Capita shares down again
FTSE 100 joined other European indices to close lower on Thursday as traders took risk of the table.
Footsie finished down over 43 points at 7,490, while FTSE 250 was also lower - down around 58 points at 20,185.
On that index, outsourcer Capita plc (LON:CPI) weighed again, plunging over 13% to 158.60p after an earlier profit warning that wiped more than £1bn off its market value.
Yesterday then firm took action to axe dividend payments and will raise £700mln by issuing new shares.
It came after the mobile phone network posted a drop in third quarter revenue.
3.25pm: FSE 100 trims earlier losses
The FTSE 100 has trimmed its losses over the past hour as the Great British pound pared its earlier gains, although the index of blue chip shares is still in the red.
Sterling – now up just 0.2% against the dollar to US$1.421 and down slightly against the euro to €1.142 – has been weighing on the footsie all day as, when it’s stronger, it makes the blue chips’ international earnings worth less when translated back into pounds.
But it has eased off the accelerator this afternoon which has allowed the FTSE 100 to creep back up towards break even, and the index is now 22.1 points, or 0.3%, down at 7,511.4.
It had dropped well below 7,500 earlier in the session.
Information and data group Relx PLC (LON:REL) is down 3% to £15.10, a few days after it completed its largest acquisition for a decade.
Oil supermajor Royal Dutch Shell PLC (LO:RDSB) is still nursing losses – down 1.8% to £24.50 – despite reporting a “strong financial performance” for its fourth quarter.
Private equity outfit 3i Group PLC (LON:III) was also on the move higher, rising 2.1% to 951.2p as it confirmed it is on track to report another year of strong growth following a positive third quarter.
Down on the FTSE 250, troubled outsourcer Capita PLC (LON:CPI) wasn’t getting any respite following yesterday’s shock profit warning.
The company, which among other things collects the licence fee on behalf of the Beeb, lost another 13.2% to trade at 158.1p. Just a week ago its share price was more than double that.
Sticking with the second tier, Royal Mail PLC (LON:RMG) finally delivered the good news to shareholders that it has settled in principle a near ten-month dispute with the Communication Workers Union (CWU).
Union members still have to formally approve it but getting union bosses on board should be the key hurdle and the rest as good as a formality.
With that cloud now disappearing and the threat of further strikes avoided, investors piled back in sending the stock 7.7% higher to 505.8p.
3pm: Kodak falls as it delays cryptocurrency release
The stock soared last month when Kodak revealed it was developing the KodakCoin which is designed to help photographers register, license and manage their images.
The initial coin offering (ICO) was announced at the CES tech trade fair in early January and reportedly attracted 40,000 potential investors.
Initially, the company said people could start buying the coins on January 31, but it now reckons the process will “take several weeks”.
The hold-up, according to Kodak’s website, is that each of the potential investors needs to be verified.
Shares are down 5.1% to US$7.50 early on Thursday.
2.45pm: Dow pares early losses
As expected the Dow Jones – which is made up of 30 of the biggest listed US companies – tanked by almost 100 points immediately after the bell.
In the fifteen minutes or so since the index has actually rallied to pare those losses and is currently flat at 26,158.6.
The S&P 500 – the one initially tipped to open positively – is down 0.2%, while the Nasdaq is off less than 0.1% to 7,406.9.
As it goes, it’s a fairly quiet start to proceedings, with traders’ eyes no doubt turning to the manufacturing data due shortly.
2.25pm: Unilever boosted by better-than-expected Q4 sales
The Marmite and Ben & Jerry’s maker said its underlying sales rose by 4.0% in the final quarter of 2017, above consensus forecasts of 3.7%.
Unilever – which spent much of last year reviewing its business after rebuffing a US$143bn takeover bid from Kraft Foods in February – added that the outperformance was driven by a step-up in emerging markets as its restructuring programme continues to bear fruit.
The Anglo-Dutch firm’s full-year net profit increased by 16.9% to €6.5bn, with underlying earnings per share up 10.7% to €2.24.
Unilever’s underlying operating margin rose by 110 basis points reflecting “strong savings delivery”.
Shares are currently up 1.3% to £40.51.
2pm: OptiBiotix Health plc (LON:OPTI) in 'strongest position ever'
1.25pm: Shell, Vodafone weighing on footsie
The pound shrugged off a surprise fall in UK manufacturing output in January to make gains on the US dollar yet again.
Sterling is currently up 0.3% on the greenback to US$1.423 and it was also up against the euro earlier in the morning, but is now off ever so slightly at €1.142.
Still, the resilient pound has stopped the FTSE 100 from rising off the 2018 lows it hit on Wednesday.
Just before 1.30pm, the index was down 19.7 points, or 0.3%, to 7,513.7.
Chief among the fallers was mobile phone network Vodafone Group PLC (LON:VOD) which shed 3.6% to 216.6p after it posted a drop in third quarter revenue, reflecting the sale of its Dutch subsidiary and foreign exchange headwinds.
Oil supermajor Royal Dutch Shell PLC (LO:RDSB) was still nursing losses – down 1.5% to £24.60 – despite reporting a “strong financial performance” for its fourth quarter.
Private equity outfit 3i Group PLC (LON:III) was also on the move higher, rising 2% to 950.2p as it confirmed it is on track to report another year of strong growth following a positive third quarter.
Down on the FTSE 250, troubled outsourcer Capita PLC (LON:CPI) wasn’t getting any respite following yesterday’s shock profit warning.
The company, which among other things collects the licence fee on behalf of the Beeb, lost another 9.7% to trade at 164.8p. Just a week ago its share price was more than double that.
12.55pm: Wall Street set for mixed open
It is set to be a mixed start for US stocks in New York when Wall Street opens for trading this afternoon ahead of manufacturing data due out later on.
The Dow Jones is seen 13.5 points lower at 26,143.8, while the tech-heavy Nasdaq is called to open 5.5 points in the red at 6,949.1.
The broader S&P 500, however, is expected to register a small 2.7 point gain on the opening bell to 2,827.1.
“The Dow Jones appears to have been a tad more bothered about the Fed’s hawkish hold than the dollar, with the futures pointing to a  dip after the bell,” wrote Spreadex analyst Connor Campbell.
“The Markit and ISM manufacturing PMIs could change that, however; the former is forecast to rise from 55.0 to 55.1 month-on-month, while the latter is expected to slip from 59.7 to a still strong 58.7.”
12.25pm: Royal Mail reaches agreement with union
Royal Mail PLC (LON:RMG) has highlighted a “continuing good trading” performance as the mail delivery firm announced that it has reached agreement in principle with the Communication Workers Union (CWU) on pensions, pay, a shorter working week, culture and operational changes.
The agreement brings to an end a near ten month dispute between the postal giant and union bosses.
11.50am: Stellar Diamonds sparkles on possible takeover bid
Stellar Diamonds PLC (LON:STEL) was by far and away the top riser in London on Thursday after the junior miner told investor investors it is in “advanced negotiations” over a possible takeover offer from Newfield Resources.
AIM-listed Stellar said the possible bid, as it currently stands, would see each shareholder receive approximately 0.76 of a Newfield share for each Stellar share held.
Given that Aussie-quoted Newfield’s stock closed at A$0.29 on Wednesday, the offer would represent a whopping of 452% to Stellar’s closing price of 2.3p yesterday.
Stellar wheeled out the usual “there can be no certainty of any offer” line, but investors still poured in. Shares surge 166% to 6.12p late on Thursday morning.
11:20am: 3mln homes to get ultrafast broadband by 2020
Openreach will kick off its so-called ‘Fibre First’ programme in Birmingham, Bristol, Cardiff, Edinburgh, Leeds, Liverpool, London and Manchester this year, connecting up to 40 UK towns, cities and boroughs with fibre to the premises (FTTP).
The company, which is a wholly-owned but independent arm of BT, said it would recruit 3,000 engineers this year for the first phase of the programme.
Openreach expects the cost of building FTTP in towns and cities over the next three years to be around £300-£400 per premise passed.
BT shares are up 1% to 258.1p this morning, ahead of a trading update due tomorrow.
We’re accelerating plans to bring some of the world’s fastest broadband to 3 million homes and businesses in the UK by 2020. This is all part of our ambition to build a large scale Fibre to the Premises network in the UK: https://t.co/F40pJy1xDZ pic.twitter.com/c9iz4Orcld— Openreach (@OpenreachGB) February 1, 2018
11am: Facebook saw revenues and profits soar in 2017
Revenue jumped 47% to US$40.6bn and net income surged 56% to US$15.9bnin the year to December 31, 2017.
The increase in profits came despite taking a US$2.3bn hit related to the new US tax law, which included a one-off tax on overseas profits.
The company said it added more users last year but they spent less time browsing after making changes to show more content from friends and family in the news feed and less from brands and publishers.
That is part of an attempt to make the site “good for people’s well-being” and the markets initially reacted badly to that, fearing it could hinder the group’s financial performance going forward.
But Mark Zuckerberg and co reassured investors on a conference call, which put some fizz back into the stock. Facebook shares are currently up 1.8% to US$190.33 in after-hours trading in the US.
10.40am: House prices rise in January
House prices saw a “surprising” pick up in January, pushing the average UK house price to record highs, said Nationwide.
Its monthly index found that house price growth accelerated to a 10-month high of 3.2% in the 12 months to January, from 2.6% in the year to December.
The average price last month was £211,756 – the highest on Nationwide’s records.
Month-on-month house price growth stood at 0.6% in January, the same as the previous month.
“The acceleration in annual house price growth is a little surprising, given signs of softening in the household sector in recent months,” said Nationwide's chief economist, Robert Gardner.
10.20am: Pound holding blue chips back
The blue chips got off to a fairly hot start this morning, but things have cooled down over the past hour or so on the back of a stronger pound.
A hawkish hold on interest rates from the US Federal Reserve – paving the way for a possible rate hike in March – wasn’t enough for the dollar’s rebound to continue, with cable (the pound-US dollar rate) climbing 0.4% to US$1.425.
Add that to the 0.2% gain versus the euro – to €1.145 – and there was little room for the FTSE 100 constituents to reverse its own mini-slump this week.
The index of blue chip shares is broadly flat just after 10am at 7,535.4.
Oil supermajor Royal Dutch Shell PLC (LO:RDSB) shed 1.5% to £24.60 in morning trading to make it one of the worst performers on the footsie, despite reporting a “strong financial performance” for its fourth quarter.
Mobile phone network Vodafone Group PLC (LON:VOD) was also weighing on the index after it posted a drop in third quarter revenue, reflecting the sale of its Dutch subsidiary and foreign exchange headwinds. The shares are currently down 2% to 220.1p.
At the other end, private equity outfit 3i Group PLC (LON:III) was the top blue chip performer – rising 3.6% to 965.2p – as it confirmed it is on track to report another year of strong growth following a positive third quarter.
10am: UK manufacturing PMI slips
UK manufacturing output grew slower than expected last month on the back of higher raw materials costs.
The IHS Markit/CIPS manufacturing purchasing managers’ index (PMI) dropped to 55.3 in January from 56.2 a month earlier – the lowest level since June 2017. Any figure above 50 indicates growth but economists had been looking for a 56.5 reading.
But what does that mean for the possibility of further interest rates in 2018?
“The index remains in healthy expansion territory, coming in above the break-even 50 level for the 18th consecutive month,” said ING economist James Knightley.
“We have also recently seen some better housing data, employment, confidence numbers and of course the above consensus 4Q GDP outturn.
“Bank of England officials also seem quite keen to tighten policy further at some stage, but there hasn’t been enough to suggest that a hike next week is on the cards.
“However, if the BoE nudges up its forecasts a touch next week and sound open to further hikes, the current 40% market-implied probability of a May rate hike will rise.”
Knightley added: “A May BoE rate rise is increasingly looking a 50:50 call to us but for now, our House View remains that there won’t be a rate hike this year.”
8.50am: Traders await economic data
The FTSE 100 was in a holding pattern ahead of whole raft of international data, kicking off with the UK Purchasing Manager’s Index, which provides a snapshot of the economic health of the manufacturing sector.
Blue-chip shares nudged higher – but only just – with the Footsie adding just 3 points to trade at 7,536.67.
Traders are also expecting Eurozone and US PMIs, along with the latest American jobs numbers.
Turning to the stock market, investors in Shell (LON:RDSA) locked in some profits after the company turned in strong financial performance in the final quarter of last year. Around 2% was wiped off the share price.
BT (LON:BT.A) was the City’s big large-cap riser with a 2.3% advance, though it is unlikely the roll-out plans for superfast broadband by its Openreach arm sparked the advance. More plausible is we are seeing some late short-covering ahead of quarterly results on Friday.
Stepping down a division, there was a bounce for teclo TalkTalk (LON:TALK) after Wednesday’s sell-off. The 4% rise was aided by an upgrade by RBC Capital.
NEX Group (LON:NEX), formerly known as Icap, was the FTSE 250’s big gainer after the financial technology company said it expected to benefit from President Trump’s raft of tax cuts. Shares in group, run by entrepreneur Michael Spencer, rose 9%.
Proactive news headlines:
Stratex International plc (LON:STI) saw its shares jump on Thursday as the miner unveiled the proposed appointment of a new CEO and said it is currently identifying new value-appropriate projects in Africa and Europe.
Highlands Natural Resources Plc (LON:HNR) told investors that gas production rates have “intermittently peaked” at up to 216 thousand cubic feet per day in testing at the Helius Two project. The result, at the natural gas and helium project in Montana, represents an important step towards commercialisation of Highlands' growing land position, HNR highlighted.
European regulators have granted Faron Pharmaceuticals Ltd (LON:FARN) a patent for the use of its Clever-1 antibodies – the mechanism behind the AIM-quoted firm’s Clevegen potential cancer immunotherapy.
Powerhouse Energy Group PLC (LON:PHE) has issued 280.4mln shares in respect of the convertible notes arrangement with finance house Hillgrove Investments. The share issue finally settles the arrangement that was announced in February of last year; the shares were not issued to Hillgrove at that time as they were subject to a lock-in arrangement.
Lithium specialist Bacanora Minerals Ltd (LON:BCN) says the proposed investment from Chinese fund management Nextview will complete later than expected. NextView has agreed to invest £31.2mln approximately at 94.53p per share. The original deadline was the end of January but this has now been extended.
LEKOIL Limited (LON:LEK) has now kicked off a new 3D seismic survey at the Otakikpo oil field in Nigeria. Sinopec is the contractor for the programme, which is expected to run through to completion in June.
Thor Mining Limited (LON:THR) expects to continue an aggressive approach at all of its core projects, executive chairman Mick Billing said in its December quarterly report.
Customised electronics supplier discoverIE Group PLC (LON:DSCV) has acquired Santon Group, a Dutch designer and manufacturer of custom switches for electronic applications.
Coal bed methane group Curzon Energy Plc (LON:CZN) has confirmed the start of well testing at the Coos Bay project, on January 29, and told investors that the initial results show the coals are fully saturated and do not need long-term dewatering. Curzon added that the well is “showing signs of early gas production” and it is anticipated that gas volumes will increase steadily as reservoir water is removed.
IronRidge Resources Limited’s (LON:IRR) boss has said the group is encouraged by the results generated from the recent aeromagnetics survey on its extensive gold portfolio in Chad, Central Africa. In a statement, Vincent Mascolo, Ironridge’s chief executive officer said: “The aeromagnetics data will help us to understand the structural settings and possible controls on known mineralisation; thereby helping define potential additional targets for follow-up work.”
Ariana Resources plc (LON:AAU) said its Kiziltepe mine in Turkey saw the production and sale of 4,501 ounces of gold and 35,095 ounces of silver during the quarter ended 31 December 2017, exceeding feasibility forecasts by around 38% for recovered gold on an annualised basis.
The fourth quarter saw record production at Pickstone-Peerless, the gold mine in Zimbabwe operated by Vast Resources PLC (LON:VAST), but output at Manaila in Romania was hit by a planned shut-down of the plant.
6.45am: Front foot start
The FTSE 100 is set to start February’s first session on the front foot thanks in part to an uptick in sentiment for global equities.
Wednesday saw a strong session for US equities, meanwhile, Japanese stocks traded positively.
“The upbeat US session spilled across into Asia and Europe is also heading towards a positive start to trading,” said Jasper Lawler, analyst at London Capital Group.
“Base metals and oil are showing steady gains across the board after Chinese manufacturing data surprised to the upside, so we could expect commodity stocks to do some heavy lifting of the FTSE early on. Precious metals, however are marginally lower.”
At the same time, US interest rates remain in focus amid succession at the head of the Federal Reserve, albeit Lawler highlighted that Janet Yellen’s last policy meeting has passed without being eventful.
Wall Street’s Dow Jones closed 72 points or 0.28% higher at 26,149 while the S&P 500 marked a smaller gain to finish at 2,823 and the Nasdaq moved 0.12% higher to 7,411.
Japan’s Nikkei rose 1.68% to trade at 23,486, whereas Hong Kong’s Hang Seng and the Shanghai Composite were in negative territory - losing 0.36% to 32,767 and down 1.1% to 3,442 respectively.
Australia’s ASX 200 benchmark, meanwhile, climbed 0.87% to trade at 6,090.
In London, CFD and spreadbetting group IG Markets sees the FTSE 100 starting 29 points higher, calling the benchmark at 7,550 and 7,554 with just over an hour to go until the open.
Significant events expected on Thursday February 1:
Around the markets
- Pound: US$1.4170, down 0.15%
- Gold: US$1,341 per ounce, up 0.17%
- Brent crude: US$68.97 per barrel, up 0.11%
- Bitcoin: US$10,091, down 0.74%
- Facebook courts investors on user wellbeing plan - Financial Times
- Monkey tests showed new VW diesel Beetle worse than ageing Ford pick-up - The Times
- Amazon overtakes Google as world's most valuable brand -City A.M.
- AT&T shares rise after posting $20B Q4 windfall – MarketWatch
- Kodak delays launch of cryptocurrency KodakCoin - USA TODAY
- Qualcomm earnings top estimates on surge in modem chip sales – Reuters