logo-loader

FTSE 100 ends in the red as Brexit wrangling weighs on sentiment

Last updated: 18:15 07 Jun 2018 BST, First published: 06:50 07 Jun 2018 BST

Brexit
  • FTSE 100 index closes down 7.97 at 7,704

  • UK government publishes Brexit "backstop" plan

  • Google to potentially face second EU antitrust fine

  • BP is top Footsie gainer

FTSE 100 reversed into the close to finish nearly eight points lower as traders got jittery on Brexit wranglings.

After the trading day started with a technical glitch, the UK's premier share index closed down 7.97 points, or 0.10% at 7,704.

FTSE 250  was also lower, off 16.69 at 21,154.

The UK’s Brexit secretary David Davis threatened to walk out amid Prime Minister Theresa May’s plans for a 'backstop' to cover the Northern Irish border, but a crisis was later apparently averted 

Whitehall now expects the 'backstop' to end before 2022, after Theresa May acted to ease the concerns of Davis and others.

In the US, stocks made modest gains, with the Dow Jones Industrial Average up 45 points at the time of writing and the S&P 500 index ahead by 12.65. The tech laden Nasdaq though was down 85 points, or 1.18%.

Top loser on Footsie in London was Mediclinic International (LON: MDC), down 5.7% to 555.40p. The biggest gainer was oil titan BP plc (LON:BP.), which added 2.20% to 589.60p.

4pm: A backstop plan

The British government has published a paper outlining a “backstop” plan for trade with European Union after Brexit.

The plan lays out temporary arrangements to match EU trade tariffs, aimed at keeping the Irish border open after the withdrawal in March 2019. It would effectively keep Northern Ireland within the EU’s customs union, to avoid a “hard border” with the Irish Republic.

The document was delayed after its proposals met resistance from Brexit Secretary David Davis, who was unhappy that they didn’t include an end date for the arrangements.

The plan has already had cold water thrown on it by the EU’s chief negotiator Michel Barnier, who questioned whether the plan was “workable solution to avoid a hard border”, essentially saying that it only covers the problem of customs and no other issues such as freedom of movement.

Meanwhile, Internet search giant Google is potentially facing a second antitrust fine from EU regulators in mid-July for using its Android operating system to push smaller rivals out of the market.

A report by Reuters said sources close to the matter had indicated that the European Commission, which has been investigating the case involving the unit of parent company Alphabet Inc (NASDAQ:GOOG) since 2015, could issue its decision in the week of July 9.

The EU competition enforcer will also tell Google to stop other anti-competitive practices such as licensing deals which prevent smartphone makers from promoting alternatives to apps such as Google Search and Maps.

In other technology news, US commerce secretary Wilbur Ross has said that the United States government has reached an agreement with Chinese telecoms manufacturer ZTE Corp to reverse a ban on the company buying parts from US suppliers.

Ross told CNBC reporters that under the deal, ZTE will change its board and management within 30 days, pay a US$1bn fine, put US$400mln in escrow and retain a new U.S.-selected compliance team.

Reuters sources also said the deal included a suspended 10-year ban on buying U.S. components that could be activated by any violations.

Ross said: “We think this settlement, which brought the company, a $17 billion company, to its knees, more or less put them out of business ... should serve as a very strong deterrent not only for them but for other potential bad actors”.

2.45pm: Wall Street sees mixed open as energy and finance stocks lead gains

US stocks had a mixed open this morning as markets were hoping to bank a fifth consecutive day of gains.

The Dow Jones was up 86 points at 25,323 at the open and the S&P 500 was up 3 points at 2,775. The outlier was the Nasdaq, which opened in the red and was down 7.5 points at 7,682.

Alec Young, managing director of global markets research at FTSE Russell, said: “U.S. equities have thus far proven very resilient as solid economic growth, strong corporate fundamentals and still accommodative Fed monetary policy are largely offsetting trade and geopolitical jitters as well as worries about higher interest rates”.

The drop in the tech-heavy Nasdaq followed an announcement from social media giant Twitter Inc (NASDAQ:TWTR) after close on Wednesday when it said it planned to sell at least US$1bn in convertible bonds.

At the open, Twitter shares were down 0.36% at US$39.7.

2.00pm: US stocks look to extend gains as ECB comments spark bond yield rise

Wall Street’s markets are on track to extend gains from the previous session as a possible shift in monetary policy from the European Central Bank (ECB) led to a climb in bond yields.

Financial services stocks outperformed on Wednesday as bond yields increased after officials at the ECB suggested that they may reveal more of their plans to end a stimulus programme for the eurozone at their meeting next week.

Following the comments, the money markets are now pricing in a 90% probability of a rate rise from the ECB in July next year, a change from last week when expectations were scaled back due to concerns over the Italian political situation.

12.45pm: Greece optimistic on June debt relief

An anonymous Greek official has told Reuters that the country is optimistic about prospects for a debt relief deal in June that will bolster its credibility as it returns to the bond markets post-bailout.

The official said: “We are weeks away from the completion of the bailout programme. There is no doubt that the programme will be completed successfully, that is, Greece will be able to regain sustainable and lasting market access beyond 2018 and 2019.”

The comments follow talks between Greece and its eurozone and IMF lenders today concerning a debt relief deal later this month.

The official added that there was a risk of contagion from volatility in the Italian bond market following the recent political turmoil in the country and was therefore counting on a three-pronged strategy of a cash buffer of around €20bn, post-bailout surveillance by the European Commission and debt relief to plot a credible return to markets.

In company news, FTSE 100 broadcaster BT Group (LON:BT.) announced that BT Sport has won the rights to broadcast a further 20 Premier League football matches for three years from the start of the 2019/20 season.

The firm said the additional games, added to the 32 Saturday matches which BT Sport won earlier this year, to give it a total of 52 games to broadcast.

In early afternoon trading, BT shares were down 0.83% at 203.4p.

12.00pm: FTSE 100 closes out shorter morning in the red as ex-dividends pile on the pressure

Despite a strong (and later) start, it didn’t take long for the FTSE 100 to drop back into the red this morning as a series of ex-dividend blue-chips suffered share price falls which tied a lead weight to the index’s feet.

The key culprit stocks were Vodafone (LON:VOD), Sainsbury’s (LON:SBRY), and Evraz (LON:EVR), who fell 3.5% to 189.7p, 2.9% to 303.9p, and 0.8% to 518.8p respectively as lunchtime approached.

Connor Campbell, financial analyst at Spreadex, said: “There is something magnetic about the 7700 mark for the FTSE at the moment. Since the end of May the index has been unable to escape its clutches, repeatedly returning to that price without, admittedly, ever drifting that far beneath it. That was the case on Thursday, a 0.2% dip dragging it back to that support level.”

In company news, utilities were in the spotlight after SSE PLC (LON:SSE) and Thames Water struck deals with regulators following investigations into poor practice.

SSE has agreed to pay £1mln to Ofgem’s consumer redress fund after providing some pre-payment meter (PPM) customers with inaccurate and misleading information in annual statements.

Meanwhile, in another regulatory ruling, Thames Water - which is owned by Kemble Water Holdings, a consortium of institutional investors - has today agreed to pay £65mln back to customers as part of a package of payments and penalties worth £120mln.

SSE shares were up 0.3% at 1,351.5p in late-morning trading.

11.15am: UK equity fund outflows since Brexit reach nearly £8bn

UK stock market funds have seen outflows since the 2016 Brexit vote reach almost £8bn as investors instead ploughed their funds in global, US, and emerging market equities in April.

Laura Suter, personal finance analyst at AJ Bell, commented: “Since Brexit £7.9bn has poured out of UK stock market funds, with £1.8bn of that coming from UK Equity Income funds, and £5.8bn from UK All Companies funds. Investors tentatively moved back into the UK Equity Income sector in April, but UK stock market funds overall still saw outflows of £142m in the period.

She added: “However, investors are getting more bullish and returned to equity markets in force, committing £1.6bn during the period. Fears of escalating trade wars, ongoing tensions with North Korea and rising interest rates have not deterred investors from the US, or global markets, which together saw more than £1bn of the equity inflows. Since April last year, more than £7.8bn has moved into Strategic Bond funds, with March being the first for outflows since the Brexit vote.”

In other Brexit news, senior members of the UK government are meeting today to agree a “backstop” plan for the Irish border when Britain leaves the EU next year, following reports that the Brexit secretary, David Davis, is opposed to the current strategy.

Pro-Brexit campaigners say the plan is another step by the prime minister to maintain the closest possible ties to the EU, undermining a clean break with the bloc.

10.30am: UK house prices pick up more than expected in May

The UK housing market increased more than expected in May, according to data from Halifax, although the general outlook for the market remained subdued.

House prices rose 1.5% in May, up from a 3.1% decline in April and higher than a rise of 1% predicted by a poll of economists by Reuters.

Year-on-year, prices were 1.9% higher in the three months to May, although despite the positive news, Halifax managing director Russell Galley said the changes “reflect a relatively subdued UK housing market”.

In other news, the Bank of England’s insurance regulator said that insurers will face being tested to see how they could cope with the potential fallout from climate change on its balance sheet.

David Rule said the BoE was conducting "stock-take" meetings with around 10 insurers on their responses to climate change and planned to issue a policy statement later this year.

9.50am: Ex-dividend blue-chips push down FTSE 100

Despite springing into action after a delayed open, the FTSE 100 quickly dropped back into the red as several ex-dividend blue chips dropped, pulling the index down with them.

The key culprits were mobile network Vodafone Group PLC (LON:VOD), which shrank 3.7% to 189.2p in early trading, followed by supermarket giant Sainsbury (J) PLC (LON:SBRY) whose shares dropped 2.7% to 304.6p.

FTSE 100 miner Evraz PLC (LON:EVR) was also weighing on the index, with its shares falling 1.6% to 514.6p.

9.05am: Footsie finally finds gains

The FTSE 100 index has finally opened higher after initial trading was delayed by an hour following a technical glitch at the London Stock Exchange.

In early deals, the UK blue chip index was up 31 points at 7,743 adding to Wednesday's 25 points advance following strong overnight gains on Wall Street and in Asia.

Connor Campbell, financial analyst at Spreadex commented: “With a banking sector rally sending the Dow Jones to levels not seen in nearly 3 months, the European indices found another reason to extend a rally that at multiple points this week has looked like petering out.

“Both the FTSE and the pound ignored the brewing, Brexit-based political instability facing Theresa May on Thursday to post some half-decent growth.”

He added: "Sterling, meanwhile, pushed 0.4% higher against the dollar to cross $1.345 and hit a 2 and a half week peak. But it had less luck against the euro, slipping 0.1% as both currencies continue to struggle to assert dominance over the other, a trend that has been in place since late May.”

8.15am: Technical glitch delays trading

So, let's all go home; or at least go down the caff for a cuppa.

That at least must have been the chatter in London's dealing room after a data failure meant the FTSE 100 was stuck 7,712.37 and the techies at the London Stock Exchange were panicked into getting the feed up and running.

The momentum as we move through the trading day looks likely to be positive, according to Lee Wild, head of equity strategy at Interactive Investor, though President Donald Trump's stance on trade remains a sticking point.

There’s no loss of appetite for risk assets right now as financial markets work through their issues," he said.  

"There’s at least a temporary fix for the ‘Italian problem’, the North Korea summit could end nuclear fears on the peninsula and there’s growing optimism that China will do enough to put its spat with the US to bed. 

"Trump isn’t about to go soft on trade, so Chinese overtures aimed at agreeing some kind of resolution with the US are what we want to hear."

Proactive news headlines:

Sound Energy PLC (LON:SOU)  has taken a material step towards production from the Tendrara project, with the award of a front end engineering design contract. A consortium – comprising Enagas, Elecnor and Fomento – has signed heads of terms for the design, conditional construction and financing for the infrastructure that will be needed (including pipelines) for the commercialisation of Sound’s gas discoveries in Eastern Morocco.

Specialty group Alliance Pharma PLC (LON:APH) has received a boost with the news that an important drug in its portfolio has received UK regulatory sign-off. The Medicines and Healthcare products Regulatory Agency (MHRA) and the Commission on Human Medicines (CHM) have given market authorisation to Diclectin, for women suffering nausea and vomiting during pregnancy.

The new boss of Feedback PLC (LON:FDBK) has outlined his plans for the medical imaging technology group after completing a strategic review.

VR Education PLC (LON:VRE) is to launch an upgraded version of its Titanic experience in August, slightly later than it originally scheduled. Dave Whelan, chief executive, said the additional time would allow it to finesse some of the final details to turn Titanic VR from “a great experience to an exceptional one."

The proposed acquisition of Newridge Corporation by European Wealth Group PLC (LON:EWG) has been called off by mutual consent.

G3 Exploration Ltd (LON:G3E) chairman Randeep Grewal told investors that the company is now working closely with partners to rapidly advance producing wells, focusing on monetising natural gas sales. The company, which has gone through significant change, today reports financial results for the 12-months ended December 31.

From a standing start, appScatter Group PLC (LON:APPS) rustled up revenue of £1.9mln in 2017 after its app distribution platform went live in November.

Live Company Group PLC (LON:LVCG) has launched its BRICKLIVE ASEAN tour in the city of Jakarta, Indonesia, which will run across ten days from 7 June.

A dietary supplement containing OptiBiotix Health PLC’s (LON:OPTI) cholesterol and blood pressure-reducing LPLDL strain has launched in the US.

W Resources PLC (LON:WRES) has reported that its advanced exploration in Portugal is progressing well, with high-grade tungsten zones identified at Tarouca.

i3 Energy PLC (LON:I3E) has announced that on 5 June 2018, in relation to the Loan Note Agreement as announced on 6 February 2018, it received notice of exercise from James Caird Asset Management (JCAM) to convert part of the loan with an aggregate par value of US$1mln into shares. Following this conversion, the value outstanding on the loan will be zero and the firm has today allotted 1,851,852 ordinary shares to JCAM.

6.45am: Higher start predicted

The FTSE 100 is expected to start Thursday higher following on from a broadly positive previous day for equities.

Having ended Wednesday up 25 points at 7,712, helped by commodity related stocks, retail trading houses see the London benchmark again on the front.

CFD and spreadbetting firm IG Markets is calling the FTSE 100 up 26 points with over an hour to go before the start of trading, calling the index at 7,729 to 7,733.

Analysts highlight that investors are buoyed as they look forward somewhat bullishly to upcoming interest rate meetings.

“Comments from ECB Chief economist Peter Praet, about the inflation outlook, as well as Bundesbank chief Jens Weidmann expressing optimism that the ECB would be able to end its bond buying program this year, helped push the euro higher along with bond yields across the region,” said Michael Hewson, analyst at CMC Markets.

“The comments followed on from speculation that the timing of such a decision on asset purchases would be up for discussion next week, despite some concerns that the recent slowdown in data might give policymakers cause for pause.”

In New York, Wall Street ended Wednesday strongly, with the Dow Jones marking a 346 point or 1.4% advance to 25,146.

The S&P 500 climbed 23 points to finish the session 0.86% higher at 2,772, and, the Nasdaq achieved another new high as it moved up 0.67% to 7,689 at the end of the day.

In Asia, Japan’s Nikkei added 190 points or 0.84% to trade at 22,815, while Hong Kong’s Hang Seng picked up 134 points or 0.43% to 31,392. The Shanghai Composite, meanwhile, was down 0.13% at 3,106.

Around the markets

  • Sterling: US$1.3434, up 0.16%
  • Gold: US$1,297 an ounce, up 0.05%
  • Brent crude: US$75.81 per barrel, up 0.56%
  • Bitcoin: US$7,707, up 0.68%

Thursday’s significant events

Finals: CMC Markets PLC (LON:CMC), MITIE Group PLC (LON:MTO), Auto Trader Group PLC (LON:AUTO), G3 Exploration Limited (LON:G3E), Ramsdens Holdings PLC (LON:RFX)

Interims: Impax Asset Management Group PLC (LON:IPX), RWS Holdings PLC (LON:RWS)

Ex-dividends: To knock 10.6 points off FTSE 100 index - Associated British Foods PLC (LON:ABF), Evraz PLC (LON:EVR), J Sainsbury PLC (LON:SBRY), Johnson Matthey PLC (LON:JMAT), Scottish Mortgage Investment Trust PLC (LON:SMT), Vodafone Group PLC (LON:VOD)

Economic data: US weekly jobless claims; US consumer credit

City Headlines

  • 2,500 TSB customers leave after IT meltdown – Sky News
  • Carillion collapse to cost taxpayers £148m – BBC News
  • Poundworld in race to avoid collapse as it struggles to secure buyer – AOL.co.uk
  • Microsoft sinks eco-friendly data centre off Scottish coast – The Times
  • Amazon committed to post-Brexit Britain and plans 2,500 new jobs – The Guardian
  • Google braced for Brussels penalty over abuse of market dominance – Financial Times
  • Giant rubbish-fuelled power plant in London snapped up for £1.5bn – The Telegraph
  • Uber launches electric bike-sharing service in Germany – The Guardian
  • Rising exports push U.S. trade deficit to seven-month low - Reuters

Oriole Resources outlines 2023 achievements and future exploration plans

Oriole Resources PLC (AIM:ORR) CEO Tim Livesey and chief financial officer Bob Smeeton join Proactive's Stephen Gunnion with details of the company's 2023 financial and operational performance. Livesey highlighted successful exploration programs in Cameroon, at the Bibemi and Mbe projects,...

2 hours, 5 minutes ago