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FTSE 100 closes flat at 7,703 as attention turns to Fed's interest rate decision

It is the second time Trump has mentioned the issue of high oil prices, having previously mentioned it in April
Oil prices
FTSE 100 closed flat on Wednesday
  • FTSE 100 flat at 7,703

  • Trump blames OPEC for high oil prices

  • Just Eat top Footsie loser; Glencore rises

  • US rate rise decision due this evening

 

FTSE 100 closed flat at 7,703 with take-away app Just Eat (LON:JE.) the biggest loser, down 4.71% to 810p.

Top riser was commodities giant Glencore plc (LON:GLEN), which added 3.75% to 398P.

FTSE 250 also closed lower, down 8.77 at 21,232, as markets get nervous ahead of the US Fed's announcement on interest rates later today.

The general consensus is that the US central bank will put up rates as the economy strengthens.

On Wall Street, the Dow Jones Industrial Average is down 6.82 at 25,313 at the time of writing.

Glencore shares surged after it unveiled a restructuring plan at one of its subsidiaries operating in the Democratic Republic of Congo, which will protect the operation, which has the potential to be the biggest cobalt mine in the world.

Meanwhile, traders lost their appetite for Just Eat, which shed 4.71% to 810p after Deliveroo confirmed ambitious expansion plans yesterday, which investors  feel will dent profits.

3.30pm: Trump says oil prices are too high

US president Donald Trump has said oil prices are too high and has laid the blame at the feet of OPEC ahead of its meeting later this month.

In a Twitter post, Trump said: “Oil prices are too high, OPEC is at it again. Not good!” as he revisited the issue after raising it in April.

Oil prices have risen by around 60% over the last year after the Organisation of the Petroleum Exporting Countries and some non-OPEC producers, including Russia, started withholding output in 2017 to reduce excess supply.

Despite Trump’s accusations, some countries have already started to increase production and there is an expectation that the group may relax its output cuts by the end of the month.

In late-afternoon trading, Brent crude was up 0.58% at US$76.32 a barrel.

2.55pm: US stocks open slightly higher

As expected, US markets have opened slightly higher over in New York, as investors and traders look instead to the Fed’s interest rate decision this evening.

With a 96% probability of a hike happening, it would appear to be almost a foregone conclusion.

The Dow Jones Industrial Average opened 18.2 points higher at 25,338.9, while the tech-heavy Nasdaq rose 16.6 points, or 0.2%, to 7,718.8.

The broader S&P 500 kicked off 1.2 points higher at 2,788.0, with telecoms giant AT&T weighing after regulators approved its takeover of Time Warner.

2.30pm: Australia now the world's leading llithium supplier

2.05pm: WPP shareholders revolt

WPP PLC (LON:WPP) shareholders have challenged the ad giant’s board of director amid anger over the way it handled the departure of its former chief executive and founder, Sir Martin Sorrell.

Nearly one-third of shareholders at the annual general meeting did not back the firm’s executive pay and bonus scheme, while 17% voted against the re-election of chairman Roberto Quarta.

Shareholders also demanded more clarity from the FTSE 100 group over the departure of Sorrell, but as we reported earlier, chairman Quarta said he was unable to comment further.

WPP shares are marginally down at £12.44.

1.30pm: IAG leads FTSE 100 higher

The weaker pound is still propping up the FTSE 100, having taken a hit following this morning’s inflation data.

The reading showed inflation remained at 2.4% in April. That was in line with some forecasts, while other economists had expected a slight rise due to higher petrol prices.

Regardless, it confirmed the downward trend of inflation since it peaked at the end of 2017 and analysts reckon it all but rules out a further rate hike this year.

Sterling is currently down 0.4% against the euro to €1.339, while it is off 0.3% versus the dollar to US$1.331.

A weaker pound helps the blue-chips on the Footsie as it makes their overseas earnings worth more when translated back into pounds.

That's help the FTSE 100 to more than claw back its earlier losses. The index is currently up 33.4 points to 7,737.1.

British Airways owner International Consolidated Airlines Group PLC (LON:IAG) is flying high at the top of the leader board, climbing 3% to 720.6p.

That’s ahead of its annual general meeting tomorrow, where the airline group could come under fire for its executive pay structure.

Swiss mining giant Glencore PLC (LON:GLEN) isn’t too far behind, up 2.9% to 394.9p as its Katanga Mining subsidiary reached a settlement with Congo’s state-run mining company, Gecamines.

IAG’s peer easyJet PLC (LON:EZJ) is also lifting off – up 2.5% to £17.96.

Among the fallers, Just Eat PLC (LON:JE.) is by far the worst hit on reports that Deliveroo – which it has so far kept at arms’ length – is set to ramp up its expansion and go toe-to-toe with the FTSE 100 online takeaway marketplace.

Sky PLC (LON:SKY) has dipped 1.5% to £13.37 as the takeover merry-go-round involving 21st Century Fox, Disney and Comcast continues.

1.10pm: No more news on Sorrell’s departure

Investors hoping to hear more about why Martin Sorrell departed ad giant WPP PLC (LON:WPP) earlier this year will be disappointed by news coming out of the FTSE 100 group’s AGM.

Chairman Roberto Quarta has reportedly repeated his prior statements that there is nothing further that the firm can “legally disclose”.

The reasons for Sorrell’s exit back in April have come under scrutiny over the past few days, with reports suggesting WPP was allegedly investigating him for using the company’s money to pay for prostitutes, something he has always denied.

1pm: Quiet start in US ahead of rate decision

The US markets are seen modestly higher when trading kicks off in New York later this afternoon.

Rather than the equity markets, traders’ focus will be on the Federal Open Market Committee’s press conference later on, during which it is widely expected to hike interest rates once again.

The Dow Jones Industrial Average is set to rise 19 points at the bell to 25,338.1; the tech-heavy Nasdaq is called 9.3 points higher at 7,217.3; while the broader S&P 500 is seen 2.8 points ahead at 2,789.0.

“The Dow Jones is set to continue to lurk around 25300, with the futures pointing to a meagre 0.1% increase after the bell,” said Spreadex analyst Connor Campbell.

“The Dow’s reticence is likely linked to Wednesday’s Fed meeting, one that has a 96.3% chance of Jerome Powell raising interest rates according to the CME Group.”

“Given how heavily signalled the hike has been it shouldn’t cause too many problems for the Dow; instead it may just act as a momentum capper, preventing the index from building beyond its current three-month highs.”

12.45pm: Ryanair top open new base at Stobart’s Southend airport

Stobart Group PLC (LON:STOB) shares took flight on Wednesday following news of a new partnership deal with Ryanair Holdings PLC (LON:RYA) which will see the Irish low-cost airline open a new base at London Southend Airport.

The FTSE 250-listed firm said the five-year agreement, extendable to ten years, was agreed on its standard commercial terms, and will see Ryanair make a US$300mln investment in the airport.

As a result, the group added, Ryanair will operate three planes out of London Southend Airport from Summer 2019, providing 13 routes to eight European countries, including six new destinations.

Shares in Stobart – which invests in, owns and operates infrastructure assets – are up 7.1% to 253.4p in early afternoon trading.

12.25pm: Connect Group CEO to leave after "extremely disappointing" H2 

Connect Group PLC (LON:CNCT) shares almost halved after the distribution group issued what we’re fairly sure is this year’s first World Cup-related profit warning.

The company “materially reduced” its full-year profit forecasts due to disappointing sales of World Cup-related products in its Smith News division, as well as a “material fall” in volumes and higher costs in its Tuffnells business.

Connect added that as a result of the “extremely disappointing” second half performance so far, the full-year dividend will “at a minimum be substantially reduced”.

On the back of that horror show, chief executive Mark Cashmore and chief financial officer David Bauernfeind are both stepping down. Shares are down 45% to 28.6p.

12pm: Bank of America dials in  on Talktalk

Talktalk Telecom Group PLC (LON:TALK) is one of the top risers on the FTSE 250 today after Bank of America Merrill Lynch double upgraded it to ‘buy’ from ‘underperform’ and increased the price target to 190p from 140p.

Analysts at heavyweight US investment bank said although TalkTalk has historically overpromised and under-delivered, they believe new management and their credible simplification strategy can reverse that cycle.

“For the first time in four years, we see guidance and consensus as achievable, ending the cycle of earnings downgrades,” read a note to clients. Talktalk shares are up 7.7% to 126.7p.

11.35am: Pimlico plumber was a worker

A plumber employed by Pimlico Plumbers should have been treated as a worker with employment rights rather than self-employed, the Supreme Court has ruled.

Gary Smith claimed unfair dismissal after a heart attack but Pimlico argued he couldn’t be unfairly dismissed as he didn’t work for the company.

The Supreme Court ruled in favour of Smith though, saying he was indeed a worker with employment rights such as holiday and sick pay.

The unanimous decision by the UK’s highest court will set a clear precedent for other companies involved in gig economy disputes such as Uber and Deliveroo.

11.10am: House price growth slows

Average house prices in the UK increased by 3.9% in the year to April, down from 4.2% in March.

London was again the worst performing region with prices climbing 1%, while the south-west saw the highest growth with prices rising 6.1%. The average property price was £226,906 in April.

10.55am: ‘Spoons to stop serving champagne

JD Wetherspoon PLC (LON:JDW) is to shun French champagne and German beer and will sell more British and non-European drinks in another example of its chairman’s Brexit fervour

In a statement on the pub operator’s website, Wetherspoon’s chairman Tim Martin, who campaigned in favour of Britain's exit from the European Union, said the move was part of a push to make the group more competitive ahead of the country's planned departure from the EU's customs union.

‘Spoons will replace champagne with sparkling wines from the UK and others from Australia, and will serve wheat beers from Britain and the United States rather than Germany.

The FTSE 250-pub chain will continue to serve Kopparberg cider after the Swedish firm confirmed it will be producing its drinks in the UK post-Brexit.

10.40am: Boohoo shares slide on Barclays downgrade

Following yesterday’s full-year results, Boohoo.com PLC’s (LON:BOO) shares are down again after Barclays downgraded the online fashion retailer to ‘equal weight’ from ‘overweight’.

In old money, that’s to ‘hold’ from ‘buy’.

In a note to clients, analysts at Barclays’ highly-regarded London branch said the brand is noticeably slowing, although they did nudge their price target up to 240p from 225p.

Although PrettyLittleThing is “on fire”, the number crunchers reckon risks are growing while growth is getting harder to come by for the company, which is one of only a handful of billion-pound AIM firms.

“With less confidence on near term upgrades to new higher forecasts, we downgrade to equal weight,” the analysts said. Boohoo.com shares are down 1.7% to 214.3p.

10.20am: Weak pound boosts FTSE 100

The FTSE 100 dropped almost 25 points shortly after the bell, but a weakening pound has helped to push it back above yesterday’s closing price.

At just after 10am, the index of blue-chip shares is up 15.4 points to 7,719.2.

Swiss mining giant Glencore PLC (LON:GLEN) has risen 2.4% so far this morning to 392.8p after its Katanga Mining subsidiary reached a settlement with Congo’s state-run mining company, Gecamines.

Russian miner Evraz PLC (LON:EVR) also continued its recent good run, climbing another 2.4% to 564.8p.

The morning’s biggest faller is Just Eat PLC (LON:JE.), down 8.1% to 781.2p, after reports emerged that its major UK rival, Deliveroo, plans to bring 5,000 new restaurants onto its platform by the end of the year.

Among the other fallers, the world’s biggest silver miner Fresnillo PLC (LON:FRES) dropped 1.7%, while telecoms giant BT Group PLC (LON:BT.A) gave up some of its recent gains, falling 1.4% to 205.5p.

Down on the second tier, FTSE 250-listed Dixons Carphone PLC (LON:DC.) fell 3.5% to 190.8p as it revealed millions of customers’ card details and personal records had been hacked.

TalkTalk was the top FTSE 250 riser, rising 6.4% to 125.1p on the back of a bullish ‘buy’ note from analysts at ‘bulge bracket’ investment bank, Bank of America Merrill Lynch.

10am: Video games offset higher petrol prices

9.50am: Pound down

The pound is down against most of the major currencies after the latest inflation reading confirmed the cost of living held steady at 2.4% in May.

“If real wage growth continues to stutter, inflation falls back from here, and economic activity remains subdued then we could see the Bank of England put off its decision to raise interest rates to next year,” said Fidelity investment director Tom Stevenson.

That isn’t good news for the pound, and sterling is off 0.4% against the dollar to US$1.332 and by a similar percentage versus the euro to €1.134.

9.35am: Inflation holds steady

UK inflation held steady at 2.4% in May, unchanged from the previous month. Core inflation – excluding food and energy – was up 2.1%. Both readings were in-line with what economists had expected.

It marks a steady climbdown for UK inflation since it peaked at 3.1% towards the end of last year, when traders were betting on at least one more rate hike in 2018.

“But since then the pull-back in inflationary pressures together with a steady stream of weakening economic data and the government’s incoherent approach to Brexit negotiations have effectively ended speculation of a rate hike this year,” said GKFX senior market strategist David Morrison.

“This is contributing to cable’s weakness and its inability to recover ground lost since mid-April.”

9.10am: Tesla to cut 9% of workforce in search of profitability

Electric car giant Tesla Inc (NASDAQ:TSLA) is slashing roughly 9% of its workforce as part of what its CEO Elon Musk is calling a “difficult, but necessary” reorganisation.

Musk said the cuts affect mostly salaried workers at Tesla, which employs roughly 40,000 people, and were necessary to put the firm on the road to profitability after almost 15 years of not delivering an annual profit.

The sackings will not hit the car maker’s production workers, a critical part of the business as Tesla looks to ramp-up production of its Model 3 over the summer months.

8.40am: Slow start for blue-chips

It was a lacklustre start for the FTSE 100, which fell 17 points to 7,687.04 ahead of the Fed decision on interest US rates - with a quarter point rise seemingly nailed on - and the latest UK inflation numbers.

The lacklustre start for the blue-chip index masked some rather lively individual stock movements with Just East (LON:JE.) the market's big casualty.

Shares in the home delivery giant fell 6.6%, wiping around £350mln from its market value, with rival Deliveroo planning to eat Just Eat's lunch (and dinner). The latter is looking to sign up 5,000 new eateries.

On the bounce back and up 2.2% was miner Glencore (LON:GLEN) after the recent sell-off precipitated by a massive write-off of the value of one of its mines.

WPP (LON:WPP) was firmer ahead of the company's annual meeting at which the major talking point is likely to be the departure of founder Sir Martin Sorrell amid allegations he used company money to engage prostitutes.

Dropping down to the FTSE 250, TalkTalk (LON:TALK) was dialling off the hook with a 6.5% rise following an upgrade by Bank of America Merrill Lynch, which went to a 'buy' recommendation straight from 'underperform'.

On the downside, Dixons Carphone (LON:DCappeared to get off lightly following a big data breach as its shares fell just 3.5% early on.

Proactive news headlines:

Eurasia Mining PLC (LON:EUA) shares jumped on Wednesday as it announced approval of the Monchetundra mine permit application by two key federal agencies: the Federal Securities Board (FSB) and Ministry of Defence (MOD).

Active Energy Group PLC (LON:AEG) shares jumped in early trading Wednesday as its joint venture (JV) company, AEG CEE Sp. z O.O., received market certification and environmental clearance by the Polish government for its ‘SuperFuel’ product.

88 Energy Ltd (LON:88E, ASX:88E) confirmed that the Icewine-2 well testing programme resumed as scheduled on June 11, at 22:30, and the well is now continuing to flow back fluids. The well is flowing back fracking fluid that was previously injected into the well to stimulate the HRZ shale formation.

Advanced materials group Haydale Graphene Industries PLC (LON:HAYD) expects to generate revenues of between £3.45mln and £3.60mln for its current financial year. That is below what Haydale had been guiding for, though, and means the loss before tax for the 12 months ended June 30 2018 will be wider than expected and broadly in line with last year’s loss of £5.64mln.

Good momentum at its US call centre business sent profits bounding ahead last year at Eckoh PLC (LON:ECK).  US sales jumped by 32% in dollar terms though the recent recovery by the pound cut this to 16%.

Flying Brands PLC (LON:FBDU) subsidiary, Imaging Biometrics (IB), said it has agreed a partnership which it reckons will "accelerate neuroscience research and increase accuracy in diagnostics support".  It hopes to do this by loading its software to a cloud-based platform called QMENTA, which provides data analysis and management for neuro experts.

Bango PLC (LON:BGO) has announced that millions of Entel subscribers in Chile are now able to pay using their phone bill for the ‘massive array of content and services’ sold in Google Play, including Minecraft, Tinder and Google Play Music.

Tharisa PLC (LON:THS) has acquired a stake in Karo Mining Holdings Limited, a company with interests in both platinum and coal mining in Zimbabwe. The miner said it had acquired a 26.8% stake in Karo for a total cash consideration of US$4.5mln.

The Phase III clinical trial of Futura Medical PLC's (LON:FUM) fast-onset gel for erectile dysfunction is on track for first patient dosing in September, chairman John Clarke confirmed ahead of the company's annual meeting later. He added that the completion of a significant out-licensing agreement for MED2002 "remains a top priority" as investors were told: "Whilst negotiations proceed, we will continue to maintain the momentum in the product's development."

Ariana Resources PLC (LON:AAU) has provided investors with an update from its wholly-owned Kizilcukur project, in Turkey. It revealed that metallurgical test of previously gathered bulk sampling material has demonstrated high gold recoveries – a 7.4 tonne sample yielded recovery rates between 83% and 92%, Ariana said.

Strategic Minerals PLC (LON:SML) (USOTC:SMCDY)  has commenced the technical assessment of the Leigh Creek Copper Mine (LCCM) with the formation of a highly experienced study team. The AIM-listed producing mineral company said the proposed work programme is expected to lead to the commencement of copper production around mid-2019.

Berkeley Energia Ltd (LON:BKY), in a stock market statement, told investors Global X, now formerly a major shareholder, had ‘completed the rebalancing’ of its stake in the company. Berkeley confirmed that a ‘ceasing to be a substantial shareholder notice’ had been filed with the Australian Securities Exchange.

Amur Minerals Corporation (LON:AMC) has completed around 25% of its planned drilling for 2018 at its Kun-Manie nickel-copper sulphide project in Russia.

Avation PLC (LON:AVAP) is to lease out two new Bombardier CS300 planes to Latvian airline airBaltic. The leases are both for 12 years and will be delivered to the airline straight from the factory.

Oil rig owner ADES International Holding PLC (LON:ADES) expects the recent uptick in oil prices will lead to higher tendering activity and hire rates. The Dubai-based group has just completed the acquisition of three jack-up rigs from Nabors.

APQ Global Limited (LON:APQ), the emerging markets income company, has further expanded its International Advisory Council with the appointment of John Toshack, an independent consultant specialising in cryptocurrency and blockchain, who will focus on opportunities for investing in Digital Assets and Distributed Ledger Technology.

Arc Minerals Limited (LON:ARCM) announces that Don Bailey, a non-executive director of the company responsible for a number of projects at the Zamsort copper cobalt project has requested that he be remunerated in shares in lieu of cash remuneration. The group said Bailey has been issued options over a total of 2.5mln new ordinary shares which have an exercise price of 7.0p each , representing an approximate 60% premium over Tuesday’s closing mid-market price, and are exercisable from 12 June 2018 and expire on 12 June 2023. Separately, the company also said it is considering setting up a Long-Term Share Incentive Programme.

Stratex International PLC (LON:STI), the AIM-quoted gold-focused exploration and development company in Turkey and Africa said that, further to Tuesday’s placing announcement, it has successfully raised £1.15mln before expenses. The company also said it has appointed Turner Pope as its joint broker with immediate effect.

The Marketing Group PLC (NASDAQ:TMG) today announced a corporate rebranding and name change to RYVL, as it aims “to disrupt the legacy ad network model with an agile, technology-centric approach.”

6.30am: Quiet start predicted

The FTSE 100 looks set to make a quiet start to proceedings ahead of the US Federal Reserve decision on interest rates with a quarter point rise baked into the market's current thinking.

The index of blue-chip shares looks set to nudge six points lower at the open to 7,707.81, according to the spread betting companies.

With the hike to borrowing costs touted as a racing certainty, the Fed's quarterly economic projections will be the talking point along with chair Jerome Powell's press conference.

"Traders will be looking closely for clues as to whether the Fed intends to hike once of twice more across the year," said Jasper Lawler, analyst at London Capital Group.

"At the last meeting in March the Fed continued with the message of three hikes across the year. However, US economic data has picked up considerably since then, with inflation now at a six-year high."

Back here in the UK we have UK inflation data, which could help mould the thinking of rate setters on this side of the pond.

Also of interest will be the WPP (LON:WPP) annual meeting and the blowback from the departure of the marketing and advertising giant's founder Sir Martin Sorrell amid prostitution allegations.

Around the markets:

  • Pound worth US$1.3367
  • Gold US$1,298.70, down 70 cents an ounce 
  • Brent crude US$76.62, down 26 cents a barrel 

City Headlines: 

Financial Times

  • Judge clears way for U$80bn AT&T bid for Time Warner: Court sides with two corporate giants in landmark antitrust litigation
  • WPP reviews codes of conduct after Sorrell probe: On eve of annual meeting executives vow to study ‘how we can make improvements’
  • Celgene admits ‘self-inflicted’ error over MS drug: Failure to integrate an acquisition lay behind regulatory knock-back, says executive
  • Tesla to cut 9% of jobs in major restructuring: Electric carmaker insists Model 3 production will not be affected

Times 

  • Record fine for auditor PWC for failings over BHS: £10m penalty as partner is given 15-year ban
  • It’s strike three at Domino’s as another finance chief walks out 

Telegraph 

  • Deliveroo squares up to Just Eat with dramatic UK expansion plans
  • Petropavlovsk boss Pavel Maslovskiy quits after board minutes were changed

 


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