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FTSE 100 closes higher as European Central Bank message cheers markets

The FTSE 100 has clawed back all of this morning's losses and some, while the ECB has unveiled plans to end its quantitative easing programme in December
ftse 100
The footsie surged in the afternoon session to reverse earlier losses
  • FTSE 100 closes firmly higher

  • Rolls Royce races ahead

  • Pound flat vs dollar, up on euro

  • ECB keeps rates on hold

FTSE 100 was a different animal by the end of the day, reversing losses, to close over 62 points higher, or 0.81%, at 7,765.

It came amid a general rise in Eurozone indices as the ECB was more dovish than many had thought it would be on interest rates, which it suggested wont be changed until at least the end of 2019.

ECB chief Mario Draghi confirmed a tapering of the central bank's bond buying scheme in the final quarter of this year.

Top riser on Footsie was British engineering stalwart Rolls Royce plc (LON:RR.), which raced up 6.54%  to 882.8p as it unveiled a big restructuring plan, to include cutting 4,600 jobs in a bid to save £400mln per year by the end of 2020.

Top loser was housebuilder Persimmon plc (LON:PSN), which shed 2.82% to 2,727p. It came as new report showed house prices continued to fall last month in the capital.

3.45pm: Barnstorming afternoon for the blue-chips

The FTSE 100 has enjoyed a barnstorming session this afternoon. Having been down 50 points earlier this morning, it is now trading 68.4 points, or 0.9%, higher at 7,772.1.

Some of that is down to the pound, which has given up its earlier gains against the dollar, helping out Britain’s blue-chip exporters in the process.

Rolls-Royce Holding PLC (LON:RR.) has been at the forefront of the charge, up 5.7% to 875.4p, as investors gave their thumbs-up to the engine maker’s decision to cut 4,600 jobs as part of plans to simplify the business and save it £400mln a year.

British Gas owner Centrica PLC (LON:CNA) is next up, rising 3.4% to 153.8p.

Th ex-divs are still among the index’s biggest fallers. Housebuilder Persimmon PLC (LON:PSN) is down 3.3% to 2,714p, water company Severn Trent PLC (LON:SVT) has shed 2.3% to 1,887p, while ad giant WPP PLC (LON:WPP) has dropped just under 1% to 1,228p.

3.20pm: What's going on with Fox, Disney, Sky and Comcast?

It's a valid question that we've tried to answer for you here.

3pm: Tech entrepreneurs flashing their cash

The Evening Standard’s city editor, Jim Armitage, is at the Founders Forum in London this afternoon…

2.45pm: Strong start in US as retail sales climb

US stocks jumped at the opening bell in New York, largely thanks to solid retail sales which posted their biggest gain in six months.

The Dow Jones Industrial Average is up 65.2 points or 0.3%, to 25,266.4 in early trading on Wall Street; the broader S&P 500 is up 9.8 points, or 0.4%, to 2,785.3; while the tech-heavy Nasdaq has jumped 36.7 points, or 0.5%, to 7,732.7.

2.15pm: Gatwick Gusher news

UK Oil & Gas Investments PLC (LON:UKOG) has moved highier this afternoon after plans to test the Horse Hill discovery received approval from the UK authorities.

The UK Oil and Gas Authority has greenlighted a proposed 150-day extended production well test at Horse Hill, AKA the Gatwick Gusher, where both the conventional Portland and unconventional Kimmeridge zones will be flowed.

“UKOG remains confident that the comprehensive long-term flow testing campaign will provide the necessary data to fully assess Horse Hill's commerciality and, most importantly, help meet our corporate target of first stable oil production and significant positive cash flow in 2019."

Specifically, the programme is a follow up to the 2016 testing, which saw aggregate oil flows at a rate of 1,688 barrels per day over short periods (three 30-90 hour tests).

1.45pm: FTSE recovers early losses

The FTSE 100 has managed to recover all of its earlier losses, and is currently up 15.9 points to 7,719.6.

The index had been nursing a 50-point loss in the morning session, weighed down by a strong pound which makes the blue-chips’ exports more expensive to foreign buyers and makes their earnings worth less when translated back into sterling.

Sterling has since given up those gains against the dollar, although it is still up on the euro, which has been hit by the ECB’s decision to keep interest rates in the Eurozone on hold.

Rolls-Royce Holding PLC (LON:RR.) is leading the charge, up 3.7% to 859.2p, as investors gave their thumbs-up to the engine maker’s decision to cut 4,600 jobs as part of plans to simplify the business and save it £400mln a year.

Struggling telecoms giant BT Group plc (LON:BT.A), which announced its boss Gavin Patterson is to step down last week, is also making a rare appearance towards the top of the leader board, climbing almost 3% to 214.1p.

Companies going ex-dividend – which means investors buying shares today won’t be entitled to the latest dividend – are still among the index’s biggest fallers.

Housebuilder Persimmon PLC (LON:PSN) is down 43.7% to £27.04, water company Severn Trent PLC (LON:SVT) has shed 2.7% to £18.78, while investment firm 3i Group PLC (LON:III) has dropped 1.5% to 971p.

1.30pm: US markets set for positive start

US stocks are set to open in the black when trading kicks off in New York in an hour or so’s time.

The Dow Jones Industrial Average is called 47 points higher at 24,245; the tech-heavy Nasdaq is expected to open 19.5 points up at 7,222.1; while spreadbettors reckon the S&P 500 will open 6.0 points up at 2,780.8.

1.20pm: Pound gives up early gains

After a strong start to the day thanks to the better-than-expected retail sales data, the pound has pared its gains against the dollar.

Sterling is now back below US$1.34 and flat for the day at US$1.337.

It is faring better against the euro, which has suffered after Mario Draghi and his team suggested they would keep interest rates on hold until at least the middle of next year. £1 will currently get you €1.140.

1.10pm: Euro takes a tumble

1pm: ECB keeps interest rates at 0%, QE to end in December

The European Central Bank has pledged to keep interest rates unchanged at 0% until at least the middle of next year, while banks will continue to be charged a negative interest rate of -0.4% in an attempt to get them lending.

The ECB has also taken the significant step of ending its quantitative easing programme.

It is currently buying €30bn of bonds every month, but it will cut this to €15bn a month after September. Come December, it plans to stop buying new bonds altogether.

The euro has fallen slightly on the back of the news, likely because no action no action was take on interest rates.

12.30pm: Tesco in the spotlight on Friday

Equity traders will have all eyes on food retail giant Tesco PLC (LON:TSCO) tomorrow as it is set to deliver a trading update.

Investors will be focused on how its latest addition – wholesaler Booker – has settled in.

The UK’s largest supermarket group – soon to be second largest if the merger of J Sainsbury plc (LON:SBRY) and Asda goes ahead – completed the Booker acquisition in March and analysts are expecting it to boost Tesco’s top and bottom lines this year.

Focus will also undoubtedly be on sales in its core UK grocery business which generates the lion’s share of profits, with Deutsche Bank expecting 1.6% growth in like-for-like UK sales – a slight slowdown from the 2.3% achieved in the final quarter of last year.

Keep your eyes peeled too for any commentary on the recent decision to shut down the non-food Tesco Direct website.

12pm: Comcast preparing financing for Fox deal

Comcast Corporation (NASDAQ:CMCSA) has reportedly starting preparing the financing should its US$65bn bid for a large chunk of of 21st Century Fox’s (NASDAQ:FOX) assets go through.

The NBCUniversal owner swooped in with the formal offer on Wednesday, trumping The Walt Disney Company’s (NYSE:DIS) US$52.4bn all-stock deal.

If Comcast succeeds in outbidding Disney, it will gain control of Fox’s TV production and movie assets as well as its stakes in Sky PLC (LON:SKY).

11.30am: Musk snaps up US$25mln of Tesla shares

A day after sacking 9% of Tesla Inc’s (NASDAQ:TSLA) workforce, Elon Musk has bought US$25mln worth of the electric car maker’s shares.

Tesla’s shares are up almost 20% since the start of June, and Musk’s purchase is bound to irritate the short-sellers of Tesla’s stock who the billionaire has promised to “burn” in the past.

The steady rise in the unprofitable firm’s value means the shorts – who profit from falls in a stock’s price – are reportedly nursing losses in excess of US$2bn.

Last week, Musk said it was “quite likely” that Tesla will meet its challenge of manufacturing 5,000 Model 3 cars each week by the close of June.

11.10am: Naked Wines drives profits at Majestic

Majestic Wine PLC (LON:WINE) has swung to a profit in its full-year results but warned that a “challenging” UK retail market was likely to continue and possibly worsen through next year.

The AIM-listed wine seller reported a pre-tax profit of £8.3mln, up from a £1.5mln loss the year before, while revenues climbed to £476.1mln from £465.4mln previously.

The growth in profit was driven primarily by the company’s Naked Wines division, which saw its adjusted earnings before interest and tax (EBIT) rise 571.2% to £8.7mln while revenues jumped 11.3% to £156.1mln.

In its outlook, Majestic’s chairman Greg Hodder said the short-term UK market remained “tough”, however the company expected to achieve £500mln in sales by 2019 and to meet its expectations for the next financial year. Shares are up 1.8% to 458p.

10.50am: All work and no play for Putin at the World Cup...

10.35am: Rolls-Royce to cut 4,600 jobs

Rolls-Royce PLC (LON:RR.) shares rose this morning as the group confirmed plans to cut 4,600 jobs, predominantly in the UK, as part of a plan to simplify its business and save £400mln a year by the end of 2020.

The FTSE 100-listed engines maker said the job cuts and overhaul of its business would cost it £500mln and be spread across 2018, 2019 and 2020.

 “Following the announcement in January that we will simplify the group into three customer-focused business units, this proposed restructuring will create smaller and more cost effective corporate and support functions and reduce management layers and complexity, including within engineering.”

10.25am: Ex-divs dragging on FTSE 100

The strong pound is doing nothing for the blue-chip exporters this morning. Sterling has hit a one-week high on better-than-expected retail sales in May.

That has the double-whammy effect of making the blue-chips’ products cost more for foreign buyers and making the earnings worth less when translated back into pounds.

Perhaps unsurprisingly, the FTSE 100 is off 46.5 points at 7,657.2.

Companies going ex-dividend – which means investors buying shares today won’t be entitled to the latest dividend – were the heaviest weights on the index.

Water company Severn Trent PLC (LON:SVT) shed 4.5% to £18.48, housebuilder Persimmon PLC (LON:PSN) is down 4.1% to £26.91, while investment firm 3i Group PLC (LON:III) has dropped 2.6% to 960p.

On the flip side, investors gave the collective thumbs-up to Rolls-Royce Holding PLC’s (LON:RR.) decision to cut 4,600 jobs as part of plans to simplify the business and save it £400mln a year. The engine maker is the footsie’s top riser, up 2.5% to 849.6p.

Just Eat PLC (LON:JE.) has regained some of yesterday’s losses, climbing 1.2% to 819.8p. The online takeaway food marketplace was clattered yesterday on reports that Deliveroo is planning a massive expansion in the UK.

10.05am: Pound rises

The pound has strengthened against both the dollar and the euro this morning, leaving it at its highest levels for a week on the back of the strong retail sales data.

Sterling has risen 0.2% against the euro to €1.137 and 0.5% against the dollar to US$1.344.

9.55am: BoE unlikely to be moved by retail data

“Today’s release was the last of several major data points this week, and the overall feeling is one of steady if not spectacular improvement for the UK economy after a slow start to the year,” said XTB’s chief market analyst David Cheetham.

“There’s probably not been enough good news here to have a significant impact on the Bank of England’s thinking with regards to an August hike but, the pick-up in data, as well as positive developments as far as the government is concerned on Brexit this week, is pleasing nonetheless and has boosted sterling across the board.”     

9.35am: Comfortable beat for retail sales

UK retail sales rose 1.3% in May compared with April with growth across all main sectors, according to the Office for National Statistics. That was comfortably ahead of analysts’ forecasts of 0.5%.

Compared with a year earlier, sales volumes were up 3.9% – the biggest rise in more than a year.

April’s month-on-month figure was also revised upwards by the ONS to 1.8% from 1.6% previously.

8.45am: Fed weighs on FTSE

As expected the FTSE 100 fell sharply at the open, losing 49 points to 7,654.50, as London's traders readjusted their trading strategies to account for four hikes to US interest rates through 2018 rather than the anticipated three.

The Federal Reserve weighed with a quarter-point hike to borrowing costs, but followed it with the change in tack.

"This more hawkish sentiment is not enough in itself to derail global equity markets, but US policymakers are divided over how aggressive the Fed must be this rate tightening cycle," said Lee Wild, head of equity strategy at Interactive Investor.  

"As Fed chairman Jerome Powell acknowledges, the risk remains that officials overcook it and bring an end to the Trump trade once and for all

"Achieving the ‘not too fast, not too slow’ Goldilocks approach to monetary policy will be key to extending the equities bull run."

Back on this side of the Atlantic, it has been well-flagged recently that the European Central bank will hold a discussion on the future of its quantitative easing bond-buying programme after its planned expiry in September at this meeting.

That had raised the possibility that the ECB could make an announcement on Thursday as to whether or not to extend the programme or allow it to expire as planned.

In London, Rolls-Royce's (LON:RR.) restructuring news was greeted with a 3% rise in the share price. As expected it contained a swathe of job losses (4,600 in total).

On the debit side, all the major builders were on offer early on, with the City now fully adjusting for the more cautious rhetoric of Bellway (LON:BWY) and Crest Nicholson (LON:CRST) earlier this week.

Stepping down a division, full-year results from the software group AVEVA (LON:AVV) brought a cheer and prompted an 11% rise in the share price.

Among the tiddlers, ImmuPharma (LON:IMM) jumped 12% on the back of some encouraging pre-clinical data that suggests there may be alternate uses for its flagship drug, which is currently being developed to treat lupus.

Proactive news headlines:

ValiRx Plc (LON:VAL) is continuing “advanced conversations” with a number of possible partners as it looks to press ahead with the development of its VAL401 lung cancer candidate. Earlier this year, the AIM-quoted firm released the results from a phase II trial which confirmed that the drug had a “statistically significant” improvement in overall survival for patients with non-small cell lung cancer compared to those receiving no treatment.

Kazera Global PLC (LON:KZG) has confirmed that it has commissioned the MSA Group (MSA), a leading provider of exploration, mineral resources and reserve estimation, to carry out the targeted exploration programme.

Pre-clinical work by ImmuPharma PLC (LON:IMM) on P140, the peptide currently being developed as Lupuzor for the treatment of people with lupus, reveals it may have other potential indications.  The company's co-founder, Professor Sylviane Muller, and her team believe the drug could be deployed to treat an autoimmune disease called chronic inflammatory demyelinating polyneuropathy, or CIDP.

Eland Oil & Gas PLC (LON:ELA) told investors that it has successfully drilled and completed the Opuama-9 well, which is due to handed over to the field’s production team in the coming week. The Nigeria focussed oil company, in a statement, said a production tree is currently being installed to the well.

ITM Power plc (LON:ITM) saw strong growth in its orders and tender opportunity pipelines in the latest financial year. The AIM-listed hydrogen energy company said in a trading update that its overall deal pipeline stood at £39mln, an increase of around 42% since June 2017 after recognising £10.4mln as income in the period.

Faron Pharmaceuticals Ltd (LON:FARN) has made some important observations while assessing the data from its unsuccessful phase III trial of Traumakine for acute respiratory distress syndrome (ARDS). It has discovered that a sub-group of patients with higher levels of certain bio-markers (CD73 serum and MxA activation) showed a reduced mortality rate and increased ventilator-free days.

Primary Health Properties PLC (LON:PHP) has announced that a wholly owned subsidiary of PHP has acquired the Moredon Medical Centre (net assets acquired £6.1mln), a standing let investment property situated in Moredon, Swindon.

SDX Energy Inc (LON:SDX, CVE:SDX) has announced the spudding of the SRM-3 appraisal well onshore Egypt. The well is following up previous exploration success at the 12.75% owned South Ramadan project.

Life sciences group Abzena plc (LON:ABZA) is in talks to monetise its royalty-bearing Abzena Inside products as it looks to secure its financial future.

Motif Bio Plc (LON:MTFB) has completed a rolling submission of a New Drug Application (NDA) to the US Food and Drug Administration (FDA) for its new antibiotic Iclaprim.

Victoria Oil & Gas plc (LON:VOG) has revealed a refinancing of its debt with BGFIBank Cameroon. The company, which has had to suspended gas shipment to a key customer, initially entered into a US$26mln debt facility back in April 2016 and it said the balance stood at around US$20.5mln at the time of the refinancing.

Kibo Mining PLC (LON:KIBO) has reported its financial results for the full-year following a flurry of activity. The AIM-listed miner reported a pre-tax loss from ordinary activities of around £4.5mln, up from £3.5mln the year before, while its cash for the end of the period stood at £766,586, up from £382,339 last year.

Savannah Resources Plc (LON:SAV) has confirmed the cost of building a lithium mine at Mina do Barroso in Portugal will be around US$109mln.

Shanta Gold (LON:SHG), the East Africa-focused gold producer, announced that it has received irrevocable undertakings from holders of the company's outstanding unsecured subordinated convertible loan notes due April 2019  representing 76% by nominal value, to vote in favour of a buyback of approximately 33.33% of the notes currently held by third parties, and a 1-year extension to the maturity date. The firm said the arrangements will provide Shanta with increased flexibility to develop Ilunga, conduct exploration at NLGM and to identify targets close to the mine.

Bushveld Minerals (LON:BMN), the integrated vanadium producer with additional investments in coal, power, said redemption of the outstanding unsecured convertible bonds previously issued to Atlas Special Opportunities, LLC was settled in full for a final aggregate cash payment of £5.116mln. The company has received confirmation of settlement from Atlas.

 

Solo Oil PLC (LON:SOLO) said representatives of the resources investment group will be meeting at 2.30pm on Thursday 14 June 2018 with a small group of private investors, at their request, who due to their collective holdings have a significant interest in the company's shares. The firm said the meeting will be recorded and will be available for playback by other interested shareholders from the company's communications advisors, Buchanan at [email protected]

6.45am: Negativity in the air

London’s FTSE 100 is expected to start Thursday negatively as investors adjust to new interest rate expectations over in the United States.

Having finished Wednesday’s session flat, at 7,703, the index of London’s top 100 shares is seen about 40 points lower ahead of the open - CFD provider IG Markets is calling the benchmark at 7,665 to 7,668 with more than an hour to go.

It comes after the US Federal Reserve confirmed a largely expected interest rate rise at its June meeting, but, also surprised slightly with a new outlook which sees four possible increases in rates through 2018 rather than the previously expected three.

“The US economic outlook has improved with the Fed expecting a continued fall in unemployment to 3.5% and a rise in inflation (PCE ) to 2%,” said Jasper Lawler, analyst at London Capital Group.

“The upbeat outlook from the Fed, along with the bank’s more aggressive stance, of 4 hikes rather than 3 previously expected across the year, raised concerns over higher borrowing costs, which dragged the markets lower.

“These same concerns, coupled with further trade war talk from the White House saw a mixed performance from Asia, whilst Europe is also set for a softer start.”

In New York, the Dow Jones closed Wednesday trading down 119 points or 0.47% changing hands at 25,201 at the end of the session. The Nasdaq gave up 0.4% to close at 2,775, meanwhile, the Nasdaq Composite was down 0.11% finishing at 7,695.

Asian stocks followed New York lower. Japan’s Nikkei shed 145 points or 0.63% to 22,821 while Hong Kong’s Hang Seng was 0.77% lower at 30,489 and the Shanghai Composite was off 0.53% at 3,033.

Looking to the session ahead, attentions will revert back to central banking.

With the Federal Reserve rate decision out of the way, attention on Thursday will switch to another central bank meeting, although the latest ECB council get-together is not expected to be quite as interesting.

It has been well-flagged recently that the European Central bank will hold a discussion on the future of its quantitative easing (QE) bond-buying programme after its planned expiry in September at this meeting.

That had raised the possibility that the ECB could make an announcement on Thursday as to whether or not to extend the programme or allow it to expire as planned.

In the UK, meanwhile, the impetus for economists comes from  UK retail sales data for the month of May - with expectations set for a positive move, as the sales growth rate is anticipated to be around 2.5% up from 1.5% in the preceding month.

In regards to corporate highlights, the day ahead also includes an annual general meeting for Wm Morrison Supermarkets, and updates from PZ Cussons and Majestic Wine.

Around the markets:

  • Pound up 0.13% at US$1.3393
  • Gold US$1,299 per ounce, up 0.2%
  • Brent crude US$76.48 per barrel, up 0.7%
  • Bitcoin US$6,479, up 2.86%

Thursday’s significant announcements:

ECB Council meeting

AGMs: Wm Morrison Supermarkets PLC (LON:MRW), International Airlines Group PLC (LON:IAG),

Trading update: PZ Cussons PLC (LON:PZC), N Brown Group PLC (LON:BWNG)

Finals: Majestic Wine PLC (LON:WINE), Aveva Group PLC (LON:AVV), Consort Medical PLC (LON:CSRT), Mountview Estates PLC (LON:MTVW), Syncona Limited (LON:SYNC)

Interims: Care Tech Holding PLC (LON:CTH), Safestore Holdings PLC (LON:SAFE)

Ex-dividends: To knock 4.5 points off FTSE 100 index - 3i Group PLC (LON:III), Mediclinic International Plc (LON:MDC), NMC Healthcare PLC (LON:NMC), Persimmon PLC (LON:PSN), Severn Trent PLC (LON:SVT), WPP PLC (LON:WPP)

Economic data: UK retail sales; US weekly jobless claims; US retail sales; US import and export prices

City Headlines:

Comcast $65bn bid sets up battle with Disney for Fox – Sky News

Volkswagen fined one billlion euros by German prosecutors over emissions cheating – Reuters

Hackers access 5.9m bank cards at Dixons Carphone – Sky News

Wetherspoon to stop selling champagne and prosecco – BBC News

Ryanair to launch operations at UK’s Southend airport – Financial Times

UK car industry faces 'extinction' after Brexit, CBI chief warns – The Independent

Rolls-Royce Parts Shortage to Delay 787 Engine Fix - Bloomberg


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