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FTSE 100 closes higher Thursday as traders come back to equities

Sterling was also stronger - up 0.06% to 1.1318 against the Euro and up 0.12% versus the US dollar
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FTSE 100 closed higher on Thursday
  • FTSE 100 closes up 59 points

  • Ocado top laggard

  • Sky higher as Comcast trumps Fox 

  • Trump touches down in UK

FTSE 100 closed higher on Thursday as traders came back to shares and drugs giant AstraZeneca plc (LON:AZN) was top gainer.

The UK's blue-chip benchmark closed over 59 points higher at 7,651.

The mid-cap FTSE 250 was also in the green - up 137.5 points to stand at 20,779.

Sterling was also stronger - up 0.06% to 1.1318 against the Euro and up 0.12% versus the US dollar - as it was supported by the release of the government’s whitepaper on the post Brexit UK – EU relationship.

"The sUBStance of the white paper has come as no surprise given the showdown last weekend, and the EU are showing a softer tone even before analyzing the paper," noted Fiona Cincotta, the senior market analyst at City Index.

Ocado Group (LON:OCDO), which has been dubbed the ' Microsoft of retail' was the top laggard on  Footsie, with shares down  2.72% to 1,018p, having set a fresh all-time high earlier in the week.

In the US, stocks were also on the rise on Thursday. The Dow Jones Industrial Average was up almost 226 points at 24,926, while the S&P 500 added around 23 to 2,797.

"Traders are brushing off the escalating trade spat and turning their attention to the unofficial start of earning season. Expectations are running high for Q2 earnings, which are expected to have grown 20% from the same period last year, on an increase of 8.1% of revenue," said Cincotta.

3.20pm: AstraZeneca jumps, Ocado stumbles

With just over 30 minutes left in the trading day, the FTSE 100 has held onto its earlier gains and is currently up 58.0 points to 7,650.0.

Drugs giant AstraZeneca PLC (LON:AZN) is the top riser, climbing 3.7% to 5,443p.

Sky PLC (LON:SKY) is also doing well, up 2.7% to 1,535p as investors bet that the bidding war between 21st Century Fox and Comcast will continue for a little while yet.

Online grocer Ocado Group PLC (LON:OCDO) is still the index’s worst performer, shedding almost 2% to 1,027p having set a fresh all-time high earlier in the week.

ITV plc (LON:ITV), down 1.6% to 174.6p, is also struggling having been downgraded by Goldman Sachs following its recent run.

Down on AIM, ASOS plc (LON:ASC) is still getting hammered, losing more than 10% to sit at 5,816p after warning investors that sales growth will be towards the lower end of guidance.

3.05pm: US stocks open higher as inflation heads toward 3%

The Dow Jones Industrial Average recorded a 170-point jump at the opening bell on Thursday morning in New York to hit 24,873.

There were also strong gains for the Nasdaq which climbed 56.9 points, 0r 0.7%, to 7,773.6, while the S&P 500 added 12.9 points to 2,786.9.

As expected the US CPI – not the Fed’s preferred measure of inflation – rose to 2.9% in June, largely due to a rise in energy prices.

“The CPI and the June employment report both keep the Fed on track to increase its policy rate twice more this year,” said Berenberg economist Roiana Reid,.

“Were it not for relatively low inflation expectations and a flat yield curve, the Fed would probably be normalizing its policy at a more aggressive pace.”

2.45pm: Brexit White Paper published

The UK government has published its long-awaited White Paper – a blueprint for the UK’s relations with the EU post-Brexit.

It sets out four areas of future co-operation: the economic partnership; security; co-operation in things like aviation and nuclear power; and the “institutional frameworks” which will enforce the agreement.

Theresa May and co want the EU to back their proposals so an exit deal can be agreed by the autumn, although the EU is expected to submit some counter suggestions.

The EU’s chief negotiator, Michael Barnier, said he would analyse the paper with his colleagues and was “looking forward” to negotiations next week.

On the back of the publishing, the pound is now up by 0.2% against both the dollar and the euro to €1.133 and US$1.323.

2.30pm: Trump's in town

2pm: Fiat workers strike over Ronaldo transfer

Fiat workers in Italy have gone on strike after Juventus paid 4112mln (£100mln) to sign football superstar Cristiano Ronaldo.

The link between a car maker and football club may not be obvious straight off the bat, but both are controlled by the Agnelli family through their holding company, Exor.

Trade union USB criticised the transfer, saying the Agnellis need to guarantee the future of thousands of people “rather than enriching only one”.

USB members will walk out at 10pm local time on Sunday and remain on strike until 6pm the following Tuesday.

1.30pm: Quick FTSE 100 update

In mid-afternoon trading, the FTSE 100 is up 68.1 points, or 0.9%, to 7,660.3, as it continues to build on gains made earlier in the session.

Compass Group PLC (LON:CPG), the UK’s largest catering company, is the top riser, climbing almost 3% to 1,645p.

Ocado Group PLC (LON:OCDO) is the heaviest faller, dipping 2.7% to 1,018p after hitting an all-time high on Tuesday.

On the currency markets, the pound is flat against the dollar at US$1.321, while it is slightly up on the euro at €1.133.

1.15pm: Bookies on the run as England crash out

Investors are betting that the bookmakers made a few quid as England crashed out of the World Cup at the hands of Croatia last night.

If history has taught us anything, it is to not back the Three Lions, but after a few decent performances and ‘It’s coming home’ memes popping up all over social media, there will no doubt be a lot of people who dipped into their pockets to stick a tenner on England.

On top of England’s semi-final heartbreak, the bookies will also have benefitted from some of the pre-tournament favourites – Spain, France, Belgium – all coming up short. A Croatia win on Sunday would be the icing on the cake.

That’s the hypothesis that the market seems to be working on anyway. Paddy Power Betfair PLC (LON:PPB) is up 2.4% to 8,500p, while Ladbrokes and Coral owner GVC Holdings is up 2% to 1,104p. FTSE 250-listed William Hill is also on the up, gaining 1.3% to 299.7p.

12.50pm: US stocks to follow Europe higher

US stocks are set to open higher when trading gets underway in New York later this afternoon.

The Dow Jones Industrial Average is called 187 points higher at 24,892; the tech-heavy Nasdaq is expected to open 30.4 points higher at 7.273.9; while spreadbettors see the broader S&P 500 climbing 13.2 points at the bell to 2,786.8.

“The Dow Jones is set to join its European peers in the green, with the futures pointing to a 150+ point increase,” said Spreadex analyst Connor Campbell.

“That would push the Dow back above 24850, and actually see it chase a fresh 3 week-plus high.”

There is some inflation data due today across the pond. The CPI reading - which is not the Fed's preferred measure of inflation - is expected to come in at 2.9% for June.

12.30pm: UK government clears Fox’s proposed takeover of Sky

The UK government has cleared 21st Century Fox’s proposed takeover of British broadcaster Sky PLC (LON:SKY).

The FTSE 100 company is the subject of a fierce bidding war between Fox and its US rival, Comcast, which yesterday upped its offer to 1,475p for each Sky share.

Comcast’s bid has already been approved by the government without conditions, while new culture secretary Jeremy Wright has told Fox it can go ahead with the planned takeover as long as it sells off Sky News as soon as the deal completes.

In reality, today’s decision doesn’t really matter. Walt Disney is in the process of snapping up Fox’s entertainment and film assets, including its stake in Sky, which means Sky News wouldn’t need to be sold off anyway. The other outcome is that Comcast wins.

12.15pm How ASOS became the ‘King of AIM’

ASOS PLC (LON:ASC) may be getting hammered today, but it’s still by far the biggest company on the junior market and would qualify for inclusion on the FTSE 100 if it chose to move up.

Here’s my take on how the online fashion retailer became the unofficial ‘King of AIM’.

11.50am: Oil prices rise

After nursing losses for most of the morning session, London’s oil supermajors are up as oil prices head north.

The International Energy Agency (IEA) said that the global supply cushion "might be stretched to the limit" because of production losses, with a large number of output disruptions underpinning prices.

The claims sent Brent crude rising 1.9% at US$74.79 per barrel while West Texas Intermediate gained 0.9% at US$71.01.

Reversing their earlier losses, BP PLC (LON:BP.) shares are now 0.2% ahead at 571.8p, while Royal Dutch Shell PLC’s (LON:RDSB) stock is 0.3% ahead at 2,732p.

11.35am: Papa John’s founder resigns over N-word use

John Schnatter, the founder of Papa John’s, has stepped down as the pizza group’s chairman after it was reported that he used the N-word in a conference call.

The 56-year-old apologised for his remark which he made during a media training session in May.

In a statement yesterday, Papa John’s said it condemned “racism and any insensitive language” and would look to appoint a new chairman over the coming weeks.

11.20am: Berenberg kicks off with a ‘buy’ on Sirius Minerals

Sirius Minerals PLC (LON:SXX), a favourite of retail investors, has been given a ‘buy’ recommendation from analysts at Berenberg who reckon the key second round of project financing is nearing completion.

The FTSE 250 group is building a huge polyhalite mine in the north-east of England. It already raised US$1.2bn last year to get the initial development underway, but it still needs another US$2.6bn to complete the Woodsmith mine.

“In our view, financing is still a key issue for Sirius, but the risks to not securing a second round of financing are sUBSiding,” read a note to clients this morning.

Berenberg’s ‘buy’ comes with a 50p price target which suggests nearly 50% upside to the current price of 33.5p.

11am: Sky investors confident of another bid

We told you earlier that Comcast had come back with an improved offer for UK satellite broadcaster Sky PLC (LON:SKY), trumping its US rival 21st Century Fox in the process.

Well shares are up 2.5% to £15.31 this morning, comfortably above the latest offer of £14.75. Are investors getting greedy?

The stock market continues to believe that the winner of the Sky takeover battle will pay more than has currently been offered. Each time one of the suitors ups their bid, Sky’s share price trades even higher.

“The question is whether investors are being too optimistic or accurately predicting that Fox will increase its £14 offer.

“Takeover battles don’t go on forever and at some point one of the competing parties will have to admit defeat.”

10.35am: Paddy Power leads Footsie higher

In mid-morning trade, the FTSE 100 is up 50.1 points, or 0.7%, to 7,642, recovering a large chunk of Wednesday’s losses.

Paddy Power Betfair PLC (LON:PPB) is leading the index higher, climbing 2.5% to 8,510p, presumably on hopes that it profited from a bunch of wishful-thinking England fans losing money on last night’s match.

ITV PLC (LON:ITV) is the top faller, down 1.2% to 175.3p, after it was downgraded by ‘Bulge Bracket’ US investment bank Goldman Sachs.

The pound is holding steady ahead of Theresa May’s publishing of her Brexit white paper later today. Sterling is ever so slightly up against the euro and the dollar at €1.132 and US$1.322, respectively.

“Cautious gains are the order of the day across markets, helped by a lack of any more trade war news,” said IG’s chief market analyst Chris Beauchamp.

“However, the sight of a fractious NATO meeting yesterday confirms the widening split between the US and its European allies, which will hardly bode well on the US/EU trade war front.”

10am: DFS expects 2018 profits to be “below” last year’s

DFS Furniture PLC (LON:DFS) said it expects a decline in 2018 earnings after the UK’s heatwave and supply issues hit fourth quarter sales. 

The furniture retailer estimated underlying earnings (EBITDA) for the year will be "below" the £82.4mln reported in 2017.

The company said it suffered a disruption to ships bringing made-to-order products from the Far East in the final quarter, while the hot weather led to “significantly” lower-than-expected order intake. A slowdown in the housing market and a tough retail market also contributed to weaker sales.

As a result, like-for-like sales fell 3% in the 23 weeks to July 7 and 4% in the 49 weeks to the same date.

9.30am: Sky shares rise as Comcast ups offer

Sky PLC (LON:SKY) shares jumped again on Thursday as investors bet that last night’s increased offer from Comcast Corp. (NASDAQ:CMCSA) which trumped a raised bid from rival 21 Century Fox Inc.'s (NASDAQ:FOXA) earlier on Wednesday won’t be the last move in the long-running bid saga.

In early morning trading on Thursday, the FTSE 100-listed firm’s shares were 2.2% higher at 1,527p, comfortably above the agreed Comcast cash offer pitched at 1,475p per share, and Sky’s previously agreed bid of 1,400p a share.

With so many moving parts, it can be a tricky story to follow, so we’ve tried to break it down for you in this brief explainer.

8.40am:  Footsie sees early rally

After being thumped on Wednesday by Trump, in the form of the US President's planned US$200bn of trade tariffs, the FTSE 100 picked itself off the canvass early Thursday, posting a 19 point gain to 7,610.92.
 
The morning's major news came from outside the blue-chip index as ASOS (LON:ASC), AIM's largest company and big enough to be a member of the elite club of UK companies, warned its earnings would be at the lower end of forecasts.
 
This saw shares in the online fashion retailer placed on the sale rail as they were marked down 8%.
 
A year-end trading update from another constituent of the sector, this time one that owns shops, was also given short shrift. 
 
Stock in home furnishing chain Dunelm (LON:DNLM) fell 3% after it said revenues for the latest trading period had been flat.
 
Sky (LON:SKY) nudged 3% higher after the bidding war for the satellite broadcaster broke out with American giant Comcast upping its offer to £26bn.

‘Red letter days are coming thick and fast for Sky shareholders. Investors are now close to doubling their money as a result of the bidding war for Sky, and there may yet be another twist in this tale which will swell their coffers even more," said Laith Khalaf, senior analyst, Hargreaves Lansdown.

"Like their counterparts at Ocado, Sky shareholders have a lot to thank Amazon for, which along with Netflix has prompted this drive for consolidation in the media industry. These tech upstarts have encroached on the territory of traditional players like Disney and Comcast, prompting them to scale up to fend of the threat of digital streaming services."

Proactive news headlines:

AFC Energy PLC (LON:AFC) shares rocketed higher on its first commercial order from Australia for a hydrogen power unit using its fuel cells. Southern Oil will install the unit, expected to be between 200kW and 400kW in capacity, at its advanced biomass facility at Gladstone.

ADES International Holding Ltd (LON:ADES) has agreed to buy 31 onshore drilling rigs located in North Africa and the Middle East from drilling services powerhouse Weatherford International. The deal doubles ADES operational drill fleet and includes contracts, management systems and approximately 2,300 staff throughout Algeria, Kuwait and Saudi Arabia.

As Europa Oil & Gas Holdings PLC (LON:EOG) today officially kicks off a data room for its farm-out efforts, the AIM-quoted explorer has added another big potential exploration programme offshore Ireland. The prospect, called Egerton, is described as being analogous to the Bay du Nord discovery, off the Canadian coast - in a similar geological setting, in the ‘conjugate’ on the other side of the Atlantic.

Itaconix PLC (LON:ITX), the designer and manufacturer of speciality polymers, is to raise up to £4.3mln (gross) through a share issue and make changes to its senior executive team.

ReNeuron Group PLC (LON:RENE), the cell therapy specialist, said it was making progress on three fronts as its latest update revealed it was well-funded for the next round of development.

Allergy Therapeutics PLC (LON:AGY) expects its top-line to jump once again this year, despite an “unusually weak” pollen season.

Primary Health Properties PLC (LON:PHP) has secured a contract to fund the construction of a purpose built primary care centre in the Republic of Ireland. The FTSE 250 healthcare-focused real estate investment trust said it had contracted to provide development funding for the construction of a new primary care centre in Bray, County Wicklow for €22.3mln.

Telit Communications PLC’s (LON:TCM) deviceWISE industrial internet of things (IIOT) platform is now fully interoperable with IBM’s Watson IoT platform.

After the close on Wednesday, BB Healthcare Trust PLC (LON:BBH) said the six months to the end of May had been another period of positive progress. During the period, the company's share price and net asset value (NAV) recorded total returns in sterling terms of 4.0% and 7.5% respectively.

Custodian REIT PLC (LON:CREI) has sold a 20,424 square foot town centre retail unit in Dumfries for £1.125mln. The UK property investment company said the sale price was in line with the June 30, 2018 valuation.

Braveheart Investment Group PLC (LON:BRH) noted that investee company Paraytec Limited has engaged an adviser to raise £4mln of equity fundraising. Paraytec said the funds will be used to fund the further development, regulatory approval and commercialisation of its innovative urine test for the detection and monitoring of bladder cancer.

Gfinity PLC (LON:GFIN) has appointed sports and media executive Graham Wallace to the newly created position of global chief operating officer.

Caledonia Mining Corporation (LON:CMCL) (TSX:CAL) has reported an increase in gold production year-on-year for the first half of the year at its Blanket mine in Zimbabwe. The AIM-listed gold miner said around 25,582 ounces of gold had been produced in the first half of the year, marginally ahead of the 25,316 ounces produced in the same period a year ago.

Strategic Minerals PLC (LON:SML) has released a quarterly update on its sales performance, for the Cobre magnetite tailings operations, which shows it had “maintained and improved” underlying volumes.

Asiamet Resources PLC (LON:ARS) has announced the appointment of Zsa Yusharyahya to the position of executive vice president - external relations based in Jakarta, effective 1 August 2018. It said Yusharyahya is a highly experienced public relations and communications specialist with an extensive senior management background across multiple business sectors.

G3 Exploration Ltd. (LON:G3E), an independent specialist in the exploration and development of coal bed methane gas (CBM) with roots in China and a focus on international expansion, said it has nominated Bryan Smart and Zhao Li Guo as non-executive directors of the company, to be voted on at its annual general meeting, which is being held on 30 July 2018.

OptiBiotix Health PLC (LON:OPTI), the life sciences business developing compounds to tackle obesity, high cholesterol, diabetes and skin care said it was notified on 11 July 2018 that Neil Davidson, its non-executive chairman acquired 210,000 ordinary shares in the company, representing 0.25% of the issued share capital, at a price of 71p per share, taking its total holding to 0.44% of the issued share capital.

Chaarat Gold PLC (LON:CGH), the AIM-quoted exploration and development company with assets in the Kyrgyz Republic, said it hosted the Kyrgyz Republic Investment Forum on 28 June 2018 and co-hosted with the Embassy of the Kyrgyz Republic and the European Bank for Reconstruction and Development entitled "The Kyrgyz Republic - Central Asia's next emerging market". The group said presentations from the Forum are available at https://www.chaarat.com/presentations.

6.40am: Rebound predicted 

Having been well and truly “Trumped” yesterday, the FTSE 100 was expected to claw back a small measure of yesterday's losses on Thursday.

President Trump's threat to impose US$200bn of tariffs on Chinese imports sent investors running for cover yesterday, resulting in a 100-point fall for the FTSE 100 at 7,592. This morning, spread betting quotes suggest the UK's top-shares index will open around 27 points higher at 7,619.

“Traders are now waiting for China’s reaction, other than the words of shock that they have expressed so far. A tit for tat response is almost guaranteed and the markets will stay jittery until there is more clarity on what will come next,” said Fiona Cincotta, a senior market analyst at City Index.

US markets were hit just as hard yesterday by the escalating trade war rhetoric but Asian markets this morning were on the comeback trail.

Stateside, the Dow Jones average tumbled 219 points to 24,700 and the broader-based S&P 500 fell 20 points to 2,774.

In Japan this morning, the Nikkei 225 was up 271 at 22,203 while in Hong Kong the Hang Seng index was up 288 points at 28,600.

Closer to home, retailers will be in focus today.

Online fashion retailer ASOS PLC (LON:ASC) is expected to report a sharp rise in third-quarter sales as it continues to benefit from the e-commerce boom.

UBS has forecast a sales increase of 23% for the quarter to June 30 with warmer weather boosting demand for ASOS’s summer clothing ranges.

The Swiss bank sees no change to the full year sales guidance of 25-30% growth and an underlying earnings (EBIT) margin of 4%.

Things may not be so comfy for fellow retailer Dunelm Group PLC (LON:DNLM), which is scheduled to issue a trading update.

The curtains and cushions flogger warned at the end of May that it had recently experienced trading conditions that have been materially more challenging than had been expected, within a soft homewares market.

The retailer said it expects total sales for the full-year to be in the region of £1.05bn, up from £955.6mln the year before.

Significant announcements expected

Trading updates: ASOS PLC (LON:ASC), Dunelm Group PLC (LON:DNLM), B&M European Retail PLC (LON:BME), Premier Oil PLC (LON:PMO), Ten Entertainment Group PLC (LON:TEG)

Interims: Dart Group PLC (LON:DTG)

Finals: ReNeuron PLC (LON:RENE)

AGMs: Land Securities PLC (LON:LAND)

Ex-dividends: Ex-dividends: To clip 0.12 points off the FTSE 100 index - Halma PLC (LON:HLMA)

Economic data: US CPI; US weekly jobless claims

Around the markets

  • Sterling: US$1.3202, down 0.03 cents
  • 10-year gilt: yielding 1.297%
  • Gold: US$1,244.30 an ounce, down 10 cents
  • Brent crude: US$74.59 a barrel, up US$1.18
  • Bitcoin: US$6,320.69, down US$34.82

Business headlines

The Times

Shocked Chinese officials accuse Washington of bullying after President Trump stepped up US’ trade offensive and announced tariffs on additional Chinese products worth $200 billion.

The French government has pledged to open places in English-language schools for the children of high-flying executives in a bid to lure financial institutions from the City before Brexit.

Recruitment company PageGroup reported record profits in the second quarter as profits grew 6% to £208.2 million in the past three months, despite a disappointing performance from its UK business amid Brexit uncertainty.

Daily Telegraph

The US cable operator Comcast swooped in with a £26 billion bid for Sky, hours after the 21st Century Fox improved its own offer.

Shares in the drug-maker Indivior fell by nearly a third as it warned that sales and profits this year would be much lower than expected after a cheaper copycat version of its best-selling opioid addiction treatment hit the US market.

More than a third of investors opposed BT's decision to pay its outgoing chief executive Gavin Patterson £1.3 million bonus at the end of a disastrous final year in charge.

Michael Spencer's Nex Group faced a stinging investor protest over pay at its annual general meeting, with more than 40% of shareholders voting against its remuneration report.

The Guardian

The number of Tesco shop workers taking part in a legal challenge to secure equal pay has swelled to 1,000, which could lead to the supermarket paying out £4 billion.

Burberry has warned of declining sales in the UK and Europe as higher exchange rates for the pound and euro are deterring Chinese tourists.


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