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FTSE 100 closes lower again as traders flee from risk

Last updated: 17:50 06 Sep 2018 BST, First published: 06:53 06 Sep 2018 BST

US jobs
  • FTSE 100 firmly in red

  • Just East top laggard

  • Wall Street shares lower

  • ADP, weekly jobless data bode well for August payrolls

 

 

FTSE 100 closed sharply lower and reached a 20-week low as traders continue to shun risk.

The UK blue-chip index finished down around 64 points, or  0.87% to 7,318.

The FTSE 250  lost nearly 105 points to close at 20,283.

In the US, the Dow Jones Industrial Average is down 0.13%, or 35 points, at 25,938. The S&P 500 is off over 25 at 2,871 at the time of writing.

David Madden, analyst  at CMC Markets, said: "European equity markets are still suffering from the same issues, poor global trading relations and weakening emerging market economies.

"These topics have been hanging over the market all week and dealers are not showing any major appetite for relatively risky assets like stocks."

On Footsie, utilities did well, with Centrica (LON:CNA) top riser, up 4.99% to 150.55p after the government’s new energy price cap ended uncertainty around the industry. SSE (LON:SSE), another supplier, advanced 1.2%.

  Top laggard was Just Eat (LON:JE), the takeway app, down 5.36% to 699.20p.

2.50pm: US edges higher

The FTSE 100 index stayed dull in late afternoon trading as Wall Street saw a mixed restart amid trade tariff talk worries and as some key US data digested.

Around 2.50pm, the UK blue chip index was about 10 points lower at 7,373, above the session low of 7,357.09 but below the morning peak of 7,397.74, with 9 points removed by stocks trading ex-dividend today.

In early New York trading, the Dow Jones industrial average managed to add 54 points at 26,030, but both the broader indexes were lower with investors nervous ahead of Friday’s August non-farm payrolls report.

Ahead of the always important jobs number, data on Thursday was positive, with payrolls processor ADP reporting a smaller than expected seasonally adjusted 163,000 increase in private-sector jobs in August, against forecast for 182,000 new, down from a revised 217,000 figure in July, which was previously 219.000.

Meanwhile, the latest US weekly initial jobless claims fell by 10,000 to 203,000, with new claims at the lowest level since December 1969.

12.50pm: Wall Street restart eyed

The FTSE 100 index remained modestly lower at lunchtime, though ex-dividend factors accounted for most of the decline, with traders awaiting the restart on Wall Street for fresh direction.

Around 12.50pm, the UK blue chip index was off 13 points at 7,370, holding off session lows of 7,357.09 but below the morning peak of 7,397.74, with 9 points removed by stocks trading ex-div.

Earlier indications in New York are for the Dow Jones to start around 20 points higher after similar-sized gains on Wednesday but the broader indexes were seen lower with investors nervous ahead of some key economic data and trade tariff moves.

James Hughes, chief market analyst at AxiTrader commented: “We’re currently eyeing some modest gains on Wall Street at today’s open, despite progress not yet being seen in those Canadian/US trade talks and the publication of a damning editorial on Donald Trump by a White House insider in the New York Times.”

He added: “We’re (also) watching for the ADP payroll numbers ahead of the US market open which will act as the usual curtain raiser ahead of tomorrow’s non-farms, but by all accounts the real direction is more likely to be coming from politicians rather than macroeconomic releases.” 

12.00pm: Blue-chip bingo 

Last night saw a rare event in terms of the FTSE 100 index – a quarterly review that saw no change in the blue-chip constituents.

Russ Mould, AJ Bell’s investment director commented: “Unusually the quarterly reshuffle of their FTSE 100’s members based on their market capitalisations has left the UK’s headline index unchanged, something that last happened in March 2006.”

He added: “No FTSE 100 firm fell to 111th in the market capitalisation rankings – a value of around £4.1 billion – to merit automatic demotion to the FTSE while no mid-cap firm made it to 90th in the list to earn automatic promotion.”

Mould pointed out: “Engineer Spirax-Sarco fell just short of a move into the top flight, as its £5.2bn market cap ranks it 92nd and just short of Taylor Wimpey and Barratt Developments, whose market valuation is currently some £5.4bn.

“Other firms knocking on the door of the FTSE 100 include former members Wood, Hikma and Weir, as well as non-life insurer Hiscox and JD Sports.

“Those closest to the drop this time were the newest entrant Rightmove, Direct Line Insurance, Royal Mail and Severn Trent. All of them could be looking over their shoulders again at the time of the next reshuffle in December.”

There were changes in the other FTSE indices, however, with petrol station giant Vivo, the firm behind the Shell brand across Africa, entering the FTSE 250, while Diversified Gas & Oil steps up to the AIM 100 after its acquisition of shale assets in the Appalachians in the USA.

Also among the smaller caps, two recently listed video gamers are also joining the AIM 100, Team17 and Codemasters.

11.15am: Start-up boost

OakNorth, the challenger bank focused on financing business start-up, has been valued at US$2.3bn (£1.8bn) after closing a US$100ln funding round, Reuters has reported

The newswire said that the lender, which also provides personal and business savings, said the funds would be used to increase the size of its business in Britain and drive sales of its financial technology platform to other banks internationally.

Rishi Khosla, OakNorth’s co-founder and chief executive, said in a statement the firm - which was launched in September 2015 - had been overwhelmed by interest in its fintech platform, dubbed Acorn, which helps banks that adopt it to lend to small and medium-sized firms more efficiently.

OakNorth said Acorn, which has opened offices in New York and Singapore, expects to add another 50 people to its team in the near term and will have more than US$5bn of assets under service by the end of the year.

The lender has doubled its UK loan book to US$2.2bn since the start of the year and expects to lend another US$600mln by the end of 2018, Reuters said.

9.55am: Footsie ticks higher

The FTSE 100 index managed to rally modestly from opening falls as the morning session progressed, although the mood remained very cautious as worries over US trade tariffs continue to weigh on global markets.

Around 9.50am, the UK blue chip index was up about 6 points at 7,389, just off the session peak of 7,390.15, having recovered from an early low of 7,357.09.

Ex-dividend factors also curbed the Footsie’s advance by around 9 points, with the likes Admiral Group PLC (LON:ADM), Antofagasta PLC (LON:ANTO), BHP Billiton PLC (LON:BLT), RSA Insurance Group PLC (LON:RSA), and Shire PLC (LON:SHP) all trading without the attractions of their latest payouts.

On currency markets, sterling just consolidated yesterday’s bounce made on rumours of a possible Brexit talks break-through, flat versus the US dollar and the euro at US$1.2930 and €1.113 respectively.

Connor Campbell, financial analyst at Spreadex commented: “Unlike the last few days, where there has at least been a wave of PMIs to deal with, Thursday has little in the way of distraction for the European markets, meaning investors are just going to have to sit and stew in this particularly unpleasant trading broth.“

Among the markets gainers, corporate updates provided a boost. Melrose Industries PLC (LON:MRO) was a strong FTSE 100 performer, up 4.2% at 232p after saying it had found "no black holes" in GKN and the business was progressing since its £8bn hostile takeover was completed.

The turnaround specialist also reported a statutory loss before tax of £303m for the half year after booking significant acquisition-related charges but only including 73 days of trading from GKN.

Also up after results, FTSE 250-listed Go-Ahead Group PLC (LON:GOG) surged 16% higher to 1,903p after the transport operator's full-year results came in ahead of consensus expectations at the operating profit level.

Elsewhere, Bovis Homes PLC (LON:BVS) rose 4.7% to 1,184.5p after the housebuilder posted a 41% jump in first-half pre-tax profit as completions rose and the mid-cap group said it was targeting a record year of profits, at the top end of its expectations.

And electricals retailer Dixons Carphone PLC (LON:DC.) gained 3.1% at 169.15p as it maintained its full-year guidance despite reporting a 2% drop in revenue for the first quarter and a flat like-for-like performance.

8.45am: Further losses for Footsie

The FTSE 100 nudged down 15 points to 7,368.67 after hitting a four-month closing low on Wednesday.

Trade worries, combined with the seeming fragility of emerging economies such as Argentina, Turkey, Indonesia and South Africa meant traders were circumspect early on.

“We also saw heavy declines in the normally bullet-proof tech sector on concerns that US lawmakers might look to take steps to target the sector for heavier regulation, on concerns over malign interference in the US political process,” noted Michael Hewson of CMC Markets.

“With both the CEOs of Facebook and Twitter facing US lawmakers’ investors decided to use this opportunity to embark on a round of profit taking.”

Here in the UK, the main casualties were the miners, led by BHP Billiton (LON:BLT), which lost almost 4%. The diggers are sensitive to ups and downs of the world economy, particularly the formerly fast-growing China, as well as the undulations of the dollar.

Centrica PLC (LON:CNA) was the Footsie’s leading riser, up 4.5%, after the government’s new energy price cap ended uncertainty around the industry. SSE (LON:SSE), another supplier, advanced 1.2%.

There were no signs of indigestion at Melrose (LON:MRO), the metal basher that took over GKN for £8bn. Shares were up 3% after it said trading had been in line with forecasts and “no black holes” had been found in the GKN business.

Dropping down a division, shares in bus company Go Ahead (LON:GOG) motored 12.5% higher after it weighed in with results ahead of market expectations.

Proactive news headlines:

Maistro PLC (LON:MAIS) saw its shares jump 16% higher in early trade on Tuesday as the eProcurement specialist said it expects its first-half 2018 revenue to exceed full-year 2017 levels. In a brief business update, the AIM-listed firm added that the strong revenue performance contribute to “increasing management confidence that this trend will accelerate into 2019 and beyond.”

Corero Network Security PLC (LON:CNS) cheered the market with a trading update in which it said full-year results are expected to be in line with expectations.

Pan African Resources PLC (LON:PAF) has more than doubled the mineral resource estimate at its Royal Sheba gold project in South Africa after results from the latest round of drilling “exceeded expectations”.

Savannah Resources PLC (LON:SAV) has revealed what it described as “outstanding” drill results from the Mina do Barroso lithium project. The explorer is carrying out both reverse circulation and diamond drilling at the Grandao area of the project where it has unearthed higher-grade lithium mineralisation over significant widths. Highlight results from Grandao included grades between 1.14% and 1.46%.

Real Good Food PLC (LON:RGD) has sold its Haydens Bakery business to Icelandic food giant Bakkavor Group PLC (LON:BAKK) for £12mln.

Challenger Acquisitions Limited (LON:CHAL) said the developers of the New York Wheel project have applied for an extension of a settlement agreement to get the project back on track.

ValiRx PLC (LON:VAL) said “commercial activity” around its lead cancer drug candidate has continued as it updated on both VAL401 and next in the queue, VAL201. Chief executive, Dr Satu Vainikka, said she looked forward to the “successful crystallisation of substantial value for patients and shareholders".

Sound Energy PLC (LON:SOU) told investors it has been awarded a production concession for the Tendrara gas discovery, bringing the field development project closer to a final investment decision. The AIM-quoted explorer said it expects to make a decision once additional key development milestones have been secured – namely, the securing of a gas sales agreement, funding and regulatory formalities.

Commercial aircraft leasing group Avation PLC (LON:AVAP) bumped up the dividend by more than a fifth after a solid year in which it diversified its revenue base.

Argo Blockchain PLC (LON:ARB) has significantly increased its cryptocurrency mining capacity through the introduction of new server technology. Use of the upgraded ASIC servers will enable Argo to support 3,000 new subscribers or seven times more than its existing installed capability.

Dale Solomon, who has been chief operating officer of Learning Technologies Group PLC (LON:LTG) since 2014, is to quit the group in mid-November as his family is relocating overseas.

CentralNic Group PLC (LON:CNIC) has acquired the business assets of GlobeHosting Inc, a Romania and Brazil-focused registrar and domain-hosting provider based in Delaware.

Active Energy Group PLC (LON:AEG), the international biomass-based renewable energy and forestry management business, said it has received notification that on 4 September 2018, Gravendonck Private Foundation disposed of 20,000,000 ordinary shares in the group at a price of 2.4p per share. Following this disposal, the group said, Gravendonck remains Active Energy's largest shareholder and holds 221,898,809 ordinary shares, representing 21.48% of the group's issued share capital with voting rights.

6.45am: Indifferent start predicted

The FTSE 100 is set for a somewhat indifferent start to Thursday’s trading session, although the market diary suggests there may be a reasonable amount of stock-specific interest.

Traders will be quite happy with the benchmark’s apparent indifference, after Wednesday’s saw a new four-month low for the London index.

Several closely followed firms reporting this morning including Currys-PC World parent Dixons Carphone, Bovis Homes, and Melrose.

In addition, around 9 points will come off the index with blue-chip miners such as BHP Billiton, Antofagasta, and Glencore going ex-dividend.

CFD and spreadbetting firm IG Markets sees the FTSE 100 gaining 2 points, calling the London index at 7,373 to 7,377 with just over an hour to go until the open.

Globally, attention remains fixed on trade.

“US and Canadian negotiators sat down again to restart further talks with respect to NAFTA ahead of a possible announcement either today or tomorrow that could signal further tariffs on a further $200bn of Chinese goods,” said Michael Hewson, analyst at CMC Markets.

“A big jump in the US trade deficit to $50.1bn appears to have convinced markets that the prospect of further tariffs is almost inevitable, given that the gap with China hit yet another record high.

“The deficit with the EU also rose to a record high, which suggests that it won’t be long before President Trump starts banging that drum again.”

Wall Street showed a fairly mixed performance, although notably, the Nasdaq closed Wednesday’s session some 1.19% lower at 7,995.

The Dow Jones edged 22 points, 0.08%, higher to finish at 25,974 while the S&P 500 marked at 0.28% decline to 2,888.

In Asia, Japan’s Nikkei was down 75 points or 0.34% at 22,504, at the same time, Hong Kong’s Hang Seng was off 318 points or 1.17% at 26,923 and the Shanghai Composite was 0.2% lower at 2,696.

Significant announcements expected on Thursday:

Trading updates: Dixons Carphone PLC (LON:DC.), McCarthy & Stone PLC (LON:MCS)

Interims: Bovis Homes PLC (LON:BVS), Melrose Industries PLC (LON:MRO), Curtis Banks Group PLC (LON:CBP), Deepmatter Group PLC (LON:DMTR), Hunters Property PLC (LON:HUNT), International Public Partnerships Ltd (LON:IMPP), Just Group PLC (LON:JUST), MPAC Group PLC (LON:MPAC), PPHE Hotel Group PLC (LON:PPH)

Finals: Go-Ahead Group PLC (LON:GOG), Mcbride PLC (LON:MCB), Avation PLC (LON:AVAP)

Traffic numbers: easyJet PLC (LON:EZJ)

Ex-dividends to knock 9.24 points off FTSE 100 index: Admiral Group PLC (LON:ADM), Antofagasta PLC (LON:ANTO), BHP Billiton PLC (LON:BLT), CRH PLC (LON:CRH), Glencore PLC (LON:GLEN), Land Securities PLC (LON:LAND), RSA Insurance Group PLC (LON:RSA), Shire PLC (LON:SHP)

Economic data: US weekly jobless; US Challenger job cuts; US services PMI index; US factory orders; US non-manufacturing ISM

Around the markets:

  • Sterling: US$1.2907, up 0.02%
  • Gold: US$1,196 an ounce, up 0.11%
  • Brent crude: US$77.13 a barrel, down 1.3%
  • Bitcoin: US$6,361, down 4.87%

City Headlines:

  • Failure over problem debt costs taxpayer £248m – BBC News
  • Cryptocurrency market in mysterious meltdown as value suddenly drops – Independent
  • British cave diver to sue Elon Musk after new rant – The Times
  • Orsted completes world’s largest offshore wind farm in Irish Sea – Financial Times
  • Royal Bank of Scotland announces closure of additional 54 branches – Sky News
  • Tests find a fifth of meat contains the wrong animal – The Times

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