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FTSE 100 closes higher as US stocks surge

Last updated: 17:42 20 Sep 2018 BST, First published: 06:53 20 Sep 2018 BST

london
  • FTSE 100 closes up 36 points

  • August UK Retail Sales beat expectations, +0.3% vs -0.2%

  • US stocks break records

  • Rio Tinto boosted by US$3.2bn share buy-back

  • Weir lifted by Morgan Stanley upgrade

FTSE 100 closed in positive territory on Thursday, with US stocks also ahead and miners adding plenty of support.

The UK's premier index closed up around 36 points at 7,367.

The FTSE 250  added almost 51 points at 20,551.

Fiona Cincotta, at City Index said Footsie had moved higher during the day, gaining ground as US markets broke "record ground".

"Although there is some froth in the rally it is also a reflection of the overall strong state of the US economy which is currently growing at around 3%. Jobless claims are still declining, the housing market is going strong and the country’s manufacturing continues to expand," she said.

"In London, miners were favoured again as metals prices continued to build on recent rallies; the moves higher were also helped by Anglo-Australian heavyweight Rio Tinto announcing plans for a large share buyback."

Top riser on Footsie was Primark owner ABF (LON:ABF), which added 2.70% to 2,285p.

3.50pm: US existing home sales unchanged in August 

US existing home sales were flat in August at a seasonally adjusted annual rate of 5.34mln units, according to the National Association of Realtors.

Economists were expecting an improvement to 5.47mln units after four straight months of declines.

A shortage of properties for sale has pushed up prices and made it difficult for Americans to get on the housing ladder.

But in August there were 1.92 million homes on the market, up 2.7% on a year ago – the first inventory increase in three years.

“As long as we have increased inventory, I think the housing market can turn for the better in terms of sales,” NAR Chief Economist Lawrence Yun said.US

US stocks are trading higher in early trading with both the Dow Jones Industrial Average and the S&P 500 rising to record levels. The Dow is up 213 points to an all-time high of 26,623 and the S&P is up 15 points to 2,923. a

3.15pm: Lloyds said to be looking to set up third EU subsidiary 

Lloyds Banking Group PLC (LON:LLOY) is reportedly seeking a license to set up a third European Union subsidiary in Luxembourg after Brexit.

The Luxembourg subsidiary will serve longstanding life insurance customers, a source told Reuters.

Lloyds has also applied for EU hubs in Berlin and Frankfurt to sure it can continue serving customers across the bloc after Brexit.

The source said initial discussions with regulators in Luxembourg has started.  Lloyds has declined to comment on the report.

Shares in Lloyds are up 1.5% to 61.4p. 

2:40pm: FTSE 100 find a little more strength as Wall Street benchmarks start higher

The FTSE 100 found some strength as its Wall Street counterparts began Thursday’s session positively.

Standing at 7,261 the London index was up 29 points or 0.39% for the session so far.

In New York, meanwhile, the Dow Jones rose by 224 points or 0.85% in early deals.

The S&P 500 was also in positive territory, albeit by only 0.13% at 2,907m whereas the Nasdaq was up 0.56% at 7,884.

12:04pm: FTSE 100 stays positive as attention to Trump vs China trade battle

After a morning fixed on forex and economic statistics, as the America’s east coast starts waking up, attention will likely turn back to international trade – and, specifically, the ongoing push-and-shove with China.

In premarket, New York’s Dow Jones is indicated just 39 points higher while, similarly, the S&P 500 is also expected to start Thursday slightly higher.

“Investors are continuing to monitor the main political stories, which have been an important driver of risk appetite for much of the year, but the latest tariffs didn’t catch anyone off guard and so the impact has been marginal,” said Craig Erlam, analyst at OANDA.

“Of far more interest to investors is what comes next with Trump having threatened to begin “phase three” if China responded with counter-tariffs, which they have.

“The speed and aggression with which Trump responds will be interesting now, especially given China’s apparent willingness to forge closer relationships elsewhere as ties with the US become increasingly strained.”

In London, meanwhile, the FTSE 100 was up around 15 points or 0.21% changing hands at 7,347.

11:00am: FTSE 100 adds to early gains, GBP boosted by retail sales stats

By the late morning, London’s FTSE 100 had found a little more impetus and was up around 16 points.

Standing at 7,347 the index was 0.23% higher for the session.

10:45am: UK retail sales surprise, but evidence of high street strength isn’t obvious

It is not obvious that the better-than-expected retail statistics translate to a positive trading session for retail stocks across the board - it has, after all, been a tough time for the sector and it will likely continue to be that way.

Marking 0.3% growth, the improvement can only be stated positively in relative terms against more bearish expectations and more broadly against a soft overall outlook. In and of itself, 0.3% isn’t exactly strong.

Evidently, retail shares such as Tesco Plc (LON:TSCO), Marks and Spencer Group Plc (LON:MKS), NEXT Plc (LON:NXT), and Sports Direct International Plc (LON:SPD) all moved higher, albeit none more than 0.6%.

Primark owner Associated British Foods plc (LON:ABF) gained 0.85% to 2,244p, while Dixons Carphone Plc (LON:DC) rallied some 2.2% to 171.9p and online clothes seller Boohoo Group Plc (LON:BOO) added 2.1% to 186.85p.

But, at the same time, both J Sainsbury plc (LON:SBRY) and WM Morrison Supermarkets Plc (LON:MRW) were on the back foot, both down around 0.2-0.3%.

ASOS plc (LON:ASC) was off 0.3%, JD Sports Fashion Plc (LON:JD. was 0.7% lower, and Debenhams Plc (LON:DEB) lost almost 3%.

Meanwhile, downbeat financial results saw French Connection Group (LON:FCCN) give up more than 12% down to 44p per share.

“This year has seen a near-constant negative news flow as far as high street retailers are concerned but the latest retail sales figures will provide a welcome tonic, with the number for August showing an unexpected rise of 0.3% in month-on-month terms,” said David Cheetham, analyst at online broker Xtb.

“The reading is all the more pleasing given that the prior month was also revised higher to 0.9% from an already strong 0.7%, in addition to the fact that most analysts expected a contraction - probably due to the prior month being such a strong reading and benefiting from 1-off factors such as positive world cup related spending on beer, waistcoats etc!”

Cheetham, however, highlighted that Brexit storylines would be the more decisive factor for the pound.

“Theresa May has reportedly told EU leaders that if an agreement can’t be reached by the end of a special Brexit summit pencilled in for mid-November then the UK would not seek to extend negotiations.

“Whether this is a negotiating tactic to try and strong-arm the EU into accepting a deal closely reminiscent of chequers or the actual government standpoint remains to be seen, but what can be said with a high degree of certainty is that things are coming to a head as far as Brexit is concerned and the developments in the coming weeks and months will be by far and away the biggest driving force on the strength of the pound going forward.”

9:50am: FTSE 100 only slightly higher as better-than-expected UK retail sales boosts pound

The pound rallied in the wake of better than expected UK retail sales statistics for August, revealing a 0.3% improvement for the month versus market expectations for a 0.2% decline.

“Retail sales remained strong in the three months to August, with continued growth across all sectors,” said Rhian Murphy, head of retail sales at Office of National Statistics.

“Food and household goods stores particularly benefitted from the warm weather when compared with last summer.”

Murphy added: “The figures for the month of August were a little more mixed, with food sales falling after strong sales earlier in the summer and clothing sales declining following a strong July, as suggested by clothing retailers.

“On the other hand, household goods grew strongly.”

In currency markets, the GBP strengthened against the dollar to 1.3184, up 0.38% for the day.

Meanwhile, on the stock exchange, the foreign exchange move dampened slightly the FTSE 100 positivity as it took some of the edge off the index’s multinational, dollar earners.

Standing at 7,334 the London benchmark was up just 3 points, 0.04%, for the session.

8.45am: Quiet start for Footsie

It was a fairly quiet start to proceedings in London with the FTSE 100 up around 13 points at 7,344.58, buoyed once again by the mining stocks.

Rio Tinto (LON:RIO) led the index of blue-chip stocks with a 1.9% gain, boosted by plans for a US$3.2bn share buy-back and as it emerged that China may counterbalance the negative impact of US trade tariffs with a fiscal stimulus programme.

Not far behind were Chile-focused copper producer Antofagasta (LON:ANTO) and diversified giant Glencore (LON:GLEN).

Follow-on selling hit B&Q owner Kingfisher (LON:KGF), which fell a further 1.4% in the wake of lacklustre half-year results on Wednesday.

The gambling group GVC Holdings (LON:GVC) was down 2% as it traded ex-dividend today and after it was revealed American fund manager BlackRock was trimming its position.

On the FTSE 250, pumps specialist Weir Group (LON:WEIR) was up 6% after Morgan Stanley upgraded the stock to ‘overweight’.

Among the tiddlers, Berenberg initiated coverage of the diamond miners. Its sparkler is Gem Diamonds (LON:GEMD), which it rates ‘buy’. Petra Diamonds, meanwhile, is a ‘hold’, and Firestone Diamonds (LON:FDI) a ‘sell’.

Proactive news headlines:

Providence Resources PLC (LON:PVR) can now start the countdown to the start of the Barryroe oil field development, as it today confirms the signing of a binding agreement for its proposed farm-out deal with its new Chinese partners. It promises to deliver Ireland’s first commercial offshore oil project, though the immediate focus will be on preparations for a new drilling programme slated to start next year.

Lansdowne Oil & Gas PLC (LON:LOGP) chief executive Steve Boldy told investors that the Irish explorer is looking forward with “great excitement” as a new binding partnership agreement has now been signed for the Barryroe farm-out.

Drug development services provider hVIVO PLC (LON:HVO) has its strongest sales pipeline for several years, according to chief executive Trevor Phillips. This month the group signed an £11.9mln contract that will start to contribute from October and throughout 2019.

As Hurricane Energy Plc (LON:HUR) counts down to its first production, targeted in the first half of 2019, the next milestone will come before the end of this month. The UK oil field developer now awaits the completion of sea trials for the Aoka Mizu FPSO vessel which is said to be in the final stage of upgrades in Dubai.

Stobart Group Ltd (LON:STOB) has continued to commercialise its core operating businesses in the six months to the end of August, delivering operational progress in its Aviation and Energy divisions.

Iofina plc (LON:IOF) found the market hard to please on Thursday with a set of interims that revealed an increase in revenue and underlying earnings.

BlueRock Diamonds PLC (LON:BRD) shares jumped in early trading Thursday after reporting a narrowed loss for the first half of the year as average grades and production increased at its Kareevlei mine in South Africa.

Caledonia Mining Corporation PLC (LON:CMCL) has added 13% to the most certain category resource at the Blanket gold mine in Zimbabwe. Measured and Indicated ounces are now 805,000oz, up from 714,000oz in August 2017, from 6.74mln tonnes at a grade of 3.72 g/t.

Frontier IP Group Plc (LON:FIPP) has taken a 10% stake in Amprologix, a spin-out from the University of Plymouth.

NetScientific PLC’s (LON:NSCI) portfolio company, ProAxsis, has had two of its products selected for inclusion in a major upcoming clinical trial into respiratory diseases.

Eco Atlantic Oil & Gas Ltd (LON: ECO, CVE:EOG) has agreed to increase its interests in the Tamar licence, offshore Namibia. The company has struck a share-based to buy-out partner Amis Oil and Gas Ltd, agreeing to issue 300,000 Eco shares in return for its 10% shareholding in the Pan Africa Oil Namibia Holdings vehicle, in turn effectively increasing Eco’s exposure to the Tamar licence up to 80% (from 72%).

The hot and dry weather in Colorado over the summer months has forced Highlands Natural Resources Plc’s (LON:HNR) partners to revise the fracking schedule at the East Denver project.

Range Resources Limited (LON:RRL) (ASX:RRS) said it has initiated a waterflood programme aimed at increasing water injection and oil production rates from early 2019 onwards as it expands in the South East (SE) area of the Beach Marcelle field in Trinidad.

Jersey Oil & Gas PLC (LON:JOG) chief executive Andrew Benitz said he is “very excited” over the prospects for the company’s key Verbier asset as partner and project operator Statoil advances an appraisal programme. Verbier was discovered with an exploration well almost a year ago, and, Statoil has subsequently put in place plans for a follow-up programme.

Eland Oil and Gas PLC (LON:ELA) has recorded its first ever profit after two new wells at its Opuama field in Nigeria meant production increased threefold.

Europa Metals Ltd (LON:EUZ) (ASX:EUZ) has increased the JORC mineral resources estimates for its 100%-owned Toral lead-zinc-silver project in northern Spain, following its recent re-logging programme of certain historical core samples.

Chaarat Gold Holdings Ltd’s (LON:CGH) Turkish mining contractor has begun deploying equipment at the Tulkubash gold deposit in the Kyrgyz Republic.

Alba Mineral Resources PLC (LON:ALBA) said a team had been dispatched to North Wales to carry out electromagnetic and magnetic geophysical surveys on its gold asset there. It follows the completion of a geochemical assessment of the Clogau-St David's mine area and near-mine extensions, samples from which have been sent for analysis.

Oracle Power PLC (LON:ORCP), which is developing a coal-fired generating plant in Pakistan, is plotting out the next phase of development of the project as it eyes sign-off from the authorities. In an update alongside interim results, the company said it will put down a US$700,000 performance bond once the Private Power Infrastructure Board has granted a notice to proceed and formally rubber-stamped a letter of intent for the 700MW facility.

Motif Bio Plc (LON:MFTB) (NASDAQ:MTFB), the clinical-stage biopharmaceutical company specialising in developing novel antibiotics, has announced that iclaprim data will be presented at two upcoming scientific conferences – IDWeek  2018 in San Francisco from October 3-7, and the World Anti-Microbial Resistance Congress in Washington DC from October 25-26.

6.45am: Muted start predicted

The FTSE 100 is expected to begin Thursday’s session on the front foot, it seems that markets are capable of keeping their heads in what feels like volatile times, on the international scene at least.

CFD provider IG Markets sees the London index up around 7 points, calling the spread at 7,336 to 7,340 with just over an hour to go until the open.

Naturally, international trade tensions persist but that is becoming something of a norm.

“Trade tensions have stepped up, but you wouldn’t know it to look at European and US equity markets. The $200 billion worth of tariffs from Trump and Beijing’s reaction wasn’t exactly a surprise,” said David Madden, analyst at CMC Markets.

“Investors are cautiously optimistic as that round of tariffs weren’t too severe. Equities in Asia overnight were mixed as the mood isn’t particularly strong one way or another.

“The Trump administration and Beijing have hardened their positions, but as long as trading relations don’t take another sour turn, investors could remain upbeat.”

Of course, the word Brexit is rarely far from anyone’s lips on this side of the Atlantic, and, indeed, the issue is a distraction for the economy.

Britain’s latest batch of hard economic stats come this morning, with the release of August retail sales data at 9:30 am. Consensus estimates see a 0.2% decline in the monthly figure, versus July’s 0.7% improvement, and, plainly the actual number will be closely watched by traders.

Last night, in New York, the Dow Jones closed up 158 points or 0.6% for the day at 26,405 whilst the S&P 500 ended 0.13% higher at 2,907 and the Nasdaq was down slightly, finishing Wednesday’s session at 7,950.

In Asia, Japan’s Nikkei climbed 0.14% to 23,706 as Hong Kong’s Hang Seng added 0.18% to 27,457 and the Shanghai Composite was only slightly in positive territory at 2,734.

Significant events expected on Thursday:

Interims: Lamprell PLC (LON:LAM), Summitt Therapeutics PLC (Q2) (LON:SUMM), The City Pub Group PLC (LON:CPC), hVivo PLC (LON:HVO), Modern Water PLC (LON:MWG), Safestyle UK PLC (LON:SFE), Science in Sport PLC (LON:SIS), Scisys Plc (LON:SYS), Venture Life Group PLC (LON:VLG)

Finals: Brooks Macdonald Group plc (LON:BRK), Diurnal Group PLC (LON:DNL), Inland Homes Plc (LON:INL), Kier Group PLC (LON:KIE)

AGMs: Diageo plc (LON:DGE), GlaxoSmithKline plc (LON:GSK), Ryanair PLC (LON:RYA)

Ex-dividends: GVC Holdings PLC (LON:GVC)

Economic data: UK retail sales; US weekly jobless claims; US existing home sales; Philly Fed business outlook survey

Around the markets:

  • Sterling: US$1.3150, up 0.05%s
  • Gold: US$1,205 an ounce, up 0.25%
  • Brent crude: US$79.68 a barrel, up 0.8%
  • Bitcoin: US$6,390, up 0.02%

City Headlines:

  • Rising inflation and sluggish growth pose dilemma for BoE – Financial Times
  • Equifax fined by ICO over data breach that hit Britons – BBC News
  • Tesla to be investigated by US Justice Department over Elon Musk tweets – Independent
  • China's Tencent Music seeks $2 billion in US IPO - Reuters
  • Ryanair strikes to go ahead as cabin crew REJECT airline's offer - Express
  • The US-China trade war is unlikely to be settled soon – Guardian

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