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FTSE 100 drops; RBS hit by huge fine warning

Last updated: 17:22 16 Nov 2016 GMT, First published: 06:46 16 Nov 2016 GMT

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FTSE 100 stocks dropped on Wednesday, dragged lower by housebuilders and building materials firms, as investors absorbed a poor trading statement from Barratt Developments (LON:BDEV). But RBS (LON:RBS) may have more bad news in the morning.

The FTSE 100 closed down 0.6% at 6,749.

Although the UK homes market is strong, London is cooling, Barratt said. Its shares ended 2.8% lower at 2701p and became the second-biggest faller on the ticker.

It was only beaten to the top of the fallers by building materials and construction group CRH plc (LON:CRH), down 2.9% at 2,702p.

Other related stocks among the top fallers were Wolseley (LON:WOS), down 2.5% to 4499p, property investor British Land (LON:BLND) down 2.3% to 592.5p, and Travis Perkins (LON:TPK) down 2.1% to 1387p.

Another faller was RBS down 1.9% to 208.4p. But the stock has scope for more declines on Thursday after the market digests news after the closing bell that may be hit with a fine as high as $12bn from US authorities, the head of the government arm that manages the UK’s stake in the lender has told lawmakers.

RBS is under investigation by the US Department of Justice over the way it sold mortgage-backed securities in the run-up to the 2008 financial crisis. The fine would be a close match to the still-contested $14bn fine meted out to Germany’s Deutsche Bank earlier this year.

Conversely, Relx (LON:REL), the former Anglo-Dutch publisher Reed Elsevier, was the biggest riser, up 2.9% to 1332p.

The mid-cap FTSE 250 closed down 0.6% at 17,473, led by broker ICAP (LON:ICAP), down 10.6% to 476.4p. ICAP slumped even as it told investors it enjoyed a boost in trading activity from the weakness of the pound and the US election – the latter for creating more volatility.

Earlier, ICAP reported first-half trading pre-tax profit fell 7%, hurt mainly by a rise in net finance costs.

ICAP's trading performance was also hit by historically low and negative interest rates, low levels of volatility and bank deleveraging, resulting in reduced risk appetite from bank customers, the company in a statement on Wednesday.

The second-biggest faller was online retailer Ocado (LON:OCDO), down 8.5% to 258.5p. It was a heavy loser after supermarket Morrisons (LON:MRW) announced a deepening of its home delivery tie-up with Amazon. Not that it helped Morrisons shares, down 1.7% to 218.14p.

Ocado already has a deal in place to deliver orders from Morrisons.com.

Among smaller caps, the FTSE AIM 100 Index was down 0.4% at 3874 and the FTSE AIM All-Share Index was down 0.4% at 809.

The gainers in London were in the minority. Only 26% of stocks gained while 36% fell.


  • FTSE 100 down 37 at 6,755

  • Wall Street starts lower

  • British Land & Barratt Dev among London's fallers

 

Small cap risers - 3.55pm

Amur Minerals (LON:AMC)  topped the late risers, but for no notifiable reason said the company. Amur is developing the huge Kun-Manie deposit in Far East Russia. Shares rose 30% to 5.94p.

Churchill Mining PLC (LON:CHL) also shot higher. The ICSID Tribunal considering its claim against the Indonesia government is finalising its decision. Shares rose 32% to 39p. The company is seeking compensation after the expropriation of the firm's rights over the huge East Kutai coal mine.

 

Wall Street's soft start puts dampener on FTSE 100 - 15.17pm

A softer start in New York kept the dampeners on the FTSE 100 on Wednesday afternoon, with London’s blue-chip benchmark down 30 points, just less than 0.5%, changing hands at 6,762 at 15:00.

Wall Street’s Dow Jones was 55 points, 0.3%, lower at 18,867 while the S&P 500 was down by a similar margin at 2,174 whereas the Nasdaq was down just 0.13% at 5,268.

In UK markets housebuilders and property firms were at the foot of the FTSE table.

British Land Co Plc (LON:BLND), down 3.1% at 587.75p, this morning revealed a Brexit shaped dent in its business with a £205mln interim loss and a 2.8% fall in net asset value.

Housebuilder Barratt Developments Plc (LON:BDEV), meanwhile, was down 2.55 % to 470p after it news of price cutting emerged.

 

13:00 - FTSE 100 slips as Trump effect eases

China Africa Resources PLC (LON:CAF) jumped 51% to 9.85p and led the small cap movers as it revealed it is in the final stages of a corporate transaction, while Petro Matad Limited (LON:MTD) jumped 31% to 3.95p as it significantly upgraded its prospective basin portfolio at its acreage in Mongolia.

Construction equipment group Speedy Hire Plc (LON:SDY) returned to the black with an interim profit of £5.9mln. “Our recovery is well-established” said Russell Down, chief executive, helping its shares rise 15% to 42.27p.

Flowgroup PLC (LON:FLOW) was a faller as the smart boiler group launched as strategic review of its microCHP operation due to the reduction in feed-in tariff payments. The review may lead to sale or closure, news that sent the shares down 8% to 10.72p.

Read: Downbeat ICAP under pressure even with Trump rally

 

10.30 am - FTSE 100 slips as UK unemployment drops; Severn Trent flows higher

FTSE 100 slipped lower in deals as traders mull over the prospect of global interest rate rises and as there was better than expected employment data in the UK.

Unemployment fell by 37,000 to 1.6 million in the three months to September, official UK stats showed, underlining  the argument that Brexit may in fact be good for Britain.

However, analysts pointed out that the pace of jobs growth was slowing  and data showed the number of people claiming unemployment benefits in October increased by 9,800, the biggest rise since May.

FTSE 100 is down over ten points, or 0.15% to 6,782, while FTSE 250 is flat at 17,573.

The biggest gainer on the day is water firm Severn Trent plc (LON:SVT), which sits atop the FTSE 100, up 2.24% to 2,187p as it revealed it is set to buy  smaller provider Dee Valley.

Having been higher earlier, Rolls Royce (LON:RR.) eased back 4.24% to 722.50p as it updated ahead of the engineer's open day for analysts and investors. Meanwhile, London-focused homes builder Barratt Developments PLC (LON:BDEV) fell 2.67% to 469.20p  as it echoed comments from rival Taylor Wimpey abut a more difficult housing market in the capital.

Conditions at the top end of the capital’s housing ladder have become more challenging, it said, and to mitigate the risks, prices have been reduced on a number of sites.

In macroeconomics, markets are  looking at increasing US bond yields in recent days, suggesting that the increased costs of borrowing for the US government will inevitably lead to interest rate hikes sooner rather than later.

 

9am - FTSE 100 gets off to quiet start

It was a rather quiet start to proceedings on the FTSE 100 with the index of blue-chip shares registering an eight point decline to 6,785.07.

Rolls Royce PLC (LON:RR. was one of the market’s main risers after what can best be described as a re-assuring update ahead of the company’s open day for analysts and investors.

The markets aren’t being particularly kind to Rolls, but its self-help programme of cost savings is getting some traction.

Joining Rolls near the top of the leader board was easyJet PLC (LON:EZJ), which enjoyed a bit of a bounce after Tuesday’s interims.

 

6.30am...FTSE 100 called higher

FTSE 100 is called to start higher on Wednesday taking the cue from a strong market performance in the US and a rise in oil prices.

Investors are also still mulling the economic repercussions of a Trump presidency and the high chance of a US interest rate rise, as the cost of borrowing for the US government gets higher.

Oil is the big story overnight and futures prices for US benchmark crude shot up from levels of US$44.50 a barrel levels to break briefly above US$46. West Texas Intermediate is now up 0.63% to stand at US$46.10.

The rise is down to optimism that OPEC will manage to strike a deal on an output cut to steady prices.

Yesterday, supermarkets and retailers helped FTSE 100 to a positive finish at 6,792 - up 0.59% or 39 points. It is tipped to start 23.7 points higher today.

The Dow Jones then added 0.29% to 18,923, while the broader based S&P500 gained 0.75% and the Nasdaq added 1.10% to 5,275.

The yield on the 10 year US government bonds slipped a tad but to 2.207% but it is still sharply higher than pre-election levels, suggesting that interest rates will have to be raised soon, which could then filter out across the rest of the globe.

In Asia, with an hour to go the Japanese Nikkei 225 is up 1.10% to 17,862, while the Shanghai Composite Index is down 0.2% to 3,200.

In UK corporate news today, there is a trading statement from house builder Barratt Developments PLC (LON:BDEV).

It will update on events since its previous statement in early September, when it said hadn’t felt any head winds from the EU referendum vote.

Investors will be looking to learn whether this is still the case, and they’ll also want to find out more about the London region in particular.

City Headlines

  • Iron ore miners in Australia took a bath as futures for the January 2017 contract fell 7.9% on the Dalian Commodity Exchange, their biggest one-day drop this year, writes the FT
  • Snapchat's parent company has quietly filed documents for a stock market listing that could see the virtual messaging company valued at between $20bn and $25bn, reports the Telegraph
  • The Pension Protection Fund was attacked by MPs last night after it was revealed that it paid a public relations firm more than £600,000 over the past two years, theTimes writes.
  • Google is to expand its UK presence and almost double its headcount in London over the next few years in an effort to recruit engineering talent and entrench itself more deeply in markets outside the US, writes the FT.
  • Tim O’Toole, head of FirstGroup, which operates the Tramlink network on behalf of Transport for London in the south of the capital, dismissed suggestions that drivers’ erratic shift patterns may have contributed to the Croydon tram crash, the Times.
  • Vodafone wrote off £4.3bn after India's richest man gave away mobile phones and free calls in a bid to scupper the firm's growth, reports the Mail.
  • Cost of cake set to rise, says Mr Kipling maker - The Guardian
  • Electricity prices to rise 10% in January - and yes, you've guessed it, green taxes are to blame - ThisisMoney
  • Nigel Farage hints he may seek to rejoin the Tories as sources suggested he will meet with Theresa May – The Telegraph

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