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FTSE 100 shares slid despite high-flying Tui

Last updated: 17:33 14 Feb 2017 GMT, First published: 06:00 14 Feb 2017 GMT

Traders
  • FTSE 100 gives up gains

  • Tui the outstanding gainer

  • Engineers take a beating

  • The pound falls 0.49% against the US dollar to  $1.2464

  • Sterling falls 0.25% against the euro to 1.1790 euros

The FTSE 100 just didn’t travel on Tuesday as the blue-chip ticker gave up light gains to end lower despite bumper results from travel firm Tui (LON:TUI).

The benchmark FTSE 100 ended down 0.14%, at 7,286.

Tui was the biggest riser on the index, up 5.3% to 1218p after its said first-quarter losses had narrowed. The company was boosted by a strong rise in UK bookings, which were up by 10% in volume from a year earlier.

On the flipside, engineer Rolls-Royce (LON:RR.) was the biggest faller in the index, down 4% to 7109.5p after it reported a pre-tax loss of £4.6bn. The aerospace company was hit by the cost of a bribery settlement, and currency-related contracts were affected by the post-Brexit vote fall in sterling.

That downside also wore off onto rival BAE Systems plc (LON:BA.) down 1.7% to 605.5p.

News that Anglo American's (LON:AAL) chairman, John Parker, plans to step down from the role in 2017 after eight years and spur a headhunt left the miner as one of the day’s losers. The shares ended down 1.3% at 1391p.

But in better mining news, the mid-cap FTSE 250 ended higher by 0.2% at 18.787 and led by Acacia Mining plc (LON:ACA) up 8% at 502.5p after it returned to profit in the final quarter of 2016 as it said 2017 gold production increased to between 850,000-900,000 ounces at lower costs of $880-$920 per oz.

Fourth quarter pre-tax profits rose to $62mln compared with a loss of $131.9mln year-on-year. Revenues were up to $263.9mln from $228.7mln.

The FTSE AIM 100 Index closed 0.2% higher at 4321 and the FTSE AIM All-Share Index up 0.3% at 902.

London gainers and losers were evenly matched at 33%.


 

1515 GMT - FTSE 100 flat with US stocks mixed on Yellen

  • FTSE 100 down 1 point

  • US stocks mixed on Yellen

  • Pound weak after UK inflation misses forecast

  • Rolls-Royce drops after posting record loss

3.15pm … Flat as Yellen digested …

The Footsie turned flat in late afternoon trading as US stocks turned mixed early on with investors cautious as Federal Reserve boss Janet Yellen delivered her latest congressional testimony.

Around 3.10pm, the FTSE 100 index was down just over 1 point at 7,277, well below the day’s peak of 7,292 which was hit after the pound took a tumble as a rise in UK inflation in January  missed forecasts.

Sterling was still down around 0.5% versus the US dollar at US$1.2464, and lost 0.4% against the euro at €1.1744.

On Wall Street, after hitting fresh record highs yesterday on hopes US president Donald Trump will deliver on tax proposals, the Dow Jones ticked 9 points higher after around the first 40 minutes of trading today, but the S&P 500 and Nasdaq composite were lower.

Investors were tuned to Yellen’s prepared remarks to Congress, with the Fed chair saying the US economy is expected to continue to expand at a moderate pace, which should allow the central bank to raise interest rates at a gradual pace.

Financial markets think the central bank will next raise rates in June, but Yellen did acknowledge that there is a risk of the Fed waiting too long to raise rates.

She said it would be “unwise” to delay because it might require the central bank to eventually raise rates rapidly.

1.30pm ... Inspiration sought ...

FTSE 100 was looking to the US for inspiration after going nowhere for most of the day.

The index was up just four points at 7,283 ahead of the start of Wall Street trading, where spread bet firms are predicting gains of around ten points for the Dow Jones Industrial.

Most of the big movers were among the small caps, where HaloSource Inc (LON:HAL) rocketed higher as its technology to extract lead from drinking water using a cartridge completed a successful US pilot trial.

The formulation reduced both colloidal lead and dissolved lead salts to below the current acceptable threshold of 10 parts per billion (ppb). Sahres added 20% to 1.65p.

Veltyco Group’s (LON:VLTY) shares jumped 18% to 42p as it reiterated 2016 results will be “significantly” ahead of market expectations.

The AIM-listed online marketing company for the gaming, lottery and financial trading industries has anticipated net revenues in excess of €5.7mln in 2016, compared to €2.6mln the previous year, while underlying profit will be €2.0mln compared with €0.7mln in 2015.

Getech PLC (LON:GTC) was another small cap riser as it picked up a contract from the UK's Oil and Gas Authority (OGA) to map the south west approaches of the UK continental shelf (UKCS).

The Wood Report recommended the UK government and industry have a current and easily accessible digital record of the geology and prospectivity of the UKCS and the contract is part of that programme. Shares rose 7% to 44.35p.

10.30am … Inflation below forecast …

The FTSE 100 rallied higher by mid morning as the pound took a tumble after an increase in UK inflation in January slightly missed forecasts, easing any lingering Bank of England rate hike concerns.

Around 10.25am, the UK blue chip index was nearly 9 points higher at 7,287, having recovered from an earlier session low of 7,251.

But on foreign exchanges, sterling dropped 0.6% versus the US dollar to US$1.2452, and shed 0.7% against the euro to €1.1738 after the UK consumer price index increased to 1.8% last month, the highest level for 31 months, but below forecasts for it to hit 1.9%.

David Cheetham, market analyst at XTB.com, commented:  “The latest UK inflation figures have risen once more, but by less than forecast.”

He added: “Despite the increase the reading is still below the 2% target for the BoE and is unlikely to have any tangible effect on future monetary policy. The immediate reaction has seen the pound fall lower whilst the FTSE 100 has rallied to its highest level of the day. “

9.30am ... Marking time ...

The FTSE 100 essentially marked time ahead of inflation data expected later this morning.

Despite a triple digit rise on the Dow Jones overnight, the index of blue-chip shares was marching to its own beat as it reversed 6 points to 7,272.

Top of the fallers was jet engine maker Rolls Royce (LON:RR.), which weighed in with a record £4.6bn annual loss.

The fall of 2.3% fall in the shares, wiping around £300mln from the business, would appear a small punishment for such a large misdemeanour.

But there are two factors to remember here: The market was braced for the loss; and also, stripping out the one-off costs and write-downs, the figures were slightly better than expected.

Flying a little higher was TUI AG (LON:TUI), whose shares gained 2% after its guardedly optimistic assessment of the 2017 holiday market buoyed investors.

On the march again was lithium exploration firm European Metals Holdings (LON:EMH), up 18%.

Drilling results last week appear to have sparked a buying frenzy, which has seen the stock advance 60% in just five trading days.

Early reporters among the small caps included Anglo Pacific Group PLC (LON:APF), which held steady at 125.6p as the royalty specialist completed a move into uranium production in Canada though a 22.5% share of the toll milling proceeds from the McClean Lake Mill.

Horizon Discovery PLC (LON:HZD) extended its contract with an unnamed top three pharma to include in vitro services, which added 1p to its share price at 176p.

Allergy Therapeutics plc (LON:AGY) has received approval for a phase I clinical study of the Acarovac MPL dust mite treatment. A total of 32 patients will take Acarovac, which will be administered at two different doses. Shares rose 3% to 25.34p.

Collagen Solutions PLC (LON:COS) dipped to 5.25p on news it is to raise up to £12mln through a placing and open offer at 5p.

Ariana Resources plc (LON:AAU) rose 2% to 1.94p as switch-on at Kiziltepe in Turkey seems imminent following completion of the tailings dam at the new gold mine.

Meanwhile, also in Turkey, Mariana Resources plc's (LON:MARL) first three of seven proposed holes at the Ergama gold-copper project in Balikesir province, in the west, returned wide intervals at depth indicative of a big porphyry system. Shares rose a touch to 75.6p.

6.45am ... Forget Wall Street ...

Despite a strong showing last night on Wall Street, UK equities are set to take a small step back.

Spread betting quotes suggest the FTSE 100 will open around 10 points down from last night’s close of 7,278.

Across the pond, the Dow enjoyed a triple digit gain last night, advancing 143 points to 20,412, while the broader-based S&P 500 climbed half a percentage point, or 12 points, to 2,328.

In Asian markets, heading into the final hour of trading, the Hang Seng in Hong Kong was more or less flat, while in Tokyo the Nikkei 225 was down 140 points to 19,319.

There was a bit of Chinese data for traders to chew on, with the inflation rate in the People’s Republic rising to 2.5% in January from 2.1% in December.

It’s the highest level the annual inflation rate has been at in China in more than two-and-a-half years, and was ahead of the consensus forecast of 2.4%.

The UK will have its own inflation data to ponder today.

“Rising fuel and food prices likely pushed up CPI inflation to a 31-month high of 1.9% in January,” predicts Samuel Tombs, the chief UK economist at Pantheon Macroeconomics.

“Core inflation likely edged up too, but it will make bigger upward strides over coming months. CPI inflation still is set to peak at 3.5% in late 2016, but weak wage growth will keep rate hikes at bay,” Tombs said.

On the company news front, power systems developer Rolls-Royce Holdings PLC (LON:RR) is all revved up and ready to release its 2016 results.

The news flow surrounding Rolls-Royce in recent months has been dominated by corruption investigations in the US, the UK and Brazil, so the company will be keen to turn in some eye-catching numbers to restore some lustre.

Analysts at the Share Centre consider the prospect unlikely, as the market believes that revenue for the year will be down slightly as sales of new engines have cannibalised older models.

In a preview note, they said: ”Group profits will also be hurt by FX hedges that have gone wrong because of Brexit.

“Nevertheless, it’s the forward looking statement on potential new contracts, progress on group restructuring and lowering costs that will be more important.”

If the winter gloom is getting you down, the first quarter trading update from travel giant TUI Group PLC (LON:TUI) might at least remind you to get that summer break booked, if you have not already done so.

The portents do not look good for TUI, given the less than stellar update earlier this month from sector peer Thomas Cook Group PLC (LON:TCG).

On the other hand, in December, TUI Group said trading for the winter and summer 2017 seasons was in line with expectations.

Around the markets

  • Sterling: US$1.2544, up 0.18 cents
  • 10-year yield on gilts: 1.392%
  • Gold: US$1,231.30 an ounce, up US$5.50.
  • Brent crude: US$55.65 a barrel, up six cents

Headlines

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  • Fevertree gingers up its drink range – The Times
  • Inflation forecast to hit 1.9% - The Independent
  • Johnson & Johnson ditches plastic cotton buds over marine pollution – The Independent
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  • Lidl’s UK Prosecco sales surged 79% despite growing trend of Dry January – The Independent
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  • Troubled lingerie chain set to be sold: Profits and sales plunge at Agent Provocateur – Daily Mail
  • Lloyds Banking Group eyes Berlin for new EU base post-Brexit – City AM

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