FTSE 100 closes over 2% higher
Sterling lower against euro
Macron favourite to win second round of French election
FTSE 100 stormed to a higher finish on Monday as traders welcomed the first round of voting in France.
Emmanuel Macron is the Centrist and pro-EU candidate and won the first round of voting. He will now face Marine Le Pen in the next round on May 7.
Markets in Europe and across the pond are reportedly taking cheer from the fact that Macron's sucess makes a Fench departure from the EU less likely.
Wall Street shares were also higher after it emerged the Trump administration is presenting its tax cut plans on Wednesday.
FTSE 100 closed at 7,254 - up over 150 points, or 2.11%.
The Dow Jones Industrial Index is up over 216 points at the time of writing.
On Footsie, while the tide was up, losing ground today were big utilities Centrica (LON:CNA) and SSE (LON:SSE), down 3.51% and 1.94% respectively after it emerged Theresa May's Conservative manifesto will include a cap on household bills.
Total group revenues for the three months ended 31 March were 34% ahead of last year’s numbers at £1.5mln (Q1 2015: £1.1mln), driven largely but a strong contribution from its bioplastics division.
3.55pm... Gold prices fall, dollar weakens versus euro
Spot gold is down 0.94% to US$1,272.31 per ounce while the dollar is down 1.23% against the euro after the first round of the French presidential election.
Carlo Alberto De Casa, chief analyst at ActivTrades, said:“The French election has managed to disrupt the usual relationship between the dollar performance and that of gold. Although technically the trend for gold still appears positive with the first support area is be placed at $1,261 per ounce, we are seeing gold prices fall as well as the greenback dropping – when one goes up, the other usually goes down.
“It is all about risk and forecasting in the market. The fear of Le Pen storming to victory appears to have gone and along with it, any worries the banking sector has harboured over a crumbling of the Eurozone. We’ve seen the French stock market rise 4% as a result and traders are more prepared to invest in more risky propositions and less drawn towards the safe haven of gold at the moment. The dollar/gold pay off could be an interesting saga over the next couple of weeks.”
3.25pm... Hollande backs Macron in French presidential election
French President François Hollande has said he will vote for Emmanuel Macron in the second round of the elections on 7 May when he is up against far-right leader Marine Le Pen.
Hollande said the far-right would threaten to tear apart the European Union and "profoundly divide France".
3.06pm....Motif Bio shares boosted on target price hike
The company last week reported positive top-line data from a phase 3 trial of its lead drug candidate, the next-generation dihydrofolate reductase (DHFR) inhibitor iclaprim for the treatment of acute bacterial skin and skin structure infections.
Top line results from the REVIVE-1 global study showed it scored well against one of the leading products, vancomycin, on two counts.
“We note that the data came slightly ahead of schedule, with our original expectation being that it would be announced in late April or early May,” said Rodman & Renshaw analyst Raghuram Selvaraju.
“In our view, the positive REVIVE-1 results constitute a critical milestone for Motif Bio and position iclaprim as a promising late-stage antibiotic candidate with the added advantage of membership in a sparsely populated drug class.”
The analyst added that it thinks Motif is “underrated and undervalued” with an attractive niche. Selvaraju said Iclaprim could target 1.2mln patients in the US Europe and Japan and may become a franchise comparable to Cubicin, which had more than US$1bn sales in the US.
2.35pm...FTSE 100 holds gains
The FTSE 100 has held onto gains, rising 130 points to 7,245.36, while the pound is down 1.53% versus the euro at €1.1759 as investors continue to breathe a sigh of relief following news that Emmanuel Macron will go through to the second round of the French presidential election. Macron is the firm favourite to win and is supportive of keeping France in the European Union.
1.20pm... Worries over possible clampdown on energy firms
“Further details of the clampdown will only become known upon publication of the party manifesto on 8 May utilities but the market is already taking evasive action, amid fears of what the policy may mean for power utilities profits and therefore dividends," said Russ Mould, investment director at AJ Bell.
“This will be of some concern to income investors in particular, as SSE is the fifth highest yielding stock in the FTSE 100 and Centrica the eleventh highest."
12.49pm...Sterling slides against euro after French elections
The pound has dropped 1.11% against the euro to €1.1810 following Emmanuel Macron's success in the first round of the French presidential election.
Paul Sirani, chief market analyst at Xtrade, said sterling could fall further ahead of the UK's general election.
"Macron topped the voting in the first round, and if elected, his pro-EU agenda could continue to stabilise markets and boost the euro in the coming months," he said.
"This could spell bad news for the Brexit-hit pound; the prospect of losing further ground to the euro may be heightened by uncertainty surrounding June’s General Election, with sterling volatility far from over.”
12.00pm...Weaker post-Brexit pound boosts exports, CBI survey shows
UK manufacturers have recorded the strongest growth in export orders for goods in six years in the three months to April, helped by a weaker pound following the Brexit vote.
The CBI’s latest industrial trends survey also showed domestic orders improved at the fastest pace since July 2014.
However, a slump in the pound meant manufacturers reported the strongest rise in unit costs in six years.
In April alone, firms recorded a slowdown in export orders after a robust performance in March.
“The April CBI monthly and quarterly surveys point to a recent robust performance by manufacturers, but the more forward-looking indicators suggest that the sector is starting to find life more challenging – which we suspect will be increasingly the case going forward,” said Howard Archer, chief UK and European economist at IHS Global Insight.
11.26am...Genel Energy shares gain as chairman Hayward steps down
Former BP boss Tony Hayward will step down from Genel Energy as its chairman in June amid struggles at the loss-making firm.
Hayward, who co-founded the Kurdistan-focused oil explorer in 2011, will be suceeded as chairman by Stephen Wyte, who has previously worked at Royal Dutch Shell. Hayward left BP in 2012 following the company's scandal over the Deepwater Horizon oil spill in the US.
His resignation from Genel following a string of problems, including asset writedowns, a slump in the oil price and failed drilling campaigns. The group reported a wider loss last year of US$1.3bn from US$1.2bn in 2015.
Shares in Genel gained 1.83% to 78.92p following the announcement.
10.58am...A Macron win would make it easier for ECB to taper, says Wilson
Neil Wilson, senior market analyst at ETX Capital, on the rally in banking stocks this morning: "Banks are doing well because there is now no major risk of significant outflows from the European banking system as investors no longer worry about the future of the euro. Until the Italian elections that is.
"The recovery in European banks is also a sign that with Macron anchoring French politics, it’s going to be easier for the ECB to raise rates and/or taper sooner; easier for businesses to invest and grow earnings; and that global reflation is still on. US stocks should enjoy a bump today too."
10.05am... Banks rally as euro strengthens on French elections
The FTSE is up 129 points to 7,244.25, tracking gains in Europe following the success of Emmanuel Macron in the first round of France's presidential election. The euro jumped 1.08% versus the pound to €0.84688. Investors feared that far-left Jean-Luc Mélenchon would beat Centrist Macron, giving voters a choice between two candidates that could push for France to leave the European Union. Macron will face far-right leader Marine Le Pen, but is the favourite to win.
Joshua Mahony, market analyst at IG, said: "The French political structure means that we were always going to see a second round, and the divisive nature of Le Pen meant that by and large, any of the others would be favourites against her. In Macron, we see the strongest opponent pitted against Le Pen, in what is likely to be the final vote of confidence for the EU in what was always going to be a critical year for the future of Europe. While this result was widely anticipated, we are seeing a substantial amount of hedges unwound this morning with most seeing this as the end of the political upheaval, hence the sharp gains for European stocks and the euro."
The rally in the euro gave shares in European banks a boost, including Societe Generale and Credit Agricole. A positive read-across the for the sector also pushed shares in London-listed banks higher, including Barclays (LON:BARC), Lloyds Banking Group plc (LON:LLOY) and Royal Bank of Scotland Group plc (LON:RBS).
9.00am...Frexit seemingly averted
The relief was palpable in the Square Mile with the French election likely to return a pro-EU candidate when the run-off takes place on 7 May.
The markets may be braced for Brexit, but Frexit? Well, that would likely have seen the disintegration of the EU, commentators said.
Okay, so the hard-right euro-sceptic Marine Le Pen is into the run-off. However, France’s establishment (and the electorate) look likely to back the independent centrist who came from nowhere, a chap called Emmanuel Macron.
On this side of the Channel, and specifically the dealing rooms of London, the new was greeted enthusiastically (even if it their inhabitants aren’t natural Europhiles). With uncertainty receding the FTSE 100 soared 112 points to 7,226.89.
“The run-off between Marine Le Pen and Emmanuel Marcon has been interpreted by the markets as a slam-dunk for En Marche, which is really a watered down edition of the failed Hollande government,” said David Buick, market commentator for the City firm Panmure Gordon.
“The only really visible difference is that this party is now headed by a ‘matinee idol’ leader with establishment and banking credentials – suave in his presentation, with enormous appeal to the young.
“Of course he is passionate about expanding France’s role in the EU and is no friend of the UK. He makes no secret of the fact that he intends to persuade the banking community to leave London and set down their stalls in Paris post Brexit. I suspect that he will have limited success.”
Centrica (LON:CNA) led the fallers as it receded 3.7% following the comments by Damian Green suggesting there will be a cap to the charges levied by the utilities if the Conservatives are re-elected in June.
Proactive news headlines...
Amryt Pharma PLC (LON:AMYT) has enrolled its first patient to the EASE phase III clinical trial of AP101. Also known as Episalvan, it offers a potential treatment for the rare, genetic skin disorder Epidermolysis Bullosa (EB).
Loss-making multi-currency payments service FairFX Group Plc (LON:FFX) turned a corner in the fourth quarter, achieving a net profit. The momentum has continued into the current year, with the first quarter seeing revenue growth of 33.1% to £2.6mln from £1.9mln the year before.
The world’s biggest golf tour has chosen AIM-listed digital media and social video broadcaster Brave Bison Group PLC (LON:BBSN) to help enhance its presence on YouTube. The PGA Tour is using Brave Bison’s experience in the world of social media to help maximise engagement with younger audiences on the popular video sharing platform.
Avacta Group Plc (LON:AVCT) said it is at an “important value inflection point” after validating the commercial potential of its Affimer technology and by extension the company's business model. It follows the successful evaluation of its technology by a “large, global diagnostics developer”. Shares rose 9% to 76p.
Healthcare and biomedical investor Netscientific PLC (LON:NSCI) portfolio company Wanda has sold off its stake in OncoVerse LLC for an undisclosed sum. The sale to BTG plc (LON:BTG) represents a “strong return” on the NetScientific’s initial investment and a “successful exit” from the first downstream application from Wanda, NetScientific said. Shares rose 5% to 57p.
Aminex plc (LON:AEX) has announced a major upgrade to the gas resource estimates for the Ntorya project in Tanzania, with the mean gas in place figures rising to 466 BCF from 153 BCF. Ntorya partner Solo Oil PLC (LON:SOLO), meanwhile, added its view of contingent resource volumes - with the 2C estimate of186 BCF, up from 70 BCF.
Aminex soared 14% to 5.63p and Solo added 2% to 0.484p.
Mobile commerce company mporium Group PLC’s (LON:MPM) decision to use media agencies as the distribution channel for its flagship IMPACT product has proved effective, it said in its full-year results. The pipeline for IMPACT is very strong , the "mobile first" digital advertising agency said, as it unveiled increased revenue of £1.82mln in 2016 from £1.27mln in 2015. The loss before tax narrowed to £4.18mln from £4.62mln.
Hummingbird Resources (LON:HUM) said its Yanfolila gold project in Mali is on time and on budget with 410 people on the ground during the construction phase. Chief executive Dan Betts is confident of having the 1.2mln tonne-a-year operation ready to enter the initial mining phase during the third quarter, enabling the first gold pour by the end of the year.
6.45am...strong start predicted
The FTSE 100 looks set to open strongly following the first round of French general election, which delivered what one commentator described as the “least bad” option.
The index of blue-chip shares looks likely to advance 43 points at the open to 7,157.55, according to the spread betters.
On Sunday hard right anti-EU candidate Marine Le Pen made it through to the final run-off on May 7.
She will be up against Emmanuel Macron, the independent centrist, who on current polling looks likely to become president.
Macron is pro-EU, which essentially means the possibility of Frexit has receded.
“While this is likely to be greeted with relief this morning, for markets this was always the least bad option, with most expecting Mr Macron to become president in two weeks’ time as the other candidates endorse him over Marine Le Pen,” said Michael Hewson, analyst at CMC Markets.
“What this won’t do is change the political schism that has opened up in France or change the sense of grievance amongst large sections of the French population, nearly 40% of whom voted for a Eurosceptic candidate, while Mrs Le Pen could well also put in a strong showing in the second round.”
In Asia the reaction was mixed with Japan up strongly, Hong Kong flat and Shanghai off 1.6%.
Back here in the UK, it looks set to be a busy week for corporate news with a welter of blue-chips reporting.
- Brent crude down 0.99% to US$51.45 per barrel
- Gold fell US$12.13 to US$1272 per ounce
- Pound worth US$1.2785
- International Airlines Group, the owner of carriers British Airways and Iberia, is stepping up its digital investment by taking stakes in two technology start-ups, Esplorio and VChain, following its first accelerator programme – FT.
- Credit Suisse is braced for a shareholder revolt this week over compensation for its top managers, despite the Swiss bank’s executive board agreeing a voluntary 40% cut in its bonuses – FT.
- Qatar, owner of London landmarks the Shard and Harrods, is moving cash into exchange traded funds and index funds as part of a more “prudent” investment strategy, said the FT citing two people familiar with the investment strategy said.
- Two advisory groups are urging shareholders in Persimmon, the UK’s second-largest housebuilder, to cast negative votes on pay – FT.
- Whitehall officials were guilty of “egregious” and unjustifiable delays before revealing details of government contracts for the Hinkley Point nuclear power project awarded to a company facing a potential conflict of interest, said the Times citing the Information Commissioner’s Office.
- Experts have slammed the Conservative Party’s pledge to cap energy prices if it is elected in June, calling it a “clumsy and counterproductive” move that would ring the “death knell for competition” – Telegraph.
- Top Bank of England officials were told about Libor rate rigging as early as 2005, witnesses claim. Court documents unearthed by the Daily Mail reveal that fears were raised about the toxic rate years before the financial crisis.
- Eddie Stobart on its way to the London Stock Exchange’s junior market with £3mln. Employees at haulage firm Eddie Stobart are in line for a windfall when the company floats this week – Daily Mail.