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FTSE 100 ends lower as inflation jump hits consumers

FTSE 100 closed down 11.88, or 0.15%, to 7,499 on Tuesday
picture of easyJet plane
Airlines were going well as the oil price dipped
  • FTSE 100 closes down at 7,499

  • Inflation hits four-year high

  • Merlin knocked by warning over terror attack impact

Britain's blue chips ended the day lower as traders await some clarity after days of UK political limbo since the general election and as inflation last month rose to an unexpected four-year high.

FTSE 100 closed out almost 12 down at 7,499, while the FTSE 250, which is a better measure of how the UK economy is doing, added over 176 points, or almost  one per cent to 19,859.

The inflation stats pushed the pound higher, which as we have seen often in recent weeks, negatively impacts the FTSE100's foreign currency earning constituents.

The consumer price index was up 2.9% in May, compared to the same month last year -  up from 2.7% in April and higher than Bank of England forecasts of 2.6%. It underlines the pressure on already squeezed household incomes and more uncertainty is likely as Brexit  - soft or hard - begin.

On Footsie, the biggest laggard was 3i Group (LON:III), which shed 2.91% to 901.50p

Merlin Entertainments PLC (LON:MERL)  was also riding lower on comments that the UK terror attacks had affected visitor numbers to its theme parks. Shares dropped 2.72% to 489.30p.

London Stock Exchange Group (LON:LSE) was the biggest riser, up 5.18% to 3,575p.

 

3.25pm... FTSE 100 in red even though Dow hits new record

 A new record high for the Dow Jones Industrial Average had little impact in London as the blue chip index was in the red again and heading lower despite

 a promising start.

US tech stocks also picked up after the bashing of the past two days, but London’s investment community refused to be cheered.

FTSE 100 was down 11 at 7,500 heading towards the close as UK inflation rose to 2.9% in May and brought with it the clear possibility of it rising over 3%.

Rising inflation geneally means higher interst rates. The Bank of England’s inflation target is still 2%, but it has missed it so often that few commentators expect a rate rise soon.

Airlines had a good day as the oil price retreated back below US$46 per barrel. Easyjet PLC (LON:EZJ) rose 2.7% to 1,361p, while British Airways’ owner IAG (LON:IAG) added 2.5% to 603p.

Merlin Entertainments PLC (LON:MERL) led the fallers on comments that the UK terror attacks had affected visitor numbers to its theme parks. Shares dropped 2% to 492.7p.

1.45pm...US markets to open higher as tech fears ease

US stocks are seen opening higher ahead of a closely watched two-day policy meeting of the Fed on interest rates.

Yesterday, Wall Street shares closed lower as the tech sell off continued to bite.

The benchmark Dow Jones Industrial Index closed at 21,235 - down 36 points, while the S&P500 closed 2.38 lower, at 2,429. Meanwhile, the tech heavy Nasdaq index finished 32 down at 6,175.

In futures today, the Dow Jones are up 20. the S&P 500 futures are ahead 3.85, while the Nasdaq futures are up 17.

1pm...FTSE 100 back where it started as Inflation spooks investors

All of FTSE 100's early gains have been eroded by the poor read for UK inflation in May. 

Consumer prices rose by 2.9% in May, the highest for four years.

Having added well over 20 points when trading got underway, the index is now barely in the blue with a gain of just one point at 7,513.

London Stock Exchange PLC (LON:LSE) was far and away the best of the risers as Credit Suisse upgraded the stock market owner.

The Swiss broker thinks the growth story remains intact despite the collapse of its merger with Germany’s Deutsche Boerse earlier this year.

In a note to clients raising their target price and estimates for LSE following an investor update meeting yesterday, analysts at the Swiss bank think that cost efficiency remains the “key positive” for the stock markets operator.

The target price for LSE to 3,600p from 3,100p sending tis shares shooting up 5.7% to 3,591p.

Goldman Sachs, meanwhile, has removed BAE Systems PLC (LON:BA.) from its ‘Conviction List’, citing the stock’s “strong performance and more muted potential for further upside”.

Goldman has trimmed 2017/18 sales estimates for the FTSE 100-listed defence contractor “ by 5%/9%, owing to lower growth in US Cyber and the continuing delay to the follow-on Eurofighter order from Saudi Arabia.”

Shares fell 1.3% to 658.5p.

 

11.00am... FTSE 100 clips gains as inflation hits four year high

Higher energy and food prices have sent UK inflation to its highest in four years, while core inflation also rose above market forecasts.

Consumer prices rose by 2.9% in May, in line with a recent warning from the Bank of England that the drop in the value of the pound following Brexit would push up prices.

A stock response of central bankers to higher prices is to put up interest rates, but this may not be the case this time said Nathan Sweeney, senior investment manager, at funmanager  Architas.

“Although the headline inflation figure has risen again we do think it may have finally reached its peak. Hitting its highest level since June 2013 was a surprise but it seems much of the inflationary pressure in the system has now been washed through.

“Coupled with the uncertainty caused by the recent general election result we don’t expect these inflation figures to cause the Monetary Policy Committee to introduce a shock rate rise this week.“

FTSE 100 was 10 points higher at 7,522.

 

8:59...FTSE 100 opens higher as tech fears ease

London has made a solid start with a steadying of the US tech sector last night giving some support.

After heavy early falls on Wall Street for tech shares, the trio of tech titans Alphabet, Apple and Amazon, rallied a little near the close, which gave some support to US markets and a tailwind for the UK today

FTSE 100 opened around 17 points higher at 7,528, reversing the losses seen Monday.

Theme park operator Merlin Entertainments PLC (LON:MERL) was a faller as it cautioned that the recent London and Manchester terror attacks had affected visitor numbers. Shares fell 2.8% to 488.5p.

Outsourcer Capita PLC (LON:CPI) jumped 13% to 621p as its results were in line and it said it was closing in on a new chief executive.

Petrol station software group Kalibrate PLC (LON:KLBT) was the best of the small caps as a private equity group launched a £29mln bid, equivalent to a 50% premium to the previous close.

Shares rose 26.3p to 83.3p.

 

Proactive news headlines ...

Life sciences group Abzena plc (LON:ABZA) saw its full-year revenue jump by almost 90%, with underlying losses reduced as it prepares for “significant growth”. Big Pic on April 5

88 Energy Ltd (LON:88E, ASX:88E) has told investors it is on schedule to start fracture stimulation at Project Icewine on June 17, with production testing due either late in the month or early July.

The company today said that the sundry application for execution of the main stimulation work at Icewine-2 has been approved by the Alaska Oil and Gas Conservation Commission (AOGCC).

“Shares in Graphene NanoChem plc (LON:GRPH) surged higher on Tuesday Morning after the nanotechnology specialist’s new polymers division successfully completed a paid pilot project for a global Tier 1 company in Malaysia.

The project saw Graphene provide its enhanced building materials solution as part of a warehouse conversion and building modification assignment for the customer.

Hummingbird Resources (LON:HUM) has increased its stake in the under construction Yanfolila gold project in Mali to 80% with the exercise of an option over a further 5% of the equity. The AIM-listed junior is buying out La Petite Mine d'Or’s interest for US$1mln, plus paying a further US$1mln to acquire its 1% royalty. Both considerations will be paid in shares.

Shares in Advanced Oncotherapy PLC (LON:AVO) edged higher this morning after the proton therapy specialist secured a new £1.5mln, one-year loan with Blackfinch Investment. This brings the total financing from Blackfinch to £6.5mln, following on from two prior agreements announced back in March and April of this year.

Ariana Resources plc (LON:AAU) has completed its resource-focused target assessments for the Tavsan gold project on the 50%-owned Red Rabbit joint venture with Proccea Construction. Extensive new geochemical target areas have been identified, demonstrating clear potential for resource growth.

APQ Global Limited (LON:APQ), the emerging markets investment group has announced that it is currently considering a further capital raise. In a brief statement, the AIM-listed firm said it “is exploring options for the capital raise which may be implemented through the issue of a convertible debt instrument or such other form of equity or debt as may be appropriate.”

Shanta Gold Limited (LON:SHG) turned in revenues of over US$107 mln during the year to December 2016 on production of 87,713 ounces of gold from its New Luika gold mine in Tanzania, up from the US$95.7 mln posted for 2015 on production of just under 82,000 ounces. The average realised gold price was higher and earnings rose significantly, from US$31.9 in 2015 to US$50.2 mln this time round, while cash generated from operations rose to US$50.1 mln from US$31.8 mln).

Ceres Power Holdings Plc (LON:CWR) has told investors it expects total income for the current financial year, ending June 30, will have more than doubled from last year. The company said revenue and other operating income are ahead of expectations, and it expects full year total income to approach £4mln, compared to £1.67mln in the preceding twelve month period.

Tethyan Resources PLC (LON:TETH) has signed an access agreement with the Municipality of Raska for the use of roads in Southern Serbia. The company has also received regulatory approval for all drilling pads required for the 2017 drilling campaign on the Company's Suva Ruda copper-gold project. Exploration work at Suva Ruda is already underway, with three drill holes completed and mapping and soil sampling progressing.

Chariot Oil & Gas Limited (LON:CHAR) boss Larry Bottomley has told investors that the explorer is continuing to screen new ‘value-accretive’ opportunities. In a statement, ahead of today’s annual general meeting, Bottomley said that as well as looking at potential new projects, the focus for the remainder of this year is on the building and maturing of the group’s offshore portfolio with a view to delivering a funded drilling inventory.

Life sciences group Abzena plc (LON:ABZA) saw its full-year revenue jump by almost 90%, with underlying losses reduced as it prepares for “significant growth”. In results for the year to March 31 2017, the AIM-listed firm saw its revenue increase by 89% to £18.7mln, up from £9.9mln a year earlier, with underlying revenue growth at 41%.

Petrol station forecourt software and services group Kalibrate Technologies PLC (LON:KLBT) is set to be taken private after investment group Hanover Equity Fund LP lodged a £29mln cash offer. That works out at 85.5p a share – a 50% premium compared to the closing price of 57p on 1 June, the day before the initial approach was made.

Concepta PLC (LON:CPT) has received its first sales order for its myLotus fertility products. The order – from HuanZhong Biotech, Concepta’s partner in China – is worth £225,000 (RMB 1.95mln). Once Concepta has fulfilled the order, HZ Biotech will distribute the myLotus products in China.

Eland Oil & Gas PLC (LON:ELA) is closing in on a new drill programme at the Opuama field to grow production, with the signing of a new rig contract. The company’s Nigerian associate Elcrest Exploration and Production has inked a contract with OES Energy Services securing a rig for a planned sidetrack of the Opuama-7 well, which is part of the OML40 asset.

 

7.01am..FTSE 100 to rise as investors shrug off US tech wobble

London’s blue chips are set for a strong start as attention remains firmly focused on who, when and if Theresa May gets her government together.

News yesterday was that the Queen’s Speech will be delayed while negotiations between the Tories and Ulster’s DUP continue over an alliance that would give the PM a working majority.

Markets have been relatively calm about the situation and spread bet firms see FTSE 100 adding more than thirty points when trading gets underway after yesterday’s 15 point loss to 7,511.

Indeed, the UK’s political uncertainty was overshadowed yesterday by another bashing for tech stocks on Wall Street on concerns that the recent strong run upwards has left them looking very overvalued.

There were more falls for Apple (NASDAQ:APPL), Google owner Alphabet and Amazon overnight, though a rally near the close helped ease fears of an all-out rout.

The Dow Jones Industrial Average closed 38 points lower at 21,235, though the tech-heavy Nasdaq saw the biggest fall with a 0.5% drop to 6,175. The S&P 500 was flat.

Asian markets were mixed with good gains in Hong Kong and Shanghai but only a modest rise in Tokyo.

Looking ahead, the US Federal Reserve’s latest two-day interest rate setting meeting starts today with the conclusion tomorrow, while Theresa May must be hoping that the inflation numbers for the UK give her some respite.

 

Business headlines

EDF’s UK chief executive Vincent de Rivas is set to resign at the end of October, The Times reports. The 63-year-old, who spearheaded the development of the Hinkley Point C nuclear plant, will be replaced by Simone Rossi, head of the French energy giant’s international division.

A key UBS tracking indicator has shown that the global credit impulse has plummeted by 6% of gross domestic product, in the same way it did during the onset of the Lehman crisis, The Telegraph writes. The decline, driven by powerful swings in China and the US, signals serious headwinds for the world economy and asset prices just as the US Federal Reserve tightens monetary policy.

UK business owners have warned that a bad deal, or no deal, on Brexit would be disastrous for British jobs, investment and growth, according to a report published by the Guardian. The report by former Shadow Chancellor Ed Balls and Peter Sands, senior fellows at Harvard University’s Mossavar-Rahmani Center for Business and Government, showed British businesses have rejected claims by leading Brexiters that trade with the rest of the world can replace free access to European markets.

London is bracing itself for a European grab on London’s treasured euro clearing market, by giving its financial regulators more power, City Am reports. The European Commission will release its proposed changes to the European Market Infrastructure Regulation (Emir) this morning.

Lloyds Banking Group (LON:LLOY) assisted former directors of a company involved in the scandal at its HBOS Reading branch buy back a valuable asset cheaply, the Financial Times reports. The bank became the main creditor of Corporate Jet Services (CJS), a private jet chartering company that collapsed in 2007, after rescuing HBOS during the financial crisis. It meant Lloyds owed £113mln to HBOS in contentious circumstances.

 

Commodities/currencies

Gold: US$1,268 down US$1

Oil (WTI): US$46.28 +20c

£/£: 1.2674 £ edges higher

 

 

 

 


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