logo-loader

FTSE 100 wavers ahead of the close as investors sift through slew of economic data

Last updated: 16:56 30 Jun 2017 BST, First published: 06:47 30 Jun 2017 BST

City

Close: FTSE 100 fades at the finish to register 200+ point fall on the month

The chart of the FTSE 100 today described an almost perfect bell curve today, as stocks waxed in the morning and waned in the afternoon.

The top-share index closed at 7,313, having risen as high as 7,377 at one point, to register a 38 point fall on the day and a 111 point slide on the week.

Considering the General Election result, the performance of the Footsie - chock-full as it is with multi-national companies, in June was relatively resilient, with the index shedding 207 points.

Having started the year at 7,143, the index is actually in credit, to the tune of 170 points.

Among the minnows, proximity marketing specialist Proxama PLC (LON:PROX) crashed 69% to 0.05p as it raised fresh capital at 0.03p a share.

Also getting set about with a butcher’s knife was GAME Digital PLC (LON:GMD), down 36%, after a profit warning. The one bright spot for the computer games seller was the Spanish operations, which continue to trade strongly. 

3.56pm: FTSE wavers with Next, Shell and BP in the red

The FTSE is wavering ahead of the close. Following a brief respite, the London index has fallen 9 points to 7,340.30.

Investors have had plenty of economic data to sift through today, including US and UK consumer confidence figures, UK GDP and the US personal consumption index.

Big movers before the closing bell include Next, which slumped as Deutsche Bank repeated a ‘hold’ rating and cut the target price to 4,250p from 4,650p.

Royal Dutch Shell and BP fell after Kepler downgraded its rating on the stocks.

United Utilities shares were also hit by a broker downgrade, with Credit Suisse lowering its rating to ‘underperform’ from ‘outperform’. 

As for the pound, it is down 0.32% versus the dollar at US$1.2966.

3.04pm: US consumer confidence falls less than forecast

US consumer confidence fell in June but by less than expected. The University of Michigan's final estimate of its index of consumer sentiment was revised up to 95.1 this month from a previous forecast of 94.5, compared to 97.1 in May.  Analysts had expected the reading to remain unchanged. 

Still, the average level of the index during the first half of 2017 was 96.8, the best half-year average since the second half of 2000.

2.17pm: Lloyds misses deadline for HBOS compensation scheme

Lloyds Banking Group PLC (LON:LLOY) has missed its deadline for compensating victims of fraud at its HBOS Reading branch. The bank set aside £100mln in April to deal with the claims and said victims would receive compensation by the end of June. 

But today the bank said just seven offers have been made and a further eight are still in the final stages of assessment.

The fraud, which took place between 2003 and 2007, involved small businesses customers, who were referred to a consultancy firm and asset-stripped. HBOS bankers were paid bribes, including sex parties and luxury parties, to refer the businesses. Victims suffered substantial losses as a result of the fraud.

Shares in Lloyds fell 1.04% to 66.45p in afternoon trading.

1.47pm: Federal Reserve’s preferred measure of inflation falls

The personal consumption expenditure index fell to an annual rate of 1.4% in May from 1.7% a month earlier, reflecting a slump in oil prices.

The core PCE index, which excludes food and energy and is considered the Federal Reserve’s preferred measure of inflation, also dropped to 1.4% from 1.5%.  The Fed is targeting inflation of 2%.

Personal income rose 0.4% in May after a 0.3% increase in April, while personal spending climbed 0.1% following a 0.2% gain.

1.36pm: ECB policy maker Coeure says euro-area recovery encouraging 

European Central Bank policy maker Benoit Coeure has said the recent broadening of euro-area recovery is encouraging but it needs real income growth to accelerate to end the crisis. 

“Importantly, none of the euro-area economies are now faced with negative inflation rates, nor with negative growth rates,” Coeure said in a speech in Brussels.

“Indeed, as we at the ECB have highlighted over the past few months, the recovery currently under way in the euro-area is increasingly broad-based, with a marked convergence in national GDP growth rates.”

But for the euro-area to leave the legacy of the crisis behind, he said it needs to “see not only reduced dispersion in growth rates, but convergence in real income levels”.  

1.22pm: HSBC wins Chinese approval for investment banking JV

HSBC Holdings PLC (LON:HSBA) has been given the green light for its investment banking joint venture with Chinese state-backed fund, Qianhai Financial Holdings Co.

The lender is the first foreign bank to win Chinese approval after a 20-month wait for a decision.

HSBC will invest 918mln yuan for 51% of a venture with Quianhai, which is majority owned by the British bank.

HSBC Qianhai Securities Ltd. is expected to start operations by the end of the year. The venture’s operations will include trading locally listed securities and underwriting initial public offerings.

1.05pm: Hawkish central bankers punish global stocks

FXTM research analyst, Lukman Otunuga, said hawkish remarks from central bankers including Comments from top central bankers including European Central Bank President Mario Draghi and Bank of England Governor Mark Carney have hit global stocks this week.

"The well-orchestrated hawkish remarks by a chorus of central bank heavyweights this week have punished global stocks with speculation mounting over whether the era of cheap money is soon coming to an end," Outunga said.

"With investor anxiety rising over historically low interest rates and central bank bond buying potentially coming to an end, Wall Street could come under further pressure this afternoon. This has been an extremely lively week dictated by central bankers and unexpected surprises, with participants likely using the weekend to mull over the events that have occurred."

12.37pm: Eurozone inflation eases but core inflation rises

Eurozone inflation slowed in June due to a slump in energy prices.

Eurostat’s flash estimate of eurozone consumer prices was 1.3% in June, compared to 1.4% in May.

But core inflation, which strips out volatile items such as energy and food, rose to 1.1% in June form 0.9% in May.

"The data will add to the ECB’s sense that reflationary pressures are appearing," said Jennifer McKeown, chief European economist at Capital Economics.

"But core inflation is still well below the Bank’s near-2% medium-term target for the headline rate, and its rise has been concentrated in Germany."

12.05pm: Weaker pound lifts FTSE after UK GDP 

London stocks have recovered from earlier lows in midday trading after weak first quarter UK economic growth data sent the pound lower against the dollar.

The FTSE 100 rose 18 points to 7,368.62 and the pound fell 0.32% versus the dollar to US$1.2966.

The final estimate of first quarter UK GDP remained unchanged at 0.2% quarter-on-quarter and 2.0% year-on-year, marking a slowdown from the fourth quarter’s 0.7% quarterly increase and 1.9% yearly growth. The data also highlighted concerns about the squeeze on household spending from rising inflation and weak wage growth.

Adding to the worries, an earlier survey from GfK showed a sharp decline in UK consumer confidence.

In company news, Boohoo shares gained after Deutsche Bank initiated coverage of the stock with a ‘buy’ rating, citing its growth potential.

John Laing Group shares climbed after saying it was pleased with its first-half portfolio progress.

Fellow retailer Next was on under the cosh, however, as Deutsche Bank repeated a ‘hold’ rating and cut the target price to 4,250p from 4,650p.

Royal Dutch Shell PLC shares fell 1.07% to 2,039.50p after Kepler downgraded the stock to ‘hold’ from ‘buy’, citing its bearish view on long-term oil prices.

BP slumped as Kepler also cut its rating to ‘reduce’ from ‘hold’, saying its cash outlay for the 2010 Deepwater Horizon disaster at the Macondo well remain significant while its free cash flow yield remains well below the likes of Shell and Total.

United Utilities shares were also hit by a broker downgrade, falling 2.62% to 875p. Credit Suisse lowered its rating to ‘underperform’ from ‘outperform’. 

Serco dropped after saying adjusted pre-tax profit for the first half will be lower than last year.

11.10am: FTSE recovers as pound weakens

The FTSE 100 has clawed back gains after the pound weakened against the dollar after official data highlighted concerns about the squeeze on household spending.  

The index rose 10 points to 7,361.05 and the pound dropped 0.12% to US$1.2992.

10.25am: Broker downgrades hit shares in Shell, BP and United Utilities

Royal Dutch Shell PLC shares fell 1.07% to 2,039.50p after Kepler downgraded the stock to ‘hold’ from ‘buy’, citing its bearish view on long-term oil prices.

Kepler also cut its rating on BP to ‘reduce’ from ‘hold’, saying its cash outlay for the 2010 Deepwater Horizon disaster at the Macondo well remain significant while its free cash flow yield remains well below the likes of Shell and Total. Downstream at its joint venture with Eni in Mozambique offers little support to FCF, Kepler added.

Shares in BP dropped 1.53% to 443p.

United Utilities shares were also hit by a broker downgrade, falling 2.62% to 875p. Credit Suisse lowered its rating to ‘underperform’ from ‘outperform’. It said the company’s outperformance is wholly dependent on financing, which leaves it most vulnerable to a cut in the baseline weighted average cost of capital. Credit Suisse also reduced its earnings per share forecasts for 2018 to 2020, reflecting its latest estimates for the retail price index.

10.05am: Interest rate hike unlikely in near term, says Pantheon

Pantheon Macroeconomics has ruled out a near-term interest rate rise on the expectation that weak consumer spending number will ensure that GDP growth remains at the first quarter’s 0.2% rate in the second quarter.

Pantheon’s chief UK economist, Samuel Tombs, noted that households’ real disposable income fell by 1.4% quarter-on-quarter in Q1, the worst result in four years.

“Consumers, therefore, had to reduce their saving rate to 1.7%—a new record low—from 3.3% in Q4, in order to finance the 0.3% increase in real spending. Little scope remains, therefore, for households to reduce their saving rate further.  

“And with consumer confidence declining and banks reporting that they intend to restrict the supply of secured credit, the saving rate is more likely to rise than fall ahead. “ 

Tombs said that wider national accounts deficit also give reason to be concerned about the durability of growth in household’s spending.

Meanwhile, the pound has weakened against the dollar following the ONS data, falling 0.21% to US$1.2980. Against the euro, it has held onto gains, rising 0.14% to €1.1385.

09.58am: UK economy should regain strength in second quarter, says IHS Markit economist

Chris Williamson, chief business economist at IHS Markit, said the economy slowed sharply at the start of the year as higher prices squeezed households, but “other pockets of growth and stronger business survey data suggest the economy should have regained some momentum in the second quarter”.

“The big disappointment was in the service sector, where growth was revised down from 0.2% to 0.1%,” he said.

“The main drag seems to have come from weaker household spending growth, which dropped from 0.7% late last year to 0.4%, which can in turn be at least partly linked to a third consecutive quarterly fall in real household disposable income – its worst run since the 1970s, according to official statisticians.”

He added that the squeeze on household spending is no surprise, given recent weak wage growth and rising inflation. This pressure on households is expected to continue through the rest of the year as inflation looks set to rise further, Williamson said. 

09.53am: UK business investment improves, current account deficit widens in first quarter

Alongside the GDP data, ONS has released figures for business investment, which showed a 0.6% quarterly increase in the first quarter, unchanged from its previous estimate and following a 0.9% drop in the fourth quarter.

It also said Britain's current account deficit widened by £4.8bn to £16.9bn in the January-March period compared to the previous year. This is equivalent to 3.4% of GDP, compared to 2.4% in the fourth quarter.

09.30am: First quarter UK GDP growth unrevised 

The final estimate of first quarter UK gross domestic product remained unchanged at 0.2% quarterly growth, as expected by analysts.

The Office for National Statistics also left its annual rate of UK GDP unrevised at 2.0%.

It compares to the fourth quarter's 0.7% quarterly increase and 1.9% yearly growth. 

ONS head of GDP, Darren Morgan, said growth was driven by business services and construction, partially offset by declines in some consumer-focused industries, such as retail sales and accommodation.

“The saving ratio has fallen again this quarter to a new record low, partly as a result of higher tax payments reducing disposable income,” Morgan said. “Some of the fall could be as a result of the timing of those payments, but the underlying trend is for a continued fall in the saving ratio.”

 

08.47am: FTSE tracks weak trading in US and Asia 

The FTSE 100 opened in the red, tracking declines in the US and in Asia, as the pound strengthened against the dollar on the back of hawkish rumblings from the Bank of England.

London’s top tier index fell 21 points to 7,328.41 in early trading while the sterling rose 0.08% versus the dollar to US$1.3017 and 0.20% against the euro to €1.1392.

The main focus in the UK today is the release of the final reading of first quarter economic growth figures from the Office for National Statistics at 9.30am. Economists expect the final estimate of gross domestic product to be 2.0% year-on-year and 0.2% quarter-on-quarter.

Earlier on the UK macro-economic front, a GfK survey showed consumer confidence suffered a sharp loss in June due to rising inflation and weak wage growth. The monthly measure of consumer confidence published by market research firm GfK dropped to -10 from -5 in May, worse than the -7 expected by analysts.

Investors are also digesting Chinese manufacturing and services data. The purchasing managers’ index on China manufacturing rose to 51.7 in June from 51.2 a month earlier, beating analysts’ estimates of 51.0 and above the 50 level that separates an expansion from a contraction in sector activity.

The non-manufacturing PMI edged up to 54.9 in June from 54.5 in May.

In the US, the personal consumption expenditure core price index – the Federal Reserve’s preferred measure of inflation -- will be released in afternoon trading.

On the company front, mining shares reversed the previous day’s gains as gold prices fell with Glencore, Fresnillo and Antofagasta on the front foot.

BHP Billiton shares dipped as approved US$250mln of financing to support its joint venture Samarco Mineração S.A. and Renova Foundation remediation and compensation programmes in Brazil.

Hurricane Energy shares declined after announcing the launch of a US$520mln equity and debt raise.

British Airways owner Intercontinental Consolidated Airlines shares jumped following a slump yesterday when stock went ex-dividend. Fellow airline easyJet was also flying higher. 

06.47am: FTSE to make weak start

The  FTSE 100 index is expected to make a weak start to the final session of the second-quarter and the first-half of 2017, extending yesterday’s falls following overnights drops on Wall Street and in Asia amid heightened concerns on tighter monetary policy globally.

Spread betting firm CMC Markets expects the UK blue chip index to open around 17 points lower at 7,333, having shed 37.48 points yesterday.

Overnight on Wall Street, the Dow Jones plunged 167 points to 21,287 led by another rout in tech stocks headed by Apple and Facebook amid profit-taking in the previously hot sector and some portfolio rebalancing at the end of the first-half.

Asian stocks followed the European and US markets lower today reflecting unease over hawkish comments from central bankers on Wednesday.

On currency markets, after getting a boost yesterday on enhanced UK rate hike possibilities following further comments from Bank of England officials, sterling edged higher overnight against both the dollar and the euro, albeit slightly cautiously after UK data.

UK consumer confidence drops

A survey released overnight showed UK consumers suffered a sharp loss of confidence in June in the face of rising inflation and weakening wage growth, after the country's inconclusive general election.

The latest GfK consumer confidence reading fell to -10 this month, weaker than the consensus forecast of -7 and the lowest reading since last July's -12, which was shortly after Britain voted to leave the European Union.

The final reading for UK first-quarter gross domestic product (GDP) will be released at 9.30am today, with traders expecting a reading of 0.2% and 2%, respectively, on a month-on-month and year-on-year basis. 

On the corporate news front,  a rush of companies will hold their annual general meetings today, with trading updates likely from a few firms including FTSE 250-listed outsourcing group Serco PLC (LON:SRP) and newspaper publisher Trinity Mirror PLC (LON:TNI).

In February, Serco – which last week secured a £1.5bn deal to run what will be Australia’s biggest prison, its largest-ever contract by value  reported an 11% organic decline in 2016 revenue as uncertainty over Brexit caused delays to contract decisions.

Trinity Mirror also issued full-year results in February and another trading statement in May which both saw a drop in print revenues.

Significant events expected on Friday 30 June:

Trading updates: Serco Group PLC (LON:SRP); Trinity Mirror PLC (LON:TNI)

Finals: ECO Animal Health Group PLC (LON:EAH), MJ Gleeson PLC (LON:GLE), SerVision PLC (LON:SEV), TLA Worldwide PLC (LON:TLA)

Interims: Diversified Oil & Gas PLC (LON:DGOC)

Around the markets:

  • Sterling: US$1.2966, down 0.32%
  • Gold: US$1,243.25 an ounce, down 0.22%
  • Brent crude: US$47.61 a barrel, up 0.40%

City Headlines:

  • Rio Tinto shareholders back China bid for Australian coal assets – Financial Times
  • Robots spying on NatWest staff as they speak to customers in effort to avoid future mis-selling scandals – Daily Mail
  • Walgreen scraps Rite Aid merger instead will buy half its stores - Reuters
  • Apple Retail UK pays £8mln tax on revenues of more than £1bn – The Times
  • Starbucks has to swallow US$22mln tax bill – The Times
  • Virgin Media to cut 200 jobs after management shake-up – Daily Telegraph
  • Delivery Hero: online takeaway company to raise £876 million with public list – The Independent
  • Australian DIY chain Bunnings creating more than 1,000 jobs in UK and doubling store expansion drive after snapping up Homebase – Daily Mail

Cordiant Digital Infrastructure marks three years of strategic growth and...

Cordiant Digital Infrastructure Ltd (LSE:CORD) Chairman of Digital Infrastructure Steven Marshall and Chief Financial Officer Mark Tiner joined Steve Darling from Proactive to provide some insight on the company’s three-year anniversary since listing on the London Stock Market. The company...

11 minutes ago