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FTSE 100 ends week on a dull note

After looking like it might regain par, the Footsie faded in the final 15 minutes of trade
The weekend starts right here
That was the week that was
  • FTSE 100 down 21 points at 7,535

  • Chinese imports data prompts demand for resource stocks

  • Sterling up against dollar

Close: Rally runs out of puff at the death

The Footsie's rally ran out of steam right at the death, causing the index to end the weak on a soft note.

The FTSE 100 index had almost made it back to parity before it slipped to 7,535, down 21 points on the day, in the final quarter of an hour of trading.

Resource stocks were wanted after China posted higher-than-expected imports in September, but the blue-chips index was weighed down by GKN PLC (LON:GKN), which warned of a potential £40mln charge from two commercially sensitive claims against the company.

GKN dived 7% to 328.49p.

Among the mid-caps, Talktalk Telecom Group PLC (LON:TALK) proposed up the FTSE 250, down 6.6% at 203.625p after being downgraded to “equal weight” by Barclays, although the target price was lifted to 215p from 185p.

3.15pm: Footsie off lows as US stocks gain

The FTSE 100 index came off its lows in late afternoon trading as US stocks pushed up to fresh highs today following some benign US data, though London shares remained weaker weighed by a rally in the pound.

Around 3.15pm, the FTSE 100 index was off about 10 points at 7,546, back nearer the day’s peak of 7,556.24 than the session low of 7,521.09.

On currency markets,  sterling was 0.3% higher against the dollar at US$1.3301, but stayed flat versus the euro at €1.1220 amid Brexit talk uncertainties.

In early trading in New York, the Dow Jones gained about 54 points at 22,895, with both all three US benchmarks hitting new all-time highs after US inflation and retail sales numbers came in slightly weaker than expected, offering some hope that the Federal Reserve may more gradually increase interest rates.

Economists at Berenberg Capital markets commented: “The results over the last couple of months suggest that the worst of the soft patch in consumer price inflation is behind us, but that price gains will continue to be only modest, but enough for the Fed to increase its policy rate at its December meeting.

“However, beyond December, the Fed will pause its rate hikes due to the growing inflation uncertainty. Our expectation is that after December it will wait until June 2018 before raising its policy rate again.”

In London, Aldermore Group PLC (LON:ALD) was an afternoon feature, jumping nearly 18% higher to 301.7p after South African financial services company FirstRand Ltd on Friday confirmed its £1.08bn bid for the UK challenger bank

The two companies remain in talks regarding the possible 313p per share takeover offer, with FirstRand having until November 10 to make a firm offer for Aldermore in accordance with UK takeover rules.

2.15pm: US CPI below forecast

The Footsie remained weaker in mid-afternoon trading weighed by a rally in the pound after yesterday’s falls, although US stocks are expected to push higher at open today after some benign US data.

Around 2.15pm, the FTSE 100 index was down 22 points at 7,533, nearer the session low of 7,521.09 than the day’s high of 7,556.24.

On currency markets, the pound extended its gains versus the dollar to 0.4% at US$1.3319, but remained flat against the euro at €1.1232 reflecting Brexit talk uncertainties.

US stock benchmarks were expected to rise after readings on inflation and retail sales came in slightly weaker than expected, offering support to those who believe that the Federal Reserve may more gradually increase interest rates.

US data supports

The US consumer-price index rose 0.5% in September, the second increase in a row and the largest in eight months but below the forecast for a 0.6% increase.

Meanwhile, US retail sales were up 1.6% in September, reflecting the largest increase in 2½ years, largely in line with Wall Street expectations.

James Knightley, chief international economist at ING said: “Inflation pressures are grinding higher and domestic activity is strong, suggesting that the main barrier to a higher Fed funds rate is political rather than economic.”

Investors also eyed the latest earnings from big banks, with Bank of America Corp.(NYSE:BAC) posting a bigger than expected  rise in third-quarter profit, but

Wells Fargo & Co. (NYSE:WFC) reporting third-quarter earnings that were weaker than expected.

12.15pm: Footsie retreats

The FTSE 100 index stayed weak but held off lows in lunchtime trading, retreating from yesterday’s new all-time closing peak as sterling recovered after yesterday’s fall, with US stocks seen higher early on although much will depend on another batch of key bank earnings and US inflation data.

Around midday, the UK blue chip index was about 20 points lower at 7,535, stuck in a tight trading range between the session high of 7,556.24 and a low of 7,521.09.

On currency markets, the pound was up 0.2% versus the dollar at US$1.3292, but had turned flat against the euro at €1.1240 reflecting Brexit talk uncertainties.

Across the Atlantic, US stock futures pointed to a higher open in New York after a retreat yesterday from recent highs, with Bank of America Corp (NYSE:BAC) and Wells Fargo & Co. (NYSE:WFC) both due to report results and the data due at 1.30pm.

Chris Beauchamp, chief market analyst at IG said: “Today’s US CPI and retail sales figures will be the key event of the day, as investors wait to see whether the data aligns with the more dovish views of some FOMC members.

“And after JPMorgan and Citigroup beat estimates yesterday, we will wait to see if Bank of America can repeat the trick.”

GKN in reverse

In London, the biggest FTSE 100 faller remained aerospace and automotive engineer GKN PLC (LON:GKN), down nearly 8% at 324.8p after it warned that full year profits will be just “slightly” higher than in the previous year after “disappointing” trading at its US aerospace arm and costs resulting from two legal claims.

The company expects a one-off charge of £40mln from two “significant external claims” related to its GKN Aerospace business and GKN Driveline division.

But on the upside, miners remained higher on the FTSE 100 index following reassuring Chinese trade data released overnight which saw imports surge by 18.7% in September from a year ago, faster than the expected growth of 15.0%.

In addition, Deutsche Bank issued a note raising price targets on selected mining stocks, including Anglo American PLC (LON:AAL), up 0.6% at 1,452p, BHP Billiton plc (LON:BLT), ahead 1% at 1,389.5p, and Rio Tinto PLC (LON:RIO) up 1.6% at 3,637.5p.

Among the mid caps,former blue chip sub-prime lender Provident Financial Group (LON:PFG) gained 10.5% at 872p after it said it had implemented a recovery plan for its troubled home credit business, helping relieve investors in the stock which has plummeted around 70% this year.

And emerging markets fund managers Ashmore group PLC (LON:ASHM) and hedge fund firm Man Group PLC (LON:EMG) both found gains after painting an encouraging picture for the active management industry, up 6.9% at 377.6p and 3.9% at 187.1p respectively.

10.45am: Bitcoin mansion

With the price of bitcoin having hit a record high above US$5,000 yesterday, there is news today that buyers of a mansion in Notting Hill, which is going on sale this month for £17mln, will have to pay in the cryptocurrency.

In what is believed to be a first for London, the Evening Standard reported that the owners of the six-storey home near Portobello Road will only accept the digital currency as payment and will not take cash.

At the current exchange rate the price is equivalent to about 5,050 bitcoin,

The paper said Lev Loginov, co-founder of property investment company London Wall, which bought the property at 4 Stanley Gardens in 2013, hopes to pioneer Bitcoin deals in Britain.

10.00am: Footsie remains dull

The UK economy shows little sign of breaking out of its lethargy and it is “extraordinary” that the Bank of England is considering raising interest rates, the British Chambers of Commerce has said.

The BCC’s Quarterly Economic Survey of businesses said sales at services firms that make up the bulk of the economy were steady in the third quarter but there was little sign of a pick-up in pay pressures or investment, both of which the BoE expects to rise markedly next year.

Overall the BCC described the survey as “uninspiring”, with political uncertainty, currency fluctuations and Brexit clearly affecting British businesses.

Around 10am, the FTSE 100 index was nearly 28 points lower at 7,528, retreating after hitting a new closing peak yesterday as sterling rallied following falls yesterday, adding 0.3% versus both the dollar and the euro at US$1.3306 and €1.1244 respectively.

8.40am: GKN weighs as FTSE100 makes negaive start

FTSE 100 turned negative in early deals as engineer GKN (LON:GKN) was  a notable casualty on Friday the 13th.

The benchmark index started over 29 points down a  7,527, while FTSE 250 shed over 23 at 22,228.

GKN shares plunged almost 9% to 321.10p and was top Footsie laggard as it issued a profit warning. The group said it had been made aware of two probable claims which are expected to result in a charge of around £40mln in the fourth quarter of 2017".

On the plus side, Ashmore, the emerging markets focused fund manager,  added over 9.6% to 387.20p.

The  group reported an 11% increase in its AUM (assets under management) in the three months to end September, compared to the previous quarter.

The figure rose to an estimated US$65bn, an increase of US$6.3bn.

Of that US$18.8bn was blended debt, and US$14.4bn was external debt.

Away from stocks, there continues to be a deadlock on Brexit proceedings, according to the  EU's chief negotiator Michel Barnier.

Barnier said yesterday there had not been enough progress to move to the next stage of pots -Brexit trade talks, but added that he hoped for "decisive progress" by the time of the December summit of the European Council.

Proactive news headlines:

The administrators of Redx Pharma Plc (LON:REDX) have applied to the High Court for an order that will allow the biotech and its subsidiaries to be rescued as going concerns. AIM-listed Redx has been in administration since May after a £2mln loan from Liverpool City Council made to Redx Oncology fell due.

Gold recovery specialist Goldplat PLC (LON:GDP) updated on positive exploration progress from Ashanti Gold Corp on the former's Anumso gold project in Ghana. Ashanti has the right to earn up to 75% of Goldplat's interest in the site by spending US$3mln on exploration.

Anglo Asian Mining Plc (LON:AAZ) has announced a 19% rise in gold production thanks to the opening of mining at the Ugur open pit in September. Gold production amounted to 14,468 ounces for the third quarter, ended September 30, while copper production totalled 550 tonnes and silver totalled 40,288 ounces.

6.50am: FTSE 100 seen lower

FTSE 100 is called to start lower on Friday after a lower finish on Wall Street but Asian shares headed north.

The UK blue-chip benchmark closed over 22 points higher yesterday at 7,556 but today, Friday 13th, spread betters at IG Index are calling it to start 14 points off.

Equites in Asia rose with the Shanghai Composite up around two points and the Nikkei surging 207 points in Japan after China exports were shown to have risen 81% in September versus  a year ago. Imports rose 18.7% in the same period.

Michael Hewson, at CMC Markets, said: "This morning’s Chinese trade data was fairly supportive of a fairly robust domestic economy with a rise in imports in September of 18.7%, an improvement on the August numbers.

"Recent Fed minutes along with decent positive economic data, including last week’s payrolls report, certainly hasn’t done anything to undermine the premise of another rate increase by the end of this year. If anything, recent inflation data from the ISM surveys are more supportive of a rate increase, despite concerns about low levels of inflation which were expressed by the Chicago Fed’s Charles Evans earlier this week."

On Wall Street, benchmarks slid off record highs as the Dow Jones closed 31 down; the Nasdaq lost 12.04 and the broader based S&P 500 index shed 4.31 at 2,550.  Traders were digesting the US producer prices, which rose 0.4% in September, while today consumer inflation data is due.

That is expected to show an annual inflation rate of 2.3%

Significant announcements due:

Trading updates: Ashmore group PLC (LON:ASHM), Man Group PLC (LON:EMG), Provident Financial PLC (LON:PFG)

Economic data: US consumer price index, US retail sales

Around the markets (at 6.57am):

  • Sterling: US$1.3277, up 0.13%
  • Gold: US$1,293.30 an ounce, flat
  • Brent crude: US$50.93, up 0.65%

Business Headlines -

  • Booker stays upbeat amid opposition to Tesco tie-up – The Times
  • Amazon deal lights up N Brown’s digital path -The Times
  • U.K. Government pledges £2.5 billion to tackle climate change – The Independent
  • Apple gets green light for new data centre from Irish High Court – The Independent
  • Chevron quits frontier project as Australian oil exploration hits 30-year low – FT
  • Wells Fargo hires Barclays’ compliance Chief – FT
  • JPMorgan’s Jamie Dimon eyes Paris for post-Brexit job moves – FT
  • Tata agrees India telecoms sale to Bharti Airtel – FT

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