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FTSE 100 near flat at close after quiet day's trading

Around 4pm, the UK blue chip index was up about 8 points to 7,531
London
The PM said she will reject a Brexit transition if the UK has failed to strike a long term trade deal
  • FTSE 100 closes 1.22 higher at 7.524

  • GKN boosted by break-up talk, profit warning hits shares in Pendragon

  • Business lobby groups urge government to agree Brexit transition deal

FTSE 100 closed practically flat on Monday, after a quiet day of trading.

The UK blue-chip benchmark closed 0.02% higher, or 1.22 points higher, at 7,524.

FTSE 250 was down over 15 points, to stand at 20,131 as Brexit worries continue to persist.

The Prime Minister Theresa May said she will reject a Brexit transition if the UK has failed to strike a long term  EU trade deal.

Top riser was GKN (LON:GKN), which added  5.14% to stand at 319p on reports of a break-up of its auto and aerospace businesses.

A report in the Sunday Times said the company - which supplies components for Airbus and Boeing planes and carmakers including Volkswagen and Fiat Chrysler - is in the early stages of considering the plan but added that a break-up could occur within months.

The biggest loser was Mediclinic International (LON:MDC), which lost 2.65% to 623.5p, as Spire Healthcare Group plc (LON:SPI) rejected its takeover approach. Spire’s shares surged, on the other hand. Spire shares surged 10.79% to 289.50p.

 

4.00pm: Eurozone consumer confidence rises in October 

Eurozone consumer confidence rose in October, according to the European Commission.  The EU's monthly measure of sentiment rose to minus 1.0 from 1.2 in September, its highest level since April 2001.

"Consumers have little to worry about at the moment," said Bert Colijn, senior economist at ING. 

"This comes on the back of modest improvements in wages and moderate inflation. This is a positive sign for household consumption and we expect domestic demand to remain strong for the final quarter."

The data comes ahead of the European Central Bank's policy decision on Thursday when the the monetary authority is expected to ease back on its bond-buying programme. 

 

3.30pm: FTSE holds onto gains but only just

The FTSE 100 is up 4 points to 7,528, barely holding onto gains, as traders assess declines in banking stocks and profit warnings from Pendragon, Dialight and Real Food Group.

Shares in Royal Bank of Scotland, Lloyds and Barclays are lower amid a sector-wide decline in European bank stocks due to political uncertainty in Catalonia.

Pendragon, Dialight and Real Food Group saw their shares sink after releasing profit warnings.

Mediclinic International is still a top faller after Spire Healthcare rejected its takeover approach. Spire’s shares surged, on the other hand.

GKN remains the biggest riser on reports of a break-up of its auto and aerospace businesses.

CRH is higher after Ash Grove shareholders approved the building materials company’s US$3.5bn takeover bid.

In currencies, the pound has recovered against the dollar, rising 0.13% to US$1.3207, and held onto gains versus the euro, up 0.46% to €1.1236. 

2.50pm: US stocks open higher

US stocks have reached record highs on renewed hopes that President Donald Trump will be able to deliver on promised tax cuts and as the busiest week earnings season kicked off.

The Dow Jones Industrial Average rose 20 points at the open, scoring an intraday record. The S&P 500 increased 1 point with Seagate Technology the best performing stock after a better-than-expected first quarter. The Nasdaq Composite Index  gained 7 points.

The Senate last week passed a Budget blueprint for the next fiscal year that could pave the way for tax cuts. Trump urged House members to adopt the Senate's budget this week and follow through on tax reform during a House GOP conference call on Sunday.

Companies reporting earnings this week include Caterpillar,  Boeing, Amazon, Alphabet and Twitter.

Closer to home the FTSE 100 is up 13 points to 7,536. 

 

2.10pm: Fed to raise interest rates in December, poll shows

Ahead of next week’s Federal Reserve policy decision, a Reuters poll of economists said the central bank is expected to raise interest rates in December and twice next year.

However, there is a greater-than-usual degree of uncertainty about monetary policy next year with the Fed’s leadership up in the air, according to RBC economist Josh Nye.

US President Donald Trump could decide this week whether to reappoint Fed Chair Janet Yellen, whose term ends in February. He has finished interviews with five candidates for the post.

The Fed blackout period came into effect this weekend, meaning that policymakers won’t be able to comment publicly on policy until after the interest announcement. 

 

1.40pm: Sadiq Khan joins calls for Brexit transition deal

London Mayor Sadiq Khan has joined UK business leaders in calls for a Brexit transition deal to be reached as soon as possible.

He warned that companies could start moving jobs and investment out of the country if they do not get a transition deal quickly.

Goldman Sachs boss, Lloyds Blankfein, tweeted last week that he was looking forward to spending more time in Frankfurt, suggesting the that bank may move operations after Brexit.

Khan said Blankfein’s remarks reflected a wider thinking in the business community.

“He’s articulating publicly what many CEOs and investors who love working in London have been saying privately, which is that unless they have certainty about what happens after March 29, 2019, they have got to make a plan B,” he said.

His comments came as a spokesperson for the prime minister failed to deny a German newspaper report that Theresa May had begged for help to break the deadlock in Brexit talks during a dinner with EU officials.   The spokesman said he had “no comment whatsoever” on the leaked report.

The European Commission accused “some people” of leaking the account of the dinner to undermine the EU’s position on Brexit talks. 

 

12.40pm: PPI claims continue to rise, says FCA

The number of complaints about payment protection insurance rose by 24% in the first half of the year to total of 1.11 million, compared to 899,000 in the previous six months, according to the Financial Conduct Authority.

The increase in PPI claims came before the FCA announced a deadline of 29 August 2019 to apply for compensation. 

PPI accounted for 82% of the £2bn paid out in total to consumers whose complaints were upheld over the six months in question, the FCA said. 

Lloyds Banking Group and Barclays, which are both due to report third quarter results this week, have been weighed down by provisions they have had to set aside for PPI claims. 

The FCA said most of the people eligible to claim have not yet done so, raising the prospect that the banks may need to set aside even more money.

12.00pm: FTSE 100 gains despite string of profit warnings

The FTSE 100 rose 12 points to 7,535 around the midday mark as the pound fell against the dollar amid uncertainty about the progress on Brexit negotiations. 

German newspaper Frankfurter Allgemeine reported Prime Minister Theresa May had “begged for help” at a dinner with EU leaders in Brussels last week.

May’s ex-adviser Nick Timothy accused EU official Martin Selmayr of being the source of the leak and claimed it showed "some in Brussels want no deal or a punitive one".

Meanwhile, five business lobby groups have written to Brexit secretary David Davis to say the government is running out of time to agree a much-needed transition deal.

Worries about Brexit saw the pound drop 0.17% against the dollar to US$1.3168.

Sterling was up 0.14% against the euro to €1.1212 as the chaos in Catalonia steepened after Spain’s Prime Minister Mariano Rajoy announced plans to fire Catalonia President Carles Puigdemont and curtail some of the freedoms of its parliament.

On the company front, GKN remained the biggest riser on the FTSE 100 following reports of a break-up. CRH gained after the building materials group said it received approval from a majority of Ash Grove shareholders to buy the US firm for US$3.5bn.

BT Group shares received a boost after the government backed its network subsidiary Openreach in its battle against Ofcom over lowering wholesale prices.

Mediclinic International was under the cosh after Spire Healthcare rejected its takeover bid. Spire’s shares jumped on the news.

Barclays PLC (LON:BARC) shares dropped after HBSC cut its price target to 240p from 250p and Deutsche Bank lowered its price target to 226p from 231p ahead of its third quarter results on Thursday.

RBS and Standard Chartered were also on the back-foot, tracking declines in European bank stocks amid political uncertainty in Catalonia.

Pendragon, Dialight and Real Good Food shares plunged after they all issued profit warnings.  

 

11.30am: UK manufacturing growth is slowing, CBI survey shows 

UK manufacturing activity growth slowed and business optimism fell in the three months to October, according to the CBI’s quarterly Industrial Trends Survey.

Optimism about the business situation fell to a balance of -11%, down from +5% in the three months to July.

The balance for total orders dropped to -2 from 7, missing expectations of 9.

“Growth in output and orders are still above historical norms, and it’s encouraging that plans for spending on innovation and training are holding their own,” said CBI chief economist Rain Newton-Smith.

“But we’ve seen a general softening in manufacturing activity over the past three months, with the outlook for investment becoming more subdued.”

She urged the government to boost investment growth by using the Budget with business rate reforms, including exempting new plant and machinery from rates altogether, and switching to the more recognised consumer price inflation measure rather retail price index when calculating upratings.

 

11.00am: UK profit warnings reach six-year high in third quarter

A string of profit warnings have been issued this morning from Pendragon, Dialight, Solid State and Real Good Food.

According to consultancy, EY, profit warnings for UK companies have jumped to 75 in the third quarter, the biggest quarterly rise in nearly six years.

Credit Suisse warned there could be more UK profit warnings to come if the economy’s growth continued to slow amid economic and political challenges.

“We need results on the Brexit talks because from a corporate perspective, for investment spending, you need better clarity,” said Pierre Bose, head of European equity strategy at Credit Suisse.

 

10.30am: Lobby groups call for urgent Brexit transition deal 

Five of the UK’s biggest business lobby groups have written to the Brexit secretary to call for a transition deal to be agreed as soon as possible to avoid the risk of losing jobs and investment.

In a letter to David Davis, seen by the Guardian, the lobby groups said the government is running out of time to strike a deal before companies finalise budgets for 2018 and prepare to implement contingency plans for Brexit.

 “We need agreement of transitional arrangements as soon as possible, as without urgent agreement many companies have serious decisions about investment and contingency plans to take at the start of 2018,” they said.

“Failure to agree a transition period of at least two years could have wide-reaching and damaging consequences for investment and trade, as firms review their investment plans and business strategies.”

Theresa May has requested a transition deal of around two years with the UK and EU trading on similar terms to existing arrangements after Brexit. 

10.00am: Dividends reach record third quarter high

UK dividends jumped 14.3% to £28.5bn in the third quarter, supported by payouts from BT Group, Rolls Royce and Lloyds Banking Group, according to data from Capita Asset Services.

It marked the largest third quarter on record and the third biggest quarterly total ever paid.

Capita's Dividend Monitor report showed that special dividends contributed to the rapid headline growth rate. One-third of third quarter dividends were paid in dollars, which meant it lost out on foreign exchange gains of the previous four quarters. 

Mining sector profits were boosted by a rebound in commodity prices, which led to a pick-up in dividends.

“We had high hopes for 2017, but the dividend seam is proving even richer than we expected, as the mining sector finds its footing again," said Justin Cooper, chief executive of Shareholder solutions, part of Capita Asset Services.

 

9.30am: FTSE claws back gains 

The FTSE 100 has clawed back gains following a weak start to trading, rising five points to 7,529, as the pound retreated against the dollar by 0.11% to US$1.3175. 

GKN continued to lead the gains following reports that the engineer is considering splitting itself into two FTSE 100 companies by breaking up its aerospace and automotive units. 

Building materials firm CRH is another big riser after its bid to buy Ash Grove Cement for US$3.5bn was approved by Ash Grove shareholders.

BT Group was on the front foot after the government backed its Openreach subsidiary in its battle with Ofcom over wholesale prices. 

Going the other way, Mediclinic International slumped after Spire Healthcare turned down its takeover bid.

Pendragon plunged after the UK car dealership cut its full year profit guidance, blaming a lull in demand for new cars. The group's chairman, Mel Egglenton, has stepped donw. 

Connor Campbell of Spreadex said Pendragon's profit warning is the latest sign of weakness in the UK economy. 

"It’s the latest sign of retail-woe in the UK, especially among companies dealing with big ticket items, as the household spending squeeze continues," he said.

8.45am: Weak start

The FTSE 100 index eased back in early trading as the pound ticked higher once again, with investors seeking fresh direction as attention remains fixed on Spain’s worries over Catalonia and the upcoming European Central Bank meeting.

Around 8.45am, the UK blue chip index was down about 9 points at 7,514, having finished flat on Friday after a late retreat caused by a jump from the pound.

On currency markets today, sterling added 0.1% against the US dollar at US$1.3193 and rose 0.3% against the euro to €1.1225 with the single currency unsettled by the Spanish and ECB uncertainties.

Michael Hewson chief market analyst at CMC Markets UK, said: “Away from the complicated nature of politics in Europe it’s also set to be a big week for central banks with a particular focus on the European Central Bank on Thursday, when it is expected we could well see some clarity on what the ECB intends to do as we head into 2018 with respect to tapering its asset purchase program, currently running at €60bn a month.”

Gainers despite dull start

In London, despite the dull start, there were some good blue chip gainers early on.

Automotive and aerospace engineer GKN PLC (LON:GKN) was the top FTSE 100 gainer, up 3.1% to 312.8p after weekend press reports said the group is considering plans to split its businesses, with the stock also recovering after a profit warning last week.

Broker Liberum Capital also gave GKN shares a lift by upgrading its rating to ‘hold’ from ‘sell’ pointing that activists are watching the group, saying upside may come from a declining pension deficit, considered a key hindrance to a break-up.

Irish building materials firm CRH PLC (LON:CRH) also found gains, up 1.5% to 2,831p after it finally reached an agreement to acquire Ash Grove Cement Company for a total consideration of US$3.5bn after the US firm gained its shareholders’ approval when a rival bid failed to materialise.

And telecoms giant BT Group PLC (LON:BT.A) took on 1.1% at 273.8p after the government backed the firm’s network subsidiary Openreach in its dispute with the UK regulator Ofcom against cheaper wholesale price.

Proactive news headlines:

Premier African Minerals Limited (LON:PREM) has completed 21 holes of drilling on the Zulu lithium project in Zimbabwe. Three holes have delivered multiple high grade intercepts, with further assay results pending.

Drug developer Ergomed Plc (LON:ERGO) has told investors that it has successfully completed the phase II clinical trial of its PeproStat blood thickening agent. The AIM-listed company said the coagulant met the primary endpoint over standard of care (SOC) in time to haemostasis – i.e. it stopped the flow of blood quicker than current treatments – with “statistical significance” in all surgery types tested.

ANGLE PLC’s (LON:AGL) Parsortix liquid biopsy system has successfully harvested disseminated tumour cells from bone marrow in a study of breast cancer patients in Germany.

Satellite Solutions Worldwide Group PLC (LON:SAT) has completed the fixed wireless broadband project in Sør-Trøndelag, Norway, ahead of schedule.

Brave Bison Group PLC (LON:BBSN) said the English Football League (EFL) has signed it up for a further two years to work on EFL the  Digital network.

TechFinancials (LON:TECH), a technology provider to financial trading brokers, is to provide funding to CEDEX, an organisation launching a Blockchain-based online exchange for diamonds.

Speciality pharma business Clinigen Group PLC (LON:CLIN) has taken another step towards becoming the ‘go to’ global supplier of unlicensed medicines. The company has snapped up International Medical Management Corporation – Japan’s largest supplier of unlicensed medicines – for an undisclosed sum.

PowerHouse Energy Group PLC (LON:PHE) has received independent confirmation that the syngas produced from its ultra-high temperature waste-to-energy system can be cleaned up into almost pure hydrogen.

Real Good Food PLC (LON:RGD) has warned turning the business around will take longer than expected. Good sales growth recently has not translated into better profits said the cake decoration and bakery group.

Cancer treatment group Nanobiotix (EPA:NANO) has completed the recruitment of patients for its Phase II/III trial of NBTXR3 in soft tissue sarcoma. The last patients are expected to start their treatment in two to three weeks with results from the trial scheduled for the first half of 2018.

Eland Oil & Gas PLC (LON:ELA) has completed its latest drilling operation at the Opuama field, in Niger, where a side-track to the Opuama-7 well has unearthed a total of 77 feet of good quality net oil pay. It has perforated some 60 feet of pay in the side-track and the well is now being hooked up for production, which will start imminently.

Having secured shareholder approval at a general meeting on 20 October, Bushveld Minerals Limited (LON:BMN) will spin out its tin assets into a new vehicle called AfriTin, which will list on Aim via an IPO. The plan is to raise £2mln in a placing of shares. AfriTin will be London's only pure-play tin company.

KEFI Minerals plc (LON:KEFI) has been awarded an exploration concession in the wider area around its Tulu Kapi gold project in Ethiopia, once development work at Tulu Kapi gets underway. KEFI's chairman Harry Anagnostaras-Adams said the area was highly prospective.

Ariana Resources plc (LON:AAU) produced 3,762 ounces of gold and just under 16,000 ounces of silver in the quarter to the end of September, taking total production to date to 5,691 ounces of gold and 30,504 ounces of silver. Gross income for the quarter was US$5.50mln.

Jubilee Platinum PLC (LON:JLP) has unveiled a new joint venture tie-up with BMR Group in which the partners will target the recovery of lead, zinc and vanadium at the Kabwe project in Zambia. A joint venture agreement sees the partners pool their resources to ‘bring the project to account’, with the companies aiming to deliver commercial production of lead and zinc in 2018.

Shares in African Potash (NEX:AFPO) are set to resume trading on the NEX shortly, after the company released its audited annual report and accounts for the year to 30 June 2017.

6.50am: Flat start predicted

The  Footsie is seen opening flat at the start of a new week despite record gains on Friday in New York and advances today from Asian markets, with a firmer pound weighing again in London.

Spread betting firm CMC Markets expects the FTSE 100 index to open around 3 points lower at 7,520 having ended flat on Friday - up 0.19 points - despite the gains in New York after a late turnaround caused by a jump in sterling on vague Brexit progress hopes.

US stocks ended at record highs on Wall Street Friday, with the Dow Jones jumping 165 points higher to 23,328 boosted by Senate approval for a Budget blueprint which should pave the way for President Trump’s promised tax cuts.

In Asia today, the focus was on Japan where shares soared as the yen fell after incumbent prime minister Shinzo Abe's easy victory in a snap general election which is expected to see continuing loose monetary policy in the country.

On currency markets, despite gains against the yen, the dollar slipped lower versus the pound, which also found gains against the euro with the single currency weighed by worries over the Spanish constitutional crisis with Catalonia and caution ahead of this week's European Central Bank council meeting.

No important UK economic data is due today, with only the second reading for UK GDP growth scheduled for later this week, although a survey released overnight showed the financial morale of UK households rose to the highest level since June despite heightened expectations for a Bank of England rate cut, according to the report from IHS Markit.

It will be a busy week on the corporate news front, with third quarter numbers due from a pair of drug majors - GlaxoSmithKline PLC and Shire PLC; two banks – Lloyds Banking Group PLC (LON:LLOY) and Royal Bank of Scotland PLC; and British Airways-owner International Airlines Group PLC (LON:IAG).

However, there will be very little company news released on Monday aside from a trade update from Petra Diamonds PLC (LON:PDL)and first half numbers from Braemar Shipping Services PLC (LON:BMS).

Significant events expected on Monday October 23:

Trading update:  Petra Diamonds PLC (LON:PDL)

Interims: Braemar Shipping Services PLC (LON:BMS)

Around the markets:

  • Sterling: US$1.3207, up 0.13%
  • Gold: US$1,274.47 an ounce, down 0.47%
  • Brent crude: US$57.79 a barrel, up 0.07%

City Headlines:

  • Boost for BT’s Openreach unit as Government warns against price controls – The Daily Telegraph
  • Rivals consider legal battle over BT Group plans – The Times
  • Refuse Murdoch’s Sky bid after $32 million O’Reilly ‘cover up’, says Tom Watson – The Guardian
  • NYSE owner Intercontinental Exchange close to tying up deal for RBS’ stake in Euroclear – City AM
  • Barclays sued for ‘engineering’ the downfall of quarrying company Portland Stone – Daily Mail
  • Designs for ‘mini’ nuclear power plants proposed by Rolls-Royce led group set to be given go-ahead – Daily Telegraph
  •  Premier Inn and Costa owner Whitbread expected to increase revenues on the back of international expansion – City AM
  • Sainsbury’s is great for Habitat, opening four “mini- stores” by the middle of next month as it continues to expand under its new owner – The Times
  • Amazon to open AI centre in Germany’s Cyber Valley – Financial Times
  • ADP squares up for fight with activist investor Bill Ackman – Financial Times
  • Sinochem chases $4 billion stake in Chilean lithium miner SQM = Financial Times
  • Fund managers leave Fidelity after harassment claims – Financial Times
  • Number of UK breweries rises 64% in five years – The Independent

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