FTSE 100 slumps 78 points after US rally quickly runs out of fizz
Stellar day for Stellar Diamonds
Investors high on the Hogg Robinson takeover offer
The US revival did not last long, prompting the FTSE 100 to stage a late swoon.
The top shares index closed at 7,092, down 78 points.
Despite the shake-out there some bright spots, most notably Stellar Diamonds PLC (LON:STEL), which soared more than 50% after it revealed it had received an unsecured loan from Newfield Resources for US$3mln.
3.45pm: Volatility dominant again
Wall Street’s bounce was, once again, swiftly eroded as the volatility which has been dominant all week held sway, pulling the FTSE 100 index back towards session lows with around three-quarters of an hours trading to go in London.
Around 3.40pm, the UK blue chip index was 67 points lower at 7,102, hovering just above the day’s low of 7,100.02.
On Wall Street, after notching up a 300 point rally in the first half hour of trading, the Dow Jones’ advance was pared back to just 21 points, while both the S&P 500 and Nasdaq composite index also cut their gains.
Among equities in London, Direct Line Group PLC (LON:DLG) was a late afternoon gainer, adding 2.6% at 377.9p after the blue chip insurance group issued a brief trading update saying it is on course for operating profits of £610mln and profit before tax of £540mln, up from £403.5mln and £353mln respectively in 2016.
Nicholas Hyett, equity analyst, Hargreaves Lansdown commented: “An unscheduled trading update on a Friday lunchtime is rarely good news. However, in Direct Line’s case it’s difficult to find things not to like.
“Higher gross premiums, more own brand policies, improved underwriting performance – you can almost hear CEO Paul Geddes emulating the Churchill brand’s famous mascot.” Ohhh yes!
British Land PLC (BLND) was also in demand, ahead 0.8% at 637p after the FTSE 100 listed property giant announced the acquisition of the Woolwich Estate, covering 4.9 acres in south east London, for a headline price £103mln - representing a net initial yield of 4.1%.
2.55pm: US stocks bounce; Footsie still weak
The FTSE 100 index remained lower in late afternoon but came off lows again as US stocks managed an early rally following the second 1,000 point drop by the Dow Jones in a week in the previous session.
Around 2.55pm, the UK blue chip index was down 27 points at 7,143, holding off the session low of 7,100.02 after a very volatile trading week which has seen it notch up a near 5% drop.
On Wall Street, after the big slide on Thursday which took the US market into official 10% correction territory, the Dow Jones rallied 302 points to 24,162 in the first half hour of trading, with the broader S&P 500 index and Nasdaq composite both recovering around 1% of the recent losses as well.
Jasper Lawler, head of research at London Capital Group said: “The question is whether this is the technical trigger for wider market contagion or just a long overdue “healthy” pullback for an over-extended market.
He added: ”A 10% market correction historically happens on average every 18 months, marking it a very “normal” phenomenon. The key point this time around is that market conditions since 2009 have been very abnormal thanks to unprecedented central bank support.
“We would interpret these latest market moves as a part of a significant transition. It is most likely a transition to a more ‘normal’ resumption of the bull market with higher volatility but the risk of it being a swift transition to a bear market should not be underestimated.”
On currency markets, after strong gains yesterday following hints from the Bank of England that UK interest rates could rise more quickly than expected, sterling fell back today versus the dollar and euro, at US$1.3811 and at €1.1264 respectively.
12.15pm: Nerves ahead of US return
The Footsie fell back again in choppy lunchtime trading as investors nervously awaited the restart on Wall Street for fresh direction following the second 1,000 point drop by the Dow Jones in a week in the previous session.
Around 12.15pm, the FTSE 100 index was 49 points lower at 7,121, heading back towards the session low of 7,121.43 after a very volatile trading week for global stock markets.
Craig Erlam, senior market analyst at Oanda, said: “US futures are trading slightly in the green ahead of the open on Friday, a day after stock markets once again tumbled leaving indices in correction territory.”
He added: “Clearly there remains a lot of volatility and nervousness in the markets and I don’t expect this to ease up heading into the weekend.
“Stock markets will likely remain vulnerable to further shocks heading into today’s close and possible even next week. That said, with a 10% correction having now completed, I wonder whether investors will now start looking to buy the dips as the fundamental backdrop remains strong.”
Erlam also pointed out that, on a more positive note, the US House of Representatives and the Senate both approved a new funding bill in the early hours of Friday morning that will see the government through to 23 March and increase spending limits for two years, ending a showdown that came into effect overnight.
He said: “Markets haven’t been too concerned about the prospect of a shutdown since the start of the year despite two having now taken place so I don’t expect to see any boost now that a deal has been reached. This is merely just another self-inflicted risk that’s been temporarily averted.”
On currency markets, after gains yesterday following hints from the Bank of England that UK interest rates could also rise more quickly than expected, the pound beat a retreat today versus the dollar, down 0.7% at US$1.3825, but had turned flat against the euro at €1.1300.
Friday takeover treats
Among equities, Hogg Robinson Group PLC (LON:HRG) shares topped the market gainers, surging nearly 50% higher to 116p on news it has received a takeover offer from the former global business travel unit of American Express, and has also agreed to sell its payments technology business to Visa Inc.
AmEx GBT has offered 120p per share for Hogg, which values the British business travel company at up to £393mln.
Trinity Mirror PLC (LON:TNI) shares also gained, adding 7.5% at 75p after the publisher of the Daily Mirror newspaper finally agreed a £126.7mln deal to buy rival titles the Daily Express and Daily Star in the biggest shake up of the UK newspaper industry in years.
The group said it would pay vendor Northern & Shell Media Group Limited an initial cash consideration of £47.7mln, a deferred cash consideration of £59mln payable between 2020 to 2023 and the balance of £20mln by the issue of shares.
The group said some 33.3mln new shares are being issued at a price of 6p per share, which is a 27% discount to Thursday’s closing price.
11.10am: No great rate shock - Broadbent
Bank of England Deputy Governor Ben Broadbent has said he does not think a couple of interest rate hikes in the space of a year should come as a great shock, but added that the central bank had not fixed any path for a tightening policy.
Speaking a day after the BoE surprised investors by saying it was likely to raise rates sooner and by more than it thought a few months ago, the BoE man said the low level of rates in recent years reflected global factors.
“But nor do I think if there were to be a couple of 25 basis point rises in a year, that that would somehow be a great shock,” Broadbent commented in a BBC radio interview.
After Thursday’s policy meeting, financial markets now price in a near 70% chance of a BoE rate hike in May.
The pound was sharply higher on Thursday following the Bank of England’s rate hike hints, but it slipped back today, losing 0.2% versus the dollar at US$1.3895, and down 0.3% against the euro at €1.1332.
That retreat by sterling index helped the FTSE 100 to come off early session lows, but the index was still down nearly 18 points at 7,153 around 11.05am, reflecting further sharp falls overnight by US and Asian stock markets.
10.25am: Dull progress as data digested
The FTSE 100 index remained weak, but held off early lows in mid-morning trading, while the pound remained fairly flat after strong gains yesterday as traders digested a big batch of mixed UK data.
Around 10.20am, the UK blue chip index was down 21 points at 7,150, holding off the session low of 7,121.43 hit following sharp falls overnight by US and Asian stock markets.
On currency markets, after gains yesterday following hints from the Bank of England that UK interest rates could also rise more quickly than expected, sterling edged up versus the dollar at US$1.3926, but lost 0.2% against the euro at €1.1349.
Exports to Germany and France rising sharply in 2017. Just in time for Brexit pic.twitter.com/fWRJleqjOw— Joshua Mahony (@JMahony_IG) 9 February 2018
Given the rate hike possibilities, investors keenly scanned the latest official UK data.
UK industrial output sank in December at the fastest pace since 2012 due to the shutdown of a major oil pipeline, but growth in manufacturing confirmed the broader picture of solid economic expansion at the end of 2017.
Industrial output fell by 1.3% month-on-month in December, the biggest drop since September 2012 after a 0.3% rise in November, the Office for National Statistics (ONS) said, and bigger than the forecast 0.9% fall.
Meanwhile, manufacturing output rose by 0.3% on the month, marking the eighth consecutive month of growth in the sector - the longest such run in nearly 30 years.
Separately, the ONS said construction output jumped 1.6% on the month, beating forecasts for growth to be flat.
However, other ONS data showed Britain’s goods trade deficit with the rest of the world widened to £13.576bn in December, above forecasts for an £11.6bn shortfall, reflecting rising crude oil prices and higher imports.
Economists at ING said the softer December trade and production data, coupled with downward revisions suggest the potential for UK fourth quarter GDP growth to be revised down to 0.4% quarter-on-quarter.
9.00am: Footsie tracks global falls
The FTSE 100 tracked Wall Street lower, although the sell-down was nowhere as near a severe as the rout we saw in the US overnight where the Dow posted its second 1,000 point drop of the week.
Here in the UK, the index of blue-chip shares was off 22 points at 7,148.61 on rather subdued volumes.
We have a fairly data-driven day with industrial and manufacturing production figures out in the next half hour alongside trade and construction output numbers. At noon, the National Institute of Economic and Social Research provides its growth forecasts.
On the market, the major miners clawed back a little of the ground they lost on Thursday, while TalkTalk (LON:TALK) gave up more ground following on from news the telco is going to tap the market for £200mln.
Among the tiddlers, Scancell (LON:SCLP) stood out after it won patent protection for its Moditope platform from which the next generation of cancer vaccinations are being developed.
Proactive news headlines:
Scancell Holdings PLC (LON:SCLP) said the European Patent Office intends to grant the company’s patent application for the Moditope immunotherapy platform. Once formally granted, the patent will provide protection for Scancell’s pipeline of Moditope vaccines that could help revolutionise the way cancer is treated.
Bacanora Minerals Ltd. (LON:BCN) has said it intends to re-commence the process of changing the domicile of jurisdiction to the UK from Canada to the UK which it thinks will benefit its plans to raise a significant amount of new debt and equity financing to fund its growth.
S & U PLC (LON:SUS) said on Friday its motor finance business delivered a record year of transactions, shrugging off recent data showing a slowdown in the car market. The Advantage motor finance arm achieved a 24% year-on-year increase in transactions to 24,500 in the year ended January 31 2018, the company revealed in a trading update ahead of its annual results in March.
NetScientific PLC (LON:NSCI) has noted that its portfolio company, Vortex BioSciences Inc, has announced a promising report published by Nature Scientific Reports. The AIM-listed transatlantic healthcare IP commercialisation group said the peer reviewed report, titled "Evaluation of PD-L1 Expression on vortex-isolated circulating tumor cells in metastatic lung cancer" describes the use of Vortex's technology.
Top Norwegian e-sports team Nordavind will join the third season of Gfinity PLC’s (LON:GFIN) Elite Series, taking place in Gfinity Arena in London next month, meaning 10 esports teams are now signed up for the event. Nordavind, previously known as BX3, is a partnership with Vålerenga Fotball, one of Norway’s biggest football teams. Norwegian businessman Tor Olav Trøim owns Vålerenga and an 80% stake in Nordavind.
Savannah Petroleum PLC (LON:SAVP) told investors that the Seven Energy assets, that are in the process of being acquired, have seen increasing production “strongly” in recent months. The assets, located in Nigeria, had gross production of 17,900 barrels oil equivalent in the month of November, 20,300 boepd in December and 21,800 boepd in January. Production in February to date has averaged 25,700 boepd gross.
Diversified Gas & Oil PLC (LON:DGOC) told investors that its proposed acquisition of producing gas and oil assets is now expected to complete on March 30. The company today confirmed that it has now entered into a conditional purchase agreement with CNX.
Tantalum miner Kennedy Ventures PLC (LON:KENV) expects its shares will return from suspension today with a name change to Kazera Global PLC planned for March. The shares were suspended in December as Kennedy’s auditors were unable to sign off the accounts in AIM's timeframe due to the complexity of consolidating its Namibian businesses and applying the IFRS standard.
Alba Mineral Resources PLC (LON:ALBA) has snapped up a licence in north-west Greenland close to its existing Inglefield Land blocks. The additional ground was previously under licence to NunaMinerals, which held some of the potentially most prospective areas in Greenland, said Alba.
PowerHouse Energy Group PLC (LON:PHE) announced that an updated corporate presentation, which was used at an investor event on 8 February 2018, is now available to view on the company's website. It said no new material information was released at the investor meeting.
6:45am: Wall Street's shockwaves to hit Square Mile
The FTSE 100 is set for another jittery session on Friday following further plunges overnight by New York and Asian stocks as market volatility rules amid rate hike and inflation concerns.
Spread betting firm IG expects the UK blue chip index to open around 48 points lower at 7,122, having dropped 108.73 points on Thursday.
Wall Street once again precipitated the global sell-off, with the Dow Jones notching its second biggest points fall ever, dropping over 4%, or 1,000 points for the second time this week, while the broader S&P 500 shed 3.7%.
With Thursday’s losses, both the S&P 500 and the Dow slid into official correction territory, falling more than 10% from the record highs hit on January 26 after a week of pain for US markets.
Asian stocks also fell sharply on Friday, with Chinese shares slipping to multi-month lows after Wall Street dropped again in the face of rapidly-rising bond yields.
Global stocks began to wobble last Friday after a healthy US labour market report sparked a spike in bond yields and fears of rising inflation which could trigger more central bank rate hikes.
On currency markets, after strong gains yesterday following hints from the Bank of England that UK interest rates could also rise more quickly than expected, sterling held fairly steady overnight, just edging up versus the dollar at US$1.3926, but flat against the euro at €1.1366.
Given the rate hike possibilities, investors will eye the latest official UK data on trade and manufacturing, industrial and construction output figures, due out at 9.30am today.
Economists predict a 1.2% year-on-year increase manufacturing production in December. Industrial output is expected to grow 0.4% while construction production is forecast to drop 1.9%.
The UK trade deficit is expected to narrow to £2.4bn from £2.8bn in November.
Thin corporate news likely to be ignored
The day’s thin corporate news is likely to be passed by, with just two second line trading updates scheduled for release.
Liberum Capital estimates that the firm’s revenues will rise 40% to £78mln in the first quarter with volumes up 13%.
In its last update in December, Victrex reported an 11% rise in pre-tax profit to £111.0mln for the 12 months to September 30, as group revenue rose by 15% to £290.2mln.
Niche lender S&U PLC’s (LON:SUS) trading update will see all eyes on its motor finance arm and bridging finance pilot operation.
Despite recent data showing a drop in car sales, the company’s motor finance division, Advantage Finance, has shown no signs of slowing down.
Meanwhile, the Aspen bridging finance pilot operation has also been gaining traction since its launch in early 2017, increasing its loan book to £9mln in December from £2mln in July.
Significant announcements expected on Friday:
Economic data: UK trade data; UK industrial, manufacturing production; UK construction output; US wholesale inventories
Around the markets:
- Sterling: US$1.3926, up 0.1%
- Gold: US$1,321.70 an ounce, up 0.4%
- Brent crude: US$60.53 a barrel, down 1%
- Daily Mirror owner agrees to £127mln deal to buy Express titles - Reuters
- GlaxoSmithKline faces fresh probe over allegations it bribed doctors to prescribe its drugs – Daily Mail
- easyJet forges ahead to protect flying rights after Brexit – Financial Times
- Debenhams to axe 320 store manager roles – The Guardian
- EE to offer fast wireless broadband to more than half a million remote homes – Daily Telegraph
- Aviva under fire for pouring £370mln into Polish coal industry – The Guardian
- Goals Soccer Centres appoints Andrew Anson as Chief Executive - CityAM
- Amazon to deliver Whole Foods groceries to Prime members – The Independent
- Expedia tumbles as investors unpack profit drop – Financial Times
- Google fined US$21mln in India over competition abuse – Financial Times
- Qualcomm opens narrow path to Broadcom deal – Financial Times
- Petropavlovsk names new Boss, dashing hopes of Kazak investor – Daily Telegraph
- Sibanye chief confident of backing for Lonmin offer – Financial Times
- Virtu shares leap after earnings beat and volatility returns – Financial Times
- AIG reports Q4 net loss on tax, wildfire hit – Financial Times
- UK insurance company Hiscox accused of data protection breach – Financial Times
- New River keeps top job in the family – The Times
- Kwek cuts dividend after M&C bid rejected – The Times
- Fashion house Hermes runs out of its coveted £8,000-plus handbags as sales hit £4.8bn – Daily Mail
- Total boosts returns to shareholders after jump in profits – Financial Times
- Société Générale ekes out quarterly profit despite charges – Financial Times