FTSE 100 closes 50 down at 7,231
ITV is the top laggard
FTSE 250 well down
As UK thermometers dipped going into Wednesday evening, so too did FTSE 100, which closed the day sharply lower, down around 50 points.
Britain's blue chip index finished at 7,231, down around 50 points, or 0.69%,
The FTSE 250 too was sold off, with the index shedding over 188 points at 19,687.
The group posted a 5% fall in net advertising revenue (NAV)- an area the firm has been struggling with inm recnt years as fewer people watch live television.
"CEO Carolyn McCall described the environment as ‘challenging’ and is focused on a ‘strategic refresh’ for the company. Investors would prefer to see a structural change sooner rather than later as the share price has been falling since July 2015," noted CMC Markets analyst David Madden.
Top riser on Footsie, meanwhile, was wealth management group St James's Place (LON:STF), which added 2.58% to 1,154.50p.
The share advance came on the back of a record business performance in 2017.
The Footsie may have mainly traded sideways throughout the day but there have been some notable movements among blue-chips.
The four biggest fallers among Footsie constituents all had trading updates today: Travis Perkins PLC (LON:TPK), down 8.9%; ITV plc (LON:ITV), down 8.3%; Admiral PLC (LON:ADM), down 4.8%; and Taylor Wimpey PLC (LON:TW.), down 4.0%.
Despite those heavy falls, the FTSE 100 was up 6 at 7,289 entering the last hour of trading.
2.35pm: FTSE 100 little changed after downward revision to US GDP
As expected, US markets have opened firmer but the fillip received by the FTSE 100 did not last very long.
The top-shares index was down a couple of points at 7,281.
In the US, the Dow was 77 points higher at 25,487 and the S&P 500 was 6.6 points better at 2,751 after the release of US gross domestic product data showed fourth quarter growth was not quite as strong as originally thought.
US GDP grew by an estimated 2.5% in final three months of 2017, down one tenth of a percentage point from the estimate published last month.
“A slight revision doesn’t take away from the fact that the US economy is powering forward, with buoyant PMI figures and business investment pointing towards good growth in 2018,” said Nancy Curtin, the chief investment officer at Close Brothers Asset Management.
“This will be supported by the wage gains we are seeing and Trump’s fiscal policy, boosting both consumer and corporate sentiment. Tax reform aside, politics have remained detached from the markets, with investors much more focused on improving economic prospects and the vast improvements in earnings that has prompted,” Curtin added.
“Of more concern is the Fed’s approach towards interest rate normalisation. If economic growth accelerates, we may see interest rates rise a little more sharply than the markets have priced in, bringing greater volatility,” she suggested.
Jacob Deppe, head of trading at online trading platform, Infinox, observed that the initial estimate had already come in below expectations and now it has turned out to be “a bigger miss than first thought”.
“How that chimes with US Federal Reserve chairman Jerome Powell’s comments that the US economic is growing strong may be questioned by some but the revision is only a slight one and there remains a good chance the US could see continued growth in the first quarter of 2018,” Deppe speculated.
“Given Mr Powell’s comments on Tuesday, a March interest rate hike seems a foregone conclusion.
“Whether we will see more than the three expected rate hikes this year may well depend on how much the economy expanded by between January and March.
“It is worth remembering that consumer spending remains fairly robust, while unemployment is at historic lows and wages are rising, so there is plenty to be positive about,” Deppe added.
1.30pm: The Footsie ventures into positive territory ahead of what is expected to be a firm start on Wall Street
The Footsie struggled into positive territory, encouraged by the prospect of a firm start on Wall Street.
The FTSE 100 was up 3 points at 7,285.
Stateside, spread betting quotes suggest the Dow Jones will open up around 46 points higher at 25,456 and the S&P 500 will advance 6 points to 2,750.
“US futures are trading slightly in the green on Wednesday, paring losses incurred on Tuesday following the hawkish testimony of new Federal Reserve chairman Jerome Powell,” noted Craig Erlam, at Oanda.
“Powell’s testimony on Tuesday in front of the House Financial Services Committee was the first of two this week, with the second being in front of the Senate Banking Committee on Thursday. The new Fed Chair was very optimistic on the economy and even opened the door to upgrades to economic forecasts next month and more rate hikes which lifted the dollar and US yields, particularly on the short end of the curve.
“The markets are already relatively well positioned for rate hikes, if the Fed raises as planned, but there’s still some catching up that will need to happen if four increases do materialise. The prospect of faster rate hikes in the near-term has been damaging for stock markets recently and explains why once again US indices shed more than 1% on Tuesday. This negative view of higher rates fed through to Asian and European stock markets also, both of which are comfortably in negative territory,” he added.
11.30am: Sluggish performance continues
London's blue-chips remained in the red, not helped by a decline in consumer confidence in February.
The FTSE 100 was down 23 at 7,260.
British households were still wary in February, waiting for wage acceleration and the next step in Brexit talks, according to the consumer confidence index from GfK— BTG Advisory (@BTG_Advisory) February 28, 2018
Market research agency GfK's consumer confidence index weakened to -10 in February from -9 in January, in line with expectations.
“A decline in consumer confidence during February indicates that while we are broadly seeing some promising signs of economic growth, there’s now a real danger that Brexit-related uncertainty around how people will be affected on a daily basis, is starting to take its toll,” suggested Robert Gordon, the chief executive officer of Hitachi Capital UK.
“Consumer spending pulled us out of the recession and if it is stifled now, due to prolonged uncertainty around what the Brexit deal actually looks like, then the impact will continue to be felt on the high street and the UK economy as a whole,” he added.
Talking of the UK high street, the British Retail Consortium's (BRC) shop price index fell 0.8% in February from January's level.
“There were some signs of relief for consumers however, as the BRC reported that shop prices moved deeper into deflationary territory, falling 0.8% y/y in February (versus -0.5% in January). The drop was led by food prices where inflation slowed to 1.6% Y/Y (from 1.9%Y/Y in January), a further sign that the impact of sterling’s depreciation has now been largely passed on,” reported Daiwa Capital Markets.
Another retailer, Dixons Carphone PLC (LON:DC), was high among the Footsie risers, up 1.3%, but all the retailers had to bend the knee to asset manager St James's Place PLC (LON:STJ), which advanced 43.5p to 1,169p on the back of a record business performance in 2017.
The City institution saw record gross inflows of £14.6bn (2016: £11.4bn) and a net inflow of funds under management of £9.5bn, up from £6.8bn in 2016.
9.45am: Footsie slides gently after US shake-out
The Footsie was feeling a bit of a cold breeze rather than a Siberian blast in early deals, despite yesterday's rout in the US.
The stock tumbled 122.5p to 1,312.5p after it reported its second consecutive decline in annual earnings, blaming a “challenging environment” with weaker consumer confidence.
‘Another good year in the house-building business has been blighted for Taylor Wimpey by the cost of rectifying onerous ground rents on some leasehold properties,” observed Laith Khalaf at Hargreaves Lansdown.
Terrestrial broadcaster ITV PLC (LON:ITV) was receiving a bit of love after yesterday a bid battle broke out for control of pay-TV broadcaster Sky PLC (LON:SKY), with some observers saying that after Sky gets taken out, ITV could be “the next cab on the rank”.
If that's the case, then any bidder would find the shares a bit cheaper – 8.6p cheaper at 164.6p, to be precise – after this morning's prelims.
“ITV has reported final results that are slightly ahead of our expectations, with PBT/EPS of £800m/16.0p compared with NSe £785m/15.7p,” noted Numis Securities.
“Adjusted Operating Profit was in line with our estimates, with the beat due to lower interest and jv charges.The dividend was increased +8% to 7.8p and there is no special,” it added.
Mike van Dulken highlighted a lengthy list of reasons why the results failed to cut the mustard, including “unsightly margin contraction”; net advertising revenues down 5% and “pedestrian guidance” of just 1% growth in the first quarter of 2018; and the absence of a special dividend.
Throw in van Dulken's no doubt well-founded cynicism about England's chances of progressing beyond the group stages of this year's World Cup and it is small wonder investors are switching off.
8.30am Modest sell-off continues
The FTSE 100 dropped in early trade after Jerome Powell, the new chair of the US Federal Reserve, said he expected further gradual interest rate hikes over the coming year.
There was a modest sell-off towards the end of the session in London on Tuesday, which continued Wednesday with the index of blue-chip shares down 34 points at 7,248.75.
The Footsie’s biggest loser was ITV (LON:ITV) after the broadcaster revealed advertising revenues were under pressure as it released its annual results statement.
A record 12 months for the insurer Admiral (LON:ADM) lifted shares 3%.
Proactive news headlines:
Mosman Oil And Gas Ltd (LON:MSMN) shares advanced in Wednesday’s early deals after the company confirmed it is exercising its right to buy into the Arkoma oil project in Oklahoma.Through a series of deals and amendments, the company ends up with a 27% stake in the project - it started with 10%, the option exercise gave it 30%, a separate agreement saw it assign 15% to partner Blackstone, and in compensation for its recent project spending, Mosman received another 2%.
Midatech Pharma PLC (LON:MTPH, NASDAQ:MTP) said it had passed an important regulatory milestone after confirming it had received orphan drug designation for its liver cancer treatment from the European Medicines Agency. The classification, which exists to get breakthrough therapies to areas of unmet medical need, brings with it certain financial and developmental support, as well as 10 years marketing exclusivity.
Thor Mining PLC (LON:THR) has begun a series of activities designed to accelerate commercialisation of its Pilot Mountain tungsten project in Nevada, USA. The AIM-listed exploration and development company said it had commissioned both a scoping study and metallurgical testwork to determine potential mining and processing scenarios around its deposits at the Pilot Mountain site.
Asiamet Resources Limited (LON:ARS) (CVE:ARS) has announced positive results from the column leach test work being undertaken as part of the Bankable Feasibility study on the Beruang Kanan Main (BKM) copper deposit in Kalimantan, Indonesia. In a statement, the AIM-listed firm said that, following a 270-day leach cycle, metallurgical results obtained from the long column (6-metre) programme, support the results previously reported in the short column test work released on 19 December 2017.
Solo Oil PLC (LON:SOLO) launched a £2mln share placing and at the same time it revealed it will acquire an additional stake in the Horse Hill oil project in southern England. It has agreed a deal with Primorus Investments PLC to acquire a 5% stake in the HHDL vehicle which owns 65% of Horse Hill. The transaction increases Solo’s holding in HHDL to 15%, giving the company an effective 9.75% interest in the underlying oil project.
Scotgold Resources Limited (LON:SGZ) topped the market gainers on Wednesday, with its shares jumping nearly 25% higher following news after-hours on Tuesday that it has received planning approval for the first commercial gold mine in Scotland's history.
Lithium specialist Bacanora Minerals Ltd (LON:BCN CVE: BCN) says potential offtake partner Nextview is now in default of a £31.2mln share placing arranged in December. Nextview agreed to buy 32.98mln shares at 94.53p but in spite of one extension to the deadline, the Chinese group has failed to complete the placing.
Cash shell Kin Group PLC (LON:KIN) ended 2017 with £836,000 in cash. As mentioned last week, the company remains in discussions with a number of interesting businesses in the software sector but it will not be in a position to complete any of these deals by the end of this month, which will mark the six-month anniversary of when it became a cash shell, as defined by AIM rules.
Allergy Therapeutics PLC (LON:AGY) said it has signed a contract with Germany’s AGC Biologics to scale up the manufacturing of its Polyvac Peanut product for use in clinical studies.The vaccine is being developed to guard against anaphylaxis and it is hoped it will also induce protective immunity.
Although it didn't contain very much material new information, Wednesday’s financial results from Eco Atlantic Oil & Gas Ltd (LON:ECO, CVE:EOG) will have made for reassuring and somewhat exciting reading for investors. The explorer is partnered with much larger partners in potentially very high impact frontier exploration projects - the Orinduik project, offshore Guyana in the vicinity of Exxon’s successful acreage continues to unearth billion barrel oil discoveries, and it has another in the waters offshore Namibia.
Life sciences business OptiBiotix Health PLC (LON:OPTI) told shareholders it is now able to make dividend payments in future, should it want to. The cancellation of its share premium account has been ratified, creating reserves that are available for distribution to shareholders.
Active Energy Group PLC has announced that it has entered into an initial supply agreement with Young Living Farms (YLF) for a new high value soil amendment product, utilising the company’s CoalSwitch process. Active Energy said that this agreement marks a new revenue stream for the company and also demonstrates the flexibility and commercial value of its unique CoalSwitch process.
Recent London-listed Shefa Yamim (A.T.M) Limited (LON:SEFA) has boosted processing capacity at its alluvial gemstone operation at Akko in northern Israel. Bulk sampling is underway at the site and throughput should rise to 50 tonnes per day from 30 tonnes currently as a result of the upgrade.
Savannah Resources PLC LON:SAV) has appointed Hatch to conduct a scoping study of a potential mine development of the Mina do Barroso lithium project in Portugal. Hatch, a world-renowned engineering group, will investigate a potential mining and concentration plant development based on the Grandao, Reservatorio and NOA spodumene deposits.
African Battery Metals PLC (LON:ABM) the AIM-quoted African-focused exploration company, has provided some photographs taken from the early part of it exploration programme at its recently acquired Kisinka cobalt-copper project in the Democratic Republic of the Congo. These photos along with others in the future will be posted to ABM's website at: https://www.abmplc.com/s/40/gallery-drc. Roger Murphy, CEO of ABM, commented: "As previously announced, our early exploration has identified a number of features which are potentially prospective for cobalt-copper mineralisation and are being followed up by both further field work and by the auger programme which has commenced. These photos provide illustration of that work.”
6.45am: Slide set to continue
The Footsie was expected to continue yesterday afternoon's late slide when it opens, following the first big statement by the new boss of the Fed.
Spread betting quotes suggest the FTSE 100 will open at around 7,238 after dipping 7 points to 7,282 on Tuesday.
“Fed chairman Jerome Powell, in his first semi-annual testimony to Congress, struck a balanced tone, emphasising continuity in the conduct of monetary policy as the Fed pursues its Congressional dual mandate of 2% inflation and maximum employment,” noted Mickey Levy at Berenberg.
“Powell’s emphasis on the Fed’s pursuit of the dual mandate reflects the Fed’s tricky position of satisfying the Congress and its two key committees that supervise the Fed — the House Financial Services and Senate Banking Committees. His testimony drew heavily on the 'Semi-annual Monetary Policy Report to the Congress' that the Fed had already submitted, Levy added.
Meanwhile, Chinese manufacturing and non-manufacturing Purchasing Managers' Index (PMI) readings for February were lower than expected at 50.3 and 54.5 respectively.
US markets had a switchback ride yesterday, with the Dow Jones giving up Monday's gains to close 299 points lower at 25,410 and the S&P 500 falling 35 points to 2,744.
Asian markets were similarly in retreat, with Japan's Nikkei 225 down 322 at 22,068 and Hong Kong's Hang Seng index off 386 points at 20,883.
On the macro front in the UK, today will see the results of several February surveys, including GfK's consumer confidence indices, the Lloyds Business Barometer and the BRC shop price index.
“While it ticked up to a four-month high of -9 in January, the GfK's headline consumer confidence index is expected to nudge a touch lower in February, thus remaining very much at the lower end of the range of the past four years and signalling subdued private spending growth ahead,” suggested Daiwa Capital Markets.
As for company announcements, commercial broadcaster ITV PLC (LON:ITV) might get a bit more attention focused on its full-year results following yesterday's outbreak of a bid battle for satellite broadcaster Sky PLC.
The FTSE 100-listed firm – in which rival US cable giant Liberty Global holds a near 10% stake - has successfully increased its programme production performance but advertising will still be the main focus.
The firm has already pre-released many of the big numbers investors would otherwise be focused on, having disclosed that volumes were up 5% year-on-year in 2017 and the average selling price was 4% higher.
Analysts calculate that should lead to full-year revenues of around £3.95bn and pre-tax profit of £818mln.
Talking of the housing market, London-focused estate agency chain Foxton’s PLC (LON:FOXT) has found things tough of late.
Analysts at Numis Securities noted that trading is expected to remain difficult through 2018, with limited prospect of a pick-up in sales, although lettings activity has proven to be relatively resilient.
Blue chip motor insurer Admiral PLC is expected to see its full-year pre-tax profit bounce back by 28% to £357mln in 2017, according to Numis’s analysts, following the Ogden-driven reserve addition in 2016.
However, they said the main catalyst for the stock on results day will be the outlook for the UK motor insurance cycle and the scope to grow the UK insurance and price comparison website lines.
Significant events expected on Wednesday February 28
Finals: ITV PLC (LON:ITV), Taylor Wimpey PLC (LON:TW.), Admiral Group PLC (LON:ADM), Foxtons Group PLC (LON:FOXT), Bakkavor Group PLC (LON:BAKK), Informa PLC (LON:INF), GoCompare.com (LON:GOCO), St James's Place PLC (LON:STJ), Shield Therapeutics PLC (LON:STX), Tarsus Group PLC (LON:TRS), Travis Perkins PLC (LON:TPK), UBM PLC (LON:UBM), Weir PLC (LON:WEIR)
Economic data: BRC UK shop price index; GfK UK consumer confidence; US preliminary Q4 GDP; US Chicago PMI; US pending home sales; Fed chairman Jerome Powell speech
Around the markets
- Sterling: US$1.3912, up 0.04 cents
- 10-year gilt: yielding 1.562%
- Gold: US$1,318.80 an ounce, up 20 cents
- Brent crude: US$66.33 a barrel, down 30 cents
- Bitcoin: £7,773.02, up £35.77
Fed chief signals rate rise likely sooner: Jerome Powell’s comments, made during his first congressional grilling as chairman of the central bank, prompted predictions that American interest rates could rise more quickly than expected.
Barclays’ ring-fence bank plan will get no ‘rubber-stamp’ from judge in court: The judge who will rule on whether Barclays can push through a sweeping restructuring has warned that he will not “rubber stamp” the plan, with only five weeks to go before the bank wants it to come into force.
Lower prices in the shops ease pressure inflicted by inflation: Shop prices have sunk deeper into deflation, suggesting that the worst of the squeeze on incomes from sterling’s devaluation since the Brexit vote may be over.
Walt Disney to invest €2 billion in Disneyland Paris: The Walt Disney Company announced a €2 billion (£1.7 billion) investment to expand its French theme park Disneyland Paris after taking full control of the business last year.
Donald Trump reaches deal with Boeing to supply Air Force One planes: US President Donald Trump has reached an agreement with the Boeing to provide two Air Force One planes for US$3.9 billion (£2.8 billion), the White House said on Tuesday.
Germany diesel ban: Court rules cities can block polluting vehicles from some areas: A German court has ruled cities can impose driving bans on the oldest and most polluting diesel cars, in a landmark ruling hailed “a victory for clean air”.
The Daily Telegraph
SoftBank-backed venture emerges as surprise bidder in UK’s 5G auction: The owner of the microchip designer Arm has backed an apparent bid to create a new mobile network in the UK as operators prepare to connect millions of more devices.
Toys R Us and Maplin on the brink of collapse, putting nearly 6,000 jobs at risk: Toys R Us and Maplin are set to become the latest casualties in the beleaguered retail sector on Wednesday, putting almost 6,000 jobs at risk.
Chief of 2 Sisters Food steps down after meat factory scandal: Ranjit Singh Boparan, the founder of the embattled 2 Sisters Food Group, has stepped down as chief executive of the firm, one of the UK’s largest chicken suppliers, after 25 years.
Nicky Morgan calls for clarity on Brexit transition period: A senior Conservative MP has criticised the government for failing to make progress on a transition deal to smooth Britain’s exit from the EU, warning that businesses could relocate jobs outside of the UK without urgent action.
Shower gel maker Swallowfield climbs 5% after buying trendy men’s grooming brand Fish in £3 million deal: Shower gel and deodorant maker Swallowfield bought ultra-cool men’s grooming brand Fish in a deal worth up to £3 million.
Sunscreen and cosmetics help chemicals firm Croda’s sales rise 10.4% to £1.3 billion: Sunscreen and cosmetics helped chemicals firm Croda’s sales rise 10.4% to £1.3 billion with profits up 13.9% to £314 million.
‘Comprehensive Strategy’ to tackle Bitcoin criminals announced by US: A strategy to crackdown on cryptocurrency criminals was announced by the US Deputy Attorney General at a Financial Services Roundtable question-and-answer session yesterday, it has been revealed.
Italian election storm prompts surge in sales of Government bonds: the upcoming Italian election has led to a surge in investors buying the country’s bonds, with the total sale of Italian bonds sold so far this year comes to £117 million (€133 million).
Economy slack could be bigger than thought and slow inflation rise: slack in the eurozone economy could be bigger than previously estimated slowing the rise of inflation, the President of the European Central Bank has warned.
Upper Crust operator SSP Group met with shareholder rebellion over chairman’s busy schedule: Upper Crust and Ritazza operator SSP Group faced shareholder unrest at its annual general meeting (AGM) today, as almost a third of investors rebelled against its chairman.
Now M&S has published its gender pay gap and pledges to encourage more flexible working: Marks & Spencer has become the latest retail giant to publish its gender pay gap figures today, saying it will look to encourage more flexible working as it seeks to improve further.
London hotels outperform the market for Clayton owner Dalata: Irish hotel company Dalata has praised its market-beating London hotels as it posted a bumper rise in revenue for 2017.