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FTSE 100 closes below 7,200 as pound firms and crude weakens

The FTSE 100 closed below the 7,200 level as sterling continues to strengthen against the dollar
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FTSE 100 and FTSE 250 closed lower on the day
  • FTSE 100 closes down 66 at 7,198

  • Pound firms

  • Martin Sorrell steps down as WPP boss

  • Dow surges at open

 

FTSE 100 closed below the 7,200 level on Monday as the pound firmed and US shares were trading higher.

The UK blue-chip benchmark closed around 66 points down at 7,198, while the FTSE 250 was around 67 points lower at 19,771.

In the currency markets, the pound was up 0.43% against the Euro and up 0.60% against the US dollar.

The market pushed sterling higher ahead of the start of negotiations this week on the UK's post-Brexit trade relationship with the EU. US crude is down 1.22% to US$66.57 a barrel after the Syria air strike.

Fiona Cincotta, analyst at City Index, summed it up thus: "The index was weighed down by a combination of a weaker oil price, a stronger pound and a large sell off in WPP and Evraz, although a rally in the US on the open helped lift the FTSE into the close.

"Investors concentrated on putting the US led military bombings against Assad’s regime behind them and fortunately there is plenty for them to focus on."

Shares in advertising behemoth WPP (LON: WPP) were among the biggest losers, down 6.48% to 1,111p as traders responded to chief executive Martin Sorrell’s resignation amid an investigation into allegations of personal misconduct.

Whitbread plc (LON:WTB), the Costa Coffee owner, added 7.19% to 4,218p after activist investor Elliott Advisors bought shares.

The latter confirmed at the weekend that it now holds a stake of more than 6% in the company. Reportedly it wants the group to be split into its Costa Coffee chain and its Premier Inn business.

On Wall Street, the Dow Jones is up 1.2% at the time of writing, while the S&P 500 gained 0.99%.

3.30pm: Trump tweets...

3.15pm: Pound's strength and resources stocks weigh on FTSE 100

The pound has gone from strength to strength of late and it has continued its resurgence so far today.

With big economic data – the kind that could force the Bank of England to think about upping interest rates once again – due later this week, it could be that traders are betting on some better-than-forecast growth in wages.

In late trading on Monday, £1 could get you US$1.433 – the most since the Brexit vote.

The strong pound is weighing on the FTSE 100 – it makes blue chips’ earnings worth less when converted back – which is down almost 1%, or 68.0 points, to 7,196.9.  

Oil price slides

Alongside sterling, big-name resources stocks are also dragging the index lower.

Supermajors BP PLC (LON:BP.) and Royal Dutch Shell PLC (LON:RDSB) were the oil sectors two big losers as prices of the black stuff fell back by more than 1% to below US$72.

Traders had suspected last week that US military action in Syria might disrupt supply that part of the world, but so far there has been little disruption.

Shell shares are down 0.4% to £24.10, while BP is down 1.5% to 496.9p shortly before midday.

Sorrell leaves WPP

Miners are also coming under pressure, with Russian outfit Evraz plc (LON:EVR) shedding 6.2% as investors wait on news of any fresh US sanctions on the country and its companies.

Elsewhere, the big story of the day surrounds advertising giant WPP PLC (LON:WPP), which is nursing some chunky losses of its own (down 6.9% to £11.07) after its chief executive Martin Sorrell stepped down after 33 years in charge.

 

By contrast, shares in Costa Coffee owner Whitbread plc (LON:WTB) surged 7.1% to £42.16 after activist investor Elliott Advisors bought a chunk of shares.

3pm: US stocks jump as expected

As expected, US stocks have opened higher on Monday morning, in part thanks to solid economic data (see US retail sales below).

The Dow Jones soared 184.9 points, or 0.8%, to 24,545 at the opening bell, while the tech-heavy Nasdaq rose 27.1 points, or 0.4%, to 7,130.2.

The S&P 500 made it three out of three, jumping 10.5 points, or 0.4%, to 2,666.8.

2.45pm: US retail sales rebound

The US economy has received another shot in the arm as latest figures show retail sales bounced back in March following three straight months of declines.

Sales rose by a stronger-than-expected 0.6% last month, helped by purchases of other big-ticket items. On an annual basis, sales were up 4.5% compared to the same month in 2017.

‘Core’ sales, which excludes sales of cars, gasoline building materials and food services, rose 0.4% last month.

Retail sales are keenly eyed by traders as consumer spending accounts for roughly 70% of economic activity in the US.

2.30pm: Unemployment and earnings data due on Tuesday

Investors will be closely eyeing the first of a key batch of UK economic data on Tuesday, with UK unemployment and average earnings numbers due to be revealed a day ahead of the latest inflation figures.

A further acceleration in wage growth could be enough to cement expectations for a May rate hike from the Bank of England, especially if the consumer price index continues to reverse.

Policymakers expect wages to rocket this year given the tight jobs market, with a further acceleration expected in the latest data. Economists at ING are forecasting UK regular pay growth to edge up to 2.8% year-on-year.

In a preview, ING pointed out that, admittedly, the numbers are being flattered by a weak patch this time last year, but so far, the data received since November does suggest pay pressures are building, as skills shortages intensify in certain sectors.

2.10pm: One bookie has stopped taking bets on next BoE governor

Online bookmaker Betway has stopped taking bets on who the next governor of the Bank of England will be.

Betway said it had decided to suspend betting after receiving a “sudden influx of bets” on Andrew Bailey, the current chief executive of the Financial Conduct Authority, replacing Mark Carney.

“There had been some speculation that Andrew Bailey was a leading candidate to replace Mark Carney as the new governor of the Bank of England, and in the last few days we’ve seen huge support for him taking the role,” said Betway’s Alan Alger.

“The current chief executive of the FCA was available at 9/1, but as a result of the weight of support towards him, we’ve had no choice but to suspend the market.”

1.30pm: Miners, strong pound taking their toll on footsie

The FTSE 100 is still stuck in the red, as the strong pound and oil stocks weigh on London’s blue-chip index.

In mid-afternoon trading, the index was down 31.9 points, or 0.4%, to 7,232.9

Supermajors BP PLC (LON:BP.) and Royal Dutch Shell PLC (LON:RDSB) were the two big losers as oil prices fell back by more than 1% to below US$72.

Traders had suspected last week that US military action in Syria might disrupt production in that part of the world, but so far there has been little to no disruption.

Shell shares are down 0.7% to £24.05, while BP is down 1.3% to 497.8p shortly before midday.

As for the pound, that has also brushed off any geopolitical tensions to creep past US$1.43 for the first time since the Brexit vote.

A stronger pound generally spells bad news for London’s blue chips as it makes their overseas earnings – which account for about 75% of revenues – worth less when converted back.

Advertising giant WPP PLC (LON:WPP) is also nursing some sizeable losses (down 5% to £11.29) after its chief executive Martin Sorrell stepped down after 33 years in charge.

By contrast, shares in Costa Coffee owner Whitbread plc (LON:WTB) surged 7.4% to £42.26 after activist investor Elliott Advisors bought a chunk of shares.

12.45pm: US markets to brush off Syria airstrikes and open higher

US stocks look set to brush off the situation in Syria and kick off the week in positive territory, with all three of the major indices seen higher at the opening bell.

The Dow Jones is tipped to open 140 points higher at 24,504, while the tech-heavy Nasdaq is seen 41.7 points higher at 6,667.1. As for the broader S&P 500, spread betting firms have that opening at 2,671.4 – 15.5 points higher than Friday’s close.

“For now, investors appear at ease with the situation [in Syria] and as long as no further escalation occurs, attention may now switch to other matters such as first quarter earnings season,” said OANDA analyst Craig Erlam.

He added: “While earnings and geopolitics may be of most interest to traders this week, there are a number of data points that will attract attention.

“Retail sales [due later today] have taken a dip at the start of the year but the trend remains solid and you would expect tax reforms to be supportive for spending over the course of the year.”

12:10pm: Pound pops past US$1.43

The pound has risen past US$1.43 for the first time since the Brexit vote.

Sterling touched US$1.50 in the days leading up to the referendum but dropped back sharply shortly afterwards.

At just after midday, £1 could buy you US$1.430.

12.05pm: Major Hammerson shareholder to vote against Intu tie-up

Shares in Hammerson PLC (LON:HMSO) are moving higher after one of its major shareholders said it would vote against the £3.4bn takeover of rival shopping centre owner Intu Properties Group PLC (LON:INTU).

Dutch pension fund manager APG has written to the top brass at Hammerson, explaining that it has “substantial concerns” over the deal.

“Furthermore, we believe the proposed acquisition will significantly dilute Hammerson's high-quality portfolio,” the pension fund said.

APG, along with other investors, is sceptical about the idea of increasing the group’s exposure to the UK market, especially given that a number of high street chains are struggling.

Stagnant wages and rising living costs have squeezed consumers, which has prompted several high-profile casualties including Toys R Us and Maplin, while several others are struggling to keep their heads above water.

11.45am: Oil prices dip

Oil prices dropped sharply on Monday, sending shares in London-listed supermajors BP PLC (LON:BP.) and Royal Dutch Shell PLC (LON:RDSB) lower.

Brent crude rose last week as traders suspected US military action in Syria might provoke a reaction from Russia and impact oil production and deliveries.

But with next to no disruption to deliveries so far, Brent crude fell back more than 1% to below US$72.

“The black stuff [is] in retreat in response following the contrast between the actually military engagement seen in Syria over the weekend and the supply-worrying rhetoric used by Trump last week,” said Spreadex analyst Connor Campbell.

Shell shares are down 0.7% to £24.05, while BP is down 1.3% to 497.8p shortly before midday.

11.20am: Spoons ditches social media

JD Wetherspoon PLC (LON:JDW) has gone against “conventional wisdom” and canned all of its social media channels.

The value pub chain’s eccentric boss Tim Martin has come out and said that the idea that social media is a must-have for every business is untrue, claiming that his team was wasting hours of their time monitoring the accounts.

“I don’t believe that closing these accounts will affect our business whatsoever, and this is the overwhelming view of our pub managers,” said Martin.

11am: Takeda’s possible US$50bn bid for Shire thrown into doubt

Shire Plc (LON:SHP) has agreed to sell off its oncology division to French pharma group Servier for US$2.4bn, raising doubts over the likelihood of a bid from Japanese drugmaker Takeda.

Takeda, which is Japan’s largest drugmaker by sales, first revealed its interest in Shire at the end of March and is said to be weighing up a US$50bn bid for the UK group.

But Monday’s news that Shire has sold off its cancer treatment unit – which includes its ONCASPAR (leukaemia) and ONIVYDE (pancreas) treatments – has thrown that possible takeover into doubt.

Takeda had identified oncology, along with gastroenterology and neuroscience, as one of the key therapeutic areas which would benefit from the acquisition.

10.45am: Pound weighs on footsie

Britain’s military intervention in Syria over the weekend hasn’t had any effect on the pound, with sterling up against all of the major currencies.

The pound is currently up 0.3% against the US dollar to US$1.428, while it is marginally stronger against the euro at €1.155.

A stronger pound typically weighs on the FTSE 100 as it makes the blue chips’ overseas earnings worth less when translated back to sterling.

That has been the case so far today, with the index down 17.1 points, or 0.2%, to 7,247.3.

WPP slides as Sorrell departs​

Advertising giant WPP PLC (LON:WPP) was the top blue chip faller, down 4.9% to £11.30, after its chief executive Martin Sorrell stepped down after 33 years at the helm.

The highest-paid boss on the FTSE 100 had been under investigation after claims of personal misconduct and misuse of the company’s money – which he has always denied – surfaced.

In a letter to WPP staff published late on Saturday, Sorrell said the "current disruption" was "putting too much unnecessary pressure on the business".

"Obviously I am sad to leave WPP after 33 years. It has been a passion, focus and source of energy for so long. However, I believe it is in the best interests of the business if I step down now.”

Software firm Sage Group PLC (LON:SGE) was also weighing on the FTSE 100, as Friday’s revenue guidance cut was still irking investors.

Sage trimmed its organic revenue forecast for 2018 to 7% from 8% because of “inconsistent operational execution”. Shares are down 3.6% to 594.8p on Monday morning.

Another activist enters the fray at Whitbread​

Stemming the index’s losses was Whitbread plc (LON:WTB) which sits atop the leaderboard after activist investor Elliott Advisors revealed it is now the Premier Inn and Costa Coffee owner’s largest shareholder.

The US hedge fund now owns more than 6% of Whitbread, according to a regulatory filing over the weekend, and along with fellow activist investor Sachem Head Capital, wants Costa to be sold off as it sees little overlap between the coffee chain and the rest of the Whitbread business.

Investors seemed to agree that a change is needed, with shares rising 6.6% to £41.96.

9am: Sorrell's departure and Whitbread dominate​

The FTSE 100 fell 11 points at the open to 7,253.26 with worries over the Syria missile attack by the US, the UK and France dominating sentiment.

Away from the game of guessing Russia’s next move in this international game of risk, there was absolutely no doubting the big corporate story of the day in London.

This was official confirmation of the departure of Sir Martin Sorrell, the chief executive of marketing and advertising giant WPP (LON:WPP).

He stepped down from the group after 33 years at the helm amid claims of misconduct.

The shares fell 3.5% early on. “Sir Martin Sorrell's resignation will raise speculation about the future of the group,” said Ian Whittaker, analyst at Liberum Capital.

“We think there is a significant possibility that WPP will now sell its data investment (ie the market research unit), and possibly PR, but that the rest of the group will be kept.

“This should drive a closing of the gap between the valuations and performance of WPP and the other agencies.”

Whitebread (LON:WTB) topped the leader-board as activist investors Elliott Advisors joined the company’s share register as its biggest investor. This comes amid calls that Costa Coffee and budget hotels group should split itself up – a move it is hoped would release value for investors. The shares rose 6.4%.

Proactive news headlines:

Anglo Asian Mining Plc (LON:AAZ) has increased gold equivalent ounce production at its Gedabek mine in Azerbaijan by 26%. Anglo Asian produced 18,307 ounces in the three months to 31 March.

Polymers specialist Itaconix Plc (LON:ITX) overcame adverse currency movements to post an increase in first quarter revenues. Group revenue rose 8% to £149,000 from £138,000 the year before, boosted by the sale of Itaconix CHT.

Medical imaging group Feedback plc (LON:FDBK) has made some changes to its board and structure as it looks to streamline and simplify its operations.

Avacta Group Plc (LON:AVCT) said its lead PD-L1 programme was on track to deliver key pre-clinical milestones this year. And it reported “excellent progress” with a second immuno-oncology research project, a LAG3 blockade, which can be combined with PD-L1 for improved efficacy.

PCF Group Plc (LON:PCF), the specialist bank, said the total value of deposits it has accepted from retail customers has surpassed the £100 million mark.

Abzena plc (AIM:ABZA) said its expects turnover for 12 months to the end of March to be in the order of £22mln, up 18% on the year before, with underlying earnings (EBITDA) in line with expectations. The life sciences group said manufacturing revenues had grown 60%, with chemistry up by 15%.

Argentina and Bolivia-focused Echo Energy Plc's (LON:ECHO) status enabled it to acquire a 50% working interest in four onshore blocks in Argentina at the start of the year said Fionia MacAulay, chief executive. Echo acquired a 50% working interest in Fraccion C, Fraccion D, Laguna De Los Capones and the exploration permit at Tapi Aike.

Shanta Gold Ltd (LON:SHG) produced 79,585 ounces of gold from its New Luika mine in Tanzania during the year to 31 December 2017. The company cut net debt by U$4.7mln to US$39.5mln, although costs did rise as mining transitioned underground.

Metal Tiger PLC (LON:MTR) has submitted an application for an environmental management plan (EMP) for drilling at its T20 Dome complex in Botswana. The AIM-listed miner said the application, lodged with the Botswana Department of Environment Affairs (DEA), would cover drilling around a circa 697 Square kilometre area.

Marble quarrying company Fox Marble Holdings PLC (LON:FOX) has installed some impressive new kit at its processing factory in Pristine, Kosovo. The company has coughed up for a new state-of-the-art computer numerical control (CNC) machine and a block vacuum pump machine to provide additional capacity to meet increased order flow and improve margins.

Polar Acquisition Limited has completed the sale of its stake in the Prognoz silver mine in Russia to Polymetal International PLC (LON:POLY). The consideration was US$72mln in Polymetal shares for the 45% stake, though volatility in the share of the Russian miner has since seen the current value drop to US$59.4mln. Polar is one of the most significant investments held by Baker Steel Resources Investment Trust (LON:BSRT),

Columbus Energy Resources PLC (LON:CERP) has agreed in principle to buyout Touchstone Exploration Inc’s stake in their joint venture, the Icacos field. Columbus currently owns 50% of the joint venture, located in the South West Peninsula of Trinidad, through its subsidiary Leni Trinidad Limited (LTL) while Touchstone owns the rest via its subsidiary, Primera Oil and Gas Limited.

G3 Exploration Ltd (LON:G3E) said it will push ahead with plans to spin-off its Chinese coal bed methane (CBM) business as it reported strong progress at its exploration and production assets. The company in December announced that it will separate its main producing assets – blocks GSS and GCZ in the southern Qinshui Basin, Shanxi Province, China –into a new Hong Kong listed business to be called Green Dragon Gas (GDG).

Ariana Resources plc (LON:AAU) produced 4,866 ounces of gold from its Kiziltepe project during the first quarter of 2018. The company remains on course to deliver on full year guidance of 20,000 ounces.

Orosur Mining Inc (LON:OMI) has booked a third quarter operating profit of US$1.168mln, as mining at the San Gregorio gold project continues. Production was down and costs were up as a result of lower grades. Elsewhere, in Colombia, Orosur continues to hit promising intercepts of gold mineralisation on the APTA project.

Cradle Arc Plc (LON:CRA) said it has entered into an option agreement with Singa Holdings Zambia Private Limited to either establish a joint venture or acquire its subsidiary, Luiri Gold Mines Limited.

RM Secured Direct Lending PLC (LON:RMDL) has highlighted an "attractive pipeline of opportunities" as the investment manager unveiled modest quarterly growth in its portfolio's net asset value (NAV) despite market conditions. The secured debt-focused investment firm said its NAV as at 31 March was 98.17p per ordinary share, which was 0.41p higher than at the end of February.

NetScientific PLC (LON:NSCI), the transatlantic healthcare IP commercialisation group, announced that its US-based portfolio company, Vortex BioSciences, a leading liquid biopsy company, is presenting compelling new data at the American Association for Cancer Research (AACR) Annual Meeting in Chicago 14 - 18 April, 2018.

LEKOIL Limited (LON:LEK), the oil and gas exploration, development and production company with a focus on Africa has appointed Numis Securities Limited as its joint broker effective immediately. The group said Numis will work alongside financial adviser and nomad Strand Hanson Limited and existing joint brokers Mirabaud Securities LLP and BMO Capital Markets.

6.45am: Flat start predicted

Geopolitical concerns are likely to keep a lid on the FTSE 100 in the wake of strikes on Syria in retaliation for nerve gas attacks on its own people.

The index of blue-chip shares set to open eight points higher at 7,272.56, according to the spread betting firms.

Worries in the wake of the offensive, led by the US, but backed by the UK and France, centre on the response of Russia, Syria’s main backer in the region.

“The US appears to be complementing its military approach by focusing on the additional sanctions route,” said Michael Hewson, analyst at CMC Markets.

“UN Ambassador Nikki Haley announced that further sanctions were being discussed on Russian companies who have dealings with Assad and the use of chemical weapons, with details likely to be announced by US Treasury Secretary Steve Mnuchin later today.”

Looking at the corporate calendar it appears to be a busy week for company news with updates from miners BHP Billiton (LON:BLT) and Rio Tinto (LON:RIO).

Also reporting are Primark owner Associated British Foods (LON:ABF) and struggling department store chain Debenhams (LON:DEB).

Around the markets

Pound is worth US$1.4261 (up 0.11%)

Gold is changing hands for US$1,348.9 an ounce, up US$1

Brent crude is off 74 cents a barrel at US$71.84

Business Headlines

Financial Times

China National Chemical Corporation is set to increase its holding in commodity trader Mercuria as part of a deal that will see the Swiss group gain an interest in the Chinese company’s onshore refining system.

Goldman Sachs buys personal-finance app Clarity Money.

Barclays has set up a new venture capital-style unit with the aim of adding billions of pounds to its annual revenues by 2025.

Advent International, the U.S. buyout group, is close to clinching a deal to buy the European generics business of Sanofi, according to two people familiar with the transaction.

Ford plans to operate its own robo-taxi network “at scale” in 2021 to transport people and goods in the most ambitious details yet revealed by a carmaker for a driverless service.

Martin Sorrell, who has quit as chief executive of WPP after an investigation into his conduct, is free to start a new advertising venture because he has never had a non-compete agreement, say people briefed on the matter.

Pressure on Whitbread’s management to consider a break-up of the business has increased after Elliott Advisors, the activist hedge fund, became the company’s largest shareholder.

Mark Zuckerberg’s control over Facebook and the company’s lack of an independent chairman have drawn fresh criticism from investors, following the severe dent to the company’s stock price from the Cambridge Analytica scandal.

Times

Consumer spending has fallen by the largest amount in almost six years as Britons feel the pressure on their finances, figures from Visa show.

Waitrose crippled by restructuring disaster, say staff

Énergie Fitness franchise is limbering up for an estimated £50mln sale after appointing financial advisers to help it to assess its options

Co-working group Wework agreed a three-way partnership to acquire Devonshire Square outright for about £580 million.

Daily Telegraph

BHP Billiton could gain two years’ breathing space on a huge compensation claim from prosecutors in Brazil over a mining disaster that killed 19 people in 2015.

Takeda Boss to meet US investors ahead of potential £35 billion Shire bid.

Facebook’s data scandal has failed to hit the tech giant’s surging advertising revenue, despite the Cambridge Analytica scandal triggering a user revolt and Mark Zuckerberg’s appearance before the US Congress.

The Bank of England has privately warned lenders that the withdrawal of its £127bn cheap funding scheme poses a “systemic risk” to Britain’s financial system.

Ripple, the world’s third largest digital currency, has urged British regulators to follow in the footsteps of Japan and implement new rules to end the “Wild West” days of the cryptocurrency market.

Independent

UK car leasing costs driven up 9% in a year because of Brexit, research shows.


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