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FTSE 100 closes slightly in red; Shire biggest gainer

FTSE 100 closed 1.39 points lower at 7,565, while FTSE 250 went the other way
London
FTSE 100 closed 1.39 down on Tuesday
  • FTSE 100 closes near flat

  • UK house prices fall in April 

  • Shire Plc biggest riser

  • Trump's Iran nuclear decision eyed

 

FTSE 100 closed near flat on Tuesday, the day after the Bank Holiday, with drugs firm Shire Plc (LON:SHP) the biggest riser.

Its shares gained 4.63% to 4,034.50p after it finally agreed to Takeda’s takeover offer.

David Madden, at CMC Markets, said: "The deal needs to be approved by Shire’s shareholders, but if it goes ahead will be worth £46bn, which would make it the largest pharmaceutical transaction since 2000."

FTSE 100  closed 1.39 points lower at 7,565, while mid-cap cousin FTSE 250 went the other way, surging over 172 points at 20,594.

In the currency markets, the pound added 0.18% against the Euro and was down 0.31% against the US dollar.

The Footsie's biggest loser was Fresnillo (LON:FRES), the silver giant, which shed 2.44% to 1,277p

Advertising giant WPP (LON:WPP) lost 1.68% to 1,259.5p  as former boss Martin Sorrell spoke at a conference in New York. 

He resigned in April after his board launched an investigation into personal misconduct allegations against him. He said today that he would "start again" after leaving the group.

3.45pm: US job openings rise more than expected

US job openings rose to a record high in March, the Labor Department has revealed in its Job Openings and Labor Turnover Survey.  

Job openings, a measure of labour demand, increased by 472,000 to a seasonally adjusted 6.6 million, beating expectations of 6.1 million.

The data suggests a recent slowdown in hiring could be the result of skills shortage rather than weak demand. 

The US dollar rose 0.45% versus the pound, 0.17% versus the yen and 0.60% against the euro.

3.20pm: Cote examines site closures

Cote has become the latest restaurant company to consider closing down sites, Sky News reported.

The company, owned by private equity firm BC Partners, is said to be looking to closing a number of restaurants that trade under the Limeyard and Jackson & Rye brands it purchased in 2016.

The news follows a wave of retailers and restaurants announcing plans for company voluntary arrangements, an insolvency mechanism used to shed underperforming leases and reduce rents.

Toys R Us, New Look, Carpetright PLC (LON:CPR) House of Fraser and the casual dining chain Prezzo have all announced proposals for CVAs in recent months amid a slowdown in consumer spending, tough competition and inflationary pressures. 

2.30pm: US stocks open in the red

US stocks have opened lower amid market jitters ahead of President Donald Trump’s decision on a key nuclear deal with Iran.  

The Dow Jones Industrial Average fell 28 points to 24,328, the S&P 500 shed 3 points to 2,669 and the Nasdaq lost 5 points to 7.258.

Trump is expected to announce the US will withdraw from a 2015 nuclear deal with Iran and reimpose sanctions on the country.

“Should the US withdraw, investors will be keen to know what sanctions will be imposed as a result and what impact that will have on the country, most notably its oil output,” said Oanda’s Craig Erlam.

“It will be interesting to see what Trump’s approach will have on risk appetite, with US equities already struggling to generate much upside momentum. Some will naturally point to the progress being made in Korea as evidence that a more hard-line approach is effective, although every situation is different and so doing so again may not yield the same result.”

1.40pm: Snap snaps up Amazon veteran as CFO

Shares in Snap Inc (NYSE:SNAP), the owner of photo sharing app Snapchat, are higher US pre-market trading after hiring former Amazon executive Tim Stone as its new chief financial officer to replace Andrew Vollero

Stares rose 1.8% to US$10.92 ahead of the opening bell, ending five days of declines. 

"I am deeply grateful for Drew and his many contributions to the growth of Snap,” Evan Spiegel, Snap's CEO, said in a regulatory filing.

“He has done an amazing job as Snap’s first CFO, building a strong team and helping to guide us through our transition to becoming a public company."

Vollero leaves after almost three years at Snap.  

Stone, who has worked at Amazon since 1998, will start on May 16.

1.00pm: US stock futures drop

US stock futures fell as investors exercised caution ahead of President Donald Trump’s decision on a nuclear deal with Iran.

Dow Jones Industrial Average futures lost 72 points to 24,222, S&P 500 futures dropped 9 points to 2,661 and Nasdaq futures declined 24 points to 6,801.

Traders are concerned that if Trump abandons a 2015 nuclear deal with Iran, the US would reimpose sanctions against the Middle Eastern nation and therefore increase tensions with trade partners.

Such a move could result in a cut to global supplies for oil, which could provide a boost to crude prices.

Investors were also mulling a report that showed small business optimism rose less than expected in April.

The National Federation of Independent Businesses’ index of small business optimism rose 0.1 point to 104.8 in April, below forecasts for a 0.2 increase.

In company news, shares in 21st Century Fox Inc. (NASDAQ:FOX) jumped after a report that Comcast Corp. (NASDAQ:CMCSA) is preparing a bid to top Walt Disney Co.’s (NYSE:DISUS $52.4bn offer for some Fox assets.

Hertz Global Holdings Inc (NYSE:HTZ) shares fell after the car rental company reported a quarterly loss that was worse than expected. 

12.00pm: FTSE 100 pulls back lunchtime trading

The FTSE 100 reversed earlier gains amid market jitters ahead of US President Donald Trump’s announcement on the Iran nuclear deal.

“Although President Trump is widely expected to withdraw the United States from the 2015 nuclear deal, lessons from the past have repeatedly taught investors that the US administration can be highly unpredictable,” said Lukman Otunuga, research analyst at FXTM.

“An unexpected scenario, in which Trump announces that the US will remain in the nuclear deal, should be warmly welcomed by investors.  Alternatively, risk aversion may intensify if he moves forward with the “nuclear option”, which reimposes all sanctions on Iran and pulls the US out of the deal.”

Investors were also digesting worse-than-expected data from Halifax on UK house prices that signalled a further softening in the market. 

On the company front, Shire Plc (LON:SHR) topped the FTSE 100 after accepting a takeover offer from Japan’s Takeda.

Unilever plc (LON:ULVR) rallied after the company and its Dutch subsidiary announced the star of a €6bn share buyback programme.

Virgin Money Holdings PLC (LON:VM. is on the front foot after receiving a takeover proposal from CYBG.

Shares in BP PLC (LON:BP) and Royal Dutch Shell PLC (LON:RBDA) slipped as oil prices declined.

Standard Life Aberdeen PLC (LON:SLA) shares edged lower as it said it would contest Lloyd Banking Group PLC’s (LON:LLOY) decision to pull £109bn in assets under management.

11.30am: Fundamentals for house buyers 'likely to remain challenging'

Howard Archer, chief economic advisor to the EY ITEM Club, said the recent softness in the housing market in highlighted in Halifax data showing a 0.1% decline in prices in the three months to March.

He added that this follows a report from Nationwide revealing “weak” 0.2% month-on-month rise in April.

“The housing market is clearly currently struggling to gain traction and we suspect that any meaningful upturn will remain elusive over the coming months,” Archer said.

“The fundamentals for house buyers are likely to remain challenging. Consumers have faced an extended serious squeeze on purchasing power, which is only gradually easing.

“Additionally, housing market activity remains hampered by relatively fragile consumer confidence and limited willingness to engage in major transactions”

House buyers will also likely be concerned about further interest rate hikes over coming months, he said.

EY Item Club predicts a "modest" 2% increase in house prices in 2018 followed by a 3% increase in 2019. 

10.30am: RBS defends branch closures

Royal Bank of Scotland Group PLC (LON:RBS) chief executive Ross McEwan has told MPs the bank’s decision to close branches in Scotland has “not been taken lightly”.

Appearing before Parliament’s Scottish Affairs Committee, McEwan defended the branch closures by saying “"changing customer behaviour" is "stark" as more people opt for online banking.

 He insisted that bank branches remain a "core part" of the service offered by RBS.

McEwan assured MPs that RBS will not look again at branch numbers in Scotland until 2020.

Committee chair and SNP MP Pete Wishart said RBS has taken a "PR pounding" on the issue.

9.50am: Challenger banks 'may not be able to survive on their own'

News that CYBG has approached Virgin Money about a possible £1.6bn takeover is “unsurprising”, according to Accendo Markets.

Accendo Markets research analyst, Artjom Hatsaturjants, said: The deal structure (i.e. full share, no cash, small premium) raises a question whether new financial upstarts, that sought to challenge the UK’s Big 4 banking titans, stand a chance to steal any meaningful market share within the gruelling financial sector environment on their own.”

The analyst added: “The young upstarts sought to disrupt entrenched power of established UK banking institutions through use of information technology and more modern branding strategies, but rising costs, tough regulatory requirements and steadily rising competition have already resulted in some sector consolidation.

“This was initially evidenced by South Africa’s FirstRand mixed cash/shares takeover of Aldermore in 2017, and the newest CYBG/VM deal adds further fuel to the fire of the idea that the challenger banks will not be able to survive on their own despite several years of exciting growth prospects.”

9.05am: UK house prices drop in April 

UK house prices fell more than expected in April, data from Halifax revealed.

Prices dropped 3.1% compared to a month ago to an average of £220,962. Analysts were expecting prices to dip 0.2% after rising 1.6% in March.

Compared to the same month a year ago, house prices rose 2.2% in April, missing forecasts for a 3.2% rise and following a 2.7% increase in March.

In the three months to April, prices declined 0.1% compared to the previous quarter.

“Housing demand has softened in the early months of 2018, with both mortgage approvals and completed home sales edging down,” said Russell Galley, managing director of Halifax.

“Housing supply – as measured by the stock of homes for sale and new instructions – is also still very low."

However, Galley expects a strong labour market, falling unemployment and a pick up in wage growth to provide some support to housing demand.

“These factors should help to ease pressure on household finances and as a result we expect annual price growth will remain in our forecast range 0-3% this year.”

8.40am: FTSE opens higher

The FTSE 100 opened its account in positive territory, taking its cue from Wall Street Monday and robust performance by Asia's main markets following upbeat trade data from China.

The index of blue-chip shares advanced 22 points to 7,588.79, although there were some nerves as President Trump continued to mull the consequences of pulling out of the Iran nuclear deal.

"The decision could mark a signature moment for Trump's presidency," said CNN.

"It gives him the chance to cement his America First philosophy but risks triggering unknowable consequences that in a worst case scenario could lead to war with Iran."

On the markets here in the UK, Shire (LON:SHP) was up 5% and the market's top riser after it agreed to be taken over by Japanese drug rival Takeda.

Traders were on the look out for the next bid target, with ITV (LON:ITV) singled out as potentially being in the cross-hairs. The shares were up 1.5%.

Moving down a division, but sticking with the takeover theme,  Virgin Money (LON:VM.) was up 10% after a bid approach from CYBG (LON:CYBG) to create the UK's largest challenger bank. The market appeared to like deal, pushing shares in the latter 3.5% higher.

Revealing the binary response to drug companies that hit a setback, Faron Pharma fell 85% in early trade after its phase III clinical trial disappointed.

Proactive news headlines:

Challenger Acquisitions Limited (LON:CHAL) jumped nearly 12% higher on Tuesday, boosted by news of share buying from its chief executive.  In a statement, the AIM-listed firm said it has been notified that Gustafson purchased 750,000 shares in the company on May 2 and a further 1,25mln shares on May 4, with both transactions made at a price of 0.3p per share.

SDX Energy Inc (LON:SDX) followed the long weekend with not one but two updates from its busy drilling campaign. In Morocco, it has revealed that the LMS-1 exploration well has unearthed a new conventional natural gas discovery within the 75% owned Lalla Mimouna permit, meanwhile, in Egypt, the company has started drilling the Kelvin-1X exploration well at the South Disouq project.

Greencoat UK Wind PLC (LON:UKW) has exercised an option to increase its stake in Clyde Wind Farms to 28.2%. The wind power specialist will pay £114.2mln to be funded by a placing at 117p to raise up to £118.8mln.

OptiBiotix Health plc (LON:OPTI) is to show off a range of new SlimBiome products and the latest research data on its LPLDL heart health products at a prestigious industry conference in Switzerland next week.

Faron Pharma Oy (LON:FARN) said its lead drug did not meet its goals for efficacy following the initial read-out from its phase III INTEREST study. Chief executive Dr Markku Jalkanen said he and the company's R&D team are now "considering how we can advance Traumakine in clinical development".

HemoGenyx Pharmaceuticals PLC (LON:HEMO) has entered into a collaboration agreement with the Rockefeller University to use its new type of humanized mice for autoimmune disease modelling in an effort to develop new treatment for autoimmune diseases, specifically Lupus.

Advanced Oncotherapy PLC (LON:AVO) has signed a lease with the UK Government’s Science and Technology Facilities Council (STFC) to establish a testing and assembly site for its LIGHT proton accelerator at the STFC Daresbury Laboratory in Cheshire.

Bloomsbury Publishing PLC (LON:BMY) said audio stories from its music business-focused imprint, 331/3, are to be available on music streaming service Spotify.

Motif Bio Plc (LON:MTFB) (NASDAQ:MTFB) said two abstracts related to its flagship antibiotic iclaprim will be the focus of poster presentations at the American Society for Microbiology Microbe conference being held in Atlanta from June 7. The first will outline efficacy data from two phase III clinical trials of the drug in patients with acute bacterial skin and skin structure infections (ABSSSI).

Custodian REIT PLC (LON:CREI) has announced the disposal of a 15,229 square feet five-unit retail development in Stourbridge for £2.25mln, in line with the 31 March 2018 valuation. The UK property investment company said the property was part of the initial portfolio acquired on the company’s admission to the London Stock Exchange in 2014.

Providence Resources PLC (LON:PVR) has updated investors on it exploration plans for the Newgrange project, off Ireland’s West Coast. The Newgrange exploration partners have now hired Gardline to carry out a new 2D seismic data gathering programme, to examine the crest of the prospect and to provide additional data to support permitting for a future exploration well.

Highlands Natural Resources Plc (LON:HNR) has spudded the sixth and seventh wells at the East Denver Niobrara shale oil and gas project in Colorado.

The boss of AIM-listed oil and gas company Tower Resources PLC (LON:TRP) has hailed the “substantial progress” made towards the end of last year.

Vast Resources PLC (LON:VAST) has highlighted “another record quarter” for the group’s Pickstone-Peerless gold mine in Zimbabwe, where overall gold production and sales increased by 4% and 14% respectively.

KEFI Minerals plc (LON:KEFI) intends to raise more than previously indicated through bond and share issues for the construction of its Tulu Kapi gold mine in Ethiopia. The formal mandate process for the listed infrastructure bonds has now started, though the loan funding is now expected to be US$160mln up from US$150mln, while the amount of equity rises to US$50mln from US$40mln.

Coinsilium Group Limited (NEX:COIN), the blockchain venture builder, advisor and investor that finances and manages the development of early-stage blockchain technology companies, announced that it has sold 100,000 ordinary shares in the Company from treasury at 9p per share.

Scancell Holdings Plc (LON:SCLP), the developer of novel immunotherapies for the treatment of cancer, said it received valid acceptances in respect of 10,142,838 open offer shares representing 60.9% of the maximum available. The company said it has therefore conditionally raised gross proceeds of approximately £1.2mln through the open offer and gross proceeds of approximately £8.7mln in total via the open offer and placing and subscription combined, that it launched on April 18.

Midatech Pharma Plc (LON:MTPH) (NASDAQ:MTP), the international specialty pharmaceutical company focused on developing and commercialising products in oncology, has reconfirmed in a US Securities and Exchange Commission filing that it is unaware of the reason for the recent trading activity in the company's securities. As previously disclosed, the group said, it is reviewing a range of options to meet its cash flow needs, including non-dilutive financing and/or other strategic alternatives.

Collagen Solutions PLC (LON:COS), the developer and manufacturer of biomaterials and regenerative medicines for the enhancement and extension of human life, has confirmed that it will be exhibiting at the prestigious ESSKA conference being held in Glasgow between 9-12 May. The firm said it will be primarily highlighting the recent positive data reported for its most advanced regenerative proprietary product, ChondroMimetic, an arthroscopic, single-surgery, cost-effective solution for osteochondral defect repair.

IronRidge Resources Limited (LON:IRR) has announced that it will be attending the RIU Resource Round-Up conference in Sydney, which takes place between 8 May 2018 and 9 May 2018 at The Sofitel Sydney Wentworth, 61-101 Phillip Street, Sydney NSW 2000. The company said it has also today uploaded its updated corporate presentation to the Investor Relations section of its corporate website.

6.45am: Catch-up time 

UK equities resume trading after the long weekend with a bit of catching up to do.

The FTSE 100, which advanced 64 points to close at 7,567 on Friday, was expected to open this morning at around 7,580.

US and European markets climbed yesterday while Britons were sunning themselves and European markets were expected to continue the upward march this morning, following the lead of Asian markets.

In the US, the Dow Jones average rose 95 points to 24,357 and the S&P 500 hardened 9 points to 2,673.

The Nikkei 225 in Tokyo was up 27 at 22,494 heading towards the close of trade while in Hong Kong the Hang Seng index stormed higher in the wake of Chinese trade figures, rising 369 points to 30,364.

Exports from China were up 21.5% year-on-year in April while imports rose 12.9%. The People's Republic enjoyed a trade surplus of US$28.8bn in April, versus a deficit in March of US$5bn.

Oil was off the top this morning after hitting West Texas Intermediate (WTI) rose above the US$70 a barrel mark yesterday for the first time since November 2014, as traders pondered the possibility of lower oil exports from Iran in the context of the Iran nuclear deal.

WTI was off 84 cents at US$69.89 a barrel while Brent crude was down 74 cents at US$75.43.

President Trump is set to make an announcement on the Iran nuclear deal today (US time).

“Robust demand and OPEC-curtailed supply have left the oil market tight and vulnerable to event shocks. Event risk revolves around Trump initiating sanctions on Iran, as the US waiver on sanctions is due to expire on the 12 May. Meanwhile, the Venezuelan economy continues to be beset by turmoil,” noted Danske Bank in its analysis of the oil markets.

“We see a tail risk of sanctions hitting Iranian oil supply or a Venezuelan meltdown, which could send Brent to USD80-85 per barrel,” it added.

Turning to the UK equity markets, despite the fact five days of results has to be crammed into four days this week, the corporate agenda is not overly busy.

The annual general meeting of bookmaker William Hill plc (LON:WMH) should see shareholders break off from downing a few shandies to celebrate “a right result” in the recent fixed odds betting terminals inquest to listen to a trading update for the first four months of the year.

That period encompassed the “Beast from the East”, which led to a high level of racing fixture cancellations, which won’t have done the bookie any favours.

The bets-taker recently agreed to sell its Australian business as new gambling regulations there are expected to put a crimp on returns.

The UK, of course, remains the core of the business but the bookie is hopeful that regulations in the US will move in its favour.

Along with commentary on US aspirations, the trading statement may include an update on the company’s online offering, which after a long period of under-performance is starting to make up ground down the back straight.

Significant announcements expected

Trading update: William Hill plc (LON:WMH), Hiscox Limited (LON:HSX)

Interims: Cambria Automobiles (LON:CAMB), Treatt PLC (LON:TET)

Finals: Faron Pharmaceuticals Oy (LON:FARN), Horizon Discovery Group PLC (LON:HZD), IDE Group Holdings PLC (LON:IDE), Vertu Motors PLC (LON:VTU)

Economic data: US JOLTS jobs report

Around the markets

  • Sterling: US$1.3556, unchanged
  • 10-year gilt: yielding 1.40%
  • Gold: US$1,312.40 an ounce, down US$1.70
  • Brent crude: US$75.62 barrel, down 65 cents
  • Bitcoin: US$9,314.89, down US$112.31

Business headlines

The Times

Trump poised to ignore warnings and scrap Iran nuclear deal

Plan for new curbs on rip‑off rail fares

Beaufort clients could be charged for its liquidation

Pilots at Air France KLM decided to suspend future strikes over pay last night

Takeover boom means bumper US$500mln return for City deal makers

Virgin Money to consider £1.6mln bid from CYBG

Daily Telegraph

Consumer debt boom is bigger than Lawson bubble, Fitch warns

Nestlé and Starbucks strike deal to create 'global coffee alliance'

Worms maker Team17 announces £230m float

The Guardian

Rail industry prepares for season ticket cull in fares shake-up

UK manufacturers urge government to enforce industrial plan quickly

Future of Air France 'in doubt' after boss quits amid strike action


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