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FTSE 100 closes higher as Wall Street struggles for direction

The UK blue-chip benchmark closed around 11 points higher at 7,334..
Donald Trump
Wall Street markets appear to be struggling for direction
  • FTSE 100  closes up 11

  • Pound lower

  • US stock market lacks direction

  • Bank of England deputy governor apologises for ‘menopausal’ comment 

 

FTSE 100 closed higher but still off the all time high as a lacklustre start in New York took the shine off stocks.

The UK blue-chip benchmark closed around 11 points higher at 7,334,  less than 50 points off the all-time high of 7,778 reached at the close in January this year.

FTSE 250 was also higher- up over 43 points at 20,828.

"Strong miners, a weaker pound and some impressive corporate earnings from the likes of Micro Focus and Burberry lifted the FTSE higher on Wednesday, as it flirted with its all-time high reached in January," said Fiona Cincotta, senior market analyst at City Index.

"However, a flat open on Wall Street and increasing geopolitical tension dampened spirits pulling the FTSE off its highs in the afternoon."

Among top risers on Footsie was Micro Focus International (LON,MRCO), which added 6.19% to 1,347.50p  after the software provider revealed that revenue was now expected to be above guidance in the first half.

"Whilst this is primarily down to an usually large licence deal closing earlier than expected, excluding this deal, revenue was towards the better end of the guidance anyway," noted Cincotta.

Top laggard was Smurfit Kappa Group (LON:SKG), which shed around 5% to 2,942P after the after US packaging firm International Paper Co (NYSE:IP) said it would not make a hostile bid for its Irish rival after being given until June 6 to make a binding offer.

Wall Street is struggling for direction at the time of writing, with the Dow Jones Industrial Average up 0.31% but the S&P 500 off 4.71 at 2,725.

3.00pm: US stock market opens slightly higher

The FTSE 100 index held firm in late afternoon trading as US stocks defied expectations for early falls and rallied at the start.

Around 3pm, the UK blue chip index was 18 points higher at 7,741, albeit still below an earlier session high of 7,745.5.

The Dow Jones industrial average jumped 16 points to 24,724, the S&P 500 increased by 4 points to 2,715 and Nasdaq rose 11 points to 7,362.

The US housing data revealed that housing starts fell 3.7% to a seasonally adjusted annual rate of 1.287mln units in April.

Building permits fell 1.8% to a rate of 1.352mln units last month. 

2.00pm: East Coast train line to come under government control

The East Coast trains will come under public control, after Virgin and Stagecoach could not meet payments in the £3.3bn contract.

 Transport Secretary Chris Grayling told parliament that after two months of analysis he had concluded that taking back control would provide the smoothest possible transition to a new operation, BBC reports.

12.30pm: New York restart eyed

The FTSE 100 index remained higher at lunchtime but held off earlier peaks on expectations for a weak start today on Wall Street amid a revival of geopolitical tensions.

Around 12.15pm, the UK blue chip index was up 17 points at 7,739, but that was below an earlier session high of 7,745.5.

After snapping an eight-session winning streak yesterday, the Dow Jones is seen opening around 60 points lower after North Korea called off planned talks with South Korea and threatened to do the same with the US. South Korea's leader, Kim Jong Un is unhappy with President Trump’s de-nuclearisation demands.

US housing starts and building permits will be released today and the consensus estimate is for 1.31mln and 1.35mln respectively, according to David Madden, market analyst at CMC Markets.

10.50am: Bank of England deputy governor apologises for 'monepausal comment'

Bank of England deputy governor Ben Broadbent has apologised for using the term ‘menopausal’ to describe the UK economy.

In an interview with the Telegraph newspaper, Broadbent said the term was used to describe economies that have past their peak.

 He issued an apology saying he was explaining the meaning of the word 'climacteric', a term used by economic historians to describe a period of low productivity growth during the 19th century. 

10.15am: FTSE 100 trading 40 points below all-time high

The FTSE 100 is now trading at 7,730, a mere 40 points below its all-time high of 7,778 achieved in January 2018 (on a market close basis).

The blue-chip index is trading 0.2% higher in Wednesday at 7,738 thanks to strength in natural resources stocks, said Russ Mould, investment director at AJ Bell.

 “Investors will be watching the market very closely to see if a new record can be set today or at least before the weekend,” he added. 

9.40am: Average person will need £260,000 for retirement

The average person will need to save £260,000 to avoid an uncomfortable retirement, research by pension provider Royal London reports.

The falling levels of home ownership mean that people who end up having to pay rent in the retirement could need £445,000 to live comfortably as they stop working. 

8.50am: FTSE 100 kicks-off in positive teritory

The FTSE 100 defied the predictions of a negative start to kick-off in positive territory, advancing 12 points to 7,734.54 in early trade.

The Dow's 193-point tumble and worries the US-North Korea summit might not go ahead combined to subdue the action in Asia.

However, in London the mood was brighter, lifted by positive trading updates from Micro Focus International (LON:MCRO) and Burberry (LON:BRBY). 

Shares in the former were up almost 10%, with the latter ahead 3%.

Richard Hunter, of Interactive Investor, said this of the fashion retailer's prelims: "Whilst these are not results which shoot the lights out, Burberry will be pleased with its progress given the fact that it is in the early stages of its planned transformation."

He added: "Less positively, the numbers are shy of some of Burberry’s high end fashion peers, and revenues are in line with expectations although for the most part flat.

"Its home market in the UK is still finding it difficult to make a strong contribution, whilst the overall transformation strategy comes with implementation risks attached as the rest of the sector continues to focus on established and well-worn successes.

"Even so, given the disruptive backdrop, these numbers show meaningful progress."

Elsewhere, the miners were in demand with Rio Tinto (LON:RIO) shares leading the pack with a 2% rise. On the downside, British Gas owner Centrica (LON:CAN) was the top faller, off 3%, after Morgan Stanley downgraded to stock to 'underweight'. 

Proactive news headlines:

Itaconix Plc (LON:ITX) said it and the chemicals giant AkzoNobel have moved from the technical evaluation phase to defining a joint marketing effort for former's bio-based chelates used in detergents and cleaners. Itaconix said commercial details remain to be finalised; however, it added both sides expect to complete agreements before the end of the year.

Ceres Power Holdings PLC (LON:CWR) has announced a strategic collaboration with Weichai Power, one of China’s leading automobile and equipment manufacturing companies, and potential initial equity investment worth £17mln. The Aim-listed firm said this agreement provides Ceres Power with access to the Chinese market, the world’s fastest-growing market for fuel cells.

Seeing Machines Limited’s (LON:SEE) Western Australia-based distributor is to take another 2,500 of the AIM-listed firm’s Guardian in-cab driver-fatigue monitoring units.

Remote meetings technology company LoopUp Group PLC (LON:LOOP) is to hit the big time with the £61.4mln acquisition of the MeetingZone Group.

Hurricane Energy PLC (LON:HUR) has updated investors on the advancing development of the Lancaster field, in the West of Shetland region offshore UK. It is working to deliver Lancaster’s Early Production System in the first half of next year, and the project has now reached another key milestone.

OptiBiotix Health plc (LON:OPTI) has signed a 5 year exclusive manufacturing and supply agreement for its cholesterol and blood pressure reducing strain in India. The AIM-listed company, which develops a range of compounds to tackle obesity, high cholesterol, diabetes and skin care, said the agreement was with Akums Drugs and Pharmaceuticals Ltd, a leading contract manufacturer in India.

Tharisa PLC (LON:THS) has made a first move into Zimbabwe with the acquisition of 90% of Salene Chrome, located on the country’s Great Dyke platinum belt. Salene has three special grants covering an area of approximately 95sq km on the eastern side of the Great Dyke, which entitles it to mine illuvial chrome at surface.

Nigeria focused Eland Oil & Gas PLC (LON:ELA) told investors that the Opuama-9 well, at the OML 40 asset, is expected to perform at the high-end of prior guidance – which was pitched at 4,000 to 6,000 barrels per day gross. Big Pic in October.

Cadogan Petroleum PLC (LON:CAD), in a statement after Tuesday’s market close, told investors that that operations will have to be shut-in at the Cheremkhivsko-Strupkivske (also referred to as  ‘Cher’) production license in Ukraine.

Asiamet Resources Ltd (LON:ARS) has published a maiden mineral resource estimate for the BKZ polymetallic deposit in Kalimantan, Indonesia. The initial Mineral Resource Estimate for BKZ is subdivided into the BKZ upper polymetallic zone (BKZ-UPZ) and the BKZ lower copper zone (BKZ-LCZ).

Greencoat UK Wind PLC (LON:UKW), the leading listed renewable infrastructure fund invested in operating UK wind farms, announced its intention to accelerate the closure of the placing it launched on 8 May 2018 following material investor demand. The group said the bookbuilding process will close no later than 1:30 pm London time on 17 May 2018.

6.30am: Subdued start predicted

The FTSE 100 looks set to make a subdued start amid selling activity in Asia and Wall Street overnight with the potential breakdown of talks with North Korea and US interest rates weighing in sentiment.

The former first. Responding to a military exercise between the US and South Korea, Pyongyang said it was pulling out of the talks set to be held on Wednesday, casting doubt over landmark summit between Kim Jong Un and Donald Trump slated for June 12.  

In the US, the Dow Jones tanked 193 points while the tech heavy Nasdaq lost around 0.8% of its value as the latest American sales data triggered a sharp move higher of 10-year treasury yields.

"Traders are not looking at the bigger picture right now," said Jasper Lawler, markets commentator at London Capital Group.

"The fundamentals say that the economy is strong which is why the Fed could be considering a more aggressive path to hiking; the irony is this is triggering a selling mentality in traders as the era of cheap money appears to be well and truly over."

Back here in the UK, the big scheduled news comes from the fashion chain Burberry (LON:BRBY) and bar owners Mitchells and Butlers (LON:MAB) and Marstons (LON:MAR). However, the City headlines will be filled with the results of a probe by MPs into the collapse of outsourcing giant Carillion.

  • Pound worth US$1.3506 
  • Gold changing hands for US$1,293.10 per ounce, up US$2.80
  • Brent crude US$78.20 a barrel, down -23 cents

City Headlines: 

  • Financial Times
  • The head of Rio Tinto has issued a stark warning to the mining industry, saying it will have to work hard to protect margins and generate cash against a backdrop of rising costs and increased political risk.
  • Worldline to buy SIX Group’s payments unit in €2.3bn deal.
  • The London Metal Exchange has reported its highest profits since 2015, buoyed by a recovery in metals markets and lower costs.
  • China’s WeChat weighs banker-friendly messaging.
  • Times
  • Results for Taveta Investments — the holding company of Arcadia Group, which owns Topshop, Miss Selfridge, Dorothy Perkins and Burton — show that operating profit fell from £215.2mln to £124.1mln.
  • Tim Cook, the chief executive of Apple, has urged President Trump to reconsider tariffs on Chinese products worth $150bn. 
  • The economic crisis engulfing Argentina could be the “tip of the iceberg in emerging markets”, according to a trade group of financial institutions.
  • Daily Telegraph 
  • US threatens sanctions against European Union after trade body rules Boeing harmed by Airbus aid.
  • Bank of England will not ‘spoon feed’ City on interest rate hikes, policymaker says.
  • Independent
  • MPs blast Carillion Bosses and Big Four accountancy firms for part in outsourcer’s collapse.
  • Thomson Reuters is planning to move its foreign exchange trading business from London to Dublin due to Brexit.

 


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