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FTSE 100 closes lower, off record peak; Glencore top loser

Footsie closed around nine points at 7,778 but it was still up 0.70% on the week - its eighth weekly gain in a row.
London
FTSE 100 closed lower. There was also yet more confusion on Brexit
  • FTSE 100 closes lower at 7,778

  • FTSE 250 also down

  • Glencore top Footsie loser as it slumps on bribery allegations

  • Pound weaker on Brexit confusion

FTSE 100 closed a shade lower on Friday and off its record high yesterday with commodities and mining giant Glencore plc (LON:GLEN) the biggest laggard.

The UK's premier index closed around nine points at 7,778 but it was still up 0.70% on the week - its eighth weekly gain in a row.

On Thursday, Footsie closed at  7,787.97, up 0.70% , or over 53 points to reach a new record peak.

FTSE 250 was also lower, down around 29 points at 20,989.

In the US, markets are mixed at the time of writing with the Dow Jones Industrial Average ahead by around 15 at 24,729 and the S&P 500 off six points at 2,715.

Fiona Cincotta, senior market analyst City Index, said: "The FTSE edged away from its record closing high, in an uninspiring session ahead of the weekend."

She said the weekly rise though was due to a combination of "low for longer" interest rates, a weaker pound and stronger crude prices.

Glencore tumbled to the bottom of FTSE 100 as reports of a UK bribery probe over its dealings in Congo emerged.

"The uncertainty of how this fraud investigation could turn out is providing investors with the perfect excuse to book profits from Glencore’s 15% rally over the past two weeks and 40% rally over the past year," said Cincotta.

"The adage there is no smoke without fire more often than not stands true, therefore it is understandable that investors want out, until there is more clarity over the situation."

Top riser on Footsie was Paddy Power Betfair (LON:PPB), which added 2.32% to stand at 8,600p each, as chief Peter Jackson said he welcomed the government's move to reduce the maximum stake on fixed odds betting terminals to £2 and said

This week the group revealed it was in talks about potentially merging its  US business with fantasy sports company FanDuel to target the sports betting market across the pond.

3.15pm: Footsie falls, Wall Street flat

The FTSE 100 index was slightly lower in late afternoon trading, with US stocks opening flat to slightly lower, as the focus remained on US-China trade talks

At around 3pm, the FTSE 100 was down 16 points to 7,771.

“The FTSE-100 is slightly offside today, but still positive for the week, potentially consolidating before the next leg higher within a 7/8-week rising channel,” said Mike van Dulken, head of research at Accendo Markets.

“Small losses are in spite of what is normally helpful GBP weakness, exacerbated by additional USD strength that is causing oil to pause and putting pressure on Metals and Miners.”

“Blame can also be pinned on disappointing results for heavyweight AstraZeneca and some profit taking in certain names following strong rallies, perhaps fuelled by geopolitical rumblings although not enough to cause panic,” he said.

Meanwhile Wall Street was fairly flat as tech stocks came under pressure and the focus remained on the US-China trade talks.

The Dow Jones industrial average edged up 2 points to 24,716, while S&P 500 was 5 points lower at 2,714, and Nasdaq composite shed 23 points lower at 7,359. 

2.00pm: Glencore slumps on bribery allegations

Glencore PLC (LON:GLEN) shares lost 6% to 373p after Bloomberg reported that the mining giant may face an investigation by the Serious Fraud Office into bribery allegations.

The allegations relate to Glencore and its work with Israeli billionaire Dan Gertler and the leader of Democratic Republic of Congo.

Sources told Bloomberg that investigators at the SFO plan to seek formal approval for a full probe into Glencore’s dealings in Congo.

12.30pm: FTSE 100 flat, US to open higher

Since starting at 7,790 on Friday morning, the FTSE 100 has remained close to Thursday's record closing high of 7,780, but has failed to reach new heights.

“The market has this morning fallen just short of its previous intra-day high at 7,791 but with the benchmark benefiting from both a softer pound and an improved global risk sentiment then there could well be a Friday rip higher into uncharted territory ahead of a weekend containing two big events for Britain with the royal wedding and the FA cup final,” said David Cheetham, chief market analyst at XTB.

Meanwhile the Dow Jones Indutrials is set to start 80 points higher at 24,800 on Friday, despite president Donald Trump’s doubts that trade talks between the US and China would succeed.

“However, with gold hitting a four-month low, and US treasuries falling, there is evidence that markets are becoming increasingly accustomed to Trump’s wildly varying announcements,” said Joshua Mahony, market analyst at IG.

11.20am: Pound weaker on Brexit confusion 

The pound fell against the dollar and the euro as it remains unknown if the UK will stay in the customs union after Brexit.

Prime Minister Theresa May said on Thursday Britain would leave the EU customs union after Brexit, but the cabinet might backstop the plan and stay in the EU customs area beyond the transitional period in 2020.

Pound slipped 0.2%  to US$ 1.3489 and 0.1% to EUR1.147. 

10.20am: FTSE 100 stays close to record high

The UK blue chip index remained sluggish mid-morning, down around 18 points to 7,769 about 10am, still staying fairly close to Thursday's record closing high.

 “Whether or not the FTSE can mount a charge on 7800 may be down to two things this Friday: Brent Crude and sterling,” said Connor Campbell, financial analyst at Speadex.

“The former is sitting at $79.50 per barrel following the latest renewal of the US-China trade war fears; a return to $80 could give the FTSE the fuel to beat its own intraday record,” he said.

“As for the pound, if the currency sees even a semi-substantial slide against either the dollar, where it is just above $1.35, and the euro, where it is down 0.1%, then that may be enough to push the UK index over the edge.”

9.40am: Cambridge Analytica files for bankruptcy

Cambridge Analytica, the company involved in Facebook data scandal, filed for Chapter 7 bankruptcy in a New York court yesterday.

The company listed assets in the range of US$100,001 to US$500,000 and liabilities in the range of US$1mln to US$10mln. 

8.48am: FTSE 100 off to a sluggish start

The FTSE 100 got off to a sluggish start after its record close Thursday with Wall Street's reverse providing the drag.

The index of blue-chip shares fell five points to 7,782.58 on subdued volumes, with druggie AstraZeneca the main market faller as it slid 2.3% in the wake of first-quarter numbers.

The headline numbers revealed a small sales and earnings "miss", but the company reiterated its guidance for the full-year.

The American outfit Jefferies, which specialises in healthcare stocks here in the UK, is still a 'buyer' of the AZ up to £59 a share (current price £51.84).

Reiterating his 'hold' advice, Roger Franklin, analyst at City broker Liberum, said the drug's giant's underlying performance was re-assuring.

"Despite the headline miss on product sales and core EPS, we believe these results are a reasonably solid set of numbers. 

"The 1% product sales miss was driven entirely by genericising Crestor whilst the key new products beat."

888 Holdings (LON:888) fell 2% a day after the UK crackdown on the gambling sector with HSBC downgrading the stock to 'neutral' from 'overweight'.

Proactive news headlines:

Echo Energy Plc (LON:ECHO) has announced a gas discovery in the ELM-1004 exploration well, at the Fracción C asset, onshore Argentina. As the first well in a four well programme, it marks a successful start to Echo’s exploration campaign.

Scotgold Resources Limited (LON:SGZ) said it has secured the final tranche of funding for the construction of the Cononish gold mine.

Rare earths group Mkango Resources Ltd (LON:MKA) has signed off its agreement with trading group Noble to develop the Songwe Hill licence in Malawi. Talaxis, a subsidiary of Noble, will acquire up 75% of Lancaster Exploration, which holds the licence, and up to 49% of Maginito, a downstream rare earths business.

SDX Energy Inc (LON:SDX, CVE:SDX) has revealed better than expected gas flow rates from the latest gas discovery well at the South Disouq project, onshore Egypt. The Ibn Yunus 1X well had encountered just over 100 feet of net natural gas pay in the Abu Madi formation, and, in flow testing it yielded a stabilised rate of 39.3 mln cubic feet. Big Pic in November.

Finance provider S & U Plc (LON:SUS) said loan applications at its motor finance business, Advantage Finance, have reached record levels.

Union Jack Oil PLC (LON:UJO) executive chairman David Bramhill said he’s delighted with the government’s statement  which yesterday gave “wholehearted support” to the  UK's onshore shale gas industry.

Live Company Group Plc (LON:LVCG) said its BRICKLIVE Kids Café will launch next month at the Dongdaemun Design Plaza in Seoul, South Korea.

OptiBiotix Health plc (LON:OPTI) has announced that its weight management ingredient SlimBiome has won the award for Weight Management  Ingredient of the Year at the Vitafoods European tradeshow in Geneva.

Arc Minerals Ltd (LON:ARCM) said it has been notified that its executive chairman, Nick von Schirnding, purchased 471,075 shares in the company yesterday at a price of 2.73p each. Following the transaction, the group added, von Schirnding holds a beneficial interest in 7,631,075 ordinary shares representing approximately 1.42% of the company's issued share capital.

Greencoat UK Wind PLC (LON:UKW) said today that the share placing it announced on 8 May 2018 raised gross proceeds of £118.8mln. The group added that net proceeds will be used to complete the purchase of UKW's further shareholding in the Clyde wind  farms on 30 May 2018.

PowerHouse Energy Group PLC (LON:PHE) announced an equity issue of 17,894,737 ordinary shares to service providers for the settlement of fees. Of the total shares, 7,894,737 are being issued at 0.76p each and 10,000,000 at 0.5p per share in accordance with the terms of the relevant service agreements.

Thor Mining PLC (LON:THR) (ASX:THR) today posted a notice of a general meeting to be held at 9am on 7 June 2018 at the offices of Grant Thornton UK, 30 Finsbury Square, London EC2P 2YU.

6.45am: Sluggish start expected 

The FTSE 100 is seen starting lower on Friday, slipping back having reached a record closing high yesterday following overnight falls from US stocks, though Asian markets were steadier.

Spread betting firm IG expects the UK blue-chip index to open around 14 points lower at 7,773, having closed 53 points higher on Thursday at the new closing peak of 7,787.97 and just below the all-time intra-day high of 7.792.60.

Wall Street ended lower on Thursday, with the Dow Jones industrials down around 55 points at 24,713 as investors fretted over US-China trade tensions after US President Donald Trump said that China “has become very spoiled on trade”.

But Asian stocks managed to tick higher on Friday, with Hong Kong’s Hang Seng up 0.2% and Shanghai ahead 0.3% as some investors bet Beijing and Washington will still reach a deal in the latest round of trade talks.

On currency markets, the pound was fairly flat versus both the dollar and the euro with no important economic data due for release on Friday.

Drugs in focus

The corporate news diary is similarly quiet, with just two first-quarter updates scheduled, both from drugmakers – blue-chip AstraZeneca PLC (LON:AZN) and mid-cap Hikma Pharmaceuticals PLC (LON:HIK).

FTSE 100-listed Astra’s product sales have edged lower in recent years due to the loss of patents on its Crestor (statin) and Seroquel (bipolar) blockbuster drugs.

But the cycle seems to have bottomed out, with product sales climbing slightly in the final quarter of last year, and the company itself is guiding for low single-digital growth in product sales in 2018.

Strong growth is expected from Astra’s new cancer drugs, Lynparza and Tagrisso, with the latter recently being approved as the go-to treatment for lung cancer patients with certain mutations.

Deutsche Bank expects 1Q sales to reflect these strong launches with total sales of Tagrisso, Imfinzi, Fasenra, Calquence and Lynparza of US$520mln, up 128% year-on-year.

Hikma rebound hopes

Meanwhile, investors will be hoping for better news from Hikma after full-year results from the FTSE 250-listed firm saw it slump to a big loss for 2017 after it wrote down the value of the West-Ward Columbus acquisition by more than US$1bn.

For the first-quarter update, analysts at Peel Hunt think the market will focus on any changes to the guidance issued with the 2017 numbers; any advancement on strategy and potential balance sheet deployment by the new CEO; and any comments around generics pricing trends and injectables margins.

They noted that current 2018 guidance calls for branded revenue growth of mid-single digits at constant exchange rates, with Peel Hunt forecasting 5% growth.

Significant events expected on Friday May 18:

Interims: AstraZeneca PLC (Q1) (LON:AZN)

Trading update: Hikma Pharmaceuticals PLC (LON:HIK)

Around the markets:

  • Sterling: US$1.3508, down 0.1%
  • Gold: US$1,288.20, an ounce, unchanged
  • Brent crude: US$71.61 a barrel, up 0.2%

City Headlines:

  • PayPal buys Swedish start-up iZettle for US$2.2bn in its biggest-ever deal – Daily Telegraph
  • Uber chief product officer Jeff Holden leaves company – Financial Times
  • Spotify and Pandora shares fall as YouTube announces new music streaming service – The Independent
  • 3i Group sees returns drop but will stay in Action – The Times
  • Sophos expects slowing sales amid tougher cybersecurity competition – Financial Times
  • Grainger raises its sights to serve Generation Rent – The Times
  • Investec ekes out tiny profit increase as Brexit, Steinhoff sting – Financial Times
  • Citigroup fined US$7.3mln by Hong Kong watchdog for IPO failings – Financial Times
  • JPMorgan and eBay under fire over shareholder meetings – Financial Times
  • Walmart narrows gap with Amazon after 33% online sales growth – Financial Times
  • Singapore Airlines to upgrade SilkAir cabins in preparation for merger – Financial Times
  • Virgin Media searches for new leader as chief executive prepares to log off – Daily Telegraph
  • New Legal & General Future World Gender in Leadership fund which will pump cash into firms which employ more women – Daily Mail

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