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FTSE 100 joins global equities to head lower as geopolitical worries weigh

News that the President will now not be meeting North Korea leader Kim Jong-un next month as planned is weighing on global stocks
Lloyds
Clouds coming? FTSE 100 closed firmly lower on Thursday
  • FTSE 100  closes down 71 points at 7,716

  • Trump cancels North Korea meeting

  • European indices and US stocks lower

FTSE 100 joined global equities to finish firmly lower on Thursday, as the bulls ran out of steam.

The UK blue chip index finished down over 71 points at 7,716, while FTSE 250 finished around 15 lower at 20,989.

David Madden , at CMC Markets, noted that the bounce equities had seen this morning was short-lived.

"The decision by the US to investigate imported car parts has thrown a spanner in the works of the trade talks between Washington DC and Beijing," he said.

"It might be a ploy by President Trump to leverage his position in trade negotiations. The move has shaken investor confidence, and it is a sign that these talks could be protracted.

Meanwhile, across the Pond, US  jobless claims rose 9,000 to 234,000 against expectations for 222,000.

"The latest home sales figures dropped by 2.5%, which was far greater than the 0.2% decline that economists had predicted. The underwhelming economic announcements confirmed the Federal Reserve’s less than hawkish update last night."

3.55pm: Lloyds shareholders attack lender over past misconduct 

Investors have attacked Lloyds Banking Group PLC (LON:LLOY) over claims it mistreated customers and held back misconduct compensation

At the bank's annual general meeting today, shareholders criticised the lender over issues including fraud, the mistreatment of small businesses and the mortgage rates it charges.

“You’re a liar and a cheat,” one shareholder shouted at Lloyds’ Chairman Norman Blackwell at the start of the meeting, according to Reuters. 

Lloyds has had a successful turnaround since the financial crisis but is still struggling to restore its reputation following past misconduct including fraud at its HBOS Reading branch and the payment protection insurance mis-selling scandal.

3.30pm: Uber self-driving vehicle's emergency  braking was disabled, officials say 

Uber's self-driving vehicle that struck and killed a woman in Arizona in March spotted her seconds before hitting her but failed to stop because the emergency braking was disabled, the US National Transportation Safety Board said. 

In the board's preliminary report into the incident, it said the vehicle's software system observed the pedestrian six second before impact but classified her as an "unknown object, as a vehicle, and then as a bicycle". 

The self-driving system determined emergency braking was needed at 1.3 seconds before impact but the braking manoeuvres were not enabled.

In a video of the crash, the driver was seen looking down just before the vehicle hit 49-year-old Elaine Herzberg in Tempe, Arizona.

Uber's self-driving system is under computer control to "reduce the potential for erratic behaviour" but requires human backup to intervene and is not designed to alert the driver.

2.55pm: Here's Trump's statement in full

2.45pm: Trump cancels North Korea meeting

The Dow Jones Industrial Average fell heavier than expected at the open on Thursday as the market reacted to news that Donald Trump’s highly-anticipated meeting with North Korea leader Kim Jong-un will now not go ahead.

The Dow fell 131.4 points, or 0.5%, to 24,755.4, while the broader S&P 500 edged 2 points, or 0.1%, lower to 2,730.9.

The tech-heavy Nasdaq opened higher but immediately plunged following the breaking news. In early trading, the index was down 31.5 points, or 0.4%, to 7,394.4.

1.50pm: US jobless claims higher than expected

The weekly US jobless claims rose by 11,000 to 234,000. Analysts had been expecting a slight fall to 220,000.

Still, the number of claims remain below 300,000, which is the level generally associated with a strong labour market.

1.15pm: TalkTalk gives up early gains

At lunchtime in the City, the FTSE 100 is down 23.5 points to 7,765.0.

Telecoms group Talktalk Telecom Group PLC (LON:TALK) had been one of the early star performers after it added almost 200,000 new customers last year, but it has given up most of its gains and is now just 1% up for the day to 122.4p.

Energy stocks are also weighing on the index, with oil off of its recent highs amid talk that OPEC might look to unwind some of its production cuts given the recent surge in oil prices.

BP PLC (LON:BP.) is down 1.6% to 567.7p, while fellow oil supermajor Royal Dutch Shell PLC (LON:RDSB) has dropped 1.2% to £27.04.

Hospitals group Mediclinic International Plc (LON:MDC) is still the top faller though, down 8.4% to 622.4p, after it reported a huge full-year loss earlier this morning.

Leading the risers is product testing company Intertek Group PLC (LON:ITRK) as it issued a bullish trading statement confirming it is on track to hit its 2018 targets. The stock is up 3.4% to £53.50.

Paddy Power Betfair plc (LON:PPB) isn’t far behind, rising 2.5% to £88.45 after it agreed a deal to merge with US fantasy sports betting firm, Fan Duel.

12.45pm: US stocks to open slightly in red

It is set to be a relatively quiet open in New York, with US stocks taking a lead from subdued trading in Europe as traders digest recent geopolitical events.

The Dow Jones Industrial Average is called to open 44.5 points down at 24,839.8, while spreadbettors expect the S&P 500 to lose 5.0 points to 2,727.6 at the bell.

As for the tech-heavy Nasdaq, that is seen 7.1 points lower at 6,946.6.

12.15pm: George Osborne gets ANOTHER job

11.45am: Deutsche Bank ‘to axe up to 10,000 jobs’

Deutsche Bank is to axe up to 10,000 jobs as it looks to reduce costs and restore profitability, reports Reuters.

Most of the cuts will come in the sales and trading divisions, which are mainly in New York and London and where it has been losing out to US rivals.

New boss Christian Sewing is keen to maintain an international presence but wants Deutsche to focus more on Europe and its home market after three consecutive years of losses.

11.30am: New uniform for Sainsbury's workers

A tongue-in-cheek Tweet made us chuckle..!

11.20am: UK activist investor writes to RUbert Murdoch

We told you yesterday that Comcast Corp. (NASDAQ:CMCSA) is preparing a bid for 21st Century Fox Inc. (NASDAQ:FOXA) in a move to top Walt Disney Co.’s (NYSE:DIS) US$52.4bn offer for Rupert Murdoch’s media business.

UK activist investor Sir Christopher Hohn, whose TCI Fund Management has a 7.4% stake in Fox, has told Mr Murdoch to sell to the highest bidder, regardless of its effect on the billionaire’s tax returns.

In a letter to Murdoch and obtained by the Financial Times, Hohn writes: “We are aware that the Murdoch family has a potential conflict of interest because of capital gains tax, which could lead them to preferring a lower-priced Disney stock offer to a higher-priced offer from Comcast.

“However, the personal tax position of the Murdoch family must be an irrelevant consideration for the board, in order for the board to comply with their fiduciary duties. It is imperative that the 21st Century Fox board runs a fair auction... and sells it to the highest bidder.”

11am: Marching on together...

Murad Ahmed, leisure correspondent at the Financial Times, tweets:

10.50am: Pound weighing on blue-chips

The FTSE 100 hasn’t managed to recover any of Wednesday’s losses so far this morning, with a resurgent pound weighing down the blue-chips.

Better-than-expected retail data has helped cable – the sterling-to-dollar exchange rate – get back up past US$1.34.

A stronger pound tends to weigh on the FTSE as it makes a company’s overseas earnings – which account for about 75% of UK blue-chips’ sales – worth less when translated back.

The FTSE 100 is currently down 4.5 points, or 0.06%, to 7,783.9.

Mediclinic slumps on huge FY loss

Hospitals group Mediclinic International Plc (LON:MDC) plunged into the red on hefty write-offs on investments in Switzerland and Spire Healthcare Group PLC (LON:SPI).

The value of Mediclinic’s 30% stake in Spire slumped by £109mln, while it also had to take a £644mln charge at Swiss group Hirslanden. Overall, the firm posted a loss of £492mln in the year to March, sending shares almost 6% lower to 5.8% to 640p.

Another company with weak results this morning was United Utilities, which reported a fall in profits amid higher net finance costs. Shares in the water supplier fell 2.3% to 784.6p, and

Primark owner Associated British Foods plc (LON:ABF) was also on offer after it was downgraded from ‘buy’ to ‘neutral’ by Goldman Sachs analysts. The stock is down 1.6% to £27.07.

Paddy Power investors like US merger plans

Paddy Power Betfair plc (LON:PPB) is the top riser after it agreed to merge with US fantast sports betting site Fan Duel.

The bookmaker is keen to expand into the States after the US Supreme Court overturned legislation that banned sports betting in most parts of the country last week. PPB shares jumped 3.5% to £89.30.

M&A was also the reason for Irish packaging firm Smurfit Kappa Group PLC’s (LON:SKG) rise this morning.

Smurfit has struck a €460mln deal to buy Dutch paper and recycling business Reparenco, which it believes can deliver “significant synergies” in the near-term.

10.30am: Pound bounces on retail data

The pound was a beneficiary of some (for once) fairly strong UK economic data. Retail sales volumes rose 1.6% in April from a month earlier, comfortably ahead of the 0.7% increase economists had predicted.

Sterling, in need of some good news after recent soft data and an abandoned rate hike, jumped 0.4% against the dollar to US$1.340

10.10am: Retailers ‘not out of the woods’

“At face value, the solid 1.6% increase in UK retail sales during April suggests that the high street managed to regain some poise after a particularly tough first quarter,” wrote ING economist James Smith.

“That said, this doesn’t really tally with other data – footfall fell again in April, whilst payments company Visa noted a further drop in spending. For this reason, we don’t think the retail sector is out of the woods just yet.”

He added: “Consumers remain cautious, not just about their finances, but also about the economic situation more generally. And whilst the worst of the household squeeze has passed, real incomes are still more or less flat.”

9.40am: Retail sales grow in April

Retail sales bounced back slightly in April, with the quantity of goods bought rising 1.6% compared to the previous month.

March sales were hit by the ‘Beast from the East’, with shoppers opting to stay inside rather than brave the snow and ice.

Petrol was the biggest gainer, notching up sales growth of 4.7% in April compared with a fall of 6.9% in March.

Total sales growth was a little more muted on a quarter-by-quarter basis, with sales climbing just 0.1% in the February-April period compared to the November-January quarter.

9.20am: Kingfisher blames bad weather for weak Q1 sales

It was the same old story at Kingfisher PLC (LON:KGF), although at least the home improvement retailer had something to blame this time.

Kingfisher’s B&Q stores continue to weigh on sales, while the French said of the business is also struggling.

In fact, the only part of the business performing well, and has been for a while now, is Screwfix in the UK.

Overall, the group reported total sales of £2.83bn for the three months to April 30, a 1.2% decline on a reported basis or 2.5% fall at constant currency.

Kingfisher boss Veronique Laury blamed the weak sales on the ‘Beast from the East’, which dumped more than a foot of snow and ice across the UK and continental Europe in February and March.

8.45am: FTSE 100 opens flat

The FTSE 100 was in a holding pattern ahead of retail data later with the index of blue-chips adding just 1.58 points to sit at 7,790.02.

Perhaps foreshadowing some rather dull numbers, the shopkeepers were all on offer early doors.

More likely rather downbeat updates from companies such as Marks & Spencer (LON:MKS) and Halfords (LON:HFDS) have finally started to made their mark.

Kingfisher PLC's (LON:KGF) lacklustre first-quarter performance sent shares in the B&Q owner 2.2% lower. 

Wm Morrison Supermarkets (LON:MRW) was the top faller, off 2.4%, while Primark owner Associated British Foods (LON:ABF) fell 1.9% as it was downgraded by Goldman Sachs.

Shares in Petra Diamonds (LON:PDL) lost their sparkle with a 12.6% drop after the miner unveiled a deeply discounted rights issue in order to raise US$178mln, much of which will be used lower the company's more than US$600mln debt pile.

The fact the stock is trading well above its notional ex-rights price (ie the price of the stock once the extra bargain shares are added to the mix) suggests an element of relief among investors.

On the plus side, Andrew Austin's ambitious new vehicle RockRose Energy (LON:RRE) rose 16% after the independent oil and gas business unveiled ambitious plans to double production with fully funded £94mln swoop for some Dutch gas assets.

Proactive news headlines:

Shares in Katoro Gold PLC (LON:KAT) surged at the opening bell on Thursday after the Tanzania-focused explorer confirmed plans to press ahead with the development of its Imweru project.

Range Resources Ltd’s (LON:RRL) recent work to optimise its producing wells in Trinidad has allowed the oiler to exceed its production targets. The AIM-listed firm had set itself the goal of producing 800 barrels of oil per day (bopd) by the end of the current quarter.

Victoria Oil & Gas plc (LON:VOG) updated investors its first quarter, a period in which it was impacted by the non-renewal of a supply deal for a gas-fired power plant in Cameroon. The agreement with ENEO Cameroon SA expired at the end of December, but, whilst ENEO’s has yet to resume gas consumption, the AIM-quoted company said it is confident that there’ll be a resolution.

Alliance Pharma plc (LON: APH) chairman David Cook will provide the company annual meeting with an optimistic assessment of prospects, telling investors: "We look forward to the year ahead with confidence."  Operationally, the business is seeing "good growth" from its star brand Kelo-cote, for scar reduction, while the continued international rollout of MacuShield, a food supplement that promotes eye health, will provide a further boost.

StatPro Group PLC (LON:SOG), the provider of cloud-based portfolio analysis and asset pricing services for the global asset management industry, has traded in line this year.

Greka Drilling Limited (LON:GDL) has secured a drilling contract in China’s Shanxi province and says it is bullish on securing new contracts in India despite setbacks with some of its current partners.

Bacanora Lithium PLC (LON:BCN), the London listed lithium exploration and development company, has drawn shareholders’ attention to surging lithium prices.

Gold miner Anglo Asian Mining Plc’s (LON:AAZ) has forecast a sizeable uplift in production in the current year after revenues and profits fell in 2017. Revenues for the year dropped to US$71.8mln from US$79.2mln as the proportion of concentrate sold increased.

Metal Tiger PLC (LON:MTR) said its joint venture project with MOD Resources Limited (ASX:MOD) has completed drilling for an infill and extension programme for its T3 (Motheo) Pit resource, with the assays received to date in line with expectations.

As Europa Oil & Gas (Holdings) Plc (LON:EOG) narrows its focus in on the Inishkea prospects, in the vicinity of Ireland’s Corrib gas field, it has decided to relinquish a portion of its portfolio. The explorer, in a stock market statement, revealed that it will give up offshore Licence Option 16/21 which covered an area in the Slyne basin, off Ireland’s West Coast.

United Oil & Gas Plc (LON:UOG) has revealed that it has landed two new exploration areas in the North Sea. It was provisionally awarded two new blocks in the UK Government’s 30th offshore licensing round.

ADES International Holding Ltd. (LON:ADES) has established a US$140mln line of credit to finance the acquisition of three jack-up oil drilling rigs from Nabors.

IronRidge Resources Limited (LON:IRR) has appointed Neil Herbert as non-executive chairman with immediate effect.

 

Asiamet Resources Limited (LON:ARS) has said that Stephen Hughes has notified the company that after 22 years in Indonesia he will be returning to live in Canada with his family and will step down from his positions of vice president - Exploration and a board executive director effective 24 May 2018.  The group said Hughes will continue to serve the company as a consultant and advisor.

6.45am: Our word of the day is 'bouncebackability'

Bouncebackability (a word invented by former footballer and manager Iain Dowie) is something that all strong bull markets need, so investors will be keenly watching the FTSE 100 as it opens this morning following Wednesday’s 1.1% drop.

With over an hour to go before trading kicks of the London index is indicated on the front foot, albeit only slightly. CFD and spreadbetting firm IG Markets sees the blue-chip benchmark up 2 points, calling it at 7,781 to 7,786.

Attentions in London will be focused on the British consumer, as monthly retail sales stats will be released later this morning.

“Whilst retail sales are forecast to have declined on an annual basis in April on negative inflation adjusted wages and the timing of the Easter holiday; they are expected to have ticked higher on a monthly basis to 0.4%, recovering from March’s heavy fall,” said Jasper Lawler, analyst at London Capital Group.

“So whilst we know that wage growth has been outpacing inflation for a couple of months now, it is still too early for consumers to be feeling any real difference and too early for this to be portrayed in an increase in retail sales, particularly non-essential items.”

Lawler added: “After Wednesday’s surprise decline in headline inflation illustrated a return to the goldilocks (not too hot, not too cold) economy, it will take a decent surprise to the upside in today’s retail sales to even come close to convincing some pound traders that August’s hike remains a possibility.”

Globally, equity markets have been mixed since the FTSE 100’s weak Wednesday.

On Wall Street, the Dow Jones ended yesterday’s session up 52 points or 0.21% at 24,886 while the S&P 500 added 0.32% to close at 2,733 and the Nasdaq strengthened further, finishing the day 0.64% higher at 7,425.

In Asia, Japan’s Nikkei slumped more than 300 points or 1.3% to 22,375. Hong Kong’s Hang Seng was only slightly higher at 30,681 and the Shanghai Composite was down 0.22% at 3,162.

Significant events expected on Thursday May 24:

Trading updates: Kingfisher PLC (Q1) (LON:KGF), Go-Ahead Group PLC (Q3) (LON:GOG), Inchcape PLC (Q1) (LON:INCH), Intertek Group PLC (Q1) (LON:ITRK)

AGMs: Lloyds Banking Group PLC (LON:LLOY)

Finals: United Utilities PLC (LON:UU.), Tate & Lyle PLC (LON:TATE), Talktalk Telecom Group PLC (LON:TALK), Electrocomponents PLC (LON:ECM), Helical Bar PLC (LON:HLCL), Mediclinic International Plc (LON:MDC), NewRiver REIT plc (LON:NRR), QinetiQ Group PLC (LON:QQ.), Renewi PLC (LON:RWI), Wizz Air Holdings PLC (LON:WIZZ)

Interims: Daily Mail & General Trust PLC (LON:DMGT), Paragon Banking Group PLC (LON:PAG), Shoe Zone PLC (LON:SHOE)

Ex-dividends: To clip 3.2 points off FTSE 100 – Bunzl PLC (LON:BNZL), Carnival PLC (LON:CCL), DCC Plc (LON:DCC), Imperial Brands PLC (LON:IMB), Wm Morrison Supermarkets PLC (LON:MRW), Whitbread plc (LON:WTB)

Economic data: UK retail sales; US weekly jobless; US existing home sales

Around the markets:

  • Sterling: US$1.3369, up 0.16%
  • Gold: US$1,294 an ounce, up 0.23%
  • Brent crude: US$79.44 a barrel, down 0.16%
  • Bitcoin: US$7,686, up 2.46%

City headlines:

  • Brexiteers are out to stop Philip Hammond and his fellow Remainers mangling Brexit – Telegraph
  • Uber to offer drivers 'free' pay protections under insurance policy - Sky News
  • Barclays explores mergers with rival banks - Financial Times
  • Regulator hails success of oil and gas licensing round - BBC News
  • Paddy Power Buys FanDuel in Bid to Dominate Sports Betting - Bloomberg
  • Topshop posts £10.9m loss as it grapples with tough retail environment - Telegraph
  • ‘10,000 face axe’ after Deutsche Bank’s torrid year – The Times
  • Jaguar Land Rover profits skid on falling diesel demand – Financial Times

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