FTSE 100 closes 50 points down
EU draws up plans for US$20bn in retaliatory tariffs
Fresnillo top loser on Footsie
House builders bounce back
FTSE 100 joined other European indices to close lower on Wednesday as traders took profits made yesterday.
The UK blue-chip index closed around 50 points lower at 7,658, while FTSE 250 was also down - over 99 points at 20,753.
In Europe, the German DAX fell over 110 points and France's CAC 40 shed nearly eight points.
On Wall Street, the Dow Jones Industrial Average is down over 48 points, but the S&P 500 is ahead by over 18 as the market digests yet another slew of corporate quarterly earnings.
David Madden, analyst at spreadbetter CMC Markets, said: "Stocks are in the red as traders lock-in profits in the wake of yesterday’s strong session.
"Dealers await the meeting between President Trump and the European commission’s Jean Claude Juncker. Mr Juncker will be on the charm offensive to try and avoid hefty tariffs being imposed on EU cars that are imported into the US."
Top loser on the UK premier exchange was silver giant Fresnillo (LON:FRES) as the miner raised its outlook for full-year 2018 gold production, but cut the forecast for silver.
Broadcaster ITV (LON:ITV) was also among top gainers, up 0.91% to 172p as the company was boosted by World Cup coverage and its smash-hit TV show Love Island.
3.45pm: EU draws up plans for US$20bn in retaliatory tariffs on US goods
The European Commission has said it is building up a list of US products that it could potentially target with US$20bn in retaliatory tariffs if Washington decides to impose duties on European car exports.
EU trade commissioner Cecilia Malmstrom said that if the talks between US president Donald Trump and Commission president Jean-Claude Juncker failed to prevent the US from extending its tariffs to EU cars and car parts, the tariffs would join a previous set of retaliatory tariffs imposed by the EU after the US slapped duties of European steel and aluminium imports.
Malmstrom added that the next potential round of EU tariffs would not target specific US states, but would instead focus on general goods such as agricultural products, machinery, and high-tech products.
3.15pm: FCA considers forcing banks to pay minimum interest rates
The Financial Conduct Authority (FCA) has said it is considering the introduction of a minimum interest rate that banks will have to provide to all customers with cash savings accounts.
The regulator opened a consultation on price discrimination on Wednesday, saying previous efforts to improve competition in the market had not stimulated a sufficient change in customer behaviour.
The proposal is also designed to negate the traditional lender strategy of offering higher interest rates to attract new customers while gradually cutting rates for older account holders.
The FCA added that large stocks of these older, low-interest accounts also provided larger banks with a cheaper way to fund lending, which had stifled efforts by smaller “challenger” banks to increase their market share.
An alternative, the FCA said, would be to introduce a “basic savings rate”, a variable minimum interest rate that would affect all easy-access cash savings accounts and ISAs after they had been open for a certain amount of time.
The regulator estimated that customers could benefit from around £300mln a year in extra interest payments if the policy was introduced.
2.35pm: US sees mixed open as traders watch for earnings reports and outcome of Trump/Juncker meeting
The main indices on Wall Street saw a mixed open on Wednesday morning as investors remained cautious ahead of the Trump/Juncker trade meeting and more earnings reports.
The Dow Jones Industrial Average was down 58 points at 25,184 shortly after the open, while the S&P 500 was little changed, down 0.2 points at around 2,820. The Nasdaq was similarly neutral, up 10 points at 7,850.
1.45pm: Wall Street braces ahead of Trump/Juncker meeting but earnings could offset tensions
US stocks are expected to open slightly lower on Wednesday as traders brace for any potential fallout from the meeting between US president Trump and European Commission president Juncker.
However, investors will be hoping that stronger earnings reports will offset the caution arising out of various trade wranglings.
Craig Erlam, senior market analyst at OANDA, said: “Investors have been encouraged by the results we’ve seen so far, with lower taxes not the only thing providing a big lift to the bottom line, although they are obviously a considerable contributor.
He added: “Another 52 companies are preparing to report on the second quarter today, including Facebook, the second of three FANG stocks reporting this week and investors will be hoping for more strong figures after Alphabet’s report was so well received, despite the $5 billion fine that was imposed on it last week.”
Back in London, the FTSE 100 was down 62 points at 7,646.
12.45pm: British banks told to draw up long-term plans for EU bases post-Brexit
Banks based in Britain are being told to show how they will operate and staff their new bases in the European Union after Brexit to avoid ‘token offices’ in the bloc.
The European Central Bank (ECB) said it would expect banks setting up bases in the EU to cover five key areas that will be accessed in license applications, including; adequate local management capabilities, access to market infrastructure such as clearing, some hedging and trading capabilities, no full reliance on booking and hedging strategies based outside the EU, and provision of accurate data on local activities.
The move is the clearest sign yet that a shift in banking jobs from the UK may rise higher than the 3,500 to 12,000 forecast in the short term by the City of London.
Around 20 banks have so far applied for licences to open bases or expand existing ones in the EU and eurozone before March 2019, when the UK is scheduled to exit the EU.
12.00pm: FTSE 100 slump continues into lunchtime as caution abounds ahead of Trump-Juncker meeting
The Footsie has ended Wednesday morning firmly in the red and back below the psychologically important 7,700 level as investors cautiously await the outcome of a meeting between Donald Trump and European Commission president Juncker.
Chris Beauchamp, Chief Market Analyst at IG, said that the positive tone struck by markets yesterday, which saw the FTSE 100 close up 43 points at 7,709, had “been replaced by caution as investors wait to see whether the Trump/Juncker meeting will produce any fireworks”.
He added that Trump’s suggestion of imposing tariffs on China had “uncomfortable implications for the EU, since it indicates he may not shrink from imposing them on all-important car imports from Europe, ramping up the trade war on the US’s other flank”.
At midday, the FTSE 100 was down 48 points at 7,660.
11.30am: CBI data shows healthy retail growth In July but cautions on weaker outlook
Data from the Confederation of British Industry (CBI) showed retail sales continued strong growth in July, albeit slightly slower than in June.
The CBI’s distributive trades survey across 111 firms, which included 50 retailers, showed above average sales although orders placed on suppliers fell denting expectations for continued growth.
The outlook was also less upbeat, with retailers expecting sales volumes and orders to flatten out in the coming month.
The CBI’s principal economist, Alpesh Paleja, said: “While the heatwave has boosted retail sales in recent months, we may be seeing some early signs of a cooling off, with orders falling in the year to July and retailers expecting no growth in sales next month.
He added: “Indeed, the long-term challenges facing the retail sector are significant. Continually subdued real wage growth means that households are still feeling the pinch, and retailers are still grappling with deeper structural issues, such as digital disruption.”
10.45am: FDF says heatwave could exacerbate shortages in event of no-deal Brexit
The Food and Drink Federation (FDF), an industry lobby group in the UK, has warned that the ongoing heatwave could exacerbate and result in disruption to food supplies caused by Britain exiting the EU without a deal next year.
Ian Wright, director general of the FDF said the hot sunny weather and little rain could affect supplies as early as this Autumn, which could then add to the pressure caused by the disruption to customs and border crossings from the UK crashing out of the EU.
Wright told BBC radio that businesses would need to get their goods across the border before 29 March, the UK’s expected exit date, to ensure that they were not affected by customs changes.
He added that it would also be prudent to forward buy in order to avoid any potential issues arising from fluctuations in currency.
10.15am: IMF: Trump tariffs likely to only have “limited impact” on US trade deficit
The International Monetary Fund (IMF) has said that protectionist tariffs introduced by US president Donald Trump in recent months are unlikely to shrink the country’s trade deficit.
The crisis lender said the effect of trade policies on the imbalance was “quite small” and that the US’s trade deficits were instead being fuelled by a US$1trn budget deficit and a stronger dollar.
The IMF’s annual report on current account imbalances also recommended that countries with trade surpluses, as well as deficit countries such as the US, "should work toward reviving liberalization efforts and strengthening the multilateral trading system - particularly to promote trade in services, where gains from trade are substantial but barriers remain high."
The IMF’s chief economist Maury Obstfeld said that fiscal policies and demographic trends have a greater long-term impact on trade and current account balances.
Obstfeld added that continued high trade surpluses in countries such as China and Germany were also helping to fuel protectionist sentiment globally.
The IMF's assessment comes ahead of what is expected to be a tense meeting later between Trump and the president of the European Commission Jean-Claude Juncker as the US and the EU seek to ease tensions following a bout of tit-for-tat tariff impositions on various goods.
As mid-morning approached, the FTSE 100 was down 43 points at 7,665.
9.45am: UK mortgage lending and credit card spending creeps up in June; Ryanair warns of job cuts as it shrinks fleet
Mortgage lending in the UK was higher in June compared to the same period in 2017, according to an update from trade association UK Finance.
The association said that in June, estimated gross mortgage lending for the total market was £23.5bn, 2.1% higher than a year earlier, however, the number of mortgage approvals by the main high street banks fell by 2.1% in the same period.
Within this drop, only remortgaging approvals increased and were 3.4% higher than for the same period a year earlier, although this was offset by a 4.7% reduction in house purchase approvals and a 4.3% drop in other secured borrowings.
UK Finance added that credit card spending for the period was up 4.7% on June 2017, with outstanding levels of card borrowing having risen 5.6% over the year. However outstanding overdraft borrowing was down 5.8% by comparison.
Meanwhile, personal deposits and deposits held in instant access accounts were 1.3% and 4.2% higher respectively.
Commenting on the figures Eric Leenders, Managing Director, Personal Finance at UK Finance said retail sales had been buoyed by recent sporting events and sunshine, linked to the rise in card spending, while the increase in mortgage lending "continues to be driven by remortgaging, as borrowers take advantage of attractive deals ahead of an anticipated Bank rate rise".
In other news, strike-hit budget airline Ryanair (LON:RYA) has told over 300 pilots and cabin crew that their jobs could be lost as it prepared to cut the size of its Dublin-based fleet by 20% for the winter season
The cut comes as the airline experiences its worst week of stoppages in its 30-year history as it struggles in talks with unions that it has recognised for the first time, which had had the added effect of hurting forward bookings for the winter period.
Cabin crew in Italy, Spain, Portugal and Belgium went on strike on Wednesday and around a quarter of Ryanair’s Dublin-based pilots carried out their third 24-hour stoppage in the space of two weeks on Tuesday.
In early morning trading, Ryanair shares were up 2.8% at 14.3p.
8.45am: Footsie weak at start
The FTSE 100 got off to a sluggish start, posting a five-point decline to 7,704.11 after Donald Trump once again ramped up the rhetoric ahead of his meeting with EU President Jean-Claude Juncker.
“It could be a bruising meeting,” reported the Guardian.
“Juncker and trade commissioner Cecilia Malmström hope to dial down the rising tensions in the global economy, and ward off the threat of a full-blown trade war.”
Good luck with that.
On the market, the housebuilders were provided a boost from an unlikely source – Berenberg, the German investment bank, which, if we are being honest, isn’t noted for moving markets.
Berenberg told clients fears over the macroeconomic outlook had been “overdone” and the climate remains supportive of the industry.
ITV’s (LON:ITV) results were met with a little fanfare by the market with most of the good news – Love Island and the World Cup – already priced in with the stock up 18% in the last three months.
Its shares tanked 16% after it told investors the financial hit from copycat competition to its main drug would be bigger than expected.
Proactive news headlines:
Eland Oil & Gas PLC (LON:ELA) told investors that the Opuama-10 well, the latest at the Opuama field in Nigeria, has unearthed significant oil pay. The well was drilled down to a depth of 8,121 feet and encountered six oil bearing reservoirs with some 307 feet of total net pay.
Alliance Pharma PLC (AIM:APH), the specialty pharmaceutical group, said it is trading in line with expectations. In an update, it said revenues for the six months ended June 30 rose 10% to £54.4mln, though trading profit tracked at a slightly slower pace due largely to phasing of marketing spend.
Med-tech specialist ANGLE PLC (LON:AGL) has confirmed it is on target to complete by the end of the year a US Food & Drug Administration study of cancer detection device, Parsortix. A total of 400 people at four leading oncology centres are taking part in the trial, which it hoped will help the company gain Class II clearance for the device, which harvests intact circulating tumour cells.
Clinigen Group PLC (LON:CLIN) has made its second acquisition in as many weeks, buying the global rights to Imukin from Horizon Pharma PLC (NASDAQ:HZNP) for an undisclosed sum. Imukin is licensed in 19 countries to help boost the immune system of patients with chronic granulomatous disease and for the treatment of a bone disease called severe malignant osteopetrosis. Both of those conditions are hereditary and considered to be rare.
Drug developer Midatech Pharma PLC (LON:MTPH) has praised the “significant progress” it made with two of its key clinical programmes in the first half of the year. The AIM-quoted firm remains on track to announce the results of the initial phase of the ongoing first in-human study of its MTD201 drug towards the end of Q3 or start of Q4 this year.
Empresaria PLC (LON:EMR) will post slightly higher interim profits as strong performances in North and South America offset regulatory disruption in Germany and Japan. "For the first half, adjusted profit before tax is up approximately 2% and net fee income is down approximately 1% on the prior year," the staffing group said in a statement.
Mineral sands miner Base Resources Limited (LON:BSE) has predicted another year of steady production from its Kwale mine in Kenya. Guidance for the year to end June 2019 is 88,000 to 93,000 tonnes of rutile, 420,000 to 450,000t of ilmenite and 32,000 to 37,000t of zircon.
Mosman Oil And Gas Ltd (LON:MSMN) has extended the deadline for its option to increase its stake in the Arkoma field, where new well flow data is awaited to reflect the impact of work-over programmes.
United Oil & Gas PLC (LON:UOG) has revealed that the planned Colter appraisal well on the south coast of England has passed an important administrative milestone and remains on-track for drilling in the fourth quarter of this year.
RYVL (NASDAQ:TMG), formerly The Marketing Group, has announced the appointment of Alex Knight as the company’s new chief financial officer (CFO), joining its board with immediate effect. The firm said Mike McElhatton, its current CFO, has resigned to pursue other interests and having stepped down from the board today, will leave the group on 31 July 2018.
ANGLE PLC (LON:AGL) (OTCQX:ANPCY), a world-leading liquid biopsy company, announced after the close on Tuesday that, further to the announcement of 18 July 2018, the company has now received confirmation from HMRC that an investment in the company will qualify for VCT tax relief.
6.50am: FTSE 100 set for tentative start
The FTSE 100 is set to start lower on Wednesday as trade and tariffs were again among the top talking points – though this time it is the EU at the sharp end of Donald Trump’s stick.
Indeed, yesterday’s equities positivity, driven by the miners, thanks to the Chinese stimulus plans, looks like it may be reversed after the London index closed 43 points higher to 7,709 on Tuesday.
IG Markets this morning sees the FTSE 100 around 15 points lower ahead of the open, calling the index at 7,695 to 7,700 with over an hour to go.
Investors may well find themselves focusing on the US and EU posturing, albeit in early deals there’ll be plenty of blue-chip updates in London to distract (at least for a while). Later, Trump is likely to start dominating the headlines.
“The unnerving headlines centred around trade tensions, which are showing no signs of evaporating anytime soon. In fact, Trump declaring that “tariffs are the greatest” paints a picture of these levies becoming a permanent fixture to his administration,” said Jasper Lawler, analyst at London Capital Group.
Lawler added: “These updates come on the eve before the head of the EU Commission, Jean-Claude Juncker is due to join President Trump in Washington for trade talks. Up until now trade tensions have focused on the unfolding US – Sino trade war.
“Today the focus will switch to the more worrying scenario of a US – EU trade war, which, under a worst case scenario has the potential to spark a crisis, if not a full blown recession. The threat as it stands so far from Trump, is a 20% tariff on all imported European autos. The EU, whilst not wanting to walk into a trade war, do however stand ready to impose tariffs on $300 billion of US imports should such a move be required.”
Tuesday saw a somewhat positive close on Wall Street
The Dow Jones finished 197 points or 0.79% higher, at 25,241, meanwhile, the S&P 500 gained 0.48% to close at 2,820.
On the other hand, the Nasdaq was left behind as it had a negative day albeit only slightly – it closed down 1 point at 7,840.
In Asia, Japan’s Nikkei was up 90 points or 0.4% changing hands just over 22,600.
Hong Kong’s Hang Seng similarly rose 183 points or 0.64% to 28,845, while the Shanghai Composite dipped slightly lower, 0.01%, to 2,902.
Australia’s ASX 200 was also in negative territory, down 0.34% at 6,244.
Around the markets:
- Sterling: US$1.3154, up 0.07%
- Gold: US$1,226 per ounce, up 0.2%
- Brent crude: US$73.97 a barrel, up 1.2%
- Bitcoin: US$8,411, up 0.17%
Significant announcements due Wednesday July 25:
Interims: GlaxoSmithKline PLC (Q2) (LON:GSK), ITV PLC (LON:ITV), Tullow Oil PLC (LON:TLW), Indivior PLC (LON:INDV), Informa PLC (LON:INF), Primary Health Properties PLC (LON:PHP), Croda PLC (LON:CRDA), Capital & Counties Properties PLC (LON:CAPC), Staffline Group PLC (LON:STAF), Rathbone Brothers PLC (LON:RAT), Quartix Holdings PLC (LON:QTX)
Trading update: Vodafone PLC (LON:VOD), Antofagasta PLC (LON:ANTO), Marston’s PLC (Q3) (LON:MARS), Wizz Air Holdings PLC (Q1) (LON:WIZZ), Brewin Dolphin PLC (LON:BRW), Empressaria Group PLC (LON:EMR), QinetiQ PLC (LON:QQ.), Victrex PLC (LON:VCTX)
Economic data: UK CBI distributive trades survey; BBA mortgage lending figures; German IFO business climate report; US new homes sales; US MBA mortgage applications
Government gives last-minute go-ahead to UK fracking site – The Independent
Ryanair publishes striking workers' payslips – Sky News
Google bets on blockchain for cloud – TechRadar
London black cab drivers plot £500m legal action against Uber – Financial Times
SFO applies to reinstate charges against Barclays bank over Qatar loan – The Guardian
EU fines Philips £25.5m for driving up prices of its products online – The Telegraph
Ryanair, EasyJet and IAG file complaints to Brussels over strikes – Financial Times
Tesla shares slump 5% after electric car company asks suppliers for refund – The Independent
Heinz Beanz advert banned for a second time over nutrition claims – Sky News
Peugeot posts record earnings after Opel-Vauxhall swings to profit – Financial Times