FTSE 100 closes higher
Pound drops on Brexit worries, weak manufacturing PMI data
US markets closed for Labour Day holiday
FTSE 100 closed higher on Monday, bolstered by the weaker pound and a rise in commodity stocks.
The UK blue-chip index finished up over 72 points at 7,504, while the mid-cap FTSE 250 was also higher, adding nearly seven points, to stand at 20,695.
The pound was suffering again after more Brexit banter over the weekend.
Chief negotiator Michel Barnier said he was "strongly" opposed to key parts of Theresa May's Chequers proposals for a future trade deal.
Her plans for a 'common rulebook' for goods but not services were not in Brussels’ best interests, he wrote in a German newspaper.
Now, there are reports raising a question mark over her future as the UK prime minister.
Fiona Cincotta, analyst at City Index, said: "Oil stocks gave the biggest boost to the FTSE, with the likes of BP and Shell trading 1.2% and 1.5% higher respectively, as they traced the price of oil northwards."
Crude headed north as oil exports from Iran, OPEC’s third largest producer, are falling faster than expected. Brent is up some 10% over the past two weeks.
3.45pm: Sterling drop is Footsie’s gain
The FTSE 100 index jumped to its highs for the session in late afternoon trading, as internationally-focused stocks benefitted from a drop by sterling amid fresh Brexit worries and weak US data, and with US markets closed on Monday for the Labour Day holiday.
Around 3.45pm, the UK blue chip index was up over 78 points at 7,510, just below the session peak of 7,516.
On currency markets, however, the pound dropped 0.6% against the US dollar to US$1.2879 and lost a similar amount versus the euro to €1.1152 after the EU's chief Brexit negotiator Michel Barnier said at the weekend that he is "strongly" opposed to key parts of UK prime minister Theresa May's Chequers proposals for a future trade deal.
Connor Campbell, financial analyst at Spreadex commented: “With the US off for Labor Day there was little change to the European markets, the start to September defined by sterling's slide.”
He said: “Despite No. 10 clapping back at Boris Johnson after the former foreign minister criticised the Chequers deal, stating that Etonian oaf doesn’t offer ‘serious leadership’ (hardly the most self-aware response), the pound failed to ease its losses as the session went on.
“It’s almost as if the currency cares more about the increased likelihood of a ‘no deal’ Brexit and the fact Michel Barnier is ‘strongly opposed’ to Theresa May’s trade proposals than the headline-grabbing Tory infighting.”
Campbell added; “The FTSE, arguably ignoring the long-term impact of the Brexit to focus on the short-term benefits of a weakened pound, was overjoyed with the currency’s collapse, climbing more than 1%”.
12.50pm: Water, water everywhere
The four top UK water companies today submitted their latest business plans to regulator Ofwat, aimed at reducing leakages and improving service, while also controlling prices.
The utilities have faced a series of fines and calls to tackle leakage issues in a summer marked by supply shortages and hosepipe bans.
South West Water said it will also cut average bills by 11% in real terms, with United Utilities to reduce them by 10.5%, while the third-listed water firm Severn Trent PLC (LON:SVT) plans a 5% reduction.
Britain's largest water company, Thames Water – which is owned by a mix of overseas pension and investment funds - said its bills would be flat but that it would return only £20mln to external shareholders compared to the £100mln returned last year.
In guidance issued in July, Ofwat called on water suppliers to be more transparent about their dividend policies, executive pay, debt-to-equity ratio and other issues.
It said today that it would scrutinise all of the companies' business plans and publish an initial assessment on 31 January 2019.
In afternoon trading, United Utilities and Severn Trent shares were among the biggest fallers on the FTSE 100 index, down 1.3% at 731.8p and 1.0% at 1,982p respectively, while FTSE 250-listed Pennon shed 1.55 at 756.8p.
Meanwhile, the FTSE 100 index remained higher, up 64 points at 7,497 reflecting gains by dollar earners as the pound dropped back against the greenback and the euro following some weak UK manufacturing data today and cautious comments on Brexit at the weekend from chief EU negotiator Michel Barnier.
12.05pm: Carney still set to depart
A spokesman for prime minister Theresa May has said Bank of England governor Mark Carney still intends to step down in 2019, according to Reuters.
The BBC News website had reported earlier in the day that the UK finance ministry was in talks with the central bank over whether Carney is willing to stay beyond his planned departure date of June 30 next year, amid difficulties finding a successor.
Former bank of Canada boss Carney originally planned to serve just five years of a maximum eight-year term as governor, but in October 2016 he agreed to stay an extra year, until mid-2019, to see Britain through Brexit.
The front-runner to succeed Carney is widely seen to be Andrew Bailey, the chief executive of City regulator, the Financial Conduct Authority and a former deputy governor at the BoE.
However, earlier this year, Chancellor of the Exchequer, Philip Hammond said he might look abroad again for a successor.
The main focus for markets in late morning trading remained the weakness of sterling after weak UK manufacturing PMI data exacerbated Brexit deal fears after negative comments at the weekend from EU chief negotiator Michel Barnier.
Having rallied last week following some positive Barnier comments, the pound dropped 0.5% against the US dollar at US$1.2886, and shed 0.7% versus the euro to €1.1095.
However, sterling’s falls were a spur for the internationally-focused FTSE 100 index, which was up 61 points at 7.494.
Although with US markets closed today for the Labor day holiday, interest may drift off for the London markets this afternoon.
10.55am: Funding Circle looking to IPO
The first peer-to-peer lender to float on the London stock market, Funding Circle could be valued at up to £2bn by the initial public offering (IPO).
Founded in London in August 2010, Funding Circle said it plans to raise gross proceeds of up to £300mln via listing on the main market of the London Stock Exchange.
The firm offers loans to small businesses in the US, Germany and the Netherlands, as well as the UK, and the funds will be used to expand in new markets.
Funding Circle said the listing would help it "engender trust" with investors, borrowers and regulators.
Danny Cox, Hargreaves Lansdown: “IPO season seems to be picking up a bit of pace, and unlike with many new share issues, private investors will be able to participate in Funding Circle’s planned flotation.”
“As ever investors should make sure they read all relevant documentation published by the company, and consider the risks as well as the potential upside of any investment.”
Last week, luxury British sports car maker Aston Martin said it is also gearing up for float on the London Stock Exchange later this year, which could value the maker of James Bond’s motors at £5bn.
The FTSE 100 index remained bullish in late morning trading, up 56 points at 7,488 boosted by a drop by sterling following weak UK manufacturing PMI data and a revival of Brexit worries after unhelpful comments from EU chief negotiator Michel Barnier.
9.55am: PMI data disappoints
UK manufacturers had their weakest month in over two years and export orders suffered a rare fall in August, according to the latest IHS Markit/CIPS UK Manufacturing Manufacturing Purchasing Managers’ index.
The August manufacturing PMI reading fell to 52.8, its lowest level since July 2016, which was immediately after the Brexit vote, and a lot weaker than the consensus forecast of 53.8. The July reading was also revised lower to 53.8 from 54.0 previously.
David Cheetham, chief market analyst at XTB.com, commented: “This reading is the lowest in two years and has put more pressure on the pound this morning with the currency already beginning the new week lower after the latest Brexit developments over the weekend.”
He added; “According to the report job creation has also slowed to ‘near-stagnation’ in what could be described overall as a fairly downbeat assessment from IHS on the current manufacturing environment.”
Sterling dropped 0.5% versus the US dollar to US$1.2893, and edged lower against the euro at €1.1105 following unhelpful comments from European Union chief Brexit negotiator Michel Barnier.
Cheetham noted: “Comments from Barnier that he "strongly opposed" UK PM May's proposals on future trade while advising European carmakers that they will have to use fewer British-made parts after Brexit had seen the pound fall lower.”
He added: “The market has now erased nearly all the gains since Barnier made his upbeat Brexit remarks last week and the near-term outlook for sterling remains clouded”.
The FTSE 100, however, drew heart from the pound’s demise, which gave a boost to the internationally-focused index’s biggest constituents.
Around 9.55am, the UK blue chip index was over 58 points higher at 7,490.
8.50am: Footsie firmer
The FTSE 100 made a better than expected start to proceedings, advancing 26 points to 7,458.72 as the Square Mile shrugged off a trade spat between the US and Canada.
The pound, however, was under pressure and back down around US$1.29 after the EU’s chief Brexit negotiator, Michel Barnier, said he was strongly opposed to parts of Prime Minister Theresa May’s Chequers Plan.
With Parliament’s return, the chorus of complaints from the Tory backbench and former frontbench appears to be growing.
“Theresa May has said she won’t back down. Meanwhile it looks like the Brexiters are waiting and ready to pounce,” said Neil Wilson, of Markets.com.
Data from the UK manufacturers looks likely to show the sector has been resilient in the face of uncertainty caused by the protracted Brexit talks and trade worries.
On the market, there was a little edginess among those overseeing the house building stocks with an across-the-board markdown ahead of a big reporting week for the sector.
Citi reckons ‘there may be trouble ahead’ for the pub sector as it gave its take on Britain’s hostelry chains.
Down 18% was Dechra Pharmaceuticals (LON:DPH) in the wake of its prelims.
Proactive news headlines:
Hurricane Energy PLC (LON:HUR) shares started the week higher as the offshore oiler struck a significant partnership deal with Spirit Energy, putting in place a new well programme to deliver first production from a second development area in the West of Shetland region.
SkinBioTherapeutics PLC (LON:SBTX) said its SkinBiotix technology was successful in stability testing. "Demonstrating the extended stability of the cream formulation was a key step to commencing the human study. This remains on track to start this month," said chief executive, Dr Cath O’Neill.
Tissue Regenix Group PLC (LON:TRX) said it remained committed to hitting its target of breaking even by 2020 as its interim results revealed the company delivered strong financial and operational performances.
SIMEC Atlantis Energy Limited (LON:SAE), a diversified sustainable energy generation company, has drawn shareholders' attention to the announcement about the planned investment at Liberty Steel’s Newport steel facility, which is next door to SAE's Uskmouth power plant.
Strategic Minerals PLC (LON:SML) (USOTC:SMCDY) has signed an agreement in principle to sell a suite of gold tenements currently held by its subsidiary Central Australian Rare Earths. The buyer is Great Southern Mining LTD (ASX:GSN).
Shefa Yamin (ATM) Ltd (LON:SEFA) has signed a letter of intent with renowned Israeli jewellery designer Yossi Harari.
Collagen Solutions PLC’s (LON:COS) chief operating officer and chief business officer have joined the regenerative medicines group’s board with immediate effect. COO Tom Hyland joined Collagen in 2014 and has recently provided oversight of the firm’s development business and the reconfiguring of its Glasgow operation. Lou Ruggiero joined as CBO back in April to focus on speed of delivery and execution within the commercial arena.
Middle East-focused oil and gas rig specialist ADES International Holding Ltd (LON:ADES) expects solid revenue growth in the second half of the year as oil activity picks up. Turnover dipped 9% in the six months to June to US$79.7mln as ADES carried out remedial work on rigs in Egypt and Saudi Arabia.
Shanta Gold LTD (LON:SHG) has commenced underground decline work at Ilunga, part of ongoing development at the producing New Luika project, three months ahead of schedule. First ore is expected in mid-2019.
IronRidge Resources Limited (LON:IRR) has strengthened its senior management with the appointment of a chief operating officer (COO), new geologists, and a renewed commitment from its chief executive (CEO).
Sunrise Resources PLC (LON:SRES) has completed bulk sampling for commercial-scale trials at its CS pozzolan-perlite project in Nevada. One hundred tons of natural pozzolan has been mined and supplied to a potential large customer for commercial-scale testing.
IXICO Plc (LON:IXI) is to seek shareholders' approval for a reorganisation of the company's share capital. The data science company that delivers insights in neuroscience, said shareholders holding fewer than 100 shares account for more than three-quarters of the shareholders on the register, resulting in significant costs and a considerable administrative burden to the company.
Learning Technologies Group PLC (LON:LTG) has announced the appointment of Aimie Chapple as non-executive director with immediate effect. The group said that, in a 25-year career at Accenture, Aimie worked with major clients in the US, Europe and Asia on large-scale change programmes across a wide range of industries, holding a variety of senior leadership roles at Accenture UK & Ireland.
Chariot Oil & Gas Limited (LON:CHAR), the Atlantic margins focused oil and gas exploration company, announced that Chris Zeal has been appointed as Independent non-executive director with immediate effect. The firm said, most recently, Zeal was managing director at Jefferies Hoare Govett (a division of Jefferies Inc.) specialising in corporate broking and investment banking and, prior to that, held a similar role at Citigroup.
HemoGenyx Pharmaceuticals PLC (LON:HEMO) announced that its CEO, Dr Vladislav Sandler, will present at the Kennedy Institute of Rheumatology conference 'From Laboratory to Clinic: Accelerating Experimental Medicine Approaches' taking place at Trinity College, Oxford, from Tuesday 4 September until Friday 7 September 2018. Sandler's presentation is entitled "Mouse-Human Hematopoietic Chimeras for Disease Modelling and Drug Development" and describes Hemogenyx's new platform technology that it uses as an engine for novel product development.
Solo Oil PLC (LON:SOLO) announced that, in relation to the US$5mln Convertible Loan facility previously announced on 14 November 2017, and the US$1.5mln advance loan drawn at that time, it has now repaid in full all principal, interest and fees payable under the facility.
6.30am: Subdued start predicted
The FTSE 100 is expected to open its weekly account little changed with international trade worries once again expected to exert a drag on the index of blue-chip stocks.
President Donald Trump has taken a swipe at Canada, lengthening the odds of an updated deal between the pair and Mexico under the banner of the North American Free Trade Agreement.
Against this backdrop, the spread betting firms expect the Footsie to nudge up just four points higher to 7,436.42 ahead of UK manufacturing data later Monday morning.
Analysts expect a reading from the survey of 53.9, down from 54 a month earlier. Anything over 50 means the sector is expanding. Economists expect the UK’s performance to be resilient compared with some of its European peers.
With many City workers returning to the Square Mile after the summer break, focus will be on the performance of house builders, with Barratt Developments (LON:BDEV), Berkeley Group (LON:BKG), Redrow (LON:RDW) and McCarthy & Stone (LON:MCS) set to provide updates this week.
Around the markets
- Pound worth US$1.2932
- Gold worth US$1,206.10 per ounce, down 60 cents
- Brent crude changing hands for US$77.50 a barrel, down 14 cents
Pressure on Carney to reveal if he will stay at the Bank of England
FTSE 100 unchanged for first time in 12 years - quarterly reshuffle not expected to see promotions or demotions
Wembley sale hinges on government demands - officials want NFL team owner to accept limits on sponsorship and naming rights
North Sea assets up for sale top US$8.8bn - oil majors scale back presence as smaller players come to the fore
Companies pay millions to avoid shame of Google tax - multinationals agree deals with taxman to protect reputations
Manufacturers have reported two years of uninterrupted growth on production lines as factories benefit from an improved global economy
Coro Energy is expected to announce a US$12 million cash-and-shares deal to acquire a 42.5 per cent stake in the Lengo gasfield off East Java, Indonesia
Britain faces an artificial intelligence “brain drain” as Silicon Valley raids its top universities for talent, data compiled by the paper shows
AIM-listed baker Finsbury Foods has seized on the burgeoning popularity of gluten-free diets with a £25mln takeover of family-owned specialist Ultrapharm
The investors who bought the former technology “unicorn” Ve Interactive out of administration are planning to pump another £15mln into the company in a bid to make it profitable
Britain loses medicines contracts as EU body anticipates Brexit
Ashley faces potential revolt at Sports Direct annual meeting - groups urge investors to vote against re-election of Ashley and chairman Keith Hellawell