FTSE 100 closes higher
US economy grows
Cruise ships operator Carnival warns on fuel costs
FTSE 100 closed in positive territory Thursday as the US dollar firmed after last night's Fed announcement, which saw rates hiked.
The UK blue-chip benchmark closed up nearly 34 points at 7,545, while the FTSE 250 shed around 63 points at 20,374.
The pound is off 0.52% against the greenback at the time of writing after the US central bank was upbeat about the state of the American economy on Wednesday.
The US economy grew by 4.2% in the second-quarter, while jobless claims ticked up from 202,000 to 214,000, but the level is still near a multi-decade low.
The headline durable goods report showed a 4.5% increase in August, but the report which strips out transportation only grew by 0.1%.
The Footsie went into a holding pattern after lunch, cementing the morning’s gains after briefly topping 7,550.
With around 45 minutes of trading to go, the FTSE 100 was up 35 at 7,546.
All sectors of the business delivered organic constant currency revenue and profit growth. Order intake was ahead of revenue and also ahead of the same period last year, Halma said.
Carnival PLC (LON:CCL) was the worst performer, tumbling 6.4% to 4,662p after its third quarter results revealed that rising fuel costs would put a six cent dent in full-year earnings per share compared to guidance issued in June.
2.30pm: Footsie consolidates gains as US markets open higher
The Footsie was holding on to gains as US indices opened firmer on Thursday in the wake of US gross domestic product (GDP) data.
The S&P 500 was up 3.9 at 2,909.8 and the tech-heavy Nasdaq Composite was 14 points firmer at 8,021; the Dow Jones was a couple of points better at 26,385.
The FTSE 100 was up 23 at 7,535.
“Today’s US GDP print remaining at 4.2% reaffirms the Federal Reserve’s bullish assessment of its economy in the latest FOMC meeting. Having raised short term interest rates for the third time in 2018 this week, the Fed remain on course for further monetary tightening before the year is out, with the futures market heavily speculating a December rate increase. With unemployment at multi-year lows and wage inflation accelerating to its quickest pace in 9-years, the Fed may have no other alternative,” suggested Anthony Kurukgy, the senior sales trader at Foenix Partners.
Final Q2 GDP Estimate At 4.2%, Strongest In 4 years https://t.co/GakBgnJm1R— zerohedge (@zerohedge) September 27, 2018
It’s been a bad week for spread-betting firms with CMC Markets grumbling earlier in the week about low volatility and IG Group Holdings PLC (LON:IGG) tumbling 13% today to 639p after the chief executive, Peter Hetherington, walked the plank.
In a week, IG Group #IGG shares have lost almost all their gains from the last 12 months. Depending on what the new CEO concludes about the future of the business model, that might not be the end of it. pic.twitter.com/Mg8susYT7j— Adam Clark (@AdamDowJones) September 27, 2018
12.30pm: UK equities pick up as spread betting quotes point to a firm start on Wall Street
With US markets expected to open firm, the FTSE 100 has roused itself to add to earlier gains.
The FTSE 100 was up 22 at 7,533.
Across the pond, the S&P 500 was expected to open at around 2,909.6, after falling 9.6 points yesterday to close at 2,906.0.
CMA still maintaining that Aldi and Lidl are not credible competitors to supermarkets because they don't sell fags— Bryan Roberts (@BryanRoberts72) September 27, 2018
Retailer Sainsburys, which is looking to subsume Asda’s stores into its supermarket chain, was down 1.8% at 313.3p after the Competition and Markets Authority (CMA) said its initial investigation of the proposed deal has found potential competition issues for stores in 463 local areas.
To no one’s great surprise, the CMA believes that the merger “may give rise to a realistic prospect of a substantial lessening of competition in many of these local areas if Sainsbury's and Asda are insufficiently constrained by other local competitors”.
11.30am: The Footsie advances against the tide in Europe
The Footsie is clinging on to modest gains but at least it has some, which is more than can be said for many European indices.
The FTSE 100 was up 7 at 7,519.
“There is a sea of red on the markets today, with Continental Europe and Asia faring the worst. Europe was hit by concerns over Italy’s budget meeting, the latest US interest rate hike served to trouble investors, and Hong Kong’s Hang Seng index saw particular weakness in technology stocks,” said Russ Mould, the investment director at AJ Bell.
“Half-year pre-tax profit is down 3.7% at just under £107 million, but that’s partly a consequence of investment needed to rebuild the business. Crucially, winning a lot more car and home insurance work has catapulted customer numbers back to levels seen before the profit warning. It’s also good to see lower costs, and Saga is throwing off enough cash to keep paying the 3p interim dividend,” observed Lee Wild, head of equity strategy at interactive investor.
The shares were up 2.5%.
Away from the large caps, Ross Group PLC (LON:RGP) headed upstream, rising 42%, after it said it had agreed to acquire the entire issued share capital of Archipelago Aquaculture from Global Blue Technologies.
The acquired business plans to start producing revenue in the near future, having already achieved proof of concept in its specialised extraction of Chitin, a natural bio-degradable polymer involved in the plastics, agricultural, veterinary, textile, cosmetic and pharmaceutical industries.
10.00am: Another subdued day looks in prospect for the Footsie
There’s more corporate news-flow from blue-chips today than there was yesterday but still not enough to light a fire under the Footsie.
After trading in a narrow range yesterday, the FTSE 100 index has so far done the same this morning and is up 8 at 7,519.
A pre-close trading update, a proposed share placing and the acquisition of the Jam Group of Companies for around £130mln sent DCC PLC (LON:DCC), the sales, marketing and support services conglomerate, down into the Footsie’s cellar.
The shares were down 5.8% at 6,885p.
While DCC was the Footsie’s worst performer, travel firm TUI AG (LON:TUI), up 1.9%, was top of the tree.
After the profit warning earlier this week from rival package tour operator Thomas Cook, shareholders might have been braced for a downbeat update but the firm said the financial year is closing out as expected with the fourth consecutive year of double-digit growth in underlying earnings.
“By contrast with Thomas Cook, TUI has come through the summer well, it seems. This kind of visibility will be welcomed by investors given that Thomas Cook’s future still looks uncertain at best. TUI’s relatively low valuation should mean today’s update provides a foundation for some gains in the near term,” suggested Chris Beauchamp, the head opinion-pedlar at spread-betting outfit, IG.
8.40am: London off to a quiet start
The FTSE 100 got off to a quiet start as it slid seven points to 7,504.72 in the wake of the expected rise to US interest rates.
The shares rose 1.5% after Goldman Sachs initiated coverage of the stock with a ‘buy’ recommendation.
Stepping down a division, the market didn’t like the management reshuffle being performed at the spread betting specialist IG Group (LON:IG), which is showing chief executive Peter Hetherington the door. It knocked around 8% off the value of the business.
Traders weren’t enamoured of Halfords (LON:HFD), which plans a swoop for rival Evans Cycles.
This and the trading update ahead of the company’s capital markets day sent the shares 5% lower in early trade.
Finally, there was some relief for investors in TUI (LON:TUI) as shares in the travel group nudged up 1% in the wake of its pre-closing trading update.
A profit warning from rival Thomas Cook (LON:TCG) on Monday hit the price, which has fallen 20% since May.
“It’s early days for winter bookings, but it’s still good to hear that most markets are up on last year,” said Lee Wild, head of equity strategy at Interactive Investor.
“However, Scandinavians are only just recovering from the hot summer, and are clearly in no mood to book ahead just yet. That’s clearly an area to watch carefully.”
6.45am: Back foot start predicted
The FTSE 100 is expected to start Thursday on the back foot, following most global equity benchmarks after both an expected and unexpected rate day in the United States.
IG Markets sees the London index down 15 points, with the spreadbetting and CFD firm calling the price at 7,493 to 7,497 with just over an hour to go until the open.
Traders had anticipated the 0.25% interest rate rise confirmed yesterday by the Federal Reserve, but, subsequent comments from chairman Jerome Powell caught the market off guard.
In New York, the Dow Jones shed 106 points or 0.4% to 26,385, the S&P 500 gave up 0.33% to 2,905 and the Nasdaq was 0.2% lower at 7,990.
“A 100 point sell off in the Dow and a sharp move lower in US 10-year yields, is not the expected reaction when the Fed is upbeat about the economy and shows not that much has changed from the strong projections in June,” said Jasper Lawler, analyst at London Capital Group.
“The Fed teed the market up for another rise in December and three more across the coming year.
“No changes there. However, Powell was quick to point out that rates could be hiked faster if needed or cut if the economy slows.
“The market had been expecting an unequivocal hawkish hike and these comments from Powell meant this was not the case, causing some disappointment for the bulls.”
In Asia, Japan’s Nikkei lost 140 points or 0.58% to 23,893 and Hong Kong’s Hang Seng dropped 129 points or 0.44% to 27,687, while the Shanghai Composite was 0.5% lower at 2,792.
Around the markets
Sterling: US$1.3133, down 0.26%
Gold: US$1,196 an ounce, up 0.2%
Brent crude: US$82.08 a barrel, up 0.25%
Bitcoin: US$6,473, up 0.22%
Thursday September 27:
Interims: Saga PLC (LON:SAGA), 888 Holdings PLC (LON:888), BioPharma Credit PLC (LON:BPCR), Circassia Pharmaceuticals PLC (LON:CIR), Maistro PLC (LON:MAIS), Midatech Pharma PLC (LON:MTPH), Petropavlovsk PLC (LON:POG)
Economic data: Nationwide UK house price index; US weekly jobless claims; US GDP; US durable goods orders; US international trade in goods
Proactive news headlines
It has been a busy day for Clinigen Group PLC (LON:CLIN) which has unveiled plans to raise £80mln from investors to fund two new acquisitions as well as posting its full-year results.
App monitoring platform operator appScatter Group PLC (LON:APP) is already winning new customers as a result of the acquisition of Priori Data earlier this year.
Kromek (LON:KMK) has been awarded US$1.8mln in funding from the US Department of Defense to help develop a next-generation radionuclide identification device for detecting radioactive substances.
Eco Atlantic Oil & Gas Ltd (LON:ECO, TSE:EOG) told investors that it now has a final Environmental Clearance Certificate for the proposed exploration well on the Cooper block, offshore Namibia.
KR1 PLC (NEXL:KR1) said the falling value of Bitcoin and Ether led it to swing to a wider first-half losses but remained confident of its prospects.
Bluejay Mining PLC (LON:JAY) expects to publish the pre-feasibility study for its Dundas ilmenite project in Greenland in the first quarter of next year.
Sirius Minerals PLC (LON:SXX) is burning through over £800,000 a day as it develops the giant Woodsmith potash mine in North Yorkshire with the cash spent on the project in the six months to June 30 totalling £148mln.
Wolf Minerals Limited (LON:WLFE) said it was still working on securing long-term financing and had made good progress on its production reliability in recent months.
Frontier IP Group PLC (LON:FIPP), which specialises in commercialising university intellectual property, has appointed Allenby Capital Limited as the company's nominated adviser and sole broker, with immediate effect.