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FTSE 100 closes at session peak after strong rebound in tandem with US stocks

At the close, the UK blue chip index was 41.12 points higher at 7,004.10, the session peak, and well above the early low of 6,995.99
new york stock exchange
UK stocks had tumbled back at the start in reaction to slumps from global markets led by a sharp drop on Wednesday by US blue chips
  • FTSE 100 adds 41 points

  • Lloyds higher as its numbers please

  • WPP plunges after Q3 results disappoint

 

4.45pm: Strong bounce-back

The FTSE 100 index finished at day’s highs, edging back above the 7,000 level after a topsy-turvy session on Thursday as US stocks bounced back following a massive slide in the previous session.

At the close, the UK blue chip index was 41.12 points higher at 7,004.10, the session peak, and well above the early low of 6,995.99.

UK stocks had tumbled back at the start in reaction to slumps from global markets led by a sharp drop on Wednesday by US blue chips.

But investors turned more positive as they digested a plethora of corporate news and eyed a further decline by sterling, with the rally taking off late in the session as US stock futures and the main New York indices posted a strong rebound.

By the London close, the Dow jones Industrials Average was around 350 points, or 1.4% higher at 24,926, with the broader S&P 500 index gaining 2.4% and the tech-laden Nasdaq Composite up 1.6%.

David Madden, market analyst at CMC Markets UK, commented: “Stocks have rebounded as solid corporate earnings and a lack of negative news prompted dealers to snap up cheap stocks.

“The mood has lightened on Wall Street, but we have seen bounce backs before, and seeing as interest rate hike fears, and geopolitical tensions still persist, the upward move may not last.”

On the corporate front in London,  Lloyds Banking Group PLC (LON:LLOY) was among the gainers, adding 2.1% at 57.83p after pleasantly surprising the market with its third-quarter profits earlier on.

But weighing against the market was advertising giant WPP PLC (LON:WPP), which plunged 13.9% to 909.20p after cutting its full-year guidance as it reporting weak third-quarter revenues.

3.40pm: FTSE 100 edges higher late on

The FTSE 100 has embarked on a late (mini) surge, boosted by the strong start in the US having struggled for direction all afternoon.

The index of blue-chip shares is currently up 28.0 points or 0.4%, to 6,991.0.

Leading the way is Irish packaging firm Smurfit Kappa Group PLC (LON:SKG) up 4% to 2,522p ahead of next week’s trading update.

Shout out to Lloyds Banking Group PLC (LON:LLOY) as well, which is up 2.1% to 57.8p after pleasantly surprising the market with its third-quarter profits earlier on.

Cancelling out the winners is ad giant WPP PLC (LON:WPP), which is down 15.3% to 892.2p after cutting its guidance, while BT Group PLC (LON:BT.A) investors don’t seem convinced by the appointment of Philip Jansen as their new boss; the stock is down 5.4% to 238p.

3.25pm: Wall Street surges

US stocks climbed at the open on Thursday as robust earnings reports bolstered investors’ confidence in the wake of the market’s sharp sell-off yesterday.

Early in the session, the Dow Jones Industrial Average Index rose 223 points to hit 24,807, lifted by Intel, Caterpillar, DowDuPont and Goldman Sachs.

The Dow’s best performer was Microsoft (NASDAQ:MSFT), which was trading 4.2% higher after the tech giant posted better-than-expected profits for its fiscal first quarter.

The S&P 500 also added 13 points to hit 2,668, pushed up by a 15% jump in shares of Twitter (NYSE:TWTR) after the social media messaging service posted its fourth consecutive profitable quarter.

Elsewhere, the tech-laden Nasdaq added 103 points to 7,211, led by a 14.4% jump in shares of the computer chipmaker Xilinx (NASDAQ:XLNX) which beat expectations with its fiscal second-quarter profit of US$215.7mln.

Tesla shares (NASDAQ:TSLA) also traded 9% higher after posting a net profit of US$312mln, its largest ever profit.

Thursday’s rebound came after the Dow plummeted by more than 600 points on Wednesday, sacrificing its gains for the year. The Nasdaq also plunged sharply on Wednesday, shedding 4.4% and recording its largest single-day drop since August of 2011.

15.05pm: Philip Green named in Parliament...

2.40pm: Dovish Draghi?

Markets.com analyst Neil Wilson gives his thoughts on Mario Draghi’s speech a little earlier this afternoon…

“That was a dovish Draghi teeing up in a fairly subtle fashion that the ECB is starting to fret over risks and will be ready to push back on rate expectations at the next meeting.

“Inflation is muted but the ECB still thinks it should come through. This would suggest downside risks to the euro, although arguably these are priced in.

“Like a desperate gambler at the roulette wheel always betting on black because at some point it has to come up, the ECB seems intent on sticking to its bullish view on inflation despite the fact it’s not emerged.”

2.15pm: Twitter shares fly despite user number miss

Shares in Twitter Inc. (NYSE:TWTR) are soaring in premarket trade in New York after the social media giant beat expectations with its third-quarter earnings.

For the quarter ended September 2018, Twitter reported earnings of US$0.21 per share on revenue of US$758mln. That topped the consensus earnings estimate of US$0.13 per share on revenue of US$703.7mln.

Revenue rose 29% year-over-year while advertising revenue reached US$650mln, also an increase of 29% from the previous year.

For the second straight quarter though, Twitter missed monthly active user (MAU) estimates. MAU fell to 326mln for the third quarter from 330mln a year earlier as the platform cracked down on ‘bot’ accounts.

Still, shares are flying 13.5% higher at US$31.26 shortly before the opening bell in New York.

2pm: Draghi confident of Italy budgel deal

Journalists at the press conference of ECB President Mario Draghi have been asking him about Italy.

There are concerns overs Italy’s high level of debt, as well as the government’s plan to run a budget deficit this year equivalent to around 2.4% of gross domestic product.

The European Commission rejected that plan earlier this week, with the two parties yet to agree a compromise.

"I'm still confident an agreement will be found," he says, before adding that it wasn't the main topic for the ECB.

1.30pm: WPP and BT holding the Footsie back

A quick check in on the FTSE 100 now, and the blue-chip index is 1.5 points down at 6,961.4.

Essentially, it’s doing nothing. It started lower, recovered those losses and then eased back again.

Chilean silver miner Antofagasta PLC (LON:ANTO) is the leader, up 5.9% to 762p as it bounces back from yesterday’s drop.

Special mention must go to Lloyds Banking Group PLC (LON:LLOY), which has gained 1.4% to 57.4p after pleasantly surprising the market with its third-quarter profits earlier on.

Cancelling out the winners is ad giant WPP PLC (LON:WPP), which is down 16.6% to 880.4p after cutting guidance, while BT Group PLC (LON:BT.A) investors don’t seem convinced by the appointment of Philip Jansen as their new boss; the stock is down 4.8% to 237.9p.

1.15pm: ECB keeps interest rates on hold

The European Central bank has left monetary policy unchanged as expected.

That means a base deposit rate of -0.4%, and a quantitative easing program capped at €15bnn per month.

Purchases were at €30bn per month up until the end of September, but the move to the lower figure had been telegraphed for several months.

The ECB remains on track to cease purchasing bonds from the end of 2018, it said, reaffirming its long-held stance on the matter.

“Today’s decision to maintain interest rates will surprise few across the European Union,” said Kerim Derhalli, chief executive of Investr investment app.

“Whilst the ECB’s long-term plan has always been to reconsider its monetary policy in September 2019, some commentators had suggested that with the US, UK and others having raised rates this quarter the ECB might have followed suit.

“This week’s news of a Eurozone-wide slowdown in corporate growth however likely had a decisive influence on any policymakers who were on the fence.”

1.05pm: US stocks to rebound

US stock futures early on Thursday pointed to a slight rebound from the steep losses seen in regular trading yesterday.

Dow Jones futures are up by 0.72% and the S&P 500 has added 0.81%, while the Nasdaq Composite is set to open 1.43% higher when regular trading begins later on.

Wednesday's decline added to what has already been a miserable October for Wall Street. The Dow has shed 7.1% this month and is on track for its biggest monthly loss since May 2010.

The S&P 500 is also sharply down 8.9% in October and is headed for its biggest one-month decline since February 2009.

There has been a significant reversal for the high-flying technology sector with the Nasdaq shedding 11.7%. It is now on pace for its worst monthly performance since October 2008, amid concerns that the biggest tech stocks may have risen too high.

Meanwhile, earnings activity peaks today with a slew of big names reporting third-quarter results. The heavy hitters include Dow components Merck in the morning and Intel in the afternoon with Twitter before the start of trading.

12.50pm: UK car production slumps

Car production in the UK slumped by 17% last month, industry figures suggest.

The Society of Motor Manufacturers and Traders (SMMT) said the number of cars built dropped by 25,610 in September compared with same month last year.

It blamed global trade tensions, model changes and uncertainty of diesel and Brexit. Testing backlogs due to new emissions rules also hit output, it added.

“Today's figures highlight the many competing challenges facing UK automotive,” said SMMT chief Mike Hawes.

“It has been a turbulent year and the industry needs stability, something which appears elusive given the lack of resolution to Brexit negotiations.”

12.30pm: Hastings warns on performance

Hastings Group Holdings PLC (LON:HSTG) shares have plunged after the firm warned that a more competitive insurance market would hit its performance this year.

The number of people taking out policies actually rose to 2.7mln in the past 12 months, but the amount they are paying for premiums is not rising as much as the value of claims being made.

Hastings said it had tried to counteract this with a “disciplined pricing strategy”, but it now expects its loss ratio, a measure of claims paid as a proportion of income, to be at the lower end of its target range of 75-79% this year.

Shares are down 9% to 200p.

12.05pm: Market likes Debenhams’ turnaround plans

Debenhams PLC’s (LON:DEB) turnaround plans have been given a big thumbs-up from its shareholders, sending shares in the troubled department store chain soaring.

The company, now valued at not much more than £100mln, has unveiled plans to close as many as 50 of its worst-performing stores and modernise the remainder of its 165-strong store portfolio.

The plans came as Debenhams posted a loss for the year of £491.5mln – the largest in its 240-year history – as it booked exceptional charges of £512.4mln.

Like-for-like sales fell 2.3% amid what the retailer called a volatile market backdrop, particularly in the second half of the year.

11.35am: Lloyds beats forecasts

Lloyds Banking Group PLC (LON:LLOY) said chief financial officer George Culmer is stepping down as it reported a 7% drop in pre-tax profit for the third quarter.

The high street lender reported statutory pre-tax profit of £1.82bn for the three months to September 30, down from £1.95bn a year ago but ahead of the £1.7bn analysts had expected.

The lower profits reflected a remediation charge of £109mln along with increased investment, higher operating expenses and a rise in restructuring costs.

Excluding items, underlying profit was still broadly flat at £2.07bn. In the year to date pre-tax profit increased 10% to £4.94bn from £4.49bn last year as costs dropped 3%.

"Despite a slip in profits for the period, in the year to date pre-tax profit is above consensus, having risen 10%, and the post-tax number is up 18%,” said interactive investor’s head of markets, Richard Hunter.

On top of that, Lloyds did not set aside any further provision for the payment protection insurance mis-selling scandal like it did in the previous quarter. Shares are up 2.1% to 57.9p.

11.10am: Better than expected in London…

It certainly hasn’t been the bloodbath some had predicted given the routs seen in New York and Asia overnight.

Having kicked off the session in the red, the FTSE 100 has recovered all of those losses and more to sit 7.3 points, or 0.1%, higher at 6,970.3.

That has been presumably aided by murmurs that US stocks will bounce back a little when trading gets underway there later today.

Chilean copper miner Antofagasta PLC (LON:ANTO) is the day’s top riser so far, up almost 4% to 753.8p as it recovers most of yesterday’s self-inflicted losses.

Banking stocks were in favour too thanks to Lloyds Banking Group PLC (LON:LLOY) reporting better-than-expected profits and not setting aside any further money for PPI compensation.

Lloyds shares rose 2.1% to 57.8p, dragging HSBC Holdings PLC (LON:HSBA) (up 1.5% to 609.8p), Standard Chartered PLC (LON:STAN) (up 1.9% to 529.4p) and Barclays PLC (LON:BARC) (up 1.4% to 173.1p), which had results of its own yesterday, with it.

Ad giant WPP PLC (LON:WPP) was by far the biggest faller, losing almost a fifth of its value to sit at 860.4p as it trimmed guidance and highlighted a slowdown in customer spending.

The announcement of a new boss hasn’t done much for BT Group PLC (LON:BT.A), with the telecoms stock down 2.2% to 243.5p.

10.50am: Facebook responds to fine

“While we respectfully disagree with some of their findings, we have said before that we should have done more to investigate claims about Cambridge Analytica and taken action in 2015.”

“We are grateful that the ICO has acknowledged our full cooperation throughout their investigation, and have also confirmed they have found no evidence to suggest UK Facebook users’ data was in fact shared with Cambridge Analytica.”

10.30am: Facebook fined £500k for Cambridge Analytica scandal

Facebook Inc (NASDAQ:FB) has been fined £500,000 by the UK Information Commissioner’s Office as part of its investigation into the Cambridge Analytica scandal.

The social media giant had challenged the initial ruling, but the watchdog upheld the fine, claiming the “contravention was so serious” that the maximum fine had to be enforced.

The ICO found that third-party developers were allowed to access the information of at least 1mln UK users without being given sufficient consent.

Facebook failed to sufficiently protect the privacy of its users before, during and after the unlawful processing of this data,” said information commissioner Elizabeth Denham.

“A company of its size and expertise should have known better and it should have done better.”

It might not sound like much for a company worth almost US$500bn, but it is the maximum possible fine which the watchdog can dish out given that the scandal took place before the new GDPR rules came into force.

Had it have happened now, Facebook could have been hit with a fine of up to £17mln or 4% of its global turnover.

10.10am: Tesla posts quarterly profit

Tesla Inc (NASDAQ:TSLA) announced its largest ever quarterly profit late on Wednesday, topping analysts’ forecasts and sending the stock soaring overnight.

The electric carmaker posted a net profit of US$312mln in the three months ended September 30, driven by a ramp-up in production of its Model 3. This time last year it reported a staggering US$619mln loss.

While still below the production target it set for June of 5,000 Model 3s per week, the roughly 4,300 Model 3s the company is now averaging per week were enough to boost results.

“Q3 2018 was a truly historic quarter for Tesla. Model 3 was the best-selling car in the US in terms of revenue and the 5th best-selling car in terms of volume,” CEO Elon Musk said in a letter to investors.

Tesla is yet to record an annual profit, but billionaire Musk indicated that it was on track to be in the black once again in the current quarter.

Shares are up 10.8% to US$288.50 in after-hours trading in New York, although that’s still almost US$100 short of where it was over summer when Musk made *that* announcement that he might take the company private.

9.45am: WPP trims guidance

WPP PLC (LON:WPP) is also lower this morning after the ad giant reported a sharp fall in third-quarter trading and cut its full-year guidance.

New boss Mark Read also unveiled plans for further sell-offs and said the group will hold off from making more acquisitions.

The FTSE 100-listed firm, which saw founder and CEO Martin Sorrell leave under a cloud in April, saw underlying net sales less pass-through costs fall by 1.5% in the third quarter, compared with a 0.7% rise in the previous three months.

It said third-quarter reported revenue was down 0.8% to £3.758bn, impacted by currency headwinds of 2.0%.

WPP also reduced its full-year 2018 guidance to reflect the slowdown in the third quarter and a more cautious outlook for the rest of the year, with like-for-like revenue less pass-through costs now likely to be down 0.5%-1.0%. Shares are down 6.0% to 887.2p.

9.25am: BT appoints Philip Jansen as new boss

After much speculation, telecoms giant BT Group PLC (LON:BT.A) has appointed Worldpay boss Philip Jansen as its new chief executive.

The 51-year-old Brit has been CEO at Worldpay for five years and recently oversaw its US$10bn merger with rival e-commerce platform Vantiv.

He is due to step down from his current role at the end of the year and will take over from outgoing BT boss Gavin Patterson on February 1 2019.

Jansen said he was “honoured” to take the top job and that he will be focused on customers’ needs and pursuing the “right technology investments” in order to grow the business.

For his troubles, he will take home £1.1mln a year, £165,000 pension contributions, plus an annual bonus of up to £2.64mln.

9am: News of the day...

8.45am: Back down

The FTSE 100 index dropped back in early morning trading in tandem with sharp falls overnight by US and Asian markets as the jitters returned with a vengeance in the face of geopolitical worries and worries over growth to come.

Around 8.40am, the UK blue chip index was off 47 points at 6,915, having closed up 8 points on Wednesday albeit that was well off earlier highs which had taken the index back to the 7,000 level as US stocks took an early tumble.

Neil Wilson, senior markets analyst at Markets.com said: “Stocks crumbled yesterday in the US as investors shrugged off bumper earnings to look at the prospect of weaker growth next year. The Dow notched a 600+ point decline amid another dreadful session.

“Growth and tech were the biggest losers as the Nasdaq suffered a beating, shedding over 4%. The S&P500 fell 3% whilst the Dow dropped 2.4% despite strong earnings from Boeing.”

He added: “This may be the start of the age of the  Bears but it may equally be just a tantrum. The macro outlook is not great - China, trade, Italy are all weights but for most of 2018 US  investors were able to shrug off any global worries.”

Investors also had a plethora of big blue chip news to digest this morning, including the appointment of a new boss at telecoms giant BT Group PLC (LON:BT.A) as well as results from Lloyds Banking Group PLC (LON:LLOY) and advertising giant WPP PLC (LON:WPP).

BT shares shed 0.3% to 249.50p as it confirmed the appointment of outgoing Worldpay boss Philip Jansen as its new chief executive.

The 51-year-old Brit had been CEO at Worldpay for five years and recently oversaw its US$10bn merger with rival e-commerce platform Vantiv.

Meanwhile, Lloyds shares rose 1.2% at 57.34p as the lender reported statutory pre-tax profit of £1.82bn for the three months to September 30, down from £1.95bn a year ago, with underlying profit was broadly flat at £2.07bn.

However, in the year to date, Lloyds pre-tax profit increased by 10% to £4.94bn, up from £4.49bn last year.

But WPP was the biggest FTSE 100 faller, plunging by 16% to 886p as the advertising giant reported a drop in third-quarter underlying net revenue and cut its full-year guidance.

The FTSE 100-listed firm, which saw its founder and CEO Martin Sorrell leave under a cloud in April, said its underlying net sales less pass-through costs fell by 1.5% in the third quarter, compared with a 0.7% rise in the previous three months.

The group said its full-year 2018 like-for-like revenue less pass-through costs are now likely to be down 0.5%-1.0%.

Proactive news headlines:

Horizonte Minerals Plc (LON:HZM) (TSX:HZM) shares jumped after the nickel development company focused in Brazil, announced that it plans to release the material findings of the Feasibility Study for its Araguaia Ferronickel Project, in Brazil's Pará State, on Monday 29 October 2018 at 7am. The group said it will host an analyst webcast presentation at 10:00am GMT on that day.

Oriole Resources PLC (LON:ORR) has reported encouraging gold intercepts from a drill programme at Dalafin in Senegal. The campaign was carried out by partner IAMGOLD and identified broad zones of anomalous gold mineralisation as well as higher grade samples that could indicate a feeder zone at depth.

After being overshadowed for a spell by the US operations, sales momentum for Eckoh PLC (LON:ECK) in the UK has returned.

SkinBioTherapeutics PLC (LON:SBTX) has made “significant progress” so far this year with the development of its moisturising cream, says the life sciences group's chief executive, Cath O'Neill.

ANGLE PLC (LON:AGL) continues to make “good progress” with the enrolment for the clinical study of its Parsortix cancer detection technology. So far, over 75% of the required 400 patients – 200 with cancer and 200 healthy – have been enrolled.

Following news on Monday of several contract wins, Feedback PLC (LON:FDBK) has conditionally raised £1.38mln through the issue of shares at 1.5p each.

StatPro Group PLC (LON:SOG), the cloud-based portfolio analysis and asset pricing services provider for the global asset management industry, has traded in line in 2018.

Capital Drilling Ltd (LON:CAPD) told investors it has landed an important new contract extension, keeping its rigs active at Centamin’s Sukari gold mine, in Egypt, until at least 2023.

AfriTin Mining Limited (LON:ATM) has completed the foundations for the pilot processing plant at the Uis tin mine in Namibia. Construction of the processing plant has started with the phase 1 pilot operation to handle 500,000 tonnes or ore a year producing around 60 tonnes of tin concentrate per month.

Range Resources Ltd (LON:RRL), in its quarterly activities report, told investors that daily production averaged 594 barrels of oil per day in the three months ended 30 September. It also confirmed a number of operational milestones such as the completion of more than 20 well workovers, reactivation and swabbing activities.

Eurasia Mining plc (LON:EUA) expects to upgrade its reserves at the alluvial platinum mine at West Kytlim in Russia following recent drilling and mining. A new calculation for the total contained platinum for the Kluchiki Area, where mining started in August, has now been submitted for approval.

Base Resources Limited (LON:BSE) (ASX:BSE) said the latest company presentation, which was presented today at the Bell Potter Emerging Leaders Conference in Sydney, Australia, is available on the company’s website.

Adamas Finance Asia Limited (LON:ADAM), the London quoted pan-Asian diversified investment vehicle, said it welcomed the publication of a first analyst report by investment research and advisory company Equity Development Limited.

6.50am: Big fall predicted

The FTSE 100 is set to take at least a 50 point hit as Thursday’s trading kicks off as uncertain or outright negative mindsets spread again through equity markets.

London traders may yesterday have clung to small gains in the blue-chips, across in the North American timezone the stock price pains continued and past wins were unwound.

“US markets finished in the red, tech stocks took the brunt of the sell-off.

“The Dow Jones and the S&P 500 have now lost all the gains that were racked up during the year.”

The analyst added: “European equity markets have been finding it difficult to hang on to any gains, and that suggests investment sentiment is still weak.

“Whenever there is a major sell-off, traders are always nervous about getting back into the market, and it appears that some dealers fear this wider negative move isn’t over.

“In light of the move in New York last night, it is no surprise that Asian markets suffered heavy losses, and dealers in Europe are likely to stay risk adverse.”

On Wall Street, the Dow Jones ended Wednesday some 608 points or 2.41% lower to finish at 24,583 while the S&P 500 lost just over 3% to 2,656 and the Nasdaq was off even more, losing 4.43% to 7,108.

In Asia, Japan’s Nikkei slid 786 points or 3.5% to 21,302 while Hong Kong’s Hang Seng was 2.09% lower at 24,709 and the Shanghai Composite was 1.65% lower at 2,560.

Around the markets:

  • Sterling: US$1.2886, up 0.04%
  • Gold: US$1,237 per ounce, up 0.8%
  • Brent crude: US$75.68 a barrel, up 0.64%
  • Bitcoin: US$6,488.05, down 0.33%

City Headlines:

  • Tesla shares jump after first profit in 2 years – Financial Times
  • Debenhams on the brink! High Street chain could close A THIRD of its stores – Daily Mail
  • Cathay Pacific hit by data leak affecting up to 9.4m passengers – The Guardian
  • Jobs threat as Gourmet Burger owner eyes CVA – Sky News
  • Capital key risks an Italy dilemma for the ECB – Financial Times
  • ‘Twisted' fibre optic light breakthrough could make internet 100 times faster – The Guardian

Significant announcements due on Thursday:

Trading updates:Lloyds Banking Group PLC (LON:LLOY), WPP PLC (LON:WPP), Hastings Group PLC (LON:HSTG), RELX PLC (LON:REL), KAZ Minerals PLC (Q3) (LON:KAZ), Aveva Group PLC (LON:AVV)

Interims: Air Partner PLC (LON:AIR)

Finals: RDI REIT PLC (LON:RDI)

Ex-dividends to clip 1.3 points off FTSE 100 index: Ferguson Plc (LON:FERG), ITV plc (LON:ITV)

Economic data: ECB policy meeting, CBI UK distributive trades survey; US weekly jobless claims; US durable goods orders; US pending home sales, international trade in goods


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