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FTSE 100 closes firmly to the good despite EU tensions

Last updated: 17:38 21 Nov 2018 GMT, First published: 06:46 21 Nov 2018 GMT

Shell
  • FTSE 100 closes higher

  • UK deficit widens in October

  • Kingfisher and Sage Group slump after disappointing updates

FTSE 100 closed the day over 102 points higher despite tensions in the EU.

The UK blue-chip benchmark closed up around 102 points at 7,050.

The mid-cap cousin FTSE 250 was also higher. It surged over 218 points northward at 18,584.

"European stock markets have gained ground today even though the tension between the Italian government and the EU has risen," noted David Madden, analyst at CMC Markets.

"The EU announced that Italy will be disciplined for their budget, and this could cause massive instability in the region."

The analyst added: "Brexit is still doing the rounds in the news, but traders are unlikely to take any notice until there are new developments."

On Wall Street, the Dow Jones Industrial Average is up 133 points at the time of writing. The Nasdaq is also higher - up over 90 points at 7,008 -  after the tech sell-off yesterday.

3.45pm: Oil prices recover as official data shows increase in weekly crude inventories

Oil prices have rebounded after falling 7% yesterday as official data showed an increase in weekly crude inventories. 

Brent crude is up 1.3% to US$63.37 per barrel and West Texas Intermediate is up 1.9% to US$54.50 per barrel.

The Energy Information Administration said today that crude inventories rose by 4.9 million barrels last week to 446.9 million barrels.

Shares in BP PLC (LON:BP) and Royal Dutch Shell PLC (LON:RDSB) are up 1.8% and 1.7% respectively. 

Meanwhile, Shell has admitted that women at the company earn nearly a fifth less than male employees.

The FTSE 100 firm said Shell UK has an average gender pay gap of 18.6% in 2018, compared to 22.2% last year.

The gap is due to a lack of women in senior management positions and specialist and trading roles that are paid higher.

The company added that almost 70% of its staff are now male due to less women entering the profession over the years.

3.10pm: MPs urge Theresa May to back to the drawing board with Brexit

MPs have urged Theresa May to renegotiate her draft Brexit agreement at the Prime Minister’s Questions today.

Andrew Rosindell, a Brexiteer and MP for Romford, said:  “I agree with the people of Romford who are deeply unhappy by the proposed EU deal, which they believe does not represent the Brexit they voted for. Will she now, even at this late stage, please think again and instead lead our country in a new direction completely cutting away the tentacles of the EU over our cherished island nation once and for all?”

Neil Parish, who voted remain in the referendum, said the Irish backstop “threatens the integrity of the UK”.

The concern is that while the backstop is in place to avoid a hard border between Northern Ireland and Ireland, the whole of the UK will remain aligned to single market regulations.

May has defended her plans, threatening that there could be "no Brexit at all" if MPs don't back the agreement. 

Meanwhile, Ryanair Holdings PLC (LON:RYA) has enjoyed its busiest day in history for its website and has not seen any impact from Brexit on demand, chief marketing officer Kenny Jacobs said.

Jacobs also told reporters in London that the group was not interested in buying Flybe, according to Reuters.

2.40pm: US stocks open higher

US stocks have opened higher, reversing yesterday’s tech-driven decline.

The Dow Jones Industrial Average added 119 points to 24,585, the S&P 500 increased 15 points to 2,657 and the Nasdaq gained 75 points to 6,982.

Investors seem to have shrugged off worse-than-expected US data on durable goods orders and weekly jobless claims.

The pullback comes ahead of the Thanksgiving Day holiday on Thursday when the US market will be closed. On Friday the New York Stock Exchange will close at 1pm Eastern Time and the bond market will close at 2pm.

On this side of the pond, the FTSE 100 is up 71 points to 7,019, led by Johnson Matthey and NMC Health. 

1.40pm: US durable goods orders sink, weekly jobless claims rise

US durable goods orders suffered the worst decline in 15 months in October due to weaker demand for airplanes, government data revealed.

Orders fell 4.4% last month, compared to forecasts for a 2.5% drop and a 0.7% rise in September.

Excluding planes and cars, orders edged up 0.1%.

A separate report from the US Labor Department showed seasonally adjusted initial jobless claims rose by 3,000 to 224,000 last week, more than the 215,000 claims economists were expecting.

12.50pm: European Commission rejects Italy's draft budget

The European Commission has rejected Italy’s draft budget for 2019 again, escalating the dispute between Brussels and Rome.

The EC ruled that Italy has “seriously violated” debt rules, and would take steps towards disciplining the nation over its budget.

"With what the Italian government has put on the table, we see a risk of the country sleepwalking into instability," Commission Vice President Valdis Dombrovskis told a press conference in Brussels.

"We conclude that the opening of a debt-based excessive deficit procedure is ... warranted," he added, referring to the EU's official process to punish member states for public over-spending.

Matteo Salvini, Italy’s deputy prime minister and leader of the far-right League, said any EU sanctions against Rome would be "disrespectful" towards Italians.

“We are convinced about the numbers in our budget. We will talk about it in a year's time," he said. 

12.15pm: US stocks set to rebound at the open

US stock futures are pointing to a higher open ahead of the Thanksgiving Day holiday on Thursday when the market will be closed.

Dow Jones Industrial Average futures rose 115 points to 24,555, S&P 500 futures increased 14 points to 2,654 and Nasdaq futures gained 52 points to 6,585.

On Tuesday, the US indices suffered heavy losses amid concerns about the valuations of technology stocks, policy errors by the Federal Reserve and trade tensions between the US and China.

Lukman Otunuga, research analyst at FXTM, said: "Investors are poised to remain heavily guarded and alert this week after a brutal selloff that began in the US technology sector spread like a virus across global equity markets.

“The tech-driven market selloff witnessed in recent days is likely to stimulate concerns over the bull run finally coming to an end. With ongoing trade tensions, fears over slowing global growth, geopolitical tensions and depressed Oil prices weighing on risk sentiment, this could truly be the end of the road for global equity bulls.”

11.40am: 'We must not go backwards" on Brexit agreement, says CBI

The Confederation of British Industry has urged MPs to back Theresa May’s draft Brexit agreement, saying “we must not go backwards”.

The CBI Chairs’ Committee said the agreement has “two essential economic benefits”, which must be achieved: avoiding a no deal cliff edge by delivering a transition period after Brexit; and opening a route to a good long-term trade deal.

“The withdrawal agreement published this week is a welcome breakthrough that will secure the important transition arrangement and the time needed to discuss the full detail of our long-term relationship with the EU,” said Paul Everitt, ADS chief executive and CBI Trade Association Council chair.

“It is in the best interests of the UK’s aerospace, defence, space and security industries for this agreement to be formally endorsed after appropriate Parliamentary scrutiny.”

Trevor Lockhart, Fane Valley chief executive and CBI Northern Ireland chair, said: “Northern Irish businesses have been clear. We need a deal that promotes frictionless trade, open and controlled access to people and a great deal for services. Without this, jobs and investment will be lost. We need progress urgently to move the UK closer to these goals.”

11.00am: NMC Health and Johnson Matthey top the FTSE 

NMC Health PLC (LON:NMC) is the top riser on the FTSE 100 with shares up 8.7% after JP Morgan upgraded the stock to ‘overweight’ from ‘neutral’ and raised its target price to 4,265p from 3,450p.

Johnson Matthey PLC (LON:JMAT) second biggest riser with shares up 8.2% to 3,005p after posting a strong rise in first-half profit and saying it expects its full-year operating performance to be towards the upper end of its guidance.

At the bottom of the FTSE 100 is Sage Group PLC (LON:SGE) with shares down 4.1% to 513p after warning that it expects margins to fall sharply this year, sending the shares in the software group lower on Wednesday morning.

B&Q owner Kingfisher PLC (LON:KGF) shares dropped 2.7% to 239p after reporting a 1.3% drop in third-quarter like-for-like sales amid tough market conditions in the UK and France. 

10.20am: Rudd expects MPs to back PM's Brexit agreement

New work and pensions secretary, Amber Rudd, has said she believes the House of Commons will vote through Theresa May’s Brexit agreement to prevent the UK from leaving the EU without a deal.

"If it doesn't get through, anything could happen," she said on the Today programme this morning.

"It is my view that the House of Commons will stop no-deal. There isn't a majority in the House of Commons to allow that to take place."

She added that she does not think there will be a second referendum on Brexit.

“I think people will take a careful look over the abyss - MPs of all parties - and consider whether they think it is in the best interests of the whole country,” she said.

"I think the likelihood is, despite what people say, that the withdrawal agreement will get through."

9.40am: UK deficit widens

Britain's deficit widened more than expected to £8.8bn in October, up £1.6bn on last year, according to the Office for National Statistics. 

Economists had predicted a deficit of £6.2bn.

The ONS said central government receipts increased by 1.2% compared to a year ago to £59.9bn while total expenditure rose 7.7% to £65.4bn.

"Much of this annual growth in central government receipts in October 2018 came from Value Added Tax (VAT), Income Tax and tobacco duties; while interest and dividend receipts (largely dividend transfers from the Bank of England Asset Purchase Facility Fund) (BEAPFF) have fallen on October 2017," it said. 

8.35am: Footsie finds gains 

The FTSE 100 resisted the pull of Wall Street's decline to open 20 points higher at 6,967.83, but is still down almost 11% since its May peak.

The Dow Jones lost 551 points, or 2.2%, while the NASDAQ lost 1.7% as the tech sector took another beating.

According to Neil Wilson, analyst at Markets.com, the major western indexes are now starting to look “oversold”.

“With the markets giving up their 2018 gains we are seeing clear signs that this selloff is building some momentum of its own,” he said.

“We may see more downward pressure than upwards for a little while yet. And yet there are signs that the market is looking oversold, although dip buyers have been burnt a couple of times already this year and may not want to get hit a third time just yet.”

Leading the Footsie was Johnson Matthey (LON:JMAT), which supplies platinum used in car catalytic converters. The shares jumped 10.5% after the company said its full-year earnings were likely to be at the upper end of expectations.

Kingfisher’s (LON:KGF) update received the thumbs down with shares in the B&Q owner off 5%.

“Whilst there are some glimmers of hope for Kingfisher’s fortunes, the company remains in a difficult place and the update is confirmation of a long road ahead,” said Richard Hunter, stocks guru at Interactive Investor.

Proactive news headlines:

Eurasia Mining PLC (LON:EUA) shares leapt higher on Wednesday after the firm revealed late on Tuesday that the extensive permit application process Monchetundra PGM and base metals project had been concluded after the office of the Prime Minister of the Russian Federation approved the issue of a mining permit.

Metal Tiger PLC (LON:MTR) has reported visible signs of metal from first drilling on its new target in the Kalahari copper belt in Botswana. The mining junior recently re-jigged its interest in the area by swapping a direct stake in the T3 prospect for 30% of Tshukudu Exploration, a joint venture which has numerous licences in the surrounding area.

Ethernity Networks Ltd (LON:ENET) has secured a contract to provide its ENET Switch/Router firmware and software to a North American Military and Defence original equipment manufacturer (OEM).

Aminex PLC (LON:AEX) has agreed to extend the longstop completion date for the farm-out agreement it signed with Omani conglomerate The Zubair Corporation over summer.

Premier African Minerals Limited (LON:PREM) shares jumped in early trading Wednesday after it said it had hit multiple high-grade intersections in an update on its drilling programme at the RHA Tungsten mine in Zimbabwe, in which it holds a 49% stake.

Anglo Asian Mining PLC (LON:AAZ) has identified ‘multiple additional gold and copper occurrences’ from an airborne survey over the  300sq km licence area of the Gedabek mine in Azerbaijan. Stephen Westhead, Group Director of Geology and Mining said: "Preliminary results from the area surveyed to date show both magnetic and electro-magnetic anomalies relating to geological entities at depth.

Kore Potash PLC (ASX:KP2; LON:KP2) has identified a possible 775mln tonnes of additional sylvinite at its Sintoukola project in Congo-Brazzaville/Republic of Congo. The potential upgrade is located at two new exploration targets, Kola South and DX North, that are adjacent to the Kola and Dougou Extension sylvinite deposits

Galantas Gold Corporation (LON:GAL) has been advised by the Court Of Appeal that the appeal against the company's planning consent has been listed for judgement on Friday 23 November 2018 at 10.00am.

IronRidge Resources Ltd (LON:IRR) has secured £5.4mln to fund the continued the advances being made with its pipeline of gold and lithium projects in Ghana, Chad and Côte d'Ivoire. The shares will be placed a 20p each, a modest discount to Wednesday’s closing price. The funding round has the backing of the company’s major investors.

Curzon Energy PLC (LON:CZN) is to evaluate a “major onshore natural gas project” in Texas after signing a memorandum of understanding (MoU) with US-based Pared Energy.

Rambler Metals & Mining PLC (LON:RMM) has reported a jump in copper production and revenues for the third quarter at its Ming mine in Canada.

MaxCyte PLC (LON:MXCT) said from November 28 all common stock will be held as unrestricted shares as it provided an update on plans to merge two separate classes of equity. The move is intended to help both trading liquidity and transparency for shareholders.

Live Company Group PLC (LON:LVCG) has published an updated corporate video on its website. The video, which gives an overview of BRICKLIVE's achievements over the past 2 years since launch and includes an insight into the business of its recent acquisition, Bright Bricks.

Adamas Finance Asia Limited (LON:ADAM) says all conditions for the proposed disposal of interests in the CPE Portfolio have been fulfilled and completion took place on 21 November 2018. The group said the move is in line with the company's objective of a managed disposal programme of its legacy portfolio where commercially viable and reinvesting the proceeds in pan-Asian income producing assets with capital gain potential.

6.45am: FTSE 100 called higher 

The FTSE 100 is poised to start higher on Wednesday but weakness across that markets continued to dominate after a negative overnight session on Wall Street.

Spread-betting firm IG expects the FTSE 100 to open around 12 points higher after closing down 53 points yesterday at 6,947, pushing the index below the psychologically important 7,000 level.

Despite the higher predicted open, several factors have analysts expecting little that could turn sentiment in a more positive direction.

Michael Hewson, chief market analyst at CMC Markets UK, said that it wasn’t surprising that investors were shunning risk, given “a deteriorating global economic outlook, downgrades to company forward earnings, a 25% fall in crude oil prices in the last six weeks, against a global geopolitical backdrop with multiple flash points from trade, Brexit and Italian politics, combined with central banks that continue to drain the punchbowl”.

“The big question now is whether we are likely to see further weakness in equity markets, or whether we could see a rebound. From a technical standpoint the omens don’t look good with recent attempts at rebounds failing miserably and any likely catalysts for a decent rebound hard to find,” he added.

The negativity was firmly in place on Wall Street yesterday, with the Dow Jones Industrial Average closing down 551 points at 24,465, while the S&P 500 closed down 48 points at 2,641 and the Nasdaq slumped 119 points at 6,908.

The drubbing received by tech stocks that weighed on the Nasdaq transferred over to the Asian markets today, with the Japanese Nikkei 225 slumping 75 points to 21,507 while Hong Kong’s Hang Seng fell 27 points to 25,813.

In the currency markets, the pound was fairly flat, up 0.07% at US$1.279 against the dollar as it continued to consolidate after last week Brexit-related turmoil.

Pre-Thanksgiving smorgasbord as plethora of blue-chips report

It will be a busy day for the company diary on Wednesday, with several blue-chip firms slated to report before the US heads off for Thanksgiving on Thursday.

Companies range from DIY retailers, all the way to utilities firms, although there will also be a showing from the FTSE 250 with TalkTalk reporting its interims.

In the economic calendar, there will be a trans-Atlantic shipment in the form of US consumer sentiment, home sales, and goods orders data while in the UK, there will be the latest set of figures for public sector finances.

Significant announcements expected:

Wednesday November 21:

Trading updates: Kingfisher PLC (Q3) (LON:KGF), Breedon Group PLC (LON:BREE)

Interims: Johnson Matthey PLC (Q2) (LON:JMAT), Talktalk Telecom Group PLC (LON:TALK), United Utilities PLC (LON:UU.), Babcock International Group PLC (LON:BAB), Biffa PLC (LON:BIFF), Creightons PLC (LON:CRL), Helical PLC (LON:HLCL), Liontrust Asset Management PLC (LON:LIO), Alpha Financial Markets Consulting PLC (LON:AFM), NewRiver REIT PLC (LON:NRR), Syncona Limited (SYNC)

Finals: Sage Group PLC (LON:SGE), Marston’s plc (LON:MARS), Countryside Properties PLC (LON:CSP), Paragon Banking Group PLC (LON:PAG), SSP Group PLC (LON:SSPG), Cambria Automobiles PLC (LON:CAMB), C4X Discovery Holdings plc (LON:C4XD)

Economic data: UK public sector finances; US durable goods orders; US existing home sales; University of Michigan final consumer sentiment index

Around the markets:

Sterling: US$1.279, up 0.07%

Brent Crude: US$63.25 a barrel, up 1.1%

Gold: US$1,221.4 an ounce, up 0.02%

Bitcoin: US$4,344, down 4.7%

City headlines:

Financial Times: Theresa May is wooing some Conservative Eurosceptics by promising to explore “technological” solutions to maintain a soft border in Ireland in place of a contentious backstop plan.

The Times: US stocks erased their 2018 gains last night after a sharp fall in the oil price prompted investors to dump energy companies and as big technology stocks suffered another day of heavy selling.

The Daily Telegraph: Amazon is understood to have placed a bid for a group of 22 local TV sports channels in the US.

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