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FTSE 100 consolidates gains as Wall Street roars ahead

The jobs and earnings data has lit a fire under the Footsie. Trade talks between the US and China have also aided sentiment
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What's up, doc? Well, the Footsie and sterling, for a start
  • FTSE 100 up 122 points, or 1.8%

  • US and China resume trade talks

  • US indices open more than 1% higher

  • MC Mining and Eurasia Mining carry the flag for small-cap miners

3.00pm: US stocks off to a flyer

US stocks got off to a flyer, encouraging the Footsie to cement its position above 6,800.

The FTSE 100 was up 122, or 1.82%, at 6,845, while in the US the Dow was up 273 points (1.12%) at 24,693 and the S&P 500 was up 30 points (1.14%) at 2,668 on reports that trade talks between China and the US are going well.

Mining stocks were lending their support to the blue-chip index while, coincidentally, the day’s biggest riser on the stock market was also a mining stock: MC Mining Limited (LON:MCM).

MC Mining soared 37% to 49.25p after the South African Department of Mineral Resources granted a mining right for the company’s 74%-owned Chapudi coking and thermal coal project in the Limpopo province.

In a similar vein, Eurasia Mining plc (LON:EUA) was up 5.6% at 0.665p after it said the official licence certificate regarding the mine permit for Monchetundra has now been delivered to the company.

“We look forward to advancing the project through construction now that the final permits are entirely in place,” said Christian Schaffalitzky, the boss of Eurasia Mining.

READ Eurasia receives mining licence for Monchetundra palladium project

12.45pm: FTSE 100 crashes through the 6,800 barrier

The Footsie has stormed through the 6,800 barrier and was trading on or around its high for the day ahead of the US open.

The FTSE 100 was up 106 (1.6%) points at 6,827, a point below its intra-day high.

“Turning to the US open and the Dow Jones is set to be on the FTSE-end of Tuesday’s gains, with the futures suggesting a 0.9% increase after the bell,” said Connor Campbell at Spreadex.

“Yesterday saw one of the Dow’s big swings, from sub-23900 intra-day lows to a 24400 close, so it’ll be interesting if it is slightly more stable this afternoon,” he added.

James Hughes, the chief market analyst at AXI Trader, is also expecting the Dow to open in positive territory, but only with a 7 point gain to 24,430; he expects the S&P 500 to open two points lower at 2,636.

“Despite what could be seen as a significant escalation in trade tensions between China and the US with Beijing banning the sale of select Apple products, the Dow Jones managed to recover from significant losses during yesterday’s session and close out the day just a shade higher. Optimism over the economy was upbeat in light of another bumper JOLT [job openings and labour turnover survey] job openings figure, whilst the idea that the Federal Reserve may not hike interest rates next week is also starting to find itself being priced in.

“US equities seem unaffected by political risk, too. The idea that Donald Trump could be impeached continues to circulate but it’s failing to drag on stocks, although with only limited US economic data due for release in the day ahead, again there’s the potential for sentiment to turn negative, especially if we see no progress with the trade situation. A call between senior US and Chinese politicians reportedly did take place yesterday in a bid to map out next steps here, although with the hard deadline still almost three months away, if the idea is to use brinkmanship then there’s still some waiting to be done,” Hughes said.

Meanwhile, pundits are still chewing over this morning’s employment and earnings data.

“A record employment rate and a rising number of jobs that can’t be filled are further signs that the labour market is tightening and that employers are finding it increasingly difficult to hire the people they need,” said Matthew Percival, the head of employment at the pressure group, CBI.

“While pay growth is improving at its fastest and most sustained rate in a decade, this is still slower than the UK has achieved in the past.

“Building on this requires stronger and more sustained productivity growth, not the fits and starts we’ve seen. There has been progress since the launch of the industrial strategy a year ago, but the government needs to focus more on providing a compelling vision for the coming years and tangible outcomes in each region,” Percival said.

On the corporate news front, carpets seller Carpetright PLC (LON:CPI) was wanted after its interim results.

The shares rose 7% to 17.5p after it said its turnaround plan was on track.

READ Carpetright losses widen but shares soar as it says turnaround plan on track

Online gaming platform operator 888 Holdings PLC (LON:888) advanced 4.9% to 161.5p after acquiring the 53% of the All American Poker Network it did not already own, for US$28mln.

 

11.15am: The Footsie eyes 6,800 as earnings and employment data provides some cheer

The release of UK earnings data has given the Footsie a real boost, with the top-shares index eyeing a return to the 6,800 level.

The FTSE 100 was up 68 points, or 1.0%, at 6,789, just four points off its intra-day high.

“In ordinary times, ministers would trumpet such record employment figures and rising wages as an achievement. Not today. The febrile atmosphere in Westminster means they will pass largely unnoticed,” suggested Pawel Adrjan, an economist at the job site, Indeed.

“In any case, while wages are inching up, the rising cost of living means real progress is glacial. The average Briton’s weekly pay-packet is now just £4.50 bigger than it was last Christmas – barely the cost of a mulled wine,” Adrjan commented, presumably before popping off to watch a re-run of Scrooged.

“Nevertheless this is the best jobs report we’ve seen in a while. More people are being tempted back into the workforce, and this will come as an early Christmas present for companies struggling to recruit.

“UK employers still have 848,000 vacancies, and the ratio of unemployed people per vacancy remains at a record low.

“As a result, many employers have had to increase wages in order to poach recruits from elsewhere or broaden their search to tap into underused talent pools.

“While January traditionally provides a boost in job-seeking activity, the tightness of the labour market means recruiters will have to fight harder – and look further – for every new hire,” he added.

Nick Kilbey, a sales trader at foreign exchange trading platform operator Foenix Partners, was in a slightly cheerier mood.

“The British economy defied Brexit chaos this morning as the latest Average Earnings print beat expectations at 3.3%, confirming the strongest pay rise in a decade.

“Regardless of the positive wage growth data, it’s difficult to see how investors will ‘bid’ the local currency in the short-term following yesterday’s humiliating defeat for Prime Minister Theresa May in the House of Commons,” he added.

Sterling was actually making ground against the greenback on the foreign exchange markets, rising almost half a cent to US$1.2607.

That’s usually bad for the Footsie but the 100-share index was well in the blue, led by WPP PLC (LON:WPP), the marketing and advertising giant, which was up 7.5% on the back of the publication of its strategy review.

READ WPP shares jump as new boss unveils fresh strategy to turn around business

Standard Life Aberdeen PLC (LON:SLA) was holding the Footsie’s wooden spoon after RBC downgraded the investment firm to ‘Sector Perform’ from ‘Outperform’ citing a “flagging” performance and a “less secure” dividend.

The shares were down 2.9%.

10.00am: The Footsie tops out after earnings data 

Confusion continues to reign on the Brexit front but there appears to be some cheerier news relating to Sino-US trade relations.

The FTSE 100 was up 24 at 6,744 as China and the US began the latest round of trade talks.

"On the agenda are Chinese imports of agricultural products and changes to the country’s economic policies, the relatively softer issues between the two countries. The really contentious ones such as patent rights in China, intellectual property theft and the South China Sea have been held back for a different occasion, allowing the market to build some hope for a resolution," commented Fiona Cincotta at City Index.

Closer to home, the UK unemployment rate was unchanged at 4.1% in October.

Average earnings, including bonuses, were up 3.3% year-on-year in the three months to the end of October, up from a 3.2% gain in the three months to September.

“Finally British workers’ pay is starting to claw back some of the ground it’s given up during the ‘lost decade’ since the financial crisis. After yesterday’s weaker than expected GDP figures and more Brexit uncertainty after Theresa May’s last-minute decision to abort today’s Brexit vote, today’s wage growth figures provide UK workers with a little bit of pre-Christmas cheer. The latest data show wage growth ratcheting up to 3.3% both including and excluding bonuses. This means our pay packets continue to comfortably outstrip inflation,” said Tom Stevenson, the investment director for personal investing at Fidelity International.

“However, while we have now seen wage growth rise for four consecutive months, we are still not out of the woods. With the ongoing political and economic uncertainty, the recent steps forward could be reversed. Britain’s pay growth continues to lag our main competitors since the financial crisis,” he added.

8.45am: Positive start for Footsie

 
The FTSE 100 got off on the front foot with the depressed pound providing a boost to the dollar earners of the top flight with the index up 37 points at 6,758.23 in the first half hour.
 
There is probably no bigger blue-chip beneficiary of the current disparity between the US and UK currencies than Ashtead Group PLC (LON:AHT), the plant hire group, which has a big presence in the US.
 
Its shares were flying 6.5% higher after it said interim profits had grown 19% and that full-year earnings would be ahead of market expectations.
 
“Given Ashtead’s continuing meteoric rise in earnings and profit, the fact that the share price has lost a third of its value in the last three months is something of a conundrum," said Richard Hunter, market commentator at Interactive Investor.
 
"On the face of it, the company is riding the wave of an economic boom, particularly in its dominant US market, where tax cuts and a healthy construction market have propelled an increase in earnings, which is largely
responsible for the improved profit figure."
 
Just behind Ashtead, and up 5% early on, was the marketing and advertising conglomerate WPP (LON:WPP), which outlined its growth plans under new boss Mark Read.
 
His blueprint will see the international group shed 3,500 jobs while spending in the order of £300mln on the re-boot.
 
Pensions and investment group Standard Life Aberdeen led the Footsie fallers with its stock off 5% after RBC Capital Markets cut its recommendation to "sector perform", while the price target was hacked back to 260p from 400p.
 
It was part of a sector-wide review, in which Aviva was named RBC's top pick. It reckons the shares are worth 540p.
 
Sticking with the broker changes, Berenberg checked out of SuperDry, the fashion retailer, which it downgraded to 'hold' from 'buy'.

Proactive news headlines:

Telit Communications Plc (LON:TCM) said it was working on the "smooth and fast" transfer of the automotive business to buyer TUS International as updated on trading and said it had found a further US$10mln of cost savings.

IQ-AI Limited’s (LON:IQAI) subsidiary Imaging Biometrics has had its new IB Rad Tech software platform installed at the Barrow Neurological Institute in St. Joseph's Hospital and Medical Center in Arizona.

Mobile payments company Bango plc (LON:BGO) has launched Bango Marketplace, a new product that increases user numbers and revenues for app developers and opens new revenue streams for mobile operators.

IXICO PLC (LON:IXI), the data science company delivering insights in neuroscience, has announced the resignation of chief financial officer Susan Lowther, who is leaving to pursue other business interests.

Amphion Innovations PLC (LON:AMP) on Tuesday said its partner company, Polarean Imaging, had raised US$4mln through a share placing. The developer of medical, life science, and technology businesses said Polarean had issued 22.3mln new shares worth 14p each.

Chariot Oil & Gas Limited (LON:CHAR) has conducted a thorough analysis of drilling cost estimates for its key prospects and remains keen to take advantage of rig rates, which currently are at historically low levels.

Echo Energy Plc (LON:ECHO) has mobilised equipment that will allow it to acquire 1,200 square kilometres of three-dimensional seismic data on the Tapi Aike exploration acreage in Neuquén province, Argentina.

Kibo Energy PLC (LON:KIBO) has elected to extend the deadline for the final confirmation of the Strategic Development Agreement with Chinese power company SEPCOIII, which was announced in July. The extension will run for a further 4 months to 30 March 2019.

The official licence certificate for the Mochetundra project in Russia has now been delivered to Eurasia Mining plc (LON:EUA). The licence was registered with the state registry of subsoil mining licences in Moscow on Monday 10 December.

Bacanora Lithium PLC (LON:BCN) has moved to quell speculation over its future funding.  The statement followed a webinar held by Cadence Minerals, which is an investor in Bacanora. "The company would like to reiterate that Cadence Minerals is not an insider to Bacanora and neither it nor any other shareholder is in possession of any inside information regarding a potential equity raise or any other funding matters," Bacanora said.

Block Energy Plc (LON:BLOE), the energy company focused on the Republic of Georgia, has signed a service agreement for the provision of downhole perforation technology. Block said conventional perforation technologies have had mixed success in Georgia so it has opted for this advanced technology, which has a proven record of significantly enhancing recovery rates.

Stobart Group Limited (LON:STOB) said that further to the announcement of 3 December, a dividend of 1.5p per share will be paid on 31 January 2019 to shareholders on the register as at 28 December 2018, not 11 January 2019 as previously announced.

Arix Bioscience Plc (LON:ARIX) has announced the appointment of Dr Christian Schetter as Entrepreneur in Residence (EIR). The firm noted that Schetter has over 20 years’ industry experience across the life sciences sector, and joins Arix from German immuno-oncology company Rigontec GmbH, where he was CEO for four years before its acquisition by MSD.

Landore Resources Limited (LON:LND) has announced the appointment of Cenkos Securities as its nominated adviser and broker with immediate effect.

Active Energy Group PLC (LON:AEG) has said it is the intention of its directors to transition the company's Nomad role from Northland to SP Angel. It added that the process has already started and, at present, the company anticipates an orderly transition of the role.

Aggregated Micro Power Holdings plc (LON:AMPH) has confirmed that the redemption of its Convertible Loan Notes occurred at the close of business on 10 December 2018. The group said that, of the £10.01mln nominal of Convertible Loan Notes outstanding, it received elections from 91% of noteholders to convert £9.13mln into a total of 11,702,811 new ordinary shares, therefore, the company is redeeming the remaining £0.88mln nominal of Convertible Loan Notes at par.

7.00am: FTSE 100 set to open on the front foot 

The FTSE 100 looks set to claw back some lost ground with the index of blue-chips set to ignore the falls on Asia's main markets overnight where trade fears continue to affect sentiment.
 
According to the spread betting firms, the benchmark will open 42 points to the good 6,743.54 with the knock-on impact from a weaker pound expected to lift the Footsie's dollar earners.
 
Overnight the pound bumped along at near recent lows with a renegotiated Brexit deal expected to be rebuffed by Brussels.
 
At 6.50am, sterling was changing hands for US$1.2573, which was up a smidge, though still not far off the 52-week low of US$1.2507.
 
"Until traders have any sense of what will happen with Brexit, they will remain extremely nervous," said Jasper Lawler of London Capital Group. 
 
"Whilst the possibility of a hard Brexit remains very real, this combined with the increasing political uncertainty is turning out be a lethal mix for the pound."
 
The UK currency will remain in focus with unemployment and average earnings data expected later this morning.

Significant announcements expected on Tuesday:

Strategy update: WPP PLC (LON:WPP)

Interims: Ashtead Group PLC (Q2) (LON:AHT), Carpetright PLC (LON:CPR), Summit Therapeutics PLC (Q3) (LONLSUMM), Shearwater Group plc (LON:SWG)

Finals: Driver Group PLC (LON:DRV), Oxford Biodynamics PLC (LON:OBD), RWS Holdings PLC (LONLRWS), Zytronic PLC (LON:ZYT), MedicX Fund Ltd (LON:MXF)

Economic data: UK unemployment; UK average earnings; German ZEW economic sentiment survey; US PPI

Around the markets:

Sterling: US$1.2584, up 0.2%

Gold: US$1,247.50, an ounce, up 3.8%

Brent crude: US$59.74 a barrel, down 0.2%

City headlines:

  • The Times: Theresa May deferred the Brexit vote in parliament after accepting the “widespread and deep concern” about the deal, and pledging to go back to Brussels and seek further “reassurances” on the Northern Ireland backstop.
  • Financial Times: Chinese court has banned sales of certain iPhone models after finding it in violation of two Qualcomm patents related to photo manipulation and using apps on a touchscreen.
  • The Daily Telegraph: Economic growth in the UK has come to a virtual standstill after output from the country's manufacturing and construction industries shrank last month.
  • The Times: A bailout worth up to £2.2bn has been handed to the Crossrail line through London amid warnings that the rail scheme could be delayed for two years.
  • Financial Times: Nissan and Carlos Ghosn have been charged by Tokyo prosecutors for understating the ex-chairman’s pay in financial documents.
  • Financial Times: Trafigura, one of the world’s biggest oil and metal traders, has registered its lowest annual profit in eight years.
  • The Guardian: Odey Asset Management and Marshall Wace have declared significant bets against companies exposed to the British consumer including big high street names.
  • The Daily Telegraph: Poundstretcher has reported a 2.5% fall in sales to £387mln in the year to the end of March as the discount retailer struggles amid difficult trading conditions in the high street.
  • Financial Times: Cleaning services provider ISS on Monday said it planned to cut 100,000 jobs in a worldwide retreat aimed at boosting growth.
  • The Times: Elon Musk, the chief executive of Tesla has said that the company’s new chairwoman will have no control over him as he remains the largest shareholder.
  • The Times: Mike Lynch, founder of Autonomy, the former FTSE 100 software developer, who is accused of perpetrating a huge accounting fraud, is expected to request a delay to a US$5bn lawsuit from Hewlett-Packard.
 

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