FTSE 100 closes higher
Dow Jones and S&P 500 lower
FTSE 250 also up
FTSE 100 closed the day ahead after a lacklustre session on a lack of major catalysts.
Footsie finished up around 49 points at 7,183, while the FTSE 250 finished up nearly 32 points at 19,443.
Analyst at CMC Markets David Madden noted that the softer pound was helping the British index.
"The eurozone equity markets are underperforming today, but it is worth noting, the DAX and CAC 40 have outperformed the FTSE 100 in recent weeks. There has been a lack of any major economic news today, and that has led to a lacklustre session," he said.
In the US, shares are generally lower at the time of writing. The Dow Jones Industrial Average is down around 1.6 points and the S&P 500 is off 2.5.
2.50pm: US markets open on the back foot
Contrary to expectations, the main US benchmarks have opened lower.
The Dow Jones was 75 points (0.3%) lower at 25,645 and the S&P 500 was down 8.5 points (0.3%) at 2,784.2.
Back in Blighty, the FTSE 100 was up 38 points (0.5%) at 7,172.
Shares initially tended lower on concerns about write-downs associated with the bringing forward of lower maximum stakes on fixed odd betting terminals (FOBTs) – a major money-spinner for bookies. There were a lot of numbers to go through in the report, however, not least to factor in the “transformational” acquisition of the Ladbrokes Coral business, and sentiment towards the stock eventually turned positive.
“While the lower FOBT limit means profits are likely to fall in 2019, the group’s trump card remains its online business. The mushrooming digital division means GVC looks well-placed to take the FOBT hit in its stride and deliver strong growth in 2020 and beyond. We think that’s an attractive proposition for investors, especially since the pace of that growth could be turbocharged by the US opening up,” said George Salmon, an equity analyst at Hargreaves Lansdown.
“Of course, there’s no guarantee the US venture will pay off, and regulatory change remains a constant threat. With debts stacking up following the Ladbrokes Coral deal, the group’s balance sheet would look more stretched if the government followed up its FOBT changes with tighter rules online, for instance,” Salmon cautioned.
“Still, as things stand, improved profitability from 2020 onwards should see the debt burden fall, and the attractive dividend yield of just over 5% means investors can expect a healthy income while they wait to see if the US expansion can deliver the goods,” the analyst concluded.
2.00pm: Blue-chips make further progress over lunchtime session
The top-share index made steady progress throughout the lunchtime session as traders wait for what they expect will be a solid opening on Wall Street.
The FTSE 100 was up 38 points (0.53%) at 7,172.
While Wall Street might be concerned over Chinese economic growth, in the UK the preparations – or lack of them – for Brexit are firmly on the agenda.
The Financial Policy Committee (FPC) has published its latest overview of the risks facing the UK financial system, including those relating to a “no deal” Brexit.
At the risk of making the FPC sound complacent, the upshot of the analysis is that the UK's financial system is ready for a disorderly Brexit but it is not so sure that lot sur le continent are.
“The biggest risks of disruption in a no-deal Brexit to financial services used by UK households and businesses have been dealt with,” the report said.
“Major UK banks and insurers are strong enough to deal even with a worst case disorderly Brexit and could continue to serve households and businesses,” it added.
The Bank of England did warn of possible disruption to cross-border services that could “primarily affect EU households and businesses” and have a knock-on effect on this side of the Channel.
“The Bank does expect volatility in market prices if a no-deal Brexit materialises, which will come as a surprise to precisely no-one; however, what is interesting is that the central bank’s numbers show the heightened risk associated with Brexit has at least been partly factored into UK share prices,” suggested Laith Khalaf, a senior analyst at Hargreaves Lansdown.
“No-one knows whether the UK will leave the EU with or without a deal, and given the range of political permutations it’s not even possible to robustly assign a probability to either outcome, let alone what the financial implications might be.
“While a no-deal Brexit would cause volatility in the market, this will ultimately pass. If we look back ten years to March 2009, the market was gripped by fear, induced by the financial crisis. Yet an investment in the UK stock market would have trebled in value by now, which goes to show that it’s often a good idea to invest when it feels most uncomfortable,” Khalaf said.
Noon: UK stocks firm as traders eye rebound on Wall Street
The Footsie has enjoyed a sedate but positive morning ahead of what is expected to be a rebound on Wall Street.
The FTSE 100 was up 17 points (0.24%) at 7,152.
“Some of the FTSE 100’s early gains have been trimmed as a result of a stronger services PMI figure for the UK, but activity in the UK’s most important sector remains under pressure, with employment and demand both weakening. Yesterday’s sudden drop in indices came as something of a shock, but the bulls are not giving up without a fight, and we have already seen attempts to regain lost ground,” commented Chris Beauchamp, the chief market analyst at IG Group.
Product tester Intertek was the Footsie's biggest faller, down 3.1%, despite hiking its dividend on the back of increased sales and profits.
Tool hire firm Ashtead fell 2% to 2,025p despite an assertion by the aforementioned Chris Beauchamp that investors “should be cheered by the robust trading in evidence at the firm”.
“They will want to keep a close eye on US data, particularly as the Atlanta Fed’s GDP forecast continues to decline. Having ramped up debt levels, the firm will have to hope for further US economic growth. Its relentless focus on North America has paid handsome dividends, but does leave it as something of a one-trick pony if things there follow the weaker economic lead set by Europe and parts of Asia,” Beauchamp suggested.
Talking of US data, James Hughes at Axi Trader notes there are a couple of key US economic releases due shortly after the opening bell.
“New home sales are expected to disappoint, although the ISM composite PMI print may offer some salvation, especially if it manages to outshine the January reading. All told, however, right now there appears to be something of a waiting game in play.
“Demand for US government debt underlines that reluctance to try and push stocks much further for now – the market is certainly in need of some clarity,” Hughes said.
Axi Trader is calling for the Dow to open 40 points higher at 25,860 and the S&P 2 points firmer at 2,795.
9.45am: Footsie's gains trimmed after PMI Services data
The UK services purchasing managers’ index (PMI) for February showed a bit of a recovery in February from a 30-month low in January.
IHS Markit revealed that the headline business activity index reading edged up to 51.3 in February from 50.1 in January; 50 represents the crossover point between expansion and contraction.
The FTSE 100, which was hovering around 7,160 before the release of the PMI data, slipped to 7,151 shortly after, up 16 points (0.2%) on the day.
“The latest PMI surveys indicate that the UK economy remained close to stagnation in February, despite a flurry of activity in many sectors ahead of the UK’s scheduled departure from the EU. The data suggest the economy is on course to grow by just 0.1% in the first quarter,” declared Chris Williamson, the chief business economist at IHS Markit.
“Worse may be to come when pre-Brexit preparatory activities move into reverse. Many Brexit-related headwinds and uncertainties also look set to linger in coming months even in the case of PM May’s deal going through. Global economic growth meanwhile remains sluggish, adding an increasingly gloomy backdrop to the UK’s current problems,” he warned.
“Business optimism about the year ahead has consequently sunk to the lowest ever recorded by the survey with the exceptions of the height of the global financial crisis and July 2016. Brexit concerns dominate the list of reasons cited by companies for deteriorating business performance by a wide margin.
“Employment across services, manufacturing and construction is meanwhile now falling at a rate not exceeded for nine years as companies cut costs and await clarity on the outlook, highlighting the rising damage to the economy from intensifying uncertainty," he added.
UK Services PMI stronger than expected at 51.3 in Feb after 2.5yr low in Jan. Sterling up a touch. Q1 still likely to be weakest since 2012— Langton Capital (@langtoncapital) March 5, 2019
Duncan Brock, the group director at the Chartered Institute of Procurement & Supply (CIPS), said: “Once again this month, the lifeblood of the sector continued to leak away with Brexit indecision striking another blow to new orders and employment in February. Any hoped-for progress next month looks like it will be equally stifled, as services activity heads for its weakest quarter since late 2012.”
“Consumer and client confidence disappeared from the sector, as the hesitancy to place orders also rippled out from Europe. Survey respondents said anxious international clients cancelled contracts and delayed decisions. Latest data pointed to the sixth straight monthly drop in export orders Notwithstanding a notable re-acceleration in services output in March, the first quarter of 2019 is set to be a disappointment," Brock added.
8.25am: Positive start
The UK’s blue-chip index moved hesitantly forward after China set its gross domestic product growth target for this year lower than last year.
The FTSE 100 was up 13 points (0.2%) at 7,147.
“China set its GDP growth target for this year at 6.0% to 6.5%, lower than last year's target. A set of pro-growth measures are planned despite positive progress in US-China trade talks, which makes us think that either China doesn't have full confidence in a trade truce or that the damages from the trade conflict cannot easily be undone,” stated Iris Pang, the economist covering Greater China at ING Economics.
The shares were down 3.5p at 647.5p after the company took a slew of non-cash write-downs relating to the amortisation of acquired intangibles – i.e. the value of brands it has acquired.
What set the market’s pulses racing – it takes all sorts – was the announcement it intends to raise roughly €4bn through the issue of sterling-denominated mandatory convertible bonds.
Proactive news headlines:
By the end of this month, top-level domains (TLD) registry company Minds + Machines Group Limited (LON:MMX) will be debt-free.
e-Therapeutics PLC’s (LON:ETX) annual results revealed a year of significant progress exploiting the potential of its network-driven drug discovery, including its first commercial research collaboration.
BATM Advanced Communications Limited (LON:BVC) has won a contract with a Philippines-based company for its agri-waste treatment solution, its first customer outside of Israel.
IXICO PLC (LON:IXI) said it will provide data analytics and neuroimaging services to a late-stage programme for people with the degenerative brain disorder Huntington's disease. Its expertise will be used in what’s called an extension study to allow people living Huntington's to continue to contribute to the search for a treatment for the condition.
Ironridge Resources Ltd. (LON:IRR) has hit multiple new high-grade lithium pegmatite intersections in reverse circulation drilling at its flagship Ewoyaa project and at the new Abonko discovery in Ghana, West Africa. Highlights from infill drilling at Ewoyaa include 80 metres grading 1.52% lithium oxide (Li2O), 68 metres grading 1.31% Li2O, and 60 metres grading 1.34% Li2O.
Kavango Resources PLC (LON:KAV) has raised £250,000 through a placing of just under 9mln shares at a price of 2.8p each. The fundraise comes immediately after a 25 February 2019 placing, which raised £500,000.
KRM22 PLC (LON:KRM), the technology and software investment company, with a particular focus on risk management in capital markets, announced that Jim Oliff has resigned from his role as non-executive director. The group noted that Oliff was diagnosed with cancer in 2018 and has made the decision to step down from his role as non-executive director while he undergoes treatment.
6.30am: Benchmark index expected to make a tentative start
The FTSE 100 is expected to make a tentative start after a sharp falls on Wall Street overnight and a mixed return from Asia’s main markets.
Spread betting firms are predicting the index of blue-chip shares will open just two points higher at 7,136.39 with the miners expected to come under pressure after China downgraded its growth forecasts.
Beijing now expects the world’s second-largest economy to expand by 6% this year rather than 6.5% with Premier Li Keqiang saying “instability and uncertainty are visibly increasing”.
The trade stand-off with the US is widely cited as a drag factor, though the mood music from the American camp remains optimistic with Secretary of State Mike Pompeo suggesting the two sides may be closing in on a deal to avert a further escalation of tariffs.
"It's never over till it's over, but they've made a lot of progress, and so I'm very hopeful that in the coming days and weeks, there'll be a significant announcement," said Pompeo on Monday in an interview in Des Moines, Iowa.
Back here in the UK, the corporate news flow appears to be slowing, though we still have updates from insurer Direct Line (LON:DLG), gambling group GVC (LON:GVC) and plant hire firm Ashtead (LON:AHT).
Significant announcements due on Tuesday:
Trading update: Ashtead PLC (Q3) (LON:AHT)
Finals: Direct Line Insurance Group PLC (LON:DLG), GVC Holdings PLC (LON:GVC), Intertek Group PLC (LON:ITRK), Phoenix Group Holdings PLC (LON:PHNX), BBA Aviation PLC (LON:BBA), Ibstock Plc(LON:IBST), e-therapeutics PLC (LON:ETX), Elementis PLC (LON:ELM), Huntsworth PLC (LON:HNT), LSL Property Services PLC (LON:LSL), 4Imprint Group PLC (LON:FOUR), MPAC Group PLC (LON:MPAC), Getbusy PLC (LON:GETB), Harworth Group PLC (LON:HWG), Apax Global Alpha Limited (LON:APAX), Science Group PLC (LON:SAG)
Economic data: UK services PMI; US new home sales; US non-manufacturing PMI; US services PMI
Around the markets:
- Pound worth US$1.3161
- Gold changing hands for US$1,289.40 an ounce, up US$1.90
- Brent crude US$65.38 a barrel, down 29 cents
- Carlos Ghosn granted bail after months in detention - former Nissan boss could be released as early as Tuesday as Tokyo court sets bail at ¥1bn
- Fox’s trade department cancels business Brexit briefings
- Toyota warns on building new UK models after Brexit - group says no-deal makes it ‘extremely complicated’ to expand British factories
- Police launch fraud investigation into Revolut - UK fintech company valued at US$1.7bn faces multiple regulatory probes
- Estate agent Countrywide has been censured for failing to carry out proper money-laundering checks
- US hedge fund dishes up sweeter Interserve rescue package
- Britain is making progress on gender equality in the workplace, but it continues to lag behind other developed countries
- Paperchase to close stores
- Daily Telegraph
- Jobs of workers in the north most at risk from rise of the robots
- Online retailer Findel rejects £140mln bid from Mike Ashley's Sports Direct
- Audit watchdog calls for tougher checks on company finances
- A charity run by Prince Charles received donations from an offshore company that was used to funnel vast amounts of cash from Russia in a scheme that is under investigation by prosecutors
- Facebook has been accused of abusing a security feature in order to weaken user privacy, after the social network was found using phone numbers initially handed over for account safety for other purposes
- The UK is one of the priciest countries in Europe for mobile phone data, with Britons typically paying almost six times more than their counterparts in Finland