FTSE 100 up 19 points
Prime Minister Theresa May is rumoured to be prevailing on Jean-Claude Juncker to have yet another go at a last gasp Brexit deal
Sterling perks up on forex markets
After rising for much of the morning, the Footsie was in consolidation mode in the afternoon.
The Footsie was 19 points (0.3%) to the good at 7,124.
“It appears that sterling is clinging onto the somewhat disputed reports that Theresa May is set to travel to Strasbourg this Monday in order to meet with Jean-Claude Juncker and finalise some kind of Brexit deal, one that would presumably then be presented to Parliament on Tuesday,” reported Connor Campbell at Spreadex.
PM last night rejected a draft of backstop reassurance presented by @JunckerEU. If EU improves its offer in next hour or so, then @theresa_may will pick it up in Strasbourg, minister tells me. And if EU won’t budge enough, she stays home. Is “chaos” the word?— Robert Peston (@Peston) March 11, 2019
“While nothing is confirmed – the root of the rumour is a comment from Ireland’s deputy prime minister – it was enough to get the pound excited. Against the dollar it was up half a percent, propelling cable above $1.308 having fallen below $1.30 earlier in the session, while against the euro it added 0.6% to cross €1.164,” he added.
A stronger sterling is generally regarded as being a bit of a millstone for Footsie companies.Two cash-strapped companies were in the headlines today.
Harder hit still was Kier Group PLC (LON:KIE), which was 12.4% lower after it revised its debt position £50mln higher and said it would take a £25mln hit on its Broadmoor Hospital redevelopment project.
Comedy Of Kier's Colossal Mis-Calculation— ThisWeekinFM (@ThisWeekinFM) March 11, 2019
Monday March 11 saw the @kiergroup with red faces over an accounting 'error' that added over £50 million of debt to the outsourcer's trading statement which had only been issued as recently as 22 January 2019 - https://t.co/WcML8bWt7R pic.twitter.com/6fAbGnn3IU
2.40pm: US benchmarks open mixed
US benchmarks opened mixed, with the S&P 500 and Nasdaq Composite advancing while the Dow Jones dipped.
The Dow was weighed down by Boeing, which was almost 8% lower in early deals. The 30-share industrial average was down just 4 points at 25,467 while the S&P was up 18 points at 2,767.
The firm start defied expectations of a weak opening by US stocks.
In contrast, the FTSE 100, which had been in positive territory all morning, continued to shed gain in the afternoon; it was up 17 points at 7,122.
1.45pm: The Footsie's gains ebb away
The leading shares index's gains are slowly ebbing away as attention switches to this afternoon's opening session on Wall Street.
The FTSE 100 was up 15 points (0.2%) at 7,119 ahead of what is expected to be a dull start for blue-chips in the US.
Spread betting quotes now suggest the Dow, weighed down by having Boeing as a constituent, will open its account at around 25,287, down 163 points; that compares to earlier forecasts of a starting level of around 25,320 before the retail sales figures for January were released.
Sales rose by 0.2% month-on-month (m/m), compared to a consensus forecast of no change, following the 1.6% decline in December. The year-on-year gain was 2.3%, up from +1.6% in December.
“Headline sales were held down by a 2.4% m/m decline in sales at auto and parts dealers, as sales excluding autos rose by a solid 0.9% m/m, reversing some of the outsized 2.1% December decline,” said Berenberg Capital Markets.
“Eight of the 13 primary categories of retail sales increased in January, compared to only three in December, … but discretionary categories of sales were mixed in January, suggesting that consumers may still be somewhat cautious,” the bank added.
“Encouragingly, non-store retail sales (includes online), the usual top performer, rose by 2.6% m/m in January, reversing some of its striking 5% m/m decline in December. Even department store sales, which are on a longer-run structural downtrend, managed to eke out a 0.1% m/m rise in January. Building materials and supply sales (+3.3% m/m) were likely boosted by preparations for inclement weather near the end of January,” Berenberg noted.
On the home front, RBC Capital Markets caught up with events by cranking up its price target for food delivery technology firm Ocado PLC (LON:OCDO) to 1,000p from 750p; the shares currently trade at 1,048.5p, down 5.5p on the day.
12.15pm: US markets tipped to open sharply lower
The Footsie has lost almost half of the gains it had at its intra-day peak as traders brace themselves for a soft opening on Wall Street.
The FTSE 100 was up 42 points (0.6%) at 7,146, having been up 78 points at one stage.
“News of a second tragic accident in a matter of months involving Boeing’s 737 MAX airliner has seen shares in the company come under some extreme selling pressure in pre-market trade. With the stock sitting around 10% lower at present, this is contributing to some significant losses for DOW futures and as further details of the incident become available, fresh weakness both for the stock and the broader index could be seen,” predicted James Hughes, the chief market analyst at Axi Trader.
“Elsewhere there’s still no progress being reported regarding the US-China trade deal, which is again undermining sentiment. The decision by Chinese regulators to ground local airlines’ fleets of 737 MAX aircraft – the only government agency to do so yet – could however be seen as applying a degree of pressure on Washington. Friday’s better than expected wage growth news is another negative for stocks as the inflationary pressures here will make it that bit more difficult for the Fed to call an end to quantitative tightening unless it can declare this is nothing more than a short term blip,” he added.
Spread betting quotes indicate the Dow will open at around 25,322, down 128 points; the S&P is tipped to open at around 2,750, down 3 points.
On the broker front, British Airways owner International Consolidated Airlines (LON:IAG) was up 1.6p at 540.6p after Citi upgraded the stock to ‘neutral’ from ‘sell’, with the price target moving up to 560p from 508p.
10.30am: Comments from Fed chairman boost global indices
The Footsie, in keeping with most global indices, was on the up after reassuring comments from the chairman of the US central bank, Jerome Powell,
The FTSE 100 was up 70 points (1.0%) at 7,174.
“In an interview last night, Fed Chair Powell indicated that he is in no hurry to change interest rates and acknowledged that over the past few months there’s been increasing evidence of the global economy slowing down,” reported Dean Popplewell at Oanda.
“Equities traded mostly higher overnight following their worst week for three months. Sovereign yields trade atop of their lows, while ‘big’ dollar trades steady,” he added.
The arbitration panel is preparing its final award with respect to Cairn's claim under the treaty and had originally indicated it expected to issue an award soon after the conclusion of the main merits hearings in The Hague held in August 2018.
Cairn Energy's retro tax arbitration award delayed https://t.co/YvpZjWx5N4— TOI Business (@TOIBusiness) March 11, 2019
In a development that will surprise very few people, there have been delays and Cairn expects that the timetable for issuing the award will be more protracted than originally anticipated and is unlikely to be before late 2019.
9.30am: Miners wanted as China reportedly mulls juicing up the economy
Hopes that China will give more support to The People's Republic's economy boosted Asian markets and are also working their magic on UK stocks.
Sterling's weakness was also contributing to positive vibes about the top-shares index; the Footsie's baby brother, the FTSE 250, was struggling to keep up as fewer of its constituents earn significant amounts of revenues overseas.
The FTSE 250 was up 67 points (0.4%) at 19,115, led by Charter Court Financial Services Group PLC (LON:CCFS) and OneSavings Bank PLC (LON:OSB), which have confirmed they are in talks over a possible merger.
The former was up 9.5% and the latter was 9.7% higher.
Exclusive: An all-share merger between Charter Court and OneSavings Bank would be the latest effort to consolidate a challenger banking sector which has struggled to gain the expected traction in the decade since the financial crisis. https://t.co/V2RRqu5FYC— Mark Kleinman (@MarkKleinmanSky) March 9, 2019
While all appeared to be very chummy in the OneSavings/Charter Court talks, Provident Financial PLC (LON:PFG) has got the right hump with Non-Standard Finance PLC (LON:NSF), which has launched a hostile bid.
Provident’s board said they were “surprised” that the offer document from NSF had been “unable” to address a number of “material issues”, including what they said was “limited banking and credit card experience” among NSF’s management.
Shares in Provident were up 2.2%.
There are also directors with their noses put out of joint at Superdry PLC (LON:SDRY), the fashion firm targeting men who have not yet realised their teenaged years are far behind them.
If you say "#InternationalWomensDay" in the mirror three times a guy in a Superdry tee will appear behind you and ask you when International Men's Day is— Gina Martin (@ginamartin_uk) March 5, 2019
The board has called on shareholders to vote against the proposed appointment to the board of Superdry co-founder and former chief executive, Julian Dunkerton, and Peter Williams, the chairman of rival firm BooHoo.
“The situation looks like a classic power struggle. The incumbent directors don’t want to make any changes despite the business going through a very tough patch and the old chief executive hasn’t been able to let go of the business despite no longer working there,” said AJ Bell's Russ Mould.
“This isn’t a tug of war match where the party with the strongest arm wins the day. It is a battle whose victor will be decided by shareholders as they are part owners of the business. They should vote for the party whose strategy makes best sense to put Superdry back on track.
“We’re currently at the stage where this is a blame-game with both sides calling each other nasty names. The real test will come on 2 April when the vote takes place,” Mould said.
8.30am: Almost a clean sweep for rising stocks in the Footsie
The FTSE 100 made the expected solid start to the week as the pound took a tumble, bolstered as well by strength in commodity plays.
in early trading, the blue-chip index was up 56 points (0.8%) at 7,160, with just half a dozen of the index's constituents in the red.
Sterling has just about poked its head back above the US$1.30 but the pound is still taking a battering ahead of this week's big Brexit vote in the House of Commons.
A very modest rebound in global equities and FTSE250 is somewhat exaggerated in #FTSE 100 because of GBP weakness on Brexit pessimism. Don't be fooled that this buying is meaningful - the GBP-linked algos have complete control of the FTSE future and can switch sides in a flash.— Rey (@JustRey7) March 11, 2019
“These votes will decide the future course of Brexit. Theresa May is not expected to achieve the numbers required to push her Brexit deal through Parliament, after she failed to obtain legally binding adjustments to the Irish backstop arrangement that Parliament requested,” explained Jasper Lawler at LCG.
“With Theresa May’s deal now an almost certain failure, pound traders are concerned about what actually comes next. A delay is looking like the most likely outcome. The sell-off in the pound shows that continued uncertainty for UK businesses, caused by a delay is nothing to cheer,” he added.
That being said, the multi-national companies in the Footsie, many of which earn large chunks of their revenue in foreign currencies, are utterly sanguine about the prospect of a weaker pound.
Proactive news headlines:
Shanta Gold Ltd. (LON:SHG) has intersected ore at the underground Ilunga mine, part of the wider New Luika gold mining complex. The intersection comes three months ahead of schedule, and occurred as predicted by the company’s geological model.
IGas Energy Plc (LON:IGAS) has confirmed a sequence of hydrocarbon bearing shale over some 250 metres in the SR-01 well, at Springs Road in North Nottinghamshire. Significant gas indications were observed, the company said.
United Oil & Gas PLC (LON:UOG) has expanded its asset portfolio, adding a frontier exploration project in West Africa. The company has inked an option deal which will allow it to acquire a 20% stake in the Bénin Onshore Block B.
Nektan PLC (LON:NKTN) has signed up the betting partner of Manchester United to its B2B E-lite platform. Mo Play, which launched last August by Addison Global, is also the betting partner of Watford FC, another premier league team.
Silence Therapeutics PLC (LON:SLN) bosses are looking forward to what should be an “exciting” nine months or so for the drug developer. The company, which makes drugs that can ‘silence’ faulty genes, expects to begin its first-ever in-human trial in the second half of 2019 as it puts its SLN124 blood disorder treatment through its paces.
Berkeley Energia Ltd (LON:BKY) has received a number of favourable assessments from various regulatory bodies in regard to permitting at its Salamanca uranium mine in Spain. These include two assessments from the Nuclear Safety Council.
Europa Metals Limited (LON:EUZ), the lead-zinc explorer, said the full independent scoping study of its wholly owned Toral project has been completed. The study puts a net present value (NPV) on the project, which is located in the Castilla y León region of Northwest Spain, of US$110mln using a discount rate of 8%.
Gold explorer Oriole Resources PLC (LON:ORR) is to receive US$0.5mln from its Turkish partner, Andolu. The pay-out was triggered after Andolu defined a JORC-compliant resource estimate of 348,150 ounces gold and 2.83mln ounces of silver at the Karaağaç project in Turkey.
Recent exploration work undertaken by Kalahari Metals, a company 34%-owned by Metal Tiger PLC (LON:MTR), on the Kitlanya joint venture project has satisfied the first earn in condition and will allow it to take a 25% stake.
WideCells Group PLC (LON:WDC) announced on Friday that it received a further notice from the European High Growth Opportunities Securitization Fund in respect of the exercise by the investor of its conversion rights under the Convertible Bonds for the principal amount of £80,000, together with a penalty payment of £120,000, resulting in the issue to it of 80,000,000 new ordinary shares in WideCells.
Tower Resources PLC (LON:TRP), the AIM-listed oil and gas company with its focus on Africa, said it will be providing an Investor Update at the London South East Oil & Gas Investor Evening which takes place at 6:15 p.m. on Tuesday 12 March 2019 at the Brewers Hall, Aldermanbury Square, London Wall, EC2V 7HR.
6.45am: Blue-chips tipped to receive sterling tailwinds
The FTSE 100 is poised to open higher on Monday morning as a looming vote on Theresa May’s Brexit deal on Tuesday helped piled pressure on the pound, thereby lifting equities.
Spread-betting firm IG expects the FTSE 100 to open around 34 points higher after closing out last week down around 53 points at 7,104.
"It’s all set up to be a big week for sterling with little indication that Theresa May’s Brexit deal will get anywhere close to getting through Parliament this week, with the pound slipping back in Asia trading this morning, as it becomes clear that there hasn’t been any progress on changing the withdrawal agreement, with neither the EU or UK government being willing to modify their current position", said Michael Hewson, chief market analyst at CMC Markets UK.
"With a “no deal” scenario still the current default position MPs will find themselves under increasing pressure to try and prevent such an outcome, however for all the hot air about “taking no deal off the table”, or warnings that Brexit might not happen, the fact is in the absence of any new legislation the UK will leave without a deal on 29th March."
On the currency markets, the looming vote helped push the pound 0.25% lower to US$1.298 against the dollar.
In the US, Wall Street’s three main indices all closed lower at the end of last week as concerns over a slowdown in global economic growth led to increased caution alongside a weaker than expected US jobs report.
The Dow Jones Industrial Average closed down 23 points at 25,450, while the S&P 500 was down 5.9 points at 2,743 and the Nasdaq was down 13 points at 7,408.
The weak US jobs report and the global economic worries carried over into trading in Asia on Monday as the Japanese Nikkei 225 slumped 331 points to 21,125 while Hong Kong’s Hang Seng was down 391 points at 28,388.
Quieter start to the week
The state of the supermarket sector will be the main corporate focus in the coming week as investors look for clues on the environment following the effective torpedoing of plans for J Sainsbury PLC (LON:SBRY) to merge with Wal-Mart Inc (NYSE:WMT) owned Asda.
However, on Monday it will be shipping and insurance driving investor reaction in the form of final results from Clarkson and Old Mutual.
Significant announcements expected on Monday:
Economic data: US consumer inflation expectations; US business inventories
Around the markets:
- Sterling: US$1.298, down 0.25%
- Brent Crude: US$66 a barrel, up 0.4%
- Gold: US$1,298.7 an ounce, up 0.13%
- Bitcoin: US$3,872.7, down 0.45%
- Some UK lenders have been told by the Bank of England to triple their holdings of easy-to-sell assets to cope with the market meltdown forecast if no-deal Brexit happens – Financial Times
- Short-sellers have built up a £180 million short position against Royal Mail in just over a month as the City worries about the fate of its dividend – The Daily Telegraph
- Britain’s third biggest household supplier SSE has urged Ofgem to toughen its stress tests on energy suppliers like those imposed on financial services - The Times
- BT is being sued by Persimmon for failing to pay for high-speed internet connections at hundreds of new homes – Daily Mail
- Jamie Oliver's ailing restaurant empire is trying to secure additional funding, casting fresh doubts over its future – Telegraph
- There would be a 33% jump in the number of homeowners who fall behind on mortgage payments if Britain were to crash out of the European Union instead of staying in the bloc - The Times
- Renault, Nissan and Mitsubishi plan to establish a new leadership structure for the alliance between the three carmakers – FT
- Britain faced punitive conditions as a price for the EU agreeing a Brexit delay if Theresa May is forced to ask for an extension this week – Telegraph
- City advisers could pocket more than £22 million in fees if Non-Standard Finance succeeds with its £1.3 billion hostile bid for Provident Financial – The Times
- China’s aviation regulator on Monday grounded nearly 100 Boeing Co 737 MAX 8 aircraft operated by its airlines, more than a quarter of the global fleet of the jets, following a deadly crash of one of the planes in Ethiopia – Reuters