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FTSE 100 joins global equities to head lower Friday as Eurozone data weighs

Over the week as a whole, the FTSE 100 exchange lost around 0.3%.
Distraught trader
A grim day - unless you had shorted the market
  • FTSE 100 closes firmly lower

  • US benchmarks tank too

  • Brexit worries weigh

The shine came off global stocks on Friday and FTSE 100 closed more than 147 points lower.

The UK premier share index finished down 2.01% at 7,207 making the 7,300 level now seem a distant memory. On the week as a whole, the exchange lost around 0.3%.

After a week of  twists and turns regarding Brexit and nothing seemingly resolved, the FTSE 250 also closed much lower on the day, off a whopping 349 points at 18,998.

The German DAX lost 185 points and the CAC 40 is 108 points lower. In the US, the Dow Jones Industrial Average is down almost 373 points at the time of writing.

The stock market declines come after poor French manufacturing and services reports, and dismal German manufacturing data.

"The updates underlined how fragile the eurozone is, and traders are worried about how the region would cope in the event of a no deal Brexit," said David Madden, market analyst at London-based CMC Markets.

In the USA, the picture didn't seem much better. The manufacturing PMI report fell from 53 to 52 – a 21 month low, while the services PMI report cooled to 54.8, from 56, but new home sales for February beat forecasts.

3.15pm: The Footsie flirts with 7,200 level

The FTSE 100 had a rough day, thanks to a combination of sterling stabilising on forex markets and European macro data underwhelming.

The index of leading shares was down a hefty 148 points at 7,206, shedding all of the gains – and more – that it had racked up earlier in the week when optimists thought the chances of a “no deal” Brexit had drastically reduced.

Standard Chartered PLC (LON:STAN) – a bank focused on emerging markets rather than Europe – was the heaviest faller, down 4.7% at 577.9p. It may not be a big player in Europe but it is sensitive to potential slowdowns in global economic activity and that seemed to be the conclusion economists drew from European data released earlier today.

“Across the board the flash PMIs [purchasing manager indices] were an eyesore, uniformly coming in worse than forecast and sinking even further into contraction territory,” wrote Connor Campbell at Spreadex.

“The German figure was especially alarming, arriving at 44.7 against the 48.0 estimated by analysts and the 47.6 seen last month, as Brexit, trade tensions between the US and China, and issues in the car industry all came to weigh heavy on the sector. The services PMIs was a tad better, though the French reading did narrowly, and unexpectedly, slip under 50.0,” he added.

2.00pm: US stocks take an early bath

US stocks opened sharply lower as soft European manufacturing data put the frighteners on equity bulls.

The Dow Jones industrial average was down 280 points (1.1%) at 25,683 while the broader-based S&P 500 was off 27 points (1.0%) at 2,828.

Back in Blighty, the Footsie’s attempted rally had already fizzled out, with the blue-chips index sporting a triple-digit fall, down 100 points (1.4%) at 7,255.

Low-cost airline easyJet PLC (LON:EZJ) was down, albeit not by as much as the Footsie, at 1,166.5p (down 0.8%) after it said it “stands ready” to activate contingency plans to suspend the voting rights of UK and other non-EU shareholders in order to continue operating in the bloc in case of a ‘no deal’ Brexit.

Meanwhile, Thomas Cook Group PLC (LON:TCG) has swung the axe again, trimming its high street branch network.

The shares were down 1.9% at 28.08p.

 

1.15pm: Eurozone jitters spread to North America

Eurozone jitters appear to have spread to North America, with the US benchmarks expected to open lower this afternoon.

The Dow Jones industrial average, which rose 217 points yesterday to close at 25,963, was expected to open at around 25,805, down 158 points.

The S&P 500, which hit a five-month high of 2,855 yesterday, was see opening trading at around 2,840.

The FTSE 100 was down 94 points (1.3%) at 7,253 and showing signs of sustaining a weak rally.

 

12.15pm: FTSE 100 close to its intra-day lows

The FTSE 100 had the 7,300 level in the rear-view window by the end of the morning.

The FTSE 100 was down 109 points at 7,246, with barely a dozen of the top shares index’s constituents in positive territory.

The top riser was fashion firm Next PLC (LON:NXT), clawing back 88p of yesterday’s losses at 5,404p after two institutions raised their target price for the stock.

CFRA hiked its target to 5,500p from 4,800p while HSBC was more optimistic still, raising its price target to 6,300p from 5,900p.

11.00am: Eurozone provokes jitters

The FTSE 100’s gentle drift lower has turned into more of a hurtle, with the index ebbing below 7,300.

The top-shares index was down 84 points (1.14%) at 7,271, meaning it is in danger of giving up the week’s gains.

Stephen Jones, the chief executive of UK Finance, the collective voice for the banking and finance industry, has called on MPs on all sides of the House of Commons to work together to “pull the UK back from the precipice by finding a majority for a way forward”.

No mention there of sitting around the campfire and singing “Kumbaya” but we get the sentiment.

Talking of sentiment, dismal German manufacturing data has soured it.

“European equity markets sold-off this morning after France and Germany posted disappointing economic announcements. The French services and manufacturing sectors are in contraction, and the German manufacturing industry reported its lowest reading since July 2012. All the focus has been on the UK regarding Brexit, but the eurozone is struggling, and the last thing Continental Europe needs is a no-deal Brexit,” according to David Madden at CMC Markets.

David Cheetham at xtb online trading said a series of worse than expected economic releases from Europe has sounded the alarm bell “not just for the bloc, but also the global economy”, by providing further evidence of a worldwide slowdown in economic activity.

“These industry surveys are keenly followed, and unlike employment or GDP figures they are commonly seen as leading indicators due to the nature of their composition which is heavily weighted to future expectations. Due to the country’s large level of exports, German manufacturing is often seen as a bellwether of global economic activity and with this metric falling to its lowest level since August 2012 - and in doing so chalking up a 3rd consecutive month in contraction territory with another PMI [purchasing manager’s index] reading below 50 - it’s sending a clear and obvious warning sign on the health of the global economy,” Cheetham said.

Time to pull up the duvet and look forward to the weekend, perhaps.

The FTSE 250 was, like the Footsie, in decline – down 138 points at 19,209 – but there was some good news for shareholders of beleaguered fashion outfit Ted Baker PLC (LON:TED).

The shares were up 4.5% at 1,673p despite a number of brokers responding to yesterday’s full-year results by cutting their price targets.

RBC’s new target is 1,900p (down from 2,000p); Goldman Sachs has moved to 1,800p from 2,150p and Liberum has cut its target ot 2,300p from 2,800p.

9.45am: The Footsie heading south for the weekend

The FTSE 100 was heading south for the weekend as sterling rallied following what was called a small step back from the Brexit cliff edge.

The top-shares index was 47 points (0.64%) lower at 7,308 and in danger of dropping below the 7,300 level.

“A small step back from the cliff-edge, for now,” was how German bank Berenberg termed the deal the EU has plonked in Theresa May’s in-tray.

“The ball is now in the UK’s court. In a series of Brexit debates and votes next week, probably including a third vote on May’s deal, UK parliament will get a chance to forge a way forward and possibly take the opportunity to seize control of the Brexit process and reduce the risk of a hard Brexit,” the bank said,

“s the situation is in flux, we make no change to our probabilities for the potential Brexit outcomes; hard Brexit (15%); May’s deal (10%); customs union model (35%); Norway model (15%); and no Brexit (25%); however, the uncertainty around these calls is high. The risks to our probabilities for May’s deal and a hard Brexit are tilted to the upside,” the bank said.

Fiona Cincotta at City Index said the latest round of Brussels talks left “a bitter aftertaste for the FTSE”.

“The index is sliding, as are other European bourses, as Britain’s position within the EU remains unresolved. In addition, concerns that the upcoming Sino-US trade discussion will make less progress than initially hoped are also weighing on European markets,” she said.

“In London, retailers and house builders are performing well but again, not enough to stem the malaise in a range of other sectors. A spike in sterling’s exchange rate against the euro didn’t help but was not the dominant factor,” she noted.

One retailer that is not performing well is department stores group Debenhams PLC (LON:DEB).

Debenhams shares collapsed as the company announced a plan to restructure its debt that will effectively wipe out shareholders,” reported Neil Wilson at markets.com.

“Shares in the company slumped 60% to a little above 1p before paring some of those losses to trade at 1.47p, down around 50%.

“Management are seeking £200mln from lenders and bondholders, which goes beyond the £150mln it said it had been looking to raise. Specifically, the company has launched a consent solicitation for holders of its 5.25% bonds due in 2021. After the downbeat trading performance post-Christmas, it looks as though the company requires more cash than previously thought,” Wilson suggested.

Sports Direct’s Mike Ashley has reportedly indicated he would be prepared to buy Debenhams’ Danish business, Magasin du Nord, for £100mln provided Debenhams installed him as its chief executive officer.

Stranger things have happened – Newcastle United nearly won the league in living memory, for instance – but the Debenhams board has had plenty of chances to accept help from Ashley and rejected them all.

8.40am: Weak start for Footsie

The FTSE 100 got off to a dull start, as expected, weighed down by sterling’s recovery on foreign exchange markets.

The index of blue-chip shares was down 29 points (0.4%) at 7,326.

The EU has given UK prime minister Theresa May a bit more time to bludgeon the House of Commons into acceptance of her Brexit deal.

The EU agreed to extend the Brexit deadline until 22 May 22 provided MPs approve May’s deal, otherwise, if no decision is taken by 12 April, the remaining options will be a no-deal Brexit, a long extension, or revoking Article 50 according to European Council President Donald Tusk.

“The deadline extension provided a boost to sterling, which recovered more than 100 pips from yesterday’s lows,” noted Hussein Sayed, the chief market strategist at FXTM.

“Despite the chances of exiting without a deal having risen significantly, traders do not believe that this is the base case scenario. Sterling remains the top performing major currency in 2019 and has been stuck in the range of 1.3 – 1.33 against the USD in March. The UK parliament may no longer kick the can further and should come up with a decision before April 12. This is likely to lead to volatile moves in the pound, but it’s difficult to bet on one direction,” he added.

Defying the weaker trend, Smiths Group PLC (LON:SMIN) rose 1.9% to 1,472p as it confirmed it would hive off its medical division.

Proactive news headlines:

Mkango Resources Ltd (LON:MKA), the exploration and development company focused on Malawi, has filed a NI 43-101 technical report for its Songwe Hill Rare Earths Project. The report relates to the resource update announced last month.

Live Company Group Plc (LON:LVCG) has inked a license agreement to hold its BRICKLIVE shows at the PALEXPO convention centre in Geneva, Switzerland.

INTOSOL Holdings PLC (LON:INTO) has continued its expansion in South Africa, signing a five-year management contract which will see it add SOUL on the Heads, a luxury six-suite operating hotel located in Knysna on the Garden Route to its SOUL Private Collection of owned and managed boutique hotels.

Sure Ventures PLC’s (LON:SURE) investment fund, Suir Valley Ventures, has backed the launch of an augmented reality (AR) mobile game being developed by game company WarDucks.

AI-driven procurement technology firm Maistro PLC (LON:MAIS) earned almost as much revenue in the fourth quarter of 2018 as it did in the whole of 2017.

Solo Oil PLC’s (LON:SOLO) management has set out its stall, revealing plans to acquire its way to 5,000 barrels of production per day. Gas assets in Tanzania - stakes Ruvuma and Kiliwani North - are still deemed ‘core’ to the business, but, the intention is to acquire new projects and become an operator, not just an investor in other company’s project

i3 Energy PLC (LON:i3E) is cracking on with the Liberator project, today announcing that it has inked contracts for a site survey. The North Sea field developer has hired Gardline Limited for the work which will be a precursor to the planned 2019 and 2020 drill programmes and also the construction of pipeline infrastructure.

Amur Minerals Corporation (LON:AMC) has extended the maturity date on its US$10mln convertible loan facility with Riverfort Global and YA II PN until March 2020. Some US$1.2mln has utilised already with a further US$500,000 now to be drawn down.

Connemara Mining Company PLC (LON:CON) has changed its name to Arkle Resources PLC to reflect its growing spread of activities across Ireland.

Seeing Machines Limited (LON:SEE) has announced that, further to the announcement of a conditional placing and subscription to raise gross proceeds of £27.5mln made on 20 March 2019, certain members of its board and senior management team have subsequently entered into subscription agreements to conditionally purchase a total of 8,941,667 new ordinary shares at a price of 3p each, raising a further £268,250 for the company

Ceres Power Holdings PLC (LON:CWR), a world-leading developer of low cost, next generation steel fuel cell technology, has announced the appointment of Investec Bank as its nominated adviser and joint corporate broker with immediate effect, alongside its existing joint corporate broker, Berenberg.

Grit Real Estate Income Group Limited (LON:GR1T) announced that shareholders that several South African, Mauritian and international investors and analysts will be visiting the company's assets in Mauritius today. It said that during the visit, a presentation will be made available to delegates regarding the property portfolio, as well as on the economic dynamics and risk profile of the country and region.

WideCells Group PLC (LON:WDC) announced that it has received  further notices of exercise from European High Growth Opportunities Securitization Fund in respect of the exercise of its conversion rights under the convertible bonds for the aggregate principal amount of £210,000, together with aggregate penalty payments of £315,000, resulting in the issue of 210,000,000 new ordinary shares to the investor.

6.45am: The strength of sterling to weigh on blue-chips

The FTSE 100 was expected to open the last session of the week on the back foot as sterling regained some of its poise on the foreign exchange markets.

Spread betting quotes pointed to the index of blue-chip shares opening 28 points lower at around 7,327, after closing 64 points higher yesterday at 7,355.

“The pound bounced off support at US$1.30 and has continued to move higher after the UK narrowly avoided an imminent no deal Brexit,” reported Jasper Lawler at LCG.

“The EU granted Theresa May an extension of two weeks to work out what to do. Theresa May now has to 12th April to decide whether to leave with a no deal or to request a longer extension. Once again, we are likely to see Eurosceptics threatened with the idea of a long extension if they don’t support her deal. As the UK moves back from the brink, the pound is moving higher,” he noted.

In the US yesterday, the S&P 500 hit a five-month high, rising 31 points to 2,855. The Dow also had a good day, climbing 217 points to close at 25,963.

Asian markets this morning have been mixed. In Japan, the Nikkei 225 was 18 points to the good at 21,627 after the consumer price index missed the Bank of Japan’s target again but in Hong Kong the Hang Seng was down 102 points at 28,966.

On the UK corporate front, Smiths Group PLC’s (LON:SMIN) plan to spin off its struggling medical division is likely to be the focus of its interim results on Friday.

Last November the company said it was looking at separating Smiths Medical from the rest of the group to focus on its remaining industrial technology operations.

Sanne Group PLC (LON:SNN) posts its full-year numbers in the wake of news that its chief executive Dean Godwin has decided to retire from the provider of alternative asset and corporate services.

Martin Schnaier, previously its chief commercial officer, will succeed Godwin as CEO in May.

Shares reacted negatively to the January announcement.

As for the financials, Sanne has said it enjoyed a strong performance in the year with the second half of the year driving record new business and sales wins.

It achieved sales wins representing £13.0mln of additional annualised revenue in the second half of 2018.

Sanne expects underlying profit before tax for the year to 2018 to meet its guidance.

Major announcements due on Friday:

Interims: Smiths Group PLC (LON:SMIN)

Finals: Sanne Group PLC (LON:SNN), Henry Boot PLC (LON:BOOT)

Economic data: US existing home sales

Around the markets:

  • Sterling: US$1.3150, up 0.43 cents
  • 10-year gilt: yielding 1.067%
  • Gold: US$1,310.60 an ounce, up US$3.30
  • Brent crude: US$67.88 a barrel, up 2 cents
  • Bitcoin: US$3,995.56, down US$1.45

City headlines:

  • Financial Times

  • The EU has postponed Brexit until 12 April giving the prime minister, Theresa May, a little wiggle room to secure backing from MPs for her deal or plot another course.
  • In a move that has worried health campaigners, cigarettes maker Philip Morris has signed a deal with youth-focused Vice Media to promote vaping,
  • The Times

  • Mike Ashley has lashed out at Philip Green in battle to take control of Debenhams as a pre-pack administration of the department store chain looking increasingly likely.
  • Rolls-Royce’s chief executive Warren East has resigned from the board of Dyson.
  • Amigo Holdings lost almost £80 million of its market value yesterday amid worries Britain’s biggest provider of guarantor loans faces growing scrutiny from the City watchdog.
  • Government borrowing costs declined to their lowest level in 18 months after doveish signals for growth from the US Federal Reserve and the rising threat of a no-deal Brexit.
  • The Daily Telegraph

  • Next's boss has claimed there is no evidence that Brexit has knocked consumer spending; he revealed the clothing retailer would benefit by up to £15 million from the Government’s plan to slash tariffs in the event of a no-deal.
  • Levi Strauss’s shares surged in New York yesterday as the jeans maker began its second stint as a public company.
  • Privately owned construction firm Wates Group’s boss hailed its family-owned business model as the company posted a 1% rise in pre-tax profits, defying the downturn sweeping the sector.
  • The Entertainer toy retailer has posted a 31% rise in pre-tax profits to £15.1 million in the year to January, cashing in from a parental “backlash” against computer games.
  • Charles Horton, the former boss of Govia Thameslink, received nearly £400,000 after he quit last summer in the wake a shambolic train timetable overhaul.
  • Britain’s two largest shopping centre owners, Hammerson and Intu, have slashed their bosses’ pay packets after a painful year for retail sector.
  • Persimmon will allow customers to hold back a chunk of the price of their homes until any faults are fixed.
  • Facebook stored up to 600 million user passwords in a readable plain text format for years, according to security researcher Brian Krebs.
  • Daily Mail

  • The Bank of England kept interest rate at 0.75% as it waits for a Brexit decision.
  • Ted Baker shares plunged nearly 6% yesterday after it came clean on a 26% slump in full-year profits.
  • Game Digital’s shares jumped over 4.5% yesterday after the group posted a 20.3% rise in first-half profits to £14.8 million.
  • The Guardian

  • A report published by InfluenceMap has said that the top five listed oil and gas companies spend nearly $200 million a year lobbying to delay, control or block policies to tackle climate change.
  • Scammers stole £1.2 billion from UK bank customers in 2018, according to official data, with year on year figure up by 25%.

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