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FTSE 100 closes lower as Brexit fears permeate markets

The UK's premier share index closed down around 30 points at 7,177
Theresa May
The pressure is ratcheting up on PM Theresa May
  • FTSE 100 closed down 30 pts

  • Global stock markets down

  • Labour Party calls on May not to put parliament through a third "meaningful" vote

FTSE 100 joined European counterparts Monday to head lower as Brexit worries permeate through the markets.

The UK's premier share index closed down around 30 points at 7,177, while the FTSE 250 plunged over 198 points at 18,799.

In the US, stocks are in the red at the time of writing, while the German DAX and French CAC 40 are also lower.

"The dreadful manufacturing figures from France and Germany, from Friday, are still playing on traders’ minds. The poor economic reports from the two largest economies in the eurozone acted as a wakeup call to investors, that a no-deal Brexit is likely to be painful for the Continent as well as the UK," said David Madden, analyst at CMC Markets.

It comes as UK Prime Minister Theresa May admitted she did not have, as things stand currently, enough support in the House of Commons to win a vote on her EU withdrawal deal.

MPs are also now poised to hold a series of votes on Brexit options.

3.00pm: May to make a statement at 3.30pm on Brexit

The FTSE 100 was in the red as details emerged of a meeting between prime minister Theresa May and Labour Party leader, Jeremy Corbyn.

The FTSE 100 was down 43 points (0.6%) at 7,165 after an hour-long meeting between the leaders of the two main parties in Parliament.

The two enjoyed – if that is the right word - a frank and comprehensive exchange of views, according to a statement issued by the Labour Party.

The statement made it clear that Her Majesty's Opposition was against the idea of bringing back Theresa May's deal – now very much like the uneaten kipper served up for breakfast day after day in the 1966 film “The Family Way” - for a third meaningful/meaningless vote.

May is said to be considering asking her MPs to vote on the withdrawal agreement separately from the political declaration, as the withdrawal agreement is the only bit that needs to be passed in order for Brexit to be extended until 22 May.

 

While all the political wrangling goes on, sterling has perked up and gained almost a quarter of a cent against the US dollar.

Meanwhile, with concerns growing about global economic growth, conservative investors have been diving into gold, which was up US$8.20 (0.6%) on the futures markets at US$1,320.50 an ounce.

2.00pm: US stocks open mixed

US stocks have opened mixed, with tech stocks dragging the NASDAQ Composite lower while the Dow and S&P 500 have advanced.

The Dow Jones industrial average was up 44 points (0.2%) at 25,546 while the S&P 500 was up 2 points (0.1%) at 2,803.

The NASDAQ Composite was off 11 points (0.2%) at 7,632.

Back in the UK, the FTSE 100 was off 55 points (0.6%) at 7,153.

The mid-cap FTSE 250 was faring even worse, down 210 points (1.1%) at 18,789.

Bid situations provided some relief from the gloom.

Wealth management firm IFG Group PLC (LON:IFP) shot up 43% to 190p after accepting a £206mln bid from Epiris Funds while satellite launcher Inmarsat Plc (LON:ISAT) jumped 9% to 551p after a private equity-led consortium took it out in a deal valued at US$3.4bn.

11.30am: The Footsie's rally runs out of steam

 The FTSE 100’s mid-morning revival has faltered ahead of what is expected to be a slightly soft opening on Wall Street.

The index of blue-chip shares was down 30 points (0.4%) at 7,178.

“Having briefly pared their losses mid-morning thanks to some reassuring comments from Janet Yellen, the European markets couldn’t completely shake their weak start to the week,” reported Connor Campbell at Spreadex.

“The former Fed chair put forward the argument that the yield curve inversion that sparked fears of a US recession may instead actually be a sign that interest rates need to be cut, an idea that immediately held sway with investors and erased much of the day’s early decline. Add onto that a better than forecast German Ifo business climate reading, and it seemed that Europe had picked itself up off the floor,” he continued, before adding that the turnaround did not last long.

James Hughes at Axi Trader is predicting that the Dow Jones industrial average will open a couple of points lower.

“Donald Trump may have been cleared of conspiring with Russia in the 2016 election campaign, but that has done nothing to boost sentiment in equity markets, with the mounting threat of recession proving far more pervasive. Expectations late last night had been that the news would set Wall Street on fire, but as it stands, positivity is being reined in by the idea that we’re on the cusp of a global economic slowdown,” Hughes said.

“Economic data before the weekend break may have disappointed, but it was the inversion of the US Treasury 10 year yield curve that appears to have been the most significant indicator over the threat of recession. Expect this metric to be closely watched in the days ahead,” Hughes added.

“Economic data in the near term remains thin on the ground and it’s also worth bearing in mind that yesterday’s news from Washington still doesn’t mark the end of the investigation against President Trump,” Hughes advised.

Oilfield support services giant John Wood Group PLC (LON:WG.) was the worst performing FTSE 350 stock, shedding 7.8% after Jefferies downgraded the stock to ‘underperform’ from ‘hold’.

The US broker said dividend risk was increasing as the need to deleverage the group’s remaining debts of US$1.54bn would put pressure on the payouts as it could no longer rely on such large disposals.

Having said that, it has agreed to sell a non-core business unit, conveyor systems, in a deal worth US$38mln – small beer for a company with debts of US$1.5bn.

 

9.45am: Leading shares pull away from intra-day lows 

The FTSE 100 remained under a cloud, with investors worried about global economic growth and pre-Brexit political paralysis in the UK.

London’s index of leading shares was at least pulling away from its low point, reducing the loss to 26 points at 7,182.

“After a weekend of intense speculation about Theresa May’s future as Prime Minister – and highly unconvincing denials of interest in the top job by those ministers touted to replace her – this morning will see May seek approval of her latest Brexit strategy in Cabinet but events seem now to be very much out of her hands, with the House of Commons set this afternoon to vote on a variant of the 'Cooper-Letwin' proposal to allow MPs to launch a new process of indicative votes on a full range of Brexit scenarios on Wednesday,” commented Chris Scicluna at Daiwa Capital Markets.

“Reports have also suggested that the Government itself intends to run such a process of indicative votes in coming days whereby MPs would be able to express their support for up to seven options – the PM’s deal and variants thereof including a customs union and single market participation, Article 50 revocation, a second referendum, or no deal – to try to find a resolution to the current impasse,” Scicluna added.

That's cleared that up, then …

“Whatever happens, we see a significant probability that May’s term as Prime Minister will end by this time next week,” Daiwa predicted.

Sterling has lost around a third of a cent against the US dollar today, which normally provides a boost to Footsie stocks but has done no favours to tool hire firm Ashtead Group PLC (LON:AHT), down 2%, which does most of its business in the US but which reports in sterling.

Meanwhile, there was more bad news from the retail sector with Majestic Wine PLC (LON:WINE) losing just over a tenth of its value after an update on its transformation plan.

The wines flogger said it was trading “broadly” in line with consensus forecasts; a company rarely, if ever, uses the term “broadly in line” if it is actually exceeding expectations.

 

The company has bitten the bullet and decided to rebrand as Naked Wines, the fastest growing part of the business, and close a number of retail stores. It also hinted that it may bin the dividend to free up money to invest in the business.

8.45am: Footsie falls

The FTSE 100 index succumbed to the sell-off that afflicted Asia’s main markets earlier in the trading day, prompted by worries over the state of the global economy.

Adding to the early jitters was the prospect of a no-deal Brexit ahead of what could once again be a politically tumultuous week.

A series of indicative votes could be used to find a parliamentary consensus, though Theresa May faces a more immediate obstacle in the form of her cabinet, which, if weekend reports are to be believed, is in open revolt.

The Prime Minister is expected to update ministers on her Brexit strategy when she chairs a meeting of her cabinet this morning.

On the markets, the index of blue-chip shares lost 48 points to trade at 7,159.71 in the first hour of trade.

Leading the losers was Smiths Group (LON:SMIN), off 2%, with profit-takers diving in. On Friday the shares advanced after the engineer announced plans to cut free its medical division.

Wood Group (LON:WG.), the oil field services specialist, fell 6% after the disposal of a conveyor systems business it owned failed to excite.

Inmarsat (LON:ISAT), meanwhile, advanced a further 7.5% after a group of pension funds formalised the terms of a £2.6bn deal to take the satellite business private.

Proactive News Headlines:

Sound Energy PLC (LON:SOU) has given investors additional technical insights with the release of information from pressure build-up analysis in the TE-7 well, onshore Morocco. The trend observed in the well pressure data over time indicates that higher than previously estimated volumes of gas will be accessible from the well.

After a tough start to 2018, digital services company Be Heard Group PLC (LON:BHRD) has now enjoyed nine consecutive months of profitability.

Kavango Resources PLC (LON:KAV) has intersected over 200 metres of intense alteration with significant anomalous base metal values at its Ditau prospect, in the first hole of an ongoing diamond drilling programme.

Kibo Energy PLC (LON:KIBO) has sent a letter to shareholders in which chief executive, Louis Coetzee, detailed the progress the company has made.

Excluding exceptional items, trading and risk management software provider Brady Plc (LON:BRY) moved back into profit in 2018. The fintech firm, which underwent a restructuring and management overhaul last year, posted adjusted underlying earnings (EBITDA) of £2.6mln, compared to a loss in 2017 of £307,000.

Oil rig contractor Ades International Holding PLC (LON:ADES) posted revenues 30% higher in 2018 as new rigs contributed for the first time and utilisation rates rose. Underlying profits rose by 26% to US$101mln, helped by a rise in the number of rigs under operation to 28 from 12 in 2017.

NetScientific PLC (LON:NSCI) has sold its stakes in portfolio companies Vortex Biosciences Inc and Wanda Inc to investment firm EMV Capital Ltd for £150,000.

Tekcapital PLC’s (LON:TEK) portfolio company Lucyd has filed 13 design patents for a new line of its Lucyd Loud Bluetooth-enabled speaker glasses.

Asiamet Resources Ltd (LON:ARS) has boosted the resource at its Beutong copper project in Indonesia to a total of over 500mln tonnes of ore. Asiamet holds an 80% interest in Beutong through its local operating subsidiary PT Emas Mineral Murni.

Exploration results at the Brits vanadium project, which lies adjacent to the Vametco mine currently being operated by Bushveld Minerals Limited (LON:BMN), have indicated that an eastward expansion of mineralisation is likely. A maiden resource is expected in the second quarter of this year.

Avation PLC (LON:AVAP), the commercial passenger aircraft leasing company, has delivered a new ATR 72-600 aircraft to the South Asian airline US-Bangla Airlines, the operating lease of which is at market rates. Avation's Executive Chairman, Jeff Chatfield said: "We are pleased to increase our diverse customer base by adding another new airline and jurisdiction, and we are equally pleased to be delivering from our order book another new ATR 72-600 into service, the world's most popular regional turboprop aircraft."

Danakali Ltd (ASX:DNK) (LON:DNK) has appointed highly experienced potash industry executive Niels Wage as chief executive officer following a thorough global search.

Caledonia Mining Corporation PLC (LON:CMCL) (TSX:CAL) announced that following the maturing of a long term incentive plan award on March 23, 2019 a total of 53,087 securities were issued to its chief financial officer, Mark Learmonth, and a new long term incentive plan award was made to him. As a result, the group said, Learmonth now holds 149,775 depositary interests which represents an interest in approximately 1.39% of the share capital of the company.

Golden Saint Tech Limited (LON:GST), an integrated information and communication technology infrastructure solutions provider, announced that one of its non-executive directors, Malcolm Groat, has been appointed as a non-executive director of InfraStrata PLC (LON:INFA).

Touchstone Exploration Inc. (LPN:TXP) (TSX:TXP), an oil and gas exploration and production company active in the Republic of Trinidad and Tobago, said it will be holding a live online investor presentation and Q&A session for investors on Wednesday 27 March 2019 at 7pm. The group said the webcast will be recorded and made available on ValueTheMarkets.com after the event.

Salt Lake Potash Limited (LON:SO4) (ASX:SO4) said a new corporate presentation is now available to view on the https://www.saltlakepotash.com.au/company-presentations/company's website. 

Ariana Resources PLC (LON:AAU), the exploration and development company with gold mining operations in Turkey, said it will be participating in the UK Investor Show. The event will take place on Saturday 30 March 2019 at the Queen Elizabeth II Conference Centre Westminster, London, SW1P 3EE.

6.35am: FTSE 100 set to slide

The FTSE 100’s slide is set to continue with the index taking its cue from Asia’s main markets, which have been haunted by recession fears.

Traders appeared to have more than weather eye on the US as a switch out of equities and into sovereign debt began overnight, perpetuating last week’s global stock market sell-off.

“Heavy losses were sustained in Japan and China,” said David Madden of CMC Markets. “US equity index futures are now in the red due to worldwide sell-off.”

A no-deal Brexit, meanwhile, would also seriously affect the already uncertain outlook for Europe with France’s economy seemingly in reverse gear and German manufacturing struggling.

Spread betting firms are predicting the UK’s blue-chip share will open trading on Monday 31 points lower at 7,176.29.

“Brexit will remain in focus as the EU granted Theresa May the extension she requested,” said CMC’s Madden.

“The length of the extension will depend on whether Mrs May can get approval for her withdrawal agreement from MPs. The UK’s departure from the EU will be mid-April or late May depending how the voting goes.”

Looking ahead, as well as more Brexit mayhem, we can expect updates this week from builder Bellway (LON:BWY), a supplier to the construction industry Ferguson (LON:FERG) and fag maker Imperial Brands (LON:IMB).

Significant announcements expected on Monday March 25:

Trading updates: Pennon Group plc (LON:PNN)

Finals: ADES International PLC (LON:ADES), Be Heard Group PLC (LON:BHRD), Brady Plc (LON:BHED), Ebquity PLC (LON:EBQ), Bigblu Broadband PLC (LON:BBB), Hansteen Holdings plc (LON:HSTN), Microgen plc (LON:MCGN), Medica Group PLC (LON:MGP), Quixant PLC (LON:QXT), SpaceandPeople Plc (LON:SAL), Spectra Systems Corporation PLC (LON:SPSY)

AGMs: WPP PLC (LON:WPP)

Economic data: CBI quarterly financial services survey; BBA UK mortgage lending; German IFO business climate survey; US new home sales; US Chicago Fed national activity index

Around the markets:

  • Pound worth US$1.3168
  • Gold up US$3 an ounce at US$1,321.70
  • Brent Crude Oil was off 3 cents a barrel at US$66.67

City Headlines:

Financial Times

  • Mueller finds no collusion between Trump and Russia
  • Deutsche Bank behind €150mln loan to Wirecard founder
  • Volvo warns on ‘irresponsible’ self-driving roll-out
  • Brussels faces clash with US over Huawei 5G plan
  • Times
  • Royal Dutch Shell has said it will consider “all opportunities” to expand in the UK household gas and electricity supply market, the paper was told
  • The boss of Centrica has taken a pay cut of about £140,000
  • Telegraph
  • Top bosses forced into pensions climbdown
  • Philip Green prepares for showdown over Arcadia pension black hole
  • UK eighth best placed large nation in clean energy race
  • Shell to switch 700,000 UK homes to renewable energy
  • Uber closes in on $3bn takeover of Middle East rival Careem
  • Guardian
  • Tesco begins plastic-free trial for selection of fruit and veg
  • Autonomy founder Mike Lynch faces UK high court and fresh charges in US
  • Geoffrey Cox accused of 'sitting on' Airbus subsidiary corruption case

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