FTSE 100 closes near flat
UK PM Theresa May tells MPs she will quit
Indicative votes later in Commons
Debenhams jumps as Sports Direct sets out bid
FTSE 100 ended the day on a damp squib, near flat at 7,194, as the market awaits the next round of the Brexit process and news emerged shortly afterwards that UK PM Theresa May will resign after her deal is passed.
Mrs May reportedly told MPs that she will resign before the next phase of the Brexit negotiations, though no exact date was set.
MPs today in London took control of the House of Commons as they try to find a way through the tangled mess. They will later have a vote on eight possible proposals, in a bid to indicate where consensus lies.
Elsewhere, in Central Bank news, Mario Draghi, the head of the European Central Bank, said the bank would hold-off on hiking rates if needed.
The UK blue-chip index closed down around two points at 7.194.
The FTSE 250 closed out down 2.5 at 18,893.
On Wall Street, the Dow Jones Industrial Average is down around 60 points and the S&P 500 shed nearly 12.
“I am prepared to leave this job earlier than I intended in order to do what is right for our country and our party" - UK PM Theresa May confirms she will quit if her #Brexit deal is passedhttps://t.co/Y8RyOLP74J pic.twitter.com/3Qslw9A2I1— BBC Breaking News (@BBCBreaking) 27 March 2019
The French and German benchmarks both went lower.
3.20pm: Housebuilders’ surge not enough
After briefly popping its ahead above the parapet, the FTSE 100 has fallen back below yesterday’s close as we near the end of the trading day.
The index of blue-chip shares is down 21.1 points, or 0.3%, to 7,175.2.
The drop has been mirrored across the pond, with the Dow Jones, Nasdaq and S&P 500 all giving up their early (modest) gains.
The FTSE 250 group said margins had been squeezed by cost inflation and a softening house market over the past six months, but it still delivered an 8.7% rise in pre-tax profits.
That has helped to push its FTSE 100 peers Persimmon PLC (LON:PSMN) (up 1.6% to 2,194p), Barratt Developments PLC (LON:BDEV) (up 1.4% to 602.8p) and Taylor Wimpey PLC (LON:TW.) (up 2.2% to 179p) higher today.
2.30pm: Investors dump Accrol shares as FCA digs deeper into loo roll-maker’s accounts
Shares in Accrol Holdings PLC (LON:ACRL) have gone down the pan again after the UK’s watchdog widened its investigation into the toilet roll maker.
In January, the Financial Conduct Authority said it was looking into statements Accrol had made to the market between 1 April 2017 and 20 November 2017.
But the FCA is now investigating all communications made since the company listed on AIM in June 2016 up until last September, when its audited full-year results were published.
Shares are down 9.5% to 19p.
1.45pm: Dow Jones ticks up
The FTSE 100 index edged into positive territory as Wall Street blue chips started with some modest gains to extend a two-session rally as recent economic growth worries eased.
US data showed the trade deficit improve in January to a figure of -$51.1bn from -$59.9bn in December, better than the -$57.0bn the market had expected, largely due to a 2.6% month-on-month drop in imports while exports increased 0.9%.
Economists at ING commented: “We’d seen the US’ trade position deteriorate very sharply towards the end of last year, which we attribute largely to US firms ramping up imports from China ahead of anticipated tariff increases from 1 January 2019.
“The tariffs were subsequently delayed in mid-December by President Trump, but businesses could not have known that would happen. Given the time it takes to ship products across the Pacific it appears, unsurprisingly, that they ordered fewer imports for January”.
In early New York trading, following a 140 points jump on Tuesday, the Dow Jones Industrials Average rose 31 points, or 0.1% to 25,685, while the broader S&P 500 index and tech-laden Nasdaq composite only just ticked into positive territory.
The UK blue chip index was similarly reticent to move too far, adding just 6 points at 7,191.
1.15pm: Sterling strength weighs on Footsie
The FTSE 100 index remained modestly lower in afternoon trading as the pound posted gains as UK MPs begin a round of indicative voting aimed at finding an alternative and consensus path for the Brexit process.
But Darren Sinden, market analyst at Pepperstone said “we have seen little in the way of cross-party consensus over the 21 months since the Brexit referendum and I don't expect a spirit of cooperation to magically appear at this 11th hour.
“And so a no deal Brexit remains a genuine possibility and one that’s not properly reflected in sterling exchange rates by a market that believes that a deal can still be struck and a no deal averted.”
The market analyst concluded: “The pound is highly likely to fall in value if we plunge over the cliff edge of a no deal Brexit.”
However, on currency markets, sterling still gained 0.2% versus the US dollar at $1.3228 and rose 0.2% as well against the euro at €1.1747.
The UK blue chip index was off 2 points at 7,193, albeit having recovered from session lows of 7,160.14 as US stock index future rallied to indicate early gains on Wall Street.
12.30pm: US to follow European stocks lower
US stocks are on course to fall at the New York bell after a mixed session in Asia and as European indices are also seeing red.
Wall Street was buoyed on Tuesday as traders were optimistic on China/US trade talks this week and there was less anxiety over the bond market.
The Dow Jones Industrial Average finished ahead by around 140 points at 25,657, while the Nasdaq added nearly 54 points. The S&P 500 gained around 20 to stand at 2,818.
But in US futures trade Wednesday, the Dow Jones is 72 points lower; the Nasdaq is off eight and the S&P 500 is around five points lower.
James Hughes, market analyst at London-based Axitrader, said: "Fresh losses for Boeing are contributing to the Dow’s underperformance when compared to the S&P and after a mixed session in Asia, there really is a dearth of fresh direction out in the market right now."
He added: “The economic calendar for the day ahead looks rather muted, too, with limited high-profile economic data scheduled for publication, again making direction difficult to call in the near term.”
12.15pm: Ferguson upgraded by JP Morgan after Tuesday’s sell-off
Ferguson shares dropped 7.6% on Tuesday after the plumbing and heating products distributor said it expects full-year profit to reach the lower end of market forecasts.
Shares have fallen more than 15% in the past 12 months amid concerns about tough trading conditions in the UK.
“We believe the recent underperformance and yesterday’s sell-off are overdone,” JP Morgan said.
“We see scope for a material re-rating through H2,” said analysts at JP Morgan, who lifted their rating for the stock to ‘overweight’ from ‘neutral’ and kept their 5,950p target in place.
“We believe new estimates will prove to be sensibly based, we see scope for US lead-indicators to start improving, and we expect scope for further buybacks to fall into view, making what is already a discounted valuation look particularly attractive.”
In early-afternoon trading, shares in Ferguson edged up 1.4% to 4,865p, making it one of the top risers on the Footsie.
12pm: Retail sales fall
Retail sales volumes fell sharply in the year to March, compounding a subdued start to 2019, according to the latest monthly CBI distributive trades survey.
The survey of 105 firms, of which 50 were retailers, showed retail sales volumes fell dropped 18%, the fastest contraction in 17 months.
“Even accounting for Easter timing, the High Street’s poor run continues,” said Anna Leach, CBI head of economic intelligence.
“While real wage growth is picking up, consumer confidence has been hit by escalating uncertainty over Brexit and concern over the economy's future.
“The pain currently being felt on the High Street is yet another reason why it is so vitally important politicians agree a deal in Parliament that is acceptable to the EU and protects our economy. No-deal must be averted at all costs.”
????️@AlpeshPaleja highlights key messages from our latest #DTS. Retail sales volumes fell in the year to March, compounding a subdued start to 2019.— CBI (@CBItweets) March 27, 2019
Find out more here – https://t.co/fUl0Fd2WDQ pic.twitter.com/X5bjx1dN0U
11.40am: Crispin Odey takes 5.2% stake in Debenhams
In a major holdings notification – called a TR-1 form – Odey revealed that it bought 1.23bn Debenhams shares on Tuesday.
Could the two be working together to stop Debenhams from agreeing a £200mln refinancing which would likely wipe out most Debenhams shareholders?
Debenhams shares are up more than 50% today after Ashley, who already owns a 30% stake in the department store chain, said he was considering making a £61mln offer for it.
Odey was previously short of Debs, according to Bloomberg data— Jonathan Eley (@JonathanEley) March 27, 2019
11am: FTSE 100 in reverse gear
After an indifferent start to proceedings, the FTSE 100 has stumbled over the past hour.
The index of blue-chip shares is currently down 21.8 points, ot 0.3%, to 7,174.5.
Heating and plumbing products supplier Ferguson Plc (LON:FERG), formerly known as Wolseley, has bounced back after yesterday’s sell-off, climbing 1% to 4,842p. An upgrade from JP Morgan analysts has also helped, no doubt.
Most of the action has been happening in the lower echelons of the London Stock Exchange.
Debenhams plc (LON:DEB) is the day’s biggest gainer, up more than 50% to 3.5p after Mike Ashley said he’d offer 5p a share if bosses agreed to put him in charge and cancel financing discussions with third-party lenders.
The five-a-side football firm said it owed at least £12mln to the UK taxman in unpaid VAT and warned that the debacle could lead to a “material change” in its financial position and dent future profits.
10.40am: Findel urges shareholder to reject Sports Direct’s takeover offer
Some more Mike Ashley news now…
The British home shopping company said the 161p per share cash offer is “opportunistic” and “significantly undervalues Findel and its future prospects”.
Sports Direct announced its takeover bid for Findel earlier this month after its stake in the retailer surpassed 30%.
Findel shares are currently unchanged from yesterday’s close at 160p.
Mike Ashley not having the best day... In addition to ongoing Debs tug of war, Findel has (again) rejected Sports Direct's takeover offer. And Goals Soccer Centre wants to suspend shares following discovery of £12m accounting error. Ashley has a 19% shareholding.— Hannah Uttley (@huttleyjourno) March 27, 2019
10.15am: Goals Soccer puts one through its own net
Shares in the Mike Ashley-backed company have been suspended “pending clarification of its financial position”.
Goals said an accounting cock-up “going back several over years” meant it hadn’t paid £12mln worth of VAT. It warned that figure could rise as well as it continues to dig through its books.
The AIM company added that the error could “lead to a material change in its overall financial position” and that it was in talks with lenders over new loan facilities.
New accounting policies are being put in place which bosses believe could “have an impact on profitability” going forward.
Surely #GOAL cannot survive this? £12m equates to the last five years profits combined but also one has to question whether they have a profitable business model. Fortunately it never appealed to me as an investment. Commiserations to holders.— Michael Broom Smith (@MBroomSmith) March 27, 2019
9.35am: Bellway boosted by Help to Buy (again)
The housebuilder said pre-tax profit increased 8.7% to £313.8mln and revenue rose 12.4% to £1.5bn in the first half ended January 31.
Bellway completed 5,007 homes in the period, up 5.6% on a year ago, and average selling prices gained 6.4% to £293,832.
However, the operating margin fell by 70 basis points to 21.5% with the company blaming cost pressures and the “reducing benefit of historical house price inflation” amid a slowdown in the market.
Still, it lifted its dividend to 50.4p from 48.0p in the first half of last year.
Shares are up 2.8% to 3,083p in early deals on Wednesday.
Bellway H1 revs +12.4%, op. profit +8.7%, interim div +5%, net asset value +15.7%, return on capital -1.1pts, operating cash flow +18%; Reservations +2.8%, Completions +5.6%, Avg sale price +6.5%, fwd sales value -2.5%, fwd sales vol +4.3%;— Mike van Dulken (@Accendo_Mike) March 27, 2019
9.15am: Debenhams flies on Mike Ashley interest
The billionaire said he was prepared to pay £61.4mln but only if Debenhams' board agreed to meet two conditions.
Firstly, it would have to make him the new chief executive while he also demanded that bosses terminated discussions with lenders to secure a £200mln lifeline.
“Sports Direct would expect the possible offer to be attractive to Debenhams shareholders and other stakeholders as an alternative to Debenhams' current restructuring and refinancing process.”
Mike Ashley reaaally wants Debenhams, doesn’t he? It’s like he’s building up a Panini sticker book of high street retail and he’s missing his shiny.— James Child (@JamesChildEG) March 26, 2019
8.45am: Modest early gains for Footsie
The FTSE 100 made a tentative start on what could be a politically tumultuous day in parliament – one in which, feasibly, Prime Minister Theresa could lay the foundations for her departure.
MPs are preparing to vote for their preferred Brexit option, with the PM due to meet Tory backbenchers in an effort to win them over to her deal.
Brexiteer Jacob Rees-Mogg told the Daily Mail he will, reluctantly, back the plan, while former foreign secretary and Leave campaigner Boris Johnson may follow suit.
Ahead of the parliamentary action the index of blue-chip shares was up just 9 points at 7,205.21 as it resisted the pull exerted by a buoyant Wall Street overnight.
The movements on the Footsie were all fairly muted with Ferguson (LON:FERG) bouncing 1% after Tuesday’s sell-off, helped by an upgrade in rating for JPMorgan Cazenove, while Carnival sank a further 1% after sounding the earnings hooter yesterday, with UBS trimming its target price.
Proactive news headlines:
OptiBiotix Health PLC (LON:OPTI) appears to be making significant commercial headway with its next-generation sweetener. Investors were told it has reached an outline deal with an unnamed US firm, which has funded pilot production of two batches of the SweetBiotix sweet fibre product.
Touchstone Exploration Inc (LON:TXP, TSE:TXP) chief executive Paul Baay, in 2018’s financial results statement, highlighted a sUBStantial improvement in all key performance indicators during a year which saw his company cement its place as the most active onshore upstream group in Trinidad.
Silence Therapeutics PLC (LON:SLN) has made a clinical trial application for its lead candidate, which is being developed to treat iron overload disorders. SLN124 already has orphan drug designation in Europe, which could shorten its time-line to market while providing the approved product with additional exclusivity.
Echo Energy Plc (LON:ECHO) has provided a production update ahead of 2018’s financial results statement, due at the end of April. The Argentina focussed oil and gas firm said that output from the Fracción C and Fracción D licences amounted to 315,825 barrels oil equivalent, which translates to an average rate of 865 boe per day.
Accesso Technology PLC (LON:ACSO) has guided towards 2019 organic growth similar to that seen in 2018, in-line with consensus expectations, as it posted strong underlying full-year earnings. The group reported 36.5% growth in adjusted underlying earnings (EBITDA) grew to US$34.8mln for the year ended 31 December 2018, as revenue increased by 15.5% to US$118.7mln.
Frontier IP Group Plc (LON:FIPP) has reported a 27% increase in the value of its portfolio in the first half. The intellectual property investor reported that for the six months to 31 December 2018 the fair value of its portfolio had increased to £11.5mln from £9.1mln in the prior six months. Big Pic in November.
RM Secured Direct Lending PLC (LON:RMDL) has paid out a total dividend of 6.5p for its latest full year, in line with its targets, following an increase in the average yield of its investment portfolio.
Korea gold explorer Bluebird Merchant Ventures Ltd (LON:BMV) expects to finalise the extraction method for ore at the Kochang mine by the end of April. Samples so far indicate the ore is not problematic and does not require complicated or expensive extraction techniques, said Bluebird, which will allow for lower cost processing options.
Avation PLC (LON:AVAP) has acquired and leased a third new Airbus A220-300 aircraft to airBaltic, the Latvian hybrid carrier. The commercial passenger aircraft leasing company said the 12-year lease commenced on 26 March 2019.
Woodbois Limited (LON:WBI), formerly known as Obtala, has raised around £960,000 from its institutional investor, Lombard Odier, as it also amended an agreement relating to the sale of its Tanzanian agricultural business. The forestry and timber firm said Lombard had sUBScribed for 16mln new shares at a price of 6p each, an 12% discount to its close price on Tuesday, taking its stake in Woodbois to 25.01%.
Oracle Power PLC (LON:ORCP) has informed investors of a change to the memorandum of understanding concerning the group’s power plant development project in the Sindh Province of Pakistan. A new 2019 agreement changes the composition of equity holdings in the project, though Oracle’s stake remains mostly intact (it will now have 12% rather than 12.1%).
Active Energy PLC (LON:AEG) said it has completed its acquisition of the industrial site in Lumberton, North Carolina, which is to become its CoalSwitch base, with all outstanding conditions now satisfied. Active Energy announced the US$3.3mln (£2.5mln) acquisition of Lumberton from vendor Alamac on 4 March, with the deal to be funded by a US$3.41mln convertible loan note.
Base Resources Limited (LON:BSE) (ASX:BSE) has appointed Berenberg as its joint broker, with immediate effect, to work alongside its existing joint broker, Numis Securities, as well as the company’s nominated adviser, RFC Ambrian.
PowerHouse Energy Group PLC (LON:PHE) said it has issued 26,145,552 ordinary shares in the company to various service providers for the settlement of fees, of which 21,838,750 are being issued at 0.5p and 4,306,802 are being issued at 0.5015p. In addition, the company said, it is issuing 1,808,333 ordinary shares in lieu of fees to its chief executive officer, David Ryan at a price of 0.6p per share, and 1,185,000 ordinary shares to its chief financial officer, Christopher Vanezis at 0.5p each.
6.45am: FTSE poised to open higher
The FTSE 100 is poised to open higher on Wednesday following a positive finish on Wall Street despite lingering fears of a slowdown in the world economy.
Spread-betting firm IG expects the FTSE 100 to open around 21 points higher after closing up 19 points at 7,196 on Tuesday.
The US markets closed higher on Tuesday after the energy and finance sectors helped lift the main indices despite softer economic data and doubts over world economic growth.
“Weak data is hard to ignore, and this is being weighed up against a more accommodative approach from central banks”, said Jasper Lawler, head of research at London Capital Group.
“Yesterday we saw US home building numbers were worse than forecast, and consumer confidence fell unexpectedly. The Fed has started a dovish shift which could have further to go. CME Fed Funds futures now suggest that there is a 67% probability of a rate cut by the end of the year. “
The Dow Jones Industrial Average closed up 0.6% at 25,657, while the S&P 500 was up 0.7% at 2,818 and the Nasdaq was up 0.7% at 7,691.
Uncertainty over the global economy led to more of a mixed performance in Asia on Wednesday, with the Japanese Nikkei 225 down 0.2% at 21,378 while Hong Kong’s Hang Seng was up 0.6% at 28,735.
On the currency markets, the pound was down 0.16% at US$1.318 against the dollar as MPs prepared to vote on a series of options to try and break the Brexit impasse in Parliament.
“There is still a possibility that Theresa May will attempt to put her deal back to Parliament for a third meaningful vote after being defeated twice before. With Jacob Ress-Mogg, Eurosceptic and leader of the pro-Brexit European Research Group now publicly supporting Theresa May’s deal the arithmetic of votes in Parliament will have changed. Changed sufficient to get the deal through? This remains to be seen”, Lawler said.
Bellways set to report
As Brexit uncertainties have been taken their toll on the UK economy and consumer sentiment, the housing market has pretty much stagnated, although builders of new homes have continued to put in solid performance helped by a demand squeeze and government incentives for first-time buyers.
In a trading update last month, Bellway PLC (LON:BWY) said it had started the second half in a solid position but remained “cautious given the uncertainty regarding the UK’s forthcoming exit from the EU and the extent to which this will affect wider customer confidence”.
The mid-cap housebuilder, which posts its interim results on Wednesday, said then that it expects first-half revenue to rise to almost £1.5bn, up from £1.3bn last year after completing 5% more homes and achieving a 6.5% increase in the average selling price.
“We expect sales rates to have remained robust from the trading update in Feb-18 when weekly reservations were up by 3%,” the Swiss bank said.
With some of the first-half numbers already known, investors will be looking out for Bellway’s guidance for the full year.
Significant announcements expected for Wednesday March 27:
Finals: Churchill China PLC (LON:CHH), Touchstone Exploration Inc (LON:TXP), Hilton Food Group PLC (LON:HFG), Inspired Energy plc (LON:INSE), M&C Saatchi Plc (LON:SAA), RHI Magnesita NV (LON:RHIM), Summitt Therapeutics PLC (LON:SUMM)
Economic data: CBI monthly distributive trades survey; US balance of trade
Around the markets:
- Sterling: US$1.318, down 0.16%
- Brent crude: US$67.58 a barrel, up 0.22%
- Gold: US$1,316,8 an ounce, down 0.39%
- Bitcoin: US$3,980, up 2%
- The consumer confidence index for the US dropped sharply in March amid signs of a wobble in the housing market; it comes at the same time as Germany, the eurozone’s biggest economy, suffers from a weakening export and employment outlook – Telegraph
- Brexiteers swing behind Theresa May’s deal as they feared another defeat would mean Britain remaining in the EU – The Times
- British companies have scaled back sharply their hiring and investment plans amid the growing turmoil around Britain’s exit from the European Union – Reuters
- The housing secretary has warned housebuilders that they must end “unacceptable” punitive costs and “nightmare” snagging problems in new homes if they want to continue to benefit from the Help to Buy scheme – The Times
- Samsung has issued a surprise profit warning, blaming a slump in memory chip prices and slowing demand for display panels. It is the latest sign that technology firms are facing tougher times amid a global economic slowdown – Guardian
- Thousands of people who put their savings into collapsed firm London Capital & Finance had their cash used for "highly suspicious transactions" that ended up in bosses' pockets, administrators have claimed – Telegraph
- Ocado shares hit a record high as it struck another foreign deal to provide the technology behind its pioneering delivery network to Australian supermarket Coles – Daily Mail
- Stephen Hester, head of insurer RSA, has become the latest FTSE 100 chief executive to agree a cut in the size of his annual pension payments – Financial Times
- Autonomy executives mischaracterised revenues from clients to inflate software sales figures before a disastrous £8 billion acquisition by the US firm Hewlett-Packard – Guardian
- US companies are increasingly struggling to pass on costs of rising labour, transportation and raw materials to customers, putting them on track to suffer their first fall in profit margins since 2015 - FT