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FTSE 100 closes in positive territory, boosted by better-than-expected US March jobs figures as Brexit uncertainty continues

Mid-cap cousin FTSE 250 was also lower, shedding around 56 points at 19,507
Cityscape
FTSE 100 closed in the red on Thursday
  • FTSE 100 closes lowre but above 7,400

  • UK software giants dented by Citi downgrades

  • Wall Street shares mixed

FTSE 100 closed the day lower as financial stocks lagged and Wall Street shares were mixed.

Footsie finished down around 16 points at 7,401.

Mid-cap cousin FTSE 250 was also lower, shedding around 56 points at 19,507.

On Wall Street, the Dow Jones Industrial Average is up 107 but the S&P 500 and Nasdaq are down at the time of writing. In Europe, the German DAX is up and the French CAC 40 is lower.

David Madden, at CMC Markets, said: "European stock markets are broadly lower this afternoon, but a strong performance from the German car makers has helped the DAX outperform. By-and-large it has been a positive week for equity markers as traders have high hopes for US-China trade talks. President Trump is due to meet China’s vice premier Liu later today. It was reported that trade negotiations are in the ‘end game’ but nothing is final yet."
 
Top lagged on Footsie was insurer Direct Line Insurance Group plc (LON:DLG), which lost 7.56% to stand at 338.80p as it went ex-dividend.

3.45pm: No return to 7,400 for the Footsie

The FTSE 100 was backing away from the 7,400 level again as it entered the last hour of trading.

Having trimmed its losses in the lunchtime session, the index of blue-chip shares was fading down the back street, down 28 points (0.4%) at 7,391.

The index's cause was not helped by a broker note from Citi that took the shine off the UK's two software giants.

Citi cut its ratings for Sage Group PLC (LON:SGE) and Micro Focus International PLC (LON:MCRO), having adjusted target prices on valuation grounds.

For Sage Group, Citi cut its rating to ‘neutral’ from ‘buy’ while raising its target price to 720p from 630p; the shares were down 1.2% at 708.2p.

The US bank cut its stance on Micro Focus to ‘sell’ from ‘neutral’ while raising its target price to 1,700p from 1,230p as it believes the stock has run ahead of fundamentals.

Micro Focus shares were down 5.5% at 1,952.75p.

2.35pm: Sterling gives up half a cent against the buck

The FTSE 100 continued to hack away at its losses, helped by US stocks opening on the front foot and sterling sliding versus the dollar.

London's index of blue-chip shares was down 20 points (0.3%) at 7,398 and threatening to return above 7,400.

Stateside, the Dow Jones industrial average rose 81 points (-.3%) at 26,299 while the broader-based S&P 500 was up 4.4 (0.2%) at 2,878.

On the foreign exchange markets, sterling was half a cent down against the greenback at US$1.3110.

“Notwithstanding relief from last night’s one-vote parliamentary majority against ‘no deal’, the brittle breakthrough just changes the flavour of uncertainty. Sterling peaked around 30 pips higher after late-night news before returning to it mid-$1.315s comfort zone,” reported Ken Odeluga at City Index.

“Hard-Brexit risk has fallen incrementally, but there’s still no alternative,” Odeluga noted.

On the subject of Brexit, online electrical retailer AO World PLC (LON:AO.) revealed it increased its core fast moving inventory levels by around £15mln in the first quarter as part of its Brexit contingency plans.

The shares fell 7% as the company said earnings for the financial year just ended are expected to be at the lower end of market expectations.

1.00pm: US stocks expected to open mixed

 The FTSE 100 continued to flounder in lunchtime trading with little prospect of a boost from Wall Street when it opens for trading.

The FTSE 100 was down 32 points (0.4%) at 7,386, breaking out of the 3,770-3,780 channel it has been in for much of the day.

“Wall Street is looking at a mixed start to the day’s trade despite yet more optimism over progress in those US-China trade talks,” reports James Hughes, the chief market analyst at Axi Trader.

“Donald Trump is reported to be meeting the Chinese vice premier later today in what could be a meaningful step forward in finding a compromise, although yesterday’s economic data from the US laid bare the impact that the global economic slowdown is having on the US economy. In turn, this is nudging up the prospects of an earlier rate cut from the Fed – markets are now pricing in a 20% chance of a quarter point easing at the June meeting – but the accompanying optimism this should bring doesn’t seem to be flowing towards stocks just yet,” he noted.

Spread betting quotes suggest the Dow Jones 30-share will kick-off with a 12-point gain at 26,230 while the S&P 500 was pegged to open a point or so lower at around 2,872.

On the equities front, there has been little news flow from the big beasts but the mid-caps have made up for it.

Saga shares continue to take a pounding, with the 33% share price fall putting the company's market capitalisation in the bottom 15% of the index's constituents.

HomeServe PLC (LON:HSV), the home repairs business, climbed 10p to 1,082p after it said adjusted profit before tax for the year just ended to be at the upper end of market expectations.

Entertainment One PLC (LON:ETO), which we are (not) contractually obliged to refer to as the Peppa Pig company, jumped 5.2% to 467.6p after an upbeat trading update.

READ Entertainment One sizzles as Peppa Pig once again helps bring home the bacon in 2019

11.30am: FTSE stabilising at a lower level

The FTSE 100 continues to trade in a narrow channel ranging from 7,370 to 7,380.

Thanks in part to a number of big dividend payers, such as Pearson, going ex-dividend today, the Footsie was down 39 points (0.5%) at 7,379.

Of those blue-chips defying the weaker trend, low-cost airline easyJet PLC (LON:EZJ) was sporting the biggest percentage gain, up 2.2% at 1,079p, despite UBS cutting its price target to 1,080p from 1,310p.

The latest data from the Society of Motor Manufacturers and Traders (SMMT) was not very encouraging for what passes as the UK car industry or car insurers.

The SMMT reported that the total number of new car registrations in March fell 3.4% to 458,054 from 474,069 the year before.

The SMMT said political and economic uncertainty and continuing confusion over diesel affected demand. Diesel registrations fell 21.4% year-on-year while petrol demand grew 5.1%.

Interestingly, alternatively fuelled vehicles (AFVs) increased by 7.6% with 25,302 registered, the biggest March volume on record, which bodes well for the likes of AFC Energy PLC (LON:AFC), Ceres Power Holdings PLC (LON:CWR) and ITM Power PLC (LON:ITM)

“Our latest research found that 78% of people believe that vehicle emissions are a significant problem in the UK, highlighting the strong potential for AFV growth throughout 2019,” said Jon Lawes, the managing director of Hitachi Capital Vehicle Solutions.

“With the imminent introduction of London’s Ultra Low Emission Zone and the arrival of more plug-in models set to increase adoption further, addressing shortcomings in charging infrastructure and supporting a transition to greener fleets must be government priorities,” Lawes declared.

Howard Archer, the chief economic advisor to the EY ITEM Club, noted that the number of new registrations was the lowest level for March since 2013.

“The underlying picture may well be weaker than the headline March figure suggests. There are indications that March’s sales were lifted by appreciable pre-registering of vehicles before the end of March when Brexit was due to occur. This could well reflect an element of concern of what would happen to car prices and supplies if there was a ‘no deal’ disruptive UK exit from the EU at the end of March or in mid-April. If this was the case, it will likely weigh down on car sales in April at least,” Archer suggested.

9.30am: Ex-dividend stocks weigh on the Footsie

The FTSE 100 was taking a bath in early deals, weighed down by ex-dividend stocks and commodity plays.

The index of heavyweight shares was down 45 points (0.6%) at 7,374, led by Direct Line Insurance Group PLC (LON:DLG) and Lloyds Banking Group PLC (LON:LLOY), down 7.5% and 3.3% respectively, both of which were trading in ex-dividend form this morning.

The next two biggest fallers, packaging firm DS Smith PLC (LON:SMDS) and St James's Place PLC (LON:STJ) – both down about 3% - were also ex-dividend.

In the resources sector, Glencore PLC (LON:GLEN) and Rio Tinto PLC (LON:RIO) were down 1.5% and 1.2% respectively while oil titans BP PLC (LON:BP.) and Royal Dutch Shell PLC (LON:RDSB) – both index heavyweights – were down by a little more than 1%.

Among the mid-caps, Saga PLC (LON:SAGA) was the big story, losing a third of its value after it essentially said its business model no longer works.

“Without brand loyalty, Saga is just another insurer,” declared Nicholas Hyett, an equity analyst at Hargreaves Lansdown.

“An attempt to roll-back several years of falling policy numbers has seen margins in Saga’s insurance broking business tumble as the group turned to price comparison websites to boost volumes. In an already lower margin broking set-up, and with Saga struggling to hang onto customers once it’s got them, that’s led to a major strategic shift aimed at restoring profits and encouraging customers to come to Saga direct[ly],” Hyett said.

Away from the FTSE 350, tailoring group Bagir Group Ltd (LON:BAGR) was up by a sixth as it revealed it had got off to a flying start to 2019.

Sales in the first three months of the year were up to US$16.3mln from US$11.2mln in the same period of 2018, with the company boasting an order backlog of US$30.6mln.

8.40am: Cautious start for Footsie

Nerves ahead of Sino-American trade talks allied to continued confusion over Brexit hit the FTSE 100, which fell 47 points to 7,371.46.

Mark Carney, the governor of the Bank of England, described the risk of a no-deal EU exit as ‘alarmingly high’.

Forex traders, however, were betting on a softer Brexit following Prime Minister Theresa May’s decision to reach out to Labour leader Jeremy Corbyn in order to garner cross-party support for a deal.

The pound nudged back towards the US$1.32-mark, which meant the overseas currency earners, which had been buoyant as sterling threatened to nose below US$1.30, gave back some of the early week gains.

The market’s big faller was Saga (LON:SAGA), shares in which collapsed 31% after it warned of a significant drop in profits and cut the dividend. The cause? The company’s insurance business.

Among the tiddlers, ReNeuron PLC (LON:RENE) was doing well after it revealed a potentially breakthrough cell-based treatment for a blindness-causing eye disease was having an efficacious impact on patients. The shares advanced 9%.

Proactive news headlines:

Tissue Regenix Group PLC (LON:TRX) has secured additional coverage from a US Group Purchasing Organization (GPO) for the use of DermaPure, its decellularized allograft dermis. The AIM-listed regenerative medical devices company said the additional coverage will open up access to a further 1,500 hospitals and 32,500 alternative care providers, primarily in the South Eastern region of the US.

ANGLE PLC’s (LON:AGL) Parsortix cancer detection system has been showcased by a number of customers at the world’s largest cancer research conference in Atlanta, US.

ReNeuron Group PLC (LON:RENE) said its cell therapy for blindness-causing disease retinitis pigmentosa is proving efficacious in the first group of phase II patients receiving the treatment. This follows from February’s update from which it emerged that the first three people taking part in the phase I/II study were able to read an additional three lines of a standard eye chart.

Frontier IP PLC (LON:FIPP) said investee company Exscientia has reached its first major milestone in its collaboration with drugs giant GlaxoSmithkline (LON:GSK) by delivering a lead molecule identified using artificial intelligence. The drug candidate will target chronic obstructive pulmonary disease, which affects 384mln people globally.

Metal Tiger PLC (LON:MTR) has said Pan Asia Metals Limited (PAM), in which it holds a 13.6% stake, has begun drilling at its Reung Kiet Lithium project (RKLP) in Thailand.

Eco Atlantic Oil & Gas Ltd (LON:ECO) (CVE:EOG) has raised US$17mln of new funds to cover its participation in a possible expansion to the exploration drilling campaign offshore Guyana. It is selling 16.1mln shares to new and existing investors at a price of 80p per share, only a small discount to Wednesday’s closing price of 83.2p.

Motif Bio PLC (LON:MTFB) (NASDAQ:MTFB), a clinical-stage biopharmaceutical company specialising in developing novel antibiotics, announced that four iclaprim abstracts have been accepted for presentation at the upcoming 28th European Congress of Clinical Microbiology and Infectious Diseases (ECCMID 2019) to be held in Amsterdam, The Netherlands, April 13-16, 2019. Details for each presentation and poster are noted below, including links to the related abstracts, which are available at https://www.eccmidlive.org.

i3 Energy PLC (LON:I3E), the independent oil and gas company with assets and operations in the UK, said it raised an aggregate amount of approximately £363,732 after receiving valid applications in respect of a total of 983,059 new ordinary shares in the company under the open offer to shareholders announced on 19th March 2019.

Victoria Oil & Gas PLC (LON:VOG) has announced the appointment of two Independent non-executive directors, John Daniel and John Knight, who it said: “bring with them a wealth of experience and expertise to strengthen the Board”. It said from 2002 to 2018, Knight held various leadership roles and board positions at Norwegian giant Equinor, formerly known as Statoil ASA. The group added, in November 2017, Daniel founded JD Oil and Gas Consultancy Limited, an independent oil and gas consultancy, specialising in technical and commercial due diligence for upstream oil and gas transactions.

Vast Resources PLC (LON:VAST), the AIM-listed mining company with mines in Romania and Zimbabwe, announced that it has appointed SP Angel Corporate Finance as its joint broker with immediate effect. The group said SVS Securities will continue to serve as a joint broker to the company.

6.45am: FTSE 100 called lower

The FTSE 100 is seen on the back foot ahead of Thursday as global equity markets focus on the pending trade talks between Donald Trump and Chinese officials – of course, more locally, Brexit remains the main point of focus.

CFD and spread betting firm IG Markets make the London index about 21 points lower with a little over an hour until Thursday’s open, quoting the price at 7,381 to 7,384.

“Overnight, it was announced that President Trump will meet with the Chinese vice premier Liu He,” said David Madden, market analyst at CMC Markets. “Equity markets in Asia were subdued as it would appear that investors are playing the wait and see game.”

Evidently, equity markets are somewhat pensive but hopeful ahead of the US trade talks with China.  There are positive narratives in the lead-up, though traders have seen this kind of thing before only to be disappointed.

In Asia, Japan’s Nikkei was treading positive territory – albeit only slightly – up 6 points or 0.03% at 21,719, while Hong Kong’s Hang Seng was 117 points or 0.39% lower at 29,850. The Shanghai Composite, however, rose 0.7% to 3,242.

Previously, Wall Street closed Wednesday’s trading on the front foot.

The Dow Jones finished up 39 points or 0.15% at 26,218, the S&P 500 marked a 0.21% gain to end at 2,873 and the Nasdaq was up 0.6% at 7,895.

Around the markets

  • The pound: US$1.3175, up 0.13%
  • Gold: US$1,292 per ounce, up 0.2%
  • Brent crude: US$69.28 per barrel, down 0.13%
  • Bitcoin: US$5,028, up 1.64%

Significant events expected on Thursday, April 4:

Trading updates: EntertainmentOne PLC (LON:ETO), Electrocomponents PLC (LON:ECM)

Finals: Saga PLC (LON:SAGA), Hunters Property PLC (LON:HUNT), Smart Metering Systems PLC (LON:SMS)

Ex-dividends to knock 11 points off FTSE 100 index: Lloyds Bank PLC (LON:LLOY), Direct Line Insurance Group PLC (LON:DLG), Ferguson Plc (LON:FERG), Hikma Pharmaceuticals PLC (LON:HIK), Melrose industries PLC (LON:MRO), Pearson PLC (LON:PSON), Smith & Nephew PLC (LON:SN.), St James’s Place PLC (LON:STJ), Taylor Wimpey PLC (LON:TW.), DS Smith PLC (LON:SMDS), Smiths Group PLC (LON:SMIN)

Economic data: US weekly jobless claims; US Challenger job cuts

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