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FTSE 100 just about manages to close in positive territory as crude oil hits 5-month high and Brexit talks continue to take centre-stage

Brent crude hit a five-month high, led by OPEC's supply cut and geopolitical tensions
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  • FTSE 100 index closes up 5.02 points

  • Oil stocks buoyant as Brent crude hits 5-month high

  • Ascent turns it around to notch up a big gain

The FTSE 100 just about managed to close in positive territory, closing the first day of the week up 5.02 points at 7,451.89, as crude hit a five-month high on rising tension in oil-rich Libya, and OPEC moves to cut crude supply helped to push prices higher.

The ongoing Brexit talks between Prime Minister Theresa May and opposition leader Jeremy Corbyn has raised concerns as speculation mounts that they are nowhere near a compromise. Focus will now be shifting to the emergency Brexit meeting to be held in Brussels on Wednesday to contemplate the next steps - including May's request for a short extension.

Financial stocks were the hardest hit, with Hargreaves Landsown down 1.46% while Standard Life Aberdeen PLC lost 1.13%.

Needless to say, BP was a top gainer, up 1.69% at 578.20.

Miners Rio Tinto PLC and Antofagasta PLC were up 1.15% and 0.48% respectively, buoyed by US-China trade talk progress.

Oil prices hit their highest level since November last year, driven by OPEC's ongoing supply cuts, US sanctions against Iran and Venezuela and fighting in Libya.

The Brent futures were up 57 US cents at US$70.91 per barrel.

 

3.45pm: Desperately seeking direction

The FTSE 100 was little changed entering the final hour of trading having had its own version of a “duvet day”.

The index of heavyweight shares was up a couple of points at 7,449, thanks largely to the two oil majors, BP PLC (LON:BP.) and Royal Dutch Shell (LON:RDSB), which were buoyed by a rising oil price.

“Oil prices have rallied to a new five-month high overnight, driven by OPEC+ supply cuts, US sanctions against Iran and Venezuela, fighting in Libya as well as strong US jobs data,” reported Dean Popplewell at Oanda.

Banking shares were also going well, particularly Lloyds Banking Group PLC (LON:LLOY) – up 0.9% - and Royal Bank of Scotland Group PLC (LON:RBS), which was also up 0.9%.

Among the small caps, there was a delayed reaction to the production update from Ascent Resources PLC (LON:AST). Initially, the shares declined from last night’s closing price of 0.28p to 0.2p but rallied impressively in the afternoon session to 0.375p, to post a 36% gain. Admittedly, the bid-offer spread is very wide on the stock – 0.35p/0.4p – but that is still a handy rise for a stock that was trading as high as 0.95p last October.

2.35pm: US stocks open lower

The FTSE 100 retained its positive posture despite US stocks falling out of bed at the start of trading.

The UK's benchmark index was up 12 points (0.2%) at 7,459. Stateside, the Dow was 170 points (0.6%) lower at 26,255 while the S&P 500 was down 11 points (0.4%) at 2,882.

“Attention will now move onto corporate earnings with the US reporting season kicking off on Friday,” said Rupert Thompson, the head of research at asset management firm, Kingswood.

“Estimates have been revised down heavily in recent months and with the consensus now looking for a small outright decline in US earnings, it shouldn’t be too hard for the numbers to beat expectations – as indeed they almost always do. Much more questionable is whether the consensus is right to expect a rebound in earnings growth to +10% by year end as economic growth is set to remain sluggish and profit margins are coming under pressure from higher wage costs,” Thompson added.

Among the UK mid-caps, Energean Oil & Gas PLC (LON:ENOG) made a bit of a splash with the news of first oil from the Epsilon sandstone reservoir in the Mediterranean.

The shares were up 2.2%.

Fellow FTSE 250 member, Unite Group PLC (LON:UTG), nudged up 0.5% to 938p after the property group, which specialises in student accommodation, revealed the value of its portfolio increased by 0.5% on a like-for-like basis in the first quarter of 2019.

12.30pm: London's blue-chips turn positive, on balance

 The FTSE 100 tip-toed into positive territory in the afternoon session, despite expectations of a soft start to proceedings on Wall Street.

At 7,454, the Footsie was up 7 points (0.1%).

“The DOW may have closed at close to six-month highs on Friday night, but with a potentially disappointing Q1 earnings season kicking off mid-week, the air of confidence does seem to be running a little thin. That sits at odds with Friday’s economic data, where the slightly better than expected non-farm payrolls print gave little cause for concern whilst lacklustre wage growth added to the idea that the Federal Reserve may yet be pushed into a more dovish position over interest rate policy, which in turn should be good for stocks,” opined James Hughes at Axi Trader.

The forex trading platform owner expects the Dow Jones will open 90 points lower at 26,335 while the S&P 500 is tipped to shed 4 points at 2,889.

There has been a distinct shortage of galvanising news on this side of the Atlantic.

Earlier today, the BDO optimism index, which tracks how businesses expect production to trend in the next three to six months, hit it lowest point since 2012, declined to 96.1 in March from 99.8 in February.

Also released this morning was a Bank of England/TNS report on the public's inflation expectations for the year ahead.

The public’s inflation expectations for the year ahead remained at a five-year high, according to the report for February.

Inflation expectations on a two-year horizon edged up to reach the joint highest level since November 2013 while there was a modest decline in inflation expectations of a five -year horizon.

Howard Archer, the chief economic advisor to the EY ITEM Club, said it was “largely disappointing news” for the Bank of England's Monetary Policy Committee (MPC).

“The MPC may have hoped that consumer price inflation falling back to a 25-month low of 1.8% in January from 2.1% in December, 2.7% in August and a peak of 3.1% in November 2017 would have led to a softening of near-term inflation expectations (the survey was carried out on 8-9 February). Inflation subsequently edged up to 1.9% in February,” Archer said.

“Inflation expectations remaining at a five-year high on a one-year horizon may well reflect concerns that prices could be pushed up by a disruptive Brexit that causes sterling to fall and push up import prices. There may also be worries that tariffs could increase overall in a 'no deal' Brexit scenario and push up prices,” he continued.

“The survey was completed before the government indicated what its policy would be on tariffs should there be a “no deal” UK exit from the EU. Specifically, the government has indicated that it would make overall reductions to tariffs in the event of a 'no deal' Brexit - under a temporary scheme 87% of imports by value would be eligible for zero-tariff access compared to 80% of imports currently being tariff-free,” he added.

Housebuilders and miners were leading the Footsie's cautious revival with alcoholic spirits brands giant Diageo plc (LON:DGE) joining in with a 0.5% rise to 3,134.25p after broker Bernstein grudgingly increased its price target to 2,850p from 2,625p.

Low-cost airline easyJet PLC (LON:EZJ) was 0.1% lower at 1,057.25p, despite Bernstein upgrading the stock to 'market perform' from 'market perform'; the upgrade reflected the recent share price fall, as the price target has been chopped to 1,000p from 1,100p.

11.30am: A quiet morning for equity markets

The FTSE 100's losses had been all but wiped out entering the final half hour of trading of the morning.

The index of blue-chip shares was down 6 points (0.2%) at 7,441.

Helped by Brent crude reaching a new high for the year of US$70.80 a barrel – up 0.7% on the day – oil majors Royal Dutch Shell (LON:RDSB) and BP PLC (LON:BP.) lent their considerable weight to the Footsie's cautious revival; the former was up 0.5% and the latter up 0.4%.

Banking giant Barclays PLC (LON:BARC) was down 0.3% at 162.29p following the latest moves by activist investor, Ed Bramson, to get the bank's board to change strategy.

Bramson's investment vehicle, Sherborne Investors, has just over a 5% stake in Barclays and has written a letter to the bank's shareholders seeking support for its proposal that Barclays moves capital away from its lacklustre investment banking business into more profitable areas.

Seeing as the board jettisoned the last chief executive who tried that and got in Jes Staley, the former head of JPMorgan's investment bank, as his replacement, it seems the stage is set for the sort of intransigence that has characterised Theresa May's Brexit negotiations.

Talking of whom … let's not.

10.35am: The quiet morning continues

London was joining other markets in taking a pause for breath after last week's advances.

The index of leading shares was down 13 points (0.2%) at 7,433.

“Stocks are a little lower this morning as dealers in Europe take their cues from the subdued Asian session. Over the weekend, Chinese state TV claimed that additional progress was made in relation to US trade talks. A Chinese government website announced on Sunday that the state authorities said it would push for a reduction in the reserve requirement ratio at banks in order to boost lending,” reported David Madden at CMC Markets.

“Stimulus polices are often viewed in a positive light, and should Beijing deliver on its pledge we should see a boost to sentiment,” he added.

Away from the blue-chips, Totally PLC (LON:TLY) shares jumped 6.4% after the “out of hospital” healthcare provider kicked off its new fiscal year with some contract awards.

Going the other way – into the sick ward – was Adept4 PLC (LON:AD4), the pay-as-you-go information technology services provider.

It issued a profit warning after it notified the market that a customer has served notice to terminate a contract, although Adept4 is disputing the legality of the cancellation notice.

The shares were down by just over a third.

9.30am: London's benchmark index on the slide as tumbleweed drifts across European markets

The FTSE 100 was slowly descending like a geriatric into a blisteringly hot bath on Monday morning.

Barely one-in-six constituents were in credit as the Footsie drifted 20 points (0.3%) lower to 7,427, and most of those defying the trend were miners or utilities.

“Despite Brent Crude climbing above $70.50 per barrel to its best price this year, the FTSE still found itself slipping,” noted Connor Campbell at Spreadex.

News flow from the blue-chips was virtually non-existent, unlike the FTSE 250, where most of the excitement derived from Sports Direct International PLC's (LON:SPD) continuing efforts to sneak through the back door and gain control of Debenhams.

READ Sports Direct's Mike Ashley calls on Debenhams executives to take lie detector test as he offers £150mln lifeline

Shares in Debenhams PLC (LON:DEB) rose to the Square root of next to zilch from the cube root of next to nothing – or rose 15.2% to 2.35p if you prefer – on the latest development.

Somewhat less dramatic, both in terms of the share price movement and the nature of the statement released this morning, was the Indivior PLC (LON:INDV) story.

The FTSE 250 drugs giant rose 1.4% after fresh data showed that its Sublocade opioid addiction treatment is more effective at higher doses.

8.30am: Subdued start for Footsie

The FTSE 100 fared better than expected, but still traded in negative territory amid Brexit uncertainty. Having been called 31 points lower, the index of blue-chip stocks essentially marked time as it nudged down just 6 points to 7,440.46.

The big news centred around a long-running saga that wasn’t Brexit-related with billionaire Mike Ashley offering to orchestrate a £300mln refinancing of Debenhams (LON:DEB) that would see Sports Direct (LON:SPD) underwriting a £150mln cash call.

There is also the prospect of an offer for the group at 5p a share, 3p more than Friday’s close. The shares rose 14%.

“Mike Ashley’s methods may be unorthodox, to say the least, but the Debenhams board needs to make sure it gives Sports Direct’s offer proper consideration,” said Laith Khalaf, senior analyst at investment firm Hargreaves Lansdown.

“The job isn’t an easy one, but they need to balance the interests of shareholders, lenders and employees. So far they haven’t given a great deal of detail as to why Sports Direct’s proposals have been kicked to the kerb, while lenders have been handed the keys to the company.”

Away from Debenhams, the mood was subdued with cross-party talks showing little sign of garnering an accord.

The Prime Minister will this week lobby Brussels for another short extension to Article 50 ahead of Friday’s deadline.

“Government talks with Labour are set to continue this week, whilst European leaders are holding an emergency meeting on April 10,” said Neil Wilson, an analyst at Markets.com.

“The April 12 deadline looms very large indeed and whilst European leaders are striking emollient tones, French president Macron has taking a tougher line and could veto any extension to the Brexit deadline. 

“It would be a bold political statement by Macron, but faced with his own domestic headwinds, could be one he is prepared to make.”

Proactive news headlines:

Anglo Asian Mining PLC (LON:AAZ) has commenced a US$1.84mln exploration programme at the 462 Square kilometre Ordubad project in Azerbaijan. The programme will include satellite mapping, geological mapping and sampling and around 6,000 metres of core drilling.

Scancell Holdings PLC (LON:SCLP) has won Japanese patent protection for its Moditope immunotherapy platform. It follows on from similar awards in key markets such as the US, Europe, South Africa and Australia, and acceptance for a grant in China.

Circle Property PLC (LON:CRC) has found a tenant for the remaining vacant space at Kents Hill Park in Milton Keynes Housing association Grand Union will take the entire first floor of the refurbished 40,000 sq ft K2 building on a 10-year lease at a headline rent after incentives of £17.50 per sq ft or £352,625 per annum.

Keywords Studios PLC (LON:KWS) reported a two-thirds increase in profits in its latest full year after a string of acquisitions helped it substantially boost earnings.

SDX Energy Inc (LON:SDX) (CVE:SDX) revealed it is to rationalise its corporate set-up to better fit the fact that its management team is based in London and its assets are in North Africa. The company, in a statement, said the benefits of maintaining a dual listing and retaining its Canadian domicile status don’t justify the costs.

SkinBioTherapeutics PLC’s (LON:SBTX) chief executive, Dr Cath O'Neill, said she was “really pleased” with the results from the company’s first human study of its SkinBiotix cream. The data revealed the product to be well tolerated and efficacious in certain age groups and at certain time points.

MaxCyte Inc (LON:MXCT) has launched an updated version of its Flow Electroporation cellular editing technology.

Concepta PLC (LON:CPT) has conditionally raised £2.3mln to help take its flagship myLotus fertility testing kit around the world. Big Pic in October.

Frontier IP Group Plc’s (LON:FIPP) portfolio firm Pulsiv Solar has signed an agreement with German engineering giant Bosch to optimise the design of its energy-efficient solar micro-inverter prototype. In a separate announcement, Frontier said Alusid, which makes a stone substitute from recycled glass and ceramics, would have its range of sustainable tiles launched and sold by Parkside Architectural Tiles, the commercial arm of retailer Topps Tiles Plc (LON:TPT).

RM Secured Direct Lending PLC (LON:RMDL), the investment trust specialising in providing tailored debt solutions, has deployed all cash available for investment in April following its fund-raising last month.

Impax Asset Management Group PLC (LON:AUM) saw its assets under management rise by 15% in the first quarter of 2019.

NQ Minerals PLC (LON:NQMI) (OTCQB:NQMLF) produced 4,712 dry metric tonnes of lead concentrate from its Hellyer mine in Tasmania during the first quarter of 2019. NQ also produced 3,015 dry metric tonnes of zinc concentrate and 18,488 dry metric tonnes of pyrite concentrate.

Salt Lake Potash Ltd (ASX:SO4) (LON:SO4) has entered into a binding split commodity and access agreement with Blackham Resources Ltd (ASX:BLK) in relation to the development of the Lake Way Project.

Tlou Energy Limited (LON:TLOU, ASX:TLOU) has raised AU$1.2mln, in a premium priced placing, to ease what was described as “near-term financial pressure”. The company, in a statement, revealed that it will issue new shares to sophisticated existing shareholders at a price of 10 Australian cents per share, a 5% to the ASX closing price on Friday.

Strategic Minerals PLC (LON:SML)(USOTC:SMCDY) will complete on the acquisition of the 50% stake in Cornwall Resources that it is acquiring from New Age Exploration Ltd on 30 May 2019. The news comes after New Age Exploration established that it isn’t required to refer the decision to sell the stake to a general meeting of its shareholders.

Arc Minerals Ltd. (LON:ARCM) has completed construction of a pilot plant at the Kalaba copper project in Zambia. The plant has now been commissioned and has produced a copper-cobalt sulphide concentrate.

Berkeley Energia Ltd. (LON:BKY) has noted recent media reports regarding various legal challenges to recently announced appointments to the board of the country’s Nuclear Safety Council. The AIM-listed uranium mine developer said it will advise shareholders of the decision by Spain’s Supreme Court on the legality of these appointments as soon as it is received.

Location Sciences (LON:LSAI), the leading mobile location data and intelligence expert, announced the appointment of Paul Thompson to strengthen its advisory panel. The group said Thompson will advise the company on its strategy and partnerships as well as the global expansion of Verify; the world's first independent location verification platform. Thompson takes on this new role following six years at Blis Media, the location data technology company, where he was most recently chief revenue officer.

Taptica International Ltd (LON:TAP), a global leader in advertising technologies for brand advertising and performance-based mobile marketing, has announced the intention to change the name of the company to Tremor International Ltd. The group said the proposed change of name will better reflect its ongoing strategic and operational focus following the transformational merger with RhythmOne.

Ariana Resources PLC (LON:AAU), the exploration and development company with gold mining operations in Turkey, announced that it will be hosting a shareholder update evening and presentation, followed by a Q&A session on 30 April 2019, at 6:00 pm, at 1 America Square Conference Centre, 17 Crosswall Street, London EC3N 2LB.

6.30am: FTSE 100 set to open in the red

The FTSE 100 looks set to open its weekly account in the red with a bout of the Brexit jitters afflicting City traders.

The index of blue-chip shares will shed 31 points to 7,416.87, according to the spread betting firms, with the Tories and Labour nowhere close to agreeing on a cross-party compromise.

Prime Minister Theresa May will meet EU leaders this week to negotiate a short extension to Article 50 ahead of Friday’s exit date. As Jasper Lawler, an analyst at London Capital Group, put it: the “clock is ticking”.

The pound, meanwhile, is on something of a mini roller coaster. Having been up towards US$1.33 less than a month ago, it was trading at US$1.308 at 6.30am.

In Asia, the picture was mixed, although the mood music was fairly upbeat as dealers factored in America’s better than expected jobs numbers from and some encouraging feedback from the latest round of Sino-American trade talks.

Back here in the UK and looking ahead, the retailers are expected to provide the excitement this week with updates from Sainsbury (LON:SBRY), Tesco (LON:TSCO) and ASOS (LON:ASC).

Significant announcements expected on Monday April 8:

Finals: Keyword Studios PLC (LON:KWS), Northbridge Industrial Services Plc (LON:NBI)

Trading updates: Sirius Real Estate Ltd. (LON:SRE)

Economic data: US consumer inflation expectations

Around the markets:

  • Brent crude US$70.61 a barrel, up 27 cents
  • Gold US$1,300.40 an ounce, up US$4.80
  • Sterling US$1.3008, down 0.1%

City Headlines:

Financial Times

  • Tough new UK tech rules herald end to ‘era of self-regulation’
  • Macron ponders his de Gaulle moment with Brexit
  • Buffett urges Wells to look beyond Wall St for next CEO
  • Saudi Aramco attracts $30bn demand for $10bn bond issue
  • Carlyle lines up $3.6bn for stake in oil group Cepsa
  • Times
  • MPs call for inquiry into Lloyds fraud ‘cover-up’
  • KPMG plots breakaway audit arm
  • Apple brand is top of tree despite profit warning
  • Daily Telegraph
  • Mike Ashley issues scathing attack on Debenhams
  • Pinterest founders attempt to woo sceptical investors with 'sunset clause'
  • Canadian gas explorer Valeura ­Energy will unveil plans to list on the London Stock Exchange this week as it looks to raise funds for a major project in Turkey
  • Vue puts debt pile in the picture ahead of refinancing
  • Guardian
  • Holland & Barrett accused of treating suppliers 'shabbily'
  • Standard Chartered readies for huge US fine over Iranian activities
  • UK businesses using artificial intelligence to monitor staff activity

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