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FTSE 100 ends flat as the market awaits the outcome of EU leaders emergency meeting on Brexit

The raft of macro-economic news from the US, the UK and ECB policy failed to cheer the FTSE 100 as the focus turned to the meeting in Brussels
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London stocks closed flat as the Brexit saga continues in Brussels
  • FTSE 100 index closes down 0.05%

  • Outcome of EU leaders emergency summit on Brexit awaited

  • Theresa May insists she is only seeking short delay to Brexit

  • Tesco closes up 3.6% after divi hike

  • ASOS closes up 7.8% after update

The FTSE 100 spent the day going nowhere, despite the release of economic data from the UK, US and ECB policy. 

Brexit was mainly on the minds of investors, as the 27 EU leaders gather in Brussels to decide on UK's Brexit date. Arriving at the summit, UK Prime Minister Theresa May has insisted that she has "been clear" with the EU that she is only seeking a short delay to Brexit that she "greatly regrets" that the UK has not already left.

May is set to address the EU leaders on her extension request before leaving the meeting, The heads of the member states will then discuss her proposal over dinner. And the market awaits ....

Shareholders obviously liked the hike in dividends and showed it, with Tesco leading the FTSE 100 leader board, closing up 3.59% at 242.30 while Severn Trent was up 1.92% at 1,967.00.

ASOS closed up 7.74% at 3,397p.

Indivior crashed 71.64% to close at 30.05p following news that a federal grand jury in Virginia issued an indictment on Tuesday night, which included 28 charges, including healthcare fraud, wire fraud and mail fraud.

In the US, the DJIA was down 0.11%, dragged by Boeing Co (down 1.17%) while the S&P 500 index gained 0.185 and NASDAQ was up 0.44% as the markets took time to look over inflation numbers as it awaits the minutes from the Federal Reserve's meeting in March.

 

3.50pm: Irish PM gives Brexit update 

Irish prime minister Leo Varadkar has just tweeted that he has left an informal meeting of European leaders from countries affected by Brexit.

He is in Brussels for an EU summit that will discuss a long delay to the UK’s departure from the bloc.

Theresa May has proposed an extension until the end of June but European leaders are discussing a delay until the end of the year or until March 2020.

3.30pm: Uber will be valued at US$120bn, says IG survey

Uber will float with a market valuation of US$120bn, according to an IG survey.

The taxi-hailing app will reportedly seek to sell about US$10bn worth of stock in its initial public offering and will make public the registration of the offering on Thursday.

It is expected to be the biggest technology IPOs of all time and the largest since Chinese e-commerce firm Alibaba floated in 2014. 

3.10pm: Arcadia buys back 25% stake in Topshop chain from US investor 

Arcadia, the company that owns and operates Sir Philip Green's retail empire, has bought back a 25% stake in Topshop and Topman from its biggest investor. 

US private equity firm Leonard Green & Partners had bought the stake in the two retail brands in 2012 for a reported £250mln. 

However, by 2017 it had written the value of the investment down to nil, suggesting Arcadia did not have to pay to buy back the holding.

The move comes ahead of a major restructuring, which is expected to include the closure of dozens of stores via a company voluntary arrangement, a type of insolvency that allows retailers to shrink their store portfolio to avoid collapse. 

Other retailers including New Look, Mothercare and Carpetright have used CVAs to downsize in the past 18 months due to pressure from tough online competition and subdued consumer spending.

2.40pm: US stocks open in positive territory 

US stocks have opened slightly higher after mixed inflation data.

The Dow Jones Industrial Average rose 45 points to 26,193, the S&P 500 gained 5 points to 2,884 and the Nasdaq added 15 points to 7,923.

US inflation rose 0.4% month-on-month in March, as expected. The annual rate increased 1.9%, ahead of the 1.8% market forecast.  

However, core inflation missed expectations, rising 0.1% month-on-month and 2.0% year-on-year against estimates of 0.2% and 2.1%, respectively.

Market participants are not turning their attention to the Federal Reserve’s meeting minutes, due to be released later today.

2.25pm: Euro falls on Dragh's bearish tone

The euro has fallen 0.22% against the dollar to US$1.238 after European Central Bank president Mario Draghi said there were downside risks to the eurozone economy following weak data.

David Lamb, head of dealing at Fexco Corporate Payments, said: “Rarely has Mario Draghi sounded so bearish about the Eurozone’s prospects.

“What the ECB President described as ‘global headwinds’ is fast turning into a perfect storm for Mr Draghi.

“Falling Chinese demand for European exports has led Germany’s economic engine to misfire, while slowing demand at home is further hampering momentum."

Lamb said Draghi’s dovish instincts should send him reaching for further monetary accommodation but the trouble is the central bank's cupboard is almost bare. 

He said the best Draghi can do is to kick the prospect of interest rate rises further into the distance and talk up TLTRO stimulus measures he announced last month. 

“Few will take any pleasure in this reminder that Brexit is way down the EU's list of worries," Lamb added.

"The clear and present danger to the Eurozone economy – and the ECB’s limited ability to tackle it – has set alarm bells ringing and led the Euro to slide against both the Dollar and the Pound.”

2.20pm: Pick-up in oil prices likely to boost US inflation 

The annual rate of US headline inflation for March beat analysts expectations on the back of higher oil prices.

Darren Sinden, market analyst at Pepperstone Limited, said the influence of oil prices on inflation could extend well beyond today's headline data.

"US investors views on the future path of inflation are notoriously sensitive to changes in oil prices so we could see the start of a feedback loop from here with inflation expectations picking up again and oil prices ticking higher on higher levels of implied demand and growth in the US ultimately that could influence the Feds thinking on interest rates of course we will get a clearer idea of what they are with the release of thier March meeting minutes this evening," he said. 

2.10pm: UK economy on course to expand 0.4% in Q1, says NIESR

The UK economy is on track to grow by 0.4% in the first quarter, according to the NIESR GDP tracker.

If current trends continue, GDP will rise by 0.3% in the second quarter. 

The report comes after the ONS revealed GDP increased 0.2% in February and 0.3% in the three months to February.

Garry Young, head of macroeconomic modelling and forecasting at NIESR, said: “The latest ONS data was better than we had expected, but recent survey evidence suggests that economic growth is likely to continue at a fairly modest pace for the first half of this year.

"This reflects the impact of Brexit-related uncertainty and slower growth in the global economy outside of the United States.

"The near-term outlook for the UK economy continues to depend on the outcome of the Brexit negotiations."

1.50pm: ECB 'committed to return inflation to 2% target'

The ECB expects inflation to decline over coming months but Draghi said the central bank is committed to return inflation to the 2% target "without undue delay".

He added that the inflation target does not imply a ceiling at 2%. 

1.40pm: Draghi confirms rates will be on hold until end of 2019

European Central Bank President Mario Draghi is speaking at a press conference after the monetary authority left key rates unchanged.

Draghi confirmed that the ECB will leave interest rates on hold until at least the end of 2019.

On the ECB's TLTRO loans scheme announced last month, Draghi said details will be discussed at a upcoming meeting and the central bank is considering whether banks need more support to cope with negative interest rates.

Draghi warned that information received since the ECB’s last meeting has confirmed that eurozone growth has slowed. He said risks to the eurozone economy “remain to the downside”.

He reiterated that he is ready to adjust all monetary policy instruments where necessary.

1.30pm: US inflation rises in line with forecast

US inflation rose 0.4% in March, in line with market expectations, the Labor Department has revealed.

That compares to growth of 0.2% in February.

On an annual basis, inflation rose 1.9% last month, beating forecasts of 1.8% after a 1.5% rise in February.

The growth was led by higher energy prices.

Stripping out volatile items like food and energy, inflation rose 0.1% month-on-month and 2.0% year-on-year, compared to 0.1% and 2.1% growth in February, respectively. Analysts had expected a 0.2% month-on-month rise and a 2.1% year-on-year gain. 

1.10pm: Plenty more to come

Commenting on the ECB decision, Naeem Aslam, chief market analyst at Think Markets Ltd said: “The ECB left the powder dry once again and the reason that the Euro is still in the positive territory is because a lot of bad news was already baked into the price."

He added: “So, the ECB had to make significant changes to its monetary policy to push the euro lower (which we have not seen). All eyes will be on Draghi now, and if he adopts overly pessimistic tone, we could see the euro moving lower against the dollar.”

Aside from Draghi’s press conference, traders were also awaiting the latest US CPI inflation data, due at 1.30pm GMT, while minutes from the last Federal Reserve policy meeting will be released as well later, and any news on Brexit from the EU leaders summit will also be closely eyed.

With all this to come, the FTSE 100 index remained subdued, down 5 points at 7,420.   

12.45pm: ECB leaves rates unchanged 

The European Central Bank has left its monetary policy unchanged, as expected. 

It kept interest rates at 0%, the marginal lending facility rate at 0.25% and the deposit facility rate at -0.40%.

"The Governing Council expects the key ECB interest rates to remain at their present levels at least through the end of 2019, and in any case for as long as necessary to ensure the continued sustained convergence of inflation to levels that are below, but close to, 2% over the medium term," the ECB said. 

"The Governing Council intends to continue reinvesting, in full, the principal payments from maturing securities purchased under the asset purchase programme for an extended period of time past the date when it starts raising the key ECB interest rates, and in any case for as long as necessary to maintain favourable liquidity conditions and an ample degree of monetary accommodation."

12.00pm: FTSE edges higher in lunchtime trading 

The FTSE 100 rose 12 points to 7,437 at the midday mark as analysts digested UK economic data and awaited the outcome on discussions for a Brexit delay at the EU summit in Brussels.  

The UK economy rose by 0.2% in February, better than the zero growth analysts were expecting.

The pound barely flinched in reaction to the data, rising 0.3% against the dollar and 0.2% against the euro.

Investors are now awaiting to hear the outcome of a debate on a long extension to Brexit at an EU summit.

May has requested the EU defer Friday’s exit until June 30 but a delay until the end of the year or until March 2020 was being discussed.

Meanwhile, the European Central Bank announces its latest monetary policy decision but is expected to keep rates and quantitative easing unchanged.

In the US, inflation data and the latest meeting minutes from the Federal Reserve will be in focus later.

Company-wise, Tesco PLC (LON:TSCO) is the biggest riser on the FTSE 100, up 2.5% to 239p, as it doubled its annual payout to shareholders after profits climbed by almost a third last year.

Going the other way, the former parent company of Indivior (LON:INDV), Reckitt Benkiser Group PLC (LON:RB), was the top faller with shares down 5% to 6,084p.

Reckitt had to clarify that the various US fraud charges against Indivior was not against Reckitt or any of its group companies.

Shares in Indivior slumped nearly 80% to 21p after a federal grand jury in Virginia issued the company with an indictment on Tuesday night, which included 28 charges, including healthcare fraud, wire fraud and mail fraud. Indvior was spun out of Reckitt in 2014. 

11.20am: Brexit delay will hurt UK economy, says economist 

The UK economy may struggle to grow by more than 1% this year if Brexit gets dragged out for too long, according to Howard Archer, chief economic advisor to the EY ITEM Club.

Following the latest GDP figures from the ONS, Archer said: "“If Brexit is delayed for a prolonged period, extended uncertainty could make it difficult for the economy to grow by more than 1% this year – especially given weakened global growth. Much would depend on how long the delay to the UK’s departure was and what final form Brexit took."

Archer thinks the economy is unlikely to eke out much growth in the second quarter due to heightened Brexit uncertainties, which "seems certain to magnify business caution on investment and committing to new projects, and it could also increasingly test the resilience of consumers".

EY ITEM Club recently cut its UK GDP growth forecast for 2019 to 1.2%, which would be the weakest performance since 2009.

It expects the economy saw growth of 0.3% quarter-on-quarter in the first quarter of 2019.

10.40am: Sports Direct considering suing Debenhams

Sports Direct International PLC (LON:SPD) is considering suing Debenhams PLC (LON:DEB) after the department store chain collapsed into administration.

Sports Direct owner Mike Ashley described the pre-pack administration as a "national scandal" yesterday after Debenhams rejected two of his last-ditch rescue proposals and decided to push ahead with a debt refinancing that will wipe out shareholders.

Sports Direct’s deputy chief financial officer Chris Wootton told the BBC he company was considering suing Debenhams and insisted it was more than an idle threat.

"It is a disgrace that we - as the biggest shareholder - have been treated in this way," he said.

He said the board “have absolutely not carried out their fiduciary duties” to shareholders.

9.40am: UK economy grows more than expected in February 

The UK economy expanded by 0.2% in February, beating expectations for zero growth, the Office for National Statistics revealed. 

In the three months to February, gross domestic product edged up 0.3%, unchanged from the previous quarter. 

The report showed industrial production gained 0.6% in February, led by a 0.9% increase manufacturing.

The ONS said it has seen some evidence that clients of manufacturers were stockpiling goods to prepare for the event of a no-deal Brexit.

"Following a period of contraction, output in production and manufacturing has risen for the second month in a row, the latter driven by domestic demand. Manufacturing is now at its highest level since April 2008," it said.

"This was driven by pharmaceuticals, food products (including beverages) and chemicals, although it was partially offset by a fall in motor vehicle production."

8.45am: Footsie edges higher

The FTSE 100 defied earlier predictions that it would trade in the red – but only just.

The index of blue-chips rose just 3 points to 7,428.79 as Sino-American trade worries and the daily Brexit pantomime continued to keep a lid on sentiment.

Tesco (LON:TSCO) led the charge after it revealed an improvement to profit margins and, importantly for income hunters, doubled its dividend payment.

While the headline figures from the UK’s largest grocer beat expectations, some of the second-tier numbers didn’t, according to David Madden, analyst at CMC Markets.

“The supermarket group is performing well, but some of the metrics didn’t quite measure up to forecasts, as fourth-quarter like-for-like UK sales ticked up by 1.7%, while equity analysts were anticipating 1.8%,” he observed.

“The net debt position edged by 9%, but that was in relation to the acquisition of Booker. Tesco has persevered with a tough turnaround plan, and now the firm has either met or is close to achieving the majority of it targets.”

Tesco’s performance, with the shares up just 1.2%, had muted impact on the sector, with just Ocado (LON:OCDO), the online provisions group, joining it on the risers list. Sainsbury (LON:SBRY) and Morrisons (LON:MRW) actually fell amid competition worries.

Sticking with the retail sector, but focusing on one of AIM’s largest companies, shares in ASOS (LON:ASC) were in demand as they rose 4% after the online giant’s first-half financial performance wasn’t quite as bad as forecast.

Obviously, much of the bad news has been factored into a stock market valuation that has more than halved in the past year.

Proactive news headlines:

Anglo Asian Mining PLC (LON:AAZ) has reported an 11% year-on-year rise in first-quarter production from the Gedabek gold, copper and silver mining contract area in western Azerbaijan and seen its net cash increase by 77% to US$10.8mln.

PowerHouse Energy Group PLC (LON:PHE), along with its development partner Waste2Tricity Limited (W2T), have signed a lease for a plot on the Protos energy hub to develop its hydrogen-from-waste technology.

Alliance Pharma PLC (LON:APH) has confirmed its morning sickness treatment Xonvea has received marketing approval in Ireland. This paves the way for the first launch of the product outside the UK. The company to start selling drug in the Republic in the final quarter of this year.

Seeing Machines Limited (LON:SEE) is to provide its FOVIO driver monitoring systems to a US automotive original equipment manufacturer (OEM) which could net the company over A$7mln in revenue.

Last week’s transformational Moroccan acquisition leaves today’s financial results statement somewhat less relevant, nevertheless, Chariot Oil & Gas PLC (LON:CHAR) highlighted its strong cash position. The company ended 2018 with US$19.8mln of cash and was debt free, it is fully funded for current work commitments (which at less than US$1mln are low).

Metal Tiger PLC (LON:MTR) said investee company Kalahari Metals Limited has entered into a binding agreement with Resource Exploration and Development Limited to purchase 100% of Kitlanya Ltd, which owns five recently granted exploration licences in the prospective Kalahari Copper Belt.

ClearStar Inc (LON:CLSU) shares shined in early deals on Wednesday after the group reported its highest ever first-quarter revenue. In a trading update for the quarter ended 31 March, the background check software group said revenues had risen 11% to US$5.1mln.

Futura Medical PLC (LON:FUM) confirmed it will deliver the results from its phase III trial for a fast-acting gel for erectile dysfunction (ED) by the end of the year, a milestone which expects to be a “major value inflection point”. The first of two studies of MED2005 got underway in October treating 1,000 men at 60 centres across Europe. Headline data should be released towards the back-end of 2019, the company said.

Bushveld Minerals PLC (LON:BMN) subsidiary Lemur Holdings has arranged a US$1mln loan facility with the Development Bank of Southern Africa for finalise details at its Imaloto thermal power station project in Madagascar. Negotiations with potential lenders are progressing said Lemur and DBSA’s loan will tide it over until financial close - the point when it has arranged funding to take the project through to commissioning.

Cabot Energy PLC (LON:CAB) has told investors that it is continuing financing talks though it may need until the end of June to conclude the discussions, it now intends to release financial results for 2018 in June. The company, in a statement, noted that it is talking to potential providers of finance – including both third parties and existing shareholders – over potential transactions at asset level and also group level.

Mineral sands miner Base Resources Limited (LON:BSE) has published its production estimate for 2020. A switch to the South Dune at its Kwale operation in Kenya will mean production of between 64,000 – 70,000 tonnes of rutile, 315,000- 350,000 tonnes of ilmenite and 25,000-28,000 tonnes of zircon.

US Oil & Gas PLC (USOP) continues to work towards the implementation of a fracking programme on the Eblana 3 well, though any timetable is contingent on regulatory approval. The company, in its full-year financial results statement, said that it also continues planning for corporate development and a new stock market listing though it noted that these plans would only be realised if it can produce oil at commercial quantities.

Eco (Atlantic) Oil & Gas Ltd. (LON:ECO) (TSX-V:EOG) said it raised, in aggregate, US$17mln (£12.9mln) before expenses through the oversubscribed placing and subscription of, in aggregate, 16,159,695 new common shares in the company which has now closed.

Cello Health PLC (LON:CLL), the healthcare-led advisory group, this afternoon is hosting a capital markets event in London for analysts and institutional investors. The event will focus on the Group's Cello Health division and its strategic growth opportunities in the pharmaceutical and biotechnology industries worldwide.

6.45am: FTSE 100 set to open lower

The FTSE 100 is expected to open slightly lower on Wednesday morning after global markets went on the slide overnight amid fresh trade tensions and a downgraded economic outlook from the International Monetary Fund.

Spread-betting firm IG expects the FTSE 100 to open around 5.5 points lower after closing 26 points lower on Tuesday at 7,425.

In the US yesterday the Dow Jones Industrial Average closed down 0.72% at 26,150 while the S&P 500 was 0.61% lower at 2,878 and the Nasdaq was down 0.56% at 7,909.

In Asia on Wednesday the Japanese Nikkei 225 was down 0.65% at 21,658 while Hong Kong’s Hang Seng was down 0.4% at 30,038.

On the currency markets, the pound was relatively steady, up 0.08% at US$1.3071 against the dollar as traders awaited the outcome of a European Council summit that will decide the length of an extension to the Brexit process as well as the latest batch of UK GDP data.

Tesco PLC results to dominate company news on ‘Super Wednesday’

Tesco has lost market share to German discounters Lidl and Aldi and faces the possibility of being overtaken by J Sainsbury PLC (LON:SBRY) and Asda as the UK’s largest supermarket chain.

The latest industry data from Kantar Worldpanel showed Tesco’s market share edged down 0.2 percentage points to 27.4% in the 12 weeks to March 24, although sales rose 0.5%.

Asda, now the second largest UK supermarket, and number-three Sainsbury’s have proposed a merger and are awaiting the final decision from the UK’s Competition and Markets Authority.

If approved, Tesco will be knocked from the top spot unless it can find a way to maintain its market position.

However, Tesco's acquisition of Booker Group has been progressing well, and a recent buying agreement with the French supermarket group Carrefour will give the group extra muscle against the merger – if it happens.

Tesco reports its full-year results on Wednesday when investors will be hoping to see more signs that the company’s strategy under Dave Lewis is working.

Significant announcements expected for Wednesday April 10:

ECB rate decision

Finals: Tesco PLC (LON:TSCO), Futura Medical PLC (LON:FUM), Central Asia Metals PLC (LON:CAML), Epwin Group PLC (LON:EPWN), Frenkel Topping Group PLC (LON:FEN), Petards Group plc (LON:PEG), RA International Group PLC (LON:RAI), Warpaint London plc (LON:W7L), Walker Greenbank plc (LON:WGB)

Interims: ASOS plc (LON:ASC), McCarthy & Stone PLC (LON:MCS), Tracsis PLC (LON:TRCS)

Trading update: Dunelm PLC (LON:DNLM), PageGroup PLC (LON:PAGE), Finsbury Food Group PLC (LON:FIF)

Economic data: UK GDP estimate; UK industrial production; UK construction output; US CPI inflation rate; US FOMC minutes

Around the markets:

  • Sterling: US$1.3071, up 0.08%
  • Brent crude: US$70.68 a barrel, up 0.1%
  • Gold: US$1,302.5 an ounce, down 0.07%
  • Bitcoin: US$5,218.5, up 0.6%

City headlines:

  • Brexit is likely to be delayed by up to a year after European leaders warned Theresa May that her proposal for a short extension until the end of June was too much of a "risk" – Telegraph
  • Mike Ashley has accused the board of Debenhams of stealing from shareholders, lying to him and obstructing his rescue efforts after the department stores chain’s pre-pack administration – The Times
  • Standard Chartered will pay US$1.1bn to settle charges that it violated sanctions and ignored red flags about its customers, including a diplomat who opened an account with £500,000 stuffed in a suitcase – Financial Times
  • De La Rue bosses are fighting for their jobs after a leading investor, Crystal Amber, branded the floundering banknote maker’s performance 'unacceptable – Daily Mail
  • Boeing’s commercial aircraft delivery fell 37% in the first quarter of the year amid concerns about the safety of its bestselling 737 Max jet = The Times
  • A proposal by the Trump administration to impose new tariffs on US$11 billion of EU products has threatened to escalate transatlantic tension – FT
  • Uber Technologies Inc has decided it will seek to sell around US$10 billion worth of stock in its initial public offering, and will make public the registration of the offering on Thursday – Reuters
  • Microsoft has been working with a Chinese military-run university on artificial intelligence research that could be used for surveillance and censorship – FT
  • Centrica chief executive Ian Conn pocketed a £2.4 million pay packet last year, despite the firm losing 742,000 customers – Daily Mail

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