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FTSE 100 closes higher despite continued trade fears

China has pledged to spend more on infrastructure to offset any downturn caused by Trump’s trade tariffs
Trading room
Not much has happened since the first hour of trading
  • FTSE 100 closes higher

  • US stocks lower at time of writing

  • Miners wanted after China signals increased spending on infrastructure projects

  • Halma the top performer after sparkling results

FTSE 100 closed higher on Tuesday although trade tensions still permeate global markets.

The UK blue-chip benchmark closed nearly 23 points higher at 7,398.

The FTSE 250  was also up, adding around 16 points at 19,325.

On Wall Street, shares are lower at the time of writing. The Dow Jones Industrial Average is off around four points at 26,060. The S&P 500 is down around 1.6 points.

"The positive momentum that stocks have enjoyed recently continues, even though the trade spat between the US and China could come to a head of at the G20 meeting later this month," noted analyst at CMC Markets David Madden.

"Mr Trump claims that China will make a deal because they have to, and he made it clear that tariffs will go up on China’s imports if Xi Jinping doesn’t attend the summit. Investors are happy to jump on the bullish bandwagon for now, but the optimism might fade as the G20 meeting nears."

Top gainer on Footsie was health and environmental tech firm Halma PLC (LON:HLMA), which gained 4.10% to 1,981.5p after another set of record results.

Pre-tax profit rose 20% to £206.7 million in fiscal 2019 on the back of record high revenue, compared to £171.9 million the year before.

4.00pm: Miners do most of the heavy lifting after China signals increased infrastructure spending

As they have done all day, mining stocks were doing most of the heavy lifting for the Footsie towards the end of the day.

The FTSE 100 was up 31 points (0.4%) at 7,406, with the likes of Antofagasta PLC (LON:ANTO), Anglo American PLC (LON:AAL), BHP Group PLC (LON:BLT), Rio Tinto PLC (LON:RIO) and Glencore PLC (LON:GLEN) from the mining sector notching up rises of 2% or more.

“China pledging to spend more on infrastructure to offset any downturn caused by Trump’s trade tariffs was music to the ears of metals traders. The positivity stemming from increased Chinese stimulus silenced Trump’s threat to raise tariff in the event that China’s President Xi won’t meet with him at the G20,” said City Index’s Fiona Cincotta.

Despite the appetite for miners, engineering firm Halma PLC (LON:HLMA) was the star performer, rising 4.3% to 1,986p after another set of record results.

Credit Suisse responded by raising its target price for Halma to 1,990p from 1,770p.

 

3.00pm: US stocks open higher

As expected, US stocks opened higher, and also as expected, the Footsie carried on treading water.

London’s index of big-cap shares was up 35 points (0.5%) at 7,410 – on or around where it has been since about 10.00am.

In the USA, the Dow Jones was up 112 points (0.4%) at 26,175 while the broader-based S&P 500 was up 17 points (0.6%) at 2,904.

“The US Producer Price Index (PPI) for final demand increased by a slight 0.1% m/m [month-on-month] in May (consensus: 0.1%), weighed down by declining energy (-1% m/m), food (-0.3% m/m), and trade services prices (-0.5% m/m). As a result, the yr/yr change in the PPI declined to 1.8% from 2.2%, its lowest since January 2017,” reported Mickey Levy at Berenberg.

The personal consumption component of the PPI increased by 0.2% m/m and according to Levy points to a 0.2% m/m increase in the May consumer price index, which is set for release tomorrow.

1.45pm: The afternoon session has not seen the Footsie kick on much

Having got off to a solid start, London’s blue-chips index has largely been spinning its wheels since then.

The FTSE 100 was up 40 points (0.5%) at 7,415.

Stateside, spread betting quotes point to a positive start for the Dow Jones and S&P 500 indices; the former is expected to open some 154 points higher at 26,217 and the latter is tipped to kick-off at around the 2,905 level, up 18 points.

While London’s top-tier benchmark has made progress today, the mid-cap FTSE 250 has been grounded by Ted Baker PLC (LON:TED), which has seen its shares fall by more than a quarter after another profit warning – quarter-baked, you might say.

READ Ted Baker expects profits to fall as much by as 20% after difficult trading

Two FTSE 250 housebuilders have given trading updates today and neither update met with much enthusiasm; Crest Nicholson Holdings PLC (LON:CRST) was down 0.1% at 357.4p and Bellway PLC (LON:BWY) was off 1.4% at 2,785p.

The latter has been in the spotlight this week since the fire on a block of Bellway flats in Barking in the east end of London.

 

12.30pm: Investors remain in "risk on"mood

Stock market indices across the globe have been on the front foot today as traders anticipate further beneficial measures from central banks.

London’s Footsie index was participating in the advance, although it seemed reluctant to rise much above the 7,400 level; early in the afternoon session it was up 36 points (0.5%) at 7,411.

In contrast, the lustre of gold is fading with the price of the forward month contract on futures exchanges sliding US$3.60 to US$1,325.80 an ounce.

“We’re seeing some more profit taking in gold on Tuesday, with the rebound in the dollar and stronger risk appetite likely contributing to the declines. Gold failed to break above $1,350 on this occasion, or hold above the February high, but that doesn’t necessarily mean the rally has run its course. Price has now fallen back towards $1,320 which could be an interesting test, having previously been a notable area of resistance. A rotation off here could see last week’s highs coming under pressure again,” suggested Craig Erlam at Oanda.

11.15am: US benchmarks tipped to join the global stock market party

After a mid-morning lull, the Footsie was recovered a bit of its mojo as futures markets pointed to a positive start on Wall Street.

The index of blue-chip shares was up 36 points to 7,411, helped by a positive reaction to results from Halma PLC (LON:HLMA), the company focused on life-saving technology.

“The market it serves is naturally a growing market given the increased needs from both consumers and regulators for safer and healthier living and working environments. These needs are longer term in nature and all the more important as populations grow and become more urbanised around the world. This reflects upon the company’s steady revenue and profitability growth over the years and the group has been proud to say it has raised the dividend by 7%, marking the 40th consecutive year of dividend growth of at least 5%,” said Helal Miah, an investment research analyst at The Share Centre.

Shares in Halma were up 2.1% at 1,942.5p.

Over in the US, the Dow Jones has been tipped to open 120 points higher at 26,182 while the S&P 500 is expected to 5 points firmer at 2,901.

The Footsie made progress despite the strength of sterling this morning following the April jobs and earnings data. The pound was up more than a quarter of a cent against the US dollar at US$1.2716; a strong pound is usually regarded as being bad for the multi-national companies that make up the bulk of the FTSE 100 index constituent list.

“Sterling has been given a boost in early European trade from the latest jobs data, which showed unemployment remaining at a 44-year low and earnings growth staying above 3%. At a time when the economy is slow, global risks are building and Brexit is unresolved, this data is quite remarkable and very encouraging. Of course, its resilient to Brexit uncertainty and everything else may not last in the event of a broad slowdown or no-deal, but that’s no reason to be discouraged,” said Craig Erlam at Oanda.

10.15am: Footsie's gains trimmed as sterling hardens following employment and earnings data

Buoyed by demand for blue-chip miners – well, most of ‘em – the FTSE 100 was sitting on a solid gain in mid-morning trade.

London’s index of leading shares was up 30 points (0.4%) at 7,405, with miner Antofagasta PLC (LON:ANTO), up 2.6%, leading the advance.

Another Latin American miner, Fresnillo plc (LON:FRES) is one of the few big names in the sector not to join the party; it is down 0.7%.

Medical technology business Smith & Nephew PLC (LON:SN.) was up 0.3%, roughly in line with the market, after it said it has agreed to acquire Atracsys Sàrl, the Switzerland-based provider of optical tracking technology used in computer-assisted surgery.

In other blue-chip acquisition news, contract caterer Compass Group PLC (LON:CPG) is to acquire Fazer Food Services for an enterprise value of roughly €475mln.

The shares were down 0.8% following the news.

 

Further down the food chain, biotechs Advanced Oncotherapy PLC (LON:AVO), Oncimmune Holdings PLC (LON:ONC) and Scancell Holdings PLC (LON:SCLP) were the subject of market chatter after featuring in a Financial Times focus piece on UK biotechs focused on cancer detection.

READ UK biotechs seek to speed up cancer detection

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On the macroeconomic front, the UK unemployment rate in the three months to April stayed at 3.8%, while wages rose 3.4% year-on-year, compared to a rise of 3.3% for the three-month period to March.

Total weekly pay (including bonus payments) increased by 3.1% year-on-year to reach £532 in April 2019.

“Overall, the labour market continues to be strong, with employment still at a joint record rate; however, while the number of vacancies remains high, it has fallen back slightly from the historic highs seen at the turn of the year,” said Matt Hughes, the deputy head of labour market statistics at the Office for National Statistics (ONS).

“With employment growth among women coming from full-timers, the overall gap between men and women in hours worked is now the lowest ever – women now average about three-quarters of men’s weekly hours, compared with around two-thirds 25 years ago,” he added.

David Cheetham at xtb online trading said the employment figures came in a little better than expected while wage growth was also higher than expected.

“The overall picture for the UK economy remains one that is far from thriving and looks to be simply treading water, to be honest; but given the dual headwinds of ongoing political uncertainty and a slowing global economy the current level of activity could arguably be viewed as about as good as could be expected under these circumstances,” he said.

“The pound has ticked higher in response to the data, with the GBP/USD rate moving back above the US$1.27 handle while sterling has moved up to its highest level of the day against the euro after earlier falling to its lowest price in almost five months,” he added.

8.40am:  Strong start for Footsie

The FTSE 100 got off to a positive start, rising 34 points to 7,409.23 - essentially mirroring advances seen on Wall Street and Asia’s main markets.

The retreat from a wholesale trade war with Mexico, the dialling down of the rhetoric between Washington and Beijing ahead of the G20 summit and the prospect of a US rate cut all helped the mood.

“Equities are continuing their remarkable relief rally as investors put trade war concerns to one side and double down on bets the Fed will ride the rescue,” said Neil Wilson of Markets.com. “But we caution not to rely on either playing out precisely how the bulls would like.”

WATCH: Investor Update: Venn Life Sciences unveils plans to raise £4.5mln

China’s tweak to financing rules to allow an increase in local authority spending had an impact thousands of miles away in the Square Mile as the miners led the blue-chip index.

Of course any easing in the fiscal policy of the world’s second largest economy is germane to the large multi-national diggers, which have long benefited from the Chinese economic miracle.

Leading the way was Glencore (LON:GLEN), up 2.3%, closely followed by BHP (LON:BHP) and Rio Tinto (LON:RIO).

Investment platform Hargreaves Lansdown (LON:HL.) was off a further 1.3% as it continued to be dogged by the fall-out from fallen star stock picker Neil Woodford’s apparent demise.

Halfway through the current year and really 2020 can’t fast enough for fashion retailer Ted Baker (LON:TED), which lost a quarter of its value after sounding the earnings alarm. It told investors current market conditions were “extremely difficult”.

On the up was the oldies’ holiday group Saga (LON:SAGA), which rose 5.2% after inking a savings deal with an offshoot of Goldman Sachs.

Proactive news headlines:

Venn Life Sciences Holdings plc (LON:VENN) has unveiled plans to raise £4.5mln via a share placing. The cash will be used to bankroll and grow the enlarged group following the takeover of corporate financier Cathal Friel’s latest venture, a firm called Open Orphan.

Berkeley Energia Ltd (LON:BKY) has said that four out the five seats contested in the local election at the village of Retortillo have been won by candidates who support the development of the company's nearby Salamanca project. Separately Berkeley has also been awarded 266 Square kilometres of new exploration ground 40km away.

Shares in PowerHouse Energy Group PLC (LON:PHE) rose on Tuesday following a documentary, War on Plastic with Hugh and Anita broadcast on BBC1 Monday night.

Total production from the Horse Hill well near Gatwick has now passed 50,000 barrels, operator UK Oil & Gas PLC (LON:UKOG) revealed today. Production from the shallow Portland layer has been stable at 220 barrels per day, with production now in excess of that from the deeper Kimmeridge reservoirs. UKOG owns a 50.63%  interest in the Horse Hill licence while Alba Mineral Resources plc (LON:ALBA) has an 11.77% stake. Big Pic in February.

Project management and consultancy group WYG PLC (LON:WYG) said its consultancy services business is stable in most areas and starting to deliver improved results.

KR1 PLC (LON:KR1) has earned around US$360,605 from the sale of ATOM tokens in the Cosmos blockchain network. The digital asset investor said that it had sold 70,079 ATOM tokens for an average price of US$5.14 each, having acquired them for around US$0.10 each in a Cosmo initial coin offering (ICO) in early 2017.

Polarean Imaging PLC (LON:POLX) confirmed that enrolment of the final few patients for clinical testing of its drug-device combination for MRI lung scans will soon begin at a third trial site.

Quadrise Fuels International PLC (LON:QFI) has inked an agency agreement with industrial infrastructure firm Redliner in an effort to fast-track projects for its MSAR synthetic fuel technology in Mexico.

Project management and consultancy group WYG PLC (LON:WYG) said its consultancy services business is stable in most areas and starting to deliver improved results.

Taptica International Ltd (LON:TAP) has said it will “aggressively defend” a complaint filed against it in a California court by ride-hailing app firm Uber Technologies Inc., as the firm gets caught up in the US-listed ride-hailing app firm’s long-running ad-fraud case.

6.45am: FTSE 100 to push higher again 

The FTSE 100 index is expected to push higher again on Tuesday, extending Monday’s advance after gains overnight from US and Asian markets as trade battle escalation worries ease.

Spread betting firm IG expects the UK blue-chip index to open around 9 points higher at 7,384, having gained 43.60 points on Monday.

Overnight on Wall Street, the Dow Jones industrial Average closed 78 points, or 0.3% higher at 26,062, albeit off earlier peaks, rising for a sixth straight day.

Investors breathed a sigh of relief after President Trump stepped back from his threat of imposing tariffs on Mexico, though he kept up the pressure on China by saying he would impose more tariffs on the country if there were no progress on trade talks around the G20 meeting at the end of this month.

The positive mood continued today in Asia, Japan’s Nikkei 225 index gaining 0.7% and Hong Kong’s Hang Seng index adding 0.3%, helped as well by hope for further rate cuts from the Federal Reserve after Friday’s weak US payrolls data.

Meanwhile Shanghai’s composite index jumped 1.7% after Beijing signalled more measures to boost the flagging Chinese economy.

UK jobs data awaited

On currency markets, sterling remained cautious as traders await further twists in the ongoing Tory party leadership battle as well as the latest UK labour market figures.

The three-month average ILO unemployment rate is expected to hold steady at 3.8%, according to economists at ING.

However, they forecast the more eagerly eyed weekly average earnings growth number, excluding bonuses, to dip to 3.1% for the latest three month period to end-April, down from 3.3% growth in March.

Housebuilders the corporate focus

Low interest rates and the government’s Help to Buy scheme have shielded housebuilders against the impact of Brexit uncertainty to a certain extent.

But house prices have cooled as consumer confidence remains subdued while a Brexit-driven decline in the value of the pound means cost pressures are rising

Investors will therefore be keen to see how well mid-cap builders Bellway plc (LON:BWY) and Crest Nicholson Holdings PLC (LON:CRST) have managed these challenges when they both update the market on trading today.

Bellway has been trying to lower costs by improving building efficiency and taking a more cautious approach to land buying.

The cost cutting programme should be the key focus of Bellway’s update along with any changes to its full-year guidance.

UBS expects Bellway to see 4.5% growth in annual volume to 10,775 units and a 2% rise in average selling prices to £209,700.

Meanwhile, the Swiss bank expects completions at rival Crest to fall by 5% to 1,188, with the average selling price to be flat at £272,000.

UBS predicts Crest’s operating margins to drop 2.5 percentage points to 14.7%, resulting in a pre-tax profit of £67mln.

“Key, in our view, will be that guidance for 2019 is held (consensus forecast for pre-tax profit of £150mln),” the analysts said.

Significant events expected on Tuesday June 11:

Trading update: Bellway plc (LON:BWY)

Interims: Crest Nicholson PLC (LON:CRST), RWS Holdings PLC (LON:RWS), Oxford Metrics PLC (LON:OMG)

Finals: Halma PLC (LON:HLMA), Motorpoint Group PLC (LON:MOTR), Trifast PLC (LON:TRI), Oxford Instruments PLC (LON:OXIG), CML Microsystems PLC (LON:CML), Iomart PLC (LON:IOM), IG Design Group PLC (LON:IGR), BP Marsh & Partners PLC (LON:BPM), Augmentum Fintech Plc (LON:AUGM)

AGMs: Optibiotix Health PLC (LON:OPTI), Primary Health Properties PLC (LON:PHP), SigmaRoc PLC (LON:SRC)

Economic data: UK unemployment, average earnings data; US PPI

Around the markets:

  • Sterling: US$1.2680, down 0.1%
  • Gold: US$1,193.71 an ounce, down 0.1%
  • Brent crude: US$62.42 a barrel, up 0.1%

City Headlines:

  • Tesco has raised the hourly pay of its shop floor staff by 10.45% over the next two years to £9.30 an hour but offset it by ditching their annual bonus - The Guardian
  • Over-50s insurance and travel company Saga has reached a deal with banking giant Goldman Sachs to revive its fortunes - The Daily Telegraph
  • Hargreaves Lansdown has lost £1.5 billion in market value amid an investor backlash over its cosy relationship with Neil Woodford - Daily Mail
  • Uber rival Bolt is re-launching in London today after a two-year suspension - The Daily Telegraph
  • Technology investor Allied Minds has parted company with its chief executive and scrapped a controversial bonus scheme amid an aggressive campaign by activist investor Crystal Amber - The Daily Telegraph
  • Google made US$4.7bn in advertising from news content last year, almost as much as the revenue of the entire online news industry, according to a study released by News Media Alliance – The Guardian
  • Donald Trump has suggested that the planned merger of United Technologies and Raytheon could be bad for competition in the sector – Financial Times
  • Plumbing and heating group Revenue saw its revenue fall short of expectations in the latest quarter amid a slowdown in American growth – The Times
  • Huawei’s threat to national security is inextricably linked to the company’s sheer scale, according to an analysis by threat intelligence firm Recorded Future - The Guardian
  • Insys Therapeutics, whose founder and top executives have been convicted of bribing doctors to prescribe a highly addictive painkiller, has filed for bankruptcy after US$225mln settlement - The Guardian
  • Jack Dorsey, one of Silicon Valley’s best-known tycoons, says he is “absolutely willing” to support small British businesses against online competition – The Daily Telegraph

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