Proactive Investors - Run By Investors For Investors
Markets

FTSE 100 closes tad higher as traders wait for G20 summit

On Wall Street, stocks are seeing red after disappointing data, while the German DAX is off over 33 points
Cityscape
Footsie closed higher, just
  • FTSE 100 closes higher

  • US stocks in the red

  • FCA regulator accuses Woodford of having "sailed close to the wind"

Like yesterday (Monday), FTSE 100 closed a shade higher as markets are still wary ahead of the G20 summit.

Footsie closed around nine points higher at 7,425.

The FTSE 250 was down around 23 points at 19,276.

On Wall Street, stocks are seeing red after disappointing data, while the German DAX is off over 33 points.

"The G20 summit is at the forefront of traders’ minds and the meeting between Donald Trump and Xi Jinping is likely to determine the next major move in equities. Some traders are sitting on their hands until the meeting between the two leaders is out of the way," said market analyst David Madden, at CMC Markets.

Top riser on FTSE 100 was 3I Group (LON:III), which added 3.58% to stand at 1,101p.

3.45pm: Neil Woodford back in the doghouse

The Footsie continued to seek direction as traders sat on their hands, waiting for Friday’s G20 summit meeting to kick off.

The index of heavyweight shares was virtually unchanged as trading entered the last hour.

“Echoing the same, slightly nervy trading seen in Europe, the Dow Jones fell 100-odd points after the bell as investors continued to take in the heightened tensions between the USA and Iran,” commented Spreadex’s Connor Campbell.

“In a sign of where investors are choosing to turn instead, gold was up 1%, striking US$1,437 for the first time in six years, the so-called safe haven becoming more appealing in the face of a geopolitical headache,” he added.

Ken Odeluga of City Index said today’s hesitancy was, “partly a holding pattern, partly a surreptitious drift to safety is a fair way to characterise the market mood as global tensions simmer ahead of the G20 meeting”.

While the Footsie was little changed, things were no better for the mid-cap FTSE 250; in fact, they were worse, with the index down 39 points (0.2%) at 19,260.

Petrofac PLC (LON:PFC), down 6.1% at 406.9p, led the mid-caps’ retreat after a disappointing trading update.

Woodford Patient Capital Trust PLC (LON:WPCT) remained about as popular as a request from Boris Johnson to borrow your laptop, shedding 3.8% at 55.8p, as the disquiet continued over stock-picker Neil Woodford’s flagship fund.

Andrew Bailey, the chief executive of the City watchdog, the Financial Conduct Authority (FCA), said Woodford “sailed close to the wind” in exploiting loopholes in the FCA’ regulations.

2.55pm: US indices open lower

US benchmarks opened lower, ahead of a much-anticipated speech this evening by the chairman of the Federal Reserve, Jerome Powell.

The Dow Jones industrial average was 48 points (0.2%) lighter at 26,680 while the S&P 500 was off 6 points (0.2%) at 2,939.

In Blighty, the FTSE 100 was more or less unchanged.

2.10pm: Footsie back at level pegging

The Footsie struggled its way back to square one by the end of the lunchtime trading session, with packaging companies leading the way.

London's index of big cap shares was unchanged at 7,417, with DS Smith PLC (LON:SMDS), up 3.3% at 357.3p, and Smurfit Kappa Group PLC (LON:SKG), up 2.4% at 2,381p, the index's star performers in the wake of the publication of the latest trending report for the global paper packaging materials market, from Ameco Research.

In the retail segment, Marks and Spencer Group PLC (LON:MKS) shrugged off a price target cut by Barclays to 290p from 320p to post a 1.5% increase at 207.3p.

12.50pm: US indices now expected to open mixed

US benchmarks now look as if they will open mixed or even slightly lower, despite which, the Footsie has pared its losses.

The index of London’s blue-chip shares was down 7 points at 7,410. In the US, the Dow Jones was expected to open some 3 points higher at 26,730 while the S&P 500 was expected to go the other way, shedding 1.7 points at 2,943.6.

Retailers continue to remain a drag on the Footsie as pundits mull over the June CBI distributive trades survey (see below).

“Even allowing for the fact that the year-on-year comparison is distorted by a very strong performance in June 2018 and the cool weather this month, this looks to be a poor CBI distributive sales survey,” declared Howard Archer, the chief economic advisor to the EY ITEM Club.

“Consumer spending appears to have been softer in the second quarter. Specifically, the CBI’s sales balance fell back to a more than 10-year low of -42% in June. This follows hard data showing retail sales volumes fell 0.5% month-on-month in May after a dip of 0.1% in April,” Archer reported.

“Admittedly, the CBI suggested that the sharp drop in the balance should be treated with 'a pinch of salt' given that the June 2018 retail sales performance had been buoyed by both the football World Cup and the heatwave. Furthermore, the cool weather this June has not been helpful for sales. Nevertheless, the underlying performance still looks weak this June,” in Archer's view.

With tensions between the US and just about everybody – but specifically today, Iran – rising, risk-averse investors continue to seek the haven that is gold.

The price of the yellow metal rose to a six-year high today, and is currently trading at US$1,432.80 an ounce, up US$14.10.

“The biggest near-term risk event for gold is Fed speak later today. Federal Reserve policymakers Bostic and Chair Powell speak at 17:00 and 18:00 BST respectively. Jay Powell is scheduled to speak to the influential Council on Foreign Relations about the economic outlook and monetary policy,” noted Jasper Lawler at LCG.

11.55am: Gains by miners dilute the Footsie's losses

Despite a demand for mining stocks, the Footsie remained in negative territory at the fag-end of the morning session.

London's index of leading shares was down 20 points (0.3%) at 7,396, despite the likes of steel-maker Evraz plc (LON:EVR) and commodity plays Fresnillo plc (LON:FRES), Antofagasta PLC (LON:ANTO) and BHP Group PLC (LON:BHP) advancing by more than 1%, helped by a soft dollar.

Credit checking firm Experian PLC (LON:EXPN) was the worst blue-chip performer, shedding 2.2% at 2,409p, even after UBS raised its price target to 2,750p from 2,400p.

Retailers have been in focus today with the release earlier this morning of the Kantar supermarket share data and the release later in the morning of the CBI Distributive Trades Survey. The latter's reported sales balance retreated to -42 in June from -27 in May; the consensus forecast was for a reading of -5.

“The decline in the reported sales balance to its lowest level since March 2009 is not a convincing sign of an emerging consumer downturn,” maintained Samuel Tombs, the chief UK economist at Pantheon Macroeconomics.

“The balance has become increasingly erratic over the last few months and it has been consistently too downbeat relative to the official data. This might reflect the survey’s dwindling sample size; June’s survey was comprised of responses from only 45 retailers, about 10% fewer than normal. In addition, the main balance reflects whether sales were higher or lower than a year ago; sales surged in June 2018 in response to the summer heatwave and the World Cup,” Tombs noted.

“The less erratic sales-for-the-time-of-year balance rose to -19 in June, from -40 in May, though it remained below its 12-month average, -7. Fundamentally, it would be extremely odd if a consumer downturn materialised now, just when wage growth has picked up to a 11-year high, the income tax personal allowance has risen by the most for five years, and consumers’ confidence has begun to recover from Brexit-related misery in Q1,” Tombs declared.

10.45am: Footsie continues to labour

While European markets are on the back foot, traders in the US are apparently expecting equities to bounce back from yesterday’s weak session.

The FTSE 100 was down 18 points (0.2%) at 7,398, loitering around the 7,400 portal but afraid to step through it.

“US index futures are suggesting a close on flat start to the day’s trade for equities, although with a flurry of Federal Reserve policymakers due to give speeches throughout the session, anything that serves to reinforce the idea that a more dovish rhetoric may prevail has the potential to fire stocks once again,” commented James Hughes at Axi Trader.

“The G20 summit in Japan creeps ever closer too, with that side meeting between Presidents Trump and Xi likely to remain under close scrutiny. Uncertainty over the outlook for tariffs was seen as being responsible for a disappointing manufacturing activity survey from the Dallas Fed yesterday, suggesting again that there’s a real domestic cost associated with current trade policies,” he added.

The US dollar has been looking listless on foreign exchange markets – even sterling has advanced by around one-eighth of a cent against it to US$1.2755 – which has provided a bit of extra impetus to the gold price.

“Gold’s lure has only increased amid intensified fears over the global growth outlook that has been severely dampened by US-China trade tensions that have lasted for nearly a year. The now enlarged scope of the US-China conflict, expanding beyond trade to include the tech sector, along with the displays of brinkmanship that have unfolded in recent weeks, creates a narrative that should keep gold’s allure intact,” suggested Han Tan at FXTM.

The price of the yellow metal was up US$14.70 (1.0%) at US$1,432.70 an ounce.

The price of oil does not seem to have been much affected by the latest cranking up of tension between the US and Iran; Brent crude was down 17 cents at US$64.01 a barrel while the US benchmark, West Texas Intermediate, was unchanged at US$57.90 a barrel.

Talking of the oil sector, oilfield services provider Petrofac Limited (LON:PFC) slipped 5.5% to 409.7p despite sticking with its full-year guidance in a trading update covering the first half of the year.

9.30am: Markets dull after latest US action against Iran

Markets were in the red this morning as Middle East tensions ratcheted up after the US imposed new sanctions on Iran.

The FTSE 100 was down 17 points (0.2%) at 7,399 as investors sought refuge in gold, which was up US$19 (1.3%) at US$1,437.20 an ounce.

“In further signs of the shifting sands of investor sentiment gold prices have once again hit their highest in SIX years, above US$1,435, while German 10 year yields have hit another record low of -0.33%,” observed CMC’s Michael Hewson.

“Crypto currencies are also feeling the benefit of record low yields attracting some capital flow as bitcoin makes another one year high above $11,000,” he added.

Supermarket stores remained in focus in the wake of the release of the market share data from Kantar.

Tesco PLC (LON:TSCO), down 2.4% at 225.7p and the biggest blue-chip faller, appears to have been designated the biggest loser.

Tesco sales were flat year on year despite an increase in volumes sold. This was caused by the average price paid per pack falling as sales of its value own label lines like Eastman’s and Redmere Farms increased by 11%, and its ‘100 Years of Great Value’ campaign continued to offer lower prices,” Kantar observed.

Ocado PLC (LON:OCDO) was off 0.7% at 1,145p, despite showing the fastest growth of the big names, “with sales growth of 11.3% comfortably ahead of the overall e-commerce market at 6%”, Kantar noted.

“However, only 3% of British shoppers currently buy from the retailer, something it will be looking to build on when it begins to stock M&S products next year,” it added.

Elsewhere in the retail sector, Carpetright PLC (LON:CPR) pleased the market with its full-year results; with its shares up 10% at 19.5p.

“It’s a tale of two halves for retailer Carpetright. The first half of its financial year ending 27 April 2019 was awful with a 12.7% reduction in UK like-for-like revenue and a significant increase in pre-tax losses on a group basis.

“The second half period was much better with UK like-for-like sales decline cut to 5.4% - and even better in the final quarter with the like-for-like sales decline trimmed to 2.3%,” reported AJ Bell’s Russ Mould.

“With the business having seemingly found its feet, thanks to right-sizing the store estate, management now have to focus on reviving sales growth and thankfully they are off to a good start with UK like-for-like sales up 8.5% in the first eight weeks of its new financial year, albeit the comparative period was fairly easy to beat,” he added.

8.30am: Gloomy and overcast - and we're not talking about the weather

The initial mood in the City was in accord with the weather: gloomy and overcast.

The FTSE 100 shed 35 points (0.5%) with supermarket giants Tesco PLC (LON:TSCO) and Wm Morrison Supermarkets PLC (LON:MRW) among the fallers after the release of the latest supermarket's marketshare data by market research group, Kantar.

J Sainsbury PLC (LON:SBRY) defied the trend, however, rising 1% to 189.8p – admittedly after falling heavily yesterday from 195.8p to 188p – after its sales fell by 0.6% year-on-year in the latest 12 week period, halving the rate of decline it had recorded in the May survey.

The latest grocery market share figures show supermarket sales overall grew by 1.4% year-on-year during the 12 weeks to 16 June 2019.

Sales at Tesco, down 1.2% at 228.6p, were flat year-on-year and its market share eased to 27.3% from 27.7%.

Morrisons’ sales decreased by 0.5%, lowering its share to 10.4% of grocery sales.

“The modest level of current growth is thanks in no small part to the wet start to the summer, with last year’s heatwave and the run up to the men’s FIFA World Cup making 2018 a difficult year to top. These challenges are reflected in typical summer categories: in the past four weeks sales of ice cream were £15mln lower than this time last year, while beer is down £17mln and burgers £6mln,” noted Fraser McKevitt, the head of retail and consumer insight at Kantar.

“However, even unseasonable clouds have a silver lining. Shoppers sought refuge from the cooler weather and spent more on traditional comfort foods, with fresh and tinned soup sales up by 8% and 16% respectively,” he noted.

Proactive news headlines:

Metal Tiger Plc (LON:MTR) has said it is “pleased to note” the recommended offer from Sandfire Resources Ltd (ASX:SFR) for MOD Resources (ASX:MOD) (LON:MOD). Metal Tiger has had a long-standing relationship with MOD exploring for copper in Botswana.

Thor Mining PLC (LON:THR) is to send drilling samples from its Pilot Mountain tungsten project back to the lab to see whether they contain gold.

Berkeley Energia Limited (LON:BKY) has kicked off the its initial drill programme across its large licence holding in Western Spain. The first phase of a 13-hole programme will see six holes drilled, with the company targeting lithium, cobalt, tin, tungsten and rare earths - several of which have previously been mined in commercial quantities in the area.

Galantas Gold Corp (LON:GAL) is expecting to book approximately US$460,000 in concentrate sales for the second quarter of the year, as underground production from the Omagh gold mine in Northern Ireland continues.

BATM Advanced Communications Ltd (LON:BVC) plans to raise at least US$15mln through a placing and subscription of shares to support the development of its technology.

Tekcapital PLC’s (LON:TEK) Guident portfolio company has exclusively licensed an “important” patent application from Michigan State University which allows driverless cars to ‘talk’ to one another.

Aquaculture and genetics firm Benchmark Holdings PLC (LON:BMK) said it was on track to meet its strategy goals as it shrugged off a challenging shrimp market to deliver a 25% rise in first-half earnings.

Supported care housing developer Ashley House PLC (LON:ASH) is struggling to reach financial close on three schemes before the end of its trading year this month. If closure of the schemes is pushed into July, Ashley House will post a loss for the year to June though still be profitable over the second half.

Cabot Energy PLC (LON:CAB), in a statement ahead of today’s AGM, described 2018 as “an important year of transition” as it reformed the group’s management team. “Our immediate focus was to stabilise the business with the aim of creating a sustainable production platform to unlock the long-term growth potential of the company,” said James Dewar, interim non-executive chairman.

INTOSOL Holdings PLC (LON:INTO) has issued an update on the development of its travel design technologies, VIRTOSOL II, VIRTOWORLD and [email protected]

C4X Discovery Holdings plc (LON:C4XD) has teamed up with fellow UK-based biopharma, PhoreMost, to look for treatments for Parkinson’s Disease and other ‘undruggable’ diseases.

The latest X-Ray Diffraction analysis conducted by IronRidge Resources Ltd (LON:IRR) on metallurgical composites has reaffirmed the dominance of spodumene as the main ore in the Ewoyaa project in Ghana.

Eland Oil & Gas PLC (LON:ELA) told investors that production averaged 9,880 barrels of oil per day, up 32%, over the first five months of 2019. The company, in a statement, noted that system uptime was recorded at 88% for the period.

Mosman Oil And Gas Ltd (LON:MSMN) told investors that it is preparing to drill a third well at the Stanley project. The company expects that the drill programme will start in the next 90 days.

Iraqi Kurdistan-focused oiler Genel Energy PLC (LON:GENL) is to buy back up to US$10mln worth of its own shares over the next ten days as bosses scratch their heads over the current share price.

ANGLE PLC (LON:AGL) is raising £18mln from new and existing investors as it gears up for potential commercialisation of its Parsortix liquid biopsy early next year. Parsortix is a simple blood test which can help doctors spot signs of cancer at an early stage

Strategic Minerals PLC (LON:SML) raised £890,000 of new capital with the issue of 63.5mln shares via a share placing. The proceeds will be used primarily to close the purchase of shares in Cornwall Resources and to provide working capital for the Leigh Creek copper mine project.

OptiBiotix Health PLC (LON:OPTI), the life sciences business developing compounds to tackle obesity, high cholesterol, diabetes and skin care, has announced the appointment of goetzpartners securities to provide financial advisory services to the company, including sector specific equity research and investor support services. The group said these services will be provided in addition to the services provided by its current broker, finnCap, extending the companies reach into European investment markets.

SDX Energy PLC (LON:SDX) said that Michael Raynes has resigned as a director of the firm following the news he is departing as CEO of Waha Capital, a 19.48% shareholder of SDX through its wholly-owned subsidiary SDX SPV Limited. The company noted that Waha intends to appoint a new nominee to its Board upon the finalisation of the appointment of Waha's new CEO in the near future.

Supermarket Income Reit PLC (LON:SUPR) has announced a 12-month extension of the maturity date for its the £100mln Revolving Credit Facility with HSBC from 30 August 2020 to 30 August 2021. It added that the original terms of the facility are unchanged, and the facility contains one further 12-month extension option to August 2022.

Xpediator PLC (LON:XPD) is to pay the final maximum deferred consideration payment of £350,000 to the vendors of Regional Express to allow it to develop potential significant new business opportunity and to focus on longer-term growth opportunities. The group noted that Regional Express has recently secured a potentially significant framework contract which will require additional investment that is expected to impact upon its ability to reach its profit target under the deferred consideration arrangements. It added that the deferred consideration payment will be settled by the payment in November 2019 of £315,000 in cash  and the issue of new ordinary shares in the Group to the value of £35,000 at the prevailing rate in November 2019.

Adamas Finance Asia Limited (LON:ADAM), the pan-Asian diversified investment vehicle, announced that, as at 31 March 2019, its net asset value was US$1.10 per share. The group noted that, since 31 December 2018, the NAV per share has decreased by 5.1% primarily due to the issuance of new shares as announced on 13 February 2019.

Taptica International Ltd (LON:TAP), the brand advertising and performance-based mobile marketing technologies group, confirmed its renaming as Tremor International Ltd (LON:TRMR) with effect from 8 am today.

6.30am: The Footsie is tipped to open lower

The FTSE 100 index is expected to start lower on Tuesday in sync with Asian stocks following a mixed session overnight on Wall Street.

The UK blue chip index was seen starting 16 points lower at 7,395, according to spread betting firm IG, having added 9.19 points on Monday. 

Last night on Wall Street, US equities came off their all-time highs, with the S&P 500 easing 0.17% to 2,945.35, while the Dow closed just above flat, with the Nasdaq Composite down 0.32%.

Levels of concern around global trade wars are keeping pressure on stocks around the world ahead of the G20 summit in Osaka at the end of this week, while simmering tensions between the US and Iran have lifted the price of gold to a six-year high.

Already on the front foot amid talk of the Fed lowering interest rates, gold was given its latest boost overnight as the White House imposed further sanctions on Iran, including the country’s supreme leader Ayatollah Ali Khamenei. Oil prices were a little lower, however, after recent gains. 

London's gold mining stocks may be exempt of an eventual downside correction, said analyst Ipek Ozkardeskaya at LCG Group. "Fresnillo shares tested the 900p handle on Monday. The persistently rising gold prices combined to the positive momentum could encourage a further recovery toward 940p, the February support."

Looking towards the US, analysts at Danske Bank said markets will keep a close eye on a range of speeches from Federral Reserve officials, including chairman Jerome Powell, with the focus centring on any indications of whether the size of an expected US rate cut will be half a percentage point or just a quarter.

Petrofac under pressure

On the corporate front, oil services mid-cap Petrofac PLC (LON:PFC) remains engulfed in a Serious Fraud Office investigation into historic allegations of bribery, so Tuesday’s latest trading update could provide a distraction.

While the FTSE 250-listed company has not been charged with any offences, there’s potential for fines and other regulatory penalties, and that continues to hang heavy on the share price.

Looking beyond the investigation at the underlying business, cost control has been an important area of focus for Petrofac , and analysts at The Share Centre expect more progress on that front - with headcount likely to continue falling.

In a preview of the update, The Share Centre analysts said: “Petrofac’s engineering contracts usually come with long lead times and it’s important the order book is kept full with new projects to support future profitability.

“Recent years have seen the value of outstanding contracts shrink significantly – that’s linked to a general downturn in activity in the oil & gas sector, but the ongoing investigation probably isn’t helping. The size of the order book is therefore our key metric to watch at the moment.”

Significant events expected on Tuesday June 25:

Trading updates: Petrofac Limited (LON:PFC)

Finals: Gear4Music Holdings PLC (LON:G4M), IMImobile PLC (LON:IMO), Mind Gym PLC (LON:MIND), Northgate PLC (LON:NTG), Redcentric PLC (LON:RCN), Redt Energy PLC (LON:RED), Tekmar Group PLC (LON:TGP)

Interims: Pressure Technologies PLC (LON:PRES)

Economic data: BBA UK mortgage lending; US new home sales; US consumer confidence

Around the markets:

Sterling: US$1.2761, up 0.2%

Gold: US$1,424 an ounce, up 0.1%

Brent crude: US$64.73 a barrel, down 0.1%

City headlines:

Financial Times:

  • Boris Johnson’s tax cut proposals would cost the exchequer as much as £20bn a year and mainly benefi richer households, according to the Institute for Fiscal Studies.
  • Monzo has raised £113m of fresh funds, doubling the British digital bank’s valuation since its last fundraising round eight months ago to just over £2bn.
  • Smith & Nephew board members have discussed moving the company’s share listing to the US, partly to escape the UK’s stricter attitude towards executive pay.

The Times:

  • President Trump signed off new sanctions yesterday targeting Iran’s Supreme Leader, his inner circle and military commanders.
  • Financial Conduct Authority chief Andrew Bailey will be braced for a rough ride when he faces MPs on Tuesday morning, including supervision of scandal-hit London Capital & Finance and for its handling of Neil Woodford’s stricken investment fund.
  • Harwood Capital founder Chris Mills, who is the second biggest shareholder in Goals Soccer Centres, has accused Mike Ashley of “bullying”.
  • Leicester Union, one of English rugby union’s most venerable clubs, is to be put up for sale with an estimated price tag of more than £60 million amid growing interest in the sport.

The Daily Telegraph:

  • Allegations that the Mercedes Benz owner manipulated diesel emissions from its cars will hit Daimler with hundreds of millions of euros to deal with.
  • Retail tycoon Philip Day has set up an “emerging luxury brands division”, based in London, that would directly compete with Mike Ashley’s Sports Direct’s “premium lifestyle division”.
  • Switzerland will ban European Union stock exchanges from trading Swiss shares in retaliation for Brussels freezing its bourses out from the EU market.
  • Civitas, one of the country's largest for-profit social landlords, is eyeing more than £200 million of new properties.
  • Nostrum Oil & Gas is considering a sale of the company as it looks into options to fund further growth.

Daily Mail:

  • Neil Woodford is seeking buyers for hard-to-sell businesses in his Equity Income fund, which was shut to investors three weeks ago after running out of ready money to pay them back.
  • Summer sales hit the High Street early as big retailers cut prices by up to 83% in a desperate bid to shift stock.

© Proactive Investors 2019

Proactive Investors Limited, trading as “Proactiveinvestors United Kingdom”, is Authorised and regulated by the Financial Conduct Authority.
Registered in England with Company Registration number 05639690. Group VAT registration number 872070825 FCA Registration number 559082. You can contact us here.

Market Indices, Commodities and Regulatory News Headlines copyright © Morningstar. Data delayed 15 minutes unless otherwise indicated. Terms of use