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FTSE 100 closes slightly in red as traders continue to sit on hands ahead of G20

The UK's premier share index closed down around six points at 7,416, while FTSE 250 shed around 26 points at 19,260
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All eyes are on the G20 summit
  • FTSE 100 closes slightly in red

  • Bitcoin up

  • Rolls Royce rolls lower

FTSE 100 closed slightly in the red mid-week, while US stocks went higher, as traders again sit on hands ahead of the G20.

The UK's premier share index closed down around six points at 7,416, while FTSE 250 shed  around 26 points at 19,260.

"Equity markets are subdued as traders are counting down to the G20 summit. Earlier in the day, Steven Mnuchin, US Treasury Secretary, said that trade talks with China were 90% complete, and that helped investors’ confidence," said analyst David Madden, at CMC Markets UK.

"The crucial word is ‘were’, and it is fair to say the relationship between the US and China has deteriorated in recent weeks, so some investors might be getting ahead of themselves."

Top loser on the Footsie was stalwart engineer Rolls-Royce Holdings PLC (LON:RR.), which dropped 2.75% to 850.20p.

3.45pm: London's leading shares lower on balance

Continuing its mildly topsy-turvy day, the Footsie was back in negative territory in the final hour of trading.

The FTSE 100 was down 6 points (0.1%) at 7,417.

Kibo Energy PLC (LON:KIBO) was the top riser in London, surging 29% to 1.35p, on acquisition news.

The company has moved to take a direct 100% interest in the Bordersley reserve power generation project acquired by its MAST Energy Developments subsidiary last week.

88 Energy Ltd ‘s(LON:88E) shares jumped 15% to 1.01p after the firm revealed that the farm-out process for Project Icewine’s conventional portfolio is advancing.

The company that the company farming into the project has now completed its internal approvals, including board sign off.

2.45pm: The Footsie remains becalmed

As anticipated, US benchmarks opened higher, clawing back some of yesterday’s losses.

The Dow Jones industrial average was up 92 points (0.4%) at 26,640 and the broader-based S&P 500 was 12 points (0.4%) firmer at 2,929.

In contrast, the FTSE 100 in London remained trapped in treacle, up 7 points (0.1%) at 7,429.

In company news, troubled retailer Bonmarche Holdings PLC (LON:BON) has thrown in the towel in its fight to stave off Spectre Holdings, the investment vehicle of Philip Day, and now recommends that shareholders accept the offer.

The change of heart came after a profit warning following a poor second quarter for the clothes flogger.

"We’re disgusted that Bonmarche has simply capitulated without consulting majority shareholders, or even putting up a semblance of a fight,” said shareholder Paul Mumford, a fund manager at Cavendish Asset Management, which has a 10.8% stake in Bonmarche.

"Given that Debenhams, M&S and House of Fraser are disappearing from the high street, Bonmarche was in a good position to be the 'last man standing', meaning we could have seen an increase in footfall. Couple this with an online offering which was growing well and some short-term leases giving them flexibility, and the medium-term picture was looking promising," Mumford claimed.

Shares in Bonmarche were down 23% at 12p. Spectre has a 52.4% stake in Bonmarche and has made a mandatory takeover offer of 11.445p per share.

2.20pm: US indices expected to open higher

US stocks are expected to bounce back when trading starts shortly on Wall Street.

Spread betting quotes point to the Dow Jones opening at around 26,628, which would be an 80 points rise, and the S&P 500 kicking off 9 points higher at around 2,926.5

In the UK, the FTSE 100 was up 5 points (0.1%) at 7,427.

1.00pm: The FTSE 100 is still seeking direction

Baron Frankenstein and all of his mad scientist equipment would have trouble injecting lift into equity markets today.

In London, the FTSE 100 was sticking close to last night's close, shedding 4 points (0.1%) at 7,427.

“Equity markets are looking a little flat on Wednesday after the Fed took the wind out of its sails and massaged expectations ahead of the July meeting,” commented Craig Erlam at Oanda.

“Investors have been too keen to believe that the Fed has entered into full easing mode, even though policy makers have been very reluctant to confirm, the economy is still strong and trade war risks are yet to fully materialize. Powell and Bullard both sought to manage expectations on Tuesday, much to the disappointment of the markets and I'm sure, Trump,” he added.

Most of the excitement in markets today has emanated from the cryptocurrency exchanges, where Bitcoin is up 11% at US$12,629 and Ethereum is 10% better at US$340.57.

In contrast, after its recent good run, gold has seen a bit of profit taking, at US$1,407.60 an ounce, down US$11.30.

11.30am: Footsie scrambles into positive territory

London’s index of leading shares has sleepwalked into positive territory.

The FTSE 100 was up 9 points (0.1%) at 7,432, despite housebuilders being out of favour following the latest mortgage approvals data.

UK Finance reported mortgage approvals declined to 42,384 in May from April's level, which was a a 26-month high.

“However, mortgage approvals remained above the levels seen just before the extension of Brexit at the end of March,” noted Howard Archer, the chief economic advisor to the EY ITEM Club.

“Despite dipping in May, mortgage approvals at 42,384 were still modestly above the 38,000-40,000 range that largely held since the start of 2018; however, they are still 16.6% below the long-run (1997-2019) average rate of 50,838,” Dr Archer observed.

“May’s mortgage data tie in with the view that housing market activity got some help from the avoidance of a disruptive Brexit at the end of March, but the overall benefit has been limited. Improved consumer purchasing power and robust employment growth has also recently been helpful for the housing market but this has recently shown some signs of levelling off,” he added.

Taylor Wimpey PLC (LON:TW.), down 0.6% at 154.9p, was the biggest blue-chip faller in the housebuilding sector, closely followed by Barratt Developments PLC (LON:BDEV), down 0.5% at 558.6p.

9.40am: Footsie still stuck in neutral

It has been an inconclusive first 90 minutes of trading in London as traders pore over yesterday’s comments from Federal Reserve chairman, Jerome Powell.

The FTSE 100 was down 8 points (0.1%) at 7,415 and looking set to hunker down for another day of minimal movement.

“There were no major surprises from Fed Chair Jay Powell’s speech at the Council of Foreign Relations yesterday,” reported Chris Scicluna at Daiwa Capital markets.

“There was no unambiguous signal of easing as soon as next month and St Louis Fed chief James Bullard, who voted for a 25bps [basis points] rate cut last week, stated in a Bloomberg interview that a 50bps cut next month ‘would be overdone’,” Scicluna added.

In the UK, Powell’s counterpart, the Bank of England governor, Mark Carney, is set to address the House of Commons Treasury Committee on the May inflation report.

“The BoE’s statement issued following last week’s policy meeting acknowledged that GDP growth in Q2 is likely to be weaker than forecast in the May IR [inflation report] and that the downside risks to the economic outlook have increased, and we might expect further exploration of these issues today. Moreover, Carney’s recent comments correcting Boris Johnson for his misrepresentation of the scope for continued tariff-free with the EU in the event of a no-deal Brexit (i.e. the GATT Article XXIV issue) might also be discussed further,” Scicluna suggested.

In the equity markets, controversial bus and trains operator Stagecoach Group PLC (LON:SGC) was 0.9% higher at 118.7p after its full-year results.

“Pretending that you didn’t want something anyway is a classic response when you’ve been ditched and that is reflected in the commentary which accompanies transport operator Stagecoach’s annual results,” opined AJ Bell’s Russ Mould.

“Having been disqualified from renewing its key railway franchises by the regulator over pensions concerns, the company now says it has no intention of bidding for new UK rail contracts.

“The loss of these franchises could blow a hole in Stagecoach’s revenue and will involve a one-off £100mln hit but the fact minimal profit is expected from its rail arm in the current financial year helps explain management’s ambivalence towards this space,” Mould explained.

8.30am: Equities put in the shade by Ethereum delirium and Bitcoin bonanza

FOMO – fear of missing out – is driving demand in cryptocurrencies and making the equity markets look positively drab in comparison.

As expected, the FTSE 100 opened lower, and as was the case yesterday, the move was less than dramatic – a 7 point (0.1%) fall to 7,415.

Meanwhile, Bitcoin was US$1,188 higher on the day at US$12,568.

“Bitcoin is building up a head of steam and there’s no point trying to stand in the way. Bitcoin futures began ramping from 11pm last night as they jumped to $11,600 before driving up to almost hitting $13,000,” said Neil Wilson at markets.com.

“There is every chance now we see this top the all-time highs and make $20k,” Wilson ventured.

Turning back to old workaday equity markets, enthusiasm for stocks has been dampened by the latest comments from the chairman of the US Federal Reserve, Jerome Powell, who has cautioned against short-termism in relation to the implementation of monetary policy.

The comments were largely interpreted as an attempt to rein in expectations for a rate cut in July.

Unlike yesterday, traders at least have a bit of news from blue-chips to get their teeth into.

The initial reaction to a trading update from oilfield support services outfit John Wood Group PLC (LON:WG.) has been favourable, with the shares up 4.6% at 436.3p.

The response to the update from Bunzl PLC (LON:BNZL) was tepid, however, the logistics firm’s shares were down 0.4% at 2,138p after it left full-year guidance unchanged.

Proactive news headlines:

88 Energy Ltd (LON:88E) has revealed that the farm-out process for Project Icewine’s conventional portfolio is advancing. The company, in a statement, said that the farminee has now completed its internal approvals, including board sign off.

Tekcapital PLC’s (LON:TEK) portfolio firm Belluscura has raised £725,000 of additional funding and is on track to receive US regulatory clearance this year for its portable oxygen concentrator.

AFC Energy PLC (LON:AFC), the alkaline fuel cell power company, has signed a manufacturing framework agreement with UK-based Advanced Plastics.

SDX Energy PLC (LON:SDX) told investors that it has made a new oil discovery, as the Rabul-7 well encountered 134 feet of pay. Rabul-7 is located in the West Gharib concession in Egypt. The well was drilled down to a depth of 5,323 feet and it encountered two formations of heavy oil pay, Yusr and Bakr, totalling 134 feet.

Two of Clinigen Group PLC’s (LON:CLIN) jetlag treatments have been granted marketing authorisations by the UK’s medicines regulator.

Next Fifteen Communications Group PLC (LON:NFC) has reiterated its full year guidance following a period of “positive changes” at its Archetype marketing agency. In an update to be delivered at its AGM on Wednesday, the digital communications firm said trading at the start of the year had been in line with its expectations, with the results from the “significant” changes at Archetype expected to be felt in the second half.

ValiRx Plc (LON:VAL) has been awarded a US patent covering the use of its VAL201 drug in the prevention and treatment of metastatic cancer, including prostate cancer.

Savannah Resources PLC (LON:SAV) has exercised its option to acquire more land adjacent to its Mina do Barroso lithium project in Portugal. The Aldeia mining lease application consists of three blocks located adjacent to Mina do Barroso.

Katoro Gold PLC (LON:KAT) is to drill its 75%-owned Haneti nickel deposit in Tanzania after a review of historical data. Mihanza Hill and Mwaka Hill will be targeted first to ascertain the existence of disseminated or massive sulphide mineralisation. they will also identify areas for further drilling.

Active Energy Group PLC (LON:AEG) told investors that it has signed two lease agreements for its recently acquired Lumberton commercial plant, in North Carolina. One is with Tencate Protective Fabrics which is an existing tenant at the site, and, the company noted that the new agreement included an increase in rent.

Faron Pharmaceuticals Oy (LON:FARN) is mulling its next steps after receiving interim results from the INFORAAA trial of its interferon-beta drug Traumakine.

Sareum Holdings PLC (LON:SAR) has raised £681,000 which it will use to advance its TYK2/JAK1 inhibitor programme towards human trials. The drug developer sold 170.37mln new shares at 0.4p as part of the fundraising, which was carried out on the online investment platform, PrimaryBid.

ImmuPharma PLC (LON:IMM) has raised around £2.66mln from a subscription agreement with institutional investor, Lanstead Capital, together with a related sharing agreement. The AIM-listed specialist drug discovery and development company said Lanstead is subscribing for 26,565,200 new ordinary shares at an issue price of 10p each.

IQ-AI Limited (LON:IQAI) announced that, following strong demand from existing and new shareholders, it has raised £250,000 through the placing of 7,142,857 new ordinary share at a price of 3.5p each. The group said the funds will be used to accelerate the development of our current Imaging Biometrics Artificial Intelligence (AI) projects, including Stone Checker, in response to rapidly growing interest in these technologies by medical practitioners.

ANGLE PLC (LON:AGL) confirmed, after the market close on Tuesday, that it had successfully raised gross proceeds of £18mln by conditionally placing 29,268,294 new ordinary shares at a price of 61.5p each with new and existing investors.

Impax Environmental Markets PLC (LON:IEM) said it had sold 200,000 ordinary shares from treasury at a price of 306p each, representing a premium to the prevailing net asset value.

Kore Potash PLC (LON:KP2) said it will provide remote access to the company's Annual General Meeting, which will be held at 9.30am on 28 June 2019, via a dial-in facility and a webcast.

6.45am: London's leading shares poised to open lower

The FTSE 100 is poised to open lower on Wednesday as markets continued to fret over the upcoming G20 summit later this week.

Spread-betting firm IG expects the FTSE 100 to open around 20 points lower after having closed up 6 points on Tuesday at 7,422.

London’s traders appear to be taking their lead from the global markets overnight, which were mostly lower as traders await the meeting between US president Donald Trump and China’s Xi Jinping around the summit in Japan.

In the US on Tuesday, the Dow Jones Industrial Average ended down 0.67% at 26,548, while the S&P 500 fell 0.95% at 2,917 and the Nasdaq closed 1.5% lower at 7,884.

The picture was more mixed in Asia today as Japan's Nikkei 225 shed 0.68%, while Hong Kong’s Hang Seng rose 0.04%.

Ipek Ozkardeskaya, senior market analyst at London Capital Group, said that while the US had delayed the next round of tariffs on US$300bn of Chinese goods before the G20 meeting, however the probability of a trade deal remained “slim” given both heads of state seem “unwilling to compromise on their respective demands”.

On the currency markets, the pound inched lower against the dollar, falling 0.2% to US$1.2672 after the greenback regained some strength after comments from Federal Reserve chairman Jerome Powell on Tuesday slightly reduced US rate cut expectations for next month, however the dovish stance of the central bank remained, capping the gains.

Looking ahead, Ozkardeskaya said “satisfactory” US durable goods data, due later today, could provide some more appetite for the dollar.

Bunzl takes company spotlight

Logistics firm Bunzl will be taking the spotlight for company news on Wednesday as the only-blue chip company to issue an update this week.

The group does not normally discuss profits in its trading statements, leaving that to the actual interims, which usually come out in August.

However, just in case it does, analysts will be looking at two things from Wednesday’s second quarter update from the firm - operating margin and its US performance.

Meanwhile, there will be updates and results statements from a number of FTSE 250 firms including Stagecoach, Tullow Oil and Wood Group.

Significant announcements expected on Wednesday:

Trading updates: Bunzl PLC (LON:BNZL), Tullow Oil plc (LON:TLW), John Wood Group PLC (LON:WG.)

Finals: Stagecoach Group plc (LON:SGC), BCA Marketplace PLC (LON:BCA), Creightons PLC (LON:CRL), Sysgroup PLC (LON:SYS)

Interims: Autins Group PLC (LON:AUTG)

AGMs: Curzon Energy PLC (LON:CZN), Next Fifteen Communications PLC (LON:NFC)

Economic data: US durable goods

Around the markets:

  • Sterling: US$1.2672, down 0.2%
  • Brent crude: US$65.19 a barrel, up 1.4%
  • Gold: US$1,407.1 an ounce, down 0.55%
  • Bitcoin: US$12,540.4, up 12.5%

City headlines:

  • FirstGroup chair Wolfhart Hauser is to stand down after 30% of investors voted against his re-election, although the train and bus operator has survived an attempt by its biggest shareholder to oust the entire board – Guardian
  • High Street sales have suffered their biggest fall for more than a decade as the miserable weather takes its toll – Daily Mail
  • “Flawed” EU rules fuelled the meltdown at Neil Woodford’s flagship fund, which froze £3.7 billion of investor money this month, the head of the main UK financial regulator said – FT
  • US drugmaker AbbVie has agreed to buy Allergan, the Irish-domiciled maker of Botox, in a $63 billion deal – Financial Times
  • Fabiana Abdel-Malek, the former head of compliance at UBS, has been convicted of leaking inside information to a friend while working for the Swiss banking giant, a jury found on Tuesday – Telegraph
  • Boris Johnson vowed to “do or die” and take Britain out of Europe in four months’ time as one in four voters have a no-deal Brexit as their first choice – Times
  • Credit Suisse has kicked off a legal battle to claw back £239 million of bonus taxes it paid a decade ago – FT

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