- FTSE 100 closes 7 points lower
- Dow Jones remains down, but S&P 500, Nasdaq ahead
- Crude prices gains after Saudi production cut
4.45pm: FTSE fades to the finish
The FTSE 100 finished the day nearly where it started, closing 0.1% lower at 7,600 points.
Equities found it difficult to maintain the atmosphere of Friday’s rally, while oil prices have faded from their intraday highs, says Chris Beauchamp, chief market analyst at online trading platform IG.
“The last OPEC production cut produced such a durable rally in crude prices that the body decided to try again, though it looks like the effect is even less pronounced than the last time around. While OPEC might hope it can buck the market, the muted reaction shows that investors are still maintaining their bearish outlook for the commodity.”
3.50pm: Gilt-y feelings
The Bank of England saw solid demand for its sale of £770mln medium-dated government bonds (gilts) from its quantitative easing stockpile on Monday, Reuters has reported, in contrast to the weak appetite shown by investors in last week's auction.
Investors bid for £1.920bn of gilts with a maturity of 7-20 years this week, giving a bid-to-cover ratio of 2.49 which was up from the 1.35 cover ratio at the BoE auction on June 1, the weakest demand since February, the newswire noted
3.35pm: US ISM surprises
Activity in the US services sector slowed unexpectedly in May, with lower new order growth as stockpiles rose.
The Institute for Supply Management (ISM) Purchasing Managers' Index fell to 50.3 last month from April's reading of 51.9, well below the consensus forecast for a rise to 52.5.
A gauge of hiring in the sector also fell, to 49.2 from 50.8, while that for inventories jumped to 58.3 from 47.2, and price pressures also eased with the ISM prices paid sub-index down to 56.2 from 59.6.
3.15pm: New car sales driving forward
The UK new car market has seen its longest uninterrupted period of growth for eight years, according to the latest figures from the Society of Motor Manufacturers and Traders (SMMT), as registrations grew by 16.7% in May to reach 145,204 units.
The performance marks 10 consecutive months of growth, although registrations remain 21.0% below pre-pandemic 2019 levels.
Large fleet registrations continued to drive the growth, up by 36.9% to 76,207 units in May, reflecting a regularisation of supply following challenging supply issues in 2022.
Registrations to private buyers fell slightly by 0.5% to 65,932 cars, while smaller business fleets registered 3,065 units, a year-on-year rise of 22.5%.
Petrol-powered cars remain Britain’s best sellers, accounting for 57.1% of all registrations. Alternatively powered vehicles, however, continue to make up an ever-larger share of the market, with plug-in hybrids (PHEVs) rising 23.0% to reach a 6.2% market share and hybrids (HEVs) growing 22.2% to comprise 12.3% of all registrations.
May saw battery electric vehicles consolidate their position as the UK’s second most popular power train, as a further 24,513 joined the road during the month, up 58.7% on May last year to secure a 16.9% market share.
2.50pm: Wall Street wavers
The FTSE 100 index held firm but off session highs as Wall Street started the new week mixed following strong gains on Friday after the US debt ceiling extension deal and a mixed May jobs report which raised Federal Reserve rate hike uncertainty.
Around 20 minutes after the New York opening bell, the Dow Jones Industrials Average was down 17 points, or 0.05% to 33,745, but the S&P 500 added 0.2%, and the Nasdaq Composite gained 0.3%.
The US employment report on Friday showed higher-than-expected job growth but also an increase in the unemployment rate and a slight moderation in wage growth.
The services ISM reading for May, due out later today, will provide another "timely update" on what is happening to activity ahead of the next Fed policy announcement, set for June 14
“What the market is doing ... I think is appropriate, but there are things that we don’t know yet and the big issue is the Fed,” Allianz chief economic advisor Mohamed El-Erian told CNBC’s 'Squawk Box' on Monday.
2.30pm: KKR finds a deal
Private equity firm KKR is splashing the cash and buying US machinery maker Circor International in a $1.6bn deal.
Under the terms of the agreement, KKR will pay $49 per share for each Circor share, which is a 55% premium to the New York-listed firm's closing share price on Friday. In pre-market trading, Circor shares were up 50% at $47.44.
KKR is making the investment in Circor through its North America Fund XIII. The company said it builds on its recent experience investing in flow control technologies and aerospace and defence industry suppliers globally, including Ingersoll Rand, Flow Control Group, Hensoldt, and Novaria Group.
2.15pm: Skies the limit
British Airways has operated its first passenger flight between London Heathrow and Beijing in more than three years after suspending the route due to the coronavirus pandemic.
The airline - part of FTSE 100-listed International Consolidated Airlines - will operate four return flights per week on the route, which is also served by its business partner, China Southern.
BA began operating a regular passenger service to China in 1980 and continued doing so until the sharp drop in demand caused by the COVID-19 crisis.
The UK airline's first flight from Heathrow to Beijing since January 2020 touched down on Sunday. Flights to China are restarting following a relaxation of the country's travel restrictions, with borders reopened to foreign nationals for the first time since 2020.
Meanwhile, rival Virgin Atlantic announced on Monday that it will operate flights to South America for the first time, with a daily service between Heathrow and Sao Paulo, Brazil, from May next year.
It will also begin flying between Heathrow and Bengaluru, India, and resume flights between Heathrow and Dubai in the United Arab Emirates, and between Manchester and Las Vegas in the US.
1.30pm: A glance at some of today's biggest movers
Risers
Diaceutics - up 15% to 93p: Shares jumped higher after news the firm has secured a three-year enterprise contract with a top 10 global pharmaceutical company in the United States, marking a significant achievement for the leading technology and solutions provider.
Chill Brands - up 14% to 12.8p: Shares soared on Monday after the company confirmed deals with specialist carriers to ship nicotine-free vapour products across all 50 states. London-listed Chill Brands will now aim to start offering the nicotine-free vapour products directly to customers across the US in June.
LifeSafe - up 17% to 40.5p: The fire safety technology company surged as sales growth in 2023 continued to exceed expectations. Revenue in the first four months was £2.1mln, marking over a 200% increase compared to the same period last year, and outpacing the company's internal budgets by 15%.
Fallers
BigBlu Broadband - down 13% to 41.7p: Shares fell after an update showed a drop in like-for-like revenue growth to 3.1% from 15% and flat total revenue of £14.9mln for the six months to 31 May 2023, reflecting "market challenges globally", and pressure as Elon Musk's Starlink makes inroads in Australia.
1.00pm: Mixed start expected in the US after strong gains Friday
US stocks are likely to open mixed on Monday as investors look ahead to the Federal Reserve’s upcoming interest rate decision on June 14 after an employment report on Friday painted a mixed picture of the US labor market.
Futures for the Dow Jones Industrial Average (DJIA) rose 0.05% in pre-market trading, while those for the broader S&P 500 index were 0.02% higher and contracts for the Nasdaq-100 declined 0.2%.
The main indices ended higher on Friday following the jobs report and after US Congress passed a bill to raise the country’s debt ceiling. The DJIA gained 2.1% to finish at 33,763 for its best session since January, while the S&P 500 rose 1.5% to 4,282 and the Nasdaq Composite added 1.1% to 13,241.
“With the US debt-ceiling crisis averted, attention now turns to the interest rate outlook, which remains uncertain across major economies such as the US, Eurozone, and UK,” commented TickMill Group market analyst Patrick Munnelly.
“The upcoming monetary policy updates from the US Federal Reserve, European Central Bank (ECB), and Bank of England (BoE) scheduled for the 14th, 15th, and 22nd, respectively, will be closely watched by the markets.
"Following a mixed US employment report on Friday, which showed higher-than-expected job growth but also an increase in the unemployment rate and a slight moderation in wage growth, the US interest rate outlook has become even more uncertain," he said.
The services ISM reading for May, due out today, will provide another "timely update" on what is happening to activity ahead of the Fed’s policy announcement, Munnelly added, noting that it showed growth still running at a solid pace in April, albeit slower than in the first couple of months of the year.
12.36pm: TUI on the buy list at Deutsche, shares rise
TUI AG (LSE:TUI) shares have jumped 1.5% after Deutsche Bank put the travel operator on its buy list.
The German investment bank upgraded its rating to buy from hold with an 843p per share price target.
Analyst Andre Juillard thinks the period of decline from the Covid crisis finally seems to be over, with the group has been witnessing a strong operating recovery throughout the past few months – which is expected to continue.
After a decent first half, Easter weekend was especially strong, with seemingly solid summer bookings, Juillard pointed out.
“Therefore, we expect TUI to beat its pre-Covid revenues in FY23e, supported by almost all business lines”, the analyst continued.
Considering the current trend in the sector in general, Deutsche has slightly increased operating expectations and come out 3%-4% higher than initial top-line expectations.
EBIT expectations for financial 2023 are more or less unchanged but up by 2-3% for the following two years.
Juillard said the new expectations are 2-4% higher than consensus, in general.
The FTSE 100 is holding steady, up 36 points at 7,644.
12.02pm: CVC enters race for Center Parcs - reports
CVC Capital Partners has entered the race to buy Center Parcs, the popular chain of family holiday villages, according to Sky.
Sky reported that the private equity backer of the Six Nations rugby championship is among the suitors of Center Parcs and is expected to table an indicative proposal to buy the six sites in the UK and Ireland ahead of a bid deadline later this month.
City sources said that a number of infrastructure funds, including French-based Antin, were also exploring whether to make offers for the company.
If CVC does table a bid, it would be through its long-term Strategic Opportunities fund, the sources added.
Industry sources suggest Centre Parcs could fetch £4bn to £5bn.
Center Parcs has been owned by Brookfield Property Partners, the Canadian property giant, since 2015.
11.45am: City of London still bringing in the money
Despite concerns that London's standing in financial markets may be on the wane, the City of London is still managing to attract overseas investment.
The UK remains Europe’s most attractive destination for financial services investment, attracting a quarter of new projects last year, according to new data from EY.
EY reported that the UK attracted 76 financial services projects in 2022 – an increase of 13 projects from 2021. That helped Britain extend its lead over France, which secured 45 projects last year, a drop of 15.
Overall, there were 292 financial services foreign direct investment (FDI) projects across Europe last year, up 5%.
Germany and Spain were tied third with 31 projects each.
Anna Anthony, UK financial services managing partner at EY, commented: "The strength of the UK financial market has meant that – even through challenging times – investors see it as the most attractive European financial services market."
"Our research shows that investors recognise the strength, gold-standard governance and resilience of the UK’s financial system and see it as the preferred destination for growth, innovation and access to top talent."
11.12am: Apple set to launch mixed reality headset
Apple Inc (NASDAQ:AAPL) is expected to announce a mixed reality headset - its first brand new product for eight years - at its annual event for developers.
The tech giant's WWDC showcase is usually reserved for software reveals - notably updates for its iPhones, iPads, and Macs - but this year fresh hardware appears to be on the cards.
An Apple headset has long been rumoured, and reports suggest the company will finally unveil its first foray into an increasingly crowded field during Monday's event.
It would be the firm's first entirely new product since the Apple Watch debuted in 2015.
The conference kicks off today and ends on June 9.
10.43am: Citi thinks Just Eat looks tasty
Just Eat Takeaway was in demand on Monday after investment bank Citi reiterated a buy rating.
“We see material upside potential from strategic action…..and believe this to be both rational and urgent given the macro backdrop and its market positioning.”
The bank highlighted the potential for two key actions: 1) Sale of Grubhub with a cash return and some reinvestment could add €8/share to valuation from reinvestment; and 2) the exit of Southern Europe and Australia segment could add €4/share to valuation.
Citi explained that Just Eat’s share in most of its key markets has been declining over the past three and while improving comparatives through the 2023 financial year should drive some re-acceleration in top-line trends, the consumer environment is lacklustre.
Shares in Just Eat advanced 1.6% to 1,220p. The FTSE 100 is up 35 points to 7,642.
10.15am: Mondi falls after scrapping deal to sell Russian plant
Mondi PLC (LSE:MNDI) has scrapped a deal with an investment vehicle owned by Russian billionaire Viktor Kharitonin for its largest plant in Russia, as there was a "lack of progress" in getting necessary approvals.
Shares in the paper and packaging firm fell 1.3% on the news that the 95bn Russian rouble – around £944mln - deal was not going ahead.
The company had agreed to sell Mondi Syktyvkar, a pulp, packaging paper and uncoated fine paper mill located in the capital of the Komi Republic in Russia to Augment Investments in August last year.
Mondi still intends to sell Syktyvkar while the disposal of three Russian packaging converting operations to Gotek Group, announced in December, remains in progress.
Shares fell 2.5% to 1,259p while the FTSE 100 rose 0.5% to 7,644.
9.50am: UK services sector remains robust in May
the UK's service sector remained robust in May with with growth holding close to April's 12-month peak.
The seasonally adjusted S&P Global/CIPS UK Services PMI posted 55.2 in May, down slightly from 55.9 in April but above the neutral 50.0 value for the fourth consecutive month.
Survey respondents cited resilient customer demand and cautious optimism about the near-term growth outlook, despite pressure on budgets from elevated inflation.
Higher levels of service sector output were often linked to rising spending on consumer services, especially tourism and leisure. There were also many reports of greater demand for technology services.
Tim Moore, Economics Director at S&P Global Market Intelligence said: "Service sector businesses have experienced strong growth so far in the second quarter of 2023, fuelled by resilient demand for consumer and technology services, combined with a post-pandemic tailwind as households switched from spending on goods to services."
9.35am: Abrdn gains after launching £150mln buyback
Abrdn PLC (LSE:ABDN) rose 2.5% in early exchanges after the fund manager launched a £150mln share buyback programme.
Last week the firm signalled its intention to make such a move after selling shares in Indian insurance firm HDFC Life Insurance Co Ltd.
The £150mln buyback will take place between 5 June and 5 September.
9.15am: Jefferies highlights value in Dowlais
Dowlais Group PLC (LSE:DWL) was given a lift as Jefferies started coverage with a 'buy' rating and 155p share price target.
“We see the auto supplier as an ideal way to play the auto recovery, with the group benefiting from a best-in-class profitability focus and an attractive electrification & China growth story,” the broker said.
Dowlais is a group of three businesses, GKN Automotive, GKN Powder Metallurgy and GKN Hydrogen, that have sat under Melrose ownership since 2018, and were demerged in April.
Jefferies sees it “as a high-quality auto supplier with attractive margin enhancement potential as the auto recovery comes, although we do not see it as overly dependent on volumes or cost recovery.”
It highlighted a strong management that has led GKN Automotive through its improvement phase and as Dowlais transitions from the prior Melrose 'buy, improve, sell' umbrella to a standalone group, “we see these businesses enhanced by a greater focus on long-term structural growth, without compromising on the pursuit of best-in-class profitability.”
Shares in Dowlais rose 2.5% to 128.4p. Meanwhile, the FTSE 100 is up 36 points at 7,643.
8.50am: FTSE firms, Asos jumps on reports of bid approach
The FTSE 100 remains in good spirits, up 39 points, at 7,646.
Susannah Streeter, head of money and markets, Hargreaves Lansdown said: "'The FTSE 100 has opened higher, gaining a lift upwards from strong trading in Asia, amid ongoing relief about the US reaching a debt ceiling deal and the move by oil-rich nations to keep crude prices higher."
Asos PLC shares jumped 8.4% after reports the embattled online fashion retailer received a £1bn approach from a Turkish company backed by Chinese giant Alibaba.
The Sunday Times cited City sources saying Asos received an approach from Turkey’s Trendyol, a fast-growing online retailer, in late December, at between £10 and £12 a share.
Shares today are swapping hands at around 380p.
The retailer, led by chief executive José Antonio Ramos Calamonte, was forced last month to shore up its finances by raising £75mln from investors via a share placing plus a £5mln retail offer. Asos also entered into £275mln of new debt facilities at an average interest rate of 11%.
Dowlais Group PLC (LSE:DWL) advanced 2,4% to 128p after Jefferies initiated coverage of the firm with a 'buy' rating and 155p price target.
8.10am: FTSE 100 makes a bright start
The FTSE 100 opened higher after encouraging data in Asia on Monday followed strong advances in US markets on Friday, and as oil majors rose following a production cut by Saudi Arabia.
At 8.10am, London’s lead index was up 27.38 points, 0.4%, at 7,634.66 while the FTSE 250 advanced to 19,208.23, up 58.92 points, at 0.31%.
In China, the headline Caixin services business activity PMI rose 0.7 points to 57.1 in May, the highest since November 2020 while in Japan, the final services PMI remained strong at 55.9 in May.
Oil prices spiked after Saudi Arabia said it will cut oil production by 1mln barrels a day in a bolster faltering to prop up oil prices, it announced after a tense meeting of the Opec+ group of producers in Vienna on Sunday.
Saudi energy minister Prince Abdulaziz bin Salman, Opec’s de facto leader, made the move as part of a deal in which several weaker African members will have quotas reduced from next year.
The news sparked a rise in oil prices on Monday. Brent crude added 1.4% at $77.17 per barrel, while US equivalent West Texas Intermediate rose 1.6% to $72.94.
BP rose 1.1% and Shell PLC (LSE:SHEL, NYSE:SHEL) climbed 1.8%.
Mining stocks were in focus. Deutsche Bank cut earnings forecasts and price targets across the sector buy upgraded its rating on Rio Tinto Ltd to 'buy' from 'hold'.
“We see attractive value underpinned by a high quality, cash generative business,” the bank said.
Deutsche had a 6,000p price target for Rio, down from 6,200p. Shares in Rio edged 0.4% lower at the open to 5.409p.
The German investment bank also upgraded Restaurant Group PLC to 'buy', sending its shares 4.6% higher to 46.55p at the open. Deutsche raised its price target to 56.50p from 42p.
7.46am: Oil price jumps as Saudi Arabia cuts production
Saudi Arabia will cut oil production by 1mln barrels a day in a bolster faltering to prop up oil prices, it announced after a tense meeting of the Opec+ group of producers in Vienna on Sunday.
Saudi energy minister Prince Abdulaziz bin Salman, Opec’s de facto leader, made the move as part of a deal in which several weaker African members will have quotas reduced from next year.
Russia, the world’s second-largest oil exporter, could also have its production targets lowered, though the group said this was subject to review.
Oil prices have slid in the past 10 months despite several attempts by producers to tighten supplies.
Opec+ announced a surprise cut in April but, after briefly rallying towards $90 a barrel, oil prices again reversed, falling to nearly $70 a barrel at one stage last week.
The news sparked a rise in oil prices on Monday. Brent crude added 1.4% at $77.17 per barrel, while US equivalent West Texas Intermediate rose 1.6% to $72.94.
The 1mln cut will initially be for July but could be extended, Prince Abdulaziz said.
He described it as a “Saudi lollipop” or sweetener for the group, whose other members were spared from making additional cuts this year. “We want to just ice the cake with what we have done,” the minister said. “We will do whatever is necessary to bring stability to this market.”
7.23am: Diageo brings forward Crew's appointment as CEO
Diageo PLC (LSE:DGE) has appointed Debra Crew as its interim chief executive with immediate effect.
The announcement came as the spirits maker said current CEO Sir Ivan Menezes is currently in hospital receiving treatment for medical conditions including a stomach ulcer.
“Over the weekend, we learned that Ivan's recovery suffered a significant setback due to complications, which followed emergency surgery on the ulcer,” Diageo said in a statement.
Crew had been due to become CEO on July 1, with Menezes retiring on June 30, but this move has now been brought forward.
Menezes joined Diageo through the merger of Guinness and Grand Metropolitan in 1997 and has held a number of senior positions in the business including Chief Operating Officer; President, Diageo North America; Chairman, Diageo Asia Pacific; and Chairman, Diageo Latin America and Caribbean.
He has been an executive director of Diageo since July 2012 and has served as chief executive officer since July 2013.
7.00am: FTSE 100 set to make a bright start to the week
The FTSE 100 is expected to open higher after strong gains in the US on Friday and as investors digest moves by Saudi Arabia to cut oil production.
Spread betting companies are calling London’s lead index up by around 20 points.
US markets soared on Friday with the Dow Jones climbing over 700 points while the S&P and Nasdaq also advanced strongly.
Saudi Arabia will reduce how much oil it sends to the global economy, taking a unilateral step to bolster the sagging oil price.
The announcement of the Saudi cut of one million barrels per day came on Sunday after a meeting of the alliance at OPEC headquarters in Vienna.
The rest of the Opec+ oil producers agreed to extend earlier cuts in supply through the end of 2024.
Asian markets climbed on Monday. In Tokyo, the Nikkei 225 index was up 1.9%. In China, the Shanghai Composite was down 0.1%, while the Hang Seng index in Hong Kong was up 0.2%.