Market Close
Federal Reserve related nerves kept markets in check today, with many, including the UK’s main index, reversing early session gains.
Stocks initially looked past weak August retail sales and industrial production data from China over the weekend as it was still better than the previous month.
After lunch, investors were not willing to carry much risk into the American session.
Connor Campbell at Spreadex said this was “understandable, adding, “there was no real news to work with this afternoon, nothing to de-fog the market-confusing mist surrounding the Fed’s current position in regards to a September rate-hike.”
The switch in sentiment from morning to afternoon was best reflected in UK-listed mining stocks as commodity companies crippled the FTSE 100.
David Madden at IG said: “Mining and energy companies are keeping the FTSE 100 under the cosh, and given the deceleration of the mineral-hungry economies, it is a theme that will be around for a while.”
Once up over half a per cent, the footsie turned the other way after lunch and ended more than 0.5% lower, 33 points, to 6,084.
Sat at the bottom of the index was Glencore (LON:GLEN), which has decided to suspend copper and cobalt mining at its Katanga mine in the Democratic Republic of Congo for at least 18 months. Shares dropped 4.4% to 128p.
Fellow miners Lonmin (LON:LMI) and Kaz Minerals (LON:KAZ) were also hit, falling 6% to 21p and 5.6% to 152p respectively.
Madden said: “The collapse in commodity markets has the macro-economic environment looking dreary, and investors can’t help but feel cagey.”
Elsewhere, banks were among the losers, seemingly following the appointment of a hard left politician John McDonnell as the new Shadow Chancellor by Jeremy Corbyn, Labour’s new leader.
Jasper Lawler at CMC Markets said: “Clearly The Labour Party are not in power but the small majority of The Conservative Party means there will be occasions where the party’s new extreme left leader can influence policy.”
Barclays (LON:BARC) dipped 1.4% to 2545p, Lloyds (LON:LLOY) 1% to 75p.
Conversely, drugs giant AstraZeneca (LON:AZN) was higher as got a shot in arm from broker heavyweight Deutsche Bank.
The broker upgraded the shares to 'buy' from 'hold' sending them 34p up to 4,320p.
In small cap news, Gem Diamonds (LON:GEMD) sold the second ‘exceptional’ white diamond recovered from the Letšeng project this year. Shares nudged 2p higher to 127p.
Elsewhere, Active Energy (LON:AEG) announced it is teaming up with a US firm to commercialise what it describes a “revolutionary” new manufacturing process that allows biomass to be burned in unconverted coal-fired power stations. Shares gained 4.5% to 5.75p.
One of the biggest gainers was Motive Television (LON:MTV), which shot up as the app maker said it is to make its TabletTV available on the new AppleTV platform.
Motive will become one of the earliest developers for the Apple TV platform and shares leapt 14% to 0.23p.
Conversely, HaiKe Chemical Group (LON:HAIK) was a big loser as it said first half was as expected but due to the slowdown in China over recent months, the firm is unlikely to make a profit for the full-year. Shares dropped 34% to 8.5 p.
Lunchtime Report
London’s blue-chip stocks were gave back this morning’s gains as markets continue to lack any palpable direction.
“Understandably, as we draw towards Thursday's long anticipated Federal Reserve meeting, the willingness of traders to hold a position throughout the whole week is going to be lower,” Joshua Mahony at IG said.
All three major European indices were in decline at lunch; the German Dax lost 10 points to 10,113 while the French Cac40 eased 11 points to 4,538.
They joined the FTSE 100, which was 8 points lower at 6,109, with miner Glencore (LON:GLEN) languishing at the bottom of the index.
The miner, which owns 74% of Katanga Mining, said the company has decided to suspend copper and cobalt mining at its Katanga mine in the Democratic Republic of Congo for at least 18 months. Shares dropped 4% to 128p.
This was on top of more disappointing data in China, that showed China’s factory output and fixed-asset investment were both weaker-than-expected last month.
Bernard Aw at IG said: “The weekend data continued to reflect the two-speed Chinese economy, with consumption holding up while investment and the industrial sector decelerating.”
Fellow miners Lonmin (LON:LMI) and Kaz Minerals (LON:KAZ) were also hit, falling 6.7% to 20p and 5.3% to 153p respectively, despite Rio Tinto (LON:RIO) chief executive Sam Walsh stating that China’s economic reassurances should be believed.
Elsewhere, banks were among the losers, seemingly following the appointment of a hard left politician John McDonnell as the new Shadow Chancellor by Jeremy Corbyn, Labour’s new leader.
Barclays (LON:BARC) dipped 1.3% to 255p, Lloyds (LON:LLOY) 1% to 75p.
Away from the FTSE 100, Aga Rangemaster (LON:AGA) lowered after reports over the weekend said Whirlpool has pulled out of a bidding war with Middleby for the company as shareholders approved a US$201mln takeover last week. Shares eased 12% to 184p.
Conversely, Trinity Mirror (LON:TNI) was higher as it confirmed it was in talks with Daily Mail & General Trust (LON:DMGT) to acquires its 38.7% stake in Local World, which owns regional papers including Leicester Mercury and Cambridge News. Shares rose 6.8% to 148p.
In the world of small caps, Motive Television (LON:MTV) shot up as the app maker said it is to make its TabletTV available on the new AppleTV platform.
Motive will become one of the earliest developers for the Apple TV platform and shares leapt 25% to 0.25p.
Record production and sales of palm oil helped Ivory Coast-based DekelOil (LON:DKL) 9% to 1.1p.
Water Intelligence (LON:WATR) was higher as it reported sales rose 25% to US$4.4mln in its half-year results, while pre-tax profit hiked almost 50% to US$910,000 in the period. Shares jumped 16% to 54p.
Conversely, HaiKe Chemical Group (LON:HAIK) said first half was as expected but due to the slowdown in China over recent months, the firm is unlikely to make a profit for the full-year. Shares dropped 26.9% to 9.5p.
MOST FOLLOWED
New Labour leader Jeremy Corbyn was the big story on the business networks today.
Already the appointment of an even more hardline left winger, John McDonnell, as shadow chancellor has led to a flood of stories promising a return to the days of state-run railways, banks and an end to the capitalist system as the UK knows it.
Other measures flagged up this morning were 60% income tax for those earning over £100,000 and a wealth tax on the richest 10% of the population.
Other than a few pence knocked of Barclays and Lloyds and BSkyB, another bogeyman for the Labour left, markets took it in its stride, however.
One view was that it made it more likely the Conservatives would win again in five years time.
The issue of Europe will also be fascinating to watch as Corbyn is said to be a Eurosceptic, something that has already reportedly prompted the resignation of former front bencher and business favourite Chuka Umunna.
Elsewhere, global warning was on the agenda as a report from the Met office suggested 2014, 2015 and 2016 are likely to be among the warmest years on record as solar radiation trapped by greenhouse gases combines with an unusually strong El Nino effect.
Already, there was have been warnings on possible impact on commodities from El Nino – which is tipped to be the strongest for sixty years.
Reducing greenhouse gases should be one of the benefits of Active Energy (LON:AEG) teaming up with Utah-based Biomass to commercialise what it describes a “revolutionary” new manufacturing process that allows biomass to be burned in unconverted coal-fired power stations.
The pair aim to construct of a network of advanced fuel manufacturing facilities close to large-scale biomass raw material sources, such as sawmills and agricultural waste sites.
The process cleanses the raw biomass by removing salts, minerals and other contaminants that harm the atmosphere and damage power plant furnaces.
Chief executive Richard Spinks said: "By utilising our sustainable clean energy biomass fuel, coal-fired power generators across the globe can choose to 'go green' - improving air quality and contributing to arresting climate change - faster than was previously possible, “
On the subject of biomass, or tomorrow’s chip paper to be precise, Trinity Mirror is talks to buy DMGT’s 38.7% stake in Local World, which owns venerable regionals such as the Leicester Mercury, Cambridge News and Nottingham Post, along with other shareholdings.
Trinity currently owns 20% of Local World but is said to want full control for about £200mln. It has has than 250 local papers, as well owning the Daily Mirror, Sunday Mirror and Sunday People national newspaper brands.
US interest rates will feature all this week in this column and everywhere else with a financial bent.
Until Wednesday evening, the debate will be why or not the US Federal Reserve should raise interest rates and afterwards it will the analysis of why. Consensus at the moment seems to be swinging towards no change.
Indeed, there is still a chance the UK may nip in ahead of the US.
Over the weekend, Martin Weale, one of the Bank of England’s policymakers said interest rates need to rise “relatively soon”.
LONDON OPEN
UK shares open higher as the week begins despite a sell-off in China overnight.
FTSE 100 gained 39 points to 6,157 with nearly all of the Footsie members showing early advances.
Concerns over the Chinese market have been a weighty theme in recent weeks and look set to continue yet, not least due to economic data over the weekend.
That showed China’s factory output and fixed-asset investment were both weaker-than-expected last month.
Markets though were fixated on the upcoming US Federal Reserve meeting and the weakness in China was seen as a possible reason for the US central bank to hold fire on interest rates.
Expectation among a consensus of commentators of a hike has now dropped to 28%, having been heading towards 50% earlier in the year.
Miners were among the big gainers today. BHP Billion (LON;BLT) added 19p to 1,076p, Rio Tinto (LON:RIO) rose 40p to 2,423p while Anglo American (LON:AAL) added 10p to 728p.
The one exception was out of favour trader Glencore (LON:GLEN), which eased back 1% to 133p after last week’s bounce on the back of its huge debt reduction measures.
Banks were among the few losers seemingly following the appointment of a hard left politician John McDonnell as the new Shadow Chancellor by Jeremy Corbyn, Labour’s new leader.
Barclays (LON:BARC) dipped to 258p, Lloyds (LON:LLOY) to 75.7p while BSkyB another company likely to be in the cross hairs in the event of a Labour election victory fell 13p to (LON:BSY).
Aga Rangemaster (LON:AGA) lowered after reports over the weekend said Whirlpool has pulled out of a bidding war with Middleby for the company as shareholders approved a US$201mln takeover last week. Shares eased 12% to 184p.
There were some big moves among the small caps.
Active Energy (LON;AEG) jumped 13% to 6.2p as it unveiled a partnership with a US firm over what it described as a revolutionary new way to treat biomass for fuel.
Seeing Machines (LON:SEE) rose 8% to 4.9p as it agreed a US$17.5mln deal to transfer the running of its fatigue monitoring systems for off road truck drivers to US group Caterpillar.
Record production and sales of palm oil helped Ivory Cost-based DekelOil (LON:DKL) 10% to 1.1p.
Motive Television (LON:MTV) said it is to make its TabletTV available on the new Apple TV platform. Motive will become one of the earliest developers for the Apple TV platform. Shares jumped 34% to 0.27p.
Conversely, HaiKe Chemical Group (LON:HAIK) said first half was as expected but due to the slowdown in China over recent months, the firm is unlikely to make a profit for the full-year. Shares dropped 26.9% to 9.5p.
PAPERS
City AM
New shadow chancellor wants to seize shares and impose 60 per cent tax rate
JEREMY Corbyn’s Labour party last night signalled a dramatic lurch to the left with the appointment of radical socialist John McDonnell as its new shadow chancellor.
McDonnell proposes the full public ownership of Britain’s banking system in order “to take control of our casino economy” and has described his interests as “fermenting the overthrow of capitalism”.
Bank of England chief economist Andy Haldane will answer questions on Twitter today
The Bank of England's (BoE) chief economist Andy Haldane will be answering questions about how the central bank should regulate financial markets in the UK on Twitter today.
Haldane, who has been touted as a possible replace to ousted Financial Conduct Authority boss Martin Wheatley, will conduct the Twitter Q&A with the hastag #BoEOpenForum between 2.30pm and 3.30pm.
"This is your chance to ask me questions about financial markets [and] how to improve them," he said.
UK cyber security jobs on rise after several high-profile data breaches and hacks
Cyber security jobs are on the rise, in the wake of a stream of recent high-profile data breaches and hacks.
Some 14 per cent of all new IT jobs are in the cyber security sector, showing that protection against cybercrime is becoming an increasing priority for companies.
Out of the 10,210 current IT vacancies in the UK, 1,420 are in cyber security, according to professional services consultant Procorre.
The Times
Treasury has sought to meddle with forecasts
The Treasury has tried to meddle with the Office for Budget Responsibility’s independent forecasts in an apparent breach of the rules that threatens to undermine the fiscal watchdog’s credibility, private documents seen by The Times show. Tomorrow the Treasury select committee will challenge Robert Chote — who was nominated by George Osborne this month for a second term as chairman of the regulator — about civil servants interfering to cast government policies in a better light.
Jaeger chief out after rows over way forward
Jaeger is trying to stitch together a turnaround after parting company with its chief executive amid a disagreement over strategy.
It emerged last week that Colin Henry, who was brought in to head the business two years ago, had taken an indeterminate “leave of absence”.
Astra enjoys its fairytale ending in Frankfurt
Like all the best stories, the one behind the glittering reveal tonight by General Motors of the all-new, British-built, seventh-generation Vauxhall Astra at the Frankfurt motor show started on a dark and stormy night.
The Guardian
Tesco bosses' lack of shareholding raises eyebrows
The entire board of Tesco has bought less than £350,000 of shares in the supermarket chain, and chief executive Dave Lewis has yet to buy any, despite being in charge for a year.
The lack of share purchases by Lewis and Alan Stewart, the finance director, has raised eyebrows among corporate governance pressure groups and shows that the Tesco executives have not been willing to back their turnaround plan by putting their own money into the retailer.
EEF calls on Downing Street to scrap 'complex' energy tax system
EEF, one of Britain’s leading employers’ groups, has urged the government to scrap the carbon price floor and other green taxes, following on from a series of ministerial moves to slash subsidies on wind and solar schemes.
The demand for more cuts comes as a high profile green crowdfunding scheme, the Trillion Fund, said it would no longer be loaning money to renewable energy projects because the government had “rocked investor confidence”.
EEF said ministers should move away from green taxes that penalise businesses, such as the carbon price floor and the carbon reduction commitment, and instead use tax incentives to reduce CO2.
Interest rates must rise 'relatively soon', says Bank of England's Martin Weale
A Bank of England policymaker has said interest rates need to rise “relatively soon”, adding to signs that support is gradually building for the first increase in British borrowing costs since before the financial crisis.
Martin Weale, one of the Bank’s rate-setters, also said a rise would give the central bank scope to make cuts if the British economy runs into trouble in the future.
“With wage growth remaining firm, the tightening labour market means that inflation is likely to rise above target in two to three years’ time,” Weale wrote in an article for the Scotland on Sunday newspaper.