Market Close
London’s blue-chip completed the fight back it was making at lunch to swing to a gain as the afternoon wore on.
Chris Beauchamp at IG said: “Ahead of what looks like the most vital Fed meeting in years, the best thing for markets to do would be simply to sit still and wait for Thursday afternoon.
“With that being impossible, they have opted for the second choice, namely running around in circles.”
The UK’s main index was boosted by a positive start to the day on Wall Street, where, having been poised to open lower the benchmark Dow Jones rose 56 points, at 16,428, the broader S&P500 was up six at 1,959 and the Nasdaq gained ten to 4,816.
With all data this week potentially affecting the Federal Reserve’s interest rate decision on Thursday, the key question is whether the US economy is robust enough to weather a rate rise.
Retail sales figures did little to solve this mystery, rising modestly in August by 0.2%.
Dennis de Jong at forex broker UFX said: “even slight improvement is still a positive, especially considering weak inflation recently.”
The data had a knock on effect in Europe, where the French Cac40 was 1.4% higher to 4,581 and the German Dax rose 83 points to 10,215.
In the UK, the FTSE 100 ended the day 53 points to the good at 6,137 with ARM Holdings (LON:ARM) leading the charge.
The chipmaker said its third quarter trading and operating costs are broadly in line with guidance.
Earlier this week, major customer Apple said initial sales of its newly introduced iPhone 6S are likely to beat the record set last year. Shares climbed 3.4% to 980p.
Conversely, B&Q owner Kingfisher (LON:KGF) was languishing at the bottom of the index, down 4% to 345p as it reported higher half-year sales but lower profits and said it was on track to close about 60 stores.
In the small cap space, Teathers Financial (LON:TEA) climbed as it said Its technology platform will be used to power a crowd equity app being launched by Shard Capital Partners.
It is Teathers’ first commercial agreement and will be free to download on iTunes, Google Play and Android. Shares rocketed almost 20% to 3.1p.
Elsewhere, Mosman Oil & Gas (LON:MSMN) shot higher as the company moved STEP closer to acquisition with a royalty agreement worth NZ$4mln.
The company recently agreed to acquire STEP - the South Taranaki Energy Project - for NZ$10mln, and shares jumped 27% to 8.2p.
Conversely, the tough oil & gas market hit Hydrogen Group (LON:HYDG), which reported widening pre-tax losses of £1.9mln from £1.1mln in its interim results. It has also scrapped its dividend.
Cost-cutting measures are expected to take effect in the second half, the company said, but it couldn’t stop shares falling 19% to 43p.
US Open
Wall Street shares got off to a good start, having been poised to open lower, as investors look to the Fed meeting and welcomed US data out this morning.
Retail sales in America rose 0.2% last month (August) compared to July, meeting expectations and giving the Fed policymakers some good news.
Elsewhere, industrial production fell a seasonally adjusted 0.4% in August - again in line with what was expected.
The two-day Fed meeting, which starts tomorrow, is hotly anticipated, due to the possibility of the first interest rate rise decision for a decade.
It's still a hard one to call (will they or won't they), with commentators seemingly sitting on both sides of the fence.
Recent market turmoil had prompted a weakening of the view that a rise would come forth, but some say today's economic figures are key.
One such is Dennis de Jong, the managing director at UFX.com, the online Forex broker, who said: "Fed chair Janet Yellen has been on a rollercoaster ride this week following the Chinese monetary meltdown, but can breathe a sigh of relief following today’s GDP results.
"Strong positive trends are showing the US economy to be in relatively decent health, while a marginal recovery from Asian trading last night also prompted an uptick in US stocks.
“All this financial turbulence means that the September interest rate hike isn’t perhaps as certain as it was previously. However, Yellen has so far flown as smooth a course as could be hoped, and received wisdom says a hike is still on the way.”
At the time of writing, the benchmark Dow Jones is up 56 points, at 16,.428, the broader S&P500 is up six at 1,959 and the Nasdaq gained ten to 4,816.
In equities, among the notable gainers was Penn West
Petroleum (TSE:PWT) (NYSE:PWE), which climbed almost 9% as it emerged the Canadian senior oil producer would sell its assets in Mitsue in Central Alberta for $192.5mln in cash to cut debt.
Upon the closing of the Mitsue deal, Penn West will have raised $605mln this year by divesting its non-core assets, the Calgary, Alberta-based company said in a statement.
Another riser was Gray Television (NYSE:GTN), which rose 8.6% to US$12.75 after it revealed it will acquire all the television and radio stations of Schurz Communications for around US$442.5mln.
The deal will expand Gray's operations to 49 television markets and 28 states and improve the overall quality of Gray's portfolio.
Anthera Pharma (NASDAQ:ANTH) also nudged 1.24% higher to US$8.03 , having fallen earlier, after firm Zenyaku backed ut of its collaboration and licence agreement struck last year to develop and commercialise blisibimod in Japan for the treatment of IgA nephropathy.
Lunchtime Report
London shares staged a fightback on Tuesday after losses sparked by data showing UK inflation falling back to zero.
The FTSE 100 Index stood 8.58 points adrift at 6076 after dropping as low as 6019 after the inflation figures came out.
The UK Consumer Prices Index (CPI) was unchanged in the year to August 2015, that is, a 12-month rate of 0%, down from 0.1% in the year to July 2015.
Dennis de Jong, managing director at foreign exchange broker UFX.com, said: “Chancellor George Osborne will be concerned to see today’s inflation data showing the UK rate is now at zero following sharp falls in petrol prices.
“However, the results released today will ease pressure on the BoE to intervene, allowing governor Mark Carney to wait and see the impact of the mooted US rate rise later this week. The Bank’s inflation target is 2%, which may prove difficult to achieve in the current climate of low crude oil prices and a strong pound."
Spread-betting firm IG also blamed the inflation figures on tumbling commodity prices, saying the falls had trickled down to the cost of living.
IG market analyst David Madden said: "The threat of deflation will keep mortgage holders happy, but it spells difficult times ahead for members of the BoE.
"When you combine falling commodity prices with weakness in the Far East, it is difficult to foresee any interest rate hike from the Fed this week, and traders will sit on their hands until then."
The news hit miners, with Anglo American (LON:AAL) retreating 0.8p to 716.1p, BHP Billiton (LON:BLT) sUBSiding 13p to 1055.5p and Rio Tinto (LON:RIO) off 27p at 2370.5p.
But crude prices were on the up, propelling oil stocks higher. The price of a barrel of Brent crude gained 1% to US$46.85 and West Texas Intermediate lifted 1.3% to US$44.56.
BP (LON:BP.) rose 2.1p to 334.1p and Royal Dutch Shell (LON:RDSB) headed 1.5p higher to 1615p.
British house prices increased by 5.2% in the year to July 2015, down from 5.7% in the year to June 2015.
French inflation data for August surprised on the downside, declining 0.1ppt to 0.1% year-on-year on the EU measure as oil prices weighed.
Daiwa Capital Markets said in a note: "We now expect tomorrow to similarly bring a 0.1ppt downward revision from the flash euro area CPI estimate to a five-month low of 0.1% year-on-year.
But there was positive news on the job front as the number of employed grew at an increased rate of 0.3% quarter-on-quarter in the second quarter.
Tour operator Thomas Cook (LON:TCG) rose 2.1p to 116.2p on market talk of a possible takeover by Chinese shareholder Fosun International.
In equities, B&Q and Castorama owner Kingfisher (LON:KGF) dropped 11.3p to 349p after it revealed lower first-half profits.
Online grocery distributor Ocado (LON:OCDO) conceded early gains to stand 1.8p down at 314.1p despite a rise in third quarter sales and profits.
North River Resources (LON:NRRP) dipped 0.02p to 0.18p on news that the Namibia-focused lead-zinc explorer launched a fully underwritten open offer and placing to raise US$2.8mln.
London Stock Exchange (LON:LSE) reversed 12p to 2468p on news that it had offloaded trading service Proquote to Australian-listed financial market technology group Iress.
Nostrum Oil & Gas (LON:NOG) publicly urged the board of Tethys Petroleum (TSE:TPL LON:TPL) to accept its takeover offer after talks stalled. Shares in Nostrum picked up 0.5p to 520.5p and Tethys's stock increased 0.25p to 5p.
LONDON OPEN
The London market plunged on Tuesday following UK inflation data and another downbeat Chinese session.
The FTSE 100 Index backtracked 63.25 points to 6021 after the Shanghai Composite had its worst two days since the peak of the August sell-off around three weeks ago,
The UK Consumer Prices Index (CPI) was unchanged in the year to August 2015, that is, a 12-month rate of 0%, down from 0.1% in the year to July 2015.
FXTM research analyst Lukman Otunuga said: "This may result in a setback on when the Bank of England plans to hike interest rates in 2016."
British house prices increased by 5.2% in the year to July 2015, down from 5.7% in the year to June 2015.
Over the Channel, French inflation data for August surprised on the downside, declining 0.1ppt to 0.1% year-on-year on the EU measure as oil prices weighed.
Daiwa Capital Markets said in a note: "We now expect tomorrow to similarly bring a 0.1ppt downward revision from the flash euro area CPI estimate to a five-month low of 0.1% year-on-year.
"This morning also brings the latest euro area trade figures for July, which are expected to show that the headline surplus rose to a new record high at the start of Q3."
In equities, B&Q and Castorama owner Kingfisher (LON:KGF) dropped 10.6p to 349.7p after it revealed lower first-half profits.
Online grocery distributor Ocado (LON:OCDO) ticked up 6p to 321.9p as third quarter sales and profits rose and it said it expected to keep growing slightly ahead of the market.
North River Resources (LON:NRRP) advanced 0.1p to 0.22p on news that the Namibia-focused lead-zinc explorer launched a fully underwritten open offer and placing to raise US$2.8mln.
MARKET PREVIEW
Thursday's long-awaited meeting at the US Federal Reserve has most traders in cautious, risk-averse mode.
Whether or not the Fed raises interest rates or defers again is still unclear, though the market is expected to see volatility whichever way the decision goes.
Craig Erlam, analyst at OANDA, however, thinks there could be some volatility before then.
“While I expect investors to maintain the cautious, risk averse approach today, there is a lot of economic data being released which could bring some volatility back to the markets,” he said in a note.
Last night, Wall Street ended on the back foot. The Dow Jones closed down 62 points, 0.38%, at 16,370 while the S&P 500 dipped 0.41% to finish at 1,953 and the Nasdaq gave up 0.34% to 4,805.
In Asia, Japan’s Nikkei was the exception as it climbed around 150 points or 0.8% to 18,111.
The Shanghai Composite was down about 2% at 3,047. Hong Kong’s Hang Seng moved 0.26% lower to 21,505.
Australia’s ASX 200, meanwhile, gave up 1.26% to 5,032.
In London, IG Markets sees the FTSE 100 more or less unchanged as the blue-chip benchmark is called at 6,096 to 6,101.
IN THE PAPERS
The Financial Times reports on the story that Google has been accused by Russia’s anti-trust authorities. The complaint relates to the preloaded Google software on Android smartphones.
Volkswagen’s pledge to release at least 20 new electric powered or electric hybrid cars by 2020, was also a feature for the FT. The plans were unveiled at a motor show in Frankfurt, and a battery powered Porsche capable of covering 500 kms on one charge was the centrepiece of the presentations.
The Times reports that savers using the government’s National Savings & Investments will be worse off as the interest rate of its Direct ISA will be reduced to 1.25% from 1.5%.
Hastings Insurance will announce plans to IPO on the London Stock Exchange, The Times says, and the float could see Goldman Sachs - the current owner of 50% - make four times its money.
The Telegraph reports that HSBC has cancelled its status as a Nomad (nominated advisor) for AIM quoted companies.
Although the bulge bracket bank has no advisory clients currently, the move adds another name to a growing list of blue-chips to abandon London’s junior market - Merrill Lynch, Goldman Sachs, UBS and Deutsche are among the other to leave in recent years.
Peer-to-peer lender Zopa has doubled revenues, according to The Telegraph, but, it is also making heavy losses as it expands headcount. Zopa had £11.5mln of revenue in 2014, up from £5.4mln in the preceding year, and chief executive Giles Andrews expects the figure to rise to “the region of £23mln” this year.
At the same time The Telegraph also reports that the City regulator has pay-day lenders Wonga and QuickQuid under the microscope, as they are being assess before they are given the all clear for new licences.
The Guardian says Ed Davey, former Lib Dem cabinet minister and energy secretary, has a new job advising law firm Herbert Smith on renewable energy projects.