Market Close
London’s blue-chip stocks ended the day lower as the afternoon’s selection of US data didn’t do much for the already risk-averse investors.
With the most important Fed statement for years only a few hours away, “jobless claims, fell to a near 2 month low, only for any hawkish goodwill to be wiped away by a 25 month low for the Philly Fed manufacturing index,” Connor Campbell at Spreadex said.
He added that “it is incredibly unlikely that the Fed would be swayed by a selection of second-tier US data, rendering the figures inert.”
It meant the Dow Jones was five at 16,735 shortly after the opening bell, while the Nasdaq gained 11 points at 4,900 and the broader-based S&P500 added one point to stand at 1,996.
The flat opening did little to help stocks in the UK, which slipped back as less-than-stellar retail sales, stuck at 0.2%, dampened the mood.
Chris Williamson at economic data group Markit said: "Sluggish growth of retail sales adds to the recent flow of economic data which point to a slowing in the UK economy."
The FTSE 100 ended the day 42 points down, 0.68%, to 6,186 with little to write home about.
The big news on the index was supplied by theme Park and tourist attraction operator Merlin Entertainments (LON:MERL) which eased 0.1p to 382.6p.
The Thorpe Park and Legoland owner said downbeat trading in its theme Park business could continue to impact profit into next year.
Away from the index, online grocery group Ocado (LON:OCDO) was the top riser in the London market on Thursday as talk swirled about a potential takeover.
Shares in the distributor soared 27p, or 8.4%, to 346p after Deutsche Bank speculated it could become a bid target if rival grocery supplier Amazon Fresh launches in the UK.
Conversely, shares in FTSE 350 company Rotork (LON:ROR) fell again today as continued weak oil prices have forced the company into a profit warning.
The valve maker for the oil and gas sector has seen its shares fall 35% so far this year, and was 10.8% down at 192p for the day.
Similarly, Premier Farnell (LON:PFL) issued another profit warning as it said it plans to sell its fire-fighting equipment company Akron Brass and slash its dividend. It had previously issued a profit warning in July. Shares dropped 16.2% to 111p.
In the small cap space, DCD Media was a big gainer today as its subsidiary, Rize Television was commissioned to produce a new singing contest ‘Got What it Takes’ for CBBC, presented by a former X Factor singer. Shares jumped 26.7% to 510p.
Elsewhere, Teathers Financial (LON:TEA) was higher after signing a content agreement with none other than Proactive Investors for its unique crowd equity app. Shares gained 7% to 3.75p.
Atlas Development and Support (LON:ADSS) said it has been in contact about a number of joint ventures but none have bore fruit.
“The securing of contracts which offer the right margins has been difficult in the short term, particularly in the oil and gas space,” it said. Share plunged 15.6% to 0.7p.
Online grocery group Ocado was the top riser in the London market on Thursday as talk swirled about a potential takeover.
Shares in the distributor soared 28.5p to 348p after Deutsche Bank said it could become a bid target if rival grocery supplier Amazon Fresh launches in the UK.
The German investment bank said in a note: "If Ocado’s sales growth and profit suffer due to the launch of Amazon Fresh (as we expect they would), we think Ocado could become a potential target.
"However, Ocado’s performance would have to deteriorate significantly before this became likely."
Ocado, which distributes Waitrose products and provides an online delivery service for Morrisons, is potentially facing more competition.
It reportedly has already warned Morrisons against trying to launch its own delivery service because of the 25-year contract that exists between the pair.
Deutsche Bank added: "The potential launch of Amazon Fresh in London could negatively impact Ocado’s sales growth and profitability.
"We expect Amazon Fresh to target high-end customers and hence have considerable overlap with Ocado."
The FTSE 100 Index fell 22.96 points to 6206 in the first hour of trading, but that was still a four-week high after Wednesday's positive reaction to upbeat UK job news.
The Fed's decision was expected to eclipse other economic news such as UK retail sales, which rose 0.2% in August versus 0.1% in July.
Chris Williamson at economic data group Markit said: "Sluggish growth of retail sales adds to the recent flow of economic data which point to a slowing in the UK economy."
Fed fund futures imply a less than 25% chance of a hike while analysts and economists polled are 50/50, said Mike van Dulken at Accendo Markets.
Craig Erlam at forex group OANDA said a rate rise would shock markets. He said: "If the Fed is still tempted to test the water while minimising the shock, it could opt to raise by only 10 basis points today and do another 15 basis point hike in December."
Theme Park and tourist attraction operator Merlin Entertainments (LON:MERL) dropped 0.1p to 382.6p as it said downbeat trading in its theme Park business could continue to impact profit into next year.
Regional airline group Flybe (LON:FLYB) ascended 3.25p to 85p after introducing an ATR 72-600 aircraft into its fleet to operate domestic and regional routes under contract to Scandinavian carrier SAS.
Shares in Constellation Healthcare Technologies (LON:CHT) were flat at 144p as the provider of support services to US hospitals and clinics said it was on the lookout for more acquisitions.
Shanta Gold (LON:SHG) sParkled 0.25p to 4.38p as the East Africa-focused gold producer, developer and explorer said production and costs were still at budgeted levels and it was on course to hit full-year guidance.
Graphene Nanochem (LON:GRPH) rallied 1.25p to 19.75p on news of a US$390,000 order for its PlatQuartz lubricant additive from Scomi Oiltools. It will be deployed to an oil and gas company in India for a 3-well drilling programme.
MARKET PREVIEW
Not exactly Christmas, but the day the market has spent months waiting for is now here – and there’s probably a fair chance of disappointment.
Later this evening, after trading in London has finished, US Federal Reserve chair Janet Yellen will reveal whether or not American interest rates will be increased.
Wall Street closed Wednesday higher, again, and it would appear that traders are betting that the economic conditions are still not quite right for the Fed to raise rates.
“This is the most highly anticipated Fed decisions in years and investors, analysts and economists everywhere are split on whether the central bank will raise interest rates this month,” said Craig Erlam, analyst at OANDA.
“The markets on the other hand seem pretty convinced, which is quite surprising given the repeated warnings from Fed Chair Janet Yellen that the intention is to raise rates this year.
“Markets are currently pricing in a less than 25% chance of a rate hike at today’s meeting which is quite surprising and leaves them open to quite a shock if the Fed does proceed as warned.”
The Dow Jones gained 140 points, 0.84%, to close at 16,739 while the S&P 500 ended 0.87% higher at 1,995 and the Nasdaq moved up 0.59% to 4,889.
In Asia, Japan’s Nikkei advanced 1.55% to 18,454 while Hong Kong’s Hang Seng added 0.77% to 22,456 and the Shanghai Composite index edged up 0.28%.
Australia’s ASX 200 climbed 46 points, 0.9%, to 5,144.
In the commodity market the price of oil rallied strongly – Brent crude gained over 4% back up to US$50 per barrel – and the gold price was also moved higher, to around US$1,120 per ounce.
In London, IG Markets is calling the FTSE 100 up about 16 points this morning at 6,256 to 6,261.
IN THE PAPERS
Altice, a cable TV group controlled by Franco-Israeli billionaire Patrick Drahi, has struck a US$17.7bn takeover deal for US group Cablevision, the Financial Times reports.
The FT also highlights strengthening competition for cab app Uber. It reports that Uber’s main competitors in America and China respectively - Lyft and Didi Kuaidi – signed an alliance deal which lets their customers use the others services.
In a separate article the FT reports that French ‘ride sharing’ app firm BlaBlaCar has just raised US$200mln in a venture capital funding round, which has valued the tech-firm at €1.4bn.
MPs have called for a Serious Fraud Office probe into Lloyds Bank and one of its property advisors in relation to potential abuses of the insolvency process, The Times says.
The Times also says Serco has lost £100mln after selling an Indian call centre business it acquired back in 2011.
Britain is facing a diesel drought, according to The Telegraph, which says a surge in diesel car sales and fewer UK refineries means the country is increasingly dependent on foreign imports of the fuel.
The Telegraph also highlights that News Corp has sealed its £114mln deal to acquire advertising platform.