FTSE 100 stocks closed flat on Monday despite an early sprint by mining and energy stocks.
Both resources sectors were boosted by respective gains in metal prices and oil prices, the latter on growing optimism that cartel OPEC will secure a historic supply freeze at the end of the month.
But by the close of trade the benchmark FTSE 100 share index was up just 2 points at 6,777. That mood was captured in the wake of news that in a low-interest rate environment, many investors have turned to equity dividends as an attractive alternative - but maybe not for much longer.
Fund manager the Henderson Group said the amount paid out in dividends across global stock markets in the third quarter was down 4.0% year-on-year. Read more.
A 2% rise in copper prices boosted mining shares, with Randgold Resources (LON:RRS) the biggest riser of 3.7% to 6005p, followed by Fresnillo (LON:FRES) up 3.2% to 1330p, Anglo American (LON:AAL) up 3% to 1122.5p and Polymetal International plc (LON:POLY), up 2.6% at 782p.
Glencore (LON:GLEN) was also in the top ten, up 2.4% to 268.15p.
Shares in energy firms were also higher after oil prices hit a three-week high on hopes of an output cut by the OPEC oil producers' group.
The price of Brent crude rose by 1.76% to $48.62 a barrel. In response, shares in oil giant BP (LON:BP.) rose 1.9% to 456.25p, while Royal Dutch Shell (LON:RDSB) was also up by 1.5% to 2100p.
In the mid-cap FTSE 250, which ended down 0.8% at 17,527, shares in outsourcing group Mitie (LON:MTO) were down 9.5% to 190p after it issued a profit warning and reported a £100mln half-year loss.
That made Mitie the second-largest decliner among mid-caps and dwarfed only by Essentra (LON:ESNT), which supplies speciality plastic and packaging components. Essentra plunged 20.4% to 393.3p after it issued a profit warning.
The firm now expects operating profits of between £137mln and £142mln for this year, down from a previous estimate of £155mln and £165mln.
The small-cap FTSE AIM 100 Index was up 0.6% at 3903 and the FTSE AIM All-Share Index up 0.3% to 813.
But across the London bourse, only 25% of stocks gained while 39% lost.
Late session
Smoking crackdown hits filter firm
FTSE 250 becoming 'profit warning central'
Blue-chip index listless
Pound back above US$1.25
A crackdown on smoking in China appears to be at the root of an earnings alert for Essentra PLC (LON:ESNT), the maker of cigarette filters and packaging. It fell 20% and was the biggest casualty on the FTSE 250, which has become profit warning central following a slew of similarly bearish updates in the past few weeks. The mid-cap index is of course the host to our home-grown talent – companies that actually make and export things.
So in the lead up to and the wake of Brexit some have fallen victim to market uncertainty as orders have been shelved.
For many the compensatory impact of the weaker pound has yet to kick in.
Moving up a division, the FTSE 100 was left floundering a little on a dull day as it fell 10 points at 6,756.64.
Randgold was the rare bright spot with the gold miner lifted 3.5% by bullish broker circulars from UBS and JP Morgan Cazenove.
Catching the eye among the small-caps was Plutus PowerGen, which surged 22% after announcing it has landed an outline deal with an unnamed major utility.
The power company in question will part fund Plutus renewable energy projects.
Finally, the pound clambered its way back above the US$1.25 mark after some reassuring words for business from Prime Minister Theresa May, who addressed the CBI this morning (see our earlier report).
2pm....
FTSE 100's gains evaporating
Theresa May could cut corporation tax
Wall Street tipped to open higher
There is not much left of Footsie's gains from this morning. The top-share index was up just seven points at 6,783 at 1.30pm, and given that all of the resource stocks are sharply higher, that's a poor showing overall.
Among the tiddlers, Aussie software company BOS Global Holdings NL (LON:BOS) perked up this on news of a contract win, rising 54%.
The productivity solutions provider, which listed on Aim at the end of August through a reverse takeover of Forte Energy, said a distribution agreement with Ag-I Solutions would prove to be transformational for the company.
11.05...
Anyone heard of the Baltic Dry Index? No, neither had we until today when we encountered a number of reports on said index.
In short it charts costs of large, ocean-going cargo vessels. It is also seen as a good proxy for international trade.Well, today the Baltic Dry has hit a two year high.
According to the aforementioned reports the reason for this has been the surge in demand for coal. This may explain why miners Glencore and Anglo American were riding so high on the FTSE 100 in mid-morning trade.
At 10.55am, the index of blue-chip shares was up 32 points at 6,807.
Investor sentiment should be boosted by the comments of Prime Minister Theresa May who said she was looking for a “transitional” Brexit deal to avoid UK business falling over the “cliff edge”.
She also hinted in her speech to the CBI at a cut to Britain’s corporation tax rate to encourage and maintain foreign investment.
9.45am.... Eyes turn to Philip Hammond ahead of Autumn statement
London’s FTSE 100 was on the back foot albeit slightly, down 19 points or 0.28%, changing hands at 6,759 at 9:30.
Retailer Next Plc (LON:NXT) was the worst performing constituent, off 2.6% at £49.59, followed by TUI AG (LON:TUI), Royal Mail Group Plc (LON:RMG) and Marks & Spencer Group PLC (LON:MKS) … all the top 15 FTSE fallers had all lost between 1.5-1.7% each.
Natural resource companies were the exclusive club at the top of the risers column, with miners Randgold Resources Ltd (LON:RRL), Glencore Plc (LON:GLEN), Antofagasta Plc (LON:ANTO) and Fresnillo Plc (LON:FRES) all up well.
BP PLC (LON:BP. and Royal Dutch Shell Plc (LON:RDSB), meanwhile, gained more than 1% each thanks to improved oil prices at the start of the new week.
Crude prices rallied on Monday morning, pushed higher again by the latest speculative comments regarding OPEC and possible price supportive co-operation.
Vladimir Putin says Russia is ready to freeze its production “where it is now” and he sees ‘high possibility’ that OPEC can make a deal next week.
In London, Brent crude was up 1.36% trading at US$47.50 whilst West Texas Intermediary was up 1.4% at US$47 a barrel.
Elsewhere, attentions are beginning to turn to the UK government’s Autumn statement, on Wednesday, with chancellor Philip Hammond expected to usher in ‘the end of austerity’ and a move to spending.
Fiona Cincotta, analyst at City Index, however, tells investors not to get too carried away.
In a note she said: “given the size of the UK’s debt pile, in addition to poor economic forecasts any expectations of Trump style spending are misplaced and he is likely to opt for a rather conservative budget in comparison.
“Sterling has seen a soft start to the week as Hammond's talking down of the UK’s post Brexit economy over the weekend has done little to support the battered currency; we are expecting to see more volatility in the lead up to and during the course of the Statement on Wednesday.”
8.45am ... FTSE 100 makes quiet start; oilers and miners in demand
The FTSE 100 got off to a rather subdued start with all eyes focused firmly in the US, where Donald Trump continues the process of picking his cabinet.
At 8.45am, the index of blue-chip shares was up 11.82 points at 6,787.59.
Here in the UK stocks from the natural resources sector were in demand.
Chilean copper miner Antofagasta (LON:ANTO) led the way with price of the red metal on the rise again after pausing briefly for breath last week.
Not far behind was Randgold (LON:RRS) resources after two leading brokers weighed in with ultra-bullish price targets for gold miner.
READ: City analysts bullish on prospects for FTSE 100 gold miner
The oilers were lifted by the mood music from OPEC, which suggests the cartel may be ready to place a cap on output.
“[The oil price] is being further helped by the dollar trading below its record highs posted on Friday,” said Henry Croft, analyst at Accendo Markets.
“Iran, Iraq and Russia all released optimistic statements that a deal could be reached on November 30.
“However Russian President Putin refused to commit to 100% certainty it will take place.”
6.45am...quiet start predicted
The FTSE 100 is set for a quiet start Monday with little in the way of direction provided by Asia overnight.
The index of blue-chip shares is slated to rise just under 5 points to 6,780.55 with the the investing public keeping their powder dry as President-elect Donald Trump continues to appoint his cabinet.
The benchmark 10-year US Treasury rose to a one-year high of almost 2.4% as the market continued to bet on a Trump administration spending heavily. The dollar rose against a basket of Asian currencies.
Better-than-expected GDP data and a weaker yen boosted Japanese stocks with the Nikkei 225 up 0.8%. Shanghai was also in positive territory with a gain of 0.4%.
The ASX in Australia and Hong Kong’s Hang Seng were off – but only by a small margin at 0.15% each.
Brent crude futures, meanwhile, edged 1.2% higher to US$7.43 amid rumours OPEC may be willing to cap production at its next meeting.
Back here in the UK the big news will be of the political/economic variety in the form of Wednesday’s Autumn Statement.
Will we see an end to austerity? Possibly. All Chancellor Philip Hammond was saying over the weekend was he wanted an economy match-fit for Brexit. Make of that what you will.
- Gold down US$1.60 an ounce at US$1,210.
- Pound worth US$1.23.
City Headlines
- Lloyds Banking Group has emerged as a potential frontrunner to acquire the UK credit card business of Bank of America, worth an estimated £7bn – Times.
- One of the biggest auctions of mobile-phone spectrum could be launched this week in a deal that could rake in at least £1bn for the Treasury and is likely to attract intense interest – Times.
- The unlikely victory boosted the Leicestershire economy by more than £140mln over the past football season, according to a report by Ernst & Young. About 120,000 visitors flocked to the city to watch the team play – Times.
- Global dividends have fallen sharply as subdued earnings in the US hit payouts alongside growing uncertainty because of the election of Donald Trump, worries about China’s economy and Brexit – FT.
- Insurers have called on the Government to help them crack foreign markets as part of efforts to foster global trade following the EU referendum – Telegraph.
- The Treasury has dismissed claims it used its access to the City watchdog to obtain price sensitive information before selling shares in Royal Bank of Scotland - Telegraph
- Facebook will unveil plans for a major expansion of its London operations in another big boost to the UK’s credentials as a hub for global technology companies – Telegraph.