FTSE lower as US shares fall
Sterling finds its feet and stabilises since Brexit shocker
Pound 0.25% higher against the US dollar at $1.2493
Sterling down 0.42% against the euro at 1.1707 euros
FTSE 100 shares closed lower on Thursday, dragged down by weaker US stocks and a flurry of ex-dividend stocks in London.
The blue-chip FTSE 100 index ended down 0.3% at 7277.
Pharma AstraZeneca (LON:AZN) led the downward trend, falling 3.4% to 4524.5p
Imperial Brands (LON:IMB), Royal Dutch Shell (LON:RDSA) and BP (LON:BP.) also took a turn for the worse after trading without entitlement to their latest dividend pay-out.
The second-biggest faller was Royal Dutch Shell whose A shares were down 2.2% at 2123p. Fifth-placed faller was BP down 2% at 448.4p while Imperial was down 1% at 3665p.
The mid-cap FTSE 250 fell by 0.7% to 18,705 and was led by defence group Cobham's shares which plunged 15.3% to 114.7p after it issued a new profit warning, its fifth in two years.
The FTSE AIM 100 Index ended flat at 4343 and the FTSE AIM All-Share Index was also flat at 906.
The pound has had a bumpy ride since last June’s UK vote to leave the EU, but with traders now left waiting for Article 50 to be triggered, a level of calm has finally descended on the currency, with one measure of volatility hitting its lowest level since well before the referendum.
Sterling’s 10-day historical volatility, which tracks its rate of change against the dollar over the last 10 days of trading, fell to its lowest level in more than a year on Thursday.
The pound was 0.25% higher against the US dollar at $1.2493 and down 0.42% against the euro at 1.1707 euros.
1515 GMT - FTSE 100 stays dull as US stocks retreat from records
FTSE 100 down 22 points as US stocks slip
Commodity stocks weak
Shire higher, Astra lower
3.15pm … Stall after records …
Weakness in heavyweight commodity issues continued to weigh on the Footsie in late afternoon trading as US stocks also eased back in early deals, consolidating after yesterday closing at fresh record highs for a fifth straight session.
Around 3.15pm, the FTSE 100 index was down about 22 points at 7,279, still holding above the day’s low of 7,260.
After about three-quarter of an hours trading on Wall Street, the Dow Jones was off earlier lows but still down around 13 points, with the broader S&P 500 and tech-laden Nasdaq composite indices also modestly lower.
Jasper Lawler, senior market analyst said: “Stocks snapped a seven-day winning streak as increased odds of a US interest rate hike in March curtailed enthusiasm for Trump-led tax cuts. Record highs in UK, US and global stock market indices were all signs of some short-term over exuberance.”
He added: “If investors were looking for signals of extreme sentiment, perhaps they needn’t look any further than the US President himself. Trump tweeted about the confidence and optimism behind the new high in the stock market on Thursday, perhaps incidentally calling a short-term top in doing so.”
Despite the FTSE 100’s weakness, some small cap stocks found gains in afternoon trading in London.
Resources investor Metal Tiger PLC (LON:MTR) leapt higher again, extending yesterday’s advance by 43.9% to 2.95p as investors continued to anticipate good news from its joint venture partner in Botswana, MOD Resources (ASX:MOD).
Elsewhere, shares in wellbeing, fitness and digital health monitoring group CloudTag Inc. (LONCTAG) gained 15% at 6.63p after it said £100,000 of loan notes have been converted at a price of 4.5p each.
But Laura Ashley Holdings plc (LON:ALY) was a big faller, shedding 6.6% to 17.5p after the fashion and homewares retailer revealed that its first-half profits fell, it cut its interim dividend and warned that full year profits would be below consensus forecasts.
12.45pm … Weak progress …
The Footsie stayed lower around lunchtime impacted by weakness in heavyweight commodity issues and a rally by the pound, with US stocks seen dipping at open after their record run.
Around 12.30pm, the UK blue chip index was about 22 points lower at 7,280, but that was above the session low of 7,260.
Chris Beauchamp, chief market analyst at IG: “Given the steady rally we have seen over the past week or more, however, some weakness is to be welcomed, taking a little heat out of the market. For now, the bulls remain unconcerned.”
On currency markets, after falls in the past two sessions following weaker than expected UK data, the pound was up 0.4% today versus the dollar to US$1.2507 in the absence of any pointers today.
Miners were among the biggest FTSE 100 fallers as commodity prices retreated, with Anglo American PLC (LON:AAL) shedding 2.9% at 1,354p, while Antofagasta PLC (LON:ANTO) lost 2.4% at 845p.
Drugs giant AstraZeneca PLC (LON:AZN) was the top blue chip faller, losing 3.8% at 4,504.5p after the failure of a Merck Alzheimer’s drug in late-phase trials raised worries over its own treatment for the disease.
News that the US Food and Drug Administration has approved Astra partner’s Valeant Pharmaceutical Siliq treatment as an injection for adult patients with moderate-to-severe plaque psoriasis was passed by.
However, fellow drug blue chip Shire Plc (LON:SHP) was a good gainer after its midday results announcement, ahead 4% at 4,779p, as it revealed its 2016 net income had grown by 75% to US$3.4bn as a result of its takeover of Baxalta.
10.30am … Further falls ..
The FTSE 100 index extended its losses as the morning progressed, giving back all of yesterday’s gains despite fresh record highs on Wall Street, weighed by falls in heavyweight commodity issues.
Around 10.30am, the UK blue chip index was down 33 points at 7,268, having gained 28 points yesterday.
Connor Campbell , financial analyst at Spreadex, said: “After the UK data drama of the past 2 days things look a bit duller this Thursday morning, with the markets reversing some of yesterday’s movement.
He added : ”A splash of red across the oil and mining sectors has been the main catalyst for the drop, though the pound’s early gains haven’t helped either. “
After falls in the past two sessions following weaker than expected UK inflation and unemployment numbers, in the absence of any data today, sterling rallied 0.5% higher against the dollar to US$1.2509.
Oil majors were among the biggest FTSE 100 fallers, with Royal Dutch Shell PLC (LON:RDSA) shedding 1.9% at 2,129p, while BP PLC (LON:BP.) lost 1.7% at 449.85p as crude prices drifted lower.
However, airlines were a positive focus, with British Airways-owner International Consolidated Airlines Group PLC (LON:IAG) the top blue chip gainer, up 2.2% to 514.5p as European peer Air France KLM reported strong results for 2016.
Eastern European budget airline Wizz Air Holdings PLC (LON:WIZZ) was also higher on the FTSE 250 index, up 1.3% at 1,667p in focus after announcing it will open its first UK airport with base operations at London Luton Airport in June..
Insurer Lancashire Holdings (LON:LRE) was the top FTSE 250 riser, gaining almost 9% at 739p after reporting above-forecast full-year results, which prompted Numis Securities to up its rating to ‘add’ from ‘hold’.
Among the small caps, healthcare communications and public-relations firm Huntsworth PLC (LON:HNT) jumped almost 13% higher to 45.75p after it said its results for 2016 will beat market expectations.
And back office workforce optimisation specialist EG Solutions plc (LON:EGS) surged by over 22% to 65.5p on news it has won a contract worth £692,000 which will see it supply its eg operational intelligence software to a public sector organisation.
8.30am ... Fairly flat ...
The FTSE 100 opened the session almost flat as the index of blue-chip shares ignored euphoria on Wall Street. At 8.30am it was off five points at 7,297.64.
The big mover was not in the top-flight, but a division below. Aero engineer Cobham crashed 20% early on as it issued an update on the state of its finances and said it needed to strengthen the balance sheet.
Travel stocks International Consolidated Airlines (LON:IAG) and TUI AG (LON:TUI) were provided a boost by the buoyant pound, while druggie Shire Plc was in good health ahead of its fourth-quarter results later.
The failure of Merck’s Alzheimer’s drug in late-phase trials led to a 3% mark-down of AstraZeneca (LON:AZN), which also treatment coming through the pipeline.
Among the small-caps eg Solutions (LON:EGS) were in the pink after landing a major new contract. The stock was up 9%.
Proactive’s Small Cap headlines:
Back office workforce optimisation specialist EG Solutions plc (LON:EGS) has won a contract worth £692,000 which will see it supply its eg operational intelligence software to a public sector organisation. Its shares leapt 21.5% higher to 65p.
Shares in Avation PLC (LON:AVAP) rose 3.5% in early deals on the back of an impressive half-year trading update, that saw lease revenue rise 43% year-on-year and pre-tax profits surge 51%.
Solo Oil PLC (LON:SOLO) has raised £2mln by placing 400mln shares at a ha'penny a pop. The funds will be used to finance the well testing programme at the Ntorya discovery in Tanzania. Shares fell 0.07p to 0.54p on the news.
Akers Biosciences (LON:AKR) has received US patent protection for a cartridge used in wellness monitors that link to mobile phones and tablets. Shares were flat at 105p.
Oil and gas explorer Gulfsands Petroleum plc (LON:GPX) has secured a £4mln financing facility with three of its major shareholders. Waterford Finance & Investment, Blake Holdings and ME Investments are clubbing together to provide the money. Shares gained 4.7% at 11.125p.
Chariot Oil & Gas Limited (LON:COPL) has expanded its interests offshore Morocco, snapping up an area close to upcoming drilling activity. The AIM quoted explorer already owns a 10% stake in the Rabat Deep project, where partner ENI plans to drill an exploration well in 2018. Shares gained 5% at 10.5p.
Solo Oil PLC (LON:SOLO) has raised £2mln by placing shares at 0.5p a pop. The company has issued 400mln new shares, representing around 5.7% of the issued share capital of Solo. Shares dropped 10% to 0.545p.
88 Energy Limited (LON:88E) has appointed a rig contractor for the upcoming Icewine-2 appraisal well, which is now confirmed for the second quarter of this year. Shares added 2% at 2.45p.
WideCells Group PLC (LON:WDC), the stem cell services group, has appointed Alan Greenberg a non-executive director. Shares were flat at 13.5p.
There were also boardroom changes at e-Therapeutics (LON:ETX). Shares were flat at 8.25p.
6.45am ... Slow start predicted ...
As stocks in the US continue to hit record highs, the big investors trading the FTSE 100 seem prepared to march to their own beat.
For the index of blue-chip shares is set to open down 17 points at 7,285.41, according to the leading spread betting firms.
On Wall Street, the Dow Jones added a further 0.5% as did the broader-based S&P 500, while the tech-focused NASDAQ closed up 0.6% Wednesday.
That’s fifth successive day of gains and some commentators are beginning to think American stocks are ‘overbought’.
“Whatever political problems President Trump maybe having on the staffing front with resignations and the like financial markets remain largely ambivalent,” said Michael Hewson of CMC Markets.
“[They are] choosing to focus on last week’s promise to deliver something ‘phenomenal” in a couple of weeks’ time, as US markets hit new record highs for the fifth day in a row, driven by banks and financials,”
All the major Asian bourses other than the Nikkei 225 were in positive territory too.
Back in the UK the big scheduled news of the day will be provided by druggie Shire, generator Drax and bottler Coca Cola Hellenic.
Markets
- Brent crude up 2 cents at US$55.77 a barrel.
- Gold up US$1.70 an ounce at US$1,234.80.
- Pound worth US$1.2465.
Business Headlines
- A trader or traders in the options market made an estimated profit of 400% betting on a big move in Fortress Investment Group shares on Tuesday, just hours before the private equity firm announced a US$3.3bn takeover offer from SoftBank – FT.
- Would-be buyers including Paragon and Prudential as well as U.S. investors have submitted final bids for £12.5bn of Bradford & Bingley mortgages being sold by the government – Times.
- Old Mutual moved a step closer to a spin-off of its wealth management division following the appointment of a trio of financial services veterans to the board of the business – Telegraph.
- Anglo American is to sell its Union platinum mine in South Africa in a move that finally completes its withdrawal from older, less profitable operations in the Rustenburg region – Times.
- Macquarie, the Australian infrastructure bank, is hoping to complete the £1.5bn sale of its 26% stake in Thames Water next month after the disposal was delayed by Britain’s decision to leave the EU - FT.
- Merck’s most senior scientist said it was “too early” to reject the main theory of what causes Alzheimer’s disease after the company’s drug became the latest medicine to flunk a late-stage clinical study – FT.
- Amazon is close to launching its own fashion label in the U.K. as part of the online giant’s efforts to corner the $3trln global fashion market – Telegraph.