FTSE and FTSE 250 end lower over Brexit jitters
Bankers and retailers hardest hit
The Man from the Pru isn’t enough to save the session
Pound falls to an eight-week low against the dollar, dropping 0.5% to $1.2157.
Sterling down 0.4% at 1.1430 euros
FTSE 100 shares closed lower on Tuesday after investors turned edgy over Brexit plans which hit banking and retail shares as well as took sterling to an 8-week low against the US dollar.
The benchmark FTSE 100 finished down 0.1%, or 8.52 points, at 7357.
On Monday the UK parliament backed the government's Brexit bill, paving the way for formal negotiations to be triggered.
However, shares in Prudential (LON:PRU) topped the leaders board and rose 3% to 1715p as strong growth in its Asian business helped its group operating profits to rise 7% to £4.3bn.
But the rise in Prudential shares did not stop the wider market from edging down.
Markets were jittery about the imminent triggering of Brexit negotiations and Scotland's call for a second independence referendum.
Bank shares were under pressure, with Royal Bank of Scotland (LON:RBS) ended down 2.5% at 235.2p.
Similarly retailer had a tough day, with Marks & Spencer (LON:MKS) shedding 2.2% to 330.5p and Burberry (LON:BRBY) down 1.5% to 1789p and Tesco (LON:TSCO) down 1.4% to 188.25p.
Meanwhile, the FTSE 250 midcaps ended down 0.4% at 18.951 and led by Amec Foster Wheeler (LON:AMFW) down 6.4% to 511p after Citigroup downgraded it to Neutral/High Risk with a target price of 580p.
The FTSE AIM 100 Index ended flat at 4467 and the FTSE AIM All-Share Index down 0.2% at 917.
Losers outstripped gainers by 37% to 27% of all London stocks.
1515 GMT - FTSE 100 finishes on a bum note, pound stumbles
FTSE 100 down 5 points to 7,362
Sterling slips against dollar and euro
Hogg resigns as BoE chief operating officer
Prudential top riser on the FTSE 100
The FTSE 100 has struggled this afternoon, with the markets cautious ahead of a string of major central bank policy meetings, an imminent US interest rate hike and the Dutch elections all playing on investors’ minds.
The blue chip index, after being up for most of the morning, was down 5 points to 7,362 shortly after 3.15pm.
The markets haven’t really been front and centre today though, holding centre stage has been sterling which hit eight week lows against the euro and the dollar earlier this morning.
A recovery in the pound, today at least, was never expected with the Fed’s upcoming interest rate decision hanging over the markets.
True to form, that’s exactly what happened, although it didn’t get worse as the day wore on if that’s some sort of consolation for the beleaguered currency.
Towards the end of play here in London, sterling was down to €1.142 against the euro, while it sank to US$1.215 against the dollar.
“With the threat of an independence vote for Scotland adding to the horrible Brexit mixture, one can understand why the buying sentiment towards Sterling remains frighteningly low,” said FXTM research analyst Lukman Otunuga.
Barring a shock Fed decision to not raise interest rates tomorrow (Wednesday), analysts are racking their brains to try and find a trigger for the pound to build some momentum.
The consensus seems to be that the pound could pick up as we hear more from Brexit negotiations as commentators reckon a lot of the potential negative fallout from those has already been priced in.
That won’t be anytime soon though, so the pound might have to wait a while yet before it can put together a strong run. That’s not the best news for those of us who are going to Spain in a couple of months…
Elsewhere, Bank of England chief operating officer Charlotte Hogg has resigned from her position after failing to disclose that her brother Quintin works at Barclays.
She broke the bank's code of conduct (which, ironically, she helped to write) after not revealing the possible conflict of interest, which only came to light when she was questioned by MPs earlier this month.
"It was an honest mistake: I have made no secret of my brother's job - indeed it was I who informed the Treasury Select Committee of it, before my hearing," said Hogg in her resignation letter.
"But I fully accept it was a mistake, made worse by the fact that my involvement in drafting the policy made it incumbent on me to get all my own declarations absolutely right."
Back to the markets and a couple of UK banks have been hit by the uncertainty at home and around the globe.
Royal Bank of Scotland Group PLC (LON:RBS) (down 3% to 234p) and Lloyds Banking Group PLC (LON:LLOY) (down 2% to 67.3p) were both dragging on the FTSE 100 this afternoon.
Prudential PLC (LON:PRU) (up 2.5% to £17.04) was the day’s biggest riser among the big boys, while AstraZeneca PLC (LON:AZN) (up 1.1% to £48.66) and Easyjet PLC (LON:EZJ) (up 2% to £10.02) also made strong gains.
In the small caps, data removal specialist Blancco Technology Group PLC ( LON:BLTG) faced a minor wipe-out of its own as investors took fright at a sizeable cash outflow in its latest half year.
Shares fell 23% to 235p as the secure data erasure group posted interim revenues up to £14.2mln (£9.9mln), while underlying profits rose to £3.6mln (£2.7mln).
But that was as good as it got. There was a trebled pre-tax loss of £1.1mln due to a raft of one-off and acquisition costs, while from a net cash position at the end of the last year net debt has risen to £5.9mln.
No-win, no-fee specialist NAHL Group plc (LON:NAH) was also out of favour as it confirmed changes in the payment thresholds for small accidents would mean an element of profits would not be recognised upfront and some cash not be received until cases are settled.
“As a result along with a short term impact on operating profit, cash generation is likely to significantly reduce in 2017 and 2018 before returning to levels previously achieved,” the company said.
1.10pm...FTSE 100 loses ground as macro uncertainties loom large
After being in the black for much of the day, the beginning of the afternoon session prompted the FTSE 100 to fall into negative territory.
Shortly after 1pm, the blue chip index was down 8 points, or 0.1%, to 7,359.
The Prudential PLC (LON:PRU) was still the biggest gainer on the FTSE 100 today, despite slipping slightly from the two-year highs it reached earlier on.
The insurer’s US and Asia businesses powered the firm higher, making up for less impressive results in the UK.
IG’s chief market analyst, Chris Beauchamp said: “[Prudential’s] pivot to Asia continues to be one of the most impressive business decisions made by UK plc in recent years, transforming a staid insurer into a firm excellently placed to benefit from emerging market growth.”
Shares in Pru were up a little over 2% in early afternoon trading at £17.01.
The biggest focus for today though (and likely the rest of the week) is the pound which plummeted to eight week lows against the dollar this morning.
Sterling has come under pressure after parliament passed the EU Withdrawal Bill last night which paves the way for the government to trigger Article 50 as it sees fit – likely to be later this month.
In a late night sitting, the House of Lords voted not to challenge the Commons over whether parliament should have a veto on the terms of exit or whether there should be guarantees for EU nationals in the bill.
“The pound has taken another hit today after the events of Monday evening, with the loss of the vote on the final deal in parliament possibly being seen as increasing the possibility of a hard Brexit,” said Craig Erlam, senior market analyst at OANDA.
“In reality, the pound had been on the way down prior to its slight bounce on Monday and the vote last night has possibly just been the capitalised on by those looking for an excuse to short.”
Despite initial resistance, the pound has also been impacted by Nicola Sturgeon’s confirmation that she will push for a second vote on Scottish independence at some point within the next 18 months.
The UK’s “looming political challenges” are what is currently driving sentiment around sterling, said Hargreaves Lansdown senior analyst, Chris Saint.
Possibly making things worse for the pound is the expected interest rate hike from the US Federal Reserve, which will further strengthen the dollar and weaken sterling.
The Fed is set to make a decision on rates tomorrow but the markets have “almost entirely priced in” a hike according to many analysts.
This would be the second rate increase this year and the markets are expecting one more as well, but if the Fed hints at a fourth, there could yet be more pain to come for sterling.
Should the pound and the greenback continue to move in opposite directions, there is likely to be some gains made by the big dollar earners in London, which in turn could help to boost the FTSE 100 to new highs.
The big miners such as Fresnillo PLC (LON:FRES) and Randgold Resources PLC (LON:RRS) and oil super majors such as BP PLC (LON:BP.) – companies which typically generate a lot of their revenues from outside the UK – will benefit as their earnings will be worth more in sterling terms.
“There is nothing on the agenda this afternoon that can really shift attention away from the pound, with the US markets still looking hesitant ahead of tomorrow’s Federal Open Market Committee get-together,” concluded Spreadex analyst Connor Campbell.
10.15am...FTSE 100 makes early gains, but pound plummets
Investors were seemingly putting the uncertainty of Brexit and ‘Scexit’ behind them as the FTSE 100, buoyed by some big names, posted gains this morning.
The blue chip index has been on the up since minute one, and is currently 12 points above yesterday’s close at 7,379.
Prudential PLC (LON:PRU) was the big name leading the way amongst the big boys, up more than 3% to £17.20.
The insurer posted an increase in profits for 2016, confirmed it was on track to meet its financial targets this year and hiked its divi by 12% on what was a good morning for its shareholders.
Rolls Royce Holding PLC (LON:RR.) gained more than 1% this morning as it continued its recent fine form.
Shares have been on a little run since the end of last week, since when it’s added more than 2.5% to its value.
Retailers Next Plc (LON:NXT) and Marks and Spencer Group Plc (LON:MKS) were both lower this morning after data suggested the UK clothing market declined more than 2% in the 12 weeks to 12 February 2017.
Both companies lost market share in the period according to research house Kantar, which weighed on both Next and M&S with their shares down 1.2% and 2% respectively.
Elsewhere in London, fashion label French Connection Group (LON:FCCN) gained more than 5% despite reporting a loss for the fifth year in a row.
Shares were up to 37p midway through the morning session as investors took comfort from the fact that sales at stores open for more than a year in the UK and in Europe – its two main markets – grew by 4.4% last year.
"In common with all fashion groups, French Connection will be judged by customer reaction to its latest collections and early indications are good with sales both in its stores and through its wholesale customers up on last year,” said AJ Bell investment director Russ Mould.
It’s not been such a bright start for the pound though, which has fallen to an eight-week low against the dollar this morning after losing 0.7% in early trading to trade at US$1.213.
Sterling also slipped against the euro, losing 0.6% to sit at €1.14.
“It appears that there are a few things in play here,” said Spreadex analyst Connor Campbell.
“The pound could be belatedly reacting to Nicola Sturgeon’s announcement of a second Scottish independence referendum, something that it basically ignored on Monday.
“Then there is the news that Article 50 will be triggered at the end of March – hardly an unforeseen problem, but one that carries a sting in its tail nonetheless.”
9am...FTSE 100 opens modestly higher; traders train a weather eye on the retail sector
The FTSE 100 opened the session 11 points higher at 7,378.12, although traders were keeping a weather eye on shop stocks early on.
For the retailers were rattled by the latest data from industry specialist Kantar Worldpanel, while French Connection Group (LON:FCCN) told a familiar tale of woe.
While for quickly-shrinking fashion retailer there was a belief that its full-year numbers could have been worse, the bearish tone of the Kantar monthly update hit sentiment towards Marks & Spencer (LON:MKS) and Next (LON:NXT) – down 2.3% and 1.9% respectively.
The former was also reeling from the ignominy of having to pull out of China just 12 months after setting up store there.
Prudential PLC (LON:PRU) received a results boost, while BT Group (LON:BT.A) continued its revival following its decision to make peace with the regulator over the future of its regulated arm, Openreach.
Prelims from building supplies specialist SIG (LON:SHI) and the appointment of a new chief executive catapulted the shares 8% higher and to the top of the FTSE 250.
Among the small-caps, MaxCyte enjoyed a decent start to proceedings Tuesday as it unveiled a licensing deal that will put it at the forefront of emerging science behind gene editing. The stock was up 8%.
Proactive news headlines
Drug discovery company C4X Discovery Holdings plc (LON:C4XD) is to raise up to £7mln through a placing of shares.
Cost savings at trading and risk management solutions provider Brady Plc (LON:BRY) saw adjusted EBITDA rise to £4.53mln in 2016 from £2.45mln in 2015.
Mobile payments company Bango plc (LON:BGO) has seen spending across its platform grow in line with expectations in 2017.
AIM-listed MaxCyte Inc (LON:MXCT) could be at centre of some exciting developments in the cutting edge arena of gene editing.
Electronics firm Stadium Group plc (LON:SDM) reported robust growth in full-year profits as its order book grew strongly, underpinned by Technology Products growth.
Sound Energy PLC (LON:SOU) Tuesday updated on progress on its Italian exploration well. Badile, near Milan, has reached its first casing point at a measured depth of 545 metres in less than a week. The next casing stop is 1,400 metres, and the well will go down to a total depth of 4,445 metres.
Horizon Discovery Group PLC (LON:HZD) has entered an agreement with an unnamed global molecular diagnostics provider to develop reference standards for non-invasive prenatal testing (NIPT).
Europa Oil & Gas Plc (LON:EOG) has confirmed changes to an onshore UK licence, in the north east, rearranging holdings following a recent acquisition.
Saffron Energy plc (LON:SRON) extended its gas sales arrangements with Shell Italia until October 2018. Chief executive Michael Masterman says it is a 'key element' of the business.
Independent Resources plc (LON:IRG), soon to be relaunched as Echo Energy, confirmed details of its open offer to raise £1.45mln.
Sula Iron ore & Gold PLC has raised £500,000 through a placing at 0.4p.
Lionsgold PLC has upgraded the resource at gold prospect Jonnagiri in India.
Metminco Ltd (LON:MNC) said the measured and indicated resource at Miraflores in Colombia now amounts to 840,000 ounces of gold and 826,000 ounces of silver.
6.45am...Footsie set for modest rise
Markets in London and elsewhere are in Fed watch mode with little change expected ahead of a predicted US rate rise on Wednesday.
London is expect to add a few points when trading starts this morning but with the US and Asia at best flat or else shedding weight overnight, the best the financial bookmakers suggest is an 8 point rise to around 7,375.
US markets were split for once with a loss for the Dow Jones Industrial Average of 21 to 20,881 but modest gains for the two other main indices.
Nasdaq and the S&P 500 were boosted by Citrix Systems Inc (NASDAQ:CTXS) which closed up 6.8% at $84.93 after Bloomberg reported, citing unnamed sources, that the company may be working with advisers on a possible sale. Citrix, an enterprise technology company, is said to be working with Goldman Sachs.
Asia was subdued across the board with modest losses in Tokyo, Hong Kong and Shanghai.
In the papers
Theresa May has ruled out Nicola Sturgeon’s plans for a new Scottish independence referendum before Brexit, but postponed triggering Article 50 after the First Minister’s demands caught her by surprise, reports the Telegraph
The Times adds that Britain is on track to record nearly $70 billion worth of deals in the first quarter, smashing last year’s total and signalling the possible start of another mergers and acquisitions bonanza. The figures will boost Theresa May’s claim that Britain remains open for business despite Brexit. Times
The Times also follows up a story that unscrupulous traders could be making millions of pounds in profits from leaked information before the publication of economic information such as unemployment and inflation figures.
Bailed-out bank Lloyds is plotting to transfer 20m customers' details to an offshore computer network, a union has warned, according to the Mail. The lender has been attacked for plans to outsource more than 1,900 jobs to IBM in a £1.3billion deal.
Commodities/Currencies
£/$: 1.2165 - pound down
Gold: down US$2 to US$1,202
Oil: US$48.30 flat