FTSE 100 closes over 28pts lower
Pearson among raft of firm's going ex-div
All eyes on Trump, Xi Florida meet
FTSE 100 erased some losses but still finished lower on Thursday as traders mulled the Fed's new hawkish tone and had an eye on Trump's meeting with the Chinese Premier.
The bluechip benchmark closed down over 28 points at 7,303, with financial stocks taking a hit and house builders making advances.
The Fed revealed it is now ready to start cutting its balance sheet before the end of the year.
“To its credit, the US central bank has managed to get everyone to live with the idea of gradually rising rates, and now it needs to communicate the message that the withdrawal of the famous ‘punch bowl’ will be done in a similarly careful fashion," said Chris Beauchamp at spreadbetter IG Index.
The biggest laggard on Footsie was Pearson (LON:PSON), down 6.67% to 637p as it went ex-dividend and suffered a downbeat note from European broker Exane BNP Paribas.
The top riser was budget carrier easyJet (LON:EZJ), which flew 4.23% higher at 1,060p.
Consumer goods giant Unilever PLC (LON:ULVR) was among the best risers, finishing 0.98% higher at 3,978p.
A strategic review resulted in its spreads business, which includes Flora and Stork margarines, going on the block.
Changes to the Anglo-Dutch firm’s structure are also in the frame as it responds to the failed bid attempt from US food giant Kraft Heinz Co (NASDAQ:KHC) two months ago.
City broker Liberum reckons there are “opportunities emerging” within the UK transport space, after it upgraded Go Ahead Group PLC (LON:GOG) to ‘buy’ from ‘hold’.
Shares in Go Ahead added 2.89% to stand at 1,742p.
In small caps, Greka Drilling Ltd (LON:GDL) rocketed over 57% to 4.26p as it won a contract from India’s largest exploration and production company to drill 73 holes over a three year period.
The company fended off competition from 16 other drilling contractors to win the contract.
16.10...Weatherly under the weather...
Weatherly International plc (LON:WTI) was among the bottom performers on the small caps front after reporting a drop in copper cathode production for the March 2017 quarter. It produced 3,236 tonnes, 24% below nameplate.
The company said lower-than-expected recoveries from ore stacked in late 2016 resulted in a need to accelerate stacking rates to compensate. Unfortunately this coincided with above average rainfall, which caused operational delays.
Full year production to June 2017 is now expected to be 14,500 to 15,000 tonnes.
Shares plunged 33.69% to 0.431p.
15.55…Unilever helps FTSE 100 gains
Consumer products giant Unilever PLC (LON:ULVR) was a FTSE 100 gainer in late afternoon trading, up nearly 1% to 3,974.5p having overcome an initial lukewarm reception to the outcome of its strategic review, launched at the end of February after the shock of a failed bid move for the group by US food giant Kraft Heinz Co (NASDAQ:KHC).
The Anglo Dutch firm unveiled plans to sell or demerge its Spreads business, which includes Flora and Stork margarines, and is looking at changing its dual-listed corporate structure.
WATCH: ETX Capital's Neil Wilson on Unilever moves ...
It is also ramping up shareholder returns through a 12% increase in its dividend and the launch of a €5bn share buyback in the coming year.
Neil Wilson, senior market analyst at ETX Capital said: “The Anglo-Dutch giant wants to make sure shareholders are not tempted by another bid and is throwing cash at the problem “.
He added: “It smacks a little of short-termism but we have to see whether the offloading of Spreads and higher gearing pays off as it looks to grow its business in emerging markets, where it generates 57% of sales and where future growth needs to come from.”
With around half an hour of trading to go in London, the FTSE 100 index was down around 22 points at 7,309, having recovered from a hefty session low of 7,258.11 as US stocks rallied modestly following a sharp sell-off yesterday.
14.50...US gains help FTSE100
Investors continue to chip away at the FTSE 100's early losses with a solid start on Wall Street cutting the deficit in London to 18 points at 7,313.
The Dow Jones Industrial Average opened higher even with concerns over the Fed taking a harder line on monetary policy, non-farm payrolls tomorrow and the trade talks between the US and China.
The Dow was 27 points higher at 20,677 with Nasdaq and the S&P 500 seeing similar rises in percentage terms.
14.20... Aminex picks up on Ntorya plans
Aim-listed oil and gas group Aminex plc (LON:AEX) edged up 2.5% to 5.15p as Jay Bhattacherjee, cheif executive, told investors it is looking to monetise gas from the Ntorya project, on the Ruvuma acreage in Tanzania, as quickly as possible.
The company, in its financial results statement for 2016, said it is prioritising the preparation of a development plan for Ntorya and will submit an application to the Tanzanian authorities for a 25-year development licence.
Watch: Aminex 'working on development plan' to monetise Ntorya gas
FTSE 100, meanwhile, continued to reduce its early losses and was down 20 at 7,311 shortly after the US open.
14.00... US shares set for gains at open
US stocks are seen higher after a topsy turvy day on Wednesday which saw the Dow soaring before finally closing lower.
Minutes from the last US Federal Reserve meeting showed that some members of the central bank's policy committee think equity values are high.
The Fed also plans to start slashing the central bank's huge balance sheet later this year - a tightening of monetary policy.
Spread bet firms predict a 20 point rise to 20,660 for the Dow Jones Industrial Average when the bell sounds.
13.45...Homeserve top FTSE 250 riser
Homeserve PLC (LON:HSV) is now the top 250 riser after a reassuring trading update this morning.
"The group has had a very good year and expects to report results at the upper end of market expectations for the year to 31 March 2017," said Richard Harpin chief executvie.
We now offer our products to over 100m affinity partner households and have 7.8m customers. In the US, there were also 50m affinity partner households and 3m customers at the year end.
That is 28% year-on-year growth said Hargreaves Lansdown. Shares rose 8.4% to 614p.
FTSE 100 was 28 points lower at 7,302.
12.45am ...MySQUAR trending higher as dilution threat recedes
Among the small caps, shares in MySQUAR Limited (LON:MYSC), the Myanmar-language social media platform operator, rose by a fifth as the prospect of shareholder dilution receded.
The company has a US$2mln loan note facility with Sandabel Capital and has thus far used US$1.1mln, but this morning it indicated it would not be using the remaining U$900,000.
Many shareholders have been expecting a fund-raise to tide the company over until its top line starts heading north at a steeper angle.
Read MySQUAR expects cash flow to improve after flurry of product launches
This morning’s statement did not rule out the possibility of the issue of more equity, or entering into new convertible loan note arrangements with other finance houses, but it also said it would look at financing its operations from cash flow, the collection of outstanding accounts receivable and by using the available head-room in the credit facility provided by Rising Dragon Singapore.
Shares in technology firm Corero Network Security PLC (LON:CNS) initially fell after the company announced it would be increasing the size of its recently announced fund-raising from £5mln to £5.4mln.
Traders seem to have had a change of heart, however, with the shares surging ahead some 17%.
Corero said the size of the share placing had been increased due to investor demand, which is obviosuly a good sign. Chairman Jens Montanana will still be backing the share placing, but not to the extent that it will take his stake over 50%, which was the original plan. That can only be good for share trading liquidity, which might also explain the rise in the shares.
11.30am ...FTSE 100 knocked by US worries
London’s blue chips have recovered a little from a sticky start as the US Federal Reserve called time on its money pumping exercise.
FTSE 100 was still 37 points lower at 7,295, but that was much better than earlier in the day.
“The Fed is now openly discussing how to begin unwinding its crisis-era measures; we all knew this day would come, but with Mr Trump still settling into his role it may seem to some that the Fed is getting ahead of itself," said Chris Beauchamp at IG Index.
“To its credit, the US central bank has managed to get everyone to live with the idea of gradually rising rates, and now it needs to communicate the message that the withdrawal of the famous ‘punch bowl’ will be done in a similarly careful fashion,”
Unilever PLC (LON:ULVR) was one of the best of the risers, up1% to 3,982p, as a strategic review has resulted in its spreads business, which includes Flora and Stork margarines, going on the block.
Changes to the Anglo-Dutch firm’s structure are also on the cards as it responds to the failed bid attempt from US food giant Kraft Heinz Co (NASDAQ:KHC) in February.
Pearson PLC (LON:PSON) was the worst of the fallers another broker downgrade, this time from Exane, coincided with it going ex-dividend. Shares fell 3.6% to 625p.
City broker Liberum reckons there are “opportunities emerging” within the UK transport space, after it upgraded Go Ahead Group PLC (LON:GOG) to ‘buy’ from ‘hold’.
Liberum also repeated its ‘buy’ recommendations for FirstGroup PLC (LON:FGP) and National Express Group PLC (LON:NEX).
In a note to clients, the broker said it still isn’t convinced by the Go-Ahead business as a whole – reflected in its reduced target price of 1,975p – but that the recent share price fall has made it good value.
“We remain cautious on rail, and the GTR franchise in particular, and add new caution on London Bus,” said analyst Gerald Khoo. Shares rose 2.6% to 1,734p.
8.45am ...FTSE 100 hit by Trump worries and Fed blow, big ex-dividend day
The FTSE 100 got off to a nervous start ahead of talks between President Trump and Chinese premier Xi later Thursday and in the wake of balance sheet changes mooted by the US Federal Reserve.
The latter laid low both Wall Street and Asia amid worries over the impact the sales of bonds and mortgage-backed securities might have on asset prices.
The index of blue-chip shares succumbed to selling pressure too, falling almost 60 points early on to 7,271.83.
The property developers were sought after with British Land (LON:LND), Land Securities (LON:LAND) and Hammerson (LON:HMSO) three of only seven risers.
Pearson (LON:PSON) was biggest Footsie casualty after shares were called ex-dividend, meaning they will be bought and sold without the right to the latest payout from the US-focused education giant.
Moving down a division, but sticking with the divi theme, the payment of a whopping £1bn special distribution by Electra Private Equity (LON:ELTA) led to more than 50% being wiped off the share price.
9.45 ... Greka Drilling rockets on huge new contract in India
Greka Drilling Ltd (LON:GDL) has won a contract from India’s largest exploration and production company to drill 73 holes over a three year period, sending its share price more than 50% higher.
The deal with state-owned Oil and Natural Gas Corporation is still subject to contract, but Greka is expecting to be issued with a letter of intent later this month.
Shares in the contract driller rose 73% to 4.68p.
Provexis PLC (LON:PXS), the developer of Fruitflow, a tomato extract food additive, has agreed a memorandum of understanding with By-Health, a listed Chinese dietary supplement business.
The two groups have agreed to collaborate on further research on the product.
Provexis and its existing partner, DSM Nutritional Products are also working with By-Health to market Fruitflow-based products in China, with the first launch envisaged in the second half of 2017.
The research agreement will look at new products that contribute to cardiovascular health and the control of blood pressure in particular.
This will include a clinical trial to be conducted in China. A formal agreement is expected to be signed later this year, with the bulk of the research programme to be completed in 2018.
Provexsis shares rose by 11% to 0.6p.
Proactive news headlines
E-commerce enabler Blur Group PLC (LON:BLUR) opened higher on Thursday after revealing it could be set to receive another boost, this time from a UK county council.
The unnamed council is continuing its programme of spend which blur said could lead to a “multiple six-figure rollout” of its Indirect Spend management platform.
Corero Network Security PLC (LON:CNS) has started 2017 well, with its recently introduced “as-a-service” sales model opening up new revenue opportunities for the cyber-security specialist. A placing to raise £5.6mln accompanied the figures.
It is the first day in the new job for e-Therapeutics PLC’s (LON:ETX) new chief executive who formally took up the role Thursday. Dr Raymond Barlow, former executive director of corporate development at Amgen, based in Switzerland, said his near-term aim was “to ensure that our resources are appropriately focused on activities that are of the greatest commercial potential”.
TechFinancials Inc (LON:TECH) was restored to profitability last year following a 57% rise in revenues aided by the performance from the trading platform business, where turnover more than doubled. The technology provider to financial trading brokers said revenues were US$21mln, while operating profit was US$5mln, up from a US$100,000 loss in 2015.
6.45am...London set to take a hit
London’s FTSE 100 is set to take a hit on Thursday’s open after Federal Reserve and Donald Trump related insecurity shook investor confidence.
After what had started as a positive day Wall Street ended in the red. The Dow Jones was down 0.2% closing at 20,648. The S&P 500 fell 0.3% to finish at 2,352, while the Nasdaq lowered 0.58% to 5,864.
Michael Hewson, analyst at CMC Markets, highlighted that the market is nervously anticipating President Donald Trump’s meeting with Chinese leader Xi Jinping later today.
In a note Hewson said: “What President Trump will we see, the one who met UK Prime Minister Theresa May, or the one who met German Chancellor Angela Merkel?
“It is this unpredictability that makes markets nervous, particularly since, by his own admission the US President expects the meeting to be difficult, even more so given another missile test this week by North Korea.”
In Asia, Japan’s Nikkei slumped 1.5% lower to trade at 18,581 while Hong Kong’s Hang Seng was down 0.56% to 24,263. The Shanghai Composite was up, meanwhile, changing hands at 3,282.
Australia’s ASX 200 dropped 0.44% trading at 5,850.
In London, IG Market is predicting a 60 point drop for the FTSE 100 calling the blue-chip benchmark at 7,260 to 7,265 just over an hour before Thursday’s open.
Business Newspaper headlines:
Deliveroo, Uber and Amazon accused of exploiting workers - The Independent
Fitzgerald will need his hard hat to turn Bovis around - The Telegraph
Thousands of Tesco jobs at risk under plan to axe some night shifts - The Guardian
Deliveroo opens 30 kitchens to meet surging takeaway demand – The Telegraph
Lloyds names locations for 100 branch closures - BBC News
City Schedule:
Final Results: Zegona Communications Plc (LON:ZEG), PureTech Health Plc (LON:PRTC), M.P. Evans Group PLC (LON:MPE), Gulf Keystone Petroleum (LON:GKP), Electrical Geodesics (LON:EGI).
Trading Statement: Homeserve PLC (LON:HSV), Electrocomponents PLC (LON:ECM).