FTSE 100 closes down 33 at 7,114
Big Tory win predicted
Burberry battered but UK-focused retailers do well
FTSE 100 closed down over 33 points with fahion brand Burberry Group plc (LON:BRBY) the biggest drag.
The UK benchmark closed down 33.14 at 7,114 after a nothger day where the spotlight was on Theresa May's snap election, approved for June 8 by MPs.
Defensive stock Sainsbury's (LON:SBRY) was top dog- up over 5% to 267.4p.
Burberry dropped almost 8% to close at 1,556p after its trading update.
Joshua Mahony, market analyst at IG Index, put it thus: "The FTSE has suffered a somewhat disappointing end to Wednesday’s trade, as early gains were eroded in the wake of the vote to dissolve parliament ahead of a snap General Election in seven weeks’ time.
"After yesterday’s dramatic crash for the FTSE, today has been more about stability as traders seek to ascertain whether such a dramatic selloff is really justified ahead of what looks likely to be a landslide for the Conservatives."
Having hit a peak of 7,151 at around 11am, the FTSE 100 spent the rest of the morning on the slide and is only now just recovering.
Circa 1.00pm the top-share index was down 20 points at 7,128, having fallen as low as 7,124 at one point.
Fashion firm Burberry Group PLC (LON:BRBY) remained the worst performer after a disappointing trading update.
READ The good and the bad at Burberry as the luxury fashion retailer overhauls its business
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Burberry shares were down 5.9% at 1,600p, a little above their worst level of the day.
Precious metals miners were friendless, with Fresnillo PLC (LON:FRES) down 2.5% and Randgold Resources 2% lower.
The oil majors are also on the slide, reflecting the lower oil price. Royal Dutch Shell B (LON:RDSB) gave back 42.5p at 2,082.5p while BP PLC (LON:BP.) shed 5.7p at 446.9p.
The latter received an extra shove lower from Citi, which abandoned its bullish position on the oil major and switched to a neutral recommendation while shaving 30p off the price target at 480p.
With the looming general election causing a bit of uncertainty, investors were turning to traditional defensive stocks such as supermarkets.
J Sainsbury plc (LON:SBRY), up 4.1%, was the pick of the bunch, while Wm Morrison Supermarkets PLC (LON:MRW), up 2.3%, and Marks & Spencer Group PLC (LON:MKS), up 1.5%, notched up handy gains.
Turning to the minnows, Nektan PLC (LON:NKTN), the business-to-business gaming solutions and services provider, was deemed worth a gamble after its trading update covering the first three months of 2017.
The shares put on more than a fifth as the company revealed year-on-year growth across all of its key performance indicators.
Thalassa Holdings Limited (LON:THAL) shot up 16% to 68.36p as it revealed it is in discussions concerning the possible disposal of one of both of the company’s wholly-owned subsidiaries.
Wall Street preview
Wall Street shares are set to open higher after yesterday's losses amid more corporate earnings.
Yesterday, Goldman Sachs (NYSE:GS) was among the biggest losers on S&P500 as its first quarter numbers were a decided disappointment.
Today, rival Morgan Stanley (NYSE:MS) is up 1.7% in pre-market with shares at $41.21 after it gave the market stronger-than-anticipated results.
In London, the shock of the PM's snap election for June appears to be calming down, with the FTSE 100 recovered to 7,132 - down around 15.
She is now facing MPs in the Commons in question and answer session ahead of a vote to hold the election.
Yesterday, on Wall Street, the Dow Jones finished 113 lower at 20,523. The tech heavy Nasdaq closed over seven down at 5,849, while the S&P500 shed 6.82 at 2,342.
In futures trading today, the Dow Jones is 26 higher, the S&P500 is up 5.95 and the Nasdaq is over 15 points higher.
Chris Beauchamp, analyst at spreadbetter IG Index, said: "US markets had a wobble yesterday but a better performance from the small-cap end of things points to a growing appetite to buy back into equities."
10.45 ... Footsie flat
The election was still dominating thoughts of investors, but AB Foods provided a welcome distraction.
Good results from the Primark owner (LON:ABP) helped the index, which was down four points at 7,143 but that was a decent rally from the start of the day.
First-half results beat market forecasts led by strength in its sugar business thanks to higher prices and currency factors.
Adjusted pre-tax profit jumped 35% to £624mln, as revenue rose to £7.296bn, up 7% at constant currency, and 19% at actual rates.
Shares added 1.8% to 2,768p.
Burberry PLC (LON:BRBY) did not fare so well. Shares shed 5% to 1,614p as licensing and wholesale sales dropped.
Total revenue came to £1.7bn in the six months to 31 March, down 1% on an underlying basis, as the trench coat maker took action to strengthen its brand positioning in the US and in its beauty business.
Royal Bank of Scotland PLC (LON:RBS) was a riser as Chancellor Philip Hammond confirmed he was prepared to sell down the government’s 73% stake at a loss.
Hammond suggested yesterday that the taxpayer’s remaining shares could be sold below the 502p average price that was paid to bail out the lender during the financial crisis in 2008 and 2009.
“We have to live in the real world” he said.
Among the small caps, European Metals Holdings PLC (LON:EMH) was under pressure as investors gave a lukewarm assessment of a pre-feasibility study on its Cinovec lithium deposit.
Shore Capital said the rate of return was a little skinny for such as large project while it was also nervous about the effect a drop in assumed lithium prices.
Symphony Environmental Holdings PLC (LON:SYM) was a strong riser as Saudi Arabia made bio-degradable plastics compulsory.
The company has a bio-degradable technology that just been granted approval in the country. Shares rose 20% to 11.68p
8.50am.. FTSE 100 opens lower as Parliament votes Theresa May's plan for snap general election
Prime Minister Theresa May’s call for the snap election appeared to take the market by surprise, precipitating an equity sell-off that was as much prompted by a resurgent pound as it was by the uncertainty caused by the call to the polls.
A day on things appear a little calmer, although the FTSE 100’s trajectory was still downward as it posted a 15 point fall early on to trade at 7,132.69.
“The election call was a pure surprise for both the MPs and the markets,” said Ipek Ozkardeskaya of London Capital Group.
All that remains is a Commons vote to ratify May’s decision, which takes place later Wednesday.
Burberry Group (LON:BRBY) was the morning’s main loser as it fell almost 6% following a lacklustre set of prelims.
Primark owner Associated British Foods (LON:ABF), up 3.6%, was in demand ahead of its market update later this week.
Among the small-caps, Lombard Risk Management (LON:LRM) was an early riser, up 9% after a better than expected trading update.
Proactive headlines
Lombard Risk Management plc (LON:LRM) said it expects revenues, underlying profits and its cash position to be ahead of market expectations following a period of substantial investment.
The provider of risk management software to the financial services industry said turnover for the 12 months ended March 31 would be in the region of £34mln-£34.4mln and EBITDA in the range of £2.4mln-£2.8mln. The company is sitting on around £7mln of cash.
British electronics manufacturer Acal Plc (LON:ACL) expects full-year results to come in slightly ahead of expectations following a strong performance towards the end of the year.
A combination of market share gains, better routes to market and greater confidence among its core customer base meant final quarter revenue was 15% ahead of last year at constant exchange rates.
Drug developer Faron Pharmaceuticals Ltd (LON:FARN) has unveiled plans to appoint two new independent directors.
They are Dr Gregory Brown and John Poulos, who bring with them a breadth and depth of industry experience.
Corero Network Security PLC (LON:CNS) has nabbed a multi-year contract with a global internet service provider to deliver a new DDoS mitigation security service.
Under the terms of the SmartProtect agreement, AIM-quoted Corero will provide its SmartWall products and SecureWatch services to the ISP’s customers.
CLICK HERE: For a daily round-up of all the Proactive news
6.45am...market called lower
The FTSE 100 is expected to open about 20 points lower from yesterday’s close as investors continue to digest the Prime Minister’s announcement of a snap general election on 8 June.
The House of Commons will vote on Theresa May’s plan to call an early election today and it will need a two-thirds majority approval from MPs.
The FTSE was under pressure yesterday as the pound jumped against the dollar following news of the general election, which May said followed division within Westminster over Brexit plans.
“Markets have welcomed the snap election and bought the sterling on expectations that the GE could give Theresa May a mandate for a ‘softer’ Brexit, by helping her to encounter the hardest ‘Brexiteers’,” said Ipek Ozkardeskaya, senior market analyst at London Capital Group.
“As Tuesday’s rally sent the GBPUSD to the overbought market (RSI (72%), we could expect correction and consolidation before a renewed attempt to the 1.30 mark.”
In the US yesterday, equities closed lower with banking titan Goldman Sachs (NYSE:GS) sagging over 4% as its first quarter numbers missed estimates.
City headlines
- No need to look beyond the snap election called by Theresa May yesterday for today’s headlines.
- The FT calls it a direct mandate for her plan to deliver a smooth British exit from the EU, adding that the pound rose on expectations that May would win a much increased Commons majority, allowing her to sideline Eurosceptics in the Conservative party.
- The Times reports an early election boost for the PM as the International Monetary Fund upgraded UK growth for the second time in six months. The think-tank admitted it had been wrong about the short-term economic impact of voting to leave the European Union.
- The Telegraph's line is that City grandees and currency investors alike backed May’s decision to call an early election in the hope she will win more authority to negotiate a smooth exit from the European Union.
- Elsewhere, the FT reports Goldman Sachs punctured some of the optimism surrounding US bank stocks with a poor quarter for bond trading that fell well short of analysts’ expectations. Investors were primed for a bright update from Goldman, following better-than-forecast figures from the investment banking units of JPMorgan.
Commodities/currencies
- £/$ - 1.2838 - pound soars on snap election
- Oil (WTI) - US$52.74 down 11c
- Gold - US$1,284 - down US$7