FTSE 100 closes 46 higher
BP, Ocado and Standard Life advance
Miners slump as copper price falls, China PMI drops
UK manufacturing activity expands further in April
FTSE 100 ended the day up over 46 points, at 7,250 as traders have an eye on the US Fed and the French election on Sunday.
The biggest gainer was testing group Intertek (LON: ITRK), which added over 3% to stand at 4,200p.
Miners fared badly with the biggest laggard on the blue chip benchmark being copper giant Antofagasta (LON:ANTO), which shed 3.52% to stand at 808.5p as the price of the red metal fell.
In the US, the Dow Jones is up over 41 points at the time of writing - to 20.954.
Today sees the start of a two day policy meeting for the US central bank which will culminate in a decision on whether or not to raise the interest rate.
3.48pm... FTSE 100 remains in positive territory
Approaching the close of the session, the FTSE is up 45 points to 7,249.00p.
BP shares are up 1.93% to 451.05p after well-received quarterly results and Ocado is 5.42% higher to 264.60p on reports of a possible tie-up with Marks and Spencer. Standard Life has gained 3,02% to 374.90% and Aberdeen Asset Management has risen 4.16% to 290.60p as their merger is “on track” and will be completed later this year.
Pharmaceuticals giant Shire surged 2.98% to 4,670.88p after it reported a 14% rise in first quarter earnings that was ahead of market forecasts.
Mining shares are still in the red, including Randgold Resources, Anglo American, Antofagasta and Fresnillo, weighed by a drop in copper prices and an unexpected fall in the Caixin Chinese manufacturing purchasing managers’ index to 50.3 in April from 51.2 a month earlier.
In the UK, the Markit/CIPS manufacturing PMI fared much better, rising to 57.3 in April from 54.2 in March.
The data gave the pound a boost, with the currency up 0.29% versus the dollar at US$1.2924 and up 0.27% against the euro at €1.1855.
Turning to the US, investors are looking ahead to second quarter results from Apple after the market closes. Analysts expect a 4.8% increase in revenue to US$52.97bn and a 12% rise in earnings per share to US$2.02 along with a 1.2% gain in iPhones sold to 51.82 million.
2.41pm... US stocks open higher
The Nasdaq has reached a new record high at the opening bell in the US as the Federal Reserve kicks off its two-day policy meeting and as traders awaited earnings from Apple after the market closes.
The Nasdaq rose 7 points to 6,102 at the open while the Dow Jones Industrial Average increased 39 points to 20,953 and the S&P 500 gained 3 points to 2,392.
1.50pm...Greece makes preliminary deal with creditors
Greece has reached a preliminary deal with its international creditors needed to release the next tranch of its €86bn bailout.
Following months of talks between Greek finance ministry officials, EU lenders and the International Monetary Fund (IMF), Greece has agreed to cut pensions futher and to lower the tax threshold to deliver savings worth 2% of gross domestic product.
Eurozone finance ministers will meet on 22 May and will need to sign off on the agreement.
The nation has to repay €6.9bn to its eurozone lenders and the IMF in July.
12.58pm...Ocado's future hangs on signing lucrative deals, Hargreaves Lansdown warns
Ocado’s shares are up on reports that it is in talks with Marks & Spencer to team up and deliver food online. But Ocado’s future depends on making such deals, according to George Salmon, equity analyst at Hargreaves Lansdown.
Salmon said: “Ocado’s technology is clearly outstanding, but in recent years its profits have been anything but. The group can point to double digit revenue growth and the fact that an ever-increasing number of us are using its service, but it’s long been clear it needs to do more to justify its current lofty valuation. The company’s future hangs on the possibility of signing lucrative deals with others for the use of its resources. Rumblings over the weekend that Marks & Spencer could be ready to strike one such deal to help the booming foods business finally launch an online offering sent the shares up 6.1% today."
Ocado has also struck a five-year deal with garden centre group, Dobbies. The deal will allow Dobbies to expand its UK deliveries and the service will be launched early next year.
On Just Eat’s slump despite reporting a jump in first-quarter revenues, Salmon pointed to a slowdown in orders. “Orders are up 25% on a like-for-like basis, slightly below the 30% growth achieved in the prior quarter. This sent the shares down 2.7%.”
12.36pm... Pound exposed to hard Brexit fears, says FXTM Research
The pound is at risk of further weakening amid worries of a hard Brexit, according to FXTM research analyst Lukman Otunuga.
Otunuga said: “The potential threat of complications and confrontations during Brexit negotiations could rekindle hard Brexit fears and expose Sterling to downside risks this quarter. Some difficulties have already materialised in the early stages of Brexit talks with European Commission President, Jean-Claude Juncker recently commenting that Theresa May is ‘living in another galaxy’, leaving investors anxious. Theresa May repeating her threats of walking away from the European Union without a deal has contributed to uncertainty, and as such sterling vulnerability could become a dominant theme.”
12.09pm...FTSE holds onto gains
The FTSE 100 is up 36 points to 7,240.88 at the midday mark after UK manufacturing activity data beat analysts’ expectations.
The Markit/CIPS manufacturing purchasing managers’ index increased to a three-month high of 57.3 in April, compared to a four-month low of 54.2 in March and economists’ expectations of 54.0 as a weaker pound boosted exports. A reading above 50 signals expansion in sector activity while a level below that indicates a contraction.
The pound rose 0.26% against the dollar to US$1.2920 following the report.
“Though this wasn’t enough to allow the pound to substantially build on its current levels, it did help wipe out sterling’s early losses, pushing cable above 1.29 while keeping the currency flat against the euro,” said Connor Campbell, financial analyst at Spreadex.
“The FTSE was undeterred by the pound’s turnaround, climbing 25 to 30 points in part thanks to the earnings-inspired growth seen by BP.”
BP’s shares rose 1.42% to 448.80p as first-quarter earnings exceeded expectations thanks to a rebound in the oil price and higher production.
Standard Life jumped 2.50% to 2.50% after Aberdeen Asset Management revealed the merger was on track and would be completed later this year. Aberdeen soared 3.65% to 289.18p, also bolstered after reporting a 10% increase in half year revenue.
Ocado Group gained 6.41% to 266.90p on reports of a possible tie-up with Marks & Spencer Group when the high street retailer kicks off its online food service.
Heading in the opposite direction, a measure of mining shares were under pressure as copper prices dropped 1.32% to US$262.55 per pound. Randgold Resources, Glencore, Antofagasta and Fresnillo were among the biggest fallers on the FTSE 100.
FTSE 250-listed Just Eat fell 2.77% to 561p even as it reiterated its full-year guidance after reporting a leap in first-quarter revenues driven by strong order growth both at home and abroad.
If you believe as I do that the #FTSE is heading down, there is a possibility that today's high (7254.8) is this weeks high. #speculation pic.twitter.com/Aq1bIRd1ug
— tradingFTSE100 (@tradingFTSE100) 2 May 2017
10.58... Pound rises against dollar after UK manufacturing PMI
The pound rose 0.12% versus the dollar at US$1.2901 after the better-than-expected UK manufacturing PMI data. The PMI rose to 57.3 in April, compared to a four-month low of 54.2 in March and economists’ expectations of 54.0, a weaker pound helped exports.
IG analyst Josh Mahony said: "The recent deterioration in UK manufacturing growth appears to have arrested, with this morning’s bumper PMI announcement sending the pound surging in response. The recent decline in UK PMI surveys have been a bit of a downer for growth expectations, with the post-Article 50 period expected to only serve to intensify this decline.
Mahony added: "However, the jump to a three-year high has proven that manufacturing is more resilient than many thought, with employment, output and new orders growth all improving markedly. Interestingly, we are seeing an important role for both domestic demand and export business, as the effect of the weak pound continues to play a beneficial role."
10.25am... Ocado soars on reports of tie-up with M&S
Ocado Group plc’s (LON:OCDO) shares surged 7.57% to 270p following reports of a tie-up with Marks and Spencer Group Plc (LON:MKS) once the latter launches its online food service.
The Daily Telegraph reported at the weekend that Ocado and M&S planned to start talks in coming weeks. M&S plans to launch a soft trial for how it might provide an online delivery service in the autumn. Shares in M&S fell 0.11% to 366.20p.
Ocado shares pop up more than 9% in early trading after Telegraph cited unnamed sources saying there'll be a deal with M&S pic.twitter.com/xWhT996jve
— Thomas Seal (@TW_Seal) 2 May 2017
Aberdeen Asset Management’s shares were also higher, up 3.73% to 289.40p, as it reported a 10% increase in half year revenue and said its merger with Standard Life was “on track” to be completed later this year.
Just Eat shares fell 3.5% to 556p even as the online food ordering company posted a 46% rise in sales to £118.9mln for the first three months of the year.
09.57am.. UK manufacturing PMI rises to three-month high in April
UK manufacturing activity growth accelerated to a three-month high in April as new orders and exports rose.
The Markit/CIPS manufacturing purchasing managers’ index increased to 57.3 in April, compared to a four-month low of 54.2 in March and economists’ expectations of 54.0. A reading above 50 signals expansion in sector activity while a level below that indicates a contraction.
Rob Dobson, senior economist at IHS Markit, said: “Growth of output, new orders and employment all gathered pace, driven higher by the continued strength of the domestic market.”
He added: “There was also a solid bounce in new export business, as the weak sterling exchange rate helped manufacturers take full advantage of the recent signs of revival in the global economy, and especially the eurozone, which is enjoying its best growth spell for six years. Although price pressures remain elevated, input cost inflation has eased significantly since hitting a record high in January.”
Major upward surprise as #PMI shows #UK #manufacturing activity spiking to a 3-year high in Apr. Up to 57.3 from Mar 4-month low of 54.2
— Howard Archer (@HowardArcherUK) 2 May 2017
09.32am... Capital Drilling and Baron Oil shares jump
Among the small caps, Capital Drilling Ltd shares are 17% higher to 58.50p after reporting its best quarterly results since 2013. Revenue in the quarter to March rose by almost 14% on the previous three months to US$31.6mln and by 65% on a year earlier. As a result, guidance for the full year has been raised to revenues of between US$120-130mln, from a previous estimate of US$105-112mln.
Baron Oil is also on the front foot, with its shares up a 26.67% to 0.475p, as it said agreed with the Union Oil & Gas Group to go ahead with drilling plans on Block Z-34 in Peru despite a dispute. The company said its row with Union Oil over the US$2mln owed to Baron's Peruvian subsidiary, Gold Oil Peru SAC, will not disrupt the progress of drilling.
Going the other way, Premier Veterinary Group saw its shares drop 24.10% to 182.44p as it completed the sale of its buying group to Animal Healthcare Services for £6.3mln in cash. Proceeds of the sale of the Premier Buying Group will be used to repay debt of £1.25mln and to fund growth plans for its Premier Pet Care Plan business in the US and Europe.
Ortac Resources shares fell 14.72% to 3.20p as it raised £2mln through the placement of shares to fund its further investment in Casa Mining Limited.
09.19am... BP shares race higher
BP's shares are up 2.46% to 453.45p after reporting better-than-expected first quarter results.
Nicholas Hyett, equity analyst at Hargreaves Lansdown, said: “A healthier oil price environment, increasing production in the upstream division, and improved refining margins in downstream, helped BP beat analyst expectations in the first quarter. That has sent the shares up in early trading, but these results also hint at the longer term challenges facing the group.
"Seven years on, the Gulf of Mexico oil spill continues to drag on the group’s cash flow – although leaving guidance unchanged suggests these costs should taper off through the year.#
"Demands on the group’s cash from fines and Capital Expenditure, which is expected to total $15-$17bn this year, means that BP’s balance sheet remains stretched. Net debt has increased substantially versus a year ago. The impact of that is exaggerated by disposals which are shrinking the size of the business even as the debt pile grows, leaving gearing at the top end of the group’s target range.
"If all goes to plan the group should see rising production and increasing efficiencies improve its cash delivery going forwards. However, a stretched balance sheet means BP will have less and less resilience to deal with the unexpected. Until that is resolved, doubts will remain over the long term sustainability of the dividend to which BP have stuck resolutely so far.”
Meanwhile, other mining shares are under the cosh, including Randgold Resources, Fresnillo and Glencore, as copper prices are down 1.01% to US$263.35 per pound.
08.45am...FTSE opens higher
The FTSE 100 got off to a positive start as trading resumed after the Bank Holiday break with the index of blue-chip shares advancing 38 points to 7,241.98.
BP (LON:BP.) topped the charts, rising 1.9% after a rebound in the oil price and higher production meant first-quarter earnings were ahead of expectations.
Chief executive Bob Dudley also seemed upbeat on the prospects for the business, with the impact of cost cuts expected to filter through in the second-half.
While Anglo American (LON:AAL) was among the early leaders, the precious metals specialist, Fresnillo (LON:FRES) and Randgold Resources (LON:RRS), were on offer early on.
Later we have results from Apple (NASDAQ:AAPL), run by the Paul O’Grady lookalike Tim Cook, which is apparently sitting on around a quarter of a trillion dollars. According to one report that’s more than the UK and Canada combined have in cash reserves.
Elections should provide some political meat to this week’s stockpot, with the French race heading into its final furling.
The country’s moderate majority (and the EU’s bigwigs) will be hoping the clear leader, Emmanuel Macron, doesn’t do a ‘Devon Lock’.
Devon Lock was the horse that led the 1956 Grand National only go sprawling in spectacular fashion just before the finish line. Remind me, what do the do with horses in France?
Click here if you have the time and inclination.
Proactive new headlines...
BOS GLOBAL HOLDINGS Limited (LON:BOS) expects 23 May will now be the day it completes the acquisition of a 40% stake in Call Design.
A binding agreement with the directors and owners of Call Design sets out the rights and obligations of each of the parties.
BOS said it expects to execute this new Call Design shareholder deed and settle both the cash and share consideration of £2.8mln on 23 May.
The consideration comprises £280,000 cash and the rest in BOS shares. Trading on Aim n the shares is expected to begin on 24 May.
The positive findings from a phase II clinical trial of Summit Therapeutics PLC’s (LON:SUMM, NADAQ:SMMT) next-generation antibiotic have been published online in a prestigious medical journal.
The Lancet Infectious Diseases carried results from the CoDIFy study, in which the company’s drug candidate ridinilazole stacked up favourably against vancomycin, the gold standard in treatment for people with C. difficile infection (CDI).
A ruling by an Ethiopian Supreme Court has reduced the potential financial impact of legacy legal issue affecting KEFI Minerals (LON:KEFI) to US$600,000 from US$12mln. The claims for damages related to impact of exploration field activities on the Tulu Kapi gold project from 1998 to 2006, which pre-dated the company’s involvement with the property.
Trinity Exploration & Production PLC’s (LON:TRIN) financial results statement, for the twelve months ended December 31, hailed a “transformational period” in which the Trinidad focussed oil firm “re-established itself as a robust entity”.
Rose Petroleum PLC (LON:ROSE) continues to look forward to its planned 3D seismic programme in Utah’s Paradox basin during the second half of this year. The company today updated investors on the ongoing permitting process for the seismic work, following a request for more information by the Bureau of Land Management (BLM).
Range Resources Ltd (LON:RRL, ASX:RRS) has confirmed it is moving forward with the proposal to acquire drill contractor RRDSL from LandOcean, signing a sale and purchase agreement which sets out the terms of the transaction.
Gold junior ECR Minerals PLC (LON:ECR) has extended the deadline for the receipt of the remainder of subscription money due from Shenyang Xinliaoan Machinery until 16 May in return for a further deposit of £50,000.
Challenger Acquisitions Limited (LON:CHAL) said the ending of its relationship with Starneth has stopped all of its cash obligations to that company while giving the the potential of up to US$6mln if the giant observation wheel project in Jakarta and one elsewhere go ahead.
“The potential receipt of fees from one or two Starneth projects and the closing of a potential new acquisition or corporate transaction should strengthen our company this year,” said Mark Gustafson, chief executive. Losses in 2016 were £6.58mln.
Medical imaging group Feedback plc’s (LON:FDBK) non-executive deputy chairman Tom Charlton is to step down to focus on his his other investment activities.
6.45am...Healthy gains predicted
London’s blue chips are set for healthy early gains as traders settle back after the bank holiday weekend.
Financial spread bet firms see FTSE 100 adding more twenty points despite a mixed night on Wall Street and in the major Asian markets.
Election news will dominate the week with the French Presidential run-off vote at the weekend and the UK hustings now hitting their straps.
In the US, Wall Street ended Monday down 27 points at 20,913, though the other two main indices were in the positive territory ahead of Apple’s results tomorrow.
President Trump’s latest suggestion - a break-up of the big Wall Street banks in to consumer and investment businesses – also unsettled the mood.
The Fed starts a two-day policy meeting on Tuesday, but the central bank is not expected to raise interest rates.
In Asia, Tokyo rose strongly but there were dips in Hong Kong and Shanghai.
Business headlines
Brussels is rushing out proposals to impose EU control on the City of London’s lucrative euro-clearing market, forcing UK operators to either relocate or be policed by European authorities, reports the FT.
The FT also reports that the Bank of Mum and Dad has unofficially become Britain’s ninth-biggest “mortgage lender” with loans and gifts from family or friends increasing 30% this year to £6.5bn as house prices keep rising.
Britain’s £40bn car finance market could be heading towards a mis-selling scandal because of concerns about the reliance on debt to buy vehicles. Nearly 90% of new cars are sold using finance deals, writes theTimes
A British company at the heart of the efforts to make large aircraft more fuel-efficient and less environmentally damaging is set to float on AIM. Velocity Composites, based in Burnley, Lancashire, has plans to expand overseas, writes theTimes.
Britain's entertainment industry has joined forces with its counterparts across Europe to attack moves in Brussels it claims will “severely erode” the “absolute cornerstone” of the film and television businesses, writes the Telegraph
Twitter's shares rose more than 6% on Monday after a report that the company is partnering with Bloomberg for streaming news, reports the Telegraph.
Commodities/Currencies
- Gold: US$1,254, down 0.20%
- Oil (WTI): US$48.54, down 0.61%
- £/$ 1.2924 - pound up 0.29%