FTSE 100 closes 15 down
Sainsbury's and mining shares fall
Federal Reserve to announce interest rate decision later
Brexit terms weigh
FTSE 100 closed around 15 points down as US shares lagged and traders fretted over the terms of the UK's departure from the EU.
The bluechip benchmark fell 15.52 at 7,234, while the FTSE 250 - a less global and more UK focused index - tumbled 121 point to finish at 19.683. The Dow Jones is down 14.21 at 20,935.
The EU and UK are now disputing the cost of the divorce bill, it was reported.
Reports suggested that the EU want up to €100bn in payments from the UK.
"First Juncker, and now Barnier; it is clear that the powers that be in the EU are setting the groundwork for two years of confrontational and tense negotiations," said Joshua Mahony at IG Index.
"Given the Canadian-EU trade deal took seven-years, it is starting to seem wholly unrealistic to expect a deal to be completed in two-year’s time."
The biggest laggard on Footsie was grocer Sainsbury's (LON:SBRY), which tanked almost 6% to 263.5p after the market was not impressed by 2016 results. Full year profit dropped 8.2%.
The biggest riser was Sage Group (LON: SAGE), which gained 3.44% to stand at 707p.
3.20pm.... Wall Streets shares start lower...
Wall Street shares started lower on Wednesday ahead of a Fed interest rate decision.
It comes despite the ADP payroll report showing private employers added 177,000 jobs in April, which was slightly above economists' expectations.
The Dow Jones is down 27 at 20,922, the S&P500 is down 5.26 at 2,385, while the tech heavy Nasdaq is down 30 at 6,065.
2.51pm...Federal Reserve's tone in policy statement is key, says analyst
The Federal Reserve is widely expected to stand pat on raising interest rates in today's policy announcement later but the market will be searching for hints on the next course of action in the central bank's statement.
Oanda's Craig Erlam said: "While the Fed decision itself may not surprise anyone – with markets pricing in only a 5% chance of a rate hike this evening – the statement could offer important clues on the central banks intentions at upcoming meetings. In the absence of a press conference with Chair Janet Yellen, the statement is all we have to go off and if the Fed is aiming to raise rates again in June, it may signal its intention to do so.
"Fortunately, with markets already pricing in a June rate hike at 66%, the Fed doesn’t have to work as hard to manage expectations as it did earlier this year and so any signal may be fairly subtle. While I expect the central bank to see through the first quarter weakness in the economy, it may refrain from sending a stronger signal in order to give itself room to manoeuvre, should the data not improve between now and the June meeting."
Fed preview: What to expect of US dollar? – Oanda https://t.co/LCLC1Dtsdt pic.twitter.com/JVGBjmQGyk
— Tip TV Finance (@OfficialTipTV) 3 May 2017
2.12pm... US private employers add more jobs than expected
The US private sector added 177,000 jobs in April, slightly above expectations of 175,000, the ADP National Employment Report showed.
Pirvate payroll gains in March were revised lower to 255,000 from an initially reported 263,000 jobs.
The report comes ahead of the all-important non-farm payrolls data from the Labor Department on Friday.
1.07pm...Pound weaker on Brexit worries, says FXTM
FXTM research analyst Lukman Otunuga said the pound’s weakness today can be attributed to speculation of Brussels bolstering the Brexit bill to up to €100bn. The pound fell 0.12% against the dollar to US$1.2924.
“Official negotiations of the UK leaving the European Union have yet to begin, but financial heavyweights have already started their battle of words on the Brexit topic.
“With Theresa May vowing on Tuesday that she will be a ‘bloody difficult woman’ in Brexit talks adding to anxiety, a rocky road filled with obstacles may lie ahead. Sterling could find itself exposed to downside shocks amid the uncertainty, with recent reports of the European Union warning that May could be barred from the negotiations terms, fueling hard Brexit fears.”
Theresa May now pledging to be "bloody difficult" with Juncker. What's she going to threaten? To leave Europe? pic.twitter.com/o3DD2WJyZl
— Paul Mason (@paulmasonnews) 2 May 2017
12.58pm...Brexit threatens oil and gas industry
The UK oil and gas industry body has warned that the cost of trade could surge if Britain does not reach a new deal with the EU before Brexit.
Oil & Gas UK said if Britain reverts back to World Trade Organisation rules with the EU and the rest of world the likely cost of oil and gas trade will be about £1.1bn per year, up from the current £600mln.
“While the trade body can’t take a position on Brexit, we commissioned the research because we need to understand the possible impact on our industry - and the possible opportunities - from exiting the EU,” said Deirdre Michie, chief executive of Oil & Gas UK.
The body said about £73bn worth of oil and gas related trade flows between the UK and the rest of the world, with about £61bn of this related to traded goods subject to tariffs.
12.11pm... FTSE slips lower on Sainsbury's, miners
The FTSE 100 fell 22 points to 7,227.75 at midday trading, led by Sainsbury’s and mining shares. The pound is down 0.12% versus the dollar at US$1.2924.
Sainsbury’s shares dropped 4.69% to 266.40p after it reported a decline in full year sales at its core supermarket operation, which dragged pre-tax profit lower.
Mining shares, including Antofagasta, BHP Billiton and Glencore, were under pressure as copper prices decreased 2.41%.
Galliford Try saw its shares slide 9.03% to 1,330.0p as the housebuilder disclosed that it will take a one-off charge of around £98mln to cover the cost of two major legacy construction contracts.
Shire gained 2.06% to 4,748.50p a day after reporting better than expected growth in first-quarter results, boosted by its acquisition last year of US haemophilia specialist Baxalta, and highlighted an advancing late-stage drugs pipeline.
Sage jumped 2.12% to 698.0p as the software group said it expects to exceed its full year revenue guidance. The company reported a 41.1% increase in first half pre-tax profit to £180m on revenue of £840m, up 22.7% from the first half of 2016, as subscriptions rose.
Wetherspoon’s shares rose 3.47% to 1,045.0p after reporting a 4% increase in like-for-like sales in the three months ending April.
On the data front, investors weighed better-than-expected UK construction data. The Markit purchasing managers’ index rose to 53.1 from 52.2 the previous month, beating expectations for a slight fall to 52.0.
Across the Atlantic, the Federal Reserve announces its latest policy decision later with economists expecting the central bank to leave interest rates unchanged.
Meanwhile, markets are keeping a close watch on developments of the French election before heading to the polls on Sunday.
10.35am...UK construction PMI reaches four-month high
UK construction activity expanded further in April, hitting a four-month high, data showed.
The Markit/CIPS purchasing managers’ index rose to 53.1 from 52.2 the previous month, beating expectations for a slight fall to 52.0.
“This is an improved survey in most respects, which suggests the construction sector could make a modestly improved contribution to UK GDP growth in the second quarter after growing just 0.2% quarter-on-quarter in the first quarter,” said Howard Archer, chief UK and European economist at IHS Global Insight.
“Nevertheless, construction activity remains well below its peak levels and there was nothing like the pick-up in activity in April that was evident in the purchasing manager’ survey for the manufacturing sector (which showed activity spiking to a three-year high).”
The figures come after the manufacturing PMI rose to 57.3 in April from 54.2 in March, marking its best month in three years.
#PMI shows #UK #construction activity in April at 2017-high (53.1, up from 52.2 in Mar). Orders also up. But still well below peak levels
— Howard Archer (@HowardArcherUK) 3 May 2017
10.00am....Wetherspoon chairman lashes out at CBI chief over Brexit
Tim Martin, chairman of pubs chain Wetherspoon plc (LON:JDW), has lashed out at CBI director-general Carolyn Fairbairn for giving “foolhardy advice” to the government over Brexit.
In the first quarter results today, Martin said: "[She] has recently said that 'leaving the negotiating table without a deal shouldn't be Plan B, but Plan Z'. It is doubtful if Ms Fairbairn has ever been involved in serious business negotiations herself, since this is the same as a housebuyer saying to a seller, 'I must have your house at any cost'.”
He added: "In this case the buyer will not pay the market price, but will pay the maximum that the seller believes he can afford."
Martin also released a cautious statement about the second half of the year and he sees significantly higher costs, mainly for business rates, utility taxes, excise duty and labour.
But shares in the company jumped 3.07% to 1,041.0p as Wetherspoon reported a 4% increase in like-for-like sales in the three months ending April.
0.942am...Skinny Tan deal with ASOS boosts InnovaDerma shares
InnovaDerma plc (LON:ADP) shares gained 11.36% to 224.40p as the UK life sciences and beauty firm announced a distribution deal with online fashion giant ASOS plc (LON:ASC) for its tanning product, Skinny Tan.
Skinny Tan will be available on the ASOS website from June and will be marketed and distributed by the online retailer across the globe.
InnovaDerma added that it achieved its highest-ever monthly revenue in April. The group said trading continues to be “very robust” and revenue growth has continued its “positive momentum”.
09.00am... Eurozone GDP growth unchanged
Eurozone economic growth was unchanged in first quarter with gross domestic product rising 0.5% quarter-on-quarter. The fourth quarter was revised higher to 0.5% from a previous estimate of 0.4%.
The figure translates to annualised growth of 1.8% in all of 2017, Eurostat said.
08.46am.... FTSE opens in the red
The FTSE 100 made a lacklustre start to the trading day, posting a 15-point decline to 7,235.08 and rolling back some of the gains made on Tuesday.
The imminent departure of chief executive Adam Crozier, the architect of the turnaround at ITV (LON:ITV), was behind a 2.2% decline in the value of shares in Britain’s largest commercial broadcaster.
Proving that old stock market adage that it is often better to travel than arrive, annual results from grocer J Sainsbury (LON:SBRY) were greeted with a flurry of profit-taking as the shares fell 2%. There was also the small matter of an 8% drop in profits.
The weaker pound helped dollar earners such as InterContinental Hotels Group (LON:IHG) and Pearson (LON:PSON).
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Looking across the Pond, analysts reckon this evenings Federal Reserve meeting could potentially tee-up a June rate hike, which may explain the rather tentative start to proceedings here in London.
Sentiment may also be swayed by construction data due late this morning with economists predicting a marked slowdown in activity.
“However, after yesterday’s UK manufacturing PMI left analysts looking a bit silly, avoiding the predicted five-month low to instead hit a three (and a bit) year high, investors will be hoping for a similar disconnect between expectation and reality this time around,” said analyst Connor Campbell, analysts at Spreadex, the spread betting firm.
Proactive news headlines....
88 Energy Limited (LON:88E, ASX:88E) said its eagerly-awaited Icewine-2 well, on Alaska’s North Slope, is on track for production testing late next month or early July as it gave a progress report.
Spudded April 24, the drill bit reached 2,978 feet by 8.33pm on April 27, marking the completion of the surface hole.
Life sciences firm OptiBiotix Health plc (LON:OPTI) has had an abstract accepted for presentation at next month's International Scientific Conference on Probiotics and Prebiotics.
The med-tech specialist ANGLE PLC (LON:AGL OTCQX:ANPCY) is making “good progress against key milestones”, according to the company’s chief executive Andrew Newland. His comments came alongside a business update following the close of the financial year on April 30.
IP specialist Tekcapital PLC (LON:TEK) will no longer own a majority stake in Belluscura following a private placement that will raise up to US$1.7mln for the med-tech business. Belluscura will use the cash for its own commercial plans that may include a separate listing later this year.
Rose Petroleum PLC (LON:ROSE) confirmed it has received further cash from the Mexican tax authority, Servicio de Administración Tributaria (SAT). The junior oil and gas firm today updated investors on its ongoing process to recover value-added tax owed by the Mexican authorities. It received the equivalent of US$167,500 (MX$3.16mln) in April, bringing the total payments since March to US$486,000.
LGO Energy PLC (LON:LGO) highlighted the handover and restart of the Bonasse field on the South West Peninsula, in Trinidad, as it updated on its operations on the Caribbean island. The company, via its subsidiary Leni Trinidad Limited (LTL), holds interests in more than 10,000 acres of prospective but underexplored acreage on the peninsula, including interests in the Icacos and Bonasse field.
Life sciences firm OptiBiotix Health plc (LON:OPTI) has had an abstract accepted for presentation at next month's International Scientific Conference on Probiotics and Prebiotics. Taking place in Budapest, Hungary, from 20 June to 22 June, the conference is the world's largest scientific gathering of the movers and shakers in the field of probiotics (micro-organisms that are believed to provide health benefits when consumed) and prebiotics (substances that induce the growth or activity of micro-organisms).
Premier African Minerals Limited (LON:PREM) expects shortly to make a first shipment of wolframite concentrate from its RHA mine in Zimbabwe. Wolframite is the source ore for tungsten and the ramp-up of the processing plant is going well said George Roach, chief executive, while the X-ray machine installed to sort the ore is working ahead of expectations.
Action Hotels PLC (LON:AHCG) has told investors that Novotel has been chosen as the brand partner for a new hotel at the Melbourne Convention and Exhibition Centre. Novotel Melbourne South Wharf, due to be completed in early 2018, will be the second largest site in the Action Hotels portfolio – with 347 rooms (30 more than originally announced).
Shanta Gold PLC (LON:SHG) has published a substantial maiden resource estimate for Nkuluwisi, one of the satellite deposits that surrounds its New Luika gold mine in Tanzania. At a 0.5g/t cut-off, Nkuluwisi holds total resources of 3.97mln ore tonnes, which at a grade of 1.1 grammes per tonne (g/t) equates to 140,894 ounces of gold.
6.45am...Sluggish start predicted
London is set for a slow start to the trading day as attention increasingly focuses on the French election.
The result of the latest US Federal Reserve meeting is published tonight and that too may keep investors wary even though no policy tightening or loosening is expected.
Financial spread bet firms see FTSE 100 shedding around five points when the market opens after its 46 point rise to 7,250 yesterday.
Wall Street had a decent day Monday with the Dow Jones Industrial Average closing 36 ahead at 20,949. Nasdaq gained 3.76 to 6,095, while the S&P500 rose 2.84 at 2,391.
Among the losers was pharma giant Pfizer inc (NYSE:PFE), down 0.5% to $33.61 as revenue fell 2% in the last three months to $12.78 bn as sales its Prevnar pneumonia vaccine top seller dropped 8%.
Asian markets were also in good shape overall, with strong gains in Tokyo and Hong Kong and a modest dip in Shanghai.
Business headlines
- Apple reported an unexpected fall in iPhone sales in the second quarter to 50.8mln handsets from 51.2mln a year ago, The Times reports. Analysts had expected iPhone sales of 52mln. Revenue from iPhone sales rose to US$33.2bn from US$32.9bn.
- Private equity giant KKR will no longer invite Barclays to take part in lucrative deals after the bank’s chief executive Jes Staley backed his brother-in-law in a legal dispute with the buyout house. KKR has not ruled out making a formal complaint to the bank’s board, sources familiar with the matter told the Guardian
- The London Stock Exchange has warned that Brussels’ proposal to restrict London’s ability to host euro-clearing would “damage European issuers, savers, investors, pension funds and intermediaries", the Financial Times reports. European politicians have argued that EU derivatives should be cleared in the EU rather than London after Brexit. The European Commission will present reforms on derivatives clearing later this week.
- Belgian finance minister Johan Van Overtveldt has said Brexit has “shattered” the principle of the ever closer union in the European Union. He warned that the EU had to transform itself to survive as there was clearly a problem with the bloc, writes The Telegraph. He also called for a quick, comprehensive trade deal with the UK as he believes punishing Britain would be counterproductive.
- City AM writes that Chancellor Philip Hammond needs to find £15bn in savings to balance the UK’s books by 2022, according to figures from the Institute for Fiscal Studies. Hammond must find the money through either tax rises or spending cuts over the next five years, the report found.
Commodities/currencies
- Gold: US$1,252 down US$4
- Oil (WTI): US$47.79 up US$0.13
- £/$: 1.2918 pound eases