FTSE 100 up one measly point at 7,387
SpaceandPeople moon-bound after raising profit expectations
BoE holds rates but hints at bigger than expected future moves
2017 GDP growth estimate trimmed, but later years' rise
A late albeit tepid rally saw the blue-chip index regain positive territory - just.
The FTSE 100 finished at 7,387, a point above last night’s close.
The Footsie owed its positive finish to precious metals miners such as Fresnillo PLC (LON:FRES) and Randgold Resources Ltd (LON:RRS); both posted handsome gains as the gold price moved up 0.4%.
Some traditional alternative safe bets to gold stocks for risk averse investors did less well.
Telecoms giant BT Group plc (LON:BT.A) shed 14.4p at 297.5p as it abandoned its target of increasing the divi 10% each year, while utilities firm Centrica PLC (LON:CNA) tumbled 5.5% on fears it will get hammered by price caps after the general election.
Among the minnows SpaceandPeople Plc (LON:SAL), which has been on a good run since March, shot up 45% as it said performance in the first four months had been ahead of management’s expectations.
The brand experience specialist lifted full-year profit guidance numbers
3.30pm: FTSE 100 falls back as Dow slides
The Footsie fell back in late afternoon trading after a big opening drop today on Wall Street, having been essentially flat earlier following mixed messages from the Bank of England.
Around 3.30pm, the FTSE 100 index was down 12 points at 7,373, just off the session low of 7,369 and well below the day’s peak of 7,396.
New York stocks were sharply lower in early trading, threatening to post their biggest daily declines in four weeks, with the Dow Jones dropping by more than 120 points, the broader S&P 500 index down 16 points, and the tech-laden Nasdaq composite losing 48 points.
Some disappointing corporate earnings and economic data adding fuel to expectations for further US interest rate hikes as early as next month’s Federal Reserve meeting did the damage on Wall Street.
But in London, UK blue chips found underlying support from gains by international earners as the pound fell back following today’s Bank of England Monetary Policy meeting minutes and latest quarterly inflation report, which saw rates left on hold but hints of future rises, while GDP growth was trimmed for this year, but raised for 2018.
Late afternoon, sterling was down 0.4% versus the US dollar at US$1.2881, and off the same amount against the euro at €1.1854.
ICYMI: We've read the Bank of England's inflation report (yes) and summarised the key points: https://t.co/KrdCEnMtHM pic.twitter.com/mYuvT1zga7
— EEF Economics Team (@EEF_Economists) 11 May 2017
Neil Wilson, senior market analyst at ETX Capital said: “Sterling cratered below the $1.29 level after we got none of the hawkishness from the Bank of England that pound bulls had been pinning their hopes on.”
He added: “The Bank seems to think there will be a bit extra inflation this year and a bit less growth as price growth crimps consumer spending.
“Those soggy Q1 numbers clearly made an impact on policymakers. Today’s weak trade balance and industrial numbers also indicate that the UK economy is beginning to falter.”
Dollar earners benefited, however, with luxury goods firm Burberry PLC (LON:BRBY) a big FTSE 100 gainer, adding 1.8% at 1,654p, while drugmaker AstraZeneca PLC (LON:AZN) added 0.8% at 4,751p, and drinks firm Diageo plc (LON:DGE) took on 0.7% at 2,295p.
But among the fallers, British Gas-owner Centrica PLC (LON:CNA) continued to be impacted by a JPMorgan downgrade today and worries over post-election energy price capping, losing 5.8% at 191.4p.
And disappointing annual results weighed on telecoms firm BT Group (LON:BT.), down 3% at 302.3p.
1.45pm: US stocks seen lower after data
The FTSE 100 stayed flat to lower as well on expectations for opening falls on Wall Street after US data today heightened expectations for another Federal Reserve rate hike next month.
Around 1.45pm, the UK blue chip index was down just 2 points at 7,383, holding off the session low of 7,373 but below the day’s peak of 7,396.
In New York, after a 0.2% decline yesterday, the Dow Jones is seen starting with a similar-sized fall today after the pointers.
US producer prices rose by an above-expectation 0.5% in April, which pushed the annual increase up to the largest gain in five years.
Meanwhile, US initial claims slipped by 2,000 to a seasonally adjusted 236,000 for the week ended May 6, with the number of people now receiving jobless benefits at the lowest level in 28 years.
1.15pm: FTSE 100 drifts lower on lack of clarity from BoE
The Footsie drifted back from modest highs to trade lower again by early afternoon after today’s mixed pronouncements from the Bank of England provided no real direction.
Around 1.15pm, the UK blue chip index was about 4 points lower at 7,381, falling back from the session peak of 7,396 but holding off the day’s low at 7,373.
Nicholas Hyett, equity analyst, Hargreaves Lansdown, commented: “Disappointing industrial production data, lower Bank of England growth forecasts and the prospect of normalising interest rates are all weighing on the stock market.”
“However, the accompanying weakness in sterling is supporting the FTSE 100’s international earners, with precious metal miners putting in particularly strong performances.”
On currency markets, the pound dropped 0.6% versus the US dollar to US$1.2854 and lost 0.4% against the euro at €1.1852 having extended earlier falls after the BoE monetary policy committee meeting minutes.
No fireworks from BOE, market is still short on GBP – Rabobank https://t.co/pPZonmAknz pic.twitter.com/MsoTtPlRhG
— Tip TV Finance (@OfficialTipTV) 11 May 2017
Dennis de Jong, managing director at UFX.com, said: “It comes as no surprise that the Bank of England’s monetary committee has decided to hold interest rates for the time being at today’s meeting.
“With Brexit negotiations ongoing and a general election on the horizon, the bank has remained on the side of caution to ensure stability during an uncertain period.”
“However,” he added, “the report from this morning’s meeting also indicates that the Bank of England sees inflation rates rising in the coming months. There could be a leniency towards a future hike in interest rates in order to strengthen sterling and help moderate inflation in the future.”
12.30pm: Footsie finds modest gains after BoE news
The FTSE 100 index edged higher in lunchtime trading as traders digested the latest mixed pronouncements from the Bank of England after its latest policy meeting.
Around 12.30pm, the UK blue chip index was about 6 points higher at 7,390, near the session peak of 7,396.
The Bank of England said there was a majority vote to keep UK interest rates on hold at a record low of 0.25% again this month, with the only member of the Monetary Policy Committee to vote for an increase in rates once again the external member Kristin Forbes.
However, the minutes of the MPC meeting showed that "some members" still thought that it would take "relatively little further upside news" on the inflation outlook for them to support a monetary tightening.
The Bank also said that policy could be tightened "by a somewhat greater extent" than markets have recently been expecting.
BoE to normalise interest rates contingent on ‘smooth’ Brexit https://t.co/qpoQMD1Bk2
— Financial Times (@FinancialTimes) 11 May 2017
Meanwhile, in its latest quarterly inflation report, the BoE revised down its 2017 GDP growth estimate slightly to 1.9%, from 2.0% previously.
However, for 2018 the forecast was raised fractionally to 1.7% and there was also a modest upward adjustment for 2019.
On currency markets, sterling slightly extended earlier falls after the BoE news, losing 0.4% versus both the US dollar and euro at US$1.2887 and €1.1858 respectively.
11.30am: Industrial production weak
Although recent UK data has looked resillient despite the Brexit uncertainties, industrial production numbers today have disappointed, throwing an interesting spanner into the works for the Bank of England Monetary Policy Committee Meeting today.
Details of March #UK #industrial #production worrying: weakness due to core #manufacturing (not volatile pharma) & energy; Q1 revised down pic.twitter.com/6buoj8uFPi
— marksastley (@astleyeconomics) 11 May 2017
11.15am: Odds shortening on UK rate hike this year
Ahead of the Bank of England’s latest monetary policy decision today, online bookmaker Betway is offering odds of 3/1 that UK interest rates will be put up by the end of the year.
Betway’s Alan Alger, said: “Despite growing inflationary pressures and the economy’s relative resilience since last June’s Brexit vote, the UK remains on choppy waters as it negotiates its way out of the European Union.
“We don’t think Mark Carney will be quick to pull the trigger on interest rates and are as sure as 1/5 for the current 0.25% to remain unchanged for the rest of 2017. Optimists can take 3/1 on the BoE tightening monetary policy by the end of the year.”
Ahead of the midday rate decision, the UK blue chip index was fairly flat again, just 1 point higher at 7,386.
Bank of England's Carney likely to stress virtue of patience - from Reuters https://t.co/EoKRW14JJl
— Hargreaves Lansdown (@HLInvest) 11 May 2017
10.45am: FTSE 100 cautious ahead of Bank of England
The Footsie remained flat in mid-morning trading as traders digested a batch of UK data and awaited the latest policy announcement and quarterly inflation report from the Bank of England.
Around 10.30am, the UK blue chip index was 7 points lower at 7,378, stuck in a tight trading from a high of 7,373 to a low of 7,389.
On currency markets, the pound was also flat to lower, losing 0.1% against the US dollar at US$1.2914 and down 0.2% versus the euro at €1.1875 ahead of the midday pronouncements of BoE boss Mark Carney and its Monetary Policy Committee.
Chris Beauchamp, chief market analyst at IG, said: “All eyes will be on whether Mark Carney and team will echo the Fed and argue that the weakness seen in Q1 is transitory.
“It is hard to imagine a particularly sunny update, given recent GDP weakness, but it is hard to escape the conclusion that the economy is in a much better state, nearly a year after the Brexit vote, than many would have suspected 12 months ago.”
However, today’s UK data was more cautious, with industrial output shrinking for a third month in a row in March, while Britain's trade deficit widened by more than expected.
Among equities, British gas-owner Centrica PLC (LON:CNA) a top blue chip faller, dropping nearly 6% to 191.7p as broker JPMorgan Cazenove double-downgraded its rating to ‘underweight’ from ‘overweight’ on worries over regulatory controls and possible energy price wars.
Elsewhere, Hikma Pharmaceuticals PLC (LON:HIK) was the worst FTSE 100 performer, dropping after the group said it believes it is unlikely that its generic version of GlaxoSmithKline plc's )LON:GSK) Advair Diskus will be approved this year.
FTSE 250-listed Vectura Group PLC (LON:VEC), Hikma's partner in the programme, also noted the response letter and said it does not expect to receive an approval milestone or sales royalties for the generic this year.
Vectura's shares topped the FTSE 250 fallers board, off 9% to 131.4p.
South Africa-based paper and packaging maker Mondi Plc (LON:MNDI) was also a big FTSE 100 faller, losing 3% to 1,972p after results showing strong sales volume growth more than offset by a significantly lower forestry fair value gain, inflationary cost pressures and lower average selling prices.
But limiting the FTSE 100’s early falls were gains by heavyweight miners and oil majors as commodity prices rallied today, with Chilean copper miner Antofagasta PLC (LON:ANTO) the top blue chip gainer, up 4% at 790.5p, and Mexican precious metals miner Fresnillo PLC (LON:FRES) adding 3.9% at 1,487p.
8.35am: Subdued start for Footsie
London’s FTSE 100 was steady in Thursday’s early deals, changing hands at an unchanged level of 7,384.
BT Group plc (LON:BT.A) confirming that chief executive Gavin Patterson and outgoing finance director Tony Chanmugam won’t receive annual bonuses was the highlight blue-chip news of the morning.
The telecoms group also revealed that 2016 profits fell due to costs associated with an accounting scandal at the telecoms company’s Italian operations.
Chanmugam and Patterson have previously indicated they would forfeit their bonus should one have been recommended by the committee after accounting irregularities in the Italian business wiped £7bn from the telecoms giant’s market capitalisation in one day.
In March BT was also forced to pay a £42mln fine and £300mln in compensation to corporate customers after regulator Ofcom found that the company’s infrastructure arm Openreach let down rivals such as Sky and TalkTalk with delays in installing high-speed phone and internet lines in 2013 and 2014.
BT shares were down around 1.7% in early deal, trading at 307.5p.
UK Banks Barclays Plc (LON:BARC) and Lloyds Banking Group Plc (LON:LLOY) were, meanwhile, on the back foot with the latter the next up in AGM season - with its meeting later today.
7.00am: FTSE 100 set to start Thursday lower, eyes on UK banks
London’s FTSE 100 is set to open Thursday’s trading in negative territory without much of a steer from global equity indices.
It was a mixed session in New York. The Dow Jones ended Wednesday’s trading down 32 points, 0.16%, at 20,943. Meanwhile, the S&P 500 finished slightly higher, up 0.11%, at 2,399 and the Nasdaq Composite closed up 0.14% at 6,129.
In Asia, Japan’s Nikkei was trading up, rising 0.35% to 19,970 while Hong Kong’s Hang Seng climbed 0.35% to 25,103. The Shanghai Composite dropped 0.74% to 3,031.
Australia’s ASX 200 was more or less unmoved at 5,875.
Here in London, the attentions are again on the banks
Specifically, the Bank of England later today is due to give its outlook on the economy. Coming ahead of next month’s general election it could deliver key economic talking points, particularly when it comes to the impacts being felt due to the ongoing Brexit process.
One expert reckons the central bank ought to take a neutral stance.
“Earlier this year the Bank of England upgraded its growth forecast for 2017 to 2%, and in the process brought it almost back to where it was just prior to last year’s June Brexit vote,” said Michael Hewson, analyst at CMC Markets.
“For that reason alone UK policymakers would do well to leave well alone when they update the markets on the outlook for the UK economy later today, given that in the last two years GDP in Q1 has started on a weak note only to pick up later in the year.
“As it is the Bank’s forecasting ability has taking an absolute hammering in the last 12 months, having been too pessimistic in the lead-up to, and in the aftermath of last year’s vote.
“The one thing they have got correct is the fact that prices would go up, as the effects of a weaker pound exacerbated an effect which was already starting to push prices up across the world as commodity prices rebounded.”
Meanwhile, eyes will also be on Lloyds Banking Group which holds its AGM later today amid rising speculation there may be change at the top.
Speculation that Lloyds chief executive, Antonio Horta-Osorio, is set to resign is rife ahead of the bank’s meeting. The lender is said to be drawing up contingency plans amid rumours that Osorio may seek another job after the government completes its sale of Lloyds’ shares.
The government, which bailed out Lloyds during the 2008 financial crisis, is expected to offload its remaining 0.89% stake as soon as this week.
Finance Director George Culmer will reportedly step in temporarily if Horta-Osorio decides to step down. Horta-Osorio has been suggested as a possible replacement for HSBC’s outgoing chief executive Stuart Gulliver, who departs next year, The Times reported.
In terms of the broader market, IG Markets sees London’s FTSE 100 lower, calling the blue-chip benchmark around 14 points lower about an hour ahead of the open, at 7,373 to 7,377.
Headlines
Barclays chief apologises to shareholders over whistleblowing incident - The Guardian
Snap investors yet to see a long-term picture - Financial Times
Boeing halts test flight of new plane - BBC News
'Stagnant' buyer demand puts the brakes on UK housing market - The Guardian
Noel Edmonds seeks £73m compensation in HBOS fraud - Telegraph.co.uk
Tesla's 'invisible' solar tiles will go on sale TODAY - Daily Mail
Thursday’s City diary
Interim Results: On The Beach Group Plc (LON:OTB), Arrow Global Group (LON:ARW), Magnitogorsk Iron & Steel Works (LON:42CL)
Final Result: Porta Communications PLC (LON:PTCM)
AGM / EGM: Royal Bank of Scotland Group PLC (LON:RBS), Starwood European Real Est Fin Ltd (LON:SWEF), TechFinancials Inc (LON:TECH), Phoenix Group Holdings (LON:PHNX), Plant Health Care PLC (LON:PHC), Keller Group PLC (LON:KLR), Lloyds Banking Group PLC ORD (LON:LLOY), Hill & Smith Holdings PLC (LON:HILS)
Trading Statement: Mondi Plc (LON:MNDI), SuperGroup PLC (LON:SGP), Vedanta Resources PLC (LON:VED), Galliford Try plc (LON:GFRD), Derwent London (LON:DLN), BT Group PLC (LON:BT.A), Coca-Cola HBC (LON:CCH), Amec Foster Wheeler PLC (LON:AMFW)