FTSE 100 closes at 7,523 - another record high
Sterling weak despite April inflation jump
Vodafone biggest gainer
The UK's leading share index flew to another record close on Tuesday as the market shrugged off the fact that UK iinflation is at its highest level since September 2013.
FTSE 100 had earlier breached the 7,500 mark and closed out at 7,523 - almost 69 points up on the day. It has risen for the last nine consecutive days.
Laith Khalaf, senior analyst at Hargreaves Lansdown, said it was a "red letter day" for investors who continue to see the value of their pensions and ISAs rise.
"An improving global economy, a weaker pound and higher commodity prices are behind the surge in share prices," he suggested.
"In the short term the market can of course move in either direction but investors will be thinking that the 8,000 mark is hovering into view.”
Top of the pile was Vodafone (LON:VOD), which dialled 3.96% higher, at 218.45p following today’s full-year results which saw a wider loss but pointed to growth in the current year.
On the losing front, Hargreaves Lansdown PLC (LON:HL.) plunged 8.5% to 1.324p on price war worries, and also flyinbg lower was budget airline easyjet PLC (LON:EZJ, which shed 7.25% to 1,215p after reporting a record first-half loss, hit by the falling value of the pound.
3.15pm: FTSE 100 consolidating above 7,500
The Footsie held near a fresh record high above the 7,500 level for the first-time ever in late afternoon trading supported by a weaker pound and firmer oil prices, and by a modestly firmer start on Wall Street.
Around 3pm, the FTSE 100 index was around 72 points higher at 7,526, slightly below the new all-time peak of 7,533.70 and set for another closing peak – the third in a row.
US stocks were more modestly higher in early trading, with the Dow Jones adding 30 points to 21,011, while the broader S&P 500 index extended yesterday’s record closing levels by just 0.5 points, as oil prices continued to rally on fresh OPEC production cut hopes.
On currency markets, sterling stayed volatile, just ticking higher versus the US dollar at US$1.2902, but losing almost 0.8% against the euro to €1.1653, after a largely expected jump in the April UK consumer prices index.
As pound trades near US$1.30 vs Jan dip below US$1.20: #UK firms use #pound strength to #hedge #forex risk https://t.co/ngCsZ6DVUN via @FT
— Howard Archer (@HowardArcherUK) 16 May 2017
Chris Saint, senior analyst, at Hargreaves Lansdown’s HL Currency Service, said: “Annual inflation in the UK accelerated to 2.7% in April, its highest level since September 2013 and slightly ahead of market expectations for a rise to 2.6%.
“The uplift partly reflects a seasonal rise in airfares associated with the later timing of Easter, along with the impact of sterling’s post-referendum weakness which continues to filter into higher consumer prices via rising import costs.”
He added; “The pound’s fall in response to today’s data suggests markets still don’t see this as adding too much pressure on the Bank of England to lift interest rates anytime soon though, with policymakers likely to remain mindful that consumer spending growth could slow abruptly as wage gains fail to keep up with inflation.
“Tomorrow’s employment market report and Thursday’s retail sales data therefore take on added significance.”
Among the UK blue chips, mobile phones giant Vodafone PLC (LON:VOD) remained the top FTSE 100 gainer, ahead 4.4% at 220.45p following today’s full-year results which saw a wider loss but pointed to growth in the current year.
But budget airline easyjet PLC (LON:EZJ continued to top the blue chip fallers, flying over 6% lower to 1,230p after reporting a record first-half loss.
READ: easyJet posts record first-half loss
Investment platform group Hargreaves Lansdown PLC (LON:HL.) was also a big FTSE 100 casualty, shedding 6% as well at 1,358p on price war worries.
US asset manager Vanguard Group announced yesterday that it is set to launch an online service to sell its funds directly to UK investors.
Vanguard said the new website will offer its funds more cheaply than competing broker, with an annual administration charge of 0.15%, while Hargreaves Lansdown charges 0.45% of invested wealth for a tax-efficient ISA account, on top of fees charged to investors by fund managers.
Away from the blue chips, walkie-takie maker Sepura PLC (LON:SEPU) jumped 17.5% higher to 18.5p as another obstacle to its agreed £74mln takeover by Hytera Communications was removed.
Following further discussions with the German authorities, the parties said they have concluded that the ‘national security’ notification from the Federal Ministry of Economic Affairs and Energy, announced on May 5, will not have implications for the timing of completion of the acquisition.
With the UK government happy to wave the acquisition through, the takeover will now proceed as planned and should complete on the close of business on 24 May.
But on the downside, Hardide Plc dropped 11% to 1.5p after surface coatings maker reported a pre-tax loss of £684,000 for the half year to the end of March, up from a loss of £624,000 reported the year before, although revenue rose to £1.5mln, up from £949,000.
2.00pm: Footsie extends record highs
The FTSE 100 index had parked itself above the 7,500 level for the first-time ever in early afternoon trading, just below the day’s new all-time peak as a weaker pound and firmer oil prices provided a boost.
Approaching 2.00pm, the benchmark index was around 60 points higher at 7,514, just below a new record level of 7,515.02.
US stock futures were indicated modestly higher after the broader S&P 500 index closed at record levels yesterday, as oil prices continued to rally on fresh OPEC production cut hopes.
On currency markets, the pound remaining volatile, turning flat versus the US dollar at US$1.2895 and losing nearly 1% against the euro to €1.1636.after a largely expected jump in the April UK consumer prices index to 2.7%.
Craig Erlam, senior market analyst at Oanda, said: “This morning’s UK CPI data caused quite a stir for the pound, with the spike in headline and core inflation in April initially sending the currency higher before almost immediately spiralling lower.
“As always, there’s a number of things to consider here, which would explain such a strong reaction.”
He added: “The above expectation spike in inflation is typically bullish for the currency, especially when the rate is already above the central bank’s target.
“Add to this the sheer size of the jump and the BoEs acknowledgement last week that ‘some MPC members would need relatively little upside news on growth or inflation to consider voting for tighter policy’ and the initial spike will perhaps seem justified.”
12.00pm: House prices faltering
As UK consumer price inflation jumped in April, the latest official house price data showed a 0.6% decline month-on-month in March meaning the average UK home cost £215,848.
The Office for National Statistics data showed the typical UK property value has remained relatively static for 10 months.
In the year to the end of March, house prices were up 4.1% on average across the UK.
UK house prices in first quarterly fall since 2012 https://t.co/T1IOke6DKc
— BBC News (UK) (@BBCNews) 8 May 2017
Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said: "It is now abundantly clear that the housing market is in its softest patch for several years."
He added: "Across the rest of the UK, house price growth looks set to remain dampened by sluggish growth in wages and the loan-to-income limits imposed on lenders."
Shares in UK housebuilders were pretty mixed despite the data, with FTSE 100-listed Taylor Wimpey PLC (LONLTW.) losing 0.1% at 196.5p but its blue chip peer Barratt Development PLC (LON:BDEV) adding 0.3% at 610p.
On the second line, Countryside Properties PLC (LON:CSP) was also a gainer, adding 4.5% at 290.3p, boosted as German broker Berenberg started coverage on the housebuilder and regeneration company with a ‘buy’ rating and 330p price target.
But Crest Nicholson Holdings PLC (LON:CRST) saw its shares shed 3.4% at 615p after the housebuilder said its completions in the first half dropped to 1,064 from 1,206 at the same time a year ago.
The group said this was due to a lower first half weighting from the timing of completions for the private rented sector..
But Crest also said it is on track to deliver 10% full year revenue growth after achieving an increase in average selling prices of 12% to £418,000 as the company invested in “high quality locations”.
By midday, the FTSE 100 index was up around 40 points at 7,494, just easing back from another new all-time high of 7,505.46, the first time ever the UK blue chip index has breached the 7,500 level.
11.00am: Highs extended as pound falls despite inflation boost
The FTSE 100 index rocketed to a new all-time peak just short of the 7,500 level in late morning trade as sterling retreated from earlier highs after a jump in UK Inflation data had a muted reaction.
Around 11am, the UK blue chip index was about 42 points higher at 7,496, just off the new record level of 7,497.39, having also reached all-time and closing peaks yesterday.
On currency markets, sterling fell back from earlier gains versus the US dollar after the largely expected rise in the April consumer prices index to 2.7%, losing 0.1% at US$1.2883. The pound also extended its falls against the euro to €1.1665.
Chris Beauchamp, chief market analyst at IG, said: “Given the dizzying ascent in sterling since the election was announced it seems a lot of the negative positioning around the UK currency has been cleared out for now.
“The headline number will grab plenty of attention, but what is particularly interesting is the robust core figure.
“It looks like the Bank of England has a tough job ahead of it, balancing the need for higher rates with an awareness of bumpy road ahead for the UK economy.”
UK water blue chips Severn Trent PLC (LON:SVT) and United Utilities PLC (LON:UU) featured among the biggest FTSE 100 fallers today after Deutsche Bank downgraded its ratings for both in a sector review today.
UU shares dropped 1.5% to 1,011p and Severn Trent lost 1.3% at 2,398p as the German bank cut its stance on both to ‘hold’ from ‘buy’ and reduced target prices.
In a note to clients, Deutsche’s analysts said: “The UK water stocks have built on almost a decade long bull run with further rises in share prices this year.
“Based on current returns the three UK waters still look attractive. However, we believe that cuts at the 2019 price review will come into focus by the end of the year.”
They added: “Our analysis suggests that Severn Trent & United Utilities now look fair value and we downgrade to Hold.”
Among the small caps, Greatland Gold plc (LON:GGP) jumped 14% to 0.37p after it signed a deal with US giant Newmont Mining Corp (NYSE:NEM), which it said could “accelerate the realisation of the potential value” of the Ernest Giles Project in Western Australia.
WATCH: 'A great day for Greatland Gold', says CEO
And Silence Therapeutics PLC (LON:SLN) rose 4.4% to 89.75p after the firm revealed that it has filed for more patent protection for its RNA therapeutics/gene silencing technology and intends to seek payment for a number of drugs already in late-stage development.
WATCH: Silence Therapeutics 'honour-bound' to attack and defend their patents, says CEO
Ali Mortazavi, Silence's chief executive, said “We believe that several third party late-stage clinical RNAi candidates, including lipid nanoparticle and GalNAc based products, require licences under our patent portfolio.”
9.45am: Inflation jump fails to curb FTSE 100
The Footsie just held below a new record high hit in early trading today failing to be impacted by data showing UK Inflation rose last month to its highest level since September 2013 pushed up by higher Easter air fares,
Around 9.45am, the FTSE 100 index was up 23 points at 7,477, just below the all-time peak of 7,480.85 hit soon after the open which extended yesterday’s peak by over 12 points.
On currency markets, the pound remained mixed but came off earlier highs against the US dollar after the inflation data, up 0.2% at US$1.2924. But sterling stayed weaker against the euro at €1.1700.
UK Inflation overshoots to 2.7% and sends Sterling lower.
— James Hughes (@James_HughesUK) 16 May 2017
The headline UK consumer price index increased at an annualised rate of 2.7% in April, up from 2.3% in March, according to the Office for National Statistics, and slightly higher than the consensus forecast of around 2.6%.
Chris Williamson, chief business economist at IHS Markit said: “The timing of Easter looks to have played an important role in pushing inflation higher in year-on-year terms, pushing air fares up in particular.”
He added: “Inflation may therefore dip again in May as the effect of higher Easter holiday prices drops out, but sterling’s depreciation since the referendum last June is also clearly a significant factor, lifting prices for imports and likely to pile further upward pressure on consumer prices in coming months.”
9.00am: Footsie reaches another peak
The FTSE 100 index pushed up to a fresh all-time high in early trade this morning, bolstered again by gains from commodity stocks, and shrugging aside any caution ahead of the latest UK inflation numbers, due at 9.30am.
After an hour of trading, the UK blue chip index was up 22 points at 7,477, just easing back from the new record level of 7,480.85 which extended yesterday’s peak by over 12 points.
Connor Campbell, financial analyst at Spreadex said: “The FTSE won’t have an easily ride this morning, however, as it deals with the latest, likely soaring, piece of inflation data.
“Analysts are expecting the CPI number to jump from 2.3% to 2.6% month-on-month, a reading that would be the highest in more than 3 and a half years.“
He added: “In theory this would inject a bit of life into the pound – which is currently up 0.3% against the dollar but down 0.1% against the euro – and could, potentially, cause the UK index to fall from its current peak.
“It will be a test of the FTSE’s resilience to see how it copes with this challenge, and may help indicate the longevity of these highs going forwards.“
Strength in oil majors provided the backbone for the FTSE 100’s record rise helped by an ongoing rally by crude prices amid hope for possible further production cuts by the Opec cartel.
With Brent crude pushing up towards US$52 a barrel, Royal Dutch Shell PLC (LON:RDSB) B shares were up 0.5% at 2,216, while BP PLC (LON:BP.) gained 0.1% at 464.9p, and FTSE 250-listed explorer Tullow Oil (LON:TLW) added 1.4% at 204p.
Mobile phones giant Vodafone PLC (LON:VOD) was the biggest blue chip gainer, jumping 3.7% higher to 218.95p as the group turned around to a big headline full-year profit, after a loss in the previous year due to India troubles, despite a fall in revenues.
But discount airline operator easyJet PLC (LON:EZJ) was at the opposite end of the FTSE 100 board, dropping 5.5% to 1,238p as it saw its first-half loss widened despite carrying a record number of passengers, impacted by a late Easter and a weak pound.
Among the small caps, Tharisa PLC (LON:THS) was a good gainer, up 5.8% to 118p as it reported more than doubled revenues to US$175mln in the half year to March 31, while underlying earnings (EBITDA) rose by more than 451% to US$81mln.
And India and Finland focused junior miner Lionsgold Limited (LON:LION) took on 4.3% at 1.23p as it told investors that IndexGold, the company’s financial technology app, has now been released.
Proactive news headlines…
Shares in Greatland Gold PLC (LON:GGP) shot up 12% after it signed a deal with giant Newmont Mining Corp (NYSE:NEM), which it said could “accelerate the realisation of the potential value” of the Ernest Giles Project in Western Australia. The New York-listed group has been granted exclusive access to the tenements and exploration database for six months and has the right of first refusal should the Greatland opt to sell or joint venture the asset in that period.
Portfolio analytics software developer StatPro Group PLC (LON:SOG) has handed over the first wodge of cash relating to its purchase of UBS Delta. An initial payment of €8.7mln has been made; in total, the company will pay around €13mln over three years.
An improvement in US sales of its PIFA Heparin PF/4 rapid assay products leaves Akers Biosciences Inc (NASDAQ:AKER LON:AKR) poised for growth in 2017. Domestic US sales of PIFA Heparin PF/4 rapid assay products were up 2.3% quarter-on-quarter at US$560,921. BP was March 2017.
Life sciences group OptiBiotix Health plc (LON:OPTI) has told investors that its health supplements were a massive hit when they were launched at the Vitafoods Europe tradeshow in Geneva last week. Opti said it has already received draft contracts from several companies at the fair which are interested in selling its CholBiome, CardioBiome and SlimBiome products.
India and Finland focussed junior miner Lionsgold Limited (LON:LION) has told investors that IndexGold, the company’s financial technology app, has now been released. IndexGold is an online platform that allows investors to take direct ownership of physical gold and silver. Parry highlighted that the launch of the app gives the group a revenue generating fintech gold division.
Oilfield drilling equipment renter Plexus Holdings PLC (LON:POS) is still being affected by new wells being postponed due to the weak oil price. Trading remains challenging with discussions over contracts taking longer than expected to conclude it said, though Plexus still anticipates order under negotiation will come through next year, to June 2018.
Union Jack Oil PLC (LON:UJO) executive chairman David Bramhill, in its financial results statement, described 2016 as “one of solid progress”. The onshore UK oil company noted operational highlights such as the competent persons report which estimated 14.8mln barrels of oil equivalent at UJO’s (now) 15% owned Wressle field.
Silence Therapeutics PLC (LON:SLN) has filed for more patent protection for its RNA therapeutics/gene silencing technology and intends to seek payment for a number of drugs already in late-stage development.
“We believe this patented technology is relevant to third party medicines in ongoing clinical trials for conditions including, but not exclusively limited to, Hypercholesterolemia, TTR-mediated Amyloidosis, Haemophilia and Acute Hepatic Porphyrias.”
Tharisa PLC (LON:THS) more than doubled revenues to US$175 mln in the half year to March 31st 2017, while earnings before interest, tax, depreciation and amortization rose by more than 451% to US$81 mln. The strong performance came as the company mined nearly 4% more ore from its chrome and platinum mines in South Africa, and boosted recoveries significantly such that platinum group metals concentrate produce rose by 15.2% and chrome concentrate by 5.4%.
7.00am: Steady start predicted
London was set to consolidate in early trading after good gains for resources stocks drove it to a new record high yesterday.
Financial spread bet firms see little change for FTSE 100 in early dealings from its close of 7,454 even though Wall Street also finished strongly ahead with new records as well for the S&P 500 and Nasdaq.
Better oil prices on hopes of a new accord between Saudi Arabia and Russia to limit production helped some of the energy majors, while fears of major contagion from the cyber attack over the weekend dissipated.
Tech stocks were among the strong risers in the US even so. The Dow Jones Industrial Average added 85 to 20,981.
Asian markets were more subdued with the news of another North Korean missile launch dampening investors’ enthusiasm.
Tokyo edged higher, but there were small losses in Hong Kong and Shanghai.
Newspaper headlines
TV star Noel Edmonds has accused Lloyds Banking Group PLC (LON:LLOY) of “foot dragging” over £73mln in compensation he is seeking in the HBOS Reading fraud for which six people were jailed in February, The Guardian reports. He has written to Lloyds chairman, Lord Blackwell, to criticise the lack of urgency in making payments to the victims of the fraud.
Energy investors are underwhelmed by the UK renewable energy market due to a lack in policy direction for the industry, The Telegraph writes. The EY latest attractiveness index has ranked the UK market in the top 10 countries globally for new investment. However, the advisory firm said the move up from 14th place last year follows major blows in other countries, rather than progress in the UK.
The Pensions Regulator is set to crack down on companies that pay dividends to shareholders before plugging their pension deficits, according to The Times. The watchdog warned in its annual funding statement that pension fund trustee should hold firms to account.
Labour leader Jeremy Corbyn will today official unveil his general election manifesto after a draft was leaked last week, City AM reports. The manifesto will propose another tax hit for the City, with a levy to be paid by firms that offer employees larger remuneration packages.
A report by insurance company Aviva has revealed millions of people in the UK have gone to work when they were ill instead of taking the day off, The Independent writes. Seven out of 10 employees in private firms – the equivalent of 18 million nationally – have at some point come into the office despite being unwell, driven by heavy workloads and employers promoting a culture of face-time.
Commodites/currencies
Gold: US$1,235oz up US$5
Oil (WTI): US$49.10 up US$0.25
£/$: US$1.2917 - pound strengthens