FTSE 100 closes at 7,503 - down 18
Dow Jones plunges on political worries
British Land leads property developers lower
5pm: FTSE 100 closes around 18 lower
FTSE 100 closed down over 18 points but still above 7,500 as the Dow Jones tumbled over 250 points across the Pond as fears over Trump's presidency weighed.
The UK bluechip benchmark finished at 7,503, down 18.56, while the FTSE 250 was also lower - down 102 points at 19,773.
The Dow Jones Industrial Index in New York is down 250 at the time of writing.
Jasper Lawler, at London Capital Group, said: "Calls for President Trump to be impeached are growing louder and that has created a long overdue sense of fear in markets.
"The so-called fear gauge, the VIX index spiked 10%, the Dow Jones tanked triple digits when it opened and haven demand for US treasuries spiked. Particularly with political risk in Europe seemingly in the rear-view mirror, financial markets are starting to react to the volatile situation in Washington."
Miners were among the big gainers on Footsie, with Fresnillo plc (LON:FRES) top dog, up 2.75% to 1,606p as the gold price rallied. On the losing front, Ashtead Group (LON:AHT) was the biggest laggard, shedding 3.82% to stand at 1,560p.
3.05pm: Big US falls drag FTSE 100 lower
An opening slide on Wall Street pulled the FTSE 100 index back below the 7,500 level in late afternoon trading as worries over White House scandals unnerved traders.
At 3.05pm, the UK blue chip index was down 25 points at 7,495, just off the session low of 7,489, having earlier managed to hold above the 7,500 barrier which was broached for the first-time ever on Tuesday.
The retreat came as the Dow Jones in New York plunged by over 225 points to 20,755 inside the first half hour of trading, while the broader S&P 500 index dropped 24 points and the tech-laden Nasdaq composite shed 73 points.
Mike van Dulken, Head of Research at Accendo Markets, said: “Equity indices are on the back foot again as investors digest the latest real-life episode of House of Cards.
“Claims that President Trump tried to strong-arm ex-FBI director Comey into dropping an investigation merely add fuel to the existing fires of political uncertainty, apparent White House incoherence slowly sapping faith in stimulus policies getting even partisan approval.”
Today on the floor of the Congress of the United States of America, I will call for the Impeachment of the President between 9am & 10am CST.
— Congressman Al Green (@RepAlGreen) 17 May 2017
On currency markets, the political worries continued to weigh on the dollar, helping the pound gain 0.3% versus the greenback to US$1.2953.
But sterling slipped back from an earlier rally against the euro, losing 0.1% at €1.1641, after further mixed UK data, with the unemployment rate falling to its lowest level in 42 years, while wage growth continued to lag inflation.
Miners featured among the FTSE 100 fallers, reversing some recent gains as a commodity price rally ran out steam, with Glencore PLC (LON:GLEN) losing 2.3% at 289.9p, and Anglo American PLC (LON:AAL) down 1.6% at 1,072p.
Rio Tinto PLC (LON:RIO) was also lower, off 0.3% to 3,091p, even though Canadian broker RBC Capital Markets upgraded its rating for the stock to 'top pick' from 'outperform'.
But precious metals miner Fresnillo PLC (LON:FRES) was the top FTSE 100 gainer, adding 2.6% at 1,604p as gold prices rallied on safe-haven demand amid worries about US president Donald Trump’s administration.
Away from the blue chips, All Bar One and Toby Carvery owner Mitchells & Butlers PLC (LON:MAB) was the biggest FTSE 250 faller, dropping 5.8% to 259.1p after its first half profits were dented by an increase in the minimum wage and a weaker post-Brexit pound.
READ: Mitchells & Butlers’ first half profits drop on rising inflation
The pub and restaurant owner reported pre-tax profit in the 28 weeks ended 8 April of £75mln, down from £83mln the same period a year earlier.
And a trio of small cap oilers, Ophir Energy Plc (LON:OPHR), Soco International PLC (LON:SIA), and Premier Oil PLC (LON:PMO) were all lower mid-afternoon as Jefferies International downgraded ratings for all three in a note in which the US broker also lowered its Brent Crude Oil price forecasts.
Jefferies reduced its rating for Ophir to 'underperform' from ‘hold', and cut both Soco and Premier to ‘hold’ from 'buy'.
Ophir shares shed 3.4% at 85.25p, Soco lost 1.6% at 135.75p, and Premier was down 1.7% at 59.5p.
1.15pm: FTSE 100 falls back on expectations for US drop
The Footsie dropped back in early afternoon trading, albeit still holding above the 7,500 level breached yesterday, but unsettled by expectations for big opening falls on Wall Street amid fresh US political uncertainties.
Around 1.15pm, the FTSE 100 index was 11.5 points lower at 7,510, still consolidating the fresh all-time highs hit for the second day in succession on Tuesday.
US stock index futures pointed to bigger early falls on Wednesday, with the Dow Jones seen down around 80 points as the fall-out from US President Donald Trump’s sacking of FBI director James Comey last week was enhanced.
Should be an interesting US session: overnight trading has brought S&P500 down to the May lows, 2380/82: pic.twitter.com/MoQjBjhp4T
— David Jones (@JonesTheMarkets) 17 May 2017
A New York Times report said that Trump had asked Comey in February to stop his investigation into the president’s former National Security Adviser Michael Flynn.
Connor Campbell, financial analyst at Spreadex, said: “Given that the ‘Trump trade’ is one of the main reasons the market has been able to break records of late, it is understandable that the scandal engulfing the US government would be of some concern to investors.”
WATCH: Trump to be impeached?- Tip TV
On currency markets, the political worries weighed on the dollar, helping push sterling 0.4% higher versus the greenback to US$1.2967.
The pound was also 0.1% higher against the euro to €1.1665, recovering after falls yesterday which followed mixed UK inflation figures.
Today’s data was also mixed, with the UK unemployment rate falling to 4.6%, its lowest level in 42 years, while wage growth continued to lag inflation.
Among equities, real estate blue chips remained under pressure following cautious outlook comments today from British Land PLC (LON:BLND), down 3% to 653.5p.
Insurance giants Prudential PLC (LON:PRU) and Legal & General PLC (LON:LGEN), which are big investors in UK property, were also FTSE 100 fallers, losing 1.5% at 1,742.5p and 1.4% at 253.7p respectively.
But on the up with financials, Lloyds Banking Group PLC (LON:LLOY) rose over 2% to 71.78p after the UK government sold off its remaining stake in the lender following its bailout in the 2007-2009 global financial crisis.
Investment platform provider Hargreaves Lansdown PLC (LON:HL.) was also a FTSE 100 gainer, up 0.5% to 1,331p, recovering some of its losses made in the previous session when its shares dropped 8.5% after ETF provider Vanguard unveiled plans to sell directly to investors in Europe for the first time.
In a note to clients, Shore Capital analyst Paul McGinnis said: "The HL business model has proved itself to be incredibly resilient in the face of a couple of major headwinds in recent years.
"We would be a lot more nervous around the implications of the Vanguard platform for the fledgling robo-advice sector."
12.00pm: Buy-to-let malaise
Aside from worries in the office sector highlighted by British Land PLC (LON:BLND), the UK buy-to-let housing market also remains under pressure, with data today showing mortgage activity there has halved since the introduction of a stamp duty surcharge last year.
The Council of Mortgage Lenders figures showed that some 71,100 loans were advanced for house purchases by landlords in the year since the tax change, down from 142,100 loans in the previous 12 months.
Home buyers took out 156,000 loans in Q1, down 13% on Q4 2016 and 5% on Q1 last year. https://t.co/1HZyjvYI65 pic.twitter.com/vuAQQcpvh0
— CML press office (@cmlpressoffice) 17 May 2017
Since April 2016, anyone buying a buy-to-let property or a second home has had to pay a 3% stamp duty surcharge.
The impact has been particularly felt by London-focused estate agent Foxtons Group PLC (LON:FOXT) which saw its shares shed 3% to 102.75p after it reported a 25% drop in first quarter revenue as sales commissions almost halved.
READ: Foxtons sees revenue drop by 25% as sales commissions almost halve
The FTSE 250-listed firm pointed out: “This quarterly performance is set against the record sales volumes in the first quarter last year when a number of transactions were brought forward ahead of the stamp duty surcharge on buy-to-let investments and second homes.“
Overall, the FTSE 250 index was around 30 points lower around midday at 19.845, while the FTSE 100 index was up just 2 points at 7,524.
11am: FTSE 100 flat; real estate battered
The FTSE 100 index was barely moving in late morning trading, just down 0.5 points at 7,521, consolidating Wednesday's record-breaking performance.
Real estate firms featured among the biggest blue chip fallers in late morning trading after British Land PLC (LON:BLND) revealed it has reduced the amount of space it is developing, and its London office customers were taking longer to make decisions on moves.
Britain's second-largest listed property developer - which owns Sheffield's Meadowhall shopping centre and office developments at Paddington Central in London - said it expected uncertainty in the property market to persist for "some considerable" time as Britain negotiates its exit from the EU.
Our CEO Chris Grigg reviews our latest full year results #BLFY2017 pic.twitter.com/ruFjIY4yQd
— British Land PLC (@BritishLandPLC) 17 May 2017
The cautious comments came as British Land reported a 7.4% increase in full-year underlying profit to £390mln, but its EPRA net asset value - a key industry metric that reflects the value of a firm's buildings - slipped 0.4% to 915p per share.
Nicholas Hyett, equity analyst, Hargreaves Lansdown, said: “The headline numbers for 2016/17 are actually pretty good, valuations haven’t tumbled and rental income has remained robust, even improved. “
“However,” he added, “ British Land is clearly uncomfortable about the future. Speculative developments have been reined right back and leverage is falling as the group sells some high profile assets, including a 50% stake in the Cheesegrater.”
In reaction, British Land shares dropped 3% to 653.5p, while among its blue chip peers, Land Securities PLC (LON:LAND) lost 1.7% at 1,112p, Intu Properties PLC (LON:INTU) shed 1.4% at 269.6p, and Hammerson PLC (LON:HMSO) fell 0.9% to 583.5p.
Against this backdrop, a Deloitte survey published on Wednesday showed that 3.9mln square feet of office space was completed over the six months to March 31, marking the highest amount delivered in central London since 2004.
The survey, which showed that a further 28 new construction projects were started in the period, also said that the amount of empty office space in London has jumped over the past 15 months and was likely to rise further this year.
10am: Unemployment strong, earnings growth muted
The Footsie remained fairly flat approaching mid morning, consolidating yesterday’s record break above the 7,500 level, while the pound only rallied modestly following data showing a drop in UK unemployment, while average earnings growth remained muted.
Around 10am, the UK blue chip index was 2.5 points higher at 7,524, drifting after posting fresh all-time intra-day and closing highs for the second day in succession on Tuesday.
On currency markets, sterling pushed 0.2% higher versus the US dollar to US$1.2947 and also rose 0.2% against the euro to €1.1673, recovering after falls yesterday after mixed UK inflation figures.
Today’s data saw the UK unemployment rate fall to 4.6%, its lowest level in 42 years, although wage growth continues to lag inflation.
Extraordinary. The UK unemployment rate has dropped to 4.6% - the lowest rate since 1975. pic.twitter.com/eIZdMnmFoH
— Ed Conway (@EdConwaySky) 17 May 2017
The Office for National Statistics said the number of unemployed people fell by 53,000 to 1.54mln in the three months to March.
Meanwhile average weekly earnings excluding bonuses increased by 2.1% in the same period, while yesterday’s figures showed inflation hit 2.7% in April, up from 2.3% in March, its highest since September 2013.
Howard Archer, chief UK & European economist at IHS Markit, said: “The good news for consumers is that the jobs market is currently continuing to see healthy growth despite the economy’s slowdown; the bad news is that there is no sign of pay picking up so they are getting increasingly squeezed as inflation rises.”
He added: “The Bank of England will no doubt see the marked 122,000 rise in employment in the three months to March as supportive to their belief in the May Quarterly Inflation Report that the labour market will remain resilient and should eventually cause pay growth to firm
“However, we still remain sceptical that the labour market can sustain its current firmness as the economy stutters and uncertainties over the outlook are likely magnified by difficult Brexit negotiations with the EU come increasingly to the fore once the general election is done and dusted.”
8.45am: Head above 7,500
The FTSE 100 was lower early on but still kept its head above the 7,500 level following a mixed showing in the US and Asia overnight.
At 8.40am, the index of blue-chip shares edged 13 points lower to 7,508.93, with Hikma Pharmaceuticals (LON:HIK) leading the list of fallers.
Its demise was prompted by the US healthcare-focused broker, Jefferies, which downgraded the stock to ‘underperform’ from ‘buy’.
Currency-affected stocks such as easyJet (LON:EZJ), Rolls Royce (LON:RR.) and plant hire firm Ashtead (LON:AHT) were also in the doldrums.
There was a bounce-back for Hargreaves Lansdown (LON:HL.), which rose 2.4%, after a sharp fall Tuesday amid competition concerns.
Just days after the internet attack that crippled the NHS, the tech security group Sophos Group (LON:SOPH) weighed in with better than expected results.
The update, which revealed a near tripling in cash flow, prompted a 7.7% rise in the share price.
WATCH: Zak Mir on Sophos
Potential macro-triggers for the market come in the form of unemployment and average earnings data later Wednesday morning here in the UK and consumer price inflation stats for Europe.
6.45am: Slow start predicted
The FTSE 100 looked set to head back towards 7,500, having hit a new high yesterday.
Spread betting quotes pointed to a fall of around 23 points from last night’s close of 7,522.
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US markets closed mixed, with the Nasdaq Composite continuing its recent trick of finishing higher while the Dow Jones and the S&P 500 lose ground.
The Nasdaq rose 20 points to 6,170, while the Dow Jones dipped a couple of points to 20,979 and the S&P also gave up a couple of points at 2,401.
Heading into the final hour of trading, most Asian markets were soft.
In Tokyo, the Nikkei 225 was down 108 at 19,812 while in Hong Kong the Hang Seng was 37 points in the hole at 25,298.
On the corporate front in London, pubs and restaurants owner Mitchells & Butlers PLC (LON:MAB) is expected to report a 5% decline in half-year pre-tax profit to £78mln on Wednesday, reflecting higher costs related to wage rises and a weaker pound.
The company has warned that profits this year would be hit by increase in costs following a slump in the pound after the Brexit vote last June and an increase in the minimum wage.
Estate agents Foxtons Group PLC (LON:FOX) holds its annual general meeting in a no doubt “well appointed” venue, and will update shareholders on current trading.
Peel Hunt is not expecting the group to report much change in the underlying market conditions since it published its full-year results back in March.
Proactive news headlines:
Redx Pharma Plc (LON:REDX) had £5.1mln in cash at the end of March, it revealed in its interim results, leaving it "optimally positioned" to capitalise on its discovery engine.
Respiratory drug discovery and development company Synairgen plc (LON:SNG) remains on track to advance a Pharmaxis compound into Phase I trials this year, while it is looking into continuing development of its inhaled interferon beta candidate, AZD9412, after drugs giant Astra returned the rights to it last month.
The US web hosting firm that signed up for Corero Network Security PLC’s (LON:CNS) Smartwall Threat Defense System last year has placed a new order, in the process becoming the second million dollars-plus a year customer for Corero's flagship product.
Shares in online merchandising specialist ATTRAQT Group plc (LON:ATQT) rose as it held out the prospect of bumper cost savings after its takeover of Fredhopper. The company said the acquisition, which was completed in March, “has been transformational both in terms of the scale and scope of the enlarged group”.
ImmuPharma PLC (LON:IMM) is on schedule to publish first results from its phase III trial of lupus drug Lupuzor early next year with all 200 patients now having had at least three months worth of treatment. The trial runs for twelve months and 28 patients have now received the full dosage, Immupharma said, while 166 are passed six months.
88 Energy Plc (LON:88E) has confirmed that the drilling phase of the pivotal Icewine-2 programme is now complete, with the well reaching target depth of 11,450 feet. The vertical well was drilled on schedule and without incident, the Alaska focussed explorer told investors.
Landore Resources Limited (LON:LND) has found ‘widespread mineralisation’ through its latest drilling campaign at BAM East at its Junior Lake deposit in Ontario. Exploration on the inferred section contained multiple instances of visible gold in the drill-core, the explorer said.
Acquisitive Keywords Studios PLC (LON:KWS) has today unveiled another new deal, picking up GameSim Inc which becomes the group’s first unit in the outsourced engineering business. The company has thus far been specialising in outsourced video game localisation, art and sound, as well as providing live support services for gamers.
Ariana Resources plc (LON:AAU) has received more indications that the gold resource at Kiziltepe is larger than thought with assay results from a site to the west of the mine. Kiziltepe started production in March and the new site, Kiziltepe West, is 4km away by road.
Around the markets
- Sterling: US$1.2938, up 0.23 cents
- Yield on 10-year gilt: 1.134%
- Gold: US$1,243.20 an ounce, up US$6.90
- Brent crude: US$51.26 a barrel, down 39 cents
Headlines
- Twitter co-founder Biz Stone rejoins company - Daily Telegraph
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- Old Mutual presses ahead with break-up - The Times
- Tesco to use 100% renewable electricity this year in UK - The Independent
- Judge backs RSPB challenge to Scottish wind farms - The Financial Times
- Lloyds reaches landmark as government sells final shares - The Guardian
- Tata Steel moves to safeguard UK. arm by offering £550 million for pensions scheme - The Guardian
- US vultures pushing for Dulux takeover now want to break up UK oil giant BHP Billiton - Daily Mail
- Nuclear crisis as National Grid pulls out of its role in the £10 billion Cumbria plant - Daily Mail