FTSE 100 closes lower
European indices also down; US shares gain
Burberry biggest gainer
FTSE 100 closed around 67 points lower as political uncertainty across the Pond weighed.
Fears remain over President Trump's ability to push through his economic reform plans against the backdrop of one crisis after another.
The UK blue-chip index finished at 7,436 - down 67.05 on the day, while FTSE 250 was also lower - shedding almost 82 points at 19,691.
The biggest laggard on Footsie was Royal Dutch Shell (LON:RDSB) down almost 4% at 2,161 p as the price of Brent crude fell.
Burberry plc (LON:BRBY) was the top riser, up 4.69% to 1,718p as it posted full year profits at the upper end of expectations.
The Dow Jones Industrial Index is up around 13 at 20,620 at the time of writing.
3pm..FTSE 100 down 66
Sterling’s rally and continuing uncertainty over Donald Trump’s Whitehouse tenure put the skids under the FTSE 100, which fell 66 points to 7,437.88.
The pound smashed through the US$1.30 mark for the first time in eight months, boosted by stronger than expected retail sales and the weakness of the dollars amid growing calls to impeach the US president.
“Though there was to be no great losses on Wall Street – not yet at least – this was of no use to the rouged-up European indices,” said Connor Campbell, analyst at the spread betting firm Spreadex.
“Thanks to sterling’s retail sales-inspired growth, and the nasty Trumpious odour hanging over the markets in general, the Footsie failed to fully erase its losses this Thursday, though it did manage to shrink its slump.
“Much of the index’s drag is coming from the commodity sector, where the oil and mining stocks are fretting over the likelihood of Trump being able to implement his huge infrastructure policies.”
2pm....FTSE down 100 points
FTSE 100 index drops over 100 points
Pound holds above US$1.30 after strong UK retail sales data
US blue chips seen weak again after 370 point drop on Tuesday
Ashtead Group slides on US infrastructure boost concerns
1.15pm: US to open lower as investors continue to have the hump with Trump
Call it a Trump slump, a trump dump, or merely investors getting the hump with Trump; any way, it is still happening with US stocks tipped to open lower.
Spread betting quotes point to the Dow opening at around 20,560, down 40 points after yesterday’s shake-out, while the S&P 500 is tipped to open at around 2,354, down a couple of points.
Kathleen Brooks at spread betting outfit City Index, wonders whether Congress can calm the markets.
“Now that a former FBI boss, Robert Mueller, is leading the investigation, could he act as a calming influence on financial markets?” she asks.
“Mueller is an independent who has been endorsed by politicians on both sides of the political spectrum, which could be a good sign for risk. If Mueller can calm the situation down, squash any leaks and keep the investigation behind closed doors, then the lack of fresh news or scandal surrounding team Trump could calm the markets and help stage a recovery in the coming days,” she speculated.
Back in Blighty, the FTSE 100 was down 86 points at 7,417, which does at least mean it is no longer sporting a triple digit decline.
Pharma giant Shire Plc (LON:SHP) gave the top share index a bit of a lift after it published positive Phase 3 trial results of a treatment for hereditary angioedema – a painful and debilitating swelling under the skin.
It was the best performing FTSE 100 constituent, up 4.9%.
READ Shire PLC rises on the back of positive results from trial of swelling treatment
11.45am: Trump slump worries
The Footsie steadied above the 7,400 level at lunchtime but still was down around 100 points reflecting caution ahead of the New York restart amid ongoing worries over a possible impeachment of US president Donald Trump.
Approaching midday, the FTSE 100 index was 103 points lower at 7,400, just recovering from the session low of 7,389.26, but well below Tuesday’s record high above the 7,500 level.
Connor Campbell , financial analyst at Spreadex, said: “Looking ahead to the US open and the Dow Jones futures aren’t promising anything too drastic, the index on track to fall another 30 points after the bell.
“However, a) that means the Dow will hit a fresh month low and b) like yesterday its losses could well increase as US investors wake up to the latest Trump-related news.”
The analyst noted that the latest reveal in the twists and turns of the Trump-Russia scandal, as reported by Reuters, is that “the Trump campaign had at least 18 undisclosed contacts with Russians and other people close to Vladimir Putin.”
US markets selling off again on out of hours - Dow now around 100 lower than last night's close. pic.twitter.com/docwFk5Jag
— David Jones (@JonesTheMarkets) 18 May 2017
The UK blue chip index was also hit by a spike in sterling to above US$1.30 following stronger than expected UK retail sales data, which added to above-forecast inflation and unemployment numbers earlier this week.
The pound was at a seven and a half month peak versus the US dollar, ahead 0.5% to US$1.3040, and added 0.6% against the euro to €1.1716.
Campbell pointed out: “In April UK retail sales surged by a far higher than expected 2.3%, bouncing back from March’s -1.4% (itself revised up from -1.8%) thanks, in part, to extra spending around Easter.
“This allayed some of the pound’s fears surrounding the country’s rapidly rising prices – and shrinking real wages – and allowed the currency to post some hefty growth, a move that tends to be bad news for the FTSE.“
10.55am: Triple-digit drop
The FTSE 100 extended its drop to over 110 points in late morning trade as a spike in the pound following strong UK retail sales data added to the pressure on equities from worries over a possible impeachment of US president Donald Trump.
Around 10.45am, the FTSE 100 index was off 112 points at 7,391, just holding above the day’s low of 7,389.26, with Tuesday’s record highs above the 7,500 level a distant memory.
The slide came, as the pound jumped to a seven and a half month peak versus the US dollar, up 0.4% to US$1.3026, and gained 0.7% against the euro to €1.1710 after the robust UK data saw retail sales rise 2.3% month-on-month in April.
Chris Beauchamp, chief market analyst at IG, said: “Not only was the monthly number much stronger than expected, and the best since February last year, but last month’s 1.8% drop was also revised slightly higher.
“Maybe we won’t see too much of a consumer squeeze after all, while sterling bears now feel even less popular than Jeremy Corbyn.”
Beauchamp added: “US futures are trying to clock up some early gains, and with options expiry tomorrow we could see some recovery over the next two sessions, particularly if the beleaguered White House can staunch the flow of bad news.”
He added: “Ahead of the open, we expect the Dow to start at 20,590, down 16 points from last night’s close.”
The biggest lower in London was again equipment hire firm Ashtead Group PLC (LON:AHT), which shed 4.7% at 1,486p on rapidly diminishing expectations of a big US infrastructure boost.
Beauchamp said: “Such big beneficiaries of the Trump bounce over the past six months are ripe for some selling, but this should subside in due course. Ashtead was doing well before Trump, and it will do well even if he is forced into an early exit from the White House.”
On the second line, Berendsen PLC (LON:BRSN) was the top FTSE 250 riser, with the laundry and workwear firm seeing its stock rise over 23% to 1,069p after French group Elis made a £2.05n bid for its UK-based rival.
Elis said in making the offer it was approaching Berendsen's shareholders directly, after Berendsen's board rejected earlier proposals made privately in April and earlier this week.
In a statement, Berendsen said it “believes Elis is making an opportunistic attempt to acquire Berendsen whilst it is implementing its capital investment programme, without reflecting the value upside inherent in this strategy.”
Broadband and telecoms provider TalkTalk PLC (LON:TALK) was also a strong FTSE 250 gainer, adding 2.7% at 179.3p after Canadian broker RBC Capital upgraded its rating for the group to ‘outperform’ from ‘sector perform’.
Among the small caps, Lightwave RF PLC (LON:LWRF) soared nearly 13% higher to 17.5p as the smart home solutions announced the launch of its full product range on the Google Assistant voice control for Google Home.
9.45am: Robust retail sales boost pound
The Footsie dropped back sharply as the morning session progressed in tandem with a jump by the pound after the latest UK retail sales data proved stronger than expected.
By 9.45am, the FTSE 100 index was down 72 points at 7,431, just off the session low of 7,429.33, extending yesterday’s late falls which took it back from Tuesday’s record highs above the 7,500 level for the first time.
On currency markets, the pound jumped 0.4% higher versus the dollar to US$1.3035, a seven and a half month peak, and rallied 0.7% higher against the euro to €1.1700 after the robust data.
#GBPUSD storms $1.30 after blockbuster retail sales and + revisions. Watch @ChrisB_IG #trading LIVE at 10:30amUK on https://t.co/nUJNv6DOa3 pic.twitter.com/WwIShj7qkr
— Jeremy Naylor (@JeremyNaylor_IG) 18 May 2017
UK retail sales in bounced back by a much larger than expected amount in April, bolstering optimism over the economy, and adding to pressure on the Bank of England to consider future interest rate rises.
The Office for National Statistics said retail sales rose 2.3% month-on-month in April, compared to a 1.4% decline in March which was revised from a previous drop of 1.8%.
April’s increase was the largest gain since January 2016 and smashed analysts expectation for an increase of just 1.0%.
David Cheetham, chief market analyst at XTB.com, said: “The retail sales figure itself was the best since the start of 2016 and will go some way to allay the fears of a slowdown in consumer spending following last month’s sharp drop in this widely viewed indicator.
“The release marks a 3rd consecutive day of GBP positive economic data, after both the CPI and unemployment figures surpassed estimates.”
Adding to the worry for equities today was the overnight slide on Wall Street made amid fears that President Donald Trump could face an impeachment move, while a big chunk of the UK blue chip index falls were also due to stocks trading ex-dividend today.
8.40am: Footsie declines after US slide
The FTSE 100 index fell back in opening trading following the overnight slide on Wall Street amid fears for President Donald Trump’s administration, but the decline in London was no worse than feared – particularly with a big chunk due to stocks trading ex-dividend today.
After around three-quarters of an hour of trading, the UK blue chip index was 38 points lower at 7,464, extending yesterday’s late falls which took it back below the 7,500 level and the record highs hit in the previous two sessions.
However, 20.3 points of the index’s decline came from companies trading without entitlement to their latest dividend payouts, including Compass Group PLC (LON:CPG), HSBC PLC (LON:HSBA), Imperial Brands PLC (LON:IMB), Intertek Group PLC (LON:ITRK), Provident Financial PLC (LON:PFG), and Royal Dutch Shell Group PLC’s A (LON:RDSA)and B shares (LON:RDSB).
Overnight on Wall Street, the Dow Jones slumped 372 points, or 1.78%, to close at 20,606 while the broader S&P 500 shed 1.82%, and the tech-laden Nasdaq composite dropped 2.57%, unsettled by talk of a possible impeachment move against Trump.
Trump Faces Deepest Crisis of Presidency With Comey Memo - Trump Faces Deepest Crisis of Presidency With Comey ... https://t.co/64PVVAbCsy
— Ruth Gemmell (@ruth_proactive) 18 May 2017
However, in early trade today US stock index futures were firmer, bouncing off last night’s closing lows, which has helped to steady nerves somewhat.
David Morrison, senior market strategist at SpreadCo., said: “Trump’s woes persist, and these may continue to unnerve investors to some extent, especially as they come on top of concerns that the US Federal Reserve is still set to tighten monetary policy further even as the strength of the US economic recovery looks uncertain.
“But the bulls should take some comfort from the technical set-up on the Dow and the S&P500. Last night’s sell-off meant that both indices have now filled the trading gaps which opened up in the aftermath of the first round vote in the French presidential election.
“This suggests that there’s the potential for a swift bounce-back. However, many traders will now be wondering if the highs are in for the major indices. “
On currency markets, sterling was fairly dull awaiting the third important set of UK data in three days, with the latest retail sales numbers due after mixed inflation and labour market numbers.
The pound just ticked 0.1% lower against a steadier dollar at US$1.2965, but lost 0.1% versus the euro at €1.1635.
Traders also had a big batch of blue chip corporate news to digest today, with well-received updates from postal delivery group Royal Mail Group PLC (LON:RMG), ahead 3.4% at 445.3p, and luxury goods firm Burberry Group PLC (LON:BRBY), up 1.1% at 1,660p.
Although credit checking firm Experian Group PLC (LON:EXPN) lost 2% at 1,660p after its results.
7.00am: Weak start expected
London’s FTSE 100 is set to start Thursday lower after talk of a possible Trump impeachment sparked volatility in US markets.
On Wall Street the Dow Jones slumped 372 points, 1.78%, to close Wednesday’s session at 20,606 while the S&P 500 shed 1.82% to 2,357.
The Nasdaq gave up more, losing 2.57%, to finish yesterday’s trading session at 6,011.
“President Trump has enjoyed an almost Teflon like existence since being in the White House with markets prepared to give him the benefit of the doubt on a number of occasions despite his tendency to stagger from one controversy to another,” said Michael Hewson, analyst at CMC Markets.
He added: “Having waited months for evidence that we would eventually see something resembling a reform program and fiscal stimulus to justify the rally in the US dollar and stock markets since November, investors finally lost patience amid a selling frenzy with US markets posting their biggest one day loss since September last year.
“The big question now is whether this turns out to be the start along a road to an impeachment process or whether this is another bump in the road.”
In Asia, markets were also trading negatively.
Japan’s Nikkei lost 273 points, 1.37%, to trade at 19,542 while Hong Kong’s Hang Seng was 0.25% lower at 25,227. The Shanghai Composite, meanwhile, was down 0.44% at 3,090.
Australia’s ASX 200 lost just over 1% to 5,723.
Here in London, CFD and spreadbetting firm IG Markets sees the FTSE 100 some 26 points lower just over an hour before Thursday’s open, calling the blue-chip benchmark at 7,454 to 7,458.
In terms of corporate news, Royal Mail is expected to be one of the early focal points as it releases final results for 2016.
Proactive news headlines:
Hayward Tyler Group PLC (LON:HAYT) has revealed new contract wins with ‘key customers’ worth £2.1mln. The AIM quoted group’s Peter Brotherhood is to provide a 9 megawatt steam turbine for a project under construction in the UK that is set to become the world’s largest biomass power station. The contract is worth £1.5mln and is due for delivery in 2019.
ReNeuron Group Plc (LON:RENE) has published what it describes as very significant data highlighting the ability of its exosome therapy candidate to target specific organs of the body. Exosome therapy is being explored by ReNeuron both as a potential new nanomedicine targeting cancer and as a delivery system for gene therapy treatments.
Feedback plc (LON:FDBK), the medical imaging software company, has identified some enhancements to its TexRAD Lung product that will delay the granting of a CE mark by several weeks.
Children’s literature continues to be a winner for Harry Potter publisher Bloomsbury Publishing PLC (LON:BMY). The company reported a 15% improvement in revenues to £142.6mln in the year to the end of February from £123.7mln the year before, driven by a 48% increase in revenue from its Children’s division.
Shanta Gold Limited (LON:SHG) has agreed €2.1mln (US$2.3mln) in equipment financing for its underground expansion at the New Luika gold mine in Tanzania. The first tranche will be repayable from June 2017 and the second from October 2017. Both tranches will carry a fixed interest cost of 6.5% and repayable in quarterly instalments over 36 months.
New management at Stratex International plc (LON:STI) has signalled a change of focus with a reverse takeover of Aussie-listed but Brazil-focused gold miner Crusader Resources Ltd (ASX:CAS). Crusader has two advanced gold projects in Brazil, Borborema and Juruena, with combined JORC-compliant resources of 2.7Moz Au, as well as the Posse iron ore mine.
eSports promotor Gfinity Plc (LON:GFIN) has announced the sixth addition to its upcoming new Elite Series league tournament, which is due to take place in London this summer. Team Endpoint, a leading eSports team, takes the sixth of eight slots in the Elite Series – joining rivals Team EnVyUs, exceL eSports, Reason Gaming, Prophecy and Team Infused.
Nanobiotix SA (EPA:NANO) has reported significant advances in turning tumours ‘hot’ in the first in-body use of its pioneering cancer treatment. The group used its treatment, NBTXR3, on 26 Soft Tissue Sarcoma patients, with the results indicating it helped trigger a much greater immune response in the body compared to radiotherapy alone.
Thursday’s diary:
Interim Results: Thomas Cook Group PLC (TCG), SSP Group Plc (SSPG), Marston's PLC (MARS), Euromoney Institutional Investor PLC (ERM)
Final Result: Land Securities Group Plc (LAND), Mothercare plc (MTC), National Grid PLC (NG.), Royal Mail PLC (RMG), Investec PLC (INVP), Elektron PLC (EKT), Booker Group PLC (BOK), Burberry Group PLC (BRBY), Dairy Crest Group PLC (DCG), Bloomsbury Publishing PLC (BMY)
Trading Statement: Rank Group (The) PLC (RNK), Hargreaves Lansdown PLC (HL.), Balfour Beatty plc (BBY)
Business headlines:
- Turmoil over recent Trump controversies triggers the Dow's biggest loss … - Washington Post
- Domestic price pressures are evident in the UK - Financial Times
- KitKat foiled again in attempt to trademark four-fingered bar's shape - The Guardian
- China property price growth slows in top cities - Financial Times
- John Lewis voted best place to work - Metro
- BP heads off pay revolt with huge cuts to executive pay – Telegraph
Key markets:
- GBP:USD – US$1.2964
- Brent Crude – US$51.96
- Gold – US$1,259