FTSE 100 up 30 points to 7,548
FTSE 100 finishes at highest ever closing level and FTSE 250 breaks through 20k level
Pound dives on positive US economic data and narrowing opinion polls
RBS biggest faller as settlement prospects fade
It’s not unusual for indices to dip before a long weekend but the FTSE 100 confounded expectations by advancing to a new high.
The top-share index closed at 7,548, up 30 points, shrugging off fears that the taken-for-granted Conservative victory in next month’s General Election will not be as convincing as previously expected.
The latest YouGov poll, published in The Times newspaper, put Tory support on 43% and Labour’s on 38% - a three point improvement for Labour and a one point decline for the Conservative party.
The poll seemed to have more of an effect on sterling, which dropped below US$1.29 for the first time since 18 May.
“The pound has been looking toppy as election odds narrowed since the release of the manifestos. The latest polls from YouGov showed the Tories with only a five-point lead over Labour. A five point gap looks to have been the breaking point,” suggested Jasper Lawler at London Capital Group.
The top blue-chip riser today was publisher Informa PLC (LON:INF) after an upbeat trading update. The shares rose 5.8% to 688.5p.
On the market as a whole, Rasmala PLC (LON:RMA) was the best performer, climbing 33.35p to 137.5p as the company said it would seek shareholder permission to spend £35mln buying back shares at 150p a pop.
I think it is on safe ground there with that proposal …
US GDP perks up Footsie
The FTSE 100 powered higher in the afternoon session on Friday, largely driven by the weakened pound which has been hit by more positive economic data coming from across the pond.
The blue chip index hit a new high this afternoon of 7,553 and is currently 32 points up for the day at 7,550.
As long as it stays above 7,522, the index is on course to post its highest daily and weekly close ever, beating the record it only set a couple of weeks ago.
The better-than-expected US GDP figures have increased the chances of the Fed hiking US interest rates next month, news which has boosted the dollar.
Pound slips to two-month lows versus euro
The pound slipped even further against the greenback on the news. It is currently down 1% versus the dollar to US$1.28, while sterling is also down 0.6% against the euro to €1.147.
A weak pound is good news for the internationally-focused blue chips on the FTSE 100 though as it boosts foreign currency-denominated earnings.
“The UK index had spent much of the morning struggling to make the most of sterling’s slump,” said Spredex analyst Connor Campbell.
“However, the deepening of the currency’s losses gave the FTSE the green light for some more substantial growth. This culminated in the index rising half a percent, climbing past 7550 for the first time in its history.”
RBS top faller, Informa top riser
The biggest riser on the FTSE 100 is exhibitions and publishing firm Informa (LON:INF), which is up 5.5% after bosses confirmed it is on course for a decent year.
Not even a sinking pound could help save Royal Bank of Scotland Group PLC (LON:RBS). The bank lost 1.6% to 261.8p as the chances of it having to go to court to face a group of disgruntled shareholders went up considerably.
Earlier in the week it had looked like RBS was going to strike a £200mln out-of-court settlement with the shareholders, who claim they were lied to over the bank’s health in the run-up to the 2008 financial crash.
But reports suggest a group of “diehard” want to see the bank and its disgraced former boss Fred Goodwin have their day in court next month.
BP and Shell ride out oil price woes
OPEC decided yesterday that it would extend its current oil production cut for another nine months until March next year.
The move didn’t have quite the reaction from traders that the cartel was expecting though, with many suggesting that more needed to be done to drain the global supply glut.
That sent the price of the black stuff into freefall, with a barrel of Brent Crude Oil now costing US$51.60. Only yesterday the price was above US$54.
Remarkably, the big oilers have held up pretty well despite the decline in the prices of their main commodity.
Royal Dutch Shell PLC (LON:RDSB) is up 0.5% for the day while BP PLC (LON:BP.) has gained 0.4%, with the pound’s fall outweighing the drop in oil prices.
FTSE 250 soars to new highs as well
It wasn’t just the blue chip index setting records today, the second tier also put in a strong performance ahead of the three-day break.
The FTSE 250 broke though the 20,000 mark for the first time ever this morning, and it’s managed to keep healthily above that level since.
US stocks open quiet
After a strong run over the past eight days or so, US stocks took a breather as they waited for the weekend.
The strong economic data did little for the Dow Jones which shed 9 points to 21,073, although it’s still not too far from its record peak.
Similarly, the Nasdaq Composite was less than a pint higher at 6,206 while the S&P 500 was dead flat at 2,415.
“US markets have opened slightly lower after yesterday’s record highs as some profit taking kicks in ahead of the long bank holiday weekend,” said CMC Market’s Michael Hewson.
2.20pm...US Q1 GDP comes in ahead of expectations
US GDP for the first three months of 2017 has been revised up from 0.7% to 1.2%.
The new figure is the second estimate of economic growth – meaning it is based on more data – and shows that areas such as consumer spending fared better than initially thought between January and March.
The upward revision is likely to increase the chances of an interest rate hike from the Fed in the coming months, perhaps as early as June.
“The global terror threat is at the top of the agenda but trade is also high on the list, with Trump drumming home the importance of investment, infrastructure and growth,” said Dennis de Jong, managing director at UFX.com.
“These figures couldn’t have come at a better time for the President and, in turn, raise the likelihood that the Fed will increase interest rates again in the near future.”
1.20pm...FTSE 100 treading water
The FTSE 100 briefly hit a new record high of 7,535.06 earlier this morning, but it’s given up most of those gains as it struggles to keep its head above water.
The blue chip index is still in the black (just) though, and is currently up 5 points to 7,523.
“Despite briefly hitting a record intraday peak, a smattering of red in its commodity sector and sharp losses from RBS, Lloyds and Barclays, has prevented the FTSE from finding any significant joy in the pound’s plunge,” said Spreadex’s Connor Campbell.
In particular, it’s being held back by Royal Bank of Scotland Group PLC (LON:RBS), which is down 2.5% after reports suggested that a court battle with disgruntled shareholders is now back on the cards.
As Campbell noted, fellow banking giants Lloyds Banking Group PLC (LON:LLOY) and Barclays PLC (LON:BARC) are also nursing heavy losses today, down 1.8% and 1.5% respectively.
The biggest riser among the blue chips though is exhibitions and publishing firm Informa (LON:INF), which is up 5.5% after bosses confirmed it is on course for a decent year.
1.05pm...Petrofac’s slide continues as RBC slashes price target
Shares in Petrofac PLC (LON:PFC) have continued to slide today after yesterday’s news that the oil services group had suspended its chief operating officer amid a Serious Fraud Office investigation.
Petrofac also had its price target slashed by RBC Capital Markets today as well, with analysts at the bank explaining that they expect the fraud inquiry to weigh on the business and hamper its effort to secure new contracts.
“In a challenging oil price environment, with fewer available contracts, we think this investigation by the Serious Fraud Office further impedes Petrofac's ability to win contracts,” wrote analyst Victoria McCullogh in a note to clients.
Reflecting that uncertainty, McCullogh slashed her price target for the stock by 60% to 400p (from 1000p) and moved Petrofac to ‘underperform’ from ‘sector perform’.
Shares fell past even that figure though, shedding 10% to trade at 389p. To put the swift decline into context, Petrofac shares were worth more than twice that only three weeks ago.
12.55pm...US to open lower, all eyes on GDP numbers
US stocks continued their bounce back from last Wednesday’s slump, with retailers and tech groups dragging the Dow Jones, S&P 500 and Nasdaq higher once again yesterday.
It looks like the run is set to come to a halt today though, with the markets across the pond set to open lower.
Spread betting quotes see the Dow opening 37 points at 21,040, while the S&P is seen 5.5 points lower on the opening bell at 2,409.
All eyes will be on GDP figures though, which policymakers hope will show once again that the US economy is growing.
“With the Fed’s latest meeting minutes showing that the central bank wants to see that the USA’s first quarter slump was just a blip, this afternoon’s second estimate GDP reading could be important for the dollar,” said Spreadex analyst Connor Campbell.
“Analysts are expecting the initial figure to be revised from 0.7% to 0.9% at the annualised rate; still weak, but a welcome improvement nevertheless. As for the Dow, the US index is set to drop 0.1% after the bell, but remains less than 100 points from a fresh all-time high.”
12.40pm...As if they don't have enough money already!
According to the Financial Times, the City's bankers are spending a LOT of money buying lottery tickets ahead of tonight's £112mln Euromillions jackpot.
London's bankers are outspending the general public on EuroMillions lottery tickets ahead of Friday's £100m jackpot https://t.co/AENyJOb33P
— Financial Times (@FT) May 26, 2017
12.25pm...Will 'Fred the Shred' get his day in court after all?
The FTSE 100 was making its gains despite the best efforts of Royal Bank of Scotland Group PLC (LON:RBS) which was the biggest mover among the big boys, down more than 2.5% to 259p.
Shares fell away in the bank after the chances of it having to go to court to face a group of disgruntled shareholders went up considerably.
Earlier in the week it had looked like RBS was going to strike a £200mln out-of-court settlement with the shareholders, who claim they were lied to over the bank’s health in the run-up to the 2008 financial crash.
But reports suggest a group of “diehard” want to see the bank and its disgraced former boss Fred Goodwin have their day in court next month.
Shareholder Neil Mitchell told The Guardian: “For many people, it’s never been about money, it’s been about principle and justice, and about seeing senior board members of the bank brought to trial.”
12.05pm...London markets hit record highs
The FTSE 100 set a new record intraday high of 7,535.06 earlier this morning. The blue chip index has fallen back since, but it’s still enjoying a day in the sun.
Shortly after midday, the index was up 11 points to 7,529.
The blue chips have had a helping hand from the weak pound which has suffered all week, during which it has given up some of its recent gains.
Today’s weakness comes from another opinion which shows Labour leader Jeremy Corbyn is closing the gap to Theresa May – the City’s preferred choice at next month’s elections.
“It’s not been a good week for Prime Minister Theresa May, already under pressure earlier this week as a result of a shambolic manifesto U-turn, another opinion poll released overnight showed that the Conservative lead over Labour has been cut to five points,” said Michael Hewson, chief market analyst at CMC Markets.
“With the pound already under pressure, this acted as an additional catalyst in pushing the pound to a two month low against the euro and to a one week low against the US dollar.”
Sterling is currently 0.6% down versus the dollar at US$1.285, while it is has shed 0.8% against the euro to €1.145.
A weaker pound helps to boost foreign currency-denominated earnings made by the big multinationals, like those listed on the FTSE 100.
The blue chip index wasn’t the only record breaker today this morning though. The FTSE 250 broke though the 20,000 mark for the first time ever, and it’s managed to keep just above that level as it heads into the afternoon.
11.15am...Ncondezi slumps as it look for new partner in Mozambique
Ncondezi Energy Ltd (LON:NCCL) is taking a hit this morning. The Mozambique-focused coal miner seems to have been led down the garden path by Shanghai Electric Power (SEP) which was supposed to be providing the funding for Ncondezi’s 300 MW power plant.
But the AIM-quoted group has said it has called off the joint development agreement – which would have seen SEP inject US$25.5mln in return for a 60% stake in the project – because delays in putting pen to paper were “unsustainable”.
The deal was originally outlined at the end of 2014 and was due to be signed in February 2016. This deadline was then pushed back to May, then to September and then December.
The agreement was then due to be signed in March this year but this also failed to happen, meaning that Ncondezi is back on the lookout for a new strategic partner.
The company needs to find additional funding if it wants to get the power plant off the ground although investors seemed sceptical given the saga with SEP. Shares shed 20% to 1.7p.
9.15am...Footsie trading sideways
The FTSE 100 made a lacklustre start to trading with index of blue-chip shares up just five points at 7,521.58 early on.
The banks were on offer along as were the oilers with the latter affected by fall in the price of crude.
While the OPEC meeting extended the production cap for a further nine months, analysts and traders had hoped for something more radical.
The exhibitions specialist Informa (LON:INF) was the Footsie’s leading gainer; it rose 4% after it delivered an upbeat update to trading.
Moving down a division, the market was similarly impressed by the performance of Frankie & Benny’s owner, Restaurant Group (LON:RTN) whose shares shot up 11%.
It was a case of ‘ouch that hurt’, for investors in Ncondezi Energy (LON:NCCL), which tumbled 41% after it suspended its exclusive negotiations with its Chinese partner.
It had been in talks with Shanghai Electric Power over the development of an ambitious coal to power project in Mozambique.
In the same statement Ncondezi raised concerns over the future funding of the business and specifically its ability to repay a shareholder loan due in September.
6.45am...cautious start predicted
The FTSE 100 index is expected to make a cautious start today after mixed showings overnight from US and Asian markets as oil prices stayed under pressure, with interest likely to tail off later in the session given the long UK bank holiday weekend.
Spread betting firm London Capital Group expects the FTSE 100 index to open around 5 points lower at 7,512, having added 2.81 points yesterday after a fairly volatile session.
London shares were subdued yesterday as crude prices dropped after an agreement by oil cartel OPEC to extend existing supply curbs disappointed investors wagering on larger cuts.
US markets managed to shrug off the sharp declines in crude oil prices with the tech sector once again leading the gainers and pushing the S&P 500 and Nasdaq to new record highs once again.
But investors in Asia did not carry on with the US enthusiasm. Australia’s ASX fell 0.64% as mining and energy stocks led losses, while Japan’s Nikkei 225 index lost 0.3%.
On currency markets, sterling continued its decline after a poll showing Theresa May's Conservatives’ lead narrowing less than two weeks before the general election which came on the heels of disappointing UK growth numbers yesterday.
US growth could be revised up
On the data front today, after yesterday’s downgrade revision to UK first-quarter GDP numbers, investors will be eyeing the second reading for US first-quarter growth this afternoon.
The initial annualised growth rate of 0.7% meant the US economy grew at its weakest pace in three years at the start of 2017, but investors are hoping for a revision up to 0.9% growth.
Aside from the GDP data, the latest US durable goods orders and final May reading for the influential University of Michigan consumer sentiment index will also be eyed today.
Among Friday’s corporate news, the only blue chip firm reporting will be testing and quality assurance equipment group Intertek PLC (LON:ITRK) which issues a trading update.
In a preview, Graham Spooner, Investment Research Analyst at The Share Centre said: “Consensus expectations are that last year’s momentum has followed through in the first quarter and we will continue to the see the benefits of sterling’s weakness.
“The Resource division however faced a tough year so it will be interesting to see if there has been any improvement in infrastructure investments in the commodity sector.”
Restaurant Group not so tasty
Meanwhile, on the second line, trading news from Restaurant Group PLC (LON:RTN), owner of the Frankie & Benny's (F&B) and Garfunkel’s brands is likely to be cautious.
Back in March, the company reported an 11% drop in full year pre-tax profits to £77mln and a 3.9% decline in like-for-like sales as it restructured the business and revamped its restaurant menus.
Analysts believe the first-quarter could show a 6% to 7% drop in like-for-like sales as the group continues to work on its menus.
On Tuesday, Swiss broker downgraded its rating for Restaurant Group to ‘sell’ from ‘neutral’ on its analysts view that that “the turnaround for F&B looks challenging based on changes implemented so far.”
Significant events expected on Friday May 26:
Trading Statement: Intertek Group PLC (LON:ITRK), Restaurant Group PLC (LON:RTN), Spectris plc (LON:SXS)
Interims: MedicX Fund Ltd (LON:MXF)
Around the markets:
- Sterling: US$1.2884, down 0.4%
- Gold: US$1,255.80 an ounce, unchanged
- Brent crude: US$48.63 a barrel, down 0.6%
City Headlines:
- City bankers outspend rest of UK on EuroMillions tickets – Financial Times
- RBS shareholders refuse to settle in effort to force Fred Goodwin to take stand – The Guardian
- BT Group boss Gavin Patterson suffers multi-million pay cut – The Independent
- BT Group may offer assets to trustees of pension scheme – Financial Times
- Royal Dutch Shell develops smart charging for electric cars to prevent blackouts – The Times
- PepsiCo to sell up to all of its stake in Britvic – Financial Times
- Discount retailer B&M adds 100 outlets to its shopping list – The Times
- QinetiQ eyes global expansion with Rockwell Collins partnership – Daily Telegraph
- Apple’s Design Chief says U.K. must keep doors open after Brexit – The Independent
- Diesel-emissions scandal spreads to General Motors – Financial Times
- Sir Philip Green mounts rescue bid for Topshop Australia after chain collapses threatening 760 jobs – Daily Mail