FTSE 100 closes 21pts down
CMA opens formal investigation into Tesco-Booker deal
US trading also subdued, but Nasdaq gains
FTSE 100 closed around 21 points down as hopes of an earlier rally being sustained faded.
Global markets generally were a sea of red, except the tech heavy Nasdaq in New York, which is up around six points at the time of writing.
Chris Beauchamp at IG Index, said: "When in doubt, buy tech stocks. That is a fair summary of this afternoon’s price action."
The market analyst noted the momentum in stocks like Facebook (NASDAQ:FB.) and Amazon (NASDAQ:AMZN) - the latter's shares having surpassed the $1000 mark this afternoon.
FTSE 100 finished down 21.12, or 0.28%, at 7,526.
The FTSE 250 closed 33 lower at 19,991.
Private healthcare group Mediclinic International Plc (LON:MDC) was the biggest laggard on Footsie, down 3.25% at 789.50p.
Top riser was 3i Group (LON:III), which gained 2.3% to 888.50p.
3.05pm - FTSE 100 builds momentum
The FTSE 100 built up some momentum in afternoon trading, but it’s still on course to finish the day a fair way short of last Friday's record close.
Shortly after 3pm, the index of blue chip stocks was down 20 points to 7,527.
Thanks to British Airways’ problems over the weekend, airliners as a whole weren’t faring too well this morning, while the falling copper price hampered miners.
Both industries picked up into the afternoon however, although BA’s owner International Consolidated Airlines Group PLC (LON:IAG) (down 2% to 602.5p) could only recover some of its earlier losses rather than eradicate them entirely.
Exhibitions and publishing firm Informa PLC (LON:INF) enjoyed a day in the sun last Friday thanks to a bullish outlook from bosses, but it gave up some of those gains today and was down 2.7% to 670p.
Mediclinic top faller, 3i Group
It was private healthcare group Mediclinic International Plc (LON:MDC) which is the biggest faller on the FTSE 100 so far today though.
The company’s share price has been on a downtrend following last week’s final results and it shed another 3.6% today to trade at 786.5p.
Despite the poor performance of the blue chips generally, there were a handful making decent strides.
Private equity investors 3i Group PLC (LON:III) continued its recent strong form and is up 2.3% to 888p, making it the top riser.
The big boys have been hit by the stronger pound, which has gained on both the dollar and euro today, heading towards US$1.29 and breaking back through the €1.15 mark.
A stronger pound is bad news for the internationally-focused blue chips on the FTSE 100 as it reduces their foreign currency-denominated earnings when changed back into sterling.
US trading subdued
As predicted by the spread-betting firms, the subdued trading here in the UK and across Europe continued over in the US, with Stateside stocks opening lower.
The Dow Jones is down 61 points to 21,019 shortly after the opening bell, while the S&P 500 is down 5.4 points at 2,410.4.
All eyes are on the income, spending and inflation data which are due out later on today.
“We’ve already had some policy makers raising concerns about the lack of inflation and a weak number today may be just enough to convince them to hold off on raising rates for a little longer,” explains Oanda analyst Craig Erlam.
“The income and spending data will also be of interest, with consumer activity of course being so important for the US economy.
“Both income and spending are expected to have grown by 0.4% in April which is consistent with the retail sales data and comes following a very disappointing first quarter.
“Strong figures today would be consistent with the current Fed belief that the slowdown in the first quarter was transitory, as it proved to be over the last few years.”
1.10pm...Airlines and miners pick up, but not enough to drag FTSE 100 into the black
The FTSE 100 took advantage of sterling’s weakness last week to close at a record high of 7,547.63 on Friday evening.
At the start of this week, the momentum has swung back the other way. The pound is rediscovering its mojo which is weighing on the multi-nationals listed on the blue chip index.
As a result, the FTSE 100 is down 37 points to 7,510, although that is still an improvement from earlier on this morning when it dipped below the 7,500 mark.
After a difficult week during which it sustained some heavy blows, the pound has recovered some of those losses. It is now back up past the €1.15 mark against the euro, while it is also 0.23% up on the dollar and heading towards the US$1.29 level.
The airlines and miners which were weighing heavily on the index at the start of trading have enjoyed a little upturn on the whole.
Ryanair PLC (LON:RYA) was down 4% or shortly after the opening bell and is now up 0.5% to €18.09, while British Airways-owner International Consolidated Airlines Group PLC (LON:IAG) has almost halved its losses to just 2.5% at £5.98.
Miner Antofagasta PLC (LON:ANTO) has also picked up as the morning has worn on and is now only down 0.5% at 820p.
The biggest faller on the FTSE 100 is private healthcare group Mediclinic International Plc (LON:MDC) which has continued its downtrend following last week’s final results.
The biggest gainer is Primark owner Associated British Foods plc (LON:ABF) which is up 1% at £29.79.
US stocks set to open lower
Over in the States, the markets look set to open lower as they also come off a three-day weekend.
The Dow Jones is seen as opening 33 points down at 21,039, while the S&P 500 is expected to open 4.8 points lower at 2,410.
Despite the subdued start, Oanda’s senior market analyst Craig Erlam reckons spending and inflation data due out later today could spice up the markets across the pond.
“US equity markets are expected to open slightly lower after the long bank holiday weekend, with traders looking to the income, spending and inflation data from the US to spark things back to life.
“With markets still heavily pricing in a rate hike at the next meeting in a couple of weeks, there is the potential for disappointment yet again today.
“The upward revision to first quarter growth may have settled people’s nerves a little but a weak inflation report today could raise questions ahead of the June meeting.”
12.40pm...CMA formally opens Tesco-Booker investigation
UK competition regulators have formally opened an investigation into Tesco PLC’s (LON:TSCO) proposed £3.7bn takeover of convenience stores giant Booker Group PLC (LON:BOK).
The deal – which was first announced back in January – has come under intense scrutiny from the Competition and Markets Authority as well as both firms’ shareholders.
Tesco shareholders have been particularly vocal in their displeasure at the buy-out, which they see as overpriced.
There are also fears the acquisition could result in the supermarket giant having to sell hundreds of its smaller Tesco Express stores to gain approval.
Today’s announcement won’t come as much of a surprise to many people, given that various commentators and public figures have previously suggested a probe was likely.
According to a release from the CMA, the investigation will “assess whether the deal could reduce competition and choice for shoppers and other customers”.
An initial decision is expected by 25 July 2017, although if the regulator identifies a potential reduction in competition, it will launch another in-depth investigation which could last for another six months.
Shars in both companies are down just over 1% currently.
12.30pm...Trump takes aim at Merkel
Donald Trump has hit back at Angela Merkel’s recent comments that questioned the reliability of the US as a trading partner.
The German Chancellor said: “The times in which we can fully count on others are somewhat over.”
That didn’t go down well with the US President who fired back this morning on Twitter.
We have a MASSIVE trade deficit with Germany, plus they pay FAR LESS than they should on NATO & military. Very bad for U.S. This will change
— Donald J. Trump (@realDonaldTrump) May 30, 2017
12.15pm...Song slamming Theresa May goes viral
After the #Grime4Corbyn campaign, it seems Jeremy Corbyn is getting another helping hand from the music industry.
This time, a song which calls Prime Minister Theresa May an untrustworthy “liar”has climbed the charts to sit at number two on iTunes just weeks before the election.
Performed by Captain Ska, ‘Liar, Liar GE2017’ – which was only released on Friday – takes aim at May for her policies on the NHS, education and poverty.
“When there's nurses going hungry and schools in decline I don't recognise this broken country of mine” is just one of the damning lines in the song.
Take a listen for yourself below…
Ooooh let's all #AskMay if she's downloaded her copy of #LiarLiar yet to support food banks around the UK https://t.co/1b8ii294tk
— Captain SKA (@CaptainSKA) May 29, 2017
11.55am...The TV ratings are in…
There was only one talent contest winner in the ratings last night, and it certainly was May vs Corbyn…
Significantly bigger audience than 2015 Cameron v Miliband. Peaked on C4 at 3.3m (with half million extra on Sky) https://t.co/Ic4AN6zX07
— Daniel Pearl (@DanielPearlC4) May 30, 2017
RATINGS
May v Corbyn - 2.79m
Britain's Got Talent - 8.45m
— Richard Osman (@richardosman) May 30, 2017
11.45am...Small businesses still waiting on rate relief
Thousands of small businesses in England are still waiting for the financial boost promised by the Government to help ease the burden of hikes in business rates.
Back in his March Budget, Chancellor Philip Hammond said there would be a cap for small “cliff edge” companies adversely affected by the changes to business rates, which are a property-based tax based on rental values.
Most of businesses saw their bills stay the same or fall slightly, but some small firms faced rate rises of up to 3,000%. That prompted Hammond to introduce a cap that meant those companies would not see their bills rise by more than £50 a month.
But almost 12 weeks in to the new tax year and business owners are still waiting for this help, which is much-needed in a lot of cases.
A Local Government Association spokesperson told the BBC: “After receiving guidance, councils have now been able to begin working with businesses in their local areas to identify those eligible for this new discretionary relief funding.”
11.25am...Barclays predicting house price boom
There’s been a lot of talk of slowing house price growth in recent weeks as Brexit and other political uncertainties start to take hold.
That slowdown is set to be short-lived according to analysts at Barclay PLC (LON:BARC), who are predicting that house prices will rise by 6.1% by 2021.
#Barclays UK Property Predictor; UK house prices to rise by 6.1% in the next five years, bringing average property value to almost £300,000
— James Alexander (@jamesalexandere) May 30, 2017
As usual, London will be leading the way with house prices tipped to jump almost 12% in the next five years. That’s great news if you own a home in London, but less so if you’re struggling to get on the property ladder in the capital.
Following closely behind are house prices in the East of England and South East, which are expected to rise by 9.4% and 8.8% respectively.
The north isn’t totally left behind though, and the bank reckons “hotspots” will start to emerge in the area as more business start-ups create new job opportunities.
11.10am...UK banking stocks fall…apart from RBS
UK banking stocks were hit this morning as they took a cue from their Italian counterparts which slumped on Monday on the prospect of an earlier than expected general election.
A vote had been pencilled in Italy’s diary for some point before the spring of 2018 but a vote to coincide with Germany’s September election would “make sense”, according to former Prime Minister Matteo Renzi.
That sent the Italian banks lower yesterday and they were followed this morning by the likes of Barclays PLC (LON:BARC) (down 0.85% to 209.9p) and Lloyds Banking Group PLC (LON:LLOY) (down 0.5% to 71.4p).
In fact, Royal Bank of Scotland Group PLC (LON:RBS) was one of the only UK banking stocks in the black this morning after it emerged that it has reached a settlement with shareholders.
The agreement means former boss Fred ‘The Shred’ Goodwin won’t have to give evidence under oath and saves RBS from having to endure a lengthy and potentially costly court trial.
The 9,000 or so shareholders, who claim they were lied to about the state of the bank’s health in the run-up to the 2008 financial crisis, accepted an offer of 82p a share – almost double what RBS had originally proposed.
Still, that was seen as the better outcome by investors, with shares in the bailed-out bank nudging 0.25% higher at 262.2p.
10.30am...Holiday hangover for the FTSE 100
Like many of us after a three-day weekend, the FTSE 100 is struggling to get itself out of bed and ready for the working day this morning.
The blue chip index has fallen 24 points from Friday’s record close to 7,523, with airlines and miners weighing heavily.
Starting with the airliners, British Airways’ computer troubles over the weekend has rather unsurprisingly hit its parent company International Consolidated Airlines Group PLC (LON:IAG).
IAG is currently down almost 3% to 597p, although given the scale of its bank holiday issues – refunds and compensation could run into the tens of millions – it’s perhaps not as bad as some thought.
That said, Hargreaves Lansdown analyst George Salmon thinks the costs of the computer systems meltdown might be more than just a financial one.
“While the costs of passenger compensation and refunds could well run into the tens of millions, the whole sorry episode has undeniably put a dent in BA’s reputation for delivering a premium service, and the worry for shareholders is that this unquantifiable impact could have longer-term consequences."
Other airliners also suffering
Low-cost carrier Ryanair PLC (LON:RYA) was also off by more than 1% at €17.80 despite posting a healthy 6% rise in annual profits.
#RYA Fares will continue to fall says Ryanair, as overcapacity, Brexit bite but not by as much as last year https://t.co/LXxieRHwd5
— Jonathon Hopkins (@jonhoppo) May 30, 2017
Investors were perhaps put off by the cautious outlook for ticket prices, although the saga over at BA seems to weighing on the industry as a whole.
That certainly seemed to be the case for easyJet PLC (LON:EZJ), which saw its recent rally come to an end as it shed 1.2% to sit at £13.69.
Copper prices hurting miners
As for the miners, they’ve been hit by another fall in the price of copper which is now at its worst level in almost two weeks.
As a result, top-tier copper miners Antofagasta PLC (LON:ANTO) (down 1.5% to 814p) and Fresnillo PLC (LON:FRES) (down 1.7% to £15.55) both took decent whacks to their share price in early deals.
Pound rallies
On the currency markets, the pound has managed to reclaim some of last week’s losses.
It has added 0.12% on the dollar to trade at US$1.285, while it’s also gained the best part 0.25% against the euro to change hands at €1.153.
The jump on the euro comes on a difficult day for Eurozone stocks, which have generally suffered amid Greek debt concerns and an early Italian election.
In Germany, the Dax 30 was nursing some losses early on, as was the CAC 40 which was down almost 1% at one point earlier on.
Fusionex battered as it plans to de-list from AIM
Over on the junior market, shares in Fusionex International PLC (LON:FXI) collapsed by 60% this morning after the big data analytics specialist told investors it plans to de-list from AIM.
Fusionex said it felt undervalued by the market and that the “current political uncertainty in Europe is unhelpful”, making a UK listing “less attractive” than when it floated back in 2012.
The reasoning behind the proposed cancellation – which was announced after the markets closed on Friday – may not be quite so clear cut though, according to some reports over the weekend.
The Malaysia-based group’s broker, Peel Hunt, and PR adviser Buchanan, have both recently quit in protest at what The Telegraph described as a “backdoor attempt by [Fusionex’s] founder to seize control”.
8.40am...BA owner adopts brace position
Investors in International Consolidate Airlines Group (LON:IAG) adopted the brace position ahead of the London open and following the computer brain-fart that left tens of thousands of passengers of British Airways, its largest subsidiary, grounded over the long Bank Holiday weekend.
In the event the mark-down wasn’t quite as bad as feared as IAG shares fell just under 4% - this in the face of a mooted of a compensation bill of £100mln.
The BA owner was nevertheless top of the FTSE 100 fallers, with budget airline easyJet (LON:EZJ) travelling in its wake, down 2% on currency rather than IT concerns.
The index of blue-chip shares, meanwhile, was off 39 points at 7,508.75 with matters political dominating sentiment.
There is a wide-spread belief among analysts and commentators in the Square Mile that Prime Minister Theresa May has effectively squandered the opportunity to build a significant parliamentary majority with her rather cack-handed election campaign.
That in turn will make it difficult to face down Brexit dissenters among her own ranks as well as on the opposition benches, they said.
Among the small-caps, the Africa focused driller and producer SDX Energy (LON:SDX) jumped 10% early on after it unveiled better than flow results from its latest gas well in Egypt.
In the year to date the share price has almost doubled in value as the company has enjoyed success with the drill bit.
6.45am...London called lower
London’s blue chips are set to fall in early dealings according to the financial bookies.
All eyes will be on British Airways owner IAG (LON:IAG) following the disastrous failure of its IT systems over the weekend.
British Airways faces the “Biggest compensation bill ever” according to the reports today, or upwards of £100mln at least with flights still not back to normal.
Reputational damage is harder to quantify but, so far, BA’s chief Alez Cruz has resisted calls to resign
Footsie is set is drop by up to 15 points from the close Friday of 7,547 as investors get their bearings following the bank holiday weekend. The closure of the markets on Wall Street yesterday also means there is no lead from the US.
The largest market in Canada closed a quiet Monday at 15,421.91 - up almost five points.
Asian markets were also quiet with China, Hong Kong and Taiwan also all shut, though the Nikkei in Tokyo was making decent headway near the close.
City headlines
- Miners brace for unveiling of strict new charter in South Africa – Daily Telegraph
- JKX Oil board faces second overthrow in less than two years – Daily Telegraph
- UK tech visas quadruple after applications soar – Daily Telegraph
- Protectionism fears rise as US warns of tariffs on solar cell imports – The Times
- Dutch court backs Akzo’s rejection of talks on bid from PPG – The Times
- Burger King anger Belgium monarchy over competition to crown ‘true ruler of the country’ – The Independent
- Brexit: French officials in ‘serious’ talks with banks about leaving London – The Independent
- Chief executives concerned over what impact on business a Conservative win would have – Financial Times
- Co-Op Bank mulls debt-for-equity exchange to bolster balance sheet – Financial Times
- Crossrail 2 hits buffers as uncertainties over Brexit and election take hold – The Guardian
- Leave oil rigs in the North Sea, say conservationists – The Guardian
- EU moves to crack down on car makers in wake of VW emissions scandal – The Guardian
- RBS investors urged to settle case with bailed-out bank – The Guardian
- One third of N Brown’s income now comes from interest and fees – Daily Mail
- Chinese healthcare group Renhe Pharmacy Co plots £600 million bid for The Body Shop – City AM
- British Airways faces escalating bill over IT nightmare as questions build for cost-cutting boss Alex Cruz – City AM
Commodities/currencies
- Gold: US$1,267 down US$1
- Oil (WTI): US$49.87 up 7c
- £/$: 1.2811 - pound lower