FTSE 100 closes down around six points
Pound reverses morning's losses against dollar and euro
Contrasting polls to blame for sterling volatility
Miners weighing as metal prices dip
FTSE 100 closed Wednesday around six points lower, well off the record close last week, as elections worries intensified and big miners took a hit.
The UK bluechip bench mark closed at 7,519 - down 6.56 points, or 0,09%.
It had earlier hit an intra-day high at 7,585 in the early afternoon, but closed well off last week's record 7,547.
"The FTSE 100 closes marginally down having hit an all-time high today after Sterling dropped on the back of the Yougov poll pointing to a hung parliament," said Peter Bould, of investment group True Potential.
He expects sterling to recover, as it did late on today, if the latest poll turns out to have been overly pessimistic for Tory leader and PM Theresa May.
Miners made up four of the five top laggards on Footsie, the biggest being Rio Tinto (LON:RIO), down 2.53% to 3,102.5p. However, the biggest gainer was Randgod Resources (LON:RRS), up 2.79% to 7,365p.
MID-SESSION
After surging to a fresh intraday high of 7,585 in early afternoon trading, the FTSE 100 has fallen back slightly.
It’s currently 19 points up for the day at 7,545 and still has last week’s record close of 7,547.63 in its sights, although it’s not looking as certain to break that as it was a couple of hours ago.
Down-and-up day for the pound
The main reason for the FTSE 100’s rapid rise and subsequent fall back today is the pound.
Sterling was hammered this morning when a YouGov poll suggested Theresa May might not secure a majority at next week’s elections, although it has rallied this afternoon when a different poll showed a healthy lead for the Tories.
Internationally-focused blue chips – like those found on the FTSE 100 – are exposed to the pound’s movements as they depend on exports and generate a lot of their earnings in foreign-denominated, meaning they should benefit from a weaker sterling.
After bouncing off this morning’s lows, the pound has recovered slightly against the euro to €1.145 (a loss for the day of 0.35%), while it is now up by 0.1% against the dollar to US$1.287.
Burberry in fashion, miners struggling
Luxury trench coat maker Burberry Group PLC (LON:BRBY) is the top riser among the blue chips, up more than 2.5% to £18.32.
Low-cost carrier easyJet PLC (LON:EZJ) was another on the up today, up more than 1% to £14.20 as it recaptured yesterday’s losses and more.
As has been the case for nearly all of the day so far, the miners are still dominating the top fallers list among the blue chips.
Anglo American PLC (LON:AAL) (down 2.2% to £10.33), Rio Tinto PLC (LON:RIO) (down 2.1% to 3,116p) and Glencore PLC (LON:GLEN) (down 1.5% to 287p) all continued their slide as metals prices inched lower once again.
US stocks open high, but quickly head south
Stateside, the Dow Jones opened modestly higher but has since fallen into negative and is currently down 60 points at 20,971.
The S&P 500 and the Nasdaq – despite the latter hitting a new record on the opening bell - followed a similar path, kicking off slightly higher before heading south.
Shortly after 3pm, the S&P 500 is down 7 points at 2,406, while the technology-heavy Nasdaq Composite is down 30 points to 6,173.
2.30pm...What effect would a Labour election win have on the markets?
1.20pm...Bright start expected for US stocks
Across the pond, US stocks are set to get off to a bright start. The Dow Jones is expected to recover most of yesterday’s losses while the S&P 500 is tipped to challenge its all-time highs once the opening bell sounds.
Spread betting quotes see the Dow Jones as opening 36 points higher at 12,062, while the S&P 500 is tipped to open 4.7 points in the black at 2,416.9.
“Still to come today we’ve got some data from the US, including pending home sales and the Chicago PMI. We’ll also hear from two Fed policy makers – Robert Kaplan and John Williams – with only two weeks to go until its next meeting,” said Oanda market analyst Craig Erlam.
“As it stands, markets are pricing in almost an 87% chance of a rate hike in two weeks but only a 42% chance of another one this year. That would explain the weakness we’ve seen in the dollar despite June appearing to have never been in doubt.”
1.15pm...FTSE 100's record-breaking run continues
The blue chip index has well and truly taken advantage of the pound’s weakness to soar through the 7,550, 7,560, 7,570 and even 7,580 barriers. In fact, it’s not too far off adding the 7,590 level to that hit list as well.
Shortly after 1pm, the index was up by 58 points to 7,585 – a new all-time high, beating the previous peak it set earlier on today and leaving it on course to set a fresh record close.
Pound's pain is the FTSE's gain
The footsie’s gain has come from the pound’s pain, with sterling suffering today as pre-election nerves start to kick in.
The index is dominated by internationally-focused companies which depend on exports and generate a lot of their earnings in foreign-denominated, meaning they should benefit from a weaker pound.
The currency had been hammered earlier on after one poll suggested a hung parliament was a possible outcome in next week’s general election.
But another poll today has shown a healthy lead for Theresa May – the City’s preferred choice – and the Tories have a healthy lead which has allowed the pound to claw back some of its morning losses.
It is now down by 0.5% against the euro to €1.144, while it has lost only 0.15% versus the dollar to US$1.284.
Standard Chartered and Burberry lead the way
Standard Chartered PLC (LON:STAN) and luxury retailer Burberry Group PLC (LON:BRBY) lead the way with both posting 3%+ rises today, while Barclays PLC (LON:BARC) isn’t too far behind, up 2.8% to 215.1p.
As has been the case for most of the day so far, the miners are still dominating the top fallers list among the blue chips.
Anglo American PLC (LON:AAL) (down 1.5% to £10.41), Rio Tinto PLC (LON:RIO) (down 1.8% to 3,124p) and Glencore PLC (LON:GLEN) (down 1.5% to 287p) all continued their slide as metals prices inched lower once again.
Capita boosted by rumours of recruitment division sale
On the second tier, troubled outsourcing group Capita PLC (LON:CPI) is the top riser after reports surfaced that it is in talks to sell off its recruitment division.
Capita – which lost its FTSE 100 status after a horrible 2016 – is looking to sell its Capita Specialist Recruitment business to specialist turnaround investor Endless for around £25mln.
While the cash side of the deal is relatively insignificant to a company worth almost £4bn, investors seem to think it is evidence of a turnaround plan being implemented by new chairman Ian Powell. Shares are up 3.5% to 587p.
China New Energy tops the small caps risers
Among the small caps, China New Energy Limited (LON:CNEL) has powered higher after the engineering and technology solutions provider revealed it has secured seven new contracts so far this year.
The contracts – which will all be underway by the end of next month and commissioned in 2018 – are worth around £12.8mln; a sizeable amount given CNE’s market cap before today was less than half that.
The news sent shares by more than a third to 1.5p.
12.30pm...Sound Energy posts video showing latest progress at its Badile project in Italy
12pm...BREAKING: FTSE 100 breaks 7,560 for first time ever
Spurred on by the pound’s fall today, the FTSE 100 has set a new intraday record just before we head into the afternoon session.
Shortly before midday, the blue chip index hit 7,561.95, beating the previous record of 7,554.21 it reached last Friday.
The index has fallen back slightly to 7,559, but it’s still on track to beat its all-time closing high of 7,547.63 which it also set last week.
11.50am…Eurozone inflation comment
ING senior economist Bert Colijn reacts to the news that inflation in the Eurozone has fallen to 1.4% this month, below the European Central Bank’s target of 2% and down from 1.9% in April.
“While concerns about the ECB being behind the curve have been rising over recent weeks, May’s inflation rate should be a wakeup call.
“Self-sustaining inflation of “just under 2%” is still far away as core inflation has not managed to push above 1% in recent months except for April, which was due to a late Easter. In fact, businesses have recently been indicating that selling price expectations have been weakening again and wage growth is still very weak.
The lower oil price and stronger euro are causing import prices to decline, while base effects in energy prices are also putting pressure on headline inflation in the months ahead. This means that further weakness in headline inflation in 2017 is more likely than a rebound to 2%.”
11.40am…Manchester United ‘most valuable club in Europe’
New York-listed Manchester United PLC (NYSE:MANU) have been named as the most valuable football club in Europe.
According to the latest KPMG Football Clubs’ Valuation Report, the Red Devils have an enterprise value (EV) of €3.095bn – making it the only club on the continent to break through the €3bn barrier.
That’s a 7% year-on-year increase for United and puts them ahead of Spanish giants Real Madrid who have the next largest EV of €2.976bn.
The table shows the financial muscle of the Premier League, with six of the top most valuable clubs in the report coming from England. Manchester City are in fifth, Arsenal in sixth, Chelsea in seventh, Liverpool in eighth and Tottenham in tenth.
11.15am…Donald Trump’s late night ‘covfefe’ tweet
If you have no idea what ‘covfefe’ means don’t worry, you’re not alone.
Just after midnight in Washington, Donald Trump tweeted “Despite the negative press covfefe”. And that was it. No more words and no clarification as to what it actually meant.
It left many of his 31mln followers baffled. Predictably then, Twitter came up with its own ideas as to the meaning of ‘covfefe’.
Ask your doctor if Covfefe is right for you. pic.twitter.com/XcDAXMNw1m
— Travon Free (@Travon) May 31, 2017
Finally figured out what Bill Murray whispered in Scarlett Johansson's ear at the end of "Lost in Translation" #covfefe pic.twitter.com/fDFJUYlEz8
— Jordan VanDina (@Shrimptooth) May 31, 2017
"Not only is covfefe a word, it's the greatest word ever uttered." pic.twitter.com/kWhfLrFaKn
— Zach Braff (@zachbraff) May 31, 2017
Trump did eventually take down the message and replaced it with another cryptic tweet.
Who can figure out the true meaning of "covfefe" ??? Enjoy!
— Donald J. Trump (@realDonaldTrump) May 31, 2017
11am…Aldi and Lidl sales surge as food inflation hits three-year high
Food prices shot up at their fastest rate for more than three years this month as the weak pound pushed up import prices.
That’s according to the latest data from the British Retail Consortium which measures the prices of 500 everyday goods.
It found that food inflation was 1.4% during the month, compared to 0.9% in April.
With the average cost of food shopping now £119 a year more expensive, it’s no surprise to see German discounters Aldi and Lidl eating into the market share of the ‘Big Four’.
All supermarkets were boosted by the higher prices, but Aldi and Lidl’s growth was the strongest, growing sales by 19.8% and 18.3% respectively.
That means the two now have a combined market share of 12%.
It wasn’t all bad news for consumers though. The BRC added that overall inflation had actually fallen with the prices of non-food items 1.5% lower than this time last year.
10.40am…Unreliable polls? Who’d have thunk it?
As mentioned below, the pound has sunk today on the news that Theresa May and the Conservatives might actually fail to win an outright majority in the election on 8 June.
Previous polls had suggested that the Tories would increase their majority, which currently stands at 17 seats.
But a projection from YouGov has suggested that a hung parliament could happen.
Not everyone thinks the poll is reliable though and it’s had its fair share of dissenters on social media.
“This was not a poll, rather it is the outcome of a model that has used untested methodology to come up with this hung parliament conclusion,” said City Index’s Kathleen Brooks.
“Other polls are predicting a completely different outcome, so we would use this information with a pinch of salt.”
That's clear then. Pollsters say that the Tories are on course to either lose 20 seats - @YouGov - or gain majority of over 100 - @ComRes
— Nick Robinson (@bbcnickrobinson) May 30, 2017
Some more context on these error intervals. YouGov seat projection says Tory minimum 274 & maximum 345. That's a wide margin #GE2017
— Keiran Pedley (@keiranpedley) May 30, 2017
Slight lack of confidence at Yougov over their "shock hung parliament" estimate.They admit slight changes could see healthy majority for May pic.twitter.com/IG4Z2Dgamg
— Alan Travis (@alantravis40) May 31, 2017
10.30am...FTSE flying high
The FTSE 100 has taken advantage of the pound’s weakness to soar towards the record highs it hit last week.
The blue chip index is currently up 21 points to 7,547, although it got as high as 7,552 just after 9.30am, only 2 points shy of the intraday peak of 7,554 it reached last Friday.
The footsie has benefitted from the weak pound, which has collapsed today after a YouGov poll suggested the Tories could fail to secure an outright majority at next Thursday’s elections.
That has sent sterling tumbling by around 0.5% against both the euro and the dollar to €1.14 and US$1.279 respectively.
The FTSE 100 is dominated by internationally-focused companies which depend on exports and generate a lot of their earnings in foreign-denominated, meaning they should benefit from a weaker pound.
After a disappointing day for the industry yesterday, airliners were among the top risers this morning.
British Airways owner International Consolidated Airlines Group PLC (LON:IAG) added 1% to claw back some of Tuesday’s losses when it hit turbulence following’s BA’s computer systems meltdown over the weekend.
easyJet PLC (LON:EZJ), which also lost ground yesterday, rediscovered last week’s form to also add another 1% or so to its share price.
The miners are still weighing on the index this morning and dominate the list of blue chip fallers.
Anglo American PLC (LON:AAL) (down 1.5% to £10.41), Rio Tinto PLC (LON:RIO) (down 1.8% to 3,124p) and Glencore PLC (LON:GLEN) (down 2% to 286p) all continued their slide as metals prices inched lower once again.
8.45am...As expected, FTSE 100 gets off to strong start
The FTSE 100 wasted no time this morning in recovering the ground lost yesterday.
The blue chip index is currently up 14 points this morning to 7,540, just shy of the 7,547 record closing high it posted at the end of last week.
The rise had been expected given sterling’s performance over night and into this morning, with the pound sinking after an opinion poll suggested the Tories could fail to win an outright majority in next week’s election.
The FTSE 100 is dominated by internationally-focused companies which depend on exports and generate a lot of their earnings in foreign-denominated, meaning they could benefit from a weaker pound.
Shortly before 9am, sterling was down 0.35% versus the dollar to US$1.281 and by a similar percentage against the euro to €1.145.
easyJet PLC (LON:EZJ) was the leading riser among the blue chips this morning. The low-cost carrier gained a little more than 1.3% to continue its recovery from yesterday morning’s slump which hit the whole airline industry.
Primark owner Associated British Foods plc (LON:ABF) wasn’t too far behind though; its decent run rolled over into another day as shares rose by 1.2% to £30.20.
The fallers list is currently dominated by the big miners.
Anglo American PLC (LON:AAL) (down 2% to £10.35), Rio Tinto PLC (LON:RIO) (down 1.8% to 3,125p) and Glencore PLC (LON:GLEN) (down 1.5% to 287.6p) all dipped as metals prices inched lower once again.
Proactive news headlines…
Futura Medical PLC (LON:FUM) said it is “delighted” by the “constructive feedback” proffered by regulators in both the UK and US reviewing the clinical trial requirements for MED2002, a breakthrough gel for erectile dysfunction (ED).
Crucially, written responses from America’s Food & Drug Administration and the Medicines & Healthcare products Regulatory Agency (MHRA) here in Britain support its timeline, which sees marketing approval for the product in the second-quarter of 2019.
Eurasia Mining plc (LON:EUA) has had the reserves report and feasibility study for its Monchetundra palladium and platinum project approved by the Russian State Agency for Subsoil Use (Rosnedra). Using Russian standard C1 and C2 categories, the reserves amount to 55.9 tonnes (1.9mln ounces) palladium equivalent (palladium and platinum) with major additional gold and base metal credits, at two open pits.
Gemfields plc’s (LON:GEM) board has advised shareholders against approving an offer by Pallinghurst Resources Limited to buy all the shares it doesn’t already own in the company. It said a review by an independent committee determined that the deal “significantly undervalues the company, its unique asset base and its leading position in the coloured gemstone sector”.
Bezant Resources plc (LON:BZT) is acquiring a plant that will be able to process alluvial ore from its Choco gold-platinum project in Colombia. Mining operations are expected to begin within the next couple of months
OPG Power Ventures PLC (LON:OPG), the developer and operator of power generation plants in India, traded in line with expectations last year. Meanwhile, operations in the current financial year have been going well, as the group prepares for the construction of the 62 megawatt (mw) Karnataka solar project, which is set to begin in the third quarter of 2017.
Deltex Medical Group plc (LON:DEMG) has been granted a new patent for its Combined Blood Flow and Blood Pressure Monitor for UK, Germany, France, Spain and Sweden. Coverage in the USA has been 'allowed' at this stage and the Company expects the US patent to be formally granted in the second half of the year.
Philippines-based gold miner Metals Exploration Plc (LON:MTL) has signed a loan agreement to borrow US $2mln from its two major shareholders, Runruno Holdings Limited ("RHL") and MTL (Luxembourg). The shareholders will provide funding on a pro-rata basis to their current shareholding.:
Pre-revenue explorer Landore Resources Limited (LON:LND) posted a loss of £1.72mln for 2016, versus a loss of £1.54mln the year before.
Development work has started on the Imweru gold project in Tanzania that Katoro Gold PLC (LON:KAT) is buying from Kibo Mining PLC (LON:KIBO). Kibo BP was September 2016.
Cadence Minerals PLC (LON:KDNC) boosted NAV from £19.58 mln at the end of 2015 to £35.42 mln at the end of 2016. The company said its two key assets, Sonora and Cinovec, could account for between 7% and 10% of global lithium supply by 2025.
European funding for its MeyGen tidal wave project in the Pentland Firth, offshore Scotland, will be unaffected by the UK’s Brexit decision Atlantis Resources PLC (LON:ARL) confirmed today. The second phase of development of MeyGen, now known at Project Stroma, has received EU backing to the tune of €37.3mln.
Gemfields plc (LON:GEM) said independent directors have advised shareholders against approving an offer by Pallinghurst Resources Limited to buy all the shares it doesn’t already own in the gemstone company. Shares fell 1.63% in morning trading as Germfields said a review by an independent committee determined that the deal “significantly undervalues the company, its unique asset base and its leading position in the coloured gemstone sector”.
Tlou Energy Limited (LON:TLOU) has chosen Aussie company Velseis to acquire seismic data for its Lesedi coal bed methane project and the adjacent Mamba permit in Botswana. The 250 km 2D seismic programme should start in the next quarter with the aim to boost gas reserves at both projects.
Horizonte Minerals Plc (LON:HZM TSX:HZM) has reported high grade nickel indications from a small trial drilling programme at its Araguaia project in Brazil. Jeremy Martin, chief executive, said the aim was to define an area with near surface transition and saprolite mineralisation that would be representative of the first five to eight years life at the nickel mine.
Sareum Holdings Plc (LON:SAR) has noted that its partner Sierra Oncology has been granted patents in the US and Europe that explicitly give greater protect for its anti-cancer Chk1 inhibitor candidate SRA737. Tim Mitchell, Sareum’s chief executive, said: "SRA737 is a valuable asset to Sareum through its licence to Sierra Oncology. We are pleased to see that patents to protect it have been granted in these major territories."
Union Jack Oil PLC (LON:UJO) has received approval from the Oil and Gas Authority for the acquisition of a further 3.33% interest in PEDL180 and PEDL182 from Celtique Energie Petroleum Limited. These licences contain the Wressle-1 discovery. Union Jack now holds a 15% interest in both licences following completion of this transaction.
Chaarat Gold Holdings Ltd’s (LON:CGH) 7.04mln ounce gold deposit was highlighted as a strategic asset for the Kyrgyz Republic at an investment forum co-hosted by the company.
6.50am...FTSE 100 set to open higher
UK stocks were set to open modestly higher despite a soft showing by US stocks yesterday.
Spread betting quotes suggested an opening level for the FTSE 100 of around 7,540, up 13 points from last night’s close.
Yesterday on Wall Street the S&P 500 slipped 3 points to 2,413 and the Dow dived 51 points to 21,029 as investors returned from the long Memorial Day weekend.
The end of the month approaches and traders may have been banking some recent gains, while Friday will see the release of the May jobs report, which could also be encouraging hesitancy.
Heading towards the close of trading in Asia, the situation was mixed. In Japan, the Nikkei 225 was down 50 points at 19,628 and in Hong Kong the Hang Seng was 17 points lower at 25,685, but Chinese stocks were going well, pushing the Shanghai Composite six points higher to 3,116.
Back in the UK, there is little in the way of economic data for traders to get their teeth into, so focus will remain on the succession of gaffes likely to be perpetrated by politicians on the campaign trail.
Spread betting firm IG yesterday reported that its customers are now predicting a Conservative majority of “only” 106 seats.
Labour was predicted to win 184 seats, up from previous predictions of a total in the 150s.
IG Group PLC (LON:IGG) issues a trading update today in which it may comment on whether the General Election is increasing its trading profits.
Financial markets on both sides of the Atlantic have been hitting new highs recently, and investors will be hoping this will translate into improved trading for IG.
Around the markets
- Sterling: US$1.2800, down 0.6 cents
- Yield on 10-year gilt: 0.998%
- Gold: US$1,263.80 an ounce, down US$1.90
- Brent crude: US$51.52 a barrel, down 32 cents
Headlines
- Unions in ‘absolute opposition’ to BT pension scheme closure - Daily Telegraph
- Irish government to float stake in Allied Irish Banks - Daily Telegraph
- Pizza Express Chief Hodgson exits just weeks after second UK sales dip - Daily Telegraph
- Passengers still without bags after British Airways IT meltdown - The Guardian
- Sir Stelios Haji-Ioannou pledges to give half of £2 billion fortune to charity - The Guardian
- Higher inflation drives down real wages for British workers - The Guardian
- G4S rally secures comeback to FTSE 100 - The Times
- BHP Billiton and Rio Tinto face £2 billion levy in Australia - The Times
- Berkeley Group breaks out of London to build a business in the Midlands - The Times
- Facebook says new German law would make companies delete legal content - The Independent
- Bank of England staff studied Dr Seuss to brush up on communication - The Independent
- RBS shareholders accept last-ditch settlement in legal dispute - The Independent
- OECD complains of lack of competition in flotation underwriting market - Financial Times
- Four Melrose executives each to trouser £36mln bonus - Financial Times
- Gold mining boss Peter Hambro fights for his position in Petropavlovsk as shareholders try to take control of board - City AM