FTSE 100 closes up 23
Late rally sees pound reverse losses against dollar
UK manufacturing grew again last month
House prices fell 0.2% in May - Nationwide
FTSE 100 held onto gains to close up over 23 points at 7,543.
It came despite the strengthening of sterling, with the pound up 0.12% against the US dollar at 1.2892.
The finish is just shy of the previous record close of 7,547.
In the midcaps, FTSE 250 closed over 38 higher, at 20,010.
The big gainer on FTSE 100 was bookie Paddy Power Betfair plc (LON:PPB) with investors sending shares up 4.34% to 8,420p.
Housebuilders were in the losing camp as new figures from Nationwide showed property prices had dropped in May for the third consecutive month.
Prices dropped 0.2% that month, while the annual rate of growth slowed to 2.1% , underlining fears of a slowdown in momentum in the market.
In the US, stocks got off to a good start, with the Dow Jones up over 50 at the time of writing, at 21,059.
3.20pm - FTSE 100 still on course
A late surge from sterling as the closing bell approach failed to knock the FTSE 100 off its course, with the blue chip index remaining within the tight range in which it has spent most of today.
Shortly after 3pm, the index was up 28 points to 7,548.
The footsie has been bolstered in recent sessions by the falling pound, with its internationally-focused blue chips seeing their foreign-denominated earnings jump once translated back into sterling.
Another poll which showed the Tories with only a three point lead heading into next week’s general election weighed on the pound this morning, although it shook this off later on to recover those losses and more.
It is now up by 0.05% against the dollar to just shy of US$1.29, while it is up by 0.2% versus the euro at €1.149.
Paddy Power still top riser, Mediclinic still top faller
Back on the markets and investors were still betting big on Paddy Power Betfair plc (LON:PPB) with the bookie up 4.5% to £84.40 to make it the top riser on the FTSE 100.
3i Group PLC (LON:III) was still going strong as well after the private equity investor had its price target upped by Barclays to 980p from 750p. “We believe the outlook is positive,” said analysts at the bank.
At the other end of the index, Mediclinic International Plc (LON:MDC) was still nursing big losses as it slumped by 3.5% to 781p.
The private healthcare group was the biggest faller among the blue chips as it was hit by two big downgrades from analysts at Bank of America Merrill Lynch and Credit Suisse.
BoA cut its rating from ‘buy’ to ‘neutral’, while Credit Suisse also moved its recommendation to ‘neutral’ from ‘outperform’.
UK housebuilder Taylor Wimpey PLC (LON:TW.) was also in the list of heaviest fallers. It is down 1.5% to 191p and was unlikely to have been helped by Nationwide data that showed house prices fell for the third month in a row in May.
Inmarsat rockets on takeover speculation
In the second tier, there was some movement from satellite firm Inmarsat Plc (LON:ISAT), which rocketed more than 6% to 849p on rumours over a takeover bid.
The chatter in the City was that Japanese tech investor and SoftBank founder Masayoshi Son could be mulling a possible bid for Inmarsat after his £11bn deal to acquire Intelsat fell through today.
Reports suggest that SoftBank – which bought ARM last year for £24bn – has already been in talks with other satellite companies about merging with its OneWeb business.
US stocks nudge higher
Over in the US it was a relatively quiet start, albeit a little better than spread betting quotes had suggested.
The Dow Jones is currently up 22 points to 21,031, while the S&P 500 Index added 3.5 points to reach 2,415.
After briefly hitting a new high of 6,218 shortly after the opening bell, the tech-heavy Nasdaq Composite has edged back although it’s still in the black (just) at 6,207 – a gain of almost 9 points.
12.40pm...Pound stabilises
As has been the case for the past few trading days, the pound continues to be a main driver for the FTSE 100 and trading in London more generally.
After staging a minor recovery yesterday afternoon, sterling has fallen back today thanks to another poll from YouGov which shows the Tories – who thought they were going to storm this snap election – with only a three point lead over Labour.
Not even the fairly decent UK manufacturing PMI – which fell month-on-month but beat expectations – could push the pound higher.
Although it might not be rising, sterling seems to have halted the decline and is currently down by 0.2% against the dollar to US$US$1.286, while it is only slightly down on the euro at €1.146.
The stabilising pound has led to a less volatile FTSE 100. The blue chip index has traded around the 7,550 mark for most of the day and is currently up 27 points to 7,457.
Broker notes send 3i and Mediclinic in opposite directions
Private equity investor 3i Group PLC (LON:III) has been in and amongst the footsie’s top gainers after Barclays hiked its price target to 980p from 750p. Analysts at the bank said: “We believe the outlook is positive.”
Taking number one spot on the top risers list was Paddy Power Betfair plc (LON:PPB), with investors taking a punt on the bookmaker to push the share price up 3.6% to £83.62.
At the other end of the index, Mediclinic International Plc (LON:MDC) was still the day’s biggest faller, down almost 4% to 778p.
The private healthcare group was hit by two big downgrades from analysts at Bank of America Merrill Lynch and Credit Suisse.
BoA cut its rating from ‘buy’ to ‘neutral’, while Credit Suisse also moved its recommendation to ‘neutral’ from ‘outperform’.
US stocks to open lower
Over in the States, the US markets are set to continue their drift lower this morning.
Spread betting firms see both the Dow Jones and S&P 500 opening modestly in the red at 20,997 and 2,411 respectively.
“Looking to this afternoon and the Dow Jones’ oh-so-gradual decline seems set to continue, with the futures teasing a sub-21000 open,” says Spreadex financial analyst Connor Campbell.
“Like most of its peers the main focus for the Dow this Thursday is on manufacturing; the Markit PMI is expected to arrive at an 8 month low of 52.5, while the ISM figure is forecast to slip back to 54.7, its worst reading since January.”
12.25pm...Record numbers of top rate taxpayers
A record number of people are paying the highest rate income tax, although they still remain a tiny fraction of total taxpayer numbers.
Around 364,000 people are paying the 45p rate of tax on income over £150,000 – that’s up from 311,000 a few years ago.
In total, these high earners represent just over 1% of all UK taxpayers, according to figures from HMRC.
The latest estimates show that just over 25mln – or 82% - are paying the basic rate of income tax, while a further 4.2mln (14%) fall in the higher 40% tax bracket.
12.05pm...Bank of England staff to vote on possible strike action
Bank of England workers are set to begin voting today on whether or not they should take industrial action in a row over pay.
Trade union Unite says the 323-year old bank has treated “its workers with contempt” after it offered a below-inflation pay rise this year.
Unite said workers “are angry that they have been given a below inflation pay offer for the second year running”.
The Bank of England will increase its pay pot by 1% this year but given that the amount an individual receives is at the discretion of managers, Unite said some could end up receiving no rise at all.
The union – which represents security, catering and legal staff, among others – called the offer “derisory” and labelled the bank as “arrogant and out of touch”.
If staff decide to back the industrial action, it is believed it would be the first strike in the BoE’s history. The ballot is due to close on 21 June.
Reports suggest that only around 2% of the bank’s 4,000-strong workforce are members of the union, although Unite claims it is much higher.
Unite is launching a strike ballot over pay - at the Bank of England! (Only among facilities staff, not Mr Carney)
— steve hawkes (@steve_hawkes) June 1, 2017
11.45am...Brexit hangover for wine drinkers
UK wine lovers are suffering a Brexit-related hangover as the price of the average has jumped to an all-time following last year’s referendum.
Prices have risen more in the first three months of 2017 than they did in the previous two years with the average bottle now costing £5.56.
According to the Wine and Spirit Trade Association – which compiled the data – there could be more price rises on the way as well.
Miles Beale, its chief executive, said: “Unfortunately, for both British businesses and consumers, we are clear that this is not a one-off adjustment, but rather that wine prices will continue to rise.”
The primary reason for the increase is the weak pound, with the slide in sterling driving up the cost of imported goods making everyday items more expensive.
11.25am...House prices fall for third month in a row
UK houses fell for the third month in a row in May for the first time since the height of the financial crash back in 2009, according to the latest data from Nationwide.
Prices dropped 0.2% in May, while the annual growth rate slowed to 2.1% - the weakest pace for more than three years.
Nationwide said the figures were further evidence that the housing market is “losing momentum”, but added that it is too early to tell if it is anything more than a “blip”.
Alex Gosling, chief executive of online estate agents HouseSimple.com, isn’t too worried though and expects house prices to continue to grow over the coming months and years.
“Although three consecutive months of negative price growth is a concern, it doesn't mean the property market is staring into the abyss. This feels like a market that is taking a breather not a market on a downward spiral,” Gosling said.
"A lack of supply is still supporting prices and mortgage rates remain extremely low with plenty of competitive deals on offer.”
11.10am...UK manufacturing grew again in May
The UK manufacturing industry seems to be in rude health as it grew once more in May, albeit at a slower rate than the month before.
The IHS Markit Purchasing Managers Index fell to 56.7 in May, down from April’s three-year high of 57.3 but slightly ahead of the 56.5 which had been expected.
The PMI found that growth largely came from higher domestic demand rather than increased exports.
IHS Markit’s senior economist Rob Dobson explained: “Growth of new export business played a lesser role in comparison, with the trend in foreign demand continuing to improve only in fits and starts, despite the assistance of a historically weak sterling exchange rate.”
UK manufacturing PMI showed export growth weakened in May, but still robust https://t.co/M2TpkMlwEJ pic.twitter.com/TtRTAPiKlh
— Chris Williamson (@WilliamsonChris) June 1, 2017
10.45am...Groundhog Day for FTSE 100
After a sluggish finish to what had been a record-breaking day yesterday, the FTSE 100 is back on the move this morning.
The blue chip index is currently up 27 points to 7,547, 40 points or so off of yesterday’s all-time high. That’s not too much when you consider how volatile the markets are at the moment.
The index was once again guided higher by sterling, which has lost ground against the dollar and euro as another poll has suggested Labour are narrowing the gap to the Tories – the City’s preferred choice.
The pound is down by 0.2% against the dollar to US$1.286 and down by 0.1% against the euro to €1.145.
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.
3i Group top riser, Mediclinic top faller
Private equity investor 3i Group PLC (LON:III) was the top riser among the big boys this morning after it was on the end of a bullish broker note from Barclays.
Analysts at the bank cited the solid performance of 3i’s investments as it hiked its price target by 31% to 980p.
Going the other way was private healthcare group Mediclinic International Plc (LON:MDC) is once again the biggest faller on the FTSE 1000, down another 3.5% to 780p. The stock is now down 10% or so since it announced its full year results last Wednesday.
Mixed outlook weighs on FirstGroup
On the second tier, FirstGroup PLC (LON:FGP) saw its shares drop back sharply this morning as a cautious trading outlook countered strong growth in full-year profits and revenue driven by its US school bus business, with the lack of a dividend reinstatement also disappointing investors.
For the year to end March, the transport operator reported adjusted pre-tax profit of £207mln, up 23% from the £168.3mln seen a year earlier, as revenue rose by 8.3% to £5.653mln.
But the FTSE 250-listed firm said it faces a "mixed trading environment" with opportunities for steady progress in the North American divisions countered by continued economic uncertainty in the UK. Shares lost 6% in early deals to trade at 141p.