FTSE 100 closes down 28
Britains head to polls in general election
US shares make gains as ex-FBI chief Comey speaks to Senate
FTSE 100 closed lower on Thursday as the market fretted over the UK general election result amid general uncertainty here
The blue chip benchmark finished the afternoon session down 28, or 0.38% at 7,449 - a three week low.
Conversely, FTSE 250 closed up around 47 at 19,743.
David Madden, analyst at CMC Markets, said dealers were concerned at the outcome.
"If you take an average of the polls conducted, it points to a Conservative win but some investors have less confidence in the polls, in the wake of Brexit and President Trump," he noted.
He added: "The ground lost by the Conservatives in the past couple of weeks has rattled some traders."
Against the US dollar the pound shed 0.18% and was 0.29% up against the Euro at the time of writing.
On the company front, miners were among the gainers with Glencore (LON:GLEN), up 2.08% to 288.9p.
Vodafone plc (LON:VOD) lost 4.8% to 218p, while WPP (LON:WPP) shed 2.68% to 1,631p as both stocks went ex-dividend.
3pm... FTSE 100 down 15 at 7,563 as all eyes turn to election result
FTSE 100 is stuck in the red as investors settle down for the election result this evening.
Exit polls recently have given an accurate guide to the result so shortly after 10pm we should have a very good idea of the colour of the next government, though if a hung parliament is indicated that could just be the starting gun for a manic round of horse trading.
US markets have given some support, with Dow Jones Industrial Average rising 14 to 21,486 as former FBI chief James Comey started to give testimony to the Senate about the Russia scandal. Comey was unceremoniously fired by US President Donald Trump recently.
Plant hire group Ashtead PLC (LON:AHT) up 2% to 1,623p, broadcaster ITV plc (LON:ITV) up 1.6% to 186.8p and a smattering of miners were the best performers. Lloyds and RBS, meanwhile, gave back most of their early gains.
Gold miners Randgold Resources PLC (LON:RRS) and Fresnillo PLC (LON:FRES) were among the fallers as precious metals retreated. Randgold fell 2% to 7,485p and Fresnillo PLC (LON:FRES) down 1.7% to 1,651p.
1.45pm... ECB hints at possible end to easing
“An initial assessment of the early statement is that the ECB may have made some tiny, tentative steps towards policy normalisation by dropping a reference that it could cut interest rates further”.
That was the verdict of Kathleen Brooks at spread bet firm CityIndex to the latest meeting of the European Central Bank.
“We still need to see the ECB staff forecasts for growth and inflation and there is a big expectation that the ECB will sharply cut its inflation forecast to the 1.5% level, way below the ECB’s 2% target rate.”
1.30pm... US shares set for subdued start on super Thursday
US shares are set to open flat ahead of ex-FBI chief James Comey before Congress.
Spread bet firms see the Dow Jones Industrial Average a few points lower at 21,170.
FTSE 100 is down 18 at 7,460 the time of writing as the market appears to be a bit in limbo before the result is known.
US crude is also continuing its pitiful run, down around half a percent at the time of writing, at US$45.48.
11.45am... FTSE 100 is going nowhere today
At lunchtime the index was five points lower at 7,473 having briefly poked its nose into the blue earlier in the day.
Lloyds and RBS were helping the index, but oil companies were under pressure as the crude price hit its lowest this year as US supplies pick up and the row between Qatar and its neighbours shows no sign of easing.
Michael Baxter, economics commentator for The Share Centre said: “ The price of Brent Crude Oil has fallen to under $49 per barrel, the lowest level since the end of November 2016. The price of West Texas Intermediate fell to less than $46.
“A contributing factor to this was a report from US Energy Information Administration predicting that US oil production could rise to a new high, of around ten million barrels a day, exceeding US oil production in the mid-1970s and not far short of oil output from Saudi Arabia.”
Other good risers included plant hire group Ashtead PLC (LON:AHT), up 1.4% to 1,615p, and property group British Land PLC (LON:BLND) up 1% to 641p and Land Securities PLC (LON:LAND) up 0.8% to 1,076p.
Vodafone PLC (LON:VOD) went ex-dividend and was the heaviest faller, shedding 4% to 219.6p.
10.40am... FTSE 100 back in the blue
The blue chip index was three points higher at 7,481 with banks, airlines and miners all doing well.
10.30am ... Lloyds the best riser as HSBC reiterates buy
Lloyds Banking PLC (LON:LLOY) was the top performer after an update from HSBC suggested a target price of 76p, 10% above the current share price.
“We rate Lloyds ‘Buy’ as we believe our forecasts are relatively cautious with, in particular, significant upside risks should either UK rates rise or industry volumes in the mortgage market pick up.”
Barclays was also a buy with a 250p target price, which implies 19% upside. HSBC liked the diversified geographical and business mix, the EPS growth stemming from non-core deleveraging and US consumer business and the improving capital position.
Royal Bank of Scotland PLC (LON:RBS) gets a reduce rating, with the target price of 210p implying downside risk of 17%. Litigation worries and regulatory penalties are the reason for the gloomy view, but HSBC also sees the state-owned back as the most vulnerable to a shock election result.
8.45am: Subdued start on big day
The FTSE 100 ticked lower in early trading this morning, with the mood fairly subdued as the UK Election Day finally arrived, with other major events in Europe and the US also keeping investors close to the sidelines.
Around 8.45am, the UK blue chip index was about 2 points lower at 7,476, albeit steadying after falls of 46.33 points yesterday caused by a surge in the pound.
On currency markets, after the strong gains yesterday sterling was just 0.1% higher versus the dollar at US$1.2973, and also took on 0.1% against the euro at €1.1526.
Craig Erlam, senior market analyst at Oanda said: “Thursday promises to be a massive day for financial markets with major risk events taking place in the UK, eurozone and US that could create substantial volatility throughout the day.”
He added: “From a markets perspective, this election is huge and could produce some substantial moves, particularly in sterling, the FTSE and UK debt. As we’ve learned from similar events previously – Brexit, US election - not only is the outcome not always obvious but the market reaction can also catch people off guard and that’s what’s had traders acting with such caution all week.”
#UK Vote the Biggest in Decades https://t.co/RG5uMrz3ID #UKElection2017 #TheresaMay #JeremyCorbyn #GBP #FTSE #ECB #Eurozone #US pic.twitter.com/vJOoMjNaCS
— Craig Erlam (@craig_forex) 8 June 2017
But, Erlam continued: “Another major risk event today is the ECB meeting, which after reports yesterday of leaked draft ECB staff projections could be very interesting indeed.
“The leaked draft indicated that the central bank is revising higher its GDP forecasts but lowering its inflation forecasts through 2019."
He added: “It’s currently assumed that further reductions in asset purchases will be planned again at the end of the year, with possibly today’s and September’s meeting being used to lay the groundwork.”
Erlam concluded: “Finally today, former FBI Director James Comey will testify before the Senate Intelligence Committee regarding a number of events involving President Donald Trump including the links between his campaign and Russia, as well as allegations that he requested at the time that an investigation into his National Security Advisor – Michael Flynn – be dropped.
“Traders will be following the public part of the hearing with great interest and should there be any ‘bombshells’, it could ruffle the markets.”
Ex-dividend factors the main drag
With all these factors to focus on, and little corporate news around, the FTSE 100 just drifted lower, weighed by a batch of stocks trading ex-dividend today - most notably among the top two fallers , Vodafone PLC (LON:VOD) and Johnson Matthey PLC (LON:JMAT) - which in total knocked 11.7 points off the blue chip index.
Once the drag from the stocks trading without entitlement to their latest payout was removed, the benchmark was marginally higher, led by gains in banking stocks and a rally by drugmakers.
Lloyds Banking Group PLC (LON:LLOY) gained 0.8% at 70.64p, while AstraZeneca PLC (LON:AZN) was up 0.7% at 5,340p.
On the second line, under-pressure oil services firm Petrofac PLC (LON:PFC) recovered 3.5% to 361.2p on news it has secured a 10-year framework agreement with oil company Petroleum Development Oman to provide engineering, procurement and construction management services for major oil and gas projects.
The worst mid-cap performer was India-focused miner Vedanta Resources PLC (LON:VED), which shed 4%, or 23.5p at 571.5p, after Jefferies international cut its rating to ‘underperform’ from ‘hold.’
The broker also cut its stance for online electricals retailer AO World PLC (LON:AO.) to ‘hold’ from ‘buy’ after yesterday’s full-year results, sending its shares 2.5%, or 3.2p lower to 123.7p.
6.55am: Gains predicted on Polling Day
Despite several ’big’ potential geopolitical catalysts today, including the general election here in the UK, the FTSE 100 is set to open modestly higher this morning.
Spread betting quotes suggest the index of blue chip shares will take its cue from US stocks which finished higher on Wednesday to open 10 points in the black at 7,475.
The Dow Jones and S&P 500 ended their two-day barren run to finish at 21,173 (+37.5 points) and 2,433 (+4 points) respectively.
Trading was once again mixed over in Asia as soft economic data out of China, Japan and Australia and today’s busy agenda taking its toll. Shortly before close, the Hang Seng index was up 47 points at 26,021, although the Nikkei 225 has shed 75 points to sit at 19,909.
As well as the UK election, markets also have to contend with a potentially explosive testimony of former FBI chief James Comey and face the ECB monetary policy meeting.
“Thursday promises to be a massive day for financial markets with major risk events taking place in the UK, eurozone and US that could create substantial volatility throughout the day,” said Oanda senior market analyst Craig Erlam.
“The UK will head to the polls in what will be the most important vote in decades to decide who will lead the country into the Brexit negotiations and what direction it will take in the years to come.
“From a markets perspective, this election is huge and could produce some substantial moves, particularly in sterling, the FTSE and UK debt.
“As we’ve learned from similar events previously – Brexit, US election - not only is the outcome not always obvious but the market reaction can also catch people off guard and that’s what’s had traders acting with such caution all week,” he added.
Election headlines
- Theresa May ended her election campaign with a warning to voters that anything other than a strong Conservative victory in Thursday’s election would weaken Britain as it prepares for its journey out of the EU, reports the FT.
- The paper also reports that the election has chilled the housing market, according to a survey of estate agents and surveyors. House sales fell in May for the second month running said the Royal Institute for Chartered Surveyors.
Business headlines
- British shareholders in Santander will be asked to dig deep into their pockets to fund the multibillion-euro rescue of a failing Spanish lender Banco Popular, the Times reports. About 1.4 mln UK-based investors in Santander, most of whom received their shareholding when the bank took over Abbey National 12 years ago, will have to buy new shares to avoid dilution of their stakes.
- The founder of crisis-torn oil and metals trader Noble Group has seen his £2bn stake in the company collapse as it fights for survival. British tycoon Richard Elman, 77, set up the firm in Hong Kong in 1986 and turned it into one of the world’s largest commodity traders during 30 years at the helm Mail.
- Sir Philip Green’s retail empire suffered a sharp decline in British sales last year as the tycoon complained that clothing was becoming a less important part of household budgets. Revenue at his chains, which include Topshop, Miss Selfridge and Evans, declined to £1.7bn in the year to August 27, down from £2.2 billion the year before, the Times reports.
- Berendsen has succumbed to a takeover proposal from French rival Elis, after the offer was raised for a second time to £2.2bn, in spite of earlier comments made by the British laundry giant's board that there had been no "basis for any further discussions", writes the Telegraph
- Top shareholders in WPP have attacked the company’s failure to put in place a proper succession plan for the chief executive, mounting a fresh rebellion over pay and governance at the FTSE 100 advertising group. More than a fifth of investors at a stormy annual meeting yesterday also voted against the £48 million pay package of Sir Martin Sorrell, the company’s founder and chief executive, reports the Times.
Around the markets
- Sterling: US$1.2958, down 0.02 cents
- Yield on 10-year gilt: 1.004%
- Gold: US$1,289.90 an ounce, down US£.20
- Brent crude: US$49.48 a barrel, down 47 cents