FTSE 100 closes 26 down
Fire in West London tower block has injured many and killed six
Housebuilders boosted by Bellway optimism
Miners take brunt of selling
FTSE 100 closed the day lower, after going into reverse, with big miners taking the brunt.
The index of leading UK shares had been up 16 points at midsession, but finished 26 lower at 7,474.
Weighing on sentiment ahead of a possible rate rise across the pond was the strength of sterling and new disappointing data on UK earnings, which showed a slowdown in the three months to April
Together with inflation, it all means real wages are falling at the fastest pace for three years.
David Madden, analyst at CMC Markets, said: "The FTSE 100 started out strong, but it has given up all its gains as the rally in the pound hit the main equity benchmark."
He added that the UK was still in "political flux", with no announcement about the talks between the Conservatives and the Democratic Unionist Party (DUP) as a mark of respect due to the highrise blaze tragedy in West London.
The biggest laggard on Footsie was Glencore (LON:GLEN), the commodities giant, which closed 2.6% down, at 286.65p.
BHP Billiton plc (LON:BLT) shed 1.79% to 1,178p and was one of the top five losers, as the miner saw activist shareholder Elliott Management step up the pressure with a call for the group to "upgrade" its board of directors as it prepares to select a new chairman this week.
Elliot said: "BHP has an entrenched board, with long-tenured directors having approved the disastrous acquisitions and poorly timed share buybacks that are at the root of much of today's underperformance.”
3.30pm... FTSE 100 hands back gains as US rate rise looms
FTSE100 has eased back ahead of the likelihood of a rise in US interest rates this evening.
From gains over 40 points just after lunchtime, FTSE 100 is now just 16 points higher at 7,516.
US Federal Reserve chair Janet Yellen is expected to raise borrowing rates to 1.25% and may indicate more rate rises are on the way though US economic data is not supporting the case according to Connor Campbell at Spreadex.
“The consumer price index contracted by 0.1% in May, down from the 0.2% growth seen in April, while the retail sales figure fell from 0.4% to -0.3% month-on-month.
“Both were far worse than forecast and combined with the weak first quarter GDP reading suggest that the US economy isn’t faring too well under the Donald Trump’s near non-existent leadership.
What that may mean he said is that the central bank’s tone may be far less hawkish than initially planned.
Best of the risers in London were gold and silver miner Fresnillo PLC (LON:FRES), up 3.5% to 1,698p, British Gas owner Centrica PLC (LON:CNA) 3.4% better at 203.7p and housebuilder Barratt Developments PLC (LON:BDEV), which added 17p to 592.5p.
Banks were weak led by Standard Chartered PLC (LON:STAN), which shed 1.2% to 760.4p, while US –focused plant hire group Ashtead PLC (LON:AH) continued to suffer from a UBS downgrade and eased 19p to 1,581p.
Shares in Acacia Mining PLC (LON:ACA) soared after the gold miner’s majority shareholder Barrick stepped in to help settle a dispute with the Tanzanian government.
New York-listed Barrick Gold Corp (NYSE:ABX) has agreed to compensate the East African country’s government, after ministers accused Acacia of under-declaring its gold shipments and “mining illegally”.
Acacia ‘strongly refuted’ the allegations, but after formal talks with Barrick – which owns a 63.9% stake in the gold miner – Tanzania's president John Magufuli said the parent company had “repented” and would “repay all the losses that we as a country incurred”.
Acacia is yet to comment directly. Shares rose 8.3% to 295p.
1.15pm... FTSE 100 overlooks bad news as US set for new record
FTSE 100 is overlooking the prospect of a hard squeeze in consumer incomes in the UK and a possible rate rise in the US this evening.
The blue chip index is 40 points higher at 7,540 ahead of the US open, where financial spread bet firms see the Dow Jones Industrial Average rising more than 30 points hewn trading gets underway.
Amid the political uncertainty, UK prime minister Theresa May is having to do deal with some tricky economic data as well.
After rising inflation yesterday, wage growth including bonuses came in at a 14 month low of 2.1% or 1.7% once bonuses are stripped out compared to the 2.9% rise in inflation seen in May.
“That means between February to April 2016 and the same period this year total pay in the UK fell by 0.4%, the tightest squeeze on workers’ wallets in 2 and a half years, said Nick Dixon, Investment Director at Aegon.
“That doesn’t bode well for the country’s second quarter growth, given that the UK’s services-based economy is going to suffer if customers are forced to spend less.”
Elsewhere, analysts says another rise in US interest rates seems almost certain today to 1.25%, but more pertinent may be the interest rate committee’s comments for the rest of the year and whether there is a lot more or not to come.
11.00am FTSE 100 up 27 but new disaster in London distracts attention
News of another dreadful incident in London has overshadowed activity on markets this morning.
A fire at the Grenfell Tower block of flats in North Kensington has seen fifty people taken to hospital and reports of a number of fatalities.
The incident occurred on the morning of one minute’s silence being observed in Borough Market for the 8 people killed in the recent terrorist attack.
FTSE 100 was 27 points higher at 7,527. Housebuilding was the best sector after a bullish update from FTSE 250 constituent Bellway PLC (LON:BWY).
Barratt (LON:BDEV) added 2.5% to 590p, while Taylor Wimpey PLC (LON:TW.) rose 2.2% to 182.3p.
Bellway said there had no let up in demand for homes in the run-up to the election with a a 13% increase in its reservation rate to 221 per week in the period from February 1 to June 4 2017, up from 196 per week a year earlier.
Full-year completions will increase by nearly 10% on last year’s 8,721 total. Shares rose 2.4% to 589p.
Plant hire giant Ashtead PLC (LON:AHT) was the worst performer after UBS got the red pen out following yesterday’s results.
Results were good it concedes, but the high valuation overestimates market acceleration, underestimates capital requirements, and increasingly misses the risks from competition.
The target price is 1,400p and sell is the rating. Shares dropped 3% to 1,553p.
8.45am.. Housebuildes give FTSE 100 a lift
The FTSE 100 opened in subdued mood with the index of blue-chip shares up just seven points at 7,507.50 ahead of the publication UK jobs data and the expected announcement of a pact between the Democratic Unionists and the Tories aimed at shoring up the minority UK Government.
On the markets the housebuilders were in demand following a better than expected trading update from Bellway (LON:BWY), which led the FTSE 250 with a 3% gain.
This in turn gave a boost to its bigger peers Taylor Wimpey, (LON:TW.), Barratt Developments (LON:BDEV) and Persimmon (LON:PSN). Their shares were up between 1.5% and 1.7%.
easyJet (LON:EZJ) was also among the early risers, nudging ahead 1.5% after an upgrade from the Irish house Davy.
Digging down into AIM, Gemfields (LON:GEM) posted a sparkling 12% gain after receiving a second bid approach, while Sound Energy (LON:SOU) advanced 5% after some positive early drill results from Italy.
Proactive news headlines...
Sound Energy PLC (LON:SOU) said drilling at its Badile onshore well near Milan, Italy, has uncovered “significant gas shows”. Drilling and logging must to be completed to establish the full picture.
Shares in Gemfields PLC (LON:GEM) boomed this morning as the ruby and emerald miner looks set to be thrust into the middle of a bidding war. Chinese conglomerate Fosun Gold has approached miner with a more lucrative cash offer than had already been put on the table by its largest shareholder, Pallinghurst Resources.
W Resources PLC (LON:WRES) has published a maiden statement of ore reserves at the La Parrilla tungsten/tin mine in Spain. Based on the reserves of 29.7mln tonnes (mt) at 931 parts per million (ppm) tungsten trioxide (WO3) and 116 ppm tin (Sn), La Parrilla will have an eleven year mine life initially producing 2mln tpa (million tonnes per year) and rising to 3.5mtpa in 2020.
Internet of Things enabler Telit Communications Plc (LON:TCM) has launched its simWISE cellular module embedded SIM technology today. The technology, which is the first of its kind, was developed alongside Telit’s Sweden-listed partner, Tele2.
IronRidge Resources Limited (LON:IRR) has identified what it describes as multiple, significant outcropping lithium pegmatites at the Egyasimanku Hill site in Ghana. Vincent Mascolo, chief executive said: "We are very excited to have located the historical Egyasimanku Hill resource which further vindicates our rigorous and exhaustive research criteria.”
Porta Communications PLC (LON:PTCM) has taken its interest in Redleaf Polhill, the City financial PR firm, to 81%. It has paid £850,037 paid in cash and shares for an additional 15% of the business after a put option was exercised, paving the way to the sale.
Futura Medical PLC (LON:FUM) continues to receive “significant commercial interest” in MED2002, its gel for erectile dysfunction, chairman John Clarke told the company’s annual meeting later Wednesday.
Metminco Limited (LON:MNC ASX:MNC) has sold its 49% stake in the Los Calatos copper project in Peru for US$5mln as it focuses on its gold assets in Colombia. Redfield Asset Management Pty Limited has also increased its holding in the company to 9.83% following share purchases over the past three months.
Mariana Resources Ltd (LON:MARL) has intersected high grade gold-copper mineralisation as part of its ongoing drilling programme at the Hot Maden project in Turkey. In an update on the project, the company said assay results from drilling included 31 metres at 7.5 grammes of gold per tonne of ore from its HTD-118 hole.
6.45am...Footsie called lower
The FTSE 100 is set to open four points lower at 7,496 as investors keep an eye on UK political developments and look ahead to UK jobs data and the Federal Reserve’s interest rate decision.
Theresa May’s Conservative Party is expected to announced a pact with the Democratic Unionist Party today, which will set the tone for Brexit talks that are due to begin next week.
Elsewhere in the UK, the Office for National Statistics releases its UK labour market report at 9.30am and is expected to show employers added 125,000 jobs in the three months to April and that the unemployment rate held at 4.6%. Earnings growth will be of particular interest as wages have failed to keep up with the pace of rising inflation.
Ipek Ozkardeskaya, senior market analyst at London Capital Group, said: "Solid earnings data should revive the Bank of England hawks before the BoE’s monetary policy meeting due on Thursday. Still, a slower wages growth combined with a fast rising inflation means gradually lower purchasing power for British households."
In the US, inflation figures will be published at 1.30pm, ahead of the Federal Reserve’s policy decision after the closing bell. The Fed is widely expected to raise interest rates by 25 basis points.
Business headlines
Former British prime minister David Cameron has added to pressure on Theresa May to adopt a “softer” Brexit, saying she should talk to the Labour opposition to develop a more consensual approach, the FT reports.
Philip Hammond is preparing to lead a battle within the government to soften Brexit by keeping Britain inside the EU customs union, according to The Times.
The City of London has warned Brussels that attempts to grab large parts of its euro clearing market will put financial stability at risk as EU bureaucrats unveiled plans to move big clearing houses inside the bloc after Brexit, is the Telegraph’s line.
US attorney-general Jeff Sessions denied playing any role in alleged collusion between the Trump campaign and the Russian government in the 2016 election, calling the accusation “an appalling and detestable lie”, the FT reports.
Banks will get fresh powers to snoop on errant traders after a WhatsApp monitoring service was backed by Blackberry. The popular mobile app is causing concern across the City because it scrambles messages – meaning it's impossible to know what is being discussed, reports the Mail.
Euan Stirling, head of governance at Standard Life, attacked the unusual plan by Fusionex International, an Aim-listed tiddler that makes computer software to go private. “It feels like the company has been taken from us without our consent,” he said to the Times.
Commodities/currencies
Gold: US$1,271oz up US$2
Oil (WTI): US$45.95 barrel down 51c
£/$: 1.2769 - pound higher