FTSE 100 closed lower as investors continued to fret over the implications of Brexit and there was a global cyber attack.
The UK benchmark closed down around 12 at 7,434, while the more UK focused index the FTSE 250 closed 157 lower at 19,526.
It comes as the Ukraine and other global companies have been hit by cyber attacks, or ransomware to be specific.
In Ukraine, the IT systems of its largest bank and national airport have been targeted.
British advertising behemoth WPP (LON:WPP) is among those affceted, saying its systems have been disrupted. Shares fell 0.79% in London.
Russian oil producer Rosneft and Danish shipping company Maersk have also reportedly been affected, including offices in the UK and Ireland.
Miners, as is oft the case with macro economic uncertainty, were the winners on Footsie, with Glencore (LON:GLEN) top dog, up 3.77% to 287.65p. The big loser was GKN (LON:GKN), which shed 4.31% to 331.20p as investors focused on the read-across from Germany's Schaeffler, which cut its profit outlook.
Earlier the Bank of England released its financial stability report.
It is raising its counter-cyclical capital buffer (CCyB) to 0.5% from 0% for banks to protect them against at possible financial crash when UK exits the EU. The central bank expects to raise the CCyB again in November to 1.0%.
The BoE also announced it is bringing its bank stress test forwards from November to September.
4.06pm: Compass and GKN among biggest fallers on FTSE 100
As we approach London's closing bell, the FTSE 100 is down 5 points to 7,442.28 with Compass Group and GKN among the worst performers.
Compass fell as every 26 existing ordinary shares consolidated into 25 new ordinary shares while GKN dropped on a read-across from Germany's Schaeffler, which cut its profit outlook.
Marks & Spencer slumped after fellow retailer Debenhams issued a profit warning, citing market volatility.
On the upside, miners Glenore, BHP Billiton, Rio Tinto and Anglo American rallied after China revealed that profits at industrial companies jumped by 16.7% in May.
British banks gained even though the the Bank of England called for lenders to set aside £11.4bnin cash over the next 18 months to protect themselves from any financial shocks. Barclays, Royal Bank of Scotland, Lloyds, HSBC and Standard Chartered gained
3.37pm: Global firms hit by cyber-attacks
British advertising agency WPP, Russian oil producer Rosneft and Danish shipping company Maersk are among the many firms across the globe reporting that they have been hit by a cyber-attack.
It has been suggested by some experts that it could be a ransomware attack. Alan Woodward, a computer scientist at Surrey University, said: "It appears to be a variant of a piece of ransomware that emerged last year.
"It was updated earlier in 2017 by the criminals when certain aspects were defeated. The ransomware was called Petya and the updated version Petrwap."
3.18pm: Consumer credit growth means rate hike risks financial stability, says EY Item Club
It remains to be seen if the Bank of England's Monetary Policy Committee will reverse last August's interest rate cut, according to Howard Archer, chief economicadvisor to the EY ITEM Club.
The Financial Policy Committee has decided to gradually withdraw emergency support for banks and raise the countercyclical capital buffer rate from 0% to 0.5%. BoE Governor Mark Carney has also cited the risk of rapidly rising consumer credit, easier mortgage lending conditions and lenders becoming complacent in their lending.
Archer said: "“The risk to financial stability coming from the recent rapid growth in consumer credit would undoubtedly be magnified if there is a near-term interest rate hike. While any interest rate hike would be small with further increases some way off, even small increases could cause problems for some consumers given their high borrowing levels,"
“It is notable that the Bank of England is bringing forward its testing of banks’ ability to cope with major losses on consumer loans to September from November. Additionally, regulators will in July publish their expectations for lenders in the consumer credit market.”
2.17pm: Retailers downbeat on outlook, CBI survey shows
Retailers expect sales growth to stall in July as rising inflation and weak wage growth squeezes disposable incomes, according to a survey by the Confederation of British Industry.
Still British shops had a better June than expected with sales and orders growing modestly. The CBI’s monthly retail sales balance rose to +12 in June from +2 in May, compared to forecasts of +2.
Howard Archer, chief economic advisor to the EY ITEM Club, said: “A modestly improved June CBI distributive trades’ survey does little to dilute the belief that consumers remain cautious in their spending. The lacklustre June CBI survey follows on from latest hard data from the Office for National Statistics showing that retail sales volumes fell back a sharp 1.2% month-on-month in May.”
Our take on the modestly improved June #CBI distributive trades survey https://t.co/0GM1APu1nc
— Howard Archer (@HowardArcherUK) 27 June 2017
2.05pm: Oil prices rise on weaker dollar
Oil prices have risen on a weaker dollar, with Brent crude up 1.3% to US$46.44 per barrel and West Texas Intermediate up 1.09% to US$43.44 per barrel. The dollar dropped 0.1% versus six major currencies ahead of a speech by US Federal Reserve Chair Janet Yellen.
However, worries about the global supply glut persisted as OPEC members Nigeria and Libya are exempt from the the body's production cuts and have raised output.
1.38pm: BoE breaks down Financial Stability Report
The Bank of England has taken to Twitter to outline its key points on the Financial Stability Report.
We've just published our latest #FinancialStabilityReport. Here are some of the key takeaways. https://t.co/fxHWueq6Ow pic.twitter.com/gr69lSswf6
— Bank of England (@bankofengland) 27 June 2017
12.27pm: FTSE falls as market shrugs off Bank of England’s Financial Stability Report
The FTSE 100 fell 8 points to 7,438.68 in midday trading and the pound held on to gains against the dollar as markets showed little reaction to the Bank of England’s Financial Stability Report.
The Bank announced it was raising the counter-cyclical capital buffer (CCyB) to 0.5% from 0% for banks to protect them against at possible financial crash when UK exits the EU. The central bank expects to raise the CCyB again in November to 1.0%.
The BoE also announced it is bringing its bank stress test forwards from November to September.
“Yet despite this barrage of information the UK markets were largely unchanged after the Financial Stability Report was released,” said Connor Campbell, financial analyst at Spreadex.
Mining shares were boosted by an increase in oil and metal prices while banks continued to gain after yesterday’s news that Italy’s government would bail out two of its lenders.
Rio Tinto, Anglo American, Glencore and BHP Billiton were among the top risers. Barclays, Lloyds Banking Group and Royal Bank of Scotland also rallied.
Going the other way, Debenhams slumped after warning that full-year profits could be towards the lower end of the current guidance range if market volatility continues.
Fellow retailer Marks & Spencer edged lower amid concerns about the challenging market.
Petrofac erased early gains as it said profits would be weighted to the second half as it is being investigated by the UK’s Serious Fraud Office into suspected bribery, corruption and money laundering.
As for the pound, it rose 0.22% versus the dollar to US$1.2751 but fell 0.52% against the euro to €1.1320. The euro was boosted after European Central Bank President Mario Draghi provided a confident outlook on the economy, saying deflationary risks had diminished.
12.06pm: Carney says consumer credit boom due to UK economic growth
Mark Carney has rejected the suggestion that his decision to keep interest rates at a record low is to blame for the boom in consumer credit.
The Bank of England Governor said strong UK economic growth over the past year had contributed to the rapid increase in personal loans.
Good chart in the Bank of England Financial Stability Report - consumer credit losses & unemployment. https://t.co/8eKaE6UiK3 pic.twitter.com/EDixNcI59f
— Duncan Weldon (@DuncanWeldon) 27 June 2017
11.34am: Monetary policy is the last line of defence, says Mark Carney
Mark Carney has said that monetary policy is the "last line of defence" in ensuring financial stability.
Carney added that the Bank was workign with firms, regulators and European authorities to reduce risks surrounding the worst possible outcome - the UK leaving the EU without a deal.
He also said the Bank was concerned about the resilience of banks and the overall risks of heavily indebted households.
"We are reinforcing some of the protections that are already there," he said.
Consumer lending is growing much fast than household income and Carney said this is driven by financing for buying vehicles due to the recovery in the car market.
On external risks, Carney said there were challenges including the slowdown in China.
11.18am: Mark Carney says consumers should consider rate hikes in taking out loans
Bank of England Governor Mark Carney has warned that consumers should consider the prospect of an increase in interest rates in taking out loans. Consumer credit lending grew by 10.3% year-on-year in April, the fatest annual growth rates since 2005.
On Brexit, Carney said the central bank is making contingency plans for any fallout from the vote.
He said the Bank will make sure banks are prepared to the possibility that Britain leaves the EU without a deal.
11.03am: Google fined more than expected by EU
Google has been hit with a record €2.42bn fine by the European Commission for abusing its market dominance over internet search.
The fine was much bigger than expected with reports previously indicating the search engine giant would receive a €1bn penalty.
The tech company was accused of illegally favouring its shopping service.
European Commissioner Margrethe Vestager said: "Google has come up with many innovative products and services that have made a difference to our lives. That’s a good thing. But Google’s strategy for its comparison shopping service wasn’t just about attracting customers by making its product better than those of its rivals. Instead, Google abused its market dominance as a search engine by promoting its own comparison shopping service in its search results, and demoting those of competitors."
10.58am: BoE warns on implications of Brexit
The Bank of England has warned of the implication of the UK’s withdrawal from the EU in its Financial Stability Report.
“The United Kingdom’s withdrawal from the European Union has the potential to affect the economy through supply, demand and exchange rate channels,” the report said.
“The supply side of the economy could be disrupted by abrupt increases in the costs of, or obstacles to, cross-border trade. Demand could be impacted by the abrupt introduction of restrictions on exports of financial and other services and tariffs on trade in goods with the European Union. A reduction in economic activity in high tax-paying sectors could affect public finances and spending.”
The Bank said the FPC will continue to assess the resilience of the UK financial system to adverse economic shocks that could arise. It will use information from its regular stress testing of major UK banks and building societies.
10.53am: BoE brings forward review of stressed losses on consumer credit lending
The Bank of England has brought forward the assessment of stressed losses on consumer credit lending to September from November.
The Financial Policy Committee (FPC), which is charged with maintaining financial stability, also intends to set the minimum leverage requirement at 3.25% of non-reserve exposures, subject to consultation.
“Consistent with its previous commitment, restoring the level of resilience delivered by its leverage ratio standard to the level it delivered in July 2016 before the FPC excluded central bank reserves from the leverage ratio exposure measure,” the report said.
10.39am: Bank of England releases Financial Stability Report
The Bank of England has rasied its capital requirements for banks to protect them against financial shocks as the UK prepares to withdraw from the European Union.
The BoE increased the counter-cyclical capital buffer (CCyB) to 0.5% from 0% and expects to raise it again in November to 1.0%. This means banks must set aside 0.5% of thier assets as capital. It also means UK banks will have to set aside more than £11bn of extra capital.
09.52am: ECB's Mario Draghi confident on outlook of eurozone economy
The euro strengthened after European Central Bank President Mario Draghi sounded a confident note on the eurozone economy.
During a speech in Sintra, Draghi said the threat of deflation was gone and “reflationary forces are at play”, fuelling speculation the central bank will soon consider tightening monetary policy.
He said the recent weakness in inflation was down to external factors, including a drop in oil and commodity prices.
The euro rose 0.61% against the dollar to US$1.1250 and increased 0.36% versus the pound to £0.8820.
“The euro gained as the European Central Bank (ECB) President Mario Draghi delivered an optimistic speech regarding the Eurozone economy, yet gains remained timid as his speech delivered no hints regarding an eventual change in the ECB's accomodative policy,” said Ipek Ozkardeskaya, senior market analyst at London Capital Group.
“The low inflation does not prevent Draghi from being confident regarding his monetary policy, but holds him back from a premature policy tightening.”
09.31am: Debenhams feeling the pinch of retail slowdown, says Hargreaves Lansdown
Debenhams shares are in the red, down 3.93% to 42.75p, after the department store chain cautioned about “current market volatility” and warned that if it continues its full-year pretax profits outcome could be “towards the lower end of the current range” of market expectations.
In a trading update, the group said its like-for-like sales were down 0.9% in the 15 weeks to June 17, with the fall at constant currency rates 2.4%, while group gross transaction value was down 1.0%.
George Salmon, equity analyst at Hargreaves Lansdown, noted that recent figures from the Office for National Statistics show that sales volumes in the retail sector have slowed and Debenhams is "feeling the pinch".
"The new CEO’s strategy, namely to improve the online offering, declutter the stores and step up the quality of the in-store service, seems sensible," Salmon said.
"However, Debenhams has struggled for years. Particularly in these difficult times, we feel investors should remember that it's one thing to correctly diagnose the problem and quite another to successfully apply the cure.”
09.00am: FTSE marks time ahad of BoE's Financial Stability Report
The FTSE 100 marked time ahead of the Bank of England’s Financial Stability Report, which will be accompanied by remarks by Governor Mark Carney.
The index of blue-chip shares opened five points lower at 7,441.87 on day where sentiment will be driven by central bankers.
What a difference a year makes as Mark Carney presents his latest financial stability report https://t.co/FLesMJ2qCc pic.twitter.com/WjlYk43Qx0
— Bloomberg (@business) June 27, 2017
US Federal Reserve chair, Janet Yellen, is in London and may provide nuanced or coded remarks on future interest rates Stateside in an address at the Royal Academy this evening.
Meanwhile, a YouGov survey has said there had been a “pronounced” decline in consumer confidence post-election reflecting the uncertainty caused by the hung parliament.
No surprise then that Marks & Spencer (LON:MKS) was one of the biggest fallers on the Footsie as it fell 1.7%.
Leading the risers were the miners, which snapped back after the recent sell-off. Top of the pile was Anglo American (LON:AAL) with a 2.5% rise.
Dropping down a division to the FTSE 250, van hire specialist Northgate (LON:NTG) blew out a rear tyre following the publication of a set of sub-par prelims. The shares tumbled 10% after it sounded the earnings alarm.
FUN FACT (yes we do trivia): It is fifty years to the day since Britain's first cash point was unveiled by Barclays in Enfield, on the outskirts of London. It's first user? Reg Varney, star of the comedy (though some would dispute that term) On the Buses.
ATM? Nah! It's the hole in the wall or the cash machine to me is 50 today. Star of the day Reg Varney opened it London @bbcmerseyside pic.twitter.com/ym2cxVGxmm
— SNELLY (@snellyradio) June 27, 2017
6.45am...modest gain predcited
London’s blue chip index is tipped to open flat this morning after a lack of direction overnight in both the US and in Asia.
Financial spread bet firms see the UK index adding around five points to follow on gains of 22 to 7,446 seen Tuesday.
London’s mood will be set by the latest Bank of England financial stability report, which gives an overview of the UK’s financial health.
It’s important for the market, though more so for currency traders and what the Bank says will likely affect the value of the pound more than the value of the stock market.
US stocks were subdued overnight. The Dow Jones Industrial Average ended up around 15 at 21,409. The tech heavy Nasdaq lost ground, finishing down 18 points at 6,247, while the S&P 500 was flat.
Asian markets were similarly mixed with gains for the Nikkei in Tokyo not matched by Hong Kong, which fell slightly, and Shanghai which was a similar percentage lower.
City headlines
The Times
NHS crisis created to push privatisation, doctors claim
Fraud office calls in robot to solve cases
Victory for Trump as Supreme Court allows travel ban
Steel dispute sparks fears of trade war
Daily Telegraph
UK's 'flourishing' labour market must be allowed to thrive, says top adviser to Theresa May
Staff fears over jobs at luxury smartphone maker Vertu Corporation as bills go unpaid
Queen's income boosted after record year for Crown Estate and its wind farms
UK is top destination for foreign workers - but Brexit makes EU workers consider leaving
The Guardian
Almost half of highly skilled EU workers 'could leave UK within five years'
Smart meter rollout could force household bills to rise, says supplier
Asda is named worst supermarket in treatment of suppliers
Commodities/currencies
- Gold: 1,250oz, up 0.35%
- Oil (WTI): US$43.85 up 1.08%
- £/$: 1.2767 - pound 0.35% higher