Close: Attempted rally peters out but Snoozebox has a dream day
An attempt at a late rally by blue-chips fizzled out, leaving the Footsie close to its low for the day at the close.
The FTSE 100 finished at 7,350, down 37 points on the day and about eight points above its intra-day low.
The top-share index’s performance was not helped by a number of big names going ex-dividend today, among them Royal Mail PLC (LON:RMG) and Coca-Cola HBC (LON:CCH).
Banks and miners were among those to defy the trend. In the former, HSBC Holdings PLC (LON:HSBA) advanced 4.2% while in the latter Rio Tinto PLC (LON:RIO) was the sector’s top performer, rising 2.4%.
Among the minnows, Snoozebox Holdings PLC (LON:ZZZ) was up with the lark, rising 38% to 0.45p on results.
The company, which provides portable temporary occupation (like a more luxurious version of a Portakabin modified for living in rather than working in), saw underlying losses reduced to £2mln in 2016 from £6mln the year before.
4.01pm: Oil prices rise as supply glut concerns ease
Oil prices rose in late afternoon trading, buoyed by government data yesterday showing a drop in domestic crude production by 100,000 barrels per day (bpd) to 9.3 million bpd last week.
The decline marked the steepest weekly fall since July 2016 as eased worries about the global supply glut.
Brent crude rose 1.14% to US$47.86 per barrel and West Texas Intermediate increased 1.19% to US$45.28 per barrel.
3.57pm: Banks and miners continue to rally
While the FTSE 100 is lower, banks have held onto their gains as the US Federal Reserve gave the go-ahead for up to $100bn in dividends and buybacks after all 34 banks in the second part of the US stress tests had passed. HBSC remained the biggest riser after Morgan Stanley raised its rating to 'overweight'. Barclays, Standard Chartered, RBS and Lloyds were also higher.
Sky shares jumped as Rupert Murdoch’s proposed takeover by his 21st Century Fox has been delivered a set back after the culture secretary told the House of Commons that she accepted a recommendation from Ofcom to call in the Competition and Markets Authority to conduct a further six-month examination of the deal.
Miners rallied as copper prices rose 1.25% on a weaker dollar with Anglo American, Rio Tinto and Glencore in the black.
Shares in Royal Mail, Babcock, Coca-Cola and Intercontinental Consolidated Airlines declined as their stock went ex-dividend.
Randgold Resources slumped as it was "a little short" of its investment criteria for its Senegal-based Massawa gold project.
3.35pm: FTSE reverses gains as pound strengthens
The FTSE 100 has reversed earlier gains, falling 23 points to 7,363.59, as investors recoiled at a stronger pound.
The pound is up 0.47% to US$1.2987 and up 0.18% versus the euro at €1.1380, supported by Bank of England Governor Mark Carney’s suggestion that interest rates will need to rise if investments improve and wage growth picks up. BoE's chief economist Andy Haldane has also delivered hawkish remarks this week.
2.28pm: US initial jobless claims rise
The number of Americans filing for unemployment benefits rose last week, the Labor Department has revealed. Initial jobless claims increased 2,000 to a seasonally adjusted 244,000 for the week ended 24 June, compared to expectations of 240,000.
However, the four-week moving average, which is considered a better measure of claims, fell 2,750 to 242,250 last week.
USD Initial Jobless Claims (JUN 24), Actual: 244k Expected: 240k Previous: 242k
— Payline by ICE (@PaylinebyICE) 29 June 2017
2.09pm: Donald Trump will be pleased at US economic growth, says UFX
President Donald Trump will be pleased by the upwards revision to the US GDP estimate, according to UFX.com's managing director Dennis de Jong.
“The President has had to focus a lot of his attention on the national and international backlash stemming from his controversial visa criteria, while he’s also expected to be taken to task by German Chancellor Angela Merkel on the topic of economic climate at his first appearance at the G20 summit next week.
“So while he has his work laid out on both national and international fronts, he’ll likely view today’s US GDP results as a step in the right direction for the White House’s future plans. The figures will give Trump a platform to build on an upward trajectory in the remaining six months of the year in order to meet his bullish growth targets.”
1.30pm: First quarter US GDP revised higher
The second estimate on US economic growth in the first quarter has been revised higher by the Commerce Department. US gross domestic product rose 1.4% in the first quarter, compared to an initial estimate of 1.2%.
Analysts had expected the estimate to remain unchanged.
The upwards revision was driven by an upgrade to personal consumption, which was estimated to grow 1.1%, compared to a previous 0.6% forecast.
Slower US inflation and bigger corporate profits decline offset better Personal Consumption and GDP prints #usd #fed
— Mike van Dulken (@Accendo_Mike) 29 June 2017
12.38pm: Murdoch's proposed Sky takeover referred to competition authorities
Rupert Murdoch's 21 Century Fox has reached a road block on its proposed takeover of Sky after the government said it intended to call in the competition authorities for a further six-month review of the deal.
Culture secretary, Karen Bradley, revealed the government's decision in the House of Commons following an Ofcom investigation into the £11.7bn takeover.
Bradley said Ofcom’s investigation found that the deal might increase the Murdochs’ ability to “influence the overall news agenda" and to sway politics.
12.16pm: Mark Carney addresses climate change concerns
Bank of England Governor Mark Carney shied away from making any further remarks about interest rates during an interview with Bloomberg.
He stuck to the topic of climate change that the interview was meant to centre around.
Carney told Bloomberg he was concerned that investors were not doing enough to assess threats that global warming will have on assets they purchase.
The central banks remarks come after he won the backing of more than 100 chief executive officers from companies – including Pepsi, Royal Dutch Shell and Bank of America Corp - for his campaign to improve financial reporting standards on issues related to the environment.
“The risk is that people aren’t thinking about this sufficiently, and that there’s a bigger adjustment where there’s much tougher regimes put in place,” he said.
Mark Carney fears investors aren't doing enough to assess the threat of global warming https://t.co/qfywNM7sSv pic.twitter.com/DYlle4AGI3
— Bloomberg (@business) 29 June 2017
12.00pm: FTSE and pound hold onto gains
The FTSE 100 rose 18 points to 7,406.46 at midday, led higher by shares in banks and miners.
Banks were given a boost after the US Federal Reserve gave lenders the green-light pay out almost all their earning to shareholders this year after passing an annual stress test.
HSBC Holdings was the top riser after Morgan Stanley raised its rating on the bank to 'overweight'. Shares in Standard Chartered, Royal Bank of Scotland, Barclays and Lloyds Banking Group were also on the front foot.
Mining stocks, including Anglo American, Glencore, BHP Billiton , were lifted by an 0.77% increase in copper prices to US296.65 per pound.
Going the other way, Royal Mail slumped as its stock went ex-dividend.
Greene King declined as it posted a fall in statutory profit for the year and warned over economic uncertainty while JD Sports was under the cosh as it warned of margin pressures.
Meanwhile, the pound gained against the dollar by 0.27% to US$1.2961 and rose 0.10% versus the euro to €1.1371 after Bank of England Governor Mark Carney signalled that interest rates may need to rise if investments and wage growth improve.
The BoE’s chief economist Andy Haldane also gave sterling a lift as he repeated his point that interest rates might have to be raised if the cost of living continues to rise.
In economic data, the BoE revealed that mortgage approvals rose slightly to beat expectations while consumer credit soared more than forecast.
11.10am: UK economic confidence rises in June, says European Commission
UK economic confidence improved in June, according the European Commission.
The Commission’s Economic Sentiment Index for the UK rose to 109.3 in June from 108.2 in May.
However, Pantheon Macroeconomics said the index only picked up because it placed too much weight on manufacturers’ responses, which have seen exports grow on a weaker pound.
“While industrial and construction firms became more confident in June, services and retail firms, as well as consumers, have become increasingly gloomy,” said Pantheon’s chief UK economist, Samuel Tombs.
“Indeed, the consumer confidence indicator—a seasonally adjusted version of the GfK index released tomorrow—fell to -7.4 in June—its lowest level since August—from -6.1 in May.”
11.01am: Bank of England's chief economist reiterates need for rate rise
Bank of England’s chief economist Andy Haldane has repeated his point that interest rates might have to rise to stop the pound from pushing inflation higher and putting a squeeze on household incomes.
Speaking to BBC Wales, he said: "We need to look seriously at the possibility of raising interest rates to keep the lid on those cost of living increases.
“For now we are happy with where the rates are, we need to be vigilant for what happens next.”
The pound rose 0.33% versus the dollar to US$1.2969.
Seeing social enterprise in action #Porth #AndyHaldane @citizenswales @bankofengland pic.twitter.com/hrTe5uWxiO
— BoEWales/Cymru (@BoEWales) 28 June 2017
10.34am: Mortgage approvals and net consumer credit grow in May
UK mortgage approvals and consumer lending grew more than expected last month, according to the Bank of England.
The BoE said consumer lending rose by £1.7bn in May after a £1.5bn increase in April, compared to analysts' expectations of £1.4bn.
The number of mortgages approved for house purchases rose to 65,202 last month from April's 65,051, beating forecasts of 64,000.
Howard Archer, chief economic advisor to the EY ITEM Club, said May’s mortgage data pointed to "lacklustre but stable housing market activity" with approvals at the second lowest level since September 2016.
“The housing market is being pressurised by weakened consumer purchasing power and increased consumer wariness over engaging in major transactions," he said.
“This is likely to limit house prices, which we now expect to rise by just 2% over 2017."
#BOE report #mortgage approvals for #UK #house purchases essentially stabilized in May as edged up to 65,202 (7-month low of 65,051 in Apr)
— Howard Archer (@HowardArcherUK) 29 June 2017
On consumer credit, Archer said the heightened squeeze on consumer purchasing power could be the reason for the 13th successive month of double-digit year-on-year growth.
“The Bank of England will be far from happy with the May consumer credit data, and it could bolster the case for a near-term interest rate hike to try to curb consumers’ readiness to borrow," he said.
“While any interest rate hike would be small with further increases some way off, even small increases could cause problems for some consumers given high borrowing levels."
#BOE report growth in net #consumer #credit stable at elevated 10.3% in May. 13th month of double digit growth. Will not please policymakers
— Howard Archer (@HowardArcherUK) 29 June 2017
09.50am: Banks rally with HSBC the biggest riser
Banking stocks are on the front foot this morning after US regulators gave lenders the go-ahead to pay out almost all their earning to shareholders this year. Federal Reserve's decision to allow a record level of post-crisis distributions came after all 34 institutions passed the second part of its annual stress test.
FTSE 100-listed banks with business in the US gained, including HSBC Holdings, Royal Bank of Scotland, Barclays and Lloyds Banking Group.
HSBC led the gains after Morgan Stanley raised its rating on the bank to 'overweight'.
Neil Wilson, senior market analyst at ETX Capital, said the rally in banks was also supported by the shift in central bank language that suggests the "decade-long pursuit of easy money policies could be ending".
"Whilst there has been some degree of confusion stemming from nuanced comments from Mario Draghi and Mark Carney, there does appear to be a shift. The Fed may soon be joined by other central banks as stimulus is dialled back."
08.46am: FTSE 100 and pound gain in early trading
The FTSE 100 and the pound were in positive territory early on after Bank of England Governor Mark Carney appeared to soften his stance on interest rates.
The market is now pricing in a 50% chance of a hike to the cost of borrowing by the end of the year, according to the Guardian’s Business Live Blog.
We may gain greater clarity when Carney is interviewed on Bloomberg TV at 11.30am.
Mark Carney just said he would consider voting for a rise in UK interest rates https://t.co/MfjR67PuIA pic.twitter.com/lnK7R5xA0N
— Financial Times (@FT) June 28, 2017
The net impact of the Governor’s surprise comments was to push index of blue-chip shares 49 points higher to 7,436.36, while sterling was hovering around a post-election high at US$1.2993.
On the markets, the banks and the miners were in demand early on.
The former, led by HSBC (LON:HSBA), which was up 3%, were buoyed by the decision by the US regulator to greenlight dividends and share buybacks.
Analysts said the Federal Reserve move, which followed stress tests of the major lenders, effectively marked the resumption of normal service in the sector after a near ten-year hiatus during and following the financial crisis.
The weaker dollar, meanwhile, gave a boost to the mining stocks. Anglo American (LON:AAL) led the pack with a 4% rise.
Dropping down a division to the FTSE 250, the City cheered paper and packaging group David S Smith’s (LON:SDMS) latest acquisition as the share price rose 8%.
Among the tiddlers security specialist Westminster Group (LON:WSG) was the stand-out feature, which rose 19% after what was interpreted by the market as a bullish AGM statement.
6.45am...positive start predicted
London’s FTSE 100 is to start Thursday positively after global equity markets found support in comments from central bankers.
Upbeat commentary of the US banking sector opened up a rally in the likes of JP Morgan, Citi and Morgan Stanley on Wednesday.
The breakthrough is that US banking stocks will be able to increase capital returns to shareholders, after every bank in the sector passed Federal Reserve stress tests. And, the aforementioned blue-chip banks, and a number of others, in a heartbeat announced they would indeed hike their respective dividend payouts.
On top of that material change, Fed chair Janet Yellen affirmed optimism, stating her belief that there’ll be no repeat of a banking crisis ‘in our lifetime’, thanks to the reforms that followed the ‘credit crunch’.
Elsewhere, the European Central Bank clarified earlier comments from Mario Draghi, reassuring that its current policy was working and it will remain in place for the foreseeable future.
A rally in Wall Street equities was welcome. The Dow Jones ran up around 144 points, 0.68%, to close at 21,454. The S&P 500 added 0.88% to 2,440 and the Nasdaq lifted 1.43% to 6,234.
In Asia, markets were also higher. Japan’s Nikkei rose 0.44% to 20,218, while Hong Kong’s Hang Seng added around 0.86% to 25,904. The Shanghai Composite, meanwhile, gained 0.25% to 3,181.
Here, in London, a positive trading day is also anticipated.
CFD and spread betting firm IG Markets is anticipating that the FTSE 100 will open around 34 points higher, calling the blue-chip benchmark at 7,424 to 7,428 just over an hour before Thursday’s open.
Commodities/currencies
- Gold: US$1,244.80 t/oz, down 0.36%
- GBP/USD: Pound at US$1,292, up 0.51%
- Brent crude: US$47.90 per barrel, up 1.25%
Headlines
- UK car production falls almost 10% despite 'strong demand' - Sky News
- If and when Co-op Bank's rescue plan is enacted, little will have changed – The Telegraph
- Japanese airline forces disabled man to crawl aboard - BBC News
- Ocado trials driverless delivery van in London - BBC News
- Amazon will kick off 30 hours of Prime Day deals – CNBC
- Trump, Amazon and 'internet taxes' – CNNMoney
- Group Sues Uber Over Lack of Wheelchair Access - NBCNews.com