FTSE 100 closes at 7,367
US stocks make gains 4th of July holiday
Poor services sector data completes "triple whammy" of disappointing PMIs this week
FTSE 100 closed the day up over ten points at 7,367 with Tesco (LON:TSCO) the biggest gainer and housebuilders doing well.
In the mid-caps, the FTSE 250 romped over 149 points higher to close the afternoon session at 19,451.
It came as macro-economic data did little to quell fears.
Services sector activity in Britain was shown to have weakened to its lowest in four months last month amid worries over Brexit, while business optimism dropped to its second-lowest in over five years, which all may put a halt on any rate rise from the Bank of England.
The UK's services sector accounts for almost 80% of economic activity.
Tesco gained 3.8% to close at 173.45p, while Persimmon PLC (LON:PSN) , the housebuilder added 2.36% to 2.345p as it issued another bullish trading update, lauding an “excellent’ first-half performance.
On Wall Street, the Dow is up over six points at the time of writing at 21,485, while the Nasdaq gained 46 at 6,156. The S&P 500 added 4.37 at 2,433.
3.30pm: FTSE 100 modeslty higher as US stocks retreat
The Footsie drifted off highs in late afternoon trading as US stocks returned from the Independence Day break in cautious fashion, but retained modest gains thanks to a slip in sterling,
With a hour of trading to go in London, the FTSE 100 index was around 3 points higher at 7,360, below the session peak of 7,386.92 but above the low of 7,347.52.
In early trade in New York, the blue chips Dow Jones industrials shed 66 points at 21,413, with the broader S&P 500 and tech-laden Nasdaq Composite lower as well.
News of a 0.8% decline in US factory orders is May raised concerns about the health of the world’s biggest economy but the dollar remained volatile amid geopolitical concerns associated with North Korea’s missile testing programme.
There was also uncertainty ahead of the publication of minutes later today from the latest Federal Reserve policy meeting.
Ipek Ozkardeskaya, senior market analyst at London Capital Group said: “In its June meeting, the FOMC raised the interest rates by 25 basis points and hinted at one more rate hike in 2017 and three more hikes in the course of next year. These expectations are factored in the current market prices.”
But, she added: “What is not accurately priced in is the size and the timing of the Fed’s balance sheet normalisation plans. Lack of details regarding the Fed’s balance sheet policy could further weigh on the US yields and the dollar.”
The pound, however, stayed a touch weaker against the greenback, down 0.1% at US$1.2920 as dull UK services PMI data today continued to pressure the currency.
Among equities, gold miners and oil stocks remained a drag on the FTSE 100 as commodities prices retreated.
But housebuilders were in demand after blue chip firm Persimmon PLC (LON:PSN) issued another bullish trading update, lauding an “excellent’ first-half performance.
1.45pm: Gold and oil stocks among fallers
Among the biggest FTSE 100 performers fallers in afternoon trading were precious metal miners Fresnillo PLC (LON:FRES) and Randgold Resources PLC (LON:RRS), down 2.7% at 1,443p and 2.0% at 6,715p, respectively, on the back of a soft gold price.
Oil majors BP PLC (LON:BP.) and Royal Dutch Shell PLC (RDSA) A shares were also lower, both down 0.5% at 448.1p and 2,063p respectively, amid lower oil prices as a recent rally in crude came to a halt.
And Lloyds Banking Group PLC (LON:LLOY) lost 1.1% at 65.62p after the lender said it intends to reshuffle its executive team, including the creation of a chief operating officer role and a new Transformation division.
Lloyds said the changes are in preparation for the release of its strategic plan for 2018 to 2020, which will be announced alongside its 2017 full-year results in February 2018.
But despite these fallers, the FTSE 100 index remained higher, up 13 points at 7,370 three-quarters an hour ahead of Wall Street’s restart.
12.30pm: Car sales continue to reverse
After the poor services PMI data, further evidence of the fragility of the UK economy came at lunchtime with data showing new car registrations fell by 4.8% in June compared to the same month last year.
According to the numbers from the Society of Motor Manufacturers and Traders (SMMT) a total of 243,454 vehicles were sold last month, "in line with 2017 forecasts" following a record first three months of the year.
Many buyers rushed to buy cars before 1 April to avoid a rise in Vehicle Excise Duty.
Some 1.4mln cars have been sold so far this year, down 1.3% on the same period in 2016.
Mike Hawes, SMMT chief executive, said: "As forecast, demand for new cars has started to cool following five consecutive years of solid growth but the numbers are still strong and the first half of the year is the second biggest on record.”
However, in early afternoon trading the FTSE 100 index had overcome a wobble to add 12 points at 7,369 helped by a dip back by sterling, with the UK currency easing 0.1% lower versus the dollar at US$1.2916.
11.55am: Footsie just spinning the wheels
The FTSE 100 index was spinning its wheels in late morning trade, as it tried to regain momentum after some discouraging economic data.
At 11.15am the FTSE 100 index was down 5 at 7,352 after it was revealed the UK service sector grew at its slowest pace in four months.
The IHS Markit PMI Survey score came in at 53.4 for June down from 53.8 in May.
“Yet another black mark occurred on Carney’s list this morning as the largest sector in the UK, services, dropped marginally below analyst forecasts at 53.4 for June,” said Anthony Kurukgy, a senior sales trader at forex trading outfit Foenix Partners.
“ Whilst the headline figures may do little to startle the Bank of England just yet, this will be a stark warning for the possibility of further trouble ahead for Carney and Co. Sterling has been given a tougher ride since last month’s election result and with a government in disarray, the business sector could continue on a sluggish path until nervy investors find reason to feel confident again,” Kurukgy suggested.
Connor Campbell, at spread betting outfit Spreadex, referred to this morning’s PMI as the third in a “triple whammy” of disappointing purchasing manager’ index (PMI) updates this week.
“Though the UK will likely produce Q2 growth of around 0.4% – double what was seen in the lacklustre first quarter – June’s election blues means the economy is heading into the third quarter with rapidly eroded momentum. That’s a worry considering that the impact of inflation may only become more pronounced over the summer months, something that could further eat away at the services sector,” Campbell suggested.
Having taken the day off for a little celebration yesterday, US investors will be back in the saddle today.
Spread betting quotes indicated that the US markets will be every bit as somnambulant as the UK, with spread betting quotes suggesting the Dow Jones will open some 11 points higher at 21,490 while the S&P 500 was project to open at around 2,427, down a couple of points.
In the absence of any trading on Wall Street yesterday, North American focus was on Canadian markets where London-based peer-to-peer foreign exchange trading platform pioneer Midpoint Holdings Ltd (CVE:MPT) was the star performer, doubling in price.
READ: Midpoint Holdings - At an Inflection Point
The stock has been well-covered on Proactive Investors and David Wong, chief executive and chairman, has been a steady buyer of the stock, lifting his stake t 10.4% in purchases over a 30-day period prior to 3 May.
9.55am: FTSE 100 relinquishes early gains after service sector shocker
The FTSE 100 gave up all its early gains after it was revealed the UK service sector grew at its slowest pace in four months.
At 9.50am the index of blue-chip shares was flat at 7,356.35 after the IHS Markit PMI Survey score came in at 53.4 for June down from 53.8 in May.
“The slowdown in business activity growth in June was linked to a softer rise in incoming new work across the service economy,” IHS Markit said.
“Moreover, the latest increase in new work was the weakest for nine months.
“Anecdotal evidence cited Brexit-related risk aversion and heightened economic uncertainty as key factors holding back client spending
8.50am...Blue chip index opens in positive territory
The FTSE 100 got off to a positive start although there was some nervousness ahead of service sector data at 9.30am, which should tell us whether the election (and the result) has hit business.
The FTSE 100 was up 11 at 7,369, after having a metaphorical yawn and a stretch at the outset.
If, as expected, the Markit Survey is little changed month on month in June the index of blue chip shares (currently up 20 points at 7,377.51) should remain in the green. Of course a surprise to the downside would undoubtedly unsettle things.
Topping the list of risers was builder Persimmon (LON:PSN), up 3.4% after what it described as an “excellent” set of first-half results.
Markets brace for UK service sector and car sales data – business live https://t.co/ogbqgRNhOf
— The Guardian (@guardian) July 5, 2017
Persimmon PLC (LON:PSN), up 3.5%, led the blue-chip index higher after the house builder enjoyed a strong first half of the year.
Sector peers Barratt Developments PLC (LON:BDEV) and Taylor Wimpey (LON:TW.) rose in sympathy, with the former advancing 1.7% and the latter 1.6%.
Pharma giant GlaxoSmithKline plc (LON:GSK) was proving a party pooper after Citi abandoned its bullish stance and turned neutral.
The US bank has a price target for Glaxo of 1,700p, which is about a quid above the current share price after this morning’s 1.554 fall.
Things were a bit more gung-ho among the mid-caps, with the FTSE 250 up 83 at 19,386, despite some broker commentary depressing mid-cap stalwarts Mitchells & Butlers PLC (LON:MAB) and Domino’s Pizza Group PLC (LON:DOM).
Liberum Capital issued sell notes on pubs group Mitchells & Butlers, down 1.6%, and pizza delivery giant Domino’s, down 1.8%.
Meanwhile. Peel Hunt became less enamoured of another pubs group, JD Wetherspoon PLC (LON:JDW), moving from ‘hold’ to ‘reduce’ .
The ‘Spoons share price ebbed to 959p from 9675p overnight.
The online delivery grocery firm Ocado (LON:OCDO) was up 1% after updating the City with a solid set of interims, while cash & carry king Booker Group PLC (LON:BOK) climbed 2.8% after its trading statement, which also gave Tesco (LON:TSCO) a boost as the supermarket giant awaits the outcome of an investigation into its proposed takeover of Booker.
Among the tiddlers Mongolia-focused oiler Petro Matad (LON:MATD) shot up 33% after it said it would start drilling a high impact well in September.
6.45am: Footsie expected to recoup losses
The FTSE 100 was expected to recoup around a third of yesterday’s losses at the outset.
Having fallen 20 points to 7,357 yesterday, spread betting quotes pointed to the FTSE 100 opening at around 7,364, up 7 points.
There was no guide from the US for traders to follow, as Wall Street was closed for the Independence Day holiday, but Asian markets were mostly firmer, despite rising political tensions in the area.
Reports confirmed that North Korea successfully tested an intercontinental ballistic missile yesterday that was capable of reaching Alaska.
In Tokyo, the Nikkei 225 was up 14 at 20,046 while in Hong Kong the Hang Seng was 151 points firmer at 25,540.
When it does open later today, the US market will not have a lot of catching up to do after yesterday's calm performance on global markets. Spread betting quotes suggested the S&P 500 would open a point or so lower at 2,428 but the Dow was seen rising to 21,502, having closed at 21,479 on Monday.
“While North Korea’s military ambitions are a background threat for markets, we don’t think that this particular geopolitical event is at the stage yet where it will cause a spike in volatility,” opined Kathleen Brooks at City Index.
“Far more important at this stage of the economic cycle is what global central bankers will do next,” she added.
“The question now for investors’ is will there be more hawkish rhetoric that could unnerve appetite for risk?”
On the UK corporate front, the big updates are from house builder Persimmon PLC (LON:PSN), which is expected to report strong first half revenues, and cash & carry king Booker Group PLC (LON:BOK), which is waiting on the Competition & Markets Authority to rule on its takeover by Tesco.
Booker reported a 0.5% rise in total sales for the 12 weeks to 24 March, as the group’s Budgen’s, Premier and Londis convenience-store brands performed well but tobacco sales were hurt by the tobacco display ban and new plain packaging restrictions.
Around the markets
- Sterling: US$1.2921, up 0.01 cents
- Yield on 10-year gilt: 1.249%
- Gold: US$1,225.40 an ounce, up US$6.20
- Brent crude: US$49.57 a barrel, down 4 cents
City headlines
- Financial Times
- So-called “bad bank” to sell £5bn more mortgages from credit crunch era
- Sports Direct’s Mike Ashley under fire in banker law suit
- The Daily Telegraph
- France to propose new measures to lure City banks to Paris
- UK remains Europe’s hotspot for tech funding despite Brexit vote
- Blow to Uber as top EU lawyer says French ban was not illegal
- British biotech Angle close to breakthrough test for ovarian cancer
- Acacia Mining management locked out of talks with Tanzania as Barrick steps in
- The Times
- State banker has £766k pay packet
- Take regular advice from business leaders, former adviser John Godfrey tells PM
- Glencore in inquiry over Chad oil deal
- Wind power link delay is £70 million blow for consumers
- London rents rise by 45% in ten years
- Dutch alter rules to prevent hostile takeovers
- The Independent
- Gender gap narrows among entrepreneurs as women excel with start ups
- UK manufacturers warn they will start cutting investment within months
- Sheffield tops list of cities with best pay rises over the last year
- Kim Kardashian helps Superdrug profits soar with face powder promotion
- Apple’s valuation ‘quadruples’ to $3.37 trillion after computer glitch
- Dropbox considers biggest tech company flotation since Snapchat
- Nestlé pledges to cut sugar in Cheerios, Shreddies and other breakfast cereals
- The Guardian
- Bank of England’s Michael Saunders: ‘Prepare for higher interest rates’
- HBOS took £240 million hit after ‘serious control breakdown’ in Reading
- Virgin Trains and six other companies agree to sell advance tickets on the day
- Daily Mail
- Hornby shares veer off the tracks after model train maker tries to derail its £27 million takeover swoop
- UK payments giant Worldpay sees £1.9 million added to its value as US rivals plot a takeover
- Daily Express
- State pension age to rise sooner than expected