FTSE 100 closes down 40.27 at 7,329
FTSE 250 down 142 at 19,215
Short-sellers merciless in their treatment of Carillion
FTSE 100 closed the day over 40 points down, with retailers taking a hit and the pound weakening.
The UK blue-chip benchmark closed out 40.27 lower at 7,329.
The more UK- company focused FTSE 250 plunged 142 points lower to 19,215.
Sterling was 0.65% lower against the Euro and 0.23% lower against the US dollar.
On Wall Street, all the major indices were in the red.
David Madden, analyst at CMC Markets, noted stock markets in Europe were lower on the day as "they continue their broader move lower, which they have been in since late May to early June".
News flows have been relatively thin, and the since central banks in The West are edging towards a more hawkish outlook, investors are cashing in their positions."
A big loser on Footsie was High Street bellwether Marks & Spencer plc (LON:MKS), which lost 4.69% to 323.10p as it reported a drop in first-quarter sales, but the drop in sales in slowing.
Also, on a more positive note, Madden notes the group's international business and the new Simply Food stores are performing well.
Primark owner Associated British Foods (LON:ABF) was also lower, dropping over 4% to 2,845p.
Commodities giant Glencore (LON:GLEN) was the biggest riser, up 2.14% to 307.50p.
3.30pm - FTSE 100 down 17
It was a grand old Duke of York sort of a day for Footsie, with hopes rising that the index may yet finish neither up or down.
Heading into the last half-hour the FTSE 100 was down 17 at 7,353, having fallen as low as 7,305 in the lunchtime session.
Mining stocks were largely responsible for the index’s revival in the afternoon session, with Glencore PLC (LON:GLEN), up 2.2%, Anglo American (LON:AAL), up 1.7%, and Rio Tinto PLC (LON:RIO), up 1.1%, the pick of the bunch.
With a much lower weighting of mining stocks, the mid-cap FTSE 250 staged less of a recovery in the afternoon session, and was down 137 at 19,220.
Carillion got another mullering today, losing 30% of its value, after its bleak update yesterday and the jettisoning of its chief executive.
A company that two days ago around £830mln if now valued at around £340mln.
14.46 ... FTSE 100 stages half-hearted rally
The FTSE 100 perked up in the run-up to the US open in the wake of a speech by the Bank of England’s Ben Broadbent.
The FTSE 100 cut its losses to 38 points at 7,332, though the rally showed signs of petering out after US stocks opened every bit as mixed as expected.
Broadbent, a member of the Bank of England’s Monetary Policy Committee, said nothing much to get overly excited about or afraid of.
“The market was eagerly awaiting his speech as it was the first opportunity to assess whether he would join the hawks and also vote for a rate hike next month,” observed Kathleen Brooks at spread betting firm City Index.
“His speech in Aberdeen, the seat of the UK oil industry, gave no direct reference to his views on the outlook for UK monetary policy; however, he was very concerned about the UK’s trade prospects after Brexit, something that is most likely shared by the export-orientated audience in Aberdeen.
“It doesn’t seem like a stretch to assume that if Broadbent is concerned about Brexit’s impact on trade then he is unlikely to make things harder for exporters by voting to raise interest rates any time soon. Thus, the hawks on the committee, now just McClafferty and Saunders, could remain in the minority for some time,” she extrapolated.
Marks & Spencer remained in the doghouse in the afternoon session and sector peers Next Plc (LON:NXT), down 1.9%, and Primark-owner Associated British Foods plc (LON:ABF), down 3.3%, kept it company.
Ahead of a trading update tomorrow, Burberry Group PLC (LON:BRBY) was down 1.7%.
READ Burberry to see modest Q1 sales growth as luxury market struggles for momentum
13.30 ... Low Marks and few Sparks
The top-share index was plumbing new depths circa 1.30pm, with Pearson plc and Marks and Spencer Group Plc battling to be the biggest disappointment.
The FTSE 100 seemed determined to duck below 7,300 before the day’s end, with the index down 60 at 7,309.
Pearson was down 5.1% as analysts reacted negatively to this morning’s conference call, while Marks and Spencer was off 4.9% as even the retailer’s food sales growth has now dried up.
“Marks and Spencer’s sales figures reported this morning have generally not been well received, with like-for-like sales in its crucial clothing department declining by 1.2%. Although this was a welcome improvement from the previous quarter’s decline of 5.8%, leading to a slight rise in share price on open at 8am, its stock has since been in steady decline,” noted Vinay Sharma, a senior trader at ayondo markets, one of those companies that does not have a Caps Lock or shift button on its keyboards.
“Investors are clearly disappointed in today’s figures and despite chief executive Steve Rowe’s assurances that they ‘remain on track’, we are seeing a lot more sellers in the stock than buyers this morning. The unexpected drop in sales for their sturdy food division could also be one of the catalysts that has got traders spooked,” Sharma suggested.
“From a technical perspective, the stock has found support around the 320p mark, and if that can hold over the next few days then we may see some more buying interest in the near term. A break below would be quite bearish and I would imagine a test of key support at 307p very soon,” the trader added.
The mid-cap FTSE 250 was hit just as hard, but at least it had a sparkling performer in its midst in the form of Galliford Try plc (LON:GFRD).
The mid-cap benchmark was down 135 at 19,223 despite Galliford Try’s 9.2% advance to 1,274p.
The house-building, regeneration and construction group said all three parts of its business put in a strong underlying performance in the financial year just ended.
12.04 ... Red sky in the morning, Footsie's falling
The FTSE 100 pottered along close to its intra-day lows in the last hour of the morning sessions.
Around noon the blue-chip index was down 56 at 7,314, just four points above its low for the day.
Sentiment towards Pearson’s decision to reduce its stake in its Penguin Random House joint venture has changed dramatically since the analysts’ conference call.
The stock was the biggest faller – down 6.1% - among Footsie constituents having been one of the best performers in early deals.
Liberum Capital Markets never tires of recommending its clients sell the educational publisher, and it was at it again today, noting that the conference call does not seem to have gone well with investors.
“We suspect one of the main issues is on the dividend, which Pearson’s comments suggesting a dividend level in the mid to high teens pence level, or only a 2%+ dividend yield, which will deter income investors but also would seem to suggest that Pearson is concerned over the need to protect its Balance Sheet moving forwards,” the broker suggested, as it reiterated its 360p target price.
Pearson shares currently trade at just below 650p.
11.05 ... US stocks unlikely to offer succour to UK bulls
If UK bulls were hoping for the US cavalry to arrive, they look set to be disappointed.
With Federal Reserve chair Janet Yellen set to make two appearances before US law makers later this week, US investors were expected to sit on their hands when US markets open in just over two-and-a-half hours’ time.
Spread betting quotes suggested the S&P 500 would open at around 2,426, down a point or so, while the Dow was seen kicking off at around the 21,407 level, also down a point or so.
In London, the FTSE 100 was down 56 at 7,313, with almost all sectors in the red.
The FTSE 250 was nursing a triple-digit fall, down 101 at 19,256.
Among the minnows, Matomy Media Group Ltd (LON:MTMY) provided some cheer after an upbeat trading statement.
The shares rose 14% to 110p after the media company said the group’s adjusted underlying earnings (EBITDA) in the first half of 2017 were 60% higher than in the same period while revenue was up about 15%.
Both metrics outperformed expectations.
Abzena plc (LON:ABZA) was wanted after it bagged a licensing deal with Taiwanese biopharmaceutical company, OBI Pharma.
The life sciences firm is licensing its ThioBridge technology in a deal worth £128mln.
READ Abzena surges as it inks Taiwanese licensing deal worth up to £128mln
Abzena and @OBIPharma sign ThioBridge™ licence agreement to enable OBI to develop potential cancer treatments https://t.co/Vt5BpqIy17
— Abzena (@AbzenaGroup) July 11, 2017
10.30 ... FTSE 100 down 43 at 7,327
The FTSE 100 continued to trend lower as the morning wore on, provoking a bit of head scratching.
Having opened moderately higher, the FTSE 100 slipped to 7,315 before rallying slightly to 7,327, down 43 on the day.
Corporate news flow is thin on the ground and there is nothing on the macroeconomic front to frighten the horses so the reason for the Footsie’s decline can be put down to the old market reporter’s standby of “more sellers than buyers”, though David Madden at spread betting firm CMC Markets reckons that “since central banks in The West are edging towards a more hawkish outlook, investors are cashing in their positions”.
They’re certainly cashing in their positions – or extending their short positions – on up-the-creek infrastructure contractor Carillion PLC (LON:CLLN), which was down a further 15.4% at 99p this morning.
After yesterday’s revenue warning from Carillion analysts got busy with their abacuses and are starting to rush out revised price targets.
UBS, for instance, slashed its price target from 185p to 78p.
“No options have been ruled out at this stage. We believe these include: (1) raising fresh equity; (2) creditors converting some of their debt to equity; and (3) asset disposals or (4) a combination of the 3,” the Swiss bank said.
“Asset sales would have the downside of disposing earnings, potentially impacting residual value to shareholders depending on valuations achieved. The potential outcome for current shareholders remains highly uncertain at this stage,” it opined.
You’re not kidding.
9.18 ... FTSE turns negative
The FTSE 100 turned negative after an ambivalent start, and the FTSE 250 joined it in the red.
The Footsie was down 33 at 7,337 while its baby-brother, the FTSE 250, was down 76 at 19,273.
Marks & Spencer Group PLC (LON:MKS) recovered a tad from a weak opening following disappointing fiscal first quarter sales figures.
Russ Mould, the investment director at AJ Bell, was among those able to find some rays of hope in the trading statement.
“Encouragingly, M&S has continued to grow its full price sales with reduced discounting and no clearance sale in the quarter. The group saw strong growth from its new Simply Food openings and its full year guidance is unchanged,” Bell said.
Among the mid-caps, the chance to sleep on yesterday’s grim update from infrastructure group Carillion PLC (LON:CLLN) did not make the bears feel any more benevolent towards the company.
Reports suggest that around a quarter of the company’s shares were sold short – the practice where traders borrow a company’s shares and sell them in the hope of buying them back at a lower price later on – ahead of yesterday’s update, and there was little sign this morning of the shorters closing out their positions.
Carillion shares were down a further 13.5% this morning.
At the other end of the FTSE 250 was house building and construction Galliford Try plc (LON:GFRD), up 6.7% after its trading update.
strong performance across all three businesses for FY 2017, with profits towards the upper end of the analysts' range #GFRD
— (((Ben Sharman))) (@BenSharman) July 11, 2017
The company said profits for the year just ended will be at the upper end of analysts’ forecasts.
Proactive News Headlines:
Flying Brands Ltd (LON:FBDU) said analysis of two studies for their Stone Checker, kidney stones treatment have reproduced and validated the results from a preliminary study, meaning the next phase of investigation can start ahead of schedule.
Shares in Abzena plc (LON:ABZA) surged on Tuesday Morning after the life sciences group signed an agreement with a Taiwanese biopharmaceutical company worth up to £128mln to license out its ThioBridge technology.
Ebiquity plc (LON:EBQ), the marketing and media analytics consultancy, has launched its Total View Attribution service, which measures how big a bang it gets for its buck (or how big a punch it gets for its pound).
Scancell Holdings Plc (LON:SCLP) has told investors that its SCIB1 skin cancer treatment continues to produce remarkable survival data from the ongoing phase I/II clinical trial. Overall, 18 of the 20 stage III/IV melanoma patients with resected disease (i.e. some or all of the tumour has been surgically removed in the past) remain alive and have lived significantly longer than the ‘established norms’.
OptiBiotix Health plc’s (LON:OPTI) calorie-free sugar sUBStitute, SweetBiotix, has been given the thumbs up from expert taste testers at the University of Reading.
ITM Power plc (LON:ITM) has signed an agreement to provide Honda with hydrogen for its fuel cell powered vehicles in the UK. The contract is priced at 10/kg, in line with other fuel supply deals ITM has signed recently.
Shares in Bango plc (LON:BGO) boomed on Tuesday Morning after the mobile payments company saw spending across its platform grow again in the first half of the year. Annualised end user spend (EUS) at the end of June exceeded £300mln a year, compared with £195mln a year at the end of December 2016.
BOS GLOBAL Holdings (LON:BOS) has announced the first of its additional strategic new board appointments, naming Adam Webb as a non-executive director with effect from today. The workplace efficiency software developer said Webb is a senior qualified solicitor and corporate financier with an expansive career spanning City lawyers Slaughter and May and mainstream investment banking with Morgan Grenfell, CIBC/Wood Gundy and Société Générale.
Chaarat Gold Holdings Limited (LON:CGH) has granted options to new chief executive Robert Benbow that incentivise him to hit specific construction and production targets. The company also extended a waiver that allows a concert party to purchase its shares without triggering a mandatory offer.
Jangada Mines Plc (LON:JAN) has added US$521mln of in situ value to its Pedra Branca platinum group metals project in Brazil through the addition of significant copper and nickel credits.
Avesoro Resources Inc (LON:ASO) has increased quarterly gold production from its New Liberty gold mine in Liberia and remains on target to produce between 90,000 and 100,000 ounces this year. The all-in sustaining costs should run at between US$925 and US$975 per ounce.
8.20am: FTSE 100 off to a quiet start as Pearson and M&S cancel each other out
The FTSE 100 was a bit slow out of the traps this morning, opening barely changed.
The top-share index was just three points firmer at 7,373, with the difference between a positive and negative performance largely down to a 3% gain by educational publisher Pearson PLC (LON:PSON) on news that it is raising around US$1bn by selling down its stake in Penguin Random House.
READ Pearson raises US$1bn by selling 22% of Penguin Random House
The company will sell 22% of Penguin to its partner in the joint venture, Bertelsmann. It will use £300mln of the funds to buy back shares.
First quarter results from Marks and Spencer Group PLC (LON:MKS) were a disappointment.
The shares shed 1.6% at 339p after the high street bellwether UK sales dipped 0.5% on a like-for-like basis in the 13 weeks to 1 July, driven by a 1.2% decline in the clothing and home business. Like for-like food sales edged down 0.1%.
The FTSE 250 index was having a better day than it did yesterday, when it was weighed down by Carillion’s share price crash.
The mid-cap benchmark was up 29 at 19,406, led by Grafton Group PLC (LON:GFTU), which was up 5.4% after a trading update.
The international builders’ merchant said revenues in the first half of 2017 were 9% higher than in the corresponding period of 2016, or 6% higher in constant currency. Like-for-like sales rose 5.7%.
Market preview
The FTSE 100 is expected to open 10 points higher to 7,380 following gains in Asia and a mixed session in the US.
With no notable economic data on today’s calendar, investors instead turned their focus to corporate releases, developments on Brexit and speeches from Bank of England policymakers Andy Haldane and Ben Broadbent in morning trading.
Haldane last month sent the pound higher after saying it would be prudent to raise interest rates before the end of the year.
“If Broadbent also gives the slightest hint of higher rates, the BoE hawks could give a decent boost to the GBP-bulls, who have recently failed to fight back the resistance at 1.2980/1.3000 zone,” said Ipek Ozkardeskaya, senior market analyst at London Capital Group.
In the US, Federal Reserve chair Janet Yellen will speak before the Congress at her semi-annual testimony on Wednesday and Thursday. She is expected to reiterate the possibility of a 25 basis point hike in interest rates in 2017.
US stocks were mixed at the close with the Dow Jones Industrial Average down 0.03% to 21,408, the S&P 500 up 0.09% to 2,427 and the Nasdaq up 0.38% to 6,179.
In Asia ahead of the close, the Nikkei gained 0.54% to 20,189, the Hang Seng rose 1.61% to 25,911 and the Shanghai edged up 0.34% to 3,223.
Meanwhile, oil prices rose with Brent up 0.27% to US$47.01 per barrel and West Texas Intermediate up 0.29% to US$44.53.
The pound was down 0.05% versus the dollar at US$1.2875.
News headlines
- Sports Direct Chairman’s ‘shock’ at £15 million bonus – Sports Direct’s Chairman has told a court that he was “shocked” when he first heard claims that Mike Ashley had offered to pay a former adviser £15 million to more than double the retailer’s share price. (The Times)
- More than two million UK. jobs linked to EU investment – More than two million UK. employees work for companies that are reliant to some extent on foreign investment from the European Union, according to new statistics from the Office for National Statistics. (The Independent)
- Elliott challenges Buffett’s $18 billion Texas utility deal – Elliott Management set the stage for a public battle between billionaire investors on Monday as the activist hedge fund controlled by Paul Singer openly challenged a $18 billion bid from Warren Buffett’s Berkshire Hathaway for the Texas utility Oncor. (Financial Times)
- Financial services still booming despite fading optimism – Britain’s huge financial services sector enjoyed robust profits and rising employment last quarter even though optimism about the future darkened with Brexit looming on the horizon, according to a new poll. (Daily Telegraph)
- Drilling rig owned by UK. fracking firm Cuadrilla ‘seriously vandalised’ – A drilling rig owned by one of the UK.’s most prominent fracking firms has been seriously vandalised, in a move seemingly intended to slow down the country’s embryonic shale industry. (Guardian)
- Foreign predators snare £121bn of British giants since the Brexit vote – Foreign companies have exploited the fall in the pound to mount takeovers of UK. rivals worth £121bn since the Brexit vote. (Daily Mail)
- Morrisons set to become the UK’s biggest florist – Morrisons has officially launched an online flower delivery service, Flowerworld, making it the UK’s biggest florist. (City AM)