FTSE 100 closes lower
Wall Street starts higher
North Korea concerns persist
FTSE 100 closed Wednesday almost 19 points down as traders continue to be spooked by North Korea threats.
The UK blue-chip benchmark finished down 18.79 at 7,354, while mid-tier index FTSE 250 lost over 74 at 19,652.
David Madden, at CMC Markets, said: "Stocks in Europe are a mixed bag this afternoon as the stalemate regarding North Korea is still ongoing.
"The FTSE 100 and IBEX 35 are a touch lower on the day while the DAX, CAC 40 and the FTSE MIB are in positive territory.
"Some European markets are performing better than others, but the broad decline that has been in place since the start of the summer is still intact. The European Central Bank (ECB) meeting and press conference tomorrow will be the focus of trader’s attention."
The big housebuilders were losing ground on the day, with Barratt Developments plc (LON:BDEV) down 4.57% to 595.50p despite it reporting profits jumping 12% in the last year.
But traders homed in apparently on the worries over outlook and Brexit.
Persimmon plc (LON:PSN) fell 2.4% to 2,561p, while Berkeley Group Holdings plc (LON:BKG) shed 3.37% to 3,625.50p as it reported in-line trading but warned on factors affecting the London market.
In the US, stocks started positively and are still ahead at the time of writing.
3:00pm - FTSE 100 narrows Wednesday’s losses after Wall Street starts higher
Wednesday’s FTSE 100 losses narrowed following a positive open on Wall Street.
The FTSE 100 was down just 17 points or 0.23% changing hands at 7,355 just after 3:00pm.
In New York, the Dow Jones was up more than 80 points, 0.38%, at 21,835 while the S&P 500 climbed 0.37% to 2,467 and the Nasdaq gained 21 points to 6,396.
2:00pm - Sports Direct chairman Hellawell keeps his seat
Sports Direct chairman Keith Hellawell is keeping his seat, after 53.24% of the retailers independent shareholders voted for his re-election.
A year ago, he failed to secure the support of independent shareholders at last year’s AGM but was spared after chief executive, Mike Ashley, used his majority voting rights to keep him on as chairman. He had promised to step down if he failed to gain shareholder support at the next AGM.
This year, Fidelity International, one of the biggest shareholders in Sports Direct with a 6% holding, has joined the revolt against Hellawell.
Fidelity joins Hermes Investment Management, Royal London, Aberdeen Standard Investments and Legal & General Investment Management in rebelling against Hellawell. Institutional Shareholder Service, Glass Lewis and Pirc have all recommended shareholders vote against his re-election.
Ashley, who owns 62% of Sports Direct, will not attend this year’s AGM due to “conflicting demands for his time in other areas of the business”.
1:10pm - FTSE 100 recovers some of morning’s losses as Wall Street is seen higher ahead of open
The FTSE 100 was looking slightly better, albeit the blue-chip benchmark is still in the red.
Just after 1:00pm, the FTSE 100 was down 28 points or 0.38% standing at 7,344.
In New York, meanwhile, the Dow Jones was pointing about 20 points higher at 21,784 while the S&P 500 and Nasdaq benchmarks were also indicated to start on the front foot.
Mike van Dulken, Accendo Markets head of research, highlighted that oil and gold prices remain supported by a weaker US dollar among other factors.
“Equities are mixed as investor resilience gives way to fresh preference for safe havens like Gold following aggressive rhetoric from both sides of a US-NK standoff that thankfully remains merely a war of words.
“Commodities like metals and oil, however, are faring fine thanks to fresh USD weakness, Texan refinery resumption and positive OPEC chat.”
The analyst added: “The UK FTSE 100 underperforms as the boost from a weaker USD on commodities is outweighed by the hindrance of opposing GBP strength for internationally exposed names.”
11:30am - FTSE 100 continues to drift lower, no direction yet in US futures
The FTSE 100 continued to drift through Thursday’s trading, down almost 50 points or 0.65% changing hands at 7,324.
Whilst it is still a tad early, Wall Street futures are pretty much directionless.
In the absence of meaningful steers, equity markets remain weighed by the concerns over the North Korea weapons crisis.
Craig Erlam, analyst at trading firm OANDA, in a note, suggested that investors presently prefer not to be active due to the current uncertainty.
“There is clear concern about the escalating tensions between the US and North Korea which has culminated in repeated stints of risk off trading in recent weeks,” he said.
“With the increasingly frequent tests in North Korea triggering such moves, it’s making traders a little more anxious than normal and it seems that for now, sitting on the side-lines is preferred.
“The verbal back and forth isn’t helping matters, although it is having less of a negative impact than it was a few weeks ago.”
10:45am – Eyes on possible shareholder revolt at Sports Direct AGM
Issuing a positive trading update ahead of this morning’s AGM may have been a nice sleight of hand for Sports Direct International Plc (LON:SPD), one that sent the retailer’s share higher, but, it remains to be seen whether chairman Keith Hellawell can manage a feat of escapism when shareholders start voting.
It is predicted that Hellawell could be forced to step down as a number of influential shareholders are said to be against his re-election (the AGM takes place at 11:00am today).
A year ago failed to secure the support of independent shareholders at last year’s AGM but was spared after chief executive, Mike Ashley, used his majority voting rights to keep him on as chairman. He had promised to step down if he fails to gain shareholder support at the next AGM.
Now, Fidelity International, one of the biggest shareholders in Sports Direct with a 6% holding, has joined the revolt against Hellawell.
Fidelity joins Hermes Investment Management, Royal London, Aberdeen Standard Investments and Legal & General Investment Management in rebelling against Hellawell. Institutional Shareholder Service, Glass Lewis and Pirc have all recommended shareholders vote against his re-election.
Ashley, who owns 62% of Sports Direct, will not attend this year’s AGM due to “conflicting demands for his time in other areas of the business”.
At around 10:45am, London’s FTSE 100 was down 40 points or 0.55% changing hands at 7,332.
9:30am - FTSE 100 down on North Korea worries, but investors are ‘nervous not scared’
London’s FTSE 100 was down around 35 points or 0.48% just after 9:30am on Wednesday with the mood in the City described as being ‘nervous but not scared’ about North Korea.
The characterisation by CMC Markets analyst David Madden is that investors are on edge – seemingly the weakness in the equity benchmark reflects an absence of buying not panicked selling.
“Investors aren’t running scared, but they are a touch on the nervous side, and while the situation keeps rumbling on, dealers could be reluctant to start a fresh round of buying,” Madden said in a note.
On a stock-by-stock basis there were a few corporate updates for those seeking to distract themselves from thoughts of the nuclear apocalypse.
Sports Direct International Plc (LON:SPD) shares raced to a near 3% lead in Wednesday’s early deals with a statement ahead of today’s AGM highlighting that efforts to revamp stores is paying off, with the new format stores trading ahead of expectations.
By around 9:30, Sports Direct shares were up 10.6p or 2.76% changing hands at 394.8p.
Seemingly positive sentiment towards housebuilders was all spent yesterday (in the wake of Redrow’s results) because Barratt Developments Plc (LON:BDEV) shares were down 3.53% at 602p despite what brokers see as “another strong year” for Barratt.
Budget airline Ryanair Holdings Plc (LON:RYA) was also on the back foot, with its shares down almost 1% at 18.02p, as it announced a new tightening of carry-on baggage terms – passengers now only get one free carry on, not two, but, at the same time it is reducing fees on check-in bags down to €25 from €35 (for 20kg luggage).
Ryanair reckons the changes will cost it €50mln (per year) in reduced checked bag fees, albeit, the airline believes the lower check in prices may increase the overall number of bags it is paid to put in the hold.
Rival EasyJet Plc (LON:EZJ), meanwhile, reported traffic stats and started positively with a 1% gain on the open, only to retreat to a 1% loss at 1,145p by around 9:30am.
8.45am: Footsie falls
The FTSE 100 index beat a retreat in early trading following overnight drops on Wall Street and in Asia amid continuing worries over the nuclear threat from North Korea.
After around three-quarters an hour of trading, the UK blue chip index was down 25 points at 7,347, having dropped 38 points yesterday.
Ipek Ozkardeskaya, senior market analyst at London Capital Group, commented: “Equity traders have a hard time clearing their thoughts as the North Korean nuclear threat occupy the global headlines.
“Safe haven assets remain in demand as Asia Business Daily based in Seoul reported that North Korea could launch a new missile before Saturday. So far, there hasn’t been any concrete plans from the US, Russia and China to respond to the nuclear threat.”
Among the early fallers in London, housebuilders were under pressure after updates from two of their number failed to excite.
Blue chip Barratt Developments PLC (LON:BDEV) shed 3.3% at 603.5p, and Berkeley Group PLC (LON:BKG) – soon to be returned to the FTSE 100 index - fell 2.3% to 3,667p
But FTSE 250-listed retirement homes builder McCarthy & Stone PLC (LON:MCS) went the other way, adding 2% at 163.7p after it reported full-year revenue at record levels as selling prices for its retirement homes hit an all-time high in a trading statement.
Drugmaker AstraZeneca PLC (LON:AZN) also found modest gains, up 0.2% to 4,580.5p after French broker Natixis raised its rating for the blue chip stock to ‘buy’ from ‘neutral’.
Proactive news headlines:
Synairgen plc (LON:SNG) has reported significant industry interest in its new idiopathic pulmonary fibrosis treatment ahead of the start of clinical trials. Richard Marsden, Synairgen’s chief executive, said: "Based on PXS-5382A's potential across a number of disease areas and the promising data seen to date, we have received significant interest from companies looking to license the programme for multiple indications.”
An upbeat interim statement from gene therapy specialist Silence Therapeutics PLC (LON:SLN) sent its share price jumping 8% to 200p.Ali Mortazavi, chief executive, repeated his view that 2017 year will be the year that RNAi becomes a widely accepted therapeutic platform.
Shares in LoopUp Group PLC (LON:LOOP) jumped at the opening bell on Wednesday after the remote meetings technology firm reported solid first-half results and said the strong performance has rolled over into second half. Revenues, profits and margins in the opening six months of 2017 were all well ahead of last year, driven by “continued strong sales and customer loyalty”.
Cell therapy specialist ReNeuron Group Plc(LON:RENE) told investors its therapeutic programmes are “progressing to plan”. In an update ahead of the company’s annual meeting it confirmed it is putting the finishing touches to data packages that will be submitted as part of its application to start a US phase III clinical trial using its CTX cells to treat stroke victims.
Faron Pharmaceuticals Ltd (LON:FARN) is headed into a crucial and potentially transformational period with recruitment to its phase III trial for its lead drug set for completion later this year. A positive readout for Traumakine, used to treat acute respiratory distress syndrome caused by pneumonia, would pave the way for its launch in Europe and the US.
SDX Energy Inc (LON:SDX, CVE:SDX) has revealed a new oversubscribed US$10mln funding, with new equity issued at Tuesday’s closing mid-market price, of 43.75p. The injection of capital is earmarked for the acceleration of the group’s exploration and appraisal of the South Disouq asset, where a well last year confirmed a new gas discovery, in additional to the development drilling programmes in Morocco.
Aminex plc (LON:AEX) has confirmed a major project milestone at the Ntorya gas project, in Tanzania, where it has now submitted a field development plan to the authorities. The oil and gas firm explained that this is a ‘key step’ towards securing a development licence and the commercialisation of the Ntorya gas discovery. Aminex owns 75% of Ntorya, alongside partner Solo Oil PLC (LON:SOLO) with the other 25%.
6.55am: Lower start predicted
London’s blue clips are set to open lower as North Korea’s sabre rattling continues to dominate the mood.
Financial spread bet firms see FTSE 100 shedding up to 25 points when trading gets underway following sizeable reverses in the US and Asia overnight. The London index shed 38 to 7,372 on Tuesday.
North Korea’s promise of more ‘gifts’ for the US following its latest nuclear test knocked US markets, with the Dow Jones Industrial Average slumping 234 to 21,753 and similarly heavy falls for Nasdaq and the S&P.
The prospect of another devastating hurricane, Irma, hitting the US after smashing through the Caribbean also weighed on the US.
Insurance companies are still recovering from the cost of Hurricane Harvey, which has been estimated at US$180bn, but Irma is expected to be even more powerful and classified a category five storm.
Asian markets were lower mostly. The Nikkei in Tokyo fell 31 to 19,355 while Hong Kong was 195 points down near the close. Shanghai was flat.
Commodities/currencies
- Gold: 1,344 flat
- Oil (WTI): down 6c at US$48.60
- £/$:1.3038 pound up slightly
City headlines:
- Charter Court mortgage lender to float for £500mln (Times)
- Poland’s answer to H&M opens Oxford Street flagship at former BHS store (City AM)
- WhatsApp launches service to help business talk to clients (Financial Times)
- Interest-only mortgage boost for older borrowers (Times)
- Brexit still might not happen, City economists predict (Independent)
- Sports Direct fails to meet 2016 pledge on working conditions (Guardian)
- Bank of England reaches agreement with striking workers over pay (Independent)
- Scandal-hit UK PR firm Bell Pottinger hires BDO to advise on sale (Financial Times)
- BBC to launch major pay review amid anger over highly paid talent (Telegraph)
Significant events expected:
Trading update: Berkeley Group PLC (LON:BKG)
Finals: Barratt Developments PLC (LON:BDEV), Diurnal Group PLC (LON:DNL), McCarthy & Stone PLC (LON:MCS)
Interims: Faron Pharmaceuticals PLC (LON:FARN), Harworth Group PLC (LON:HWG), Loopup PLC (LON:LOOP), PPHE Hotel Group PLC (LON:PPH), Somero Enterprises Inc (LON:SOM), Vectura Group PLC (LON:VEC), WANdisco PLC (LON:WAND), Xaar PLC (LON:XAR)
Traffic figures: easyJet PLC (LON:EZJ)
Economic data: BRC UK shop price index; US balance of trade; US ISM non-manufacturing report