FTSE 100 closes up 42
ECB: No changes on interest rates or QE
Wall Street shares lower
FTSE 100 closed over 42 points higher on Thursday, holding onto gains, despite mixed trade across the pond.
The UK benchmark closed at 7,396 - up 42.85, while the more UK company focused index, the FTSE 250 finished up over 26 at 19,678.
Meanwhile, Brent crude gained 1.90% to stand at $53.19 a barrel and the price of gold added 0.42% to $1,343.50 an ounce.
In the currency markets, the pound was 0.30% down against the Euro and 0.51% up against the US dollar.
Financial groups and miners lagged but the top loser was insurance giant Admiral plc (LON:ADM) which shed 1.97% to 1,838p as it went ex-dividend.
On the winning front, software group Micron Focus International plc (LON:MICRO) gained 2.76% to stand at 2,401.59p.
3:20pm - FTSE 100 holds onto earlier gains as Wall Street starts on back foot
London’s FTSE 100 held onto Thursday’s earlier gains, up 42 points or 0.57% to 7,395, despite Wall Street starting on the back foot.
In New York, the Dow Jones index was down 23 points or 0.11% trading at 21,783 while the S&P 500 dipped 0.14% to 2,461 and the Nasdaq was down 0.13% to 6,386.
1:00pm - FTSE 100 strengthens into afternoon trading, no surprises from ECB
Thursday lunch brought no surprises from the ECB, with the European Central Bank making no changes to interest rates.
In London, the FTSE 100 continued to strengthen into the afternoon following the back-and-forth beginnings of the session. At around 1:00pm, the blue-chip benchmark was up 33 points or 0.46% changing hands at 7,388.
Watch ECB press conference live: President Mario Draghi explains today’s monetary policy decisions https://t.co/aDel5ASN5G
— ECB (@ecb) September 7, 2017
“The ECB’s monetary policy has been backed up by encouraging results over the past year and it seems as though any change in direction will wait for another month at least,” said Dennis de Jong, managing director at online trading firm UFX.
“The call to bottom out rates isn’t without its critics.
“There are increasingly loud calls from Germany and various regional banks to end the era of cheap money and consistent QE with early signs of bubbles forming. However, it seems as though these won’t be strong enough for Frankfurt decision makers to change track with a buoyant Euro and growth figures continuing to impress.”
Carsten Brzeski, chief economist at ING, meanwhile, commented: “Whether and how much ECB president Draghi will talk about tapering in his introductory statement and the Q&A session will highly depend on the weight the ECB attaches to the euro exchange rate.
“Giving no hint of and at the tapering game plan at all will keep markets at unease and will do little to calm speculations.
“At the same time, talking down the euro would also only work if the ECB was to give signals that tapering could be postponed.
Brzeski added: “the ECB is probably not concerned about the past appreciation of the euro but rather about the future appreciation.
“In this regards, to get out of the euro trap, don’t be surprised if Draghi presents a more detailed game plan than market participants expect.”
11:30am - Will FTSE 100 take the power back from the 250 as UK growth stutters?
Stockbroker Sanlam UK reckons the FTSE 100 may be due to take the power back from the FTSE 250, which has “largely outperformed” the index of the 100 ‘biggest’ shares.
Philip Smeaton, Sanlam chief investment officer, in a note, highlighted that the possible slowing down of the British economy could see the ‘outperformance’ switch back to the FTSE 100 and the index’s multinationals.
“The UK has enjoyed over 20 years of strong economic growth, with smaller UK-centric firms performing well, and generally better than the mega-cap multinationals,” Smeaton said.
“Consequently it’s not surprising that the FTSE 100 fell out of favour since it holds a high proportion of these global earners.
“Investors struggle to remember a time when large and established UK companies outperformed their smaller, faster-growing counterparts, hence the reason the FTSE 250 (a proxy for smaller, more domestically focussed businesses) became the UK index of choice.
“But could that be about to change?”
Smeaton noted that the UK is facing several challenges for the medium and long term – government spending is unlikely to increase, corporate spending is down, and consumer spending may wane - and he claimed that the FTSE 100 typically “comes into its own” when the UK economy is underperforming the rest of the world.
At 11:30am, the FTSE 100 was up 33 points or 0.45% to 7,387 as the market awaits news from the European Central Bank.
10:40am - FTSE 100 holding positive ground ahead of ECB
Investors are awaiting the latest instalment from the European Central Bank, which announces its rate decision and holds a press conference later today (from 12:45pm), though attention will not really be on what the ECB does but rather what it says.
A change to the rate is not expected today.
“Traders will be listening out for clues as to what the ECB are going to do in relation to the stimulus package, and whether the size of it will be reduced in the coming months,” said David Madden, analyst at CMC Markets.
“Mario Draghi, the ECB chief, would like to keep the euro as weak as possible, and I suspect he will use the relatively low inflation rate in the eurozone as an excuse for not reigning in the loose monetary policy as soon as some traders predict.
“Mr Draghi will tread a fine line between acknowledging the need to lower the size of the bond buying scheme down the line, while also highlighting that inflation isn’t high enough and unemployment is still too high.”
At 10:40am, London’s FTSE 100 was up about 18 points or 0.24% changing hands at 7,372.
9:40am - FTSE 100 flitting between the ups and downs, investors remain cautious
The FTSE 100 continued to flit between positive and negative territory through Thursday morning’s trading - at around 9:30am the blue-chip benchmark was just 5 points in the green, changing hands at 7,359.
Stock-by-stock and sector-by-sector, there were a number of potential trading catalysts, indeed the market top-lists show several signs of movement, nonetheless, the ever present worry over North Korea continues to be a weight against risk sentiment.
Capita PLC (LON:CPI) was dented by a restatement of last year’s results.
Elsewhere, the insurance sector has been boosted by a government U-turn.
Bovis Homes Group PLC (LON:BVS) was the latest housebuilder to report this week – following on from Redrow and Barratt – and its share price advanced 7.3% to 1,130p.
Financial results, showing a confident outlook and revenue growth despite a decline in total completions, were further supported by house price statistics from Halifax that indicated an apparently resilient market.
A 1.1% rise in prices in August took the average price to an eight-month high and marked the fastest month-to-month growth this year.
8.45am: Footsie slips lower
The FTSE 100 index slipped back from opening modest gains in early trading today as the benefit of overnight gains in the US and Asia amid a slighting fading in North Korea tensions was balanced by some caution ahead of the outcome of the latest European Central Bank Council meeting today.
After three quarters of an hour of trading, the UK blue chip index was down around 4 points at 7,350, steadying having closed 18.79 points lower yesterday.
Markus Huber, trader at City of London Markets Limited, said: “No doubt today’s ECB meeting is important, not only in regard to Draghi’s shedding more light into his plans to reduce QE but also concerning the strength of the Euro versus the USD and the GBP.“
He added: “The ECB meeting combined with ‘monster’ hurricane Irma has pushed although very likely only temporarily, ever increasing tensions between the US and North Korea in the background.
“Overall sentiment is neutral to slightly negative for now. Seasonally September isn’t necessarily the best month for stocks on the other hand either a major new development in regard to US and international politics or the global economy will be needed for markets to stage a breakout out of the current trading range.”
Insurers get Ogden boost
Among the gainers in London, insurer Direct Line Group PLC (LON:DLG) was the top FTSE 100 riser, up 2.2% to 379.9p as the sector welcomed a bit of backtracking by the government on plans to change the discount rate for compensation claims.
The Ogden rate will now be in a range between zero and 1%, having been previously slashed from 2.5% to -0.75%.
Neil Wilson, senior market analyst at ETX Capital commented: “The impact of this rather odd decision was significant on insurers’ 2016 profits. Direct Line operating profits for last year fell 23% to £404m. If the rate had been left alone, profits would have been 11% higher. The company had to halve dividends as a result of the £175mln hit it took to full-year profits.”
But the biggest blue chip faller early on was outsourcing firm Capita PLC (LON:CPI) which dropped over 6% to 602.5p after the firm restated its revenues and profits for 2016 following a move to IFRS 15 reporting that affects the value of contracts with customers.
The shift means revenue will more evenly spread over the life of contracts, which entails lower profits or losses recognised earlier, all of which means a big revision to 2016 results, with profits slashed by 30%, down from £481mln to £335mln.
Proactive news headlines:
Stratex International PLC said it has “identified potential optimisation opportunities” at Crusader Resources Limited's Borborema project in Brazil “which are expected to yield material economic gains and lower upfront capital spend”. The AIM-quoted gold and exploration company said it expected to reduce capex at the project from the current estimate of US$120mln to around US$100mln.
Chariot Oil & Gas Limited (LON:CHAR) has told investors that it has secured a drilling rig for the upcoming RD-1 well, targeting the JP-1 exploration prospect which forms part of its operations in Morocco. Project operator ENI has contracted Saipem 12000, an ultra-deepwater drillship, for the programme and it is currently anticipated that the rig will arrive in the later part of the first quarter of 2018 with drilling due to start shortly thereafter.
ValiRx PLC (LON:VAL) is to accelerate the pre-clinical trials of its VAL101 cancer-fighting molecule after making a breakthrough with its development. The biotech has developed a technically and commercially improved second generation of the therapeutic, whilst managing to maintain its cancer-fighting properties.
Cambridge Sensor Innovation, one of the companies backed by Frontier IP Group PLC (LON:FIPP), has launched a new sensor that will enable the humble domestic oven to produce professional standard results in less time.
Chaarat Gold Holdings Limited has reported positive results from the drilling programme in the Tulkubash Zone of the Chaarat Gold Project in the Kyrgyz Republic, with the pit length increased and the drilling programme extended to 15,000 meters from 11,000 metres. The AIM-listed firm said additional mineralisation has been identified within the current Tulkubash pit, and the mineralisation there extends to connect with other drilled areas to increase pit length from approximately 1,100 to 2,200 metres.
Life and pensions consolidator Chesnara PLC (LON:CSN), which owns Countrywide Assured, said it is still working with the Financial Conduct Authority (FCA) to bring a speedy termination to the watchdog's investigation into the company's treatment of long-standing customers. The statement came after the FCA said it had closed the probe into another fund - Police Mutual.
Shares in Avation PLC (LON:AVAP) were flying high early on Thursday morning after the aircraft leasing group posted another record-breaking full-year results. A higher lease yield helped to push up revenues by almost a third to US$94.2mln (2016: US$71.2mln) during the 12 months ended 30 June, while pre-tax profits jumped by 18% to US$21.4mln.
Oxo-biodegradable plastic technology company Symphony Environmental Technologies PLC (LON:SYM) has continued momentum in the second half of 2017 after showing strong growth in the first. Profit before tax soared 400% to £95,000 on the back of a 14% increase in revenues to £3.69mln.
Centralnic Group PLC (LON:CNIC) has said it is on track to become a “major global player” in the internet domain names sector after enjoying a “most encouraging” first half. Total revenues across the business jumped 19% to £10.6mln (H1 2016: £8.9mln), while a slight improvement in margins saw gross profit surge by almost a third to £3mln (H1 2016: £2.3mln). CentralNic confirmed it has renegotiated and renewed its exclusive wholesaler contract with XYZ.COM, which owns the .xyz top-level domain.
Full-year results for trading and risk management software provider Brady PLC (LON:BRY) are expected to be in line with market expectations, with a continued rise in recurring revenues as the group moves away from the legacy licence model.
Highlands Natural Resources PLC said it has successfully finished drilling on the Wildhorse 5-64 15-16-1BHZ well, the second on the East Denver Niobrara Project in Colorado ahead of schedule, and has seen the positive "shows" of oil and gas. The AIM-listed company said it reached the total depth of 18,483 ft on the Wildhorse well on 4 September.
Ferrum Crescent PLC (LON:FCR) has confirmed high lead-zinc concentrations near the surface at its Toral prospect in Spain. Each of the six holes in the latest drill programme hit lead and zinc, confirming the visual inspections of the cores reported in July, while three were high grade intercepts.
Strategic Minerals PLC (LON:SML) has reported good tin grades from first drilling at the Redmoor prospect in Cornwall, but their nature has meant a shift in approach going forward. John Peters, managing director, said the assays from ten of the 14 holes drilled so far suggest a better (and easier) mining prospect may be the high-grade zones within the sheeted vein system rather than following lodes.
Akers Biosciences, Inc. (NASDAQ:AKER) (LON:AKR) has appointed Pamela E. Hibler to lead the rapid health information technologies developer's North American commercial team as Vice President, Sales and Distribution. Since 2010, Hibler has been working for Cogentix Medical, a global medical device company that was formed through the 2015 merger of two public entities, Uroplasty and Vision Sciences.
OptiBiotix Health PLC (LON:OPTI) said it has been invited to present its research and commercial developments at the 18th edition of Expoquimia-World Chemical Summit in Barcelona, Spain, on 5 October 2017. The life sciences group, which is developing compounds to tackle obesity, cardiovascular disease and diabetes, will present a presentation titled: 'New approaches: microbiome modulation as therapeutic intervention'.
6.45am: FTSE seen slightly higher
London’s FTSE 100 is expected to start slightly higher, with factors from North America providing positive antidotes to the lingering fears over North Korea and the weapons testing crisis.
On Wall Street, the Dow Jones closed Wednesday’s trading up 54 points or 0.25% at 21,807 while the S&P 500 and Nasdaq rose 0.31% and 0.28% respectively.
President Donald Trump has reportedly decided to extend the deadline for the debt ceiling for three months to support the economic response and aid following Hurricane Harvey.
“This helped US stocks, as well as the US dollar finish the day higher, despite Republican house speaker Paul Ryan declaring the proposal unworkable and ridiculous, which might render passing the proposal problematic given that Republicans control both houses,” said Michael Hewson, analyst at CMC Markets.
“In any case the proposal seems eminently sensible, as well as being smart politics by the Democrats, even more so given the current circumstances with the prospect of Hurricane Irma to come, and another, Jose forming in the Atlantic.”
In Asia, equity markets were mixed. Japan’s Nikkei was up, rising 0.15% to 19,386, while Hong Kong’s Hang Seng was moving slightly lower to 27,599. The Shanghai Composite was also only slightly lower, at 3,383.
In Australia, the ASX 200 benchmark had fallen 0.14% to 5,681.
Meanwhile, in London, CFD and spreadbetting firm IG Markets sees the FTSE 100 rising about 8 points, calling the blue-chip benchmark at 7,353 to 7,357 about an hour before the open.
Ex-dividend factors will knock 6.5 points off the FTSE 100 index on Thursday, with Admiral Group PLC (LON:ADM), Antofagasta PLC (LON:ANTO), BHP Billiton PLC (LON:BLT), CRH PLC (LON:CRH), ConvaTec Group PLC (LON:CTEC), Glencore PLC (LON:GLEN), Land Securities PLC (LON:LAND), RSA Insurance PLC (LON:RSA), Shire PLC (LON:SHP), Standard Life Aberdeen PLC (LON:SLA), all trading without entitlement to their latest dividend payment.
Significant events expected on Thursday September 7
Finals: Ashmore group PLC (LON:ASHM), CPL Resources PLC (LON:CPS), Frontier Developments PLC (LON:FDEV), Go-Ahead Group PLC (LON:GOG), McBride PLC (LON:MCB), Redde PLC (LON:REDD)
Interims: Biffa PLC (LON:BIFF), Bovis Homes PLC (LON:BVS), Brady PLC (LON:BRY), Centralnic Group PLC (LON:CNIC), EnQuest PLC (LON:ENQ), Filtra Group Holdings PLC (LON:F LTA), Gama Aviation PLC (LON:GMAA), Hunters Property PLC (LON:HUNT), International Public Partnerships Limited (LON:INPP), Molins PLC (LON:MLIN), ProPhotonix PLC (LON:PPIX) Sanne Group PLC (LON:SNN)
FTSE 100 ex-dividends: Admiral Group PLC (LON:ADM), Antofagasta PLC (LON:ANTO), BHP Billiton PLC (LON:BLT), CRH PLC (LON:CRH), ConvaTec Group PLC (LON:CTEC), Glencore PLC (LON:GLEN), Land Securities PLC (LON:LAND), RSA Insurance PLC (LON:RSA), Shire PLC (LON:SHP), Standard Life Aberdeen PLC (LON:SL.)
Economic data: ECB interest rate decision; Halifax UK house price index; US weekly jobless claims
Headlines
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