FTSE 100 falls 80 points to 7,215
Pound heads towards US$1.36 as BoE policymaker signals rate hike
Investors raise a glass to Wetherspoons
US retail sales fall 0.2% in August
Though US investors seemed to be sanguine about North Korea's latest missile launch, UK markets reacted more nervously, which is perhaps understandable on a day when there has been a terrorist attack on the tube in London.
The FTSE 100 closed at 7,215, down 80 points, with cruise operator Carnival PLC (LON:CCL) the biggest faller after being downgraded by Credit Suisse. The company faces a double whammy from cancelled bookings in the hurricane season and the rising oil price following hurricanes Harvey and Irma. The shares tumbled 6.4%.
PUBS group JD Wetherspoon PLC (LON:JDW) provided cheer, rising 14% on the back of its results.
"It was a record year for sales, profits and earnings per share. Wetherspoon seems to be thriving in post-referendum Britain, and according to the chairman, it will continue to do so after Brexit," said Neil Wilson of ETX Capital.
"The positivity is admirable - instead of talking about margin pressures from the weak exchange rate causing prices to rise like everyone else, he argues that the biggest threat of Britain leaving is to European suppliers as UK importers look elsewhere. Wetherspoon is 'extremely confident that it can switch from EU suppliers', he says, although the company is 'very reluctant to initiate such actions'," Wilson added.
3.05pm...Dow Jones opens at record high
Well so much for the dull start…The Dow Jones – made up of 30 major companies – set a fresh record high at the open as it jumped to 22,235.33.
It’s fallen back slightly now but it’s still up 0.1%, or 22.7 points, to 22,226.3. The North Korea missile launch earlier today obviously hasn't affected sentiment.
It wasn’t quite the same on the S&P 500 or the Nasdaq Composite which are both broadly flat at 2,495.5 and 6,430.3 respectively.
2.35pm...Nothing going right for the FTSE 100
The FTSE 100 started the day on the back foot as nervous London traders took the latest North Korean missile launch as their cue to sell.
Shortly after that, the blue chips on the index were dealt another blow when Bank of England policymaker Gertjan Vlieghe, traditionally seen as a dove, said in a speech that “we are approaching the moment when Bank Rate may need to rise”.
Pound at post-Brexit high
That sent the pound soaring up towards US$1.36 – it’s highest level since last summer’s EU referendum – with the Footsie heading in the other direction.
A stronger pound tends to weigh on the index as it cuts the value of companies’ overseas earnings when translated back into sterling and simultaneously makes their products more expensive to overseas buyers.
With everything seemingly going against it, it’s not entirely surprising to see the FTSE 100 nursing some heavy losses shortly before traders shut up shop for the weekend. It’s currently 86.2 points, or 1.2%, down 7,209.1.
Carnival and Provident sink
Cruise operator Carnival PLC (LON:CCL) is the top faller heading into the final hour or so of trading. It share price has sunk by 4.2% to £48.94 as nervous investors wait on next week’s quarterly update.
The dual-listed company has kept schtum about the impact of the recent US hurricanes on its operations so shareholders will be hoping that no news is good news.
Elsewhere, troubled doorstep lender Provident Financial PLC (LON:PFG) gave up all of Thursday’s gains and more today, slipping 2% to £8.
Its fall came after reports that it is facing a £300mln fine for the mis-selling of a payment protection insurance product which is far from ideal, especially after last month’s profit warning.
Next top riser
On the risers side, there wasn’t too much to shout about today.
Clothes retailer Next Plc (LON:NXT) was the pick of the bunch after host of big name brokers – including Deutsche Bank and JP Morgan Cazenove – all raised their price targets following yesterday’s upbeat statement.
Even though it sat atop of the leader board, the high street chain could still only muster a 1.3% rise to £50.61 – hardly earth-shaking stuff.
Spoons froths higher
On the second tier, British pub chain JD Wetherspoon PLC (LON:JDW) frothed 11.2% higher to £11.59 after a strong set of full-year results.
Like-for-like sales in the 12 months ended 30 July increased by 4% which was at the top end of guidance, while margins also increased throughout the year to 7.7% (2016: 6.9%).
That helped pre-tax profits break through the £100mln barrier to £102.8mln – a 25% or so increase on the £80.6mln posted last year.
On top of that, Spoons confirmed it had made a hot start to the current year, with sales 6% ahead in the opening six weeks or so.
1.40pm...Dull start predicted in the US as retail sales fall in August
The US Commerce Department has revealed that retail sales across the pond unexpectedly fell in August by 0.2% compared to July. Analysts had expected a small rise of around 0.1%.
July data was also revised down to 0.3% retail sales growth instead of the 0.6% which had previously been reported.
“Today’s US retail figures will provide the White House with cause for concern after August’s results showed an unexpected decline,” said UFX.com managing director Dennis de Jong.
“The president has been reliant on bullish US retail figures to drive growth in recent months, and he will hope that next month’s data can recover and replicate the solid results that were recorded earlier this year.”
Americans cut back spending on cars, electronics, building materials, clothing and online in Aug #retailsales biggest spending jump? Gas pic.twitter.com/VZIaZABGEb
— Sara Eisen (@SaraEisen) September 15, 2017
As a result of the poor figures, a dull start is predicted over in the US when trading gets underway shortly. All three of the key indexes are seen opening in the red but not by any significant amounts.
Spread bet firms see the Dow Jones 3 points lower at 22,208 at the opening bell, while the S&P 500 is set to lose 1.7 points to 2,494.5. As for the tech-heavy Nasdaq, that’s seen as opening 8 points in the red at 5,960.
1.15pm...US$1.37 now a realistic target for sterling
“Sterling has stolen the spotlight in the foreign exchange arena today,” sayd FXTM research analyst Lukman Otunuga.
“It rose to its highest level since the results of the Brexit vote, following hawkish comments from BoE policymaker Gertjan Vlieghe.
Vlieghe, a notorious dove, has backed the central bank’s hawkish rhetoric, ultimately reinforcing expectations of a UK interest rate hike before the end of 2017.
“With the markets now pricing in a very high possibility of a rate hike before year end, Sterling is likely to regain its attitude and remain supported moving forward.
“A weekly close above the US$1.34 region should offer enough encouragement for bulls to target US$1.37.”
Sterling. Quite liderally bullish. pic.twitter.com/DLxARNYkO3
— Katie Martin (@katie_martin_fx) September 14, 2017
1pm...Bitcoin hovers above US$3,000 as Chinese exchange stops trading
Bitcoin tumbled again on Friday after a major Chinese cryptocurrency exchange said it would stop trading by the end of the month, as authorities in the country crack down on virtual currencies.
The announcement by BTC China – China’s largest digital currency exchange – comes a week after the People’s Bank of China banned fund-raising for new digital currencies which are known as ICOs.
The exchange’s decision is the first of its kind in China, and it raises the possibility of other exchanges shutting down Bitcoin trading in the future.
Bitcoin has fallen 4% today to US$3,096, meaning has lost the best part of US$2,000 from its value since it hit record highs of almost US$5,000 at the start of the month.
My advice: sit back and wait for everyone to realise that most of the money going into Bitcoin is not Chinese money
— Alistair Milne (@alistairmilne) September 15, 2017
12.30pm...Spoons boss tells EU chiefs to "wise up"
JD Wetherspoon PLC (LON:JDW) boss Tim Martin has told European Commission president Jean-Claude Juncker to take a “wise-up pill” if he wants to avoid further economic damage to some struggling countries on the continent.
Martin – dubbed the ‘giant of the British pub industry’ given his height – also used his pub chain’s final results to tell EU negotiators that Europe would be in more trouble than the UK if the Brexit divorce is an ugly one.
"It is my view that the main risk from the current Brexit negotiations is not to Wetherspoon, but to our excellent EU suppliers - and to EU economies,” said Martin.
“Juncker, Barnier, Selmayr, Verhofstadt and others need to take a wise-up pill in order to avoid causing further economic damage to struggling economies like Greece, Portugal, Spain and Italy - where youth unemployment, in particular, is at epidemic levels.”
Wetherspoon boss Tim Martin warns he'll switch to non-EU suppliers if Eurocrats don't wise up. UK can thrive with no deal - EU will suffer! pic.twitter.com/iHsdwSchAR
— LEAVE.EU (@LeaveEUOfficial) September 15, 2017
12.00pm: FTSE drops as pound jumps on hawkish BoE remarks
The FTSE 100 fell 88 points to 7,206 as the pound surged against the dollar and the euro after a Bank of England official signalled an interest rate hike in November.
Sterling shot up 1.60% against the dollar to US$1.3613 and jumped 1.35% versus the euro at €1.1394.
BoE policymaker Gertjan Vlieghe said in a speech in London that rates could be hiked "as early as in the coming months".
Elsewhere, North Korea fired a missile over Japan adding to concerns about the country’s threat.
In London, 18 people were taken to hospital with injuries after an explosion on a Tube train at Parsons Green station. The incident is being treated as terrorism.
On the company front, Next was top riser after Deutsche Bank, UBS, JPMorgan Cazenove, Jefferies International, and Societe Generale all raised their target price.
Morrison Supermarkets reversed declines from yesterday when it reported a slowdown in first half sales growth.
Going the other way, Provident Financial slumped following reports yesterday that it is facing a £300mln fine for the mis-selling of a payment protection insurance product as the company undergoes a strategic review after a profit warning.
Glencore shares fell as UBS downgraded the stock to 'neutral' from 'buy' but lifted the target to 370p from 350p, saying it believes there's better potential for returns from peers BHP Billiton (LON:BLT) and Rio Tinto (LON:RIO).
Looking ahead to afternoon trading will be US retail sales figures at 1.30pm, manufacturing data at 1.15pm and the University of Michigan’s consumer confidence report.
11.20am: Next rallies as analysts raise target price
Fashion retailer Next has extended yesterday’s gains after Deutsche Bank, UBS, JPMorgan Cazenove, Jefferies International, and Societe Generale all raised their target prices.
The company rallied yesterday after raising its full year forecasts in its first half results.
Jefferies’ analysts were the most bullish, boosting their target for the retailer to 5,200p from 4,600p but left their rating at ‘hold’. JPMorgan lifted its target to 4,830p from 4,580p with a ‘neutral’ rating, UBS increased its target to 5,00p from 4,9000 with a ‘buy’ rating.
Deutsche Bank raised its target to 4,400p from 4,150p and keeping a ‘hold’ stance while SocGen analysts hiked their target to 4,737p, up from 4,129p previously, also maintaining a ‘hold’ rating.
10.40am: Pressure for rate rise building, says ETX Capital
Hawkish remarks by the Bank of England's Gertjan Vlieghe highlight the internal pressures building towards an interest rate hike, said Neil Wilson, senior market analyst at ETX Capital.
"This does not mean the start of a tightening cycle as we understand them necessarily, but at least a 'correction' to the Bank's cut last August," Wilson said.
"Indeed with sterling now back to more sensible levels it will no doubt raise debate again about whether the Bank should have cut rates given that the collapse in sterling is what's driving inflation.
"GBPUSD soared to hit US$1.35900 at one point - it's not been this high since June 24th when it crashed from above US$1.50 to US$1.32 in very short order. The pound is now trading higher than it was in the days immediately after the referendum."
10.15am: Evolution of data suggests we need to hike rates, says BoE's Vlieghe
Here's more of what Bank of England policymaker Gertjan Vlieghe had to say about interest rates in a speech to the Society of Business Economists in London:
“Until recently, I thought the appropriate response of monetary policy was to be patient, given modest growth and subdued underlying inflationary pressure.
“But the evolution of the data is increasingly suggesting that we are approaching the moment when Bank Rate may need to rise.
“If these data trends of reducing slack, rising pay pressure, strengthening household spending and robust global growth continue, the appropriate time for a rise in Bank Rate might be as early as in the coming months.”
09.50am: Pound gains as Bank of England policymaker signals rate hike
The pound has strengthened after Bank of England policymaker Gertjan Vlieghe signalled that interest rates could rise as soon as November.
Vlieghe, who voted to keep rates on hold yesterday, said in a speech in London that rates could be hiked "as early as in the coming months".
Sterling rose 1.02% versus the dollar to US$1.3536 and 0.93% against the euro to €1.1346.
The FTSE is down 52 points at 7,243.
08.35am: FTSE opens lower amid North Korea fears
You wonder whether Kim Jong-un, North Korea’s baby-faced dictator, is smarter than his haircut would suggest.
For the really shrewd move would have been to bet a few trillion won (the country’s currency) on a fall in world stock markets knowing exactly when the next missile would be launched.
Of course this is fanciful and highly unlikely, given North Korea is mired in sanctions and the boy wonder is looking for political rather than financial advantage.
Yet here we are again with the Kim regime blasting another rocket over Japan.
Nervous London traders took this act of nuclear brinksmanship as their to cue sell with FTSE 100 down 28 points at 7,267.32 in opening deals.
Major movers
Next Plc (LON:NXT) was the market’s top riser thanks to follow-on buying in the wake of Thursday’s sales upgrade.
Dropping down a division, JD Wetherspoon (LON:JDW) was up 7% - buoyed, one suspects, by better than expected results rather than the anti-Europe invective spouted by mullet-maned motor-mouth chairman Tim Martin.
Proactive news headlines:
Echo Energy PLC (LON:ECHO) told investors that it has hired a contractor for the reprocessing of 3D seismic for the Huayco and Rio Salado blocks, onshore Bolivia. The contract was awarded to DMT Petrologic which, according to Echo, has extensive experience in the reprocessing of vintage data in similar thrust belt areas.
Mosman Oil And Gas Ltd (LON:MSMN) confirmed it has now completed the deal for the Welch Permian basin project, marking its second acquisition in the last quarter. It added that other potential acquisitions are under review, but, the immediate focus is on its new projects.
Asiamet Resources Limited (LON:ARS) expects to complete a feasibility study for its Beruang Kanan Main zone (BKM) early next year, with a development decision thereafter. In the six months to end June, Asiamet posted a net loss of $2.014mln against a loss of $808,000 a year earlier - the increase mainly relating to ongoing feasibility work at BKM and exploration and advancing the mining license at the Beutong project to production from exploration.
Premier African Minerals Limited (LON:PREM) has increased the estimate of the amount of tungsten in the underground section of its RHA project in Zimbabwe. The company said in a statement that measured resources rise 32% to 0.029m tonnes with a 52% increase in grade to 5.45kg WO3 (tungsten trioxide) per tonne.
SDX Energy Inc (LON:SDX, CVE:SDX) has confirmed the completion of its US$10mln equity placing which aims to fund an acceleration of new drilling plans in Egypt and Morocco. New shares were issued at 43.75p, which was the mid-market price immediately before the placing was announced earlier this month.
Green Dragon Gas Ltd (LON:GDG) is poised to add 6.36Bcf (billion cubic feet) to its output per year after it received approval for the Greka Chengzhuang Block (GCZ). The green light from the state means the firm can begin what's called the overall development plan (ODP) on the acreage.
APQ Global Limited (LON:APQ), the emerging markets growth investor announced that, as at the close of business on 31 August 2017, its unaudited book value per was 96.49p per ordinary share.
Rosslyn Data Technologies PLC (LON: RDT) has granted a total of 13,866,670 options to sUBScribe for new ordinary shares to various employees and directors of the company. The cloud-based enterprise data analytics platform group said the options are split into three equal tranches and each tranche shall vest evenly over a 3-year period. It added that the options are exercisable at 5.625p and will expire on 1 September 2027.
6.45am: FTSE 100 set to open lower
FTSE 100 is set to open lower as North Korea fired another missile over Japan - the second time it did so in weeks.
Asian markets were largely not much flustered by the move, as commentators, said the move from Pyongyang, was nothing new. Indeed, the Nikkei 225 in Japan is up 105 at the time of writing to 19,912 as the Yen firmed. In China, the Shanghai Composite lost around ten.
The ballistic missile reportedly travelled 3,700km and reached an altitude of 770km before landing in the sea off Hokkaido - the northernmost of the islands.
A strengthening pound did for the Footsie yesterday after the Bank of England sent some into a spin over a rate rise in coming months, and it closed around 84 points lower at 7,295. Today, spreadbetters are calling it to decline further, although marginally, by about five points.
On Wall Street, The Dow Jones closed at a new record high at 22,203, but the S&P 500 and Nasdaq both finished lower.
There's not much on the corporate front today but pub chain JD Wetherspoon PLC (LON:JDW) and boss Tim Martin, shold provide a draw.
His gripes with ‘Remoaners’ and supermarkets are well-known, but whatever issues he has with politics, the group is expected to report a solid year.
Significant announcements expected:
Finals: JD Wetherspoon PLC (LON:JDW)
Trading update: Investec PLC (LON:INVP), SThree PLC (LON:STHR)
Economic data: US retail sales, US industrial production, US Empire State manufacturing survey
Around the markets:
- Sterling: US$1.3577, up 1.3%
- Gold: US$1,324.4 an ounce, down 0.4%
- Brent crude: US$55.60 a barrel, up 0.23%
City Headlines
- U.S. inflation at 7-month high - The Times
- BP signs $3.6 billion Azerbaijan oil deal for further 25 years - The Times
- Uber introduces price hikes and slashes discount services - The Independent
- VW recalls 5 million cars in China over airbags linked to deaths - The Independent
- BlackRock reshuffles senior roles in U.S. and Europe - FT
- Google set to change free access to news sites - FT
- Oracle beats earnings expectations with a boost from cloud business - FT
- FCA rejects calls to publish report into RBS’s controversial restructuring unit - Daily Telegraph