FTSE 100 closes 37 higher at 7,253
Mark Carney hints at rate rise in coming months
BAE soars on £1bn Qatar fighter jet order
Sterling falls but still above US$1.35 and €1.13
FTSE 100 closed almost 38 points higher as the pound weakened and after Bank of England governor Mark Carney continued to hint at an interest rate rise in coming months.
The blue chip UK index finished at 7,253 - up 0.52%.
Carney was speaking in Washington to the IMF.
He signalled that "some withdrawal of monetary stimulus" could be needed to bring UK inflation back to the 2% target that has been set, but said any rate rise would be ‘gradual’ and ‘limited’.
It sets the scene for a rate hike in coming months, which would be the first rate rise for a decade.
Millions of people in the UK have never witnessed a UK rate rise in their adult lives and it would see the cost of borrowing, such as mortgages, which have been very cheap in recent years, rise. Savers on the other hand, would benefit from some return on their investments.
The pound fell slightly after Carney's comments, dropping 0.65% against the Euro and 0.79% against the US dollar.
In stocks, BAE Systems (LONBA.) was the top gainer on Footsie, adding 3.94% to 619.50p.
It comes after Qatar's defence minister signed a letter of intent to buy 24 Typhoon jets from the company.
The big laggard was Provident Financial (LON:PFG), which shed 5.79% to stand at 748p.
In the FTSE 250 Petra Diamonds Ltd (LON:PDL) shares tanked 6.715 to 78.36p after it disappointed on earnings and warned that the restriction on exports from Tanzania after the seizure of some of its diamonds could dent its lending facilities.
Last week, Petra said the East African country’s government had stopped a large parcel containing 71,650 carats of diamonds which were due to be exported.
3.10pm - FTSE 100 kicks back into action
After a minor post-lunch lull, the FTSE 100 has kicked back into action and is set to snap its losing streak as it follows the US markets higher in late afternoon trading.
The index of blue chip shares is currently 33.7 points higher at 7,248.9 – a daily gain of 0.5%
Some of those gains have come from the slight weakness in the pound which has fallen back from Friday’s highs.
Aerospace firms GKN PLC (LON:GKN) and BAE Systems PLC (LON:BA.) have rotated at the top of the Footsie leader board throughout the day, although it’s the latter which is currently the day’s biggest winner.
GKN is up 2.5% to 347.4p after it was upgraded by analysts at Exane BNP Paribas, while BAE has surged 3.8% to 618.5p after Qatar placed an order for 24 of its Eurofighter Typhoon jets which is estimated to be worth in excess of £1bn.
Troubled doorstep lender Provident Financial PLC (LON:PFG) is the top faller, down 5.2% to 753p as its mini-rally comes to an end ahead of its demotion to the FTSE 250.
2.45pm…Record open for US markets
As the spread bet firms had expected, the Dow Jones jumped to an all-time high shortly after the bell as it headed past the 22,300 level for the first time ever.
The index is currently up 0.25%, or 54.8 points, to 22,323.1 with trucks and diggers maker Caterpillar Inc (NYSE:CAT), up 1.8% to US$123.53, leading the way.
The S&P 500 has also set a fresh high after shooting up 0.2% to 2,504.7, while the Nasdaq also got off to a hot start, gaining 0.4% to 6,476 – just shy of its own record.
Analysts have put the strong start down to a relatively uneventful few days with regards to North Korea, which was helped by US Secretary of State Rex Tillerson’s comments on finding a “peaceful solution” with the country’s leader, Kim Jong-Un.
There could be more to come as well, with the Fed meeting starting tomorrow followed by an announcement the following evening.
2.30pm...Sterling falls from Friday’s highs
Sterling made some strong gains last week, fuelled by “hawkish” comments from the Bank of England which suggested a rate rise might not be as far away as the markets think.
The pound peaked at just above US$1.36 but, as perhaps was to be expected, it has given up some of those gains today.
That said, it is still trading above US$1.35 and €1.13 respectively. Mark Carney is also due to give a speech at the International Monetary Fund in Washington DC later on this afternoon so traders will no doubt be keeping an ear out for what he has to say.
ING’s currency analyst Viraj Patel thinks we may have seen the best from sterling for the time being.
“Any BoE-fuelled sterling rally may be on its last legs; what we have defined as a 'withdrawal of stimulus' hiking cycle is now priced into the currency,” he said today.
1.40pm…Dow Jones set to open at record high
It’s expected to be a similarly bright start for the US markets when they open later on this afternoon.
In fact, the Dow Jones is seen as opening 40 points higher at 22,312 which would be a new record high and the first time the index has gone past 22,300.
The S&P 500 is also expected to add 3.5 points at the open to 2,503.3, while the tech-heavy Nasdaq is seen 9 points higher at 5,996.7.
“While there’s no data on the cards it still could be a memorable US session,” says Spreadex analyst Connor Campbell.
“Even something as meagre as a 0.2% is enough for the Dow Jones to hit a fresh high, with the index on track to open above 22300 for the first time in its history.
“Given it wasn’t too long ago that it was fretting about North Korea, as well as Donald Trump’s (in)ability to deliver on his tax and infrastructure promises – issues that are still very much on the table – it’s remarkable that the Dow has risen so aggressively in the past week or so.”
1.30pm…FTSE holding on to early gains
The FTSE 100 raced ahead at the opening bell and it has managed to maintain most of those gains throughout the day.
The index of blue chip shares is currently 28.7 points, or 0.4%, ahead at 7,244.2.
Automotive and aerospace components maker GKN PLC (LON:GKN) is the index’s top riser after it was upgraded by analysts at Exane BNP Paribas following last week’s boardroom changes. Shares zipped 3.2% higher to 349.7p.
Defence giant BAE Systems PLC (LON:BA.) isn’t too far behind after Qatar revealed it had placed an order for 24 Eurofighter typhoon jets.
No financial details have been officially released, but analysts reckon the deal is worth at least £1bn. That sent BAE shares soaring to 614p – a gain of 3%.
Antofagasta PLC (LON:ANTO) was also making strides as copper prices recovered after last week’s fall. Shares a in the copper miner rose 2.9% to 959p.
The price of gold was going in the opposite direction though as global markets rallied. That weighed on Fresnillo PLC (LON:FRES) (down 1.1% to £14.25) and Randgold Resources Limited (down 0.9% to £74.75).
Doorstep lender Provident Financial PLC (LON:PFG) was the top faller though with its post-profit warning rally seemingly over. Its shares are currently 3.5% down at 766.5p.
1.10pm…Interserve rallies after last week’s profit warning
Interserve PLC (LON:IRV) saw its shares rally today after it named Mark Whiteling as its chief financial officer, days after the support services and construction company cut its full-year revenue and earnings expectations.
In a statement, the support services group said Whiteling was previously deputy and interim chief executive and chief financial officer at Premier Farnell PLC prior to its take-over by Avnet, and has been finance director of Communisis PLC and group finance director of Tibbett and Britten.
The small cap firm saw its shares nearly halve in value last Thursday after it lowered full-year guidance on due to "disappointing" trading in its domestic market in July and August.
In early afternoon trading, Interserve shares were up nearly 20%, or 16.3p at 97.8p, helped as well by an upgrade in rating from broker Peel Hunt to ‘hold’ from ‘reduce’.
1pm…‘Brexit chaos’ as top official quits
A top official at the Department for Exiting the European Union is set to step down after little more than a year in the role.
Oliver Robbins is moving from permanent secretary at DExEU to a coordinating role at Downing Street according to the Evening Standard.
His move follows reports of a number of clashes with Brexit secretary David Davis over the summer, with Davis’ opposite number Sir Keith Starmer saying the situation smacks of “chaos”.
"The Prime Minister has appointed Oliver Robbins as her EU Adviser in the Cabinet Office, in addition to his role as EU Sherpa" https://t.co/KhFItwTIyE
— Alberto Nardelli (@AlbertoNardelli) September 18, 2017
12.30pm ... Someone is flushing €500 notes down the toilet in Geneva
Talk about flushing money down the loo….Someone in Geneva has reportedly been cutting up hundreds of €500 notes and putting down the toilet.
Swiss authorities opened an investigation after the first note was found earlier this year in a bathroom not too far from a bank vault at UBS’ Geneva branch.
More notes have been found since in toilets at nearby restaurants, with police recovering thousands of euros from blocked pipes.
Destroying bank notes isn’t a crime in Switzerland, but prosecutors are intrigued. A spokesperson told Bloomberg: “There must be something behind this story.”
11.45am ... Hiscox to take US$150mln from Hurricane Harvey
Insurance provider Hiscox Ltd (LON:HSX) is forecasting claims of about US$150mln as a result of Hurricane Harvey which hit Houston, Texas last month.
The Bermuda-based company said it was exposed to the claims through both its insurance and reinsurance businesses, including flood coverage for homeowners and businesses.
FTSE 250-listed Hiscox added that premiums in Texas would likely increase as a result of Harvey.
“2017 will be an expensive year for natural catastrophes but the industry can cope,” said chief executive Bronek Masojada.
“Insurance remains a cyclical business and after a long period of price reductions, insurance rates in the affected areas … are likely to increase.”
As for Hurricane Irma which battered the Caribbean and Florida at the beginning of the month, Hiscox said it will announce claims estimates “once the impact of the storm has become clearer”.
Shares in the insurer fell 2.3% to £12.22.
11.25am ... US hedge fund not buying BoE’s hawkish tone
We’ve heard today that HSBC analysts are now expecting two rate hikes within the next 12 months given the “hawkish” comments coming out of the Bank of England over the last week or so.
But one US hedge fund reckons Mark Carney and co are just bluffing and that they will “talk and act slowly”.
Haidar Capital Management, a US$325mln global macro fund led by Said Haidar, has stuck by its bets against the pound and added to its short position last week as most of the market went the other way.
“It’s been a shot across the bow but I don’t believe them. My guess is they won’t even raise by February,” he told Bloomberg.
11.15am ... PwC blames Brexit and US elections for fall in profits
PricewaterhouseCoopers LLP saw its UK profit fall 1% for the full year to June 30, while average executive profit at the accountancy firm fell by 8% impacted by the consequences of the 2016 Brexit vote, and elections in the UK and US.
In the firm’s latest annual report, published on its website, PwC said its profit fell to £822mln, down from £829mln a year earlier, with the average profit per partner was £652,000, down from £706,000 a year earlier.
Although that’s still a fair wad of cash, partners at rival Deloitte’s UK business took home £865,000 this year.
On top of the fall in profits, PwC published data which showed that its black, Asian and minority-ethnic staff (BAME) earn almost 13% less than other employees.
PwC said that its BAME workers were statistically paid less because more of them work in admin and junior roles, rather than senior ones.
PWC - the firm looking into BBC pay inequalities, admit they pay their BAME workers 13% less than other employees. https://t.co/vgNEavIPb9
— Sam Singh (@MissSamSingh) September 18, 2017
11am ... HSBC now expecting two rate rises within a year
British bank HSBC Holdings PLC (LON:HSBA) now reckons the Bank of England will raise interest rates two times over the next year and a bit.
Analysts hadn’t expected a rate hike until 2019 but said last week’s “hawkish” minutes from the latest BoE meeting and sUBSequent comments from policymakers “sealed the deal”.
“We think the bank is clearly signalling it intends to raise rates in November. We now expect a 25bp rise in that meeting, followed by another in May 2018, taking the bank rate to 0.75%.”
10.45am ... Norwegian poaches 140 Ryanair pilots
Ryanair PLC (LON:RYA) is one of the biggest fallers among London’s big boys today (down 2.5% to €16.59) after it was forced to cancel hundreds of flights after it “messed up” on staff holidays.
Well it turns out that Norwegian Air might be responsible for some of Ryanair’s problems after it poached 140 pilots from the Irish low-cost carrier this year alone with more possibly on the way.
A spokesperson told the BBC: “We can confirm that 140 pilots have joined us from Ryanair this year. Pilot recruitment is also underway for more pilots for our new Dublin base opening later this year.”
It's not just pilots that seem to prefer Norwegian either ...
Dont ever fly #RyanAir, if you want low cost flights try @Fly_Norwegian - cheap, lots of destinations and good quality #ryanaircancellations
— Anthony Shaw (@AnthonyShaw91) September 18, 2017
@Ryanair hopefully you lot are finished! Ripping customers off for too long... Norwegian are kicking your arse ha ha
— Kalvin Clapson (@KalvinClapson) September 18, 2017
10.30am ... Footsie continues recovery
The FTSE 100 is up 27.5 points, or 0.4%, to 7,243 in mid-morning trade as it continues to bounce back from last week’s shocker.
Defence giant BAE Systems PLC (LON:BA.) is still the top riser, up 2.9% to 613p, after it received a hefty order – reported to be around £1bn – from Qatar for some of its Eurofighter Typhoon jets.
Not far behind is automotive and aerospace components maker GKN PLC (LON:GKN) which has gained 2.7% to 348p after it was upgraded by analysts at Exane BNP Paribas following last week’s boardroom changes.
Troubled doorstep lender Provident Financial PLC (LON:PFG) was the heaviest faller on no new news, down 2.4% to 775p.
9.45am: Esure motors higher on deal speculation
Esure Group PLC (LON:ESUR) is motoring this morning after it was reported over the weekend that its founder and largest shareholder is looking to offload his 30.8% stake.
Peter Wood is said to have held informal talks with possible buyers over a deal to sell his controlling interest, according to senior City sources cited in the Sunday Times.
Bosses of other UK insurers claim to have been approached by Wood in recent months the paper added, but a merger with a US firm is considered more likely.
The Sunday Times added that Wood has hinted he could have an agreement in place as early as next month.
The deal speculation boosted the Esure share price by 6.4%, leaving it at 279.4p.
Insurance tycoon Sir Peter Wood eyes £1bn sale of his Esure empire https://t.co/sr7NFrCy6Z pic.twitter.com/ODkPGnvRME
— SundayTimes Business (@ST_Business) September 17, 2017
9.00am: Housebuilders in the red as house price growth falls
A host of housebilders have started the week in the red after property website Rightmove PLC (LON:RMV) said UK house prices rose by 1.1% in the year to September, down from a 3.1% increase in August.
It was bad news if you own property in Kensington or Chelsea, where house prices fell more than 10%.
While Londoners have seen prices dive the past year, several regions up north, including Yorkshire and the North East, recorded house price rises.
Countryside Properties PLC (LON:CSP) was the worst hit, down 2.1% to 326.1p, while Barratt Developments PLC (LON:BDEV) (down 0.6% to 580p), Taylor Wimpey PLC (LON:TW.) (down 0.3% to 186.3p) and Redrow PLC (LON:RDW) down 0.8% to 544p) all suffered minor losses.
UK Sept Rightmove House Price growth disappoints; -1.2% MoM/1.1% YoY vs -0.9%/3.1% in Aug; China Property Prices too; +8.3% YoY vs +9.7%
— Mike van Dulken (@Accendo_Mike) September 18, 2017
8.45am: FTSE 100 clawing back some of last week's losses
After taking a battering in the wake of sterling’s surge last week, the FTSE 100 has clawed back some of those losses this morning.
The blue chip index is currently up 24.4 points, or 0.3%, to 7,239.9.
Defence giant BAE Systems PLC (LON:BA.) was the top riser in early deals following reports over the weekend that Qatar is set to buy 24 of its Eurofighter Typhoon jets.
The market, and the company itself, had been fretting over a lack of new orders for the fighter jet but the order has eased those concerns somewhat, with shares surging 2.9% to 613.4p.
Asia-focused bank HSBC Holdings PLC (LON:HSBA) benefitted from the strong trading in that part of the world overnight; it’s up 1.3% to 717.6p.
Weighing on the Footsie were gold miners Fresnillo PLC (LON:FRES) (down 0.8% to $14.30) and Randgold Resources Limited (LON:RRS) (down 1% to £74.70) which both followed the gold price lower.
An ounce of the yellow metal will now set you back US$1,315 – a fall of almost 0.5%.
Ryanair PLC (LON:RYA) was flying lower after it announced over the weekend that thousands of flights will be cancelled over the next couple of months.
On Saturday the low cost carrier said it would have to cut 40-50 flights a day after it “messed up” on staff holidays. Shares dipped 3.3% to sit at €16.57.
Proactive news headlines:
Jersey Oil & Gas PLC (LON:JOG) has given investors some fresh hope that value could be salvaged from the Verbier exploration well, with news that a side-track is being drilled to test another target. It was announced last week that Verbier’s main target was unsuccessful, with the reservoir found to be water bearing.
Flying Brands Limited (LON:FBDU) has announced that its North American contract manufacturer has now delivered the StoneChecker software prototype with testing having commenced and statistical analysis of the kidney stones medical imaging product “materially” exceeding expectations. Earlier this month, Flying Brands had said that a recent fire at the manufacturer’s warehouse meant it would not receive the Stone Checker prototype this month as originally planned.
Itaconix PLC (LON:ITX), which changed its name in March to reflect a change in focus to polymers, is starting to see the benefits of its reboot. Revenues and gross profits in the first half of 2017 matched those of the same period of 2016, while the company has been successful in lowering its cost base.
By the end of the last quarter of the year, all Goldplat PLC (LON:GDP) operations were operating profitably. This is perhaps the key takeaway from Goldplat’s preliminary results, which show that the company produced 42,857 ounces of gold during the year to 30 June, up 13.7% year-on-year, and due in part to the successful implementation of a turnaround strategy at the Kilimapesa gold mine.
Allergy Therapeutics PLC (LON:AGY) is set to kick off the Phase II clinical trial of its hay fever treatment “imminently” after the pharma group got the necessary approvals from authorities. Results from the trial – which will assess 440 patients in Germany, Poland and Austria – are expected in the second half of next year.
Rose Petroleum PLC (LON:ROSE) described the six months to June 30 as a “time of continued operational progress”. The company highlighted that its strategy is to create value from its existing asset portfolio and to take advantage of other convincing market opportunities.
Eland Oil & Gas PLC (LON:ELA) told investors drilling is now underway on the Opuama-7 sidetrack well in Nigeria. The company said the well is on track to be completed in October.
SDX Energy Inc (LON:SDX) told investors it has now kicked off the drilling of its KSR-14 development well at the Sebou project onshore Morocco. It is the start of a nine-well programme that will cover the Sebou, Gharb Centre and Lalla Mimouna projects.
Lombard Risk Management PLC (LON:LRM) is to integrate its COLLINE collateral management solution with GlobalCollateral's Margin Transit Utility.
European Wealth Group PLC (LON:EWG) saw funds under management rise strongly over the past six months. The wealth manager was managing £1.74bn at the end of June, against £1.5bn six months earlier.
Shares in Learning Technologies Group PLC (LON:LTG) were higher in early trade after the company posted interim results that beat expectations. However it expects the impact of March’s purchase of NetDimensions to really kick in during the second half. Underlying profit (EBITDA) from the company, which is at the forefront of the ed-tech revolution, was £4.1mln, up 41% on the year earlier.
Indian wind and solar power group Mytrah Energy Limited (LON:MYT) has refinanced a part of its loan book through the issue of US$277mln of non-convertible debentures to Indian conglomerate Piramal. The NCDs have a 7-year tenor and will split with US$150mln earmarked for Mytrah Energy and US$127mln for Mytrah Ujjwal Power.
Pizza delivery firm DP Poland PLC (LON:DPP) is on track to open its 50th store next month as it continues its drive towards to critical mass. The confirmation came as the AIM-quoted company revealed it has made a strong start to the second half after growing sales by 50% in the opening six months of 2017.
Stride Gaming PLC (LON:STR) expects results for the year just ended will be at the upper end of market expectations.
Pharmaceutical services and drug development group Ergomed PLC (LON:ERGO) grew first half earnings and revenue in the first half of 2017.
Metal Tiger PLC (LON:MTR) is to delay the planned listing of its Thai sUBSidiary in order to allow potential investors time to digest the ramifications on new mining legislation in Thailand. The company has also appointed a consultant to advise on strategic options in relation to its 30% stake in MOD Resources.
KIBO Mining PLC (LON:KIBO) remains in talks with potential funding partners for the development of its Mbeya coal-to-power project in Tanzania. The company is also progressing with talks regarding a power purchase agreement with TANESCO, Tanzania's electricity distributor.
Landore Resources Limited (LON:LND) has discovered more gold mineralisation in on its Junior Lake Property in Canada, to go with the 301,000 ounces already discovered at the BAM East zone. A winter drill campaign is now planned.
Capital Network has published a report on dual-listed oil and gas producer Zenith Energy Ltd (LON:ZEN) estimating a potential upside of up to 41p (C$0.66) per share, based on third-party reserves assessment and recognising the risks and challenges facing Zenith the group in Azerbaijan. Its analyst Lionel Therond concluded: “We believe that Zenith’s strategy to own its rigs is a critical risk-mitigating factor for the project, whilst management’s ownership of c. 20% of the equity provides perfect alignment of interests with shareholders.”
7.00am: Footsie to follow Asian markets higher
The FTSE 100 is set to start on the front foot, taking its cue from Asia overnight where the main tracking index for the region hit a high last seen 10 years ago.
The benchmark for UK blue-chip shares is predicted to rise 30 points to 7,245.47 at the open.
All eyes this week will be on the US Federal Reserve after the Bank of England hinted a rate hike is on the horizon.
“Last week’s performance in bond markets appears to suggest that investors are starting to price in the prospect for some form of additional central bank tightening in the coming months, with yields in German bunds, UK gilts and US treasuries all rising sharply, with UK gilt prices suffering their worst weekly performance this year,” said Michael Hewson, analyst at CMC Markets.
“This is a little surprising particularly where the US is concerned given that the path of recent economic data hasn’t been that great and last week retail sales showed that the consumer didn’t release the purse strings anywhere near as much as had originally been thought in June and July.”
The two-day Fed meeting kicks off Tuesday and will have a number of moving parts, according to the CNBC financial news service.
Setting aside the rate decision (most commentators expect the Fed to stand pat) we could see the “beginning of the balance sheet unwinding and an update on how economic growth is likely to trend, CNBC added.
Here in the UK the news flow is starting to ramp up as we head into the business end of September with updates from Kingfisher (LON:KGF), Ocado (LON:OCDO), Smiths Group (LON:SMIN) and Dairy Crest (LON:DCG).
Around the Markets:
- Pound worth US$1.3573
- Gold worth US$1,321.4, down US$3.80 an ounce
- Brent up 11 cents a barrel at US$55.73
Significant events expected on Monday September 18:
Trading update: Dairy Crest PLC (LON:DCG)
Finals: City of London Investment Group PLC (LON:CLIG), Finsbury Food Group PLC (LON:FIF), Green REIT PLC (LON:GRN), Petra Diamonds Ltd (LON:PDL)
Interims: Concurrent Technologies PLC (LON:CNC), Ergomed Plc (LON:ERGO); Learning Technologies Group PLC (LON:LTG), Medica Group PLC (LON:MGP), MP Evans Group PLC (LON:MPE), Secure Income REIT PLC (LON:SIR), Veltyco Group plc (LON:VLTY)
Business Headlines:
- Workplace messaging app Slack has been valued at US$5.1bn in its latest fundraising, which drew US$250 million from investors – FT.
- Defence giant Northrop Grumman is close to acquiring rival Orbital ATK for more than US$7bn – FT.
- BAE boost as Qatar looks to buy 24 Typhoon fighter jets – FT.
- London Evening Standard owner Evgeny Lebedev interested in buying Metro – Times.
- AA ‘broke promise’ to ease chairman Bob Mackenzie’s workload – Times.
- Harrods Bank closes after years of losses – Times.
- Bank for International Settlements discovers US$14 trillion of dollar debt offshore – Telegraph.
- US investment giant Capital Group has ramped up its stake in East European airline Wizz to become its third-largest investor – Telegraph.
- Pub industry pressures causing ‘early warning signs’ over debt, Moody’s warns – Telegraph.
- Asking prices for London homes record biggest falls this decade – Guardian.
- Row between British tech star Imagination Technologies and Apple set to intensify after unveiling of new iPhone – Daily Mail.