FTSE 100 closes down 8pts at 7,263
Theresa May and Florence in focus
Ex-divs largely responsible for the fall
Kingfisher gives back some of yesterday's gains
FTSE 100 closed around eight points lower as markets get ready for the big speech on Brexit from PM Theresa May in Italy.
All ears will be on what the Premier has to say, especially concerning concessions or final payments, in a speech that feels like a major moment in an already drawn out process.
FTSE 100 closed down 8.05 at 7,263, while mid-cap index FTSE 250, the more UK company focused, felt the heat even more, shedding over 122 points to close at 19,418.
On Wall Street all the major benchmarks are currently in the red, as the reality of the Fed's hawkish stance on the US economy and where it's heading sinks in.
Top gainer on Footsie was specialty chemical giant Johnson Matthey plc (LON:JMAT) , which surged 14.6% higher at 3,390p after it confirmed its guidance for the year and announced a big investment - initially up to £200mln - in its battery material technology business.
On the losing front, B&Q store owner Kingfisher plc (LON:KGF) shed 4.09% to $300.20p , as it gave up gains won yesterday when it released better-than-expected results.
4pm: FTSE 100 lookimg at a loss
In the last half of trading the Footsie was looking at swallowing a small loss ahead of tomorrow’s Brexit speech from the prime minister.
The FTSE 100 was 7 points lower at 7,265.
Much, if not all, of that could be accounted for by the ex-dividend status of the likes of Taylor Wimpey and Old Mutual.
Kingfisher PLC (LON:KGF), at 300.1p, was the biggest faller, giving up 12.9p of the gains won yesterday when it released better-than-expected results.
3.30pm: US stocks open lower
US stocks opened lower, pulling back from record highs.
After an hour or so of trading, the Dow Jones was down 34 at 22,378 and the S&P 500 was down 9 at 2,500.
Back in Blighty, the FTSE 100 continued to dither, alternating between small gains and minuscule losses.
With just over an hour of trading to go, the blue-chips index was more or less unchanged.
Even the brokers seemed to have better things to do than watch the Footsie spin its wheels.
Asset manager Schroders PLC (LON:SDR) sustained a minor dent as JP Morgan Cazenove moved from ‘overweight’ to ‘neutral’.
The shares dipped 1.5% to 3,265p as Cazenove sliced two quid off the price target at 3,550p.
2.30pm: Mid-caps take a pasting
Most of the action continues to happen in the mid-cap section today, as blue-chips remained mixed over the lunchtime sessions.
The FTSE 100 index was up 4 at 7,268 ahead of the open on Wall Street, where stocks are expected to open slightly lower on balance.
The FTSE 250, meanwhile, was down 129 at 19,412.
Engineer Senior PLC (LON:SNR) was a high-profile mid-cap faller, down 4.6% at 259.4p, after Peel Hunt downgraded the stock to ‘reduce’ from ‘hold’, though the target price has been raised to 260p.
“The shares have been flying high over the summer, regaining much of the altitude lost over the previous two years. The wave of aerospace M&A activity will likely inflate sector multiples; however, as a big dollar earner, the sharp recovery in sterling poses a potential headwind for 2018,” the broker said.
“We believe it is prudent to take profits until the momentum in key Flexonics end markets and the extent of sterling recovery become clearer,” it added.
1.30pm: No sign of the cavalry arriving from Wall Street
UK blue-chips remained mixed, with little prospect of any sort of lead coming from Wall Street when it opens.
The FTSE 100 index was down 5 at 7,267.
Across the pond, the Dow Jones average is expected to open at around 22,410, down a couple of points. The broader-based S&P 500 was tipped to kick-off at around 2,506, also down a couple of points from last night.
Banks remain wanted on the prospect of higher interest rates on both sides of the Atlantic, but miners get the bargepole treatment as commodity prices dipped following the rise of the US dollar, though Anglo American PLC (LON:AAL) defied the trend, rising 2.4%.
Anglo’s rise came after Volcan Investments said it is to acquire shares worth between £1.25bn and £1.5bn, equivalent to 7.5%-9.0% of the company, in addition to the £2bn it spent on acquiring a 12.43% holding in March.
Noon: Compass heads south after CEO signals intention to step down
The Fed interest rate decision is out of the way but traders have a new excuse for inaction: tomorrow’s Brexit speech from Theresa May.
“Her set piece in Florence will determine whether the pound finishes the week at 1.37 or back towards 1.32,” according to Kathleen Brooks, at City Index.
As for equity markets, the FTSE 100 was having another quiet day, up 8 at 7,280.
Contract caterer Compass Group PLC (LON:CPG) was one of the index’s heavier fallers, down 2.1%, after it was announced that chief executive officer Richard Cousins would step down from the role on 31 March 2018.
He will be succeeded by Dominic Blakemore, who is currently chief operating officer for Compass’s European business.
Also on the downturn was B&Q owner Kingfisher PLC (LON:KGF), which gave back some of yesterday’s gains, declining 7.6p to 305.4p.
The FTSE 250 mid-cap index, meanwhile, was in the red, down 80 at 19,461.
Half-year results from Capita PLC (LON:CPI) prompted market makers to lop one-tenth off the market cap of the outsourcing giant.
Underlying pre-tax profit jumped by 46% to £195mln, but underlying revenue fell by 3% to £2.07bn.
Mitchells & Butlers PLC (LON:MAB) became the latest pubs group to sound a note of caution on recent trading.
“Trading recently has been tougher but the group maintains that, albeit aided by conversions and capital spending, its LfL [like-for-like] sales are ahead of those of the sector as a whole,” notes Mark Brumby at Langton Capital.
“Evidence of a turn in the company’s fortunes may be emerging but the markets are tough and getting tougher and the competition is not standing still,” Brumby noted.
“As regards its share price, we are now at a point where the group is trading at only around 7.5x current year earnings and it has a 3.0% yield,” he observed.
Liberum could care less about the earnings multiple and the yield; it remains a seller.
“While the summer dip in trading is a familiar story, the M&B estate has benefited from significant investment over the last two years. Capex has been running at c9% sales, 480 sites have been converted (28% of total) and 79 underperforming sites have been disposed. At this rate, the outperformance versus the sector should really be wider,” the broker argues.
M&B shares were down 4% at 235.7p.
10.00am: The Footsie shows signs of life
If traders were hoping the Fed’s statement would rouse the market out of the apathetic state seen for most of yesterday, they have been disappointed.
The FTSE 100 was up 16 points at 7,288, buoyed by demand for banks and oil shares.
Barclays PLC (LON:BARC), up 2.8%, was the best performing bank, while Royal Bank of Scotland Group PLC, HSBC Holdings PLC and Lloyds Banking Group PLC were also wanted.
The dollar moved higher following last night’s confirmation from the Federal Reserve of an end to quantitative easing, which has hit mining stocks, though oil prices are, like minerals, quoted in dollars and this has not stopped Royal Dutch Shell ‘B’ (LON:RDSB) rising 1% and BP PLC (LON:BP.) climbing 0.7%.
“The Federal Open Market Committee, as widely expected by market participants, announced … that the Fed would begin to taper its balance sheet in October,” said Daiwa Capital Markets.
“In terms of interest rate policy, the committee remained on board for additional tightening,” the Japanese broker added.
Precious metals processor Johnson Matthey PLC (LON:JMAT) topped the Footsie leader board as it delivered an upbeat statement as a prelude to its Capital Markets Day today.
The shares rose 3.2%.
CRH PLC (LON:CRH) rose 78p to 2,733p after it agreed the acquisition of Ash Grove Cement.
The building materials group won the hand of the US cement producer by waving US$3.5bn under the company’s nose.
8.55am: The only way is sideways
London didn’t know what to make of US Federal Reserve’s decision to wind down quantitative easing as the FTSE 100 traded sideways.
At 8.50am the index was up just three points at 7,274.35 with the drag provided by the sharp appreciation of the pound of late, which is now US$1.3498.
According to Mike van Dulken at Ascendo Markets there are technical reasons why the Footsie is struggling to punch through the 7,290 and 7,300 levels.
And he said: “Bears [are] now even more hopeful of a full retrace to recent lows around 7,200.”
We’ll see. In the meantime, the market’s biggest riser was CRH (LON:CRH), which was up 4% after announced its US$3.5bn swoop for Ash Grove Cement.
Behind it was a mix of miners and banks. Top of the fallers were the precious metals stocks Fresnillo (LON:FRES) and Randgold Resources (LON:RRS), which were down in line with the gold price.
Ailing support services group Capita (LON:CPI), which was recently relegated to the FTSE 250, was in the dog house again after the release of its half-year results. Their shares were off almost 11% despite the signs of some green shoots of recovery.
6.45am ... Fed digest
London’s FTSE 100 is expected to start Thursday slightly higher as investors digest the latest update from the US Federal Reserve.
Yesterday, the Fed told the markets what they’d been expecting to hear, that whilst interest rates will be unchanged the central bank intends to start the process of tightening.
“As expected the US Federal Reserve fired the starting gun on its plans to reduce the size of its balance sheet, with plans to begin the process next month, though with an initial $10bn roll off, it is likely to take a very long time, so much so you could argue that glaciers move faster,” said Michael Hewson, analyst at CMC Markets.
He added: “None of this should have been in doubt, particularly keeping the option of another rate rise on the table, given that any December decision still remains some distance away.
“The first rule of central banking is always making sure that all the various options are kept open, despite concerns about the economic damage caused by hurricanes Harvey and Irma, might do to their projections.”
Wall Street closed out Wednesday’s session mixed. The Dow Jones finished up 40 points or 0.19% at 22,412 and the S&P 500 rose just 0.06% to 2,508 while the Nasdaq was slightly lower closing at 6,456.
In Asia, Japan’s Nikkei gained 0.34% to 20,379 while Hong Kong’s Hang Seng was down slightly at 28,103 and the Shanghai Composite edged a tad higher to 3,366.
Australia’s ASX 200 dipped 0.77% lower to 5,665.
In London, IG Markets sees the FTSE 100 in positive territory, albeit not by much. Just over an hour until the open, the CFD and spreadbetting group calls the blue-chip benchmark about 5 points higher, at 7,270 to 7,274.
Significant announcements expected on Thursday September 21
Trading update: IG Group PLC (LON:IGG), Mitchells & Butlers PLC (LON:MAB), NCC Group PLC (LON:NCC)
Finals: Kier Group PLC (LON:KIE)
Interims: Capita PLC (LON:CPI), Cambridge Cognition Holdings PLC (LON:COG), Elektron Technology PLC (LON:EKT), Quixant PLC (LON:QXT), Safestyle UK PLC (LON:SFE), Scisys PLC (LON:SSY), The Mission Marketing Group PLC (LON:TMMG) Venture Life PLC (LON:VLG)
Ex-dividend factors: 0.9 points off the FTSE 100 index - Old Mutual PLC (LON:OML),Taylor Woodrow PLC (LON:TW.)
Economic data: UK public sector finances, BBA UK mortgage lending; US weekly jobless claims
Headlines
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