Fergus tops the blue-chip leader-board
Sterling's weakness gives a lift to Footsie's big dollar earners
FTSE 100 closes over 29 higher at 7,468
FTSE 100 continued higher into the close, with the top share index closing over 29 points to the good, at 7,468.
The blue-chip benchmark was aided, as ever, by the weaker pound, and against the Euro, sterling was down 0.42% and 0.25% lower against the US dollar at the time of writing.
Meanwhile, European indices elsewhere were subdued as the German market was closed as the nation celebrates Unity Day.
In commodities, gold slipped 0.19% at US$1,271 an ounce, while Brent crude was down 1.60%.
Top riser was Ferguson, previously known as Wolseley, which gained over 4% to 5,060p, after the plumbing products supplier issued a well-received trading update this morning after revamping its US operations.
The biggest loser was insurance giant Admiral Group (LON:ADM), which shed 2.73% to 1,784p
In small caps, Greatland Gold plc (LON:GGP) shares added 6.77% to 71p after it announced the initial exploration campaign kicked off at the Panorama project in the Pilbara region of Australia.
The programme is targeting gold and cobalt. It will include orientation drainage sampling, soil sampling and geological reconnaissance.
3.30pm: FTSE 100 pushes on
Well into the last hour of trading, the FTSE 100 index had pushed on, encouraged by sterling’s travails in foreign exchange markets.
The top-shares index had risen to 7,461, up 22.
Plumbing products supplier Ferguson was holding on to its position at the head of the Footsie leader-board following its well-received trading update this morning.
“We are surprised that Ferguson is not re-rating as the group becomes a purer play around its dominant US subsidiary and continues to return capital through disposal proceeds and re-gearing,” said Liberum Securities, as it reiterated its ‘buy’ recommendation.
“We see compelling value for what is effectively the dominant US leader, and would expect re-rating to resume as its own e-commerce strength becomes better understood,” it added.
Liberum thinks the shares are worth 5,300p. Currently, they trade at around 5,035p, up 171p on the day.
2.45pm: Footsie moves up a gear
Praise be, the Footsie’s gain made it in to double figures, with a little bit of retail therapy helping out.
Supermarkets J Sainsbury plc (LON:SBRY) and Tesco PLC (LON:TSCO) were among the top blue-chip performers, with the former up 2.3% at 245.1p and the latter 1.2% better at 188.8p ahead of its trading update tomorrow.
Primark-owner Associated British Foods plc (LON:ABF) was also wanted, rising 1.6% to 3,258p.
READ Tesco set for 'upbeat interims'
Among the mid-caps, investors were tucking into Greggs plc (LON:GRG), the hot snack food specialist, after its trading statement.
“Increasing like-for-like sales, plus the planned addition of around 100 net new shops this year means Greggs has got all the ingredients of an attractive roll-out story,” opined Laith Khalaf at stockbroker Hargreaves Lansdown.
“It’s good to see the group investing to ensure its menu doesn’t become stale too. New breakfast options and balanced choices like Thai Chicken soup are gaining increasingly popularity with customers, and are a step forward as the country becomes ever more health-conscious,” he added.
Wizz Air Holdings PLC (LON:WIZZ) kept news flow from the airline sector bubbling with its traffic statistics for September.
The load factor, which measures how full the company’s aircraft are, rose to 92.9% from 91.6% in September 2016.
The shares rose 53p to 3,053p on the update.
In the US, the Dow Jones industrial average was up 27 at 22,585 after 15 minutes of trading. The S&P 500 was up 0.3 at 2,529.4.
1.00pm: FTSE 100 clinging on to gains
US indices were expected to open firmer, though UK investors have been disinclined to take their lead from the US today.
Spread betting quotes point to the Dow Jones opening at around 22,592, up from 22,558 last night, and the S&P 500 kicking off about one-and-a-half points higher than last night’s close of 2,529.
US indices closed at record levels last night but that proved little incentive to UK investors, and progress this side of the pond was like wading through treacle.
The FTSE 100 was at least in positive territory, up 6 at 7,445.
Marketing giant WPP PLC (LON:WPP) was acting as a drag on the index, down 2.1% at 1,364p.
Morgan Stanley offloaded 22.5mln shares in WPP, which it said it did to hedge its exposure under derivative transactions, according to the Reuters news agency.
WPP’s fall might please Accenture, which last week was named as a possible buyer for the £17.4bn-valued Footsie giant.
Publicis and WPP are takeover targets and Accenture 'looks a credible buyer', bank says https://t.co/PijS5jaxHZ pic.twitter.com/Yy6fLtogiF
— Paul Doran (@dorando) October 3, 2017
Away from the semi-comatose large caps, the Capital Markets Event for e-learning specialist Learning Technologies Group PLC (LON:LTG) must have been a jolly affair, with the shares up 8.1% at 60p.
READ Learning Technologies sets new ambitious targets after rapidly passing previous milestones
The company will be explaining to analysts how it plans to hit ambitious new targets.
Metal Tiger PLC (LON:MTR) roared higher after an update on its copper joint venture (JV) in Botswana.
The JV has intersected new zones of visible copper mineralisation 300 metres west and northeast of the planned pit, sending the shares 6.9% higher to 1.95p.
READ Metal Tiger and partner expand scope and scale of MOD copper project in Botswana
11.30am: All a bit of a struggle for the Footsie
The blue-chip scene remained largely moribund, and mid-caps were hardly tearing it up either towards the end of the morning trading session.
The FTSE 100 was up 8 at 7,446 and the mid-cap FTSE 250 was up 51 at 20,008.
Among the blue-chips, supermarket stocks were in the spotlight of brokers for the second day in succession.
German bank Berenberg initiated coverage of: Wm Morrison Supermarkets PLC (LON:MRW) with a price target of 200p and a ‘sell’ recommendation; Ocado Group PLC (LON:OCDO) with a price target of 286p and a ‘hold’ recommendation; J Sainsbury PLC (LON:SBRY) with a price target of 300p and a ‘buy’ recommendation; and Tesco PLC (LON:TSCO) with a price target of 180p and a ‘hold’ recommendation.
The bank also found the time to put the boot into defence company BAE Systems PLC (LON:BAE), which was down 9.5p at 621p after Berenberg moved from ‘buy’ to ‘hold’.
Anglo American PLC (LON:AAL) rose 2.1% to 1,391.5p after HSBC upgraded the precious metals miner to ‘buy’ from ‘hold’, with a price target of 1,630p, up from 1,410p.
In the mid-cap space, Electrocomponents PLC (LON:ECM) hardened 16p at 654.5p after its trading update was received favourably.
Numis Securities raised its earnings forecasts for the next three years by around 5-6% and said the company is clearly taking market share.
Its recommendation is ‘add’, and the price target is 705p.
Liberum is a buyer, and values the shares at 680p, up from its previous price target of 660p.
“Stronger than expected revenue growth alongside sustained improvements in the gross and operating margins supports a 6% upgrade to our FY18 PBT estimate,” the broker said.
Electrocomponents PLC $LON:ECM Stock "Add" Rating Reaffirmed at Peel Hunt https://t.co/qNPvqG2JJJ
— Brian Lowry (@BrianLo75961198) October 3, 2017
10.31: Coca-Cola mourns the demise of CEO Dimitris Lois
The death of chief executive officer, Dimitris Lois, sent shares of Coca-Cola HBC AG (LON:CCH) lower this morning.
The stock was the biggest faller on the Footsie, shedding 66p at 2,4910p.
Lois was on a leave of absence for medical reasons. The company said Michalis Imellos would continue the role of acting chief executive officer.
Despite CCH’s weakness, the FTSE 100 was up 4 points at 7,443, with Ferguson PLC (LON:FERG), up 3.5% at 5,035p, leading the way after the release of full-year results.
“As expected, Ferguson, the world's leading supplier of plumbing and heating products, delivered a strong set of full year results. Overall revenues grew by 18% to £17.3bn while trading profits jumped by 22% to £1.1bn,” said Helai Miah, an investment analyst at The Share Centre.
“US revenues grew by 10.4%, even before currency gains are taken into account, and this was courtesy of robust US residential, commercial construction and infrastructure market. Investors should appreciate that the group’s US operations account for nearly 90% of its overall business,” Miah observed.
9.35: Underwhelming construction data gives Footsie a lift
The FTSE 100 was drifting lower until construction data released at 9.30am provided a little pick-up.
The top-shares index wiped out small early losses to be a couple of points higher at 7,440, with fallers outnumbering risers by 58 to 43.
The recovery happened despite the construction numbers not being very good.
The UK construction sector moved backed into reverse gear in September for the first time since July of last year.
The IHS Markit/CIPS UK Construction Purchasing Managers’ Index (PMI) for September fell to 48.1, below the 50 point mark that signifies the divide between expansion of activity and contraction.
In August, the reading had been 51.1
“Lower volumes of construction work reflected marked falls in both commercial and civil engineering activity during September. The reduction in civil engineering work was the steepest for almost four-and-a-half years, which some firms linked to a lack of new infrastructure projects to replace completed contracts,” IHS Markit said.
UK Construction PMI contracts for below 50 boom/bust line first time in a year.
GBPUSD pic.twitter.com/uCN9Dtfk2b
— Boris Schlossberg (@Fxflow) October 3, 2017
Open: Airlines to the fore in subdued opening
The FTSE 100 resisted the pull of Wall Street, which once again stomped into record territory. The index of UK blue-chips it drifted seven points lower to 7,432.12.
The airlines were once again front and centre with both Ryanair (LON:RYA) and Wizz Air (LON:WIZZ) updating the market.
The former is yet to show the scars from the cancellations debacle that consumed thousands of column inches last week, while the latter appeared in rude health.
Not sure if the updates were rushed out in the wake of Monarch Airlines’ collapse, but they will have helped shore up sentiment.
On the Ryanair numbers, Neil Wilson of ETX Capital, said: “Of course it is too early to assess reputational damage from these figures, but it does signal that it is still enjoying strong growth fuelled by price cuts.
“And demand in the European short-haul budget sector appears robust as Wizz Air has also reported a big jump in passengers.”
Ferguson (LON:FERG), the building supplies group formerly known as Wolseley, topped the risers following an upbeat assessment of prospects, particularly in the US, and the unveiling of plans to return £500mln of surplus funds. The shares advanced 3.4%.
Anglo American (LON:AAL) was given a 2% boost by an upgrade to ‘buy’ (from ‘hold’) by mining analysts at HSBC.
Dropping down a division, Electrocomponents (LON:ECM) was up 2.5% after it said trading remained strong and it revised up its profit forecast for the first half.
The builders had a good trot on Monday. Let’s see if they can weather the monthly construction figures later, which are expected to show they are struggling a tad.
Proactive news headlines:
SkinBioTherapeutics PLC (LON:SBTX) said its flagship technology had passed a key safety test as it updated on progress. Its SkinBiotix cream was assessed for cellular toxicity and specifically for adverse biological reactions from mammalian cell cultures.
Learning Technologies Group PLC (LON:LTG) is to announce some ambitious growth targets at its Capital Markets Event today. The e-learning group will outline a plan to double run-rate revenues to £100mln and for run-rate underlying earnings (EBIT) to exceed £25mln.
Mosman Oil And Gas Ltd (LON:MSMN) has extended its option deal for the Arkoma project, in Oklahoma, where it now has until November 15 to complete its ongoing work programme before making a decision. The AIM-quoted company is highlighted that the extension means it can include encouraging recent results from the Cromwell and Union Valley zones to be included in the resources report.
Drilling on Metal Tiger PLC’s (LON:MTR) copper joint venture in Botswana has intersected new zones of visible copper mineralisation 300 metres west and northeast of the planned pit. In all copper mineralisation now extends over a strike length of 1.5 kilometres and remains open.
Asiamet Resources Limited (LON:ARS) has discovered significant mineralisation at the BKZ prospect, 800 metres south of the BKM project which is currently at an advanced stage of conceptual development. Early signs are that BKZ may be viable as a standalone project, with good near-surface gold grades.
Strategic Minerals PLC (LON:SXX) has convened a general meeting to be held at the offices of BDO UK, 55 Baker Street, London, W1U 7EU at 10:30 a.m. on 19 October 2017 seeking to give authority to the directors to set up an option programme.
ClearStar, Inc. (LON: CLSU) has announced that ClearID, its on-the-spot ID validation and face-match technology, and ClearContact, an industry-first electronic qualified labour address book, together have been named a 2017 Top HR Product by Human Resource Executive Magazine.
6.45am: Slow start predicted
The FTSE 100 index is seen starting unchanged today, consolidating yesterday’s strong gains despite further record closes overnight on Wall Street and advances by Asian markets.
Spread betting firm CMC Markets expects the FTSE 100 index to open flat at around 7,438, having gained 66.08 points yesterday.
New York stocks also started the fourth quarter on a strong note with all three key indices hitting new all-time highs buoyed by some upbeat US manufacturing and construction data.
On currency markets, the pound eased back further overnight against a stronger dollar which was supported by the US data and hopes for a boost from President Trump's proposed tax changes.
The latest UK construction PMI survey is the only important domestic data release due today, with the sector having been a bit of a weak spot for the UK economy and forecasts seeing September's reading coming in at 51.2, just above parity.
Michael Hewson, chief market analyst at CMC Markets (UK) commented: "This weakness may help explain the weekend announcement of an extension of 'help to buy' but while house builders may welcome the extension it does little to address the supply and affordability problems."
Greggs looking healthier
The corporate diary is also fairly sparse. Food-on-the-go specialist Greggs PLC (LON:GRG) will issue a trading update and investors will be hoping that it will get a boost from the healthier options being introduced alongside its traditional sausage rolls and pasties.
The high street chain saw its profits fall in the first half largely as a result of restructuring charges, and shareholders will want to start seeing evidence that the business overhaul is paying off.
Sales actually rose in the opening six months of the year though thanks to the new, healthier additions to its menu. With the UK consumer becoming increasingly health-focused, it will be interesting to see if Greggs is planning on introducing any other ‘balanced choice’ products.
Ferguson name change will focus former Wolseley
There will also be first half numbers from Ferguson PLC (LON:FERG) – the blue chip plumbing supplies group formerly known as Wolseley.
In a preview, George Salmon, equity analyst at Hargreaves Lansdown noted: “With 84% of trading profit coming from the US ‘Ferguson’ branded commercial and residential plumbing supplies business, all eyes will again be on this division. In particular, will the recent bout of hurricanes have any bearing on business activity.”
He added: “Looking further afield, the group may announce what it intends to do with the cash generated by the sale of its Nordic business.”
Significant events expected on Tuesday October 3:
Trading updates: Electrocomponents PLC (LON:ECM), Greggs PLC (LON:GRG), ITE Group PLC (LON:ITE)
Finals: Ferguson PLC (LON:FERG), Revolution Bars Group PLC (LON:RBG), SCS Group PLC (LON:SCS), St Ives PLC (LON:SIV)
Economic data: UK construction PMI report
Around the markets:
- Sterling: US$1.3251, down 0.2%
- Gold: US$1,268.90 an ounce, down 0.3%
- Brent crude: US$50.42 a barrel, down 0.3%
City Headlines:
- BP experiments with blockchain for oil and gas trading – Financial Times
- Sky overhauls measurement of TV audience figures – The Times
- Squabbling BT is holding back development of mobile internet in Britain, slams Ofcom – Daily Mail
- Old Mutual Wealth to decide on fund management unit before IPO – Financial Times
- Jury told former Tesco executive lied to chairman: - Financial Times
- Unilever to buy Brazilian organic food business Mãe Terra – Financial Times
- Ryanair pilots form unofficial union in battle with Michael O’Leary – The Guardian
- Ted Baker bags REVL startup Founder and retail expert as non-executive director – City AM
- Angling Direct lands Birmingham superstore Fosters Fishing for £3mln – Daily Mail
- Tesla misses production targets for Model 3 cars – Daily Telegraph
- Uber’s UK boss quits as worldwide chief flies in for London licence talks – The Guardian
- Google axes one-click rule on news sites – The Times
- Facebook lays out plans for ad transparency – Financial Times
- Equifax puts silence down to fear of ‘copycat’ cyber attacks – Financial Times
- Goldman Sachs asset management unit to absorb research costs under Mifid rules – Financial Times
- GM aims to have 20 all-electric car models by 2023 – Financial Times
- Nissan shares have been hit by a £167mln recall scandal of all cars sold in Japan in the last three years – City AM
- General Electric chairman steps down earlier than expected – Daily Telegraph
- Global Bankers Insurance to buy Lincoln Benefit from Cowdery’s Resolution Life – Financial Times
- Abramovich-backed Truphone raises £255mln – Daily Telegraph
- Record profit puts Shop Direct firmly in credit column – The Times
- Jamie Oliver loses £10mln as he shuts six of his failing Italian-style restaurants – Daily Mail
- O2’s £10bn flotation is put on hold – Daily Mail
- Bank of England tells lenders to find £116bn to help prevent bailouts – The Guardian
- Royal London backs the City’s prospects with the largest ever launch of a UK property fund: - City AM
- Brexit and Government partly to blame for Monarch, says Vince Cable – The Independent
- Supermarket bags for life could spread harmful food poisoning bacteria – The Independent
- Restrictions on European sugar firms are lifted – The Independent