FTSE 100 closes at new high - 7,562
Brent crude up to US$62 a barrel
US markets open higher
Paradise Papers reaction
FTSE 100 closed out at a fresh record high as the pound gained and US stocks headed north.
The UK blue chip benchmark closed up 1.93 at 7,562.
On Friday, the Footsie closed at 7,560, which was a record high - the second one in a month, but today's finishes surpasses that- marginally.
In the currency markets, sterling added 0.70% against the Euro and was up 0.58% against the US dollar at the time of writing.
While FTSE 100 gained on the day, FTSE 250 went the other direction, shedding over 39 points, at 20,432.
Despite Footsie's rise, it was a quiet day for news.
David Madden, at CMC Markets, said: "European stock markets haven’t moved much today as it has been a quiet day for news.
"The macroeconomic and political outlook is largely still the same from last week. Volatility has been low and we have seen some small amounts of profit taking. Stock markets have been strong in Europe lately and it appears the bulls are taking a breather today."
The analyst said the recent weakness in the pound was likely to keep the FTSE 100 in demand, while the stimulus programme by the European Central Bank (ECB) could keep the eurozone markets propped up.
Colostomy bag maker ConvaTec Group PLC (LON:CTEC) was the top riser on the day, up 3.79% to 188.90p, while the biggest laggard was security services firm G4S, which shed 2.41% at 279.60p.
Analysts reckon growth from the group may be weak for many months yet, with UBS expecting third quarter organic growth to crash down to around 2% compared to 6.2% in the first half.
3.40pm...City broker: ‘BT won’t cut its dividend’
After a torrid year so far, there’s finally some good news if you’re a BT Group plc (LON:BT.A) investor. Well, according to Numis anyway.
Analysts at the broker reckon the telecoms giant won’t cut its dividend despite concerns that it can’t really afford to do so.
Numis left its rating on BT at ‘buy’ and raised its target price to 400p from 390p, saying: “We remain confident DPS (dividend per share) will not be cut because of our own FCF (free cash flow) analysis and because management has said so repeatedly.
“We expect BT will sUBStantiate this point again in investor meetings which start today, and on Wednesday when the CFO will host a Q&A session for sell-side analysts.”
3.30pm...FTSE 100 closes in on fresh closing high
The FTSE 100 got off to a slow start on Monday morning, although that was always likely to be the case having finished last week at an all-time closing high of 7,560.
The index picked up as traders headed into the afternoon session to get its head back above the water.
All of that means, despite a generally sluggish performance, the Footsie is on course to set a fresh end of day high once again.
With about 35 minutes left in the trading day, the FTSE 100 is currently 7.3 points, or 0.1%, higher at 7,567.6.
ConvaTec and miners still lead the way
Colostomy bag maker ConvaTec Group PLC (LON:CTEC) (up 3.9% to 189p) has led the risers from start to finish as investors pile back into a stock that sunk to an all-time low on Friday afternoon.
The miners have been busy today too, buoyed by iron ore prices which continue to rise. BHP Billiton plc (LON:BLT) (up 2.5% to £14.62) was the star performer in the industry, although Anglo American PLC (LON:AAL) (up 1.9% to £15.13) wasn’t too far behind.
Tesco and Next down ahead of retail updates
There were no major drags among the blue chips on Monday, with security services group G4S PLC (LON:GFS) the biggest faller, although even that was only 1.6% down at 282p.
Tesco PLC (LON:TSCO) (down 1.6% to 176.3p) and Next Plc (LON:NXT) (down 1.6% to £44.02) were two other fallers as the markets ready themselves from a slew of retail updates later this week, including from Marks and Spencer Group Plc (LON:MKS), Halfords Group plc (LON:HFD) and J Sainsbury plc (LON:SBRY).
Brighter-than-expected start in New York
Over in the US the markets got off to a better start than what the spread bet firms had thought, with all three major indices currently in positive territory.
The Dow Jones is up 19 points, or 0.1%, to 23,554 driven by decent gains from Caterpillar Inc (NYSE:CAT) (up 1.1% to US$138.15) and plane maker Boeing Co (NYSE:BA) (up 1.2% to US$264.94).
The S&P 500 is marginally higher at 2,588.9, while the tech-heavy Nasdaq was the best performer, up 21.3 points, or 0.3%, to 6,785.7.
2.10pm...How offshore investments work...
How to hide your cash #ParadisePapers
Full story: https://t.co/6P0YQX7ht2 pic.twitter.com/JJAs4gyNDs
— BBC Business (@BBCBusiness) November 6, 2017
1.10pm...FTSE edges into the black
As traders sat down for their lunches, the FTSE 100 edged its way back into the black early on Monday afternoon.
The blue chip index had been in negative territory for most of the day, but was up 2.2 points to 7,562.5 shortly before 1pm UK time.
ConvaTec top riser, Tesco top faller
Colostomy bag maker ConvaTec PLC (LON:CTEC) was still the index’s top riser as it rebounded from its all-time low on Friday. Shares were up 4.5% to 190.2p as investors took a chance that things can only get better.
Also dragging the Footsie above breakeven were miners Anglo American PLC (LON:AAL) and BHP Billiton plc (LON:BLT) which both benefited from the continued rise in iron prices.
Anglo is currently up by 1.9% to £15.13 while BHP has jumped 2.5% to £14.63.
Water company Severn Trent PLC (LON:SVT) is also in demand after the investment banking arm of HSBC turned positive on the shares.
It has moved to ‘buy’ from ‘hold’ after re-looking at the merits of the utility and values the shares at £23 each (up from £21.60 and around £2 ahead of the current price). Shares flowed 2.2% higher to £21.78.
Tesco PLC (LON:TSCO) was the biggest drag among the blue chips, down 1.4% to 176.6p ahead of results from its UK rivals Marks and Spencer Group Plc (LON:MKS) and J Sainsbury plc (LON:SBRY) later this week.
Carillion and Mitie lift FTSE 250
Down on the second tier Carillion PLC (LON:CLLN) was still having a decent morning, up 1.6% to 46.8p, after it inked two fresh deals with Network Rail worth more than £320mln.
A ‘buy’ note from US broker Jefferies helped get MITIE Group PLC (LON:MTO) back on track on Monday. Analysts said the path to rehabilitation “will not be smooth” for the outsourcing group, but reckon the shares are undervalued at current values.
Investors seemed to agree as shares in the FTSE 250 company jumped 4% to 247.7p.
Slow start on Wall Street
Looking ahead to the US open, spread betting firms are expecting a slow start on Wall Start.
The Dow Jones is tipped to open up 11 points lower at 23,520; the Nasdaq Composite is seen as 1.5 points down at 6,291.6; with the S&P 500 set to open broadly flat at 2,584.
“There is precious little for the US markets to contend with. That explains why the Dow Jones is facing such a limp open, with the futures pointing to a 0.1% slide when the bell rings on Wall Street,” writes Spreadex analyst Connor Campbell.
“Still, that keeps the Dow above 23500, meaning the slightest change in fortunes would send the US index to yet another all-time high.”
11.55am…Oil prices hit four-year highs
Oil prices hit a four-year highs on Monday morning, with Brent crude futures trading 38 cents higher at US$62.45 late on Monday morning after hitting a peak of US$62.90 earlier in the session.
Despite the political unrest in Saudi Arabia at the moment with Crown Prince Mohammed bin Salman arresting royals, ministers and investors over the weekend, UBS doesn’t expect the country to change its policy of boosting prices.
“We believe the kingdom will stick to the OPEC+ deal and continue to focus on reducing global oil inventories,” said analyst Giovanni Staunovo.
Saudi Energy minister Kalid al-Ailh recently said that he was happy with how OPEC’s production-cutting deal introduced earlier this year was going, but said the “job is not done yet”.
Analysts reckons OPEC will extend its cuts of around 1.8mln barrels a day throughout the whole of next year, which should further support oil prices.
11.40am … Car sales fall for seventh month in a row
Car sales fell by more than 12% in October compared with last year according to the Society of Manufacturers and Traders (SMMT), marking the second consecutive month of declines.
The SMMT blamed a drop in business and consumer confidence for the fall.
Perhaps to be expected with the raft of new regulations being bought in, sales of diesel cars slumped by a third.
Given the falling numbers, SMMT chief executive Mike Hawes has called on the government to do more to boost sales.
"Declining business and consumer confidence is undoubtedly affecting demand in the new car market but this is being compounded by confusion over government policy on diesel," said Mike Hawes, SMMT chief executive.
"We urge the government to use the forthcoming Autumn Budget to restore stability to the market, encouraging the purchase of the latest low emission vehicles as fleet renewal is the fastest and most effective way of addressing air quality concerns."
Oct 12.2% y/y drop in #UK new #car sales points to #consumers reluctant to make major purchases & #businesses more cautious over fleet buys
— Howard Archer (@HowardArcherUK) November 6, 2017
11.30am ... Glencore 'loaned billionaire millions to secure DRC mining agreement'
Back to the Paradise Papers now and Glencore PLC (LON:GLEN), the world’s largest mining company, secretly loaned millions of dollars to an Israeli billionaire after it enlisted him to secure a mining agreement in the Democratic Republic of Congo.
The documents allege that in 2009, Glencore loaned Dan Gertler US$45mln on the condition that it would only have to be repaid if agreement with DRC authorities was not reached to secure a mining contract for a company linked to the miner, the Guardian reported.
Lawyers for Gertler say the businessman categorically denies the report’s allegations.
Here's what you need to know about Glencore and the Paradise Papers leak https://t.co/bqtXKrwWtG pic.twitter.com/0t0o0LTei8
— Bloomberg (@business) November 5, 2017
11.15am … Barclays suffers from broker downgrades
More on UK bank Barclays PLC (LON:BARC), which we said earlier on had dipped on price target cuts from Deutsche Bank and UBS.
Deutsche trimmed its target to 210p from 226p, saying last month’s third quarter results were a “clear disappointment”.
UBS moved its target down to 220p from 235p but kept its ‘buy’ rating in place.
It noted Barclays’ targets for return on tangible equity (ROTE), excluding litigation and conduct, above 10% in 2020 and above 9% in 2019, based on a common tier equity 1 (CET1) ratio of around 13%.
UBS said while the ROTE targets represent “reasonable upgrades to consensus”, the route by which the firm aims to get there - investing in higher costs and aiming for better revenue growth - was “always going to be a tough sell”.
Barclays shares were down 0.9% in mid-morning trade, although they had been almost 2% off earlier in the session.
11am ... Bono named in Paradise Papers
Another huge leak of documents has revealed that the ultra-rich want to legally protect their wealth and stop the average Joe from knowing how much money they’ve really got.
Is that news? Apparently so.
Anyway, the Paradise Papers – a leak of 13.4mln files – show how some of the world’s biggest businesses, political figures and sports stars shelter their wealth in secretive tax havens.
According to the Guardian – one of the institutions with access to the files – the project shows how millions of pounds from the Queen’s private estate has been invested into a Cayman Islands fund, while it also reveals how Twitter and Facebook received hundreds of millions of dollars in investments that can be traced back to Russian state financial institutions.
U2 frontman Bono (you know, the one always asking the public to give to charity) is also among those to have had his investments leaked.
U2 Singer Bono exhorts the rest of us to give to charity but has his own offshore tax avoiding secrets, as revealed in #paradisepapers
— Paul Lewis (@paullewismoney) November 6, 2017
10.45am ... Carney sees slower growth without Brexit deal
Bank of England governor Mark Carney has said the UK economy will grow more slowly in the short-term if Theresa May and co walk away from Brexit negotiations without a trading deal with the EU.
Asked if Britiain’s economy would take a hit if there is no Brexit deal, the Canadian told ITV:
““In the short term, without question, if we have materially less access (to the EU’s single market) than we have now, this economy is going to need to reorient and during that period of time it will weigh on growth.”
Carney – who raised interest rates for the first time in a decade last week – also said that the British economy should be booming right now given the strength of the world economy, but that uncertainty about Brexit is still weighing.
10.20am ... Slow start to Monday
After closing at a record high on Friday, Monday morning was always likely to disappoint somewhat.
The FTSE 100 is down 11.5 points, or 0.5%, to 7,549.3, with a slightly stronger pound partly behind the small fall.
The index of blue chip shares had closed at 7,560 on Friday, beating the previous end of day high of 7,556 which was set only last month.
Platinum refiner Johnson Matthey PLC (LON:JMAT) was leading the index lower, down 1.6% to £34.49 as prices of the precious continue to hover around US$920 per ounce, having been over US$1,000 only a month or two ago.
Barclays PLC (LON:BARC) was also out of favour after it was downgraded by analysts at Deutsche Bank and UBS, shedding 1.1% 181.2p.
It was a different (and much welcome) store for colostomy bag maker ConvaTec Group PLC (LON:CTEC), which has endured a rough rise over the past month or so.
A profit warning last month and renewed competition fears with Danish rival Coloplast have both weighed on the share price, which hit a record low on Friday.
It has rebounded this morning though and ConvaTec is currently the top blue chip riser; up 6.6% to 193.9p.
Down on the FTSE 250 there was at last some respite for Carillion PLC (LON:CLLN) shareholders after the construction services group bagged two contracts with Network Rail.
The contracts are worth more than £320mln over the next few years and will see Carillion upgrade the London to Corby rail line currently operated by East Midlands Rail.
8.45am ... Severn Trent in demand after HSBC upgrade
The FTSE 100 made a quiet start to proceedings Monday after ending last week at record closing high with the index of blue-chip shares edging two points higher to 7,562.11.
Severn Trent (LON:SVT) topped the list of gainers (up 1.8%) after the investment banking arm of HSBC turned positive on shares in Britain’s largest water company.
It has moved to ‘buy’ from ‘hold’ after re-looking at the merits of the utility and values the shares at £23 each (up from £21.60 and around £2 ahead of the current price).
Also in demand were the miners, led by Anglo American (LON:AAL), which rose 1.4% early on.
The movement seems slightly illogical ahead of President Donald Trump’s visit to China and some possibly fraught trade negotiations that could negatively impact the diggers. The gold price was a little stronger, pushing Randgold Resoures (LON:RRS) a 1.2% higher.
The retailers were on offer ahead of a big week for the sector with Marks & Spencer (LON:MKS) and Wm Morrison Supermarkets (LON:MRW) off slightly ahead of a slew of results and trading statements.
On AIM, Purplebricks (LON:PURP), one of the darlings of junior market, issued the briefest of updates, telling investors that hybrid estate agent was trading in line with management expectations.
The shares, which have flown almost 200% higher in the year to date, nudged up a further 2% in early trading.
6.45am ... small reversal predicted
After topping out at a record high on Friday, the FTSE 100 looks set to lose 14 points to 7,546.35 at the open, taking its cue from Asia, where the main markets fell or were flat.
Donald Trump fired the first salvo of trade rhetoric on his visit to the region, while China’s central bank chief warned of the perils of excessive leverage.
The yen took a hit as the Bank of Japan prepared the market for an inflation overshoot.
Back here in the UK, the coming week looks to be an exceptionally busy one for corporate news.
On Wednesday, we will be able to gauge the mood on the High Street pre-Christmas with updates from Marks & Spencer (LON:MKS) and Sainsbury (LON:SBRY), which also runs the Argos chain.
The day before that we have results from Associated British Foods (LON:ABF), owner of discount clothier Primark, while Halfords (LON:HFD) reports on Thursday, followed by Burberry (LON:BRBY) on Friday.
- Pound US$1.3072
- Gold US$1,270.20, up US$1 an ounce
- Brent crude US$62.39 a barrel, up 32 cents
Proactive headlines
Ortac Resources Limited (LON:OTC) is to acquire a further 33.8% stake in Casa Mining, the gold company with assets in the Congo, in an all-shares deal worth around £1.1mln. In conjunction with the exercising of a loan note, it will take Ortac's total holding in Casa to around 70%. Ortac also plans to acquire the rest of Casa.
Galileo Resources PLC (LON:GLR) has hired a consultant to help it explore its Star zinc property in Zambia. An initial soils programme ought to be complete within six weeks, with a drill programme envisaged in due course.
Landore Resources Ltd (LON:LND) is considering a secondary listing on the Toronto Stock Exchange as it seeks to exploit the much larger acreage it has at Junior Lake following the acquisition of the contiguous Lamaune property.
Big changes are underway at Redx Pharma Plc (LON:REDX) as the drug discovery group rejoins the junior market Monday. The company had been in administration since May after a £2mln loan from Liverpool City Council made to its sUBSidiary, Redx Oncology, fell due.
Belvoir Lettings PLC (LON:BLV), the UK's largest property franchise, was crowned Franchise/ Network of the Year at the Negotiator Awards 2017, a set of awards for the residential estate and letting agency industry.
Satellite Solutions Worldwide Group Plc (LON:SAT) has made three acquisitions for a total of £1.8mln that are “strategically compelling and are immediately accretive to earnings”. It has bought two fixed wireless broadband Internet service providers and a satellite broadband customer base, paid from part of the proceeds from July’s £8mln share placing.
Union Jack Oil PLC (LON:UJO) has struck a deal with Egdon Resources Ltd for a 20% stake in the Fiskerton Airfield oil project, in Lincolnshire.To acquire the stake Union Jack is paying around £137,000 and it will cover costs related to new seismic reprocessing, estimated at £35,000.
Aminex plc (LON:AEX) and Solo Oil PLC (LON:SOLO) told investors that gas production is being restricted at the Kiliwani North well in Tanzania. The rate is being temporarily reduced to less than 1mln cubic feet per day because the KN-1 well is now thought to be draining only a single compartment within the greater Kiliwani North structure.
Business Headlines
Financial Times
Energy stocks rose in Sydney on Monday as the price of oil looked set for a solid week in the face of growing risk in the international oil market.
The new head of Brazil’s biggest private company, Vale, has said the miner must halve net debt to less than US$10bn if it wants to become a “results-orientated” company.
Ford has applied to launch a commuter bus network in London, just weeks after its San Francisco service was briefly suspended by California regulators for inspection failures.
The master dealmaker behind Broadcom, Hock Tan, was putting the finishing touches to his most ambitious deal yet on Sunday as the chipmaker prepared an unsolicited US$100bn bid for Qualcomm.
Alibaba and JD.com are taking the battle for shoppers’ wallets to everything from the seasonal delicacy hairy crabs to luxury labels as China’s ecommerce titans prepare to face off on Singles Day.
Qatar Airways has agreed to purchase a nearly 10.0% stake in Hong Kong airline Cathay Pacific for US$661mln.
Daily Telegraph
Plans for a blockbuster float of Saudi Arabia’s national oil explorer could be thrown into further doubt after one of the company’s board members was arrested as part of a corruption crackdown in the Gulf state.
One of Britain’s biggest rail franchises could be broken up by the government in an attempt to make running strike-ravaged train networks more palatable to transport companies.
Financial advisory firm Lazard has begun a search for a new London office, indicating that it is committed to maintaining a presence in the capital for a number of years.
Soaring stock market valuations on both sides of the Atlantic are stoking fears of a looming correction as valuations hit levels not seen since the dotcom bubble and the eve of the Wall Street crash.
The City Pub Group has raised a glass to its long-awaited stock market listing in London by announcing plans to raise £30mln so that it can snap up more pUBS.
Times
It may be the remnant of the old British Midland airline empire, but the future of BMI Regional, the flier of 50-seater jets around provincial airports, will no longer be in Britain as it aims to connect the industrial cities of Europe. Meanwhile, the High Court could rule as early as today whether Monarch Airlines’ administrator has the legal right to sell the failed carrier’s take-off and landing slots to raise money for creditors.
British companies expect a surge in deal making this year as Executives defy Brexit uncertainty and look to cut costs.
A huge surge in trade with the Channel Islands and offshore tax havens has prompted calls for the government to explain the source of the growth amid concerns that it is masking the importance of trade with the European Union.
Guardian
Sir Vince Cable has criticised the Royal Bank of Scotland boss, Ross McEwan, for his failure to show “genuine contrition” over the bank’s mistreatment of small business customers in the aftermath of the financial crisis.
The new Marks & Spencer chairman, Archie Norman, has told senior managers that the retailer needs to cut clothing prices and that too much of its fashion is aimed at the over-55s.