FTSE closes down 15 at 7,715
US stocks higher
GKN starts producing improved forecasts as it seeks to repel Melrose
Barclays top riser
FTSE 100 closed in the red after a day of low volatility as global traders await the next news from the US after the government shutdown.
Britain's blue-chip index finished around 15 points lower at 7,715 with Rentokil Initial (LON:RTO) the biggest laggard.
In contrast, the FTSE 250 closed higher, up 1.85 at 20,655.
"The deadlock in Washington DC gives investors in Europe as excuse to play the wait and see card. European equities were experiencing low volatility last week, and this is the continuation," said David Madden, at CMC Markets.
In the currency markets, sterling added 0.57% against the Euro and was up 0.48% against the US dollar.
Top gainer on Footsie was Barclays (LON:BARC), up 4.34% to 209.20p. It came after a US hedge fund invested more than US$1bn into the British bank.
Tiger Global Management now owns around 2.5% in the company.
FTSE makes move - downwards..
Having stayed in the world of single-digit movements for most of the day the Footsie has finally decided on a decisive move – downwards.
The FTSE 100 was down 23 at 7,708, with the housebuilders prominent among those dragging the index lower.
Bid target GKN PLC (LON:GKN) fell 1.4% to 433.3p despite lifting its sales forecast for its electric car unit as it attempts to fight off the hostile bid approach from Melrose industries PLC (LON:MRO).
The eDrive unit, which makes parts for BMW and Volvo, is now expected to achieve sales of £275mln in 2020, up from a previous forecast of £200mln and last year’s £33mln.
Among the tiddlers, Vela Technologies PLC (LON:VELA) shot up 17.5% to 1.175p after one of the companies in which it has invested, BTL Group, released further information on the next phase of its previously announced European energy trading project.
15.30 ... US markets open firm
US markets opened higher but that only prompted the FTSE 100 to step back into the red.
An hour after the US markets had opened, the FTSE 100 was down 6 points at 7,724.
In the US, the Dow Jones was 30 points firmer at 26,102 and the S&P 500 was up 9 at 2,819.
13.30 ... Footsie stuck in neutral
No need to refresh your browser; the FTSE 100 really is at the same level it was an hour ago.
The Footsie has been stuck in the mud all day, and is up 5 points at 7,738, as it seems to have been most of the day.
Contract caterer Compass Group PLC (LON:CPG) was among those blue-chips pushing the top-shares index higher, as it revealed that its effective tax rate for fiscal 2018 will drop to 24% from 26.5% as a result of the recent US tax changes.
The stock rose 0.5% on the news.
Retailers continue to hog the headlines and it seems no one is much mourning the departure of chief executive Sebastian James from Dixons Carphone Plc (LON:DC.)
The extended warranties seller has seen its Carphone Warehouse business run into trading difficulties of late, but James no longer has to worry about that as he is off to take the helm at Boot’s the Chemist.
He has been replaced by Alex Baldock, currently the boss of online retailer Shop Direct.
The shares surged 7.1% as the company reported strong Christmas trading and lifted profits guidance. It said it now expects full year pre-tax profits between £365mln and £385mln, compared to a previous guidance of £360mln to £400mln.
The average consensus forecast for pre-tax profit is about £377mln.
Engineering software group AVEVA Group PLC (LON:AVV) was wanted after an encouraging trading update and news of a contract extension.
The company, which is soon to merge with Schneider Electric’s industrial software business, said revenue in the first nine months of the year has been ahead of expectations.
It also announced the closing of a significant contract with one of its key global account EPC (engineering, procurement and construction) customers.
AVEVA’s shares were up 4.2% at 3,024p.
11.45 ... Footsie marking tim e as investors show no sign of concern at US government shut-down
The Footsie seems disinclined to stray far from Friday night’s close as it waits for further developments in the US government shutdown saga.
The FTSE 100 was up 4 at 7,735 towards the end of the morning trading session and US investors seem equally sanguine about the government impasse, with US indices set to open only a tad lower.
“There were some concerns that the shutdown may weigh on investor sentiment and halt what has been another impressive run in US stock markets but as of yet, there’s little evidence to support this. Yes, futures are a little lower ahead of the open but these declines don’t even wipe out Friday’s marginal gains which suggests that what we’re seeing is not out of the ordinary,” commented Craig Erland of Oanda.
“As long as a solution is found in reasonable time to fund government and reopen the areas that are now closed, I don’t expect investors to concerns themselves much with it. The last shutdown in 2013 lasted 16 days and had minimal, if any, lasting economic impact and it’s this that is likely giving investors the confidence to shrug it off this time around,” he added.
Bookmakers remain under pressure even after Jim Mullen, the chief executive officer of Ladbrokes Coral, did his best Corporal Jones impersonation and implored investors not to panic about the outcome of the government’s investigation into fixed odds betting terminals.
"The triennial review has been running for over 15 months and throughout that time there has been constant rumour and speculation about potential outcomes, of which this is yet more. It should be noted that the current call for evidence is yet to conclude and industry responses have not yet been submitted to Government,” he noted in response to weekend press speculation that the government has already made up its mind and opted for the option that the bookies like least: a reduction in the maximum stake from £100 to £2.
“The industry has also always made it clear that a cut to stakes will have serious consequences - resulting in shop closures which will ultimately affect jobs, tax revenue and the funding of racing,” Mullen continued, probably raising a cheer in the process from those people who oppose the colonisation of the High Streets of poorer areas by the bookmakers.
Shares in Ladbrokes, which had fallen as low as 158.75p, rallied to 167.1p, down 8.4% on the day. Fellow traveller William Hill recovered from 285.1p to 297.7p, down 11.5%, while Paddy Power Betfair plc (LON:PPB) was down a mere 0.5% at 8,405p.
Telecoms and media giant BT Group plc (LON:BT.A) rose 2.4% to 270.5p after UBS maintained its ‘buy’ rating and 330p target price, despite BT receiving a knockback from the High Court in its attempt to link pension payments to a lower measure of inflation – the consumer price index – rather than the retail price index.
9.50 ... Footsie stumbles into positive territory
The top-shares index has moved into positive territory but it’s not so much a triumphant march as an apologetic stumble.
At 9.45am, the FTSE 100 was up 5 at 7,736.
Bookmakers were under the whip this morning after weekend press reports that the government will go for the hard-line option on the maximum stake of £2 on fixed off betting terminals.
FTSE 100 stock Paddy Power Betfair plc (LON:PPB) escaped relatively lightly, down 0.8% at 8,380p, but William Hill plc (LON:WMH) and Ladbrokes Coral Group PLC (LON:LCL) are clearly perceived to have a much greater reliance on supplying their punters with the so-called “crack cocaine of gambling”.
William Hill was down 42.5p at 293.8p and Ladbrokes – the seventh most heavily traded stock in London this morning in volume terms - was off 18.95p at 163.5p.
Among the minnows, Solo Oil PLC (LON:SOLO) floated 5.4% higher to 4.875p after it updated investors on the progress of its 15%-owned associate Helium One, which is considering options for new funding to support exploration plans in Tanzania.
An initial public offering on the Australian Securities Exchange is one option being considered by Helium One.
It’s an ill wind that blows nobody any good and Indivior PLC (LON:INDV) shareholders were celebrating this morning after Camurus, which is developing a rival opioid drug to Indivior’s, faced a regulatory setback.
Numis Securities described it as a “small positive” as it reiterated its ‘buy’ recommendation for Indivior.
“Over the weekend Camurus announced that it had received a Complete Response Letter (i.e. not approvable) from the FDA in relation to CAM2038, the nearest competitor to Indivior’s Sublocade. This goes against the recommendation for approval from the Advisory Committee (in late Nov-17), and likely reflects the regulators’ concerns about the dose versus efficacy, in our view,” the broker said.
“Camurus claims that no further trials will be needed, and so the delay may be between 3 - 10 months depending on the extent of questions. This follows the recent $110m financing for their US distribution partner, Braeburn. We view this news as a slight positive, albeit with Indivior now responsible for all the heavy lifting associated with a new product/concept launch.,” Numis added.
Indivior shares were up 4.4% on the news.
8.50 ... Footsie mixed
Blue-chip shares continued to look for direction early doors, leaving the Footsie little changed.
The FTSE 100 was down one point at 7,730, while the FTSE 250 was down 24 at 20,629.
NMC Health plc (LON:NMC), the private healthcare business, was doing its bit to bolster the Footsie, rising 1.5% to 3,332p after announcing earnings-enhancing acquisitions in the United Arab Emirates and the Kingdom of Saudi Arabia.
Among the mid-caps, groceries delivery specialist Ocado Group PLC (LON:OCDO) was the top riser, up 13.2% at 467.55p, after announcing its second major international tie-up.
“The agreement with Sobey’s means entry to the Canadian market and comes just a couple of months after it joined forces with Casino in France. As we noted then, the Casino deal was likely to be the launch pad for many more international partnerships. More should follow in 2018 but these deals are not immediately earnings accretive and the share price is still trading at very high multiples,” noted Neil Wilson at ETX Capital.
For the market as a whole, Learning Technologies Group PLC (LON:LTG) was the best performer, up 8.3% at 81p, after it said results for 2017 would be significantly ahead of market expectations.
8.30am ... Retailers in focus as the Footsie slides gently beneath the surface
As expected the FTSE 100 slid into the red, falling 13 points to 7,718.25.
The quantum of that fall revealed traders in London are none too perturbed about the goings on in the US.
Across the Atlantic Senate Republicans and Democrats are in a stand-off over the budget, with the latter wanting immigration to part of the discussions.
The upshot is the American government has been shut down, with hundreds of thousands of federal workers unable to report for work.
Back here in the UK, the big news was Dixon Carphone’s (LON:DC.) boss Sebastian James being given the order of the boot after a retailer narrowed its earnings guidance.
Dispiritingly for the outgoing chief executive, the shares rose 2.5% following his exit.
Sainsbury (LON:SBRY) was little changed after a downgrade to ‘neutral’ from ‘outperform’ by Credit Suisse, one of London’s most influential investment banks.
6.30am...US shutdown, so what
The FTSE 100 looks set to open lower, though sentiment isn’t expected to be unduly affected by the government shutdown in the US.
The index of blue-chip shares will nudge just 10 lower to 7,720.79, according to the spread betting firms.
The fall looks set to mirror the fleeting anxiety seen in Asia where the main markets enjoyed a subdued opening session.
READ: The full story on the US shutdown
“The much-anticipated shutdown of the US government on Saturday did not trigger much of a knee-jerk reaction in Asian markets,” CMC Markets analyst Margaret Yang.
“Safe-havens namely Japanese yen and gold edged higher, showing market sentiment remains cautious amid uncertainties of how long it will take the Democrats and Republicans to find a common ground on immigration concessions in order for the government to resume operating.”
Back here in the UK, expect more fall-out from the Carillion (LON:CLLN) collapse, while on a busy week for scheduled news interim results from Diageo (LON:DGE) are set to be among the highlights.
Also in the City diary are updates from easyJet (LON:EZJ), ASOS (LON:ASC) and Dixons Carphone (LON:DC.).
READ: The Proactive preview to the week's events
- Pound worth US$1.3863
- Gold changing hands for US$1331.40 an ounce, down US$1.70
- Brent crude up 14 cents at barrel at US$69.78
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