FTSE 100 rises 85 points
BoE's Vlieghe says UK interest rate hike likely
Mining and oil stocks gain on higher commodity prices
Utilities friendless as risk appetite returns
The FTSE 100 rose more than 1% with just the ten index constituents – many of them defensive favourites – failing to make progress.
The FTSE 100 closed at 7,177, up 85 points, with steel producer Evraz plc (LON:EVR), up 5.8%, leading the charge.
Mining giant Rio Tinto PLC (LON:RIO) advanced 2.8% to 3,895.5p after credit ratings agency S&P upgraded its rating on the miner's senior unsecured debt to 'A' from 'A-'.
“The upgrade reflects Rio Tinto's journey of strengthening its balance sheet and living by its financial policy for the past two years. Rio Tinto recently published strong 2017 financial results,” S&P noted.
Elsewhere in the mining sector, Wishbone Gold PLC (LON:WSBN) shot up 12% to 0.48p after the company announced the first shipment of gold from Thailand through a recently formed entity.
4.00pm: Goldman names Netflix, Alphabet as stocks to consider
Goldman Sachs has recommended buying cyclical names and companies with relatively low labour costs in the US.
The bank believes rising inflation and interest rates should boost cyclical sectors, such as financial stocks.
"Firms with low labour costs should be most insulated from accelerating wages, a trend that our economists expect will persist in 2018,” said Goldman’s US equity strategist, David Kostin.
It named Prudential Financial NYSE:PRU), Google parent Alphabet (NASDAQ:GOOG) and Molson Coors Brewing Co (NYSE:TAP) and Netflix Inc (NASDAQ:NFLX) among the low labour costs stocks.
On last week’s sharp sell-off in the US, Kostin said: "The typical correction took 70 trading days to trough and 88 days to recover. However, an investor who bought the S&P 500 10 percent below its peak without waiting for a bottom would have experienced positive three-, six-, and 12-month returns in 75% of corrections."
3.30pm: Evraz boosted by Goldman Sachs upgrade
Evraz plc (LON:EVR) is a top FTSE 100 riser after Goldman Sachs upgraded the Russian steelmaker to ‘buy’ from ‘neutral’.
Mining stocks, Glencore PLC (LON:GLEN), Anglo American PLC (LON:AAL), BHP Billiton (LON:BLT) and Rio Tinto (LON:RIO) are higher thanks to a jump in silver, copper and gold prices.
An increase in oil prices has lifted BP PLC (LON:BP) and Royal Dutch Shell PLC (LON:RDSB).
Heading in the opposite direction, Acacia Mining PLC (LON:ACA) shares tanked after it scrapped its dividend and reported a decline in full year earnings after it took a hit from an export ban by the Tanzania government.
BT Group plc (LON:BT.A) is on the back foot following weekend reports that it faces fresh calls to spin off its Openreach sUBSidiary due to frustration from ministers and regulators over its failure to commit to a large-scale broadband network upgrade.
2.30pm: US stocks open in the green
US stocks opened higher following steep losses on Friday as investors waited to hear from President Donald Trump on his infrastructure spending plans.
The Dow Jones Industrial Average rose 1.1% to 24,453 points, the S&P 500 edged up 0.9% 2,643 and the Nasdaq grew 0.9% to 6,936.
The 10-year Treasury yield rose 21.7 basis points to 2.857% but is lower than the four-year high of 2.891% earlier in the day.
The US dollar is weaker, sending gold and oil prices higher.
On this patch of soil, the FTSE 100 is up 98 points to 7,191 with an increase in gold and oil prices boosting mining and energy stocks.
1.55pm: Lloyds sets ethnic diversity target
Lloyds Banking Group PLC (LON:LLOY) has become the first FTSE 100-listed company to set a target for ethnic diversity among its top executives.
It plans to raise the proportion of staff from black, Asian or minority ethnic backgrounds to 8% of senior management by 2020.
We are proud to be the first #FTSE100 company to set targets to increase the representation of Black, Asian and Minority Ethnic colleagues. https://t.co/V3PKJgKkUO #BAME #HelpingBritainProsper pic.twitter.com/HKDu2ymHAG
— Lloyds Banking Group (@LBGNews) 12 February 2018
Lloyds also plans to increase the proportion of non-white staff to 10% of its total workforce by the end of the decade.
The group said 8.3% of its 75,000 workforce and 5.6% of senior managers currently come from a BAME background.
1.15pm: US stock futures climb
US stock futures are extending gains following Friday’s late-session rebound.
Dow Jones Industrial Average futures increased 289 points to 24,454, S&P 500 futures added 29 points to 2,647 and Nadaq futures climbed 68 points to 6,486.
President Donald Trump is expected to unveil his administration’s plan to spend US$200bn on infrastructure later.
Hopes for increased US infrastructure spending have lifted stocks since Trump was elected in late 2016.
12.40pm: Fox commits to Sky News independence
Rupert Murdoch’s Twenty-First Century Fox Inc. (NASDAQ:FOX) has suggested remedies to address media plurality concerns raised by the competition watchdog over its planned takeover of Sky PLC (LON:SKY).
The proposals to help push the deal over the line include a commitment to maintain Sky News in Britain for at least five years and establish an independent board for the channel.
The Competition and Markets Authority last month said Fox’s US$15.7bn bid to buy the 61% of Sky it does not already own should be blocked on worries that Murdoch would hold too much influence over the news.
The CMA will present a final report to media secretary Matt Hancock by May 1. Hancock has said he will rule on the deal by June 14.
12.00pm: FTSE higher; BoE's Vlieghe sees UK rate rise as likely
The FTSE 100 rose 80 points to 7,171 in lunchtime trade with NMC Health PLC (LON:NMC) and Evraz PLC (LON:EVR) leading the charge.
The pound strengthened after Bank of England policymaker Gertjan Vlieghe said a further interest rate hike was likely if a strong global economy and labour market improvement continued to mitigate Brexit headwinds.
“A further rise in interest rates is likely to be appropriate if all those trends continue and we are on a trajectory. It wasn’t just one hike in November and then we take a very long break,” he said, according to Reuters.
His remarks come after the BoE last week said rates were likely to need to rise faster than previously expected as it tackles stubbornly high inflation.
Sterling increased 0.3% against the dollar to US$1.3873 and rose 0.1% versus the euro to €1,1302.
The prospect of higher interest rates saw shares in housebuilders fall, including Barratt Developments PLC (LON:BDEV) and Taylor Wimpey PLC (LON:TW).
Shares in miners Glencore PLC (LON:GLEN), Anglo American PLC (LON:AAL) and Rio Tinto PLC (LON:RIO) jumped as gold, silver and copper prices gained.
11.20am: More Carillion jobs saved
The Official Receiver said it has saved another 4,418 jobs at collapsed contractor Carillion PLC (LON:CLLN).
The saved jobs include staff at defence bases catering, cleaning services and prison facilities management.
Employment for 59 people working on paused construction projects could not be secured and will leave the business later this week, the receiver added.
“Those who have lost their jobs will be able to find support through Jobcentre Plus’ Rapid Response Service and are also entitled to make a claim for statutory redundancy payments,” a spokesperson for the receiver said.
Some 6,668 jobs have now been saved and 989 jobs lost after Carillion went into liquidation last month.
The receiver said the process to find new suppliers to deliver Carillion’s contracts continues.
“I am continuing to engage with staff, elected employee representatives and unions to keep them informed as these arrangements are confirmed,” the spokesperson said.
10.30am: Barclays and Lloyds gain as UBS retains 'buy' rating
Barclays PLC (LON:BARC) shares are up 1% to 194p despite saying the Serious Fraud Office has charged the bank with unlawful financial assistance in relation to a US$3bn loan it provided Qatari investors.
The loan was allegedly provided to Gulf investors after they injected cash into the bank’s emergency fundraising during the height of the financial crisis in 2008.
However, Barclays shares received a boost today after UBS repeated a ‘buy’ rating and lifted its target price to 225p from 220p.
In a note on UK banks ahead of full year earnings in February, UBS said it thinks Barclays and Lloyds Banking Group are “best positioned to outperform”.
“We particularly like Barclays asymmetrically skew to the upside given the significant discount at which the stock trades to book value and its European peers,” UBS said.
UBS left its rating on Lloyds at 'buy' with a 85p target price, saying it sees the bank's capital generation as undervalued. Shares in Lloyds rose 1% to 67p.
9.30am: Unilever threatens to pull ads from Facebook and Google
Unilever PLC (LON:ULVR) is threatening to pull its advertising from online platforms such as Google and Facebook if they fail to address content that promotes hate or is harmful to children.
Chief marketing officer, Keith Weed, will say in a speech later today at the annual Interactive Advertising Bureau conference in California that Unilever “needs its consumers to have trust in our brands”.
“As one of the largest advertisers in the world, we cannot have an environment where our consumers don’t trust what they see online," he will tell major advertising, media and technology companies.
"And we cannot continue to prop up a digital supply chain – one that delivers over a quarter of our advertising to our consumers – which at times is little better than a swamp in terms of its transparency.”
Tech companies are under rising pressure to crack down on fake news, online harassment, hate speech and content that creates division in society.
8.40am: FTSE reverses Friday's slide
The FTSE 100 rebounded from Friday’s sell-off with the miners leading the way.
As predicted, the index of blue-chip shares posted an 82-point rise to 7,174.23.
“Investors will be hoping that Monday’s early gains means the market has cauterized its wounds following last week’s bloodbath,” said Connor Campbell, of Spreadex.
“Of course, as proven time and again, these things can turn on a dime, and it is way, way too early to treat the day’s initial growth with anything but caution.”
Russian steel giant Evraz (LON:EVR) lead the early charge as it advanced 4.5%. It’s odd that rise should happen when the iron ore price decided to falter after a six month rally.
The major miners were bid up, pushing the FTSE 350 mining index 1.8% higher following a fall over the past month of almost 10%.
Among the tidders Scancell Holdings (LON:SCLP) was doing well early on with a 5% rise after its lead drug effectively received the thumbs up from researchers writing in a leading medical journal. This builds on the 30% advance seen in the past week.
Proactive news headlines:
Oracle Power PLC (LON:ORCP) has ticked off another requirement for the Thar thermal power station in Pakistan. The Private Power and Infrastructure Board has approved the issue of a Notice to Proceed (NOP) and Letter of Intent (LOI) to the company's sUBSidiary Thar Electricity (Private) Limited (TEPL).
Anglo Asian Mining PLC (LON:AAZ) has refinanced the majority of its existing debts with a new US$15 million facility at 7%. Anglo Asian’s debts are well supported by cash flow, and the announcement comes not long after the company projected that it would produce between 78,000 and 84,000 gold equivalent ounces from its mines in Azerbaijan this year.
88 Energy Ltd (LON:88E) has secured “a level of certainty” that it will receive A$6.75mln of additional capital funding in March, after entering into an underwriting agreement related to listed share options. There are around 340mln listed options which are exercisable at 2 Australian cents before a deadline of March 2 (current ASX price: 2.9 Australian cents).
Thor Mining PLC (LON:THR) has revealed that the Kapunda project in South Australia contains an inferred resource of 119,000 tonnes of copper contained. Thor is earning in to an effective 45% of Kapunda. The plan is to extract the copper using in-situ leaching.
Allergy Therapeutics PLC (LON:AGY) said results of its Phase II clinical trial are due to be published ahead of expectations early in the second-half following the completion of patient recruitment. The study of its PQ Grass immunotherapy, an aluminium-free, ultra-short course hay fever treatment, is designed to evaluate dose response and safety.
The cancer specialist Scancell Holdings PLC’s (LON:SCLP) said its lead drug has received a glowing write-up in a leading cancer journal as it released data from melanoma patients five years on from receiving the treatment. Immuno-therapy SCIB1, which is expected to progress into Phase II clinical trials in the second-half of the year, was the focus of a peer-reviewed paper in OncoImmunology.
Sound Energy PLC (LON:SOU) has secured a new eight-year petroleum agreement, giving it rights to the Sidi Moktar project area, onshore Morocco. The new project area, to be referred to as ‘Sidi Moktar Onshore’, covers a 4,499 square kilometres including the Sidi Moktar Nord, Sud and Ouest permit areas.
Echo Energy PLC (LON:ECHO) has revealed plans for its projects in Argentina where it will drill four new exploration wells this year.
Accesso Technology Group PLC (LON:ACSO), the ticket and queue management firm, has announced a five-year extension to its existing agreement with Cedar Fair Entertainment Company (NYSE:FUN), the US amusement park corporation.
Savannah Resources PLC (LON:SAV) is accelerating exploration at its Mina do Barroso lithium project in Portugal, following the intersection of good grades at NOA and Grandao deposits. Savannah already has an established resource based around results from the nearby Reservatorio deposit.
Canada-based copper miner Rambler Metals & Mining PLC (LON:RMM) (CVE:RAB) achieved record throughput at its Ming mine in Newfoundland in the last three months of 2017. Production for the year overall was also a record with the level of ore processed rising by 27% to 339,631 tonnes, which generated 3,968 tonnes of saleable copper and 3,357 ounces of gold.
Active Energy Group PLC (LON:AEG) has announced that its first commercial CoalSwitch™ plant in Utah, United States was officially opened on Friday 9 February 2018. The event consisted of an introduction to Active Energy, its Utah operations, management team and a demonstration of the reactors which can produce five tonnes per hour of finished CoalSwitch™ product. A video of the presentation has been uploaded to the company's website.
Falcon Oil & Gas Ltd. (AIM:FOG) (TSXV: FO) said it has been informed by Burlingame Asset Management, LLC that they now hold 48,772,302 common shares in Falcon, representing 5.24% of the company’s issued and outstanding shares.
Block Commodities Limited, formerly known as African Potash Limited (LON:AFPO) announced that it completed its change of name with effect from 8:00am today. The company said its new name reflects the strategy of the group to focus on the development of commodities ecosystems in Africa based on blockchain technology.
6.40am: FTSE slated for near 90-point rebound
The FTSE 100 is set to recoup Friday’s losses, taking its cue from Asia and a late rally on Wall Street after hours at the end of a turbulent week.
The index of blue-chip shares will jump 88 points at the open to 7,180.43, according to the spread betting companies.
Monday look set to be the calm after a storm on the equity markets that has raged for the last two weeks driven by fears interest rates will rise faster and further than first feared.
Worst fortnight in a decade for equity investors
“Even though US markets enjoyed a positive day on Friday the late rebound can’t disguise the fact that US, as well as global equities, have undergone their worst fortnight this decade,” said Michael Hewson of CMC Markets.
“For a market that has enjoyed steady gains and fairly low volatility over the course of the past two years the steepness of the falls speaks to a complacency that has been prevalent for a while now and which appears to have been shattered in the wake of a surge in volatility.
“How this plays out over the coming days depends on whether the rebound we saw on Friday can translate into some form of base for a continuation of the uptrend that has been in place for the last nine years.
“This may well depend on whether we see further increases in bond yields, or a rise in interest rate expectations from other central banks around the world.”
Worries over rising prices
Global worries over rising prices and interest rates means inflation reports from the US, UK and Germany will be closely scrutinised.
After a deluge of results and trading statements post-Christmas, it looks to be a relatively quiet week for corporate news with the bottler Coca Cola HBC (LON:CCH) and druggie Shire (LON:SHP) topping a threadbare schedule.
Around the Markets:
- The pound worth US$1.3858
- Brent crude US$59.85 a barrel, up 65 cents
- Gold worth US$1,3250 an ounce, US$9.80
City Headlines:
Financial Times
Unilever, the world’s second-biggest marketing spender, is threatening to pull its advertising from digital platforms such as Google and Facebook if they “create division”, foster hate or fail to protect children.
An error by the index provider S&P Dow Jones Indices led to unexpected losses for investors in a popular exchange-traded fund following the collapse of Carillion, the UK’s second-largest construction group.
Bridgewater investment chief sees new era of volatility: The world’s biggest hedge fund has warned that global markets are entering a new era of volatility as the world adjusts to higher interest rates after a decade of ultra-loose monetary policy.
Amgen, the world’s largest biotech company, has said it is “looking hard” for deals to deploy its US$27bn cash pile but warned it is struggling to find targets amid soaring valuations in the life sciences sector.
The chief executive of French oil company Total has urged Donald Trump to keep faith with the Iran nuclear deal and told the US President that oil and gas investment would help Iranian reformers in their struggle against hardliners in Tehran.
Didi Chuxing tests self-driving taxis on public roads
Times
Lloyds Banking Group could be set to deliver a heavy blow to Standard Life Aberdeen by announcing the withdrawal of £100bln of funds.
Greece has completed the benchmark sale of a seven-year bond, sending markets the strongest signal yet that the country may have turned a corner after years of fiscal retrenchment and international bailouts.
Chetwood Financial has received £50mln in the form of equity from Elliott Advisors, giving the fund a majority holding, with a further debt facility of up to £100mln available. Elliott is one of the best-known investors in the financial services sector.
Daily Telegraph
Toys R Us seeks £120mln lifeline as survival battle intensifies
Anger at BT Group plc’s failure to commit to a large-scale broadband network upgrade has triggered a new discussion of whether it should be forced to spin off its network sUBSidiary Openreach.
The Big Six energy suppliers will be forced to sacrifice thousands of customers who are stuck on poor value deals to an auction where rival suppliers can make a better offer.
Guardian
Tesco PLC ‘planning’ discount chain to take on Aldi and Lidl: Britain’s biggest supermarket group is understood to be working on a secret plan to develop a new discount grocery chain to take on cut-price chains Aldi and Lidl.
Fruit and vegetable farms across the U.K. were left short of thousands of migrant workers in 2017, leaving some produce to rot in the fields and farmers suffering big losses.
Daily Mail
Under-siege engineering firm GKN is set to reveal a turnaround plan this week as bosses try to fight off a hostile £7bn takeover. In a crucial appeal, the British company is expected to pledge huge cash returns in a bid to win over shareholders.
Ryanair boss Michael O’Leary could force British investors to sell their stock if UK fails to strike Brexit deal.
Pressure mounting on City watchdog to publish full findings on Royal Bank of Scotland’s toxic turnaround unit after fresh details leaked.
Investors braced for another week of turmoil as spectre of inflation rattles global stock markets.
Independent
Retail footfall slumped in January as inflation-pinched consumers remain cash conscious.
Daily Express
TopShop to be absent from London Fashion Week catwalk for the first time in a decade amid restructuring.
Bitcoin could reward its investors by hitting values of $25,000 (£18,069) by the end of the year and as much as $20,000 (£14,455) by the middle of 2018, the co-founder of a strategy and sector research company has claimed.