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FTSE 100 finishes lower as mining stocks retreat on Chinese tariff fears

Investors remain nervous over the prospect of an escalating trade war between the US and China but were somewhat placated by anaemic jobs growth in March in the US, which has made four rate rises this year less likely

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Trump, China and tariffs - an ongoing theme
  • FTSE 100 down around 16 at 7,183

  • US jobs report weaker than expected

  • Trade war rhetoric keeps investors in a nervous state

  • Mining stocks weak after Trump proposes more trade tariffs against China

London's top-shares index faded in the final furlong to close in the red.

The FTSE 100 closed at 7,183, down 16 points, weighed down by weak mining stocks.

“The calmer reaction to escalating trade tensions on Friday shows that investors have other things on their mind,” suggested Jasper Lawler at London Capital Group.

“A big miss on US jobs growth figures in March lessens the fear that interest rates will quickly rise to a level that makes the stock market unattractive. The negative reaction to more tariffs may have been muted because of anticipation over a testimony from Federal Reserve Chair Jerome Powell. Although the pace of wage gains picked up in March, one month’s data is unlikely to change Powell’s opinion that there is no discernible shift higher in earnings or inflation,” Lawler added.

2.40pm: FTSE 100 still in red

With less than two hours till the end of trading, the FTSE 100, despite some earlier glimmers, is still in negative territory.

European indices are all lower, while Wall Street shares look to be making a weak start.

FTSE 100 is off around five points at 7,194.

Global equity markets are fearful amid rising and continuing trade tensions between the US and China  - two economic powerhouses.

Marks & Spencer (LON:MKS) is still among the top five losers, while commodities giant Glencore plc (LON:GLEN) is top laggard, down 1.99% to 351.60p, joining other big diggers to go lower.

Anglo American plc (LON:AAL) lost 0.69% to 1, 633.80p which has also revealed that it has been fined US$38mln for pollution caused by the first of two leaks from an iron ore pipeline at its Minas Rio mine in Brazil last month.

1.45pm: US creates fewer jobs than expected

FTSE 100 was unmoved and still lower after the US job creation number came in below expectations.

The US created fewer jobs in March than had been expected but the latest non-farms report suggest the labor market across the Pond is healthy.

There were 103,000 new jobs created, while economists had expected a figure of 170,000 new nonfarm jobs.

The unemployment rate remained at 4.1%, a 17-year low, for the sixth straight month.

Average hourly pay ticked up, climbing 2.7% compared with a year earlier.

The government also said 326,000 new jobs were created in February instead of 313,000 in a revision of the numbers. But January's gain was reduced to 176,000 from 239,000.

 

Jacob Deppe, head of trading at Infinox,  noted the sharp drop in the dollar straight after the report.

"After such a buoyant week, there was only one way for the Greenback to go in response to such a big miss," he said.

"But the Dollar quickly recovered from its initial kneejerk fall, as the markets began to focus less on the disappointing headline number but rather on the uptick in wage rises.

"While wage inflation could be taken as a sign of the strength of the US economy, coupled with the slowing rate of job creation it’s also a strong hint of how tight the labour market is getting."

12.45pm: Rio Tinto shares down

Rio Tinto (LON:RIO), the copper giant,  saw shares plunge 2.03% to 3,571.5p on Friday as broker Exane BNP Paribas downgraded its stance to ‘neutral’ from ‘outperform’.

It repeated a 4,000p target price and said it now has a marginal preference for blue chip mining rival BHP Billiton plc (LON:BLT) at this point.

But BHP's shares were also lower on a day where uncertainty in macro economics hit big cap diggers.

Its shares dropped 1.77% to 1,385.2p.

FTSE 100 is down 12 at 7.186.

 

12.35pm: Facebook hoepital data plan on hold

Facebook (NASDAQ:FB.) can't seem to stop itself being in the public glare, perhaps appropriately given the group's basic sharing concept.

Now it has brought to a halt plans to collect patient data from hospitals and match it up with users' information as it works through its data scandal issues.

Meanwhile, European Commissioner Commissioner for Justice, Vera Jourova, will speak to Facebook's co-founder and chief executive Mark Zuckerberg next week, according to an EU spokesman, after the tech giant admitted that 2.7mln people in the EU may have had their data improperly shared with Cambridge Analytica.

12.20pm: Tanzania plans gemstone wall

Tanzania is planning to build a 24km wall to protect the country's heavy gemstone  endowment from thieves, according to reports.

It's the only place in the world that produces tanzanite - a blue, violet and burgundy mineral mined since the late 1960s.

The president of Tanzania, John Magafuli,  has orderd the building of the barrier, reports the BBC.

11.50am: US jobs in focus..

FTSE 100 was still stagnating ahead of the Wall Street re-start and the non-farm payroll numbers.

The UK premier benchmark was down  over ten points at 7,189 at the time of writing as traders shy away from stocks amid President Trump's latest talk on launching another tariff shot at China.

After a strong close on Thursday, US benchmarks are seen opening lower, with  Dow Jones futures down 149 points, the Nasdaq off over 33 points and the S&P 500  lower by 14.

The jobs report for March in the US is sure to open the debate on rate rise timings for this year.

In February, employers added a much bigger-than-expected 313,000 jobs Economists had forecast 200,000.

Today's report is expected to reveal 185,000 jobs were added last month (March) while the unemployment rate is forecast to fall to 4.0% from 4.1%. It will come after a robust ADP private sector report on Wednesday, while the initial jobless claims figure ticked up.

St Louis Fed chief James Bullard said earlier this week that the  Fed didn't have  to raise interest rates further, as monetary policy was close to "neutral".

"It is not necessary in this circumstance to raise the policy rate further in order to put downward pressure on inflation, since inflation is already below target," he had reportedly said.

Connor Campbell, analyst at Spreadex, summed up the lacklustre European trade of this morning ahead of the  New York bell:  "With the Dow Jones looking at a 170 point drop after the bell, however, the situation in Europe may become a bit more severe as US traders get more involved.

"In amidst all this tariff-talk comes the latest non-farm jobs report, a data set that may struggle to make itself heard above all the macro-chatter."

10.40am: UK productivity shows growth in second half last year

Britain showed robust productivity growth in the last three months of 2017, new figures showed.

It meant the second half of last year was the strongest six months in more than a decade.

Economic output per hour worked rose by 0.7% in the fourth quarter - above its long-run average though a shade less than first estimated in February.

But to put  a dampener on things, analysis showed that the capital's financial industry and several regional manufacturing industries accounted for a large chunk of the recent slowdown, ONS data showed.

 

The sectors made a considerably reduced contribution to productivity growth in the five years to 2016 than over the five years to 2007.

 

FTSE 100 is down nearly ten points at 7,189

10.30am - Sugar tax on soft drinks comes into force

UK consumers will now pay more for soft drinks as the new sugar tax comes in today.

The move, one of the government's anti-obesity measures, is aiming to balance out the impact of obesity on the health service.

"But whether or not the extra costs will be enough to deter those looking for sugar is not yet known. As well as the costs of drinks shooting up by around 8p a can and 18p a litre, prices will also rise in pubs and restaurants."

10am: FTSE 100 struggling still

FTSE 100 was still in the doldrums in early deals as it struggles to get to the 7,200 level with Marks & Spencer (LON:MKS) still top loser after the Citi downgrade.

Footsie is at 7,183 at the time of writing, down around 15 points.

Among stocks in focus was white goods retailer AO World plc (LON:AO), which said on Friday its start-up European business has reached inflection point and will improve from here.

The firm has been investing heavily to set up a European operation, which will mean another full-year loss this year to March though this will be in the middle of the expected range, said the statement.

"In order for AO World to be a blockbuster business it is going to have to produce the magic word beginning with ‘p’. Sadly for shareholders, it could take another two years before it hits the gold run and makes a profit at the group level, judging by analyst forecasts," said Russ Mould at AJ Bell.

Shares in AO  shed 0.52% to 114.20p in early deals.

On the winning front was broadcast software firm Pebble Beach Systems Group plc (LON:PEB), which shot up over 326% to 4.90p as it agreed new terms with its lender Santander UK.

The arrangements include a 'simplification' of its banking covenants, the firm said and involved the company securing until November 30, 2019 its current revolving credit and term loan facilities at 'competitive rates'.

AJ Bell has also noted that as stock market volatility ramped up last month and in February, it has pushed forecast dividend yields higher for FTSE 100 constituents (as their share prices have fallen.)

The FTSE 100 is now forecast to pay out a total of £87.5 billion in dividends this year, equating to a yield of 4.4%, it says.

But it adds that investors should be cautious because some of the highest forecast dividend yields in the FTSE 100 this year are starting to look questionably high.

Property group Persimmon (LON:PSN), for example, is at 9.35 forecast yield, Centrica plc (LON:CNA) is at 8.4%.

“The presence of three house builders in the top four highest yielders is testimony to the size of their capital return programmes, but it may also hint at investor scepticism that the industry can maintain its current lofty levels of profitability without the benefit of Government assistance, via the Help-to-Buy and Lifetime ISA schemes," notes Mould.

8.45am - FTSE 100 starts lower..

FTSE 100 started lower, as expected, as President Trump ramps up the China trade tariff talk.

The blue chip index is off around 19 points, or 0.27% at 7,180, with big cap miners bearing the brunt of losses.

Big cap utilities, typically seen as defensive stocks were higher though, with British Gas owner Centrica plc (LON:CNA), up 1.45% to 143.35p.  Severn Trent (LON:SVT)  was also up 0.54%.

The biggest laggard though was High Street bellwether Marks & Spencer (LON:MKS), down 2.63% to 266.80p after Citigroup downgraded shares to 'neutral' in an extensive look at the European retail sector. Next (LON:NEXT) was also cut to 'sell'. Shares dropped 1.85% to 4,731p.

Budget carrier easyJet (LON:EZJ) flew 0.30% lower to 1,636.5p as it reported a 3.4% increase in passenger numbers for March despite flight cancellations resulting from the so-called ‘Beast from the East’.

Proactive news headlines:

Echo Energy Plc (LON:ECHO) told investors that the rig has been mobilised for the planned three well programme at the Fracción D asset, onshore Argentina. The Quintana-01 rig is travelling around 250 kilometres by road to Fracción D and the mobilisation is expected to take 3 days.

Symphony Environmental Technologies plc (LON:SYM), a global specialist in products and technologies that "make plastic smarter", has announced the appojntment of Bob Wigley as a non-executive director with immediate effect, having acted as an adviser to the company over the last few years. Wigley is an experienced City professional having enjoyed a successful career in banking, latterly as chairman of Merrill Lynch for Europe, the Middle East & Africa.

88 Energy Limited (LON:88E, ASX:88E) has provided an update on its operations in Alaska, where it has both conventional and shale interests within the Project Icewine acreage. The company said that a 450 square kilometre 3D seismic exploration programme was completed on March 28, highlighting that the work was finished on schedule and within budget. It now expects processed data from the first areas will be available in June.

Appscatter Group PLC (LON:APPS) is to strengthen its app monitoring service with the acquisition of German firm Priori Data for £13.5mln. Berlin-based Priori runs an app data intelligence operation and combined with appscatter’s existing service will enable the performance of millions of apps and billions of devices to be analysed, said Philip Marcella, chief executive.

Range Resources Ltd (LON:RRL) (ASX:RRS) has said it does not consider its interest at the Perlak field in Indonesia to be ‘a material oil and gas project’, citing the ‘significance of its oil and gas assets in Trinidad’. The AIM and ASX-listed oil and gas explorer said based on its initial 23% indirect interest in the Indonesia-based Perlak project, the net forecast production is estimated at 46 barrels of oil per day (bopd) and net 1P reserves of 64,183 barrels.

Bacanora Minerals Ltd (LON:BCN) reckons it's on track to begin production from its Sonora lithium mine in Mexico in the first quarter of 2020 and expects construction to begin in the first half this year Design of both the roaster/kiln FEED (front end engineering design) and the crystalliser/evaporation/IX FEED has begun, the firm said in a broad update.

Lansdowne Oil & Gas Plc (LON:LOGP) has raised £900,000 through a share placing, giving it sufficient capital to cover its costs for the Barryroe project until the group’s Chinese farm-out deal completes. Some 69.2mln new shares are being sold at a price of 1.3p each. The placing investors will also receive share warrants, which will exercise at 1.3p also.

Eland Oil & Gas PLC (LON:ELND) has updated investors on its reserves based lending (RBL) facility which, following the success of the Opuama-8 well, now puts the company in a stronger financial position. A re-profiling of the Opuama field’s RBL, which is provided by Standard Chartered Bank, leaves the company with the same headline scope of US$35mln but the company notes that the borrowing base for the loan increases significantly to just over US$70mln, from US$40mln.

Sunrise Resources Plc (LON:SRES) said it was pleased to see the company, which bought its Junction copper-silver-gold project in Nevada, USA expand its footprint there. Sunrise holds an interest in VR Resources Ltd and says the latter's claim staking on the ground has increased nearly sevenfold since the project was sold.

Pembridge Resources PLC (LON:PERE) has announced the appointment of Paul Fenby as its chief financial officer with immediate effect. The mining-focused acquisition company noted that Fenby has over 25 years’ experience in natural resources, most recently as CFO at Asia Resource Minerals PLC, a UK-listed, Indonesia-focused coal mining company, with responsibility for both the London and Jakarta listed entities.

6.30am: FTSE 100 seen lower

FTSE 100 is called to start in the red as the shine comes off yesterday's rally amid more  US - Sino trade tensions.

After the strong US close Thursday, President Trump reportedly asked that another US$100bn of potential tariffs on Chinese goods be identified.

It comes after earlier in the week, China - the other largest economy in the world - unveiled plans for additional tariffs on 106 US products.

Stocks in Asia were mixed after the announcement, with the Shanghai Composite Index down over five points 3,131, while in Japan, the Nikkei 225 shed over 41 points at 21,604.

FTSE 100 closed Thursday up over 165 points at 7,199 but today spreadbetter IG index is calling the UK benchmark to start 39.5 points lower.

In macro focus today, and usually a stimulus for the market movers, are the US's non-farm payroll numbers.

Last month’s US non-farm payrolls report showed employers added a much bigger-than-expected 313,000 jobs in February. Economists had forecast 200,000.

Today's report is expected to reveal 185,000 jobs were added last month (March) while the unemployment rate is forecast to fall to 4.0% from 4.1%.

Economists anticipate average hourly earnings growth will accelerate to 2.7% year-on-year in March from 2.6% a month earlier and month-on-month growth will rise to 0.3% from 0.1%.

David Madden at CMC Markets noted this morning: "Earlier in the week, the ADP private sector employment report was strong, while the initial jobless claims figure ticked up.

"Traders remain undecided whether the Federal Reserve will hike interest rates two or three more times this year. For the time being, the Fed seem to be unfazed by the economic standoff with China, and they feel they should base their decisions on the economic data."

Significant announcements due:

Finals: Pacific Industrial & Logistics REIT (LON:PILR)

Trading statements: Motorpoint Group (LON:MOTR)

AGM: XP Power Ltd (LON:XPP)

Economic data: US non-farm payrolls report; US consumer credit numbers

Around the markets:

  • Sterling: US$1.3991, down 0.07%
  • Gold: US$1,328.10 an ounce, up 0.29%
  • Brent crude: US$63.12 a barrel, down 0.66%

City headlines

  • Housebuilders buy land for £1bn worth of homes at Ebbsfleet - The Telegraph
  • Facebook shares stage recovery after Zuckerberg says no 'meaningful' impact of data scandal - The Telegraph
  • New York Stock Exchange owner swoops up Chicago bourse -  The Telegraph
  • BP breaks century-long precedent as AGM heads to Manchester - The Telegraph
  • Diesel car sales fall almost 40% as UK buyers hit brakes
  • Pension contribution increases a 'harsh jolt' for millions - BBC
  • Trade dispute escalates as Trump threatens $100 billion more in China tariffs - Reuters
  • U.S. says AT&T wants Time Warner deal to save pay-TV 'cash cow' - Reuters
  • Hong Kong fund says Toshiba chip unit worth more than 3.3 trillion yen - Reuters
  • Samsung Electronics to maintain stake in Samsung Heavy after rights issue - Reuters
  • Anglo American fined $38m over pollution from Brazil iron ore leak -  The Times

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