FTSE 100 down 40.51 points
Wall Street stocks recover but still in the red
US vs China trade tensions back in focus
Bitcoin & Ethereum prices rise
Eurozone inflation below market expectations
Service sector PMI disappoint
The FTSE 100 extended its losses, falling 40.51 or 0.54% to close Thursday at 7,502.69, whilst Wall Street didn’t fare any better, with key indices trading in the red.
In New York, the Dow Jones, was trading off lows, down 66 points at 23,851 after plunging by almost 394 points in late-morning trade.
The S&P 500 lost 8.34 points or 0.29% to 2,627.10 while the Nasdaq Composite eased 0.18% or down 12.67 to 7,086.99.
The DAX was also down 112.10, closing at 12,690.15 while the CAC 40 lost 27.56, ending at 5,501.66. The Stoxx Europe 600 index was down 0.73% at 384.62.
The pound was weaker against both the US dollar and the euro at 1.3567 and 1.1332 respectively.
Bitcoin rose 4.86% to trade at US$9,594.81 on Thursday, along with the other high profile digital currencies.
Ethereum shot up more rapidly, jumping 12.37% to US$767.33.
As the services sector PMI for April signalled the economy’s second weakest month of growth since the Brexit vote, there was a retreat in the value of the British pound (which had begun the day strongly).
While the Federal Reserve is signalling rising inflation, it was a different scenario in the EU, with April inflation in the eurozone coming in at 1.2%, down from the 1.3% posted in March and falling short of market expectations.
Surprise fall in Eurozone inflation poses challenge for central bankers https://t.co/pWXGvfL1pi via @WSJ
— Paul Hannon (@PaulHannon29) 3 May 2018
The price of Bitcoin advanced 1.43% or US$120 to trade at US$9,339 on Thursday, along with the other high profile digital currencies.
Ethereum shot up more rapidly, rising 8.54% or US$58 to trade above US$745.
At home, meanwhile, the polls are open for local elections and there are suggestions the results could be a source of new pressures for Theresa May’s government.
The bookies, at least, are anticipating a shake-up.
Smith & Nephew (LON:SN.) plunged 7.0% to close at 1,302.50p after the replacement hip maker downgraded its guidance.
3:30pm: FTSE 100 extends loss as Dow Jones slumps in early deals
The FTSE 100 extended its losses, falling 44 points or 0.59% to trade at 7,499, whilst Wall Street stocks opened lower.
In New York’s early deals, the Dow Jones gave up 296 points or 1.24% to 23,628.
The S&P 500 lost 20 points or 0.8% to 2,613 while the Nasdaq Composite lowered 47 points or 0.67% to 7,082.
Federal Reserve comments Wednesday that the US inflation was ticking higher, raising hopes for a faster pace of interest rate hikes than what had already been outlined.
On another front, eyes will be in Beijing, where both US and Chinese officials are holding talks on tariffs and trade issues.
Given the recent sharp exchanges and slapping of punitive trade tariffs, the market will be closely monitoring developments and any news that may come out of the meeting.
“Despite a lack of news surrounding the ongoing takes between the US and China, the various aggressions reported last night – including news that China has stopped by soybeans from the US, with the latter potentially set to impose restrictions on certain Chinese telecommunication companies selling equipment in America – have reignited fears of a trade war,” said Connor Campbell, analyst at online broker Spreadex.
“It’s clear that investors aren’t confident about the outcome of the day’s delegation get-together.”
3:00pm: Bitcoin and Ethereum digital currencies rally
The price of Bitcoin advanced 1.43% or US$120 to trade at US$9,339 on Thursday, along with the other high profile digital currencies.
Ethereum shot up more rapidly, rising 8.54% or US$58 to trade above US$745.
One analyst said the move was triggered by the passing of a key technical marker, and, as it provides a longer term validation of the cryptocurrencies potential.
“Bitcoin might be the king of the crypto world but those who understand the technology behind Ethereum, I don’t expect them to sell anytime soon. Most ICOs are built on the Ethereum protocol,” said Naeem Aslam, analyst at Think Markets.
“This means, running an ICO requires acquiring Ethereum first. Should the ICO trend continue, I predict initial coin offerings to take over traditional ways of fundraising and Ethereum to reach new dizzy highs.”
Aslam explained, however, that the Ethereum community needs to agree on controversial issues - including ether supply, lost fund recovery and the upcoming new mining hardware.
He added: “Currently at $716, Ethereum is trading at levels not seen since the beginning of March.
“While American regulators are trying to decide whether Ethereum is a commodity, a security or something else, I expect the sentiment to remain positive and the rally to continue all the way up to $1,000.”
2:15pm: FTSE 100 stays on back foot, Wall Street set to start lower
The FTSE 100 remained on the back-foot into Thursday afternoon, whilst Wall Street benchmarks are indicated for a weak start.
Changing hands at 7,533 the London index was down 16 points or 0.22%.
Over in New York, meanwhile, the Dow Jones futures pointed to a 90 drop at 23,736. At the same time, both the S&P 500 and Nasdaq are also expected to open lower.
1:00pm: FTSE 100 lowers on quieter, but political Thursday
By lunch, it was looking like a somewhat indifferent day in the market, attentions are at least partially on politics.
The FTSE 100 was down 17 points or 0.23% changing hands at 7,526.
Globally, the trade tensions between America and Russia has resurfaced - with telecommunications products in the crosshairs.
At home, meanwhile, the polls are open for local elections and there are suggestions the results could be a source of new pressures for Theresa May’s government.
The bookies, at least, are anticipating a shake-up.
Spreadbetting firm Sportingindex believes the Conservative party has a fight on its hands, and, makes Labour favourites to win a number of key councils in London.
It gives Jeremy Corbyn’s party a 51% chance of taking Wandsworth from the Tories, a 56% chance of taking control of Barnet, and it sees 53% chance of the Liberal Democrats turning Richmond yellow from blue.
Elsewhere, Betway has highlighted the targets on the back of a number of high profile MPs. It says Liam Fox has been well backed to be the next MP to follow Amber Rudd out the door, with the price narrowing to 8-1 down from 50-1 amid disagreement over Britain’s role in the customs union.
Despite the rush of money on to Fox, there’s still a three-way tie for the ‘next cabinet minister to resign’ with Boris Johnson, Chris Grayling and Sajid Javid all currently priced at 6-1.
Bets aside, today’s local elections will be the latest talking points and will no doubt be layered by Brexit commentary.
11:30am: FTSE 100 flip-flops as US vs China trade tensions resurface
The FTSE 100’s initial reaction to April’s services PMI was apparently short lived, as macro matters seem be coming to the forefront.
Changing hands at 7,536 the London index was down 6 points, meanwhile, the pound was up 0.15% at US$1.3596.
“Some potentially key data was effectively ignored this Thursday, as the markets instead traded tentatively in the shadow of the US-China trade talks.
“It appears that the pound has maybe become accustomed to the UK’s recent string of duff data; that, or investors feel at the moment it hasn’t got much more reason to fall lower, the currency exorcising most of its dovish demons ahead of next week’s Bank of England meeting.”
He added: “A lack of further misery for the pound meant the FTSE had no reason to erase its own losses, the UK index remaining stuck below 7550 after dipping 0.3%.”
10:00am: FTSE 100 turns positive as weak services data halts pound rally
The FTSE 100 turned positive in the wake of the latest economic statistics for the British economy, highlighted an awkward juxtaposition for UK based investors.
As the services sector PMI for April signalled the economy’s second weakest month of growth since the Brexit vote, there was a retreat in the value of the British pound (which had begun the day strongly).
In step, the FTSE 100 got back on the front foot.
Albeit it is a simplistic point of view, but, evidently bad news for the domestic economy tends to equal positivity for the London markets many dollar-earning multinational companies.
At around 10:00am, the FTSE 100 was up 5 points or 0.6% changing hands at 7,548.
9:45am: UK services sector PMI shows British economy in slow-lane
Britain’s services activity improved in April, lifting off a 20-month low in March, but, when it comes to the pace of growth the sector is described as being in the slow lane.
The monthly measure of UK Services Purchasing Managers Index (PMI) came in at 52.8 for April, which whilst marking an improvement from 51.7 March it was some way beneath some analyst forecasts for 53.5.
It comes after the preceding days’ measures for manufacturing and construction – the former, out Tuesday, was worse than expected, while, Wednesday’s construction measure was better than expected but still weak overall.
Chris Williamson, IHS Markit chief business economist, today, said: “The services survey adds to signs that the rate of economic growth remained disappointingly subdued at the start of the second quarter.”
“The three PMI surveys collectively showed only a muted rebound in business activity after being disrupted by heavy snowfall in March, failing to regain February’s pace of growth to suggest that the underlying performance of the economy has continued to deteriorate.”
Moreover, Williamson pointed out that the overall growth indicated by the three signals represented the second-weakest month since the 2016 Brexit vote.
It points to GDP growth of just 0.2% at the start of the second quarter, he added.
9:15am: FTSE 100 on back foot for first time this week, pound strengthens against dollar
For the first time in the days London’s FTSE 100 is lit in red across market screens, albeit the benchmark is only a few points lower.
At 7,540, the index of London’s biggest 100 shares was down 3 points or 0.4%.
It comes after America’s central bankers ended their two day policy meeting without delivering any major surprises, though the Federal Reserve’s statement came across somewhat less hawkish than some had anticipated.
At US$1.3623 the British pound was up 0.35% against the dollar on Thursday morning.
Relative weakness of the dollar against sterling has eased some sentiments to London’s big dollar earning multinationals (which had been nudged higher on dollar strength in recent sessions).
Donald Trump, meanwhile, reintroduced the possibility of a trade squabble into the minds of the market, with reports that the US President is planning to restrict certain Chinese telecommunications products in the United States.
Domestically, economic eyes will be on the services sector PMI reading for April which follows a worse-than-expected measure for manufacturing and a better-than-expected figure for construction.
It may, depending on the result, provide a further steer for currency markets which are evidently among the few steers to investor sentiment presently.
“Yesterday’s construction PMI rebound didn’t create long-lasting gains for the pound, with sterling instead wilting as the day went on,” said Connor Campbell, analyst at online broker Spreadex.
“Today’s services PMI reading could create a more substantial reaction, but only if it matches – or ideally surpasses – the 53.5 forecast by analysts, compared to the 51.7, post-Brexit low seen in March.”
8:50am: FTSE 100 stands pat; Smith & Nephew hit after downgrading guidance
The FTSE 100 opened almost unchanged on Wednesday’s close (it was down 3 points at 7,540.67) as traders picked through the entrails of the Federal Reserve’s statement overnight.
The general direction of travel is for gradually higher US interest rates. The nuance was around that the rather guarded language describing the world’s largest economy.
The big faller of the morning was Smith & Nephew (LON:SN.), which dropped 6.6% after the replacement hip maker downgraded its guidance.
After a disappointing trading statement on Wednesday, it was downgrade time for the insurer Direct Line (LON:DL.).
Its shares were down 2.2% after City heavyweight JP Morgan Cazenove reduced its recommendation on the stock to ‘neutral’ from ‘overweight’.
Ex-dividends skewed the index Kingfisher (LON:KGF), G4S, (LON:GFS), the London Stock Exchange (LON:LSE), Mondi (LON:MNDI) and Unilever (LON:ULVR) having closed their windows to shareholder pay-outs.
Proactive news headlines:
Hydrogen fuel cell specialist has AFC Energy plc (LON:AFC) has appointed Richard Dunkley as chief financial officer. Most recently, Dunkley was Interim Head of Finance - Business Partnering at Boots Contract Manufacturing UK.
Mkango Resources Ltd (LON:MKA) (CVE:MKA) said the initial phases of the feasibility study for the Songwe Hill rare earths deposit has started.
Highlands Natural Resources Plc (LON:HNR) has told investors that it has continued its ongoing spudding process for its programme of drilling at the East Denver project - it is setting surface casing for all six planned wells before starting any vertical drilling.
Junior explorer Erris Resources plc (LON:ERIS) has been awarded a licence for a new gold target in Sweden. Enåsen no.5 comprises 59.4 sq km in central Sweden that surrounds the Enasen gold mine, which produced between 1984 and 1991.
Midatech Pharma Plc (LON:MTPH (NASDAQ:MTP) has said it knows of no reason why its share price nearly doubled in value yesterday simply reiterating previously announced news that it is looking at non-dilutive financing options and on track to deliver all R&D programmes.
Medical imaging services specialist IXICO Plc (LON:IXI) is proposing to raise £5.5mln through a placing of shares at 28p a pop.
Live Company Group Plc (LON:LVCG) has launched a permanent hotel fixture BRICKLIVE Kid’s Club in The Westin Chosun Haevichi Resort in Guam, having signed a three year contract with South Korea’s Haevichi Hospitality Guam Inc.
ANGLE PLC (LON:AGL, OTCQX:ANPCY) said its co-marketing agreement with the US samples and assay technologies specialist QIAGEN (NYSE:QGEN) is “progressing well”. The pair are working on combining ANGLE's Parsortix liquid biopsy system to harvest circulating tumour cells in prostate cancer with QIAGEN's downstream AdnaTest gene expression analysis kit.
Symphony Environmental Technologies plc (LON:SYM) has launched a series of healthcare products, starting with latex examination gloves, made with its antimicrobial d2p technology. The AIM-listed environmentally friendly plastic maker said it was working with Health & Hygiene Ltd, a British company, and Biomax Rubber Industries of Malaysia through a collaboration agreement signed on 2 February 2018.
ECR Minerals PLC (LON:ECR) told investors that it has now completed drilling at the Bung Bong gold project in Central Victoria, Australia. The programme of work is part of a larger diamond drilling campaign which will span a number of the company’s gold projects in the region.
United Oil & Gas Plc (LON:UOG), in a statement after Wednesday’s close, told investors that it has extended the deadline for the company to complete its acquisition of a 10% stake in Corallian Energy’s interests in southern UK oil and gas assets. The AIM-quoted group’s option extends to 31 May.
TyraTech, Inc. (LON:TYR) (LON:TYRU), the life sciences company focussed on nature-derived insect and parasite control products, has announced the appointment of WH Ireland Limited as its sole broker with immediate effect.
Rose Petroleum (LON:ROSE), the AIM-quoted natural resources business, said its CEO Mathew Idien will be presenting at an investor evening hosted by Turner Pope Investments Ltd (TPI) to be held on Monday 14 May 2018, in London EC2 at 5.30pm. TPI is acting as placing agent in the £1m fundraise announced by Rose Petroleum on 2 May 2018.
6.40am: FTSE 100 expected to fall 32 points
The FTSE 100 is expected to start the session on the back foot following the US Federal Reserve meeting at which it kept interest rates pat, but reiterated its stance of gently increasing borrowing costs against backdrop of firming inflation.
The spread betting firms predict the index of blue-chip shares will lose around 32 points at the open to 7511.20, taking its cue from both Wall Street and Asia.
While the message from the Fed was as expected there was some nuance around it, according to Michael Hewson, analyst at CMC Markets.
'Not exactly effusive' on the economy
“[Its] outlook on the economy while positive wasn’t exactly effusive, if anything it was strangely ambivalent,” he explained.
“The removal of the reference to the strengthening of the economic outlook, while innocuous, may well suggest some latent concerns about a possible softening heading towards the end of the year.
“This may reflect some concern about a slowdown or be merely an attempt to inject a little bit of optionality into the market.
“This is never a bad thing, as it keeps the bank from backing itself into a corner, something the Bank of England would do well to learn.”
Back here in the UK, the corporate news flow looks a little slower than it has been in recent days with updates from miner Glencore, Trinity Mirror, the newspaper group, and replacement hip maker Smith & Nephew forming the pick of the crop.
Around the markets:
- Pound worth US$1.3576, up 0.18%
- Gold up US$4.10 an ounce at US$1,309.10
- Brent crude US$73.13 a barrel, down 23 cents
Business Headlines
- Financial Times
- Glencore, the miner and commodity trading house, expects to plug a capital shortfall at its joint venture in the Democratic Republic of Congo
- Goldman CEO pledges caution in consumer lending
- Volkswagen is set for a tetchy annual meeting on Thursday
- Bankrupt Weinstein Company sold to Lantern Capital
- Times
- Veteran investor Mark Mobius is to raise US$1bn for a new asset management firm based in London that will focus on India, China and Latin America
- Maplin creditors face £217mln wipeout
- Tesla has said that it will shut its electric car factories for ten days to address “bottlenecks”
- Telegraph
- Techies: Snap shares drop to new low as growth disappears; Spotify shares slip after disappointing on revenue
- Questor: Sainsbury’s takeover of Asda is full of risks, so sell the shares and buy Tesco instead
- Guardian
- Gold demand weakest since 2008