FTSE 100 closes 12 points higher
Wall Street stocks down
UK unemployment lowest since 1975
easyJet flies high after result, Vodafone hit by CEO succession plan
FTSE 100 closed the day up as Wall Street flagged and UK listed big miners took a hit.
The UK blue-chip index added 12 points to stand at 7,722 as gains were tempered by some profit-taking.
David Madden, at CMC Markets, said: "In the past two months European markets have enjoyed a positive run, but traders are now looking for an incentive to stay long."
The analyst added: "London-listed commodity stocks like Glencore, BHP Billiton, Rio Tinto and Anglo American are lower today after China released some mixed economic data overnight.
"Growth in the world’s second-largest economy is cooling, and dealers are worried China’s demand for natural resources will wane."
Glencore (LON:GLEN) shares shed 1.68% to 378.75p, while BHP Billiton plc (LON:BLT) lost 0.51% to 1,712.20p.
FTSE 250 was also lower, falling around 16 points to 20,784, while in the US, at the time of writing, the S&P 500 was down around 16 points at 2,711 and the Dow Jones lost over 205 points at 24,693.
On Footsie, top laggard was Vodafone (LON:VOD), which plunged 4.26% to 198.38p as it revealed that chief executive Vittorio Colao will step down in October after ten years in charge, to be replaced by chief financial officer Nick Read.
3.20pm: US stocks in negative territory
US stocks are sitting lower in early trading as investors digest the latest data on retail sales.
The Dow Jones Industrial Average fell 200 points to 24,697, the S&P 500 declined 21 points to 2,708 and the Nasdaq dropped to 7,335.
US retail sales rose 0.3% in April after increasing 0.8% the previous month, the Commerce Department revealed.
The US dollar rose to a new five-day high against a handful of currencies following the data.
A separate report from the New York Fed revealed business confidence increase in May. The Empire State manufacturing index rose to reading of 20.1 from 15.8 in April.
“Encouraging data on U.S. consumers and businesses suggest that GDP growth is on pace for a rebound in Q2 after a shaky and quirky Q1,” said Berenberg.
Meanwhile, homebuilder confidence was also higher in May. The National Association of Home Builders/Wells Fargo housing market index edged up two points to 70.
2.20pm: Footsie wobbles
The FTSE 100 index retreated from earlier highs in afternoon trading with US stock futures expected to start lower after a rise in US retail data cemented expectations for another interest hike by the Federal Reserve.
Around 2.20pm, the UK blue-chip index was up 4.7 points at 7,715, well below the session peak of 7,752.02.
US retail sales climbed 0.3% in April for the third month in a row, matching expectations, after a 0.8% gain in March, the US Commerce Department said. Americans increased their spending on clothes in April, with home-furnishing stores, internet retailers and department stores also reporting increase in sales.
1.00pm: Wickes cuts 100 jobs at its head office
DIY retailer Wickes, owned by Travis Perkins (LON:TPK), said it will cut 100 jobs at its head office in Watford, Hertfordshire, as part of a cost-cutting drive.
Last month Travis Perkins posted a 3% increase in like-for-like sales in the first quarter, driven by a 19.7% jump in in the plumbing and heating division, despite the impact of poor weather conditions in February and March and weakness in the UK DIY market.
Taylor Wimpey is the biggest riser, up 3.5% as the housebuilder said it plans to increase its dividend in 2019 to 7.5% up from 5% in 2017.
easyJet is up 2.7% following it better than expected first half results.
'Wage growth has now overtaken the rate of inflation', says analyst
“It’s a good day for consumers as today’s ONS figures show that those in work have seen their first real pay increase in more than a year as wages grew at their fastest rate since 2015, in the first quarter of this year. Wage growth has now overtaken the rate of inflation and the return of real purchasing power will be welcome news for consumers,“ said Kate Smith, head of pensions at Aegon.
“Today’s news doesn’t however guarantee the much awaited interest rate rise and consumers should adapt spending and savings habits appropriately. Setting aside an increased amount of wages into savings will pay off in the long run, despite the flagging economic backdrop."
Thomson Reuters to move forex derivative trading to Dublin due to Brexit
Thomson Reuters is planning to move its foreign exchange derivative trading to Dublin from London due to Brexit and has applied to the Irish central bank for a licence.
It will be used to cover Thomson’s derivatives business – the largest in Europe, which trades more than US$300bn a day, the Financial Times reports.
11.00am: Pound unimpressed by the employment figures
“Sterling was distinctly unimpressed by the employment figures this morning, looking through stronger headline figures to focus on a real wage figure that was unchanged compared to a year earlier, showing that there is still little real upward momentum in workers’ pay packets,” said Chris Beauchamp, chief market analyst at IG.
“This dreary news will only add to the impression that there is no rate hike coming from the Bank of England for the foreseeable future. Still, the weakness in sterling has been good for a few points on the FTSE 100, which continues to tiptoe closer to its previous record high, having shrugged off the weakness of the past few months in impressive form,“ he concluded.
10.00am: UK unemployment lowest since 1975
UK unemployment in the three months to March reached the lowest point since 1975, according to data from the Office for National Statistics.
There were 32.34mln people in work, 197,000 more than the period from October to December 2017 and 396,000 more than for a year earlier.
There were 1.42mln unemployed people, 46,000 fewer than for October to December 2017 and 116,000 fewer than for a year earlier.
The unemployment rate was 4.2%, down from 4.6% for a year earlier.
Latest estimates show that average weekly earnings for employees in Britain in nominal terms increased by 2.9% excluding bonuses, and by 2.6% including bonuses, compared to a year earlier.
Commenting on today’s wage growth figures, Tom Stevenson, investment director for personal investing at Fidelity International, said: “British workers are feeling marginally better off after wages grew in real terms for the second month on a trot.”
“It has long been suggested that wage growth has been the missing piece of the puzzle in Britain’s long, slow recovery from the financial crisis. It should be the key to unlocking a return to monetary normality.”
“But just as this piece has fallen into place, another has fallen down the back of the sofa - economic growth. UK GDP growth slowed markedly in the first quarter of 2018 and, last week, the Bank of England trimmed its growth forecast for the year as a whole.”
8.40am: FTSE 100 edges lower ahead of jobs and wages data
The FTSE 100 got off to a slow start, receding 16 points to 7,694.79 with UK traders taking their cue from Asia, where equity markets were largely lower, rather than Wall Street.
The early movements were muted as the professionals opted to keep their powder dry ahead of UK employment numbers out later this morning.
The percentage out of work is expected to remain at a 40-year low of just over 4%; however, wage data will be more keenly assessed.
Analysts reckon basic pay growth rose to 2.9% in the first three months of this year - up from 2.8%.
The top riser was easyJet (LON:EZJ), which flew 3.5% higher in the vapour trails of its interim results statement which brought with it an optimistic assessment of prospects.
Yet not everyone in the market is convinced the budget carrier can maintain this altitude, with City broker Liberum repeating its 'sell' recommendation on the stock.
"Management’s guidance implies a material uplift to consensus earnings, but in our view this is already at least partially priced in," said analyst Gerald Khoo in a note to clients.
"We believe the market is focusing excessively on short-term earnings momentum rather than fundamentals, and that easyJet's challenges are not reflected in its rating."
The exit of Vittorio Colao, Vodafone's (LON:VODA) chief executive for the last 10 years, didn't go down well in the Square Mile as the shares fell 3%.
Proactive news headlines:
Tech recruiter Harvey Nash PLC (LON:HVN) has acquired eMenka, a Belgium-based Microsoft specialist. Based near Antwerp, eMenka focuses on placing Microsoft specialists both in full-time employee and independent contractor roles.
Symphony Environmental Technologies PLC (LON:SYM) has upped its marketing expenditure ahead of an expected increase in orders for 2018. The AIM-listed plastics manufacturer reported in a trading update that revenues had increased 17% in the first four months of the year when compared to the same period a year ago.
Genedrive PLC (LON:GDR) is set to pocket up to £1.9mln in cash through the sale of its contract research and pharmacogenomics divisions.
Frontier IP Group PLC (LON:FIPP) has announced that Palintest Ltd, a sUBSidiary of FTSE 100 group Halma PLC (LON:HLMA), is launching Siren BW, a water testing kit developed by a portfolio company Molendotech Ltd, a spin-out from the University of Plymouth. The AIM-listed intellectual property firm said it is the first commercial application for Molendotech’s novel test able to identify the concentration of faecal bacteria in water.
APQ Global PLC (LON:APQ), an investment company focused on emerging markets, has set up an innovative new network aimed at harnessing the potential of up and coming businesses in its spheres of interest. "The partner companies represent an additional growth opportunity for APQ Global, which has the right of first refusal to participate in any of their future capital raises," it said.
Mobile app distribution platform AppScatter Group PLC (LON:APPS) has launched a scanning service to highlight security weaknesses and to comply with GDPR regulations. The service enables appScatter platform users to address any potential security issues during their app maintenance programme. Existing and new customers can use the service for an additional sUBScription fee.
Higher commodity prices helped royalty company Anglo Pacific Group PLC (LON:APF) get off to a solid start in 2018. Royalty income from the Kestrel coal mine and other projects totalled £7.9mln in the opening three months of the year, in line with the £8.2mln generated in the same period of 2017, which was a record year for the company.
United Oil & Gas PLC (LON:UOG) today highlighted that partner Corallian Energy has now has an agreement for a rig for the upcoming Colter well, off England’s south coast. A letter of intent has been signed with Ensco UK which, subject to approvals, sees drilling taking place during the third and/or fourth quarters of this year.
Union Jack Oil PLC (LON:UJO) has acquired a stake in two potential UK shale projects, with a minimal upfront investment. The company and its investment partner Humber Oil & Gas Limited have agreed to each acquire 16.25% in the PEDL201 licence, in the ‘Widmerpool Gulf’, as well as 12.5% stake in the PEDL181 asset in the Humber basin.
Falcon Oil & Gas Ltd’s (LON:FOG) partner at the Beetaloo basin shale gas project in Australia’s Northern Territory has identified four additional potential plays. At an oil and gas conference in Adelaide, Origin Energy said initial indications are that each of them is a “material multi-TCF” [trillion cubic feet] play.
“For us, this is a big game-changer,” says Nick von Schirnding of Arc Minerals Ltd (LON:ARCM). Arc has just moved to acquire an additional 35% of Zamsort Ltd, a company that controls the Kalaba copper-cobalt project in Zambia. Combined with a convertible loan note for 5% more, that takes Arc’s total holding to 54%, and it could go higher if further purchases took place.
KEFI Minerals PLC (LON:KEFI) has been in communication with all Ethiopian government offices dealing with the Tulu Kapi Gold Project in the Federal and Oromia Regional Governments to welcome new appointments of state ministers.
Base Resources Limited (LON:BSE) has appointed partners to deliver the pre-feasibility study (PFS) for its Toliara mineral sands project in the south-west of Madagascar. The AIM-listed miner said it had appointed Mineral Technologies and Lycopodium, which had strategically aligned to bring their project delivery skills to support the delivery of the PFS, having previously undertaken studies and projects in mineral sands, including previous work on the Toliara project.
6.45am: Retreat expected to continue
UK equities were expected to resume yesterday's retreat ahead of the release of jobs data.
After falling 14 points yesterday to close at 7,711, the FTSE 100 was expected to open at around 7,692.
US markets closed firmer yesterday, albeit off their best levels. The Dow Jones average climbed 68 points to finish at 24,899 and the S&P 500 rose 2.4 to finish the session at 2,730.
Heading into the close, most Asian markets were lower. In Tokyo, the Nikkei 225 was 24 points in the hole at 22,841 while in Hong Kong, the Hang Seng index was off 290 points at 31,251
In the UK, the jobs numbers are out with employment set to continue tracking an upward trend, according to Daiwa Capital Markets, “with the headline three-month growth rate likely to have risen close to 100k from 54k 3M/3M in February”.
“Nevertheless, the three-month unemployment rate is likely to have remained unchanged at 4.2%, although there is some risk of a lower reading. With regard to the all-important rate of pay growth, we expect that the picture was fairly stable in the latest month - regular wage growth seems likely to have remained unchanged, at 2.8% 3M/Y, but total wage growth might edge lower from the same rate,” it added.
On the corporate news front, updates are expected from big names such as Vodafone, Land Securities, easyJet and Hargreaves Lansdown.
It should be a strong set of figures from no-frills airline easyJet as it has already reported increased numbers of passengers for the last three months.
UBS expects easyJet’s first-half sales to come in at £2.13mln, up from £1.83 a year earlier, with fare growth of roughly 9% and traffic growth of around 7%.
The Swiss bank also expects the airline’s pre-tax loss to narrow to £113mln, down from £212mln a year earlier.
Mobile phone networks operator Vodafone will release full-year results, to top its recently announced blockbuster deal with Liberty Global.
Vodafone revealed that it is to become Europe’s biggest quad-play (mobile, home phone, pay-TV and internet) operator after acquiring operations in four countries from the US cable giant.
Third quarter revenue trends did little to enthuse investors but Numis Securities thinks the market’s reaction was over the top.
It is forecasting full-year underlying earnings (EBITDA) of €14.75bn, earnings per share of 11.82 cents and a dividend of 15.1 cents. Free cash flow has been estimated at €3.80bn.
Given the fact the company has just splashed out on a big acquisition, investors might take a closer interest than usual in free cash flow and gearing, not to mention the dividend.
Significant announcements expected on Tuesday 15 May:
Interims: easyJet PLC (LON:EZJ), CYBG PLC (LON:CYBG), Elegant Hotels Group PLC (LON:EHG), Ei Group PLC (LON:EIG), ITE Group PLC (LON:ITE), Patisserie Holdings PLC (LON:CAKE), Ten Lifestyle Group PLC (LON:TENG)
Finals: Vodafone PLC (LON:VOD), Land Securities PLC (LON:LAND), DCC Plc (LON:DCC), Premier Foods PLC (LON:PFD), BTG PLC (LON:BTG), Animalcare Group PLC (LON:ANCR), Braemar Shipping Services PLC (LON:BMS), Gear4music Holdings PLC (LON:G4M), Sprue Aegis PLC (LON:SPRP)
Trading update: Hargreaves Lansdown PLC (LON:HL.), Spirax-Sarco PLC (LON:SPX)
Economic data: US retail sales; US housing market index; US business inventories; US Empire State manufacturing index
Around the markets:
- Sterling: US$1.3549, down 0.07 cents
- 10-year gilt: yielding 1.474%
- Gold: US$1,311.60 an ounce, down US$6.60
- Brent crude: US$78.29 a barrel, up 6 cents
- Bitcoin: US$8,737.66, down US$104.56
City headlines:
The Times
- Bookies hit jackpot as US lifts ban on sport betting: More than £1.5 billion was added to the value of British bookmaking firms yesterday after the US Supreme Court issued a judgement that could lead to sports betting being legalised across America.
- City on alert after officials sound out brokers on RBS share sale: Officials charged with managing the taxpayer’s stake in Royal Bank of Scotland have begun contacting City brokers to gauge interest in a potential share sale
- Investors turn up heat on Centrica chiefs: Management at Centrica came under fire at the company’s annual meeting yesterday as frustrated shareholders demanded answers about the collapse of the British Gas owner’s share price.
- Trump vow on Chinese phone company eases trade tensions: A pledge by President Trump to save 75,000 jobs at a Chinese mobile phone company that has been crushed by US penalties has eased concerns about a trade war between the world’s two largest economies.
- Theresa May hits wall over EU customs deal as she admits both her current options are unworkable
- FirstGroup under attack as activist demands sale over 'chronic' under-performance
- Mothercare set to accelerate store closures in overhaul bid
- Elon Musk restructures Tesla to iron out Model 3 production bottlenecks
- British companies may be banned from European satellite programme in Brexit row
- UK bookmaker values rise by over £1.5bn as sports betting to be legal in US: Paddy Power Betfair, 888 and William Hill enjoy gains after US supreme court ruling
- UK-based sport streaming service adopts Netflix model after US$1bn deal: DAZN aims to revolutionise US pay-per-view boxing after link-up with promoter Eddie Hearn
- Npower owner warns staff they will be first to be cut in E.ON deal: Innogy has said E.ON workers are likely to be get priority as 5,000 roles are axed after asset swap
- WPP chairman faces investor revolt over unpublished Martin Sorrell report: Roberto Quarta should be ousted for handling of chief executive’s exit, says Glass Lewis