FTSE 100 made a late flurry on Wednesday, gaining ground, and finishing almost 57 points up at 7,689.
Wall Street shares were also powering ahead with the Dow Jones Industrial Average up 1.10%, or 268 points at the time of writing.
It came as nervousness over the Italian political situation eased somewhat in the wake of the successful government bond (debt) auction, which suggested demand was high..
Big oilers were the standout gainers von Footsie, with Royal Dutch Shell plc (LON:RDSA) the standout gainer, up 2.64%. BP (LON:BP.) was also higher, up 2.56% to 573.5p.
Elsewhere, security firm G4S (LON:GFS) was the biggest laggard, down 1.85% to 271.10p.
In the currency markets, the pound was 0.78% lower against the Euro, and up 0.15% against the US dollar.
3.30pm: FTSE 100 struggling to hold gains
Despite a firm start on Wall Street, UK blue-chips were struggling to hold on to gains entering the last hour of trading.
The FTSE 100 was up just 7 points at 7,641. Across the pond, the Dow Jones was up 120 at 24,481 and the S&P 500 was 15 points higher at 2,705.
The 0.1% rise on the FTSE 100 was mirrored on the FTSE 250, which was up 24 at 20,770, despite the mid-cap index having a few more stocks reacting to positive news flow than its bigger brother.
Mid-cap B&M European European Value Retail (LON:BME), the retail chain, was up 4.1% at 388.25p after it reported like-for-like sales growth of 4.7% in its UK estate in the 53 weeks to the end of March 2018.
At the other end of the FTSE 250 was bus and trains operator Go-Ahead Group PLC (LON:GOG) on the back of a downgrade by Liberum Capital Markets.
The shares shed just over a quid to 1,738p as Liberum moved to 'hold' from 'buy' even as it upped its price target to 1,890p from 1,810p.
READ Go-Ahead shares fall as Liberum Capital downgrades its rating to ‘hold’ from ‘buy’
“A 2019E dividend yield of 5.6% and equity FCF [free cash flow] yield of 8.4%, while still attractive, are no longer at the compelling levels of a few months ago with the shares having risen 20% over the past three months,” Liberum said.
Ahead of results tomorrow, sector peer Firstgroup PLC (LON:FGP) was down 1.9% at 111.9p.
1.30pm: FTSE 100 in consolidation mode ahead of Wall Street open
UK blue-chips remain moderately firmer ahead of the opening on Wall Street, where US stocks are expected to start on a positive note.
The FTSE 100 was up 22 at 7,654, with oil giants BP PLC (LON:BP.) and Royal Dutch Shell PLC (LON:RDSB) doing much of the heavy lifting as the price of crude continues to head north.
In the US, the S&P 500 was expected to rebound from yesterday's plunge and open at around 2,702, up 12 points from last night's close.
“We’ll get an early look at US employment in May today, with ADP releases its estimate ahead of the official jobs report on Friday. While this is typically not entirely reliable as an estimate of the non-farm payrolls figure, it could give us some insight into whether markets are well positioned or not. We’ll also get a revised GDP reading for the US for the second quarter, which is expected to be unchanged at 2.3% on an annualised basis,” said Craig Erlam at Oanda.
In the UK, the blue-chips are keeping a low profile in terms of corporate news flow leaving the field open to the mid-caps.
Bodycote PLC (LON:BOY), the provider of heat treatment and specialist thermal processing services, was the best performing FTSE 250 stock, rising 7% to 990p on an upbeat trading update.
“We have seen robust growth in the first four months of the year in spite of the foreign currency headwind. At this early stage, and notwithstanding the group's limited visibility, the board now expects full year revenue to be higher than previously expected and headline operating profit to be slightly ahead of current analysts' consensus,” the company said.
Among the small caps, Redx Pharma Plc (LON:REDX) was wanted, up 3.7% on news it will restart early-stage clinical trials on its cancer drug after discussion with the regulator.
The phase I/IIa assessment of RXC004 was halted in March amid concerns the initial dosing was too high.
11.30am: FTSE edges into positive territory
Miners and banks are slowing an attempted rally by the top-shares index.
The FTSE 100 was up 13 at 7,646 despite the likes of mining stocks Glencore PLC (LON:GLEN), Anglo American PLC (LON:AAL) and banking stocks Royal Bank of Scotland Group PLC (LON:RBS), Standard Chartered PLC (LON:STAN) and HSBC Holdings PLC (LON:HSBA) shedding around 1% or more.
The latter have been spooked by continued concerns over the political situation in Italy, which threatens to add further pressure on harmony within the European Union.
“Although Italy’s domestic political strife is still taking pole position in the markets the concerns seem to have eased slightly. The news flow does not particularly merit this but nevertheless the Italian market opened higher this morning, the euro rebounded and even the embattled Italian bonds are responding with lower yields,” noted Fiona Cincotta, a senior market analyst at City Index.
“The tensions in Italy have been rising for months as the country hasn’t been able to form a government since an election in March only for things to come to a head this week after the country’s president rejected the nomination of a eurosceptic. Instead, he asked former International Monetary Fund official Carlo Cottarelli to form a government but Cottarelli is now considering giving up the mandate, which would pave the way for elections before the end of July,” she suggested.
Advertising and marketing agency WPP PLC (LON:WPP) was also in the red, shedding 0.7% at 1,226p as its founder and erstwhile chief executive, Sir Martin Sorrell, confirmed he is not ready for the pipe and slippers just yet and is back in the saddle again with a new company that will reverse into cash shell Derriston Capital.
WPP owns Kantar, the market research group that today had some welcome if not altogether unexpected news for the supermarkets; the Royal Wedding proved good for business.
Sales at all UK grocers rose in the 12 weeks to May 20, prompting market makers to nudge up the quotes for J Sainsbury PLC (LON:SBRY) – up 0.9% - and Wm Morrison Supermarkets PLC (LON:MRW) – up 1%.
Morrisons launches a supersized fry-up for £6 https://t.co/pWvz294AbA
— Metro (@MetroUK) May 29, 2018
10.00am: Pause for breath after tumultuous Tuesday
The bulls and bears were engaged in a stand-off in early trading in London.
Concerns about the Italian political situation and what it might mean for the future of the European Union linger but on the other hand, some traders clearly believe there are bargains to be had after yesterday's shake-out.
The FTSE 100 was up 3 points at 7,635.
“The twists kept coming well into Tuesday evening underscoring the low chance of a break any time soon from market ructions,” commented Ken Odeluga at City Index.
“Unconfirmed local TV reports said the new PM designate Cottarelli might follow the lead of his predecessor a day earlier and throw in the towel, i.e., give up trying to form a government – even just a transitionary [sic] one – having just been handed a mandate by the head of state that morning. The talk fuelled panicky reactions in US shares, triggering a late spike in the VIX volatility index and a deepening rout in bank stocks,” Odeluga noted.
There is little corporate news flow among blue-chips to whet the appetite, save for the resignation of Ewen Stevenson, the chief financial officer of Royal Bank of Scotland Group PLC (LON:RBS) to “take up an opportunity elsewhere” - possibly an opportunity for a good night's sleep, given the travails the bank has suffered in Stevenson's time as chief bean counter.
RBS shares were down 0.65 at 278.3p, ahead of today's annual general meeting.
High street bellwether Marks and Spencer Group PLC (LON:MKS) was down 0.4% at 296.9p despite apparently keeping its place in the FTSE 100 in the next reshuffle.
‘Marks and Spencer looks like it’s avoided relegation from the FTSE 100 by the skin of its teeth. Reshuffles happen every three months though, so this is a stay of execution rather than a full pardon,” suggested Laith Khalaf, a senior analyst at wealth manager Hargreaves Lansdown.
“In a sign of the old economy giving way to the new, Ocado now looks set to gain promotion to the FTSE 100 in this reshuffle. A spate of licensing agreements has trumped up the share price in recent months, and shows that Ocado is well-versed in the art of the deal.
“Likewise gambling group GVC looks like it has nabbed a spot in the winner’s enclosure. The potential opening up of the US sports betting market has significantly cushioned the blow of the UK government’s clampdown on Fixed Odds Betting Terminals,” Khalaf said.
You can't keep a good man down, the adage goes, and whether that applies to Sir Martin Sorrell is open to dispute but there is no denying that the ex-WPP is bouncing back.
READ: Ex-WPP boss Martin Sorrell making stock market comeback weeks after leaving advertising giant
The fabulously wealthy septuagenarian clearly has no intention of taking things easy, judging by an announcement from cash shell Derriston Capital that it has reached agreement on the terms of a transaction to acquire S4 Capital Limited, a new company formed by Sorrell.
S4 Capital recently completed a £51mln equity fund-raising, of which Sorrell contributed £40mln, with the balance of the funds coming from institutional and other investors.
Sorrell has taken ~six weeks to launch WPP 2.0 after a very public resignation amid a storm of rumours.
I was meant to take a bin bag of clothes to the charity shop six weeks ago and they're still sat by the door. https://t.co/Ro5uQRjwpg
— Katie Deighton (@DollyDeighton) May 29, 2018
08.40am: A bit of calm after the storm
The FTSE 100 made a subdued start to the new trading day amid continued worries over the fall-out from the Italian elections.
The index of blue-chip shares fell 12 points to 7,620.50 on thin volumes.
While the financial stocks were hit hard in the sustained sell-off on Wall Street that followed through to impact Asia's main markets, here in the UK the sector was largely unaffected Wednesday.
Lloyds Banking Group (LON:LLOY), down 1.1%, was the one lone casualty.
"Bank stocks look exposed not only because of mark-to-market losses on assets and higher costs, but as the crisis in Italian politics forces a rethink of assumptions about central bank activity," said Neil Wilson of Markets.com.
An upbeat trading update from the metal basher Bodycote (LON:BOY) pushed the shares 7% higher in early trade.
Finally, a downgrade to 'neutral' by the heavyweight retail team at JP Morgan Cazenove appeared to have little impact on the progress of home furnishing group Dunelm (LON:DNLM), which was off less than 1%.
Proactive news headlines:
Landore Resources Limited (LON:LND) says its infill drill programme has discovered “widespread gold mineralisation” between the BAM East and BAM gold deposits at its Junior Lake property in Ontario.
Vast Resources PLC (LON:VAST) has updated investors of progress with the Baita Plai project where it plans to secure permissions to mine. The company has agreed to certain payments following meetings with the Ministry of Economy and Baita SA, the holder of the Baita Plai Head Licence, as it prepares to receive formal approval that would give Vast the right to mine.
Live Company Group PLC (LON:LVCG) has launched its BRICKLIVE Kids childcare crèche in China in the latest expansion of its BRICKLIVE brand.
Rare earths explorer Mkango Resources Ltd (LON:MKA) has boosted its cash holdings to US$8.5mln following the recent investments by Talaxis. Net losses for the quarter to March were US$1.16mln.
OptiBiotix Health PLC (LON:OPTI) said it has raised £1.5mln in an oversubscribed share placing – cash that will be used to capitalise on commercial opportunities for three key products. The company, which is developing advances that use the human microbiome to tackle obesity, high cholesterol and diabetes, is issuing the new stock at 62p, a modest discount to Tuesday's closing price.
Keywords Studios PLC (LON:KWS), the video games support services provider, has beefed up its art services offering with the acquisition of Fire Without Smoke Ltd for up to £5.2mln.
Kromek Group PLC (LON:KMK), a radiation detection technology company, has been awarded a new five-year contract renewal by an existing customer. The contract renewal is worth US$1.2mln over five years.
Redx Pharma PLC (LON:REDX) has confirmed it will restart early-stage clinical trials on its cancer drug after discussion with the regulator. The Phase I/IIa assessment of RXC004 was halted in March amid concerns the initial dosing was too high.
Cadogan Petroleum PLC (LON:CAD) told investors that it has successfully carried out a workover programme for the Blazh-Mon 3 well, which has now seen production double. The Blazh-Mon 3 well has flowed at a rate of 24 barrels of oil per day following the intervention.
Bezant Resources PLC (LON:BZT) is positioning its Mankayan copper project in the Philippines for the next upward leg in the commodity cycle, according to Peter Bird, executive chairman. The fundamentals for base metals are very encouraging and particularly for copper he believes, with global demand forecast to double by 2030.
Kore Potash PLC (LON:KP2) (ASX:KP2) has appointed Stuart Bradley Sampson as chief executive officer and director, effective from 4 June 2018. The company said Sampson, a mining engineer, has more than 25 years’ resources industry experience across numerous locations including West and Southern Africa.
Stratex International PLC (LON:STI) has appointed Bob Smeeton as its new chief financial officer. He replaces Perry Ashwood who is retiring after holding the position at the mining junior since 2005.
W Resources PLC (LON:WRES) has drawn down the second tranche of US$21.875mln from the term loan from funds managed by BlackRock, and issued warrants equal to 5% of the current fully diluted share capital.
Falcon Media House PLC (LON:FAL), the global digital media group, intends to delist its shares.
Mosman Oil And Gas Ltd (LON:MSMN) told investors that it expects GEM International Resources Inc (CVE:GI) will have its suspension lifted on the trading of its shares. The AIM-quoted junior oiler has a shareholding in GEM which has now completed financial reports and other corporate requirements necessary to resume its listing in Canada.
Alliance Pharma PLC (LON:APH), the specialty pharmaceutical company, announced that Thomas Casdagli has decided to step-down as a non-executive director of the company as of 30 May 2018 after nine years.
OPG Power Ventures PLC (LON:OPG), the developer and operator of power generation facilities in India, has advised that, effective from 29th May 2018, Ravi Gupta stepped down from his position as a non-executive director of the company, having served 10 years on the board.
6.45am: Italian concerns persist
Continued concerns over the political situation in Italy were expected to weigh on investors' minds this morning.
After tumbling 98 points yesterday to close at 7,633, the FTSE 100 was expected to open down 18 points at around 7,615 this morning.
The US, which like the UK, resumed trading yesterday after an extended weekend, saw the Dow Jones average give up 392 points at 24,361 and the S&P 500 plunge 31.5 points to 2,689.9.
This morning, Asian markets were equally concerned about the Italian political situation and what it means for the future of the European Union.
Heading into the close, the Nikkei 225 was 351 points lower at 22,008 in Tokyo while in Hong Kong the Hang Seng index was 420 points to the bad at 30,065.
“The interim Italian Prime Minister Carlos Cattarelli failing to present a finalised list of ministers to the Head of State Sergio Mattarella doesn’t bode well, nor does the warning from the Italian central bank chief that Italy could be on the brink of losing investors' trust, both moves that sent jitters through the markets,” commented Jasper Lawler at LCG.
“The heavy sell-offs on Wall Street spilled over into Asia overnight and is expected to land once again on the shores of Europe as trading begins on Wednesday. The FTSE MIB is set to extend its 2.6% losses from the previous session, putting it in line for a weekly loss so far of 4.6% and a monthly loss of almost 11%,” he added,
Banks have borne the brunt of the losses, which does not bode well for the annual general meeting of Royal Bank of Scotland Group PLC (LON:RBS), taking place today.
On the bright side, there is talk of the bank resuming dividend payments.
The state-owned lender is reportedly considering asking for permission to restart dividends after making progress in resolving legacy issues and returning to an annual profit for the first time in a decade.
The dividends could be as generous as that paid by Lloyds Banking Group PLC (LON:LLOY), a source told The Times. The group has been banned from paying dividends since its £45.5bn taxpayer bailout 10 years ago during the financial crisis.
Past misconduct has weighed on the bank’s shares and earnings, preventing RBS from resuming dividends, but in May the group made headway in putting its legacy issues behind it after agreeing a US$4.9bn settlement with the US Department of Justice to end an investigation into the sale of mortgage-backed securities.
RBS has also made progress in its turnaround plan, swinging to a profit of £752mln in 2017 after nine years of losses.
Significant events expected:
AGM: Royal Bank of Scotland Group PLC (LON:RBS)
Finals: B&M European Retail PLC (LON:BME), De La Rue PLC (LON:DLAR), LondonMetric Property PLC (LON:LMP), Telford Homes PLC (LON:TEF), Trans-Siberian Gold PLC (LON:TSG)
Interims: Nexus Infrastructure PLC (LON:NEXS), Oxford Metrics PLC (LON:OMG)
Economic data: US Q1 GDP second reading; US ADP employment report; US international trade on goods; US Federal Reserve Beige Book
Around the markets
- Sterling: US$1.3252, down 0.01 cents
- 10-year gilt: yielding 1.196%
- Gold: US$1,303.10 an ounce, down US$1.00
- Brent crude: US$75.15 a barrel, down 24 cents
- Bitcoin: US$7,503.01, up US$3.87
Business headlines
The Times
Police to treat gangs like terror suspects: Action on videos that incite violence
Journalist who criticised Putin is shot dead outside Kiev flat: A prominent Russian opposition journalist who fled his country last year after receiving threats, has been shot dead in the Ukrainian capital.
Italy bitterly divided over threat of ‘EU referendum’: As Italy’s new stop-gap prime minister struggled to form a cabinet yesterday, the country was bitterly divided by a political crisis that sent shudders through global markets and threatened to undermine the European Union.
Sorrell set to take on WPP with rival firm: Cash shell used for spectacular return to market
Dixons blames management failings as it issues profit warning
Investors take fright at Shire takeover
Daily Telegraph
Dixons Carphone boss points finger at predecessor as profit warning sends shares tumbling
Sorrell to return to London market with Derriston as comeback vehicle
Regus owner IWG rejects another takeover approach
M&S seeks to escape humiliation of FTSE 100 relegation
The Guardian
Italy at risk of new financial crisis in wake of coalition's collapse: Shares in New York and Asia fall sharply as investors and EU politicians take fright at strengthening mood against euro
White House to impose 25% tariff on $50bn worth of Chinese goods: Aggressive step in an effort to reduce $337bn US trade deficit
Government urged to use RBS majority stake to veto branch closures: Shadow chancellor accuses government of ‘dancing to the tune of the bank’s board’
Ocado set to join FTSE 100 elite in quarterly stock market reshuffle: Retailers fare badly in rejig though Marks & Spencer hangs on ‘by the skin of its teeth’
Bosses may be forced to pay £500,000 fines for nuisance calls: Directors could face financial penalty on top of fine directly imposed on company
Gambling website games based on fairy tales banned: Advertising body bans games featuring wolves and fairies ‘likely to appeal to children’