FTSE 100 closes in the red as Trump's tariffs spook investors

Tariffs are to be imposed on steel and aloooooooooomin'm imported from Canada, Mexico and the European Union.

Steel being forged
Donald Trump is the 45th US president

FTSE 100 closed in the red on Thursday as the Dow Jones Industrial Average slumped as president Donald Trump confirmed the US will impose tariffs on steel and aluminium from the EU, Mexico and Canada.

The UK's top share index finished down around 11 points at 7,678.

On Wall Street, the Dow Jones is 227 points lower at 24,440, while the S&P 500 is up over 22 points.

"The confirmation from the White House that levies will be imposed on aluminium and steel from Canada, Mexico and the EU has hurt US indices. Protectionist policies have a history of damaging economies, and investors fear a backlash from the respective countries," noted David Madden, analyst at CMC Markets.

The levies will kick in at midnight tonight, and the announcement also sent European indices lower. The German DAX lost 178 points, while France's CAC 40 shed almost 29 points.

The biggest loser on Footsie was Taylor Wimpey (LON:TW.), whose shares shed 5.49% to 190.15p as it went ex-dividend today.

Marks & Spencer Group (LON:MKS) was also lower, down 4.54% to 284p, for the same reason.

Oddly, bearing in mind Trump's move, steel producer Evraz plc (LON:EVR) was the top gainer, up 5.78% to 510.80p.

4pm: Footsie heads lower

US markets turned lower after the US pulled the trigger on import tariffs on steel and aluminium, taking some of the wind out of the sails of the FTSE 100.

The Footsie was up 16 at 7,706, keeping its head above the 7,700 level but 21 points below its highest level of the day.

The tariffs of 25% on steel imports and 10% on aluminium were announced in March by president Trump and apply to imports from Canada, Mexico and the European Union.

As political opponents of Trump have been quick to point out, all three are close allies of the USA. Some observers are also suggesting that German car makers will be the next in Trump’s sights.

Ironically, steel producer Evraz plc (LON:EVR) is the top riser among FTSE 100 constituents, up 4.5% at 504.8p.

Among the mid-caps, the Bank of Georgia – or Bgeo Group PLC (LON:BGEO), if you prefer – was wanted after revealing it had been recognised as the Best Sub-Custodian Bank in Georgia 2018 by Global Finance.

It’s not an accolade that is likely to set a Hollywood scriptwriter’s pulses racing but nevertheless, the shares rose 2.6% to 1,879.6p on the news.

In contrast, fellow FTSE 250 constituent, Card Factory PLC (LON:CARD), was having a bad day shedding 13.8p at 204.6p after a fiscal first quarter trading update.

First quarter like-for-like (LFL) sales growth of -0.4% was below the historic target range of 1-3%, according to Liberum Capital Markets.

“LFL sales growth was positive, however, on the key seasons in the lead up to Mother's Day and Valentine's Day. The drag has been from every-day card sales, which have underperformed. Management have been working on re-designing these over the past weeks and note that there have been improvements. There is nothing in terms of the margin mix that management has not expected,” the broker said.

1.45pm: FTSE 100 puts on a bit of a spurt ahead of Wall Street open

With the S&P 500 set to open a couple of points higher across the pond, the UK’s blue-chips index has put on a bit of a spurt.

The FTSE 100 was up 34 at 7,724 as investors come round to the point of view that any Italian government is better than another snap election.

“Not too long ago, a coalition government in Italy consisting of two eurosceptic populist parties was a feared and unlikely prospect that many believed would majorly concern investors. While much of this remains true, it is also currently viewed as the least unattractive and feasible outcome for markets, with the other alternative being fresh elections and the possibility that the parties are given an even stronger and potentially less euro-friendly mandate,” suggested Craig Erlam at trading platform operator, Oanda.

Shares in London were also given a lift by the latest UK consumer confidence survey by Gfk.

The May reading may have been negative at -7 but that was better than the -8 level economists had expected and was up from April’s -9; indeed, the index is at its highest level in a year.

“The details showed some improvement in the consumers assessment of their personal financial situation and the economic outlook,” noted Daiwa Capital Markets.

“Meanwhile, the climate for making major purchases worsened slightly. Some respondents suggested that special factors such as good weather and the Royal Wedding had a positive effect on high street activity; however, the effect might be temporary, not least given that real wage growth remains very low,” Daiwa said.

Away from the blue-chips, satellite broadband specialist Avanti Communications PLC (LON:AVN) was flying high after its fiscal third quarter trading update.

The shares climbed 18% to 6.48p after the debt-laden company said it continues to pursue “multiple lines of funding to complement the restructuring which the board expects to conclude positively in the short to medium term”.

HYLAS 4, the satellite launched last month, was said to be “in excellent health” and will move to its operational position in July.

11.45am: FTSE 100 back below 7,700

The FTSE 100’s early gains were ebbing away as the morning trading session drew to a close and the index had dipped back below 7,700.

The top-shares index was up 9 at 7,699.

Taylor Wimpey PLC (LON:TW.) was the biggest faller among FTSE 100 constituents as it went ex-dividend today.

Sentiment will not have been helped by the latest housing and mortgage data.

“A double whammy of weak news on the UK housing market with the Bank of England reporting that mortgage approvals for house purchases dipped further to a 2018-low in April while the Nationwide reported that house prices fell 0.2% month-on-month in May, which was the third drop in four months,” noted the EY ITEM Club.

“Not only were mortgage approvals for house purchases at a 2018-low in April but they were at the second lowest level (after December 2017) since August 2016,” the forecasting unit added.

“The further dip in mortgage approvals in April – albeit slight – looks particularly disappointing given housing market activity had likely been adversely affected in March by the severe weather," said Howard Archer, the chief economic advisor to the EY ITEM Club.

“April’s mortgage performance indicates that housing market activity remains muted as it [is] pressurized by still limited consumer purchasing power, fragile confidence and likely further gradual Bank of England interest rate rises following November’s first hike since 2007. There seems little evidence that the cutting of stamp duty for first-time buyers in the late-November’s budget has yet provided a noticeable boost to housing market activity,” Archer added.

Meanwhile, traders continue to keep an eye on developments in Italy.

“We have been underweight European equities for some time and plan on remaining so. Recent worries have left many European markets looking cheaper, but we think they are cheaper for a reason,” declared Richard Stammers, an investment strategist at European Wealth Group.

“The reason is that there is still a lot of embedded risk in European assets – we have yet to find out if it is a ‘house of cards’ propped up by the European Central Bank’s vast asset purchasing programme. When the programme stops, what happens next? Throw into the mix the political worries and it all looks a bit troubling. We would need to see valuations even cheaper before we were willing to add to our clients’ positions,” he stated.

11.00am: FTSE 100 in consolidation mode

After a bright opening, the FTSE 100 was trading sideways, ahead of tomorrow’s release of the market-moving US unemployment figures.

The FTSE 100 was up 19 at 7,709, bolstered by a positive response to the results from the platinum refiner, Johnson Matthey PLC (LON:JMAT).

“Chemicals and precious metals group Johnson Matthey this morning reported a 7% rise in underlying full-year sales at constant exchange rates to £3.8bn, which was slightly ahead of expectations. Pre-tax profit dropped 1% to £486m but the dividend was raised 7% and the company said it expects mid to high single-digit growth in operating performance in the new financial year,” commented Ian Forrest, an investment research analyst at The Share Centre.

The shares were up 45p at 3,442p.

Going the other way were shares in FirstGroup PLC after chief executive Tim O’Toole was kicked off the bus.

The shares tumbled 14.75p to 86.05p but Liberum Capital Markets stuck with its ‘buy’ recommendation and 125p target price after analysing the bus and trains operator’s full-year results.

“Results broadly in line with downgraded expectations, with a shortfall in First Student largely balanced on the central cost and interest lines. The CEO's departure should be viewed as an opportunity to pursue a different approach, although there is a lack of clarity as to what that might be at this stage,” Liberum said.

“The provision against future losses at the TransPennine franchise was a surprise, although there had been concerns about the outlook. The failure to restore the dividend is disappointing, but not surprising given the TransPennine provision and the ongoing pressure on current trading in some divisions. Value remains, but realising it remains a challenge,” the broker said.

Among the small caps, Cluff Natural Resources PLC (LON:CLNR) fell out of bed this morning after the UK Oil and Gas Authority confirmed that it has waived its requirement for a farm-out to have been concluded by 31 May 2018 on the company's two wholly-owned Southern North Sea Gas licences, P2248 and P2252.

The shares fell 18.6% to 2.95p on the news, suggesting traders would have preferred the licences to lapse. That’s not a view with which the chief executive, Graham Swindells, agrees.

“With the OGA's support, we are able to continue the process of securing partners and funding to drill one or more wells in 2019,” Swindells said.

It was probably the mention of securing funding that prompted the share price mark down.

9.45am: Miners lend support to the Footsie's rally

Much as it did yesterday, the FTSE 100 has made a half-hearted positive start.

Yesterday it did so despite the weakness of miners whereas today it is doing so on the back of the strength of the mineral extractors, plus a little bit of improved sentiment, thanks to signs of progress on the formation of an Italian government.

The FTSE 100 was up 21 at 7,711 despite the presence of a number of heavy-hitting stocks going ex-dividend, such as Taylor Wimpey, National Grid and Marks & Spencer.

“Further steps in the right direction in regards to Italy avoiding another snap election – even if it does result in the Five Star Movement and League parties forming a Eurosceptic government – allowed the European markets to hold steady on Thursday,” said Connor Campbell at Spreadex.

Building materials group CRH PLC (LON:CRH) topped the Footsie leader-board after announcing organisational and business improvement initiatives.

The shares were up 4.6% at 2,802p.

“The company is set to combine and thereby streamline certain of its businesses in Europe and the US, underpinning a target to boost margins as much as 3% by 2021,” explained AJ Bell’s investment director, Russ Mould.

“There had been speculation the company was considering a spin-off of its US arm, but this would have been at odds with the company’s long-standing strategy of being diversified across different products, geographies and end-uses to soften the impact of fluctuating demand at different points of the economic cycle.

“Guidance on cash generation is impressive with the company signalling it should have €7bn at its disposal over the next four years even after it has paid dividends and met all its capital expenditure commitments. This should enable it to pursue M&A opportunities,” Mould added.

8.45am: Another positive but subdued start following signs of progress among Italy's political power brokers

The FTSE 100 got off to a subdued but positive start as traders chose to ignore the unfolding political drama in Italy, which could effectively consign to the dustbin of history the extended European experiment.

The index of blue-chip stocks rose 13 points to 7,702.24, though some City commentators were wondering whether there's an element of denial pervading the Square Mile.

"To look at the markets, you’d think the problem had been resolved, and this could indeed be something about nothing if the two anti-establishment parties play ball and avoid another divisive election," said Lee Wild of Interactive Investors.  

"However, as with all political crises, and especially in a politically volatile debt-ridden state like Italy, they can rumble on, and this is one to add to the list of banana skins for this bull market.  

"Focus will switch briefly back to tomorrow’s US nonfarm payrolls, but few expect any major surprises, and certainly none capable of upsetting current interest rate expectations."

So, Marks & Spencer (LON:MKS) clung to its position in the top flight a little like Southampton on the last day of the Premier League season. Will the trap door open at the next quarterly FTSE 100 reshuffle? Only time will tell. 

Ocado (LON:OCDO), mirroring Fulham in the playoffs, came through to claim a spot in the top division for Britain's biggest companies.

It was the order of the boot for FirstGroup (LON:FGP) boss Tim O'Toole after the transport giant's prelims gave a rather downbeat assessment of prospects.

To make matters worse, O'Toole rejected two bids from a private equity that could have provided management and investors with a get out of jail free card.

Proactive news headlines:

Cradle Arc PLC (LON:CRA) has unveiled a maiden ore reserve for the open pit portion of the Mowana copper mine in northeast Botswana. The new report, produced by Wardell Armstrong International (WAI), sees 31.8mln tonnes of proved and probable reserves at a grade of 1.17% of copper, representing 370,800 tonnes of contained copper.

Stratex International PLC (LON:STI) has announced that IAMGOLD Corporation (TSE:IAG, NYSE:IAG) has completed its preliminary studies at the company’s 85%-owned Dalafin gold project in Senegal and the drilling will commence shortly.

Ariana Resources PLC (LON:AAU) has announced a Joint Ore Reserves Committee resource update for the Kepez prospect, which is part of the Red Rabbit joint venture. The new estimate represents a roughly 270% increase on a gold-only basis from the previous estimate.

Bezant Resources PLC (LON:BZT) is raising £800,000 to move forward with its Mankayan copper-gold project at Luzon in the Philippines. Executive chairman Colin Bird is putting up £50,000, which will take his stake to 2.5% once the fund raise completes.

Internet domains firm CentralNic Group PLC (LON:CNIC) saw significant revenue growth in its wholesale and retail divisions in 2017.

Clinigen Group PLC (LON:CLIN) has extended its relationship with Bristol-Myers Squibb (BMS) in a deal that will provide access to the latter's products in South Africa. The UK business' commercial medicines arm will lend local regulatory expertise, supply and distribution infrastructure and experience in managing licensed drugs in the region.

OptiBiotix Health PLC (LON:OPTI) has entered into an evaluation agreement with a global dairy company for its SweetBiotix calorie-free sweet fibres.

Coinsilium Group Limited (NEX:COIN) has turned a profit for 2017 as it saw demand for its advisory services continuing “unabated” into the new financial year.

Brady PLC (LON:BRY) has seen “substantial progress” in the four months of the year following the completion of a restructuring in March, according to executive chairman Ian Jenks.

Biomass boiler specialist Aggregated Micro Power Holdings PLC (LON:AMPH) has upgraded its sales guidance for the year just ended for a second time. Turnover for the year to March will be more than £42mln, against the £40mln forecast previously. AMP had already raised its revenue forecast from £30mln.

Sareum Holdings PLC (LON:SAR) said it had regained the rights to a pre-clinical technology that may have the potential to treat acute myeloid leukaemia and other blood-borne cancers. The Aurora+FLT3 kinase inhibitors were handed back by Hebei Medical University Biomedical Engineering Center (HMUBEC), a Chinese group, which encountered "ongoing issues relating to the intravenous formulation".

Bluejay Mining PLC (LON:JAY) is engaged in a number of positive discussions with potential off-take partners, it told investors in its full-year results. Another bulk sample will be taken from the active beaches at Moriusaq, in northern Greenland, in 2018, where the current resource has been defined to supply final product parcels to customers.

Advanced Oncotherapy PLC (LON:AVO) said it has received the final investment payment from Yantai Cipu, its partner company in China. The AIM-listed proton therapy developer said the £10mln payment completed Yantai’s £30mln investment in the company, in addition to a £6.5mln payment received in May.

Highlands Natural Resources PLC (LON:HNR) told investors that it has leased an 800-acre area in Kansas where it sees the potential for abundant, low-cost nitrogen gas resources. With this move, the company believes it can become a low-cost nitrogen producer which would complement its DT Ultravert well services business (which requires nitrogen supplies).

Pan African Resources PLC (LON:PAF) shares retreated on Thursday morning as the firm revealed that PAR Gold Propriety Limited has disposed of 130mln of its shares, representing 5.8% of the miner's issued share capital.

Mosman Oil And Gas Limited (LON:MSMN) told investors that it has now seen the first flow of fluids following the installation of two Electrical Submersible Pumps at the Arkoma project in Oklahoma. The company said that it is too early to provide oil or gas measurements, though stabilised flow rates are due at the end of June.

Arc Minerals Ltd. (LON:ARCM) has announced the appointment of Don Bailey as a director of the company effective from 1 June 2018.  The group said Bailey spent 30 years with Rio Tinto where, as Joint Global Head of Mining Operations, he was responsible for the development of numerous major international projects. Subsequent to his time with Rio Tinto, Don was a founder member, CEO and chairman of LionOre Mining International Ltd which was acquired by Norilsk Nickel in June 2007.

Motif Bio PLC (LON:MFTFB) (NASDAQ:MTFB), a clinical-stage biopharmaceutical company specialising in developing novel antibiotics, announced that it will give a company presentation and meet with investors at the following Jefferies Global Healthcare Conference held on June 5-8, 2018 in New York, USA.

6.45am: Footsie set to open on the front foot 

The FTSE 100 is seen rising ahead of Thursday’s open and whilst Eurozone related fears have evidently receded somewhat, attention remain fixed on the continent.

CFD and spread betting firm IG Markets sees the London benchmark rising around 38 points with over an hour to go until the start of trading, calling the price at 7,700 to 7,704.

It follows a rally for the Euro on Wednesday, amid reports that Italy’s radical League and the 5 Star Movement parties are making renewed efforts to form a coalition government.

Wall Street found support also. The Dow Jones added more than 300 points to close up 1.26% at 24,667 whilst the S&P 500 similarly climbed 1.27% to finish at 2,724, and the Nasdaq ended Wednesday up 0.9% at 7,462.

In Asia, Japan’s Nikkei rose 162 points or 0.75% to reach 22,184 while Hong Kong’s Hang Seng gained 0.87% to 30,332 and the Shanghai Composite added 1.56% to 3,088.

Australia’s ASX 200 was also on the front foot, up 0.39% to 6,007.

Attentions now turn back to Europe and pending inflation statistics.

“Wednesday’s rally in the euro could find fresh legs today as investors focus on Eurozone CPI figures,” said Jasper Lawler, an analyst at London Capital Group.

“Whilst headline inflation is expected to pick up to 1.6% year on year in May, up from 1.2% in April; core inflation is forecast to increase to 1% in May, up from 0.7% the previous month.”

Inflation will also be on the agenda later this afternoon, with the focus shifting to the United States.

Lawler added: “A rate hike in June is currently 91% priced in. Even if inflation surprises slightly to the downside, it is unlikely to prevent the Fed from hiking when it meets in two weeks’ time.

“However, signs of softening inflation in the US could impact on the outlook for the implied path of hiking across the second half of the year, leaving the dollar vulnerable to a further sell-off.”

Significant announcements expected on Thursday, May 31:

Finals: FirstGroup PLC (LON:FGP), Johnson Matthey PLC (LON:JMAT), 7Digital Group PLC (LON:7DIG), Air Partner PLC (LON:AIR), Caffyns PLC (LON:CFYN), TR Property Investment Trust plc (LON:TRY)

Trading update: Card Factory PLC (LON:CARD)

Ex-dividends: To knock 6.05 points off FTSE 100 index - Marks & Spencer Group PLC (LON:MKS), National Grid PLC (LON:NG.), Taylor Wimpey PLC (LON:TW.)

Economic data: US weekly jobless claims; US personal income and outlays; US Chicago PMI

Around the markets:

  • Sterling: US$1.3319, down 0.25%
  • Gold: US$1,303 an ounce, up 0.15%
  • Brent crude: US$77.40 a barrel, up 2.5%
  • Bitcoin: US$7,495, up 1.6%

City Headlines:

  • Martin Sorrell returns to stock market with Derriston deal – Financial Times
  • Two million SSE customers to see bills rise by £76 a year – Sky News
  • Phoenix unveils £950m rights issue to fund Standard Life Aberdeen deal – The Telegraph
  • Ryanair quietly increases charge to travel with your carry-on bag – The Telegraph
  • Investor Mark Mobius predicts 30 per cent drop in US stocks - CNBC
  • Glasgow shortlisted for Channel 4 HQ – BBC News
  • New car models drive UK production growth in April – BBC News
  • UK hospital launches rehab programme for bitcoin addiction - The Independent 

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