FTSE 100 closes 56 points higher at 7,737
Sterling weak
Manufacturing output slows in April
Modest gains for US stocks
FTSE 100 closed convincingly higher as the weak pound bolstered the blue-chip index, while US stocks made solid gains.
The London benchmark closed 56 points higher at 7,737, while mid-cap cousin FTSE 250 was also up on the day, ahead by 158 points to 21,318.
In the currency markets, the pound shed 0.38% against the Euro, while it was off 0.30% against the US dollar.
This was due to weak economic data out today, which suggested the economy was lacklustre.
For example, manufacturing output fell 1.4% in April this year, which was the biggest decline for nearly six years.
On Wall Street, the Dow Jones Industrial Average is up 0.10% on the day to stand at 25,342 at the time of writing.
"Stock markets are broadly positive, despite the turbulence at the G7 meeting at the weekend. Traders seem unfazed by the tough talk from President Trump," said David Madden, market analyst at CMC Markets.
"The markets are likely to stand their ground until there is a formal reaction from other members of the G7.
"Donald Trump is playing hardball, but he would probably settle for a compromise, and some dealers suspect it is all a ploy to get a better deal for the US in terms of trade."
Top riser on Footsie was Russian steelmaker Evraz (LON:EVR), which bulked up 7.53% to 537p, while top laggard was financial stock Old Mutual plc (LON:OML), which shed 1.89% to 218.20p.
3.30pm FTSE 100 well up..
The FTSE 100 has trimmed some of its earlier gains, but London’s blue-chip index is still well up on Friday’s close.
With just under an hour left in the trading day, it has gained 41.7 points, or 0.5%, to stand at 7,722.5. It closed at 7,681.1 on Friday but had been has high as 7,754 earlier on.
The weak pound is responsible for much of the growth, making the blue-chips’ overseas earnings – about 75% of all earnings – worth more when translated into pound.
Sterling is currently down 0.5% against the euro at €1.134, while it has recovered some of the ground lost against the dollar and is now only down 0.1% at US$1.339.
The pound’s fall came after some weak economic data, with manufacturing output plunging and the UK’s trade deficit widening.
Russian miner is the top riser, up 8.3% to 540.8p, with cigarette maker British American Tobacco plc (LON:BATS) not far behind, rising almost 2% to £37.26.
Hospital operator NMC Health plc (LON:NMC) is also towards the top of the leaderboard, climbing 3.5 to £35.46 after it unveiled a joint venture which will expand its presence in the Middle East.
South African investment group Old Mutual PLC (LON:OML) is the top faller, down 1.8% to 218.4p, on a day when there haven’t been too many firms in the red.
2.40pm: US stocks open modestly higher
Contrary to the spreadbettor’s predictions, US stocks have opened in the black in New York, albeit only just.
The Dow Jones Industrial Average edged 11.6 points higher at the opening bell tp 25,328.2, while the broader S&P 500 is 8.7 points ahead at 2,779.0.
The Nasdaq is up 4.10 points at 7,649.61.
2.30pm: Ocado-Kroger tie-up “transformational”
Ocado Group PLC (LON:OCDO) have jumped 7% to £10.70 today as Goldman Sachs upgraded its rating after calling UK online grocer’s partnership with US retail giant Kroger Co (NYSE:KR) “transformational”.
Goldman Sachs upgraded Ocado’s rating to ‘buy’ from ‘neutral’ and set its price target at 1,160p.
Analysts at the investment bank reckon the tie-is “transformational” both in the number of distribution centres Kroger is looking to start building and in its validation of Ocado’s Smart Platform (OSP) as an online grocery solution with a global addressable market.
“Though the stock price moved materially to reflect this, our analysis at a local market level points to a US opportunity more than double Kroger’s initial commitment, with the economics to Kroger clear on our calculations,” read the note.
2.10pm: Poundworld founder 'looking to buy back 200+ stores'
The founder of @PoundworldTweet confirms he is talking to Deloitte about taking on "200 plus" of 335 stores. Chris Edwards says business, which he sold to TPG in 2015, "shouldn't be in this position" and its predicament is "totally down to bad management".
— Joel Hills (@ITVJoel) June 11, 2018
1.45pm: Rolls-Royce finds another engine fault
Rolls-Royce PLC (LON:RR.) has said a problem affecting the durability of a certain type of Trent 1000 engine has been discovered in another type and will require further inspections.
The FTSE 100-listed engineer has been working to fix a problem with the compressor in the Trent 1000 Package C engines that power Boeing's 787 Dreamliner jet, forcing planes to be grounded while they are fixed. In a statement on Monday, Rolls-Royce said it had now found a similar issue on a "small number of high life Package B engines".
It added that while this would incur some additional cost, it did not expect it to affect its free cash flow guidance for 2018 of around £450mmln, plus or minus £100mln. Shares are down 1.1% to 826.2p.
1.10pm: FTSE 100 boosted by pound’s tumble
The FTSE 100 is still motoring on, up 46.2 points to 7,727.3 in early afternoon trading.
Much of the rise stems from the weaker pound which makes the blue-chips’ overseas earnings – about 75% of all earnings – worth more when translated into the pound.
Sterling is currently down 0.5% against the euro at €1.134, while it has shed 0.3% versus the dollar to sit at US$1.336.
NMC Health PLC (LON:NMC) is still the top dog, climbing more than 4% to £35.80 after it unveiled a joint venture which will expand its presence in the Middle East.
Cigarette maker British American Tobacco PLC (LON:BATS) was also smoking higher, rising 2.9% to £37.61.
Ocado Group PLC (LON:OCDO), which is set to join the FTSE 100 next week, has jumped 6% to £10.61 after analysts at heavyweight investment bank Goldman Sachs issued a ‘buy’ note on the online supermarket.
Losers are few and far between so far on Monday. One of the stocks in the red, though, was Rolls-Royce Holding PLC (LON:RR.) which is down 1.2% to 825.6p after it uncovered issues with another of its engine types.
12.35pm: Slow start predicted in US
US stocks are poised to open broadly flat as traders wait and see what this week’s summit with Kim Jong Un, the North Korean leader, will bring.
The highly anticipated meeting in Singapore has the world on tenterhooks as Jong-un's nuclear weapons program will be discussed.
The G7 summit at the weekend turned sour after the US pulled out of a joint communique amid a rift with Canadian president Justin Trudeau.
Wall Street shares on Friday closed higher, with the Dow Jones Industrial Average up around 75 points at 25,316. The S&P 500 added 8.66 points on the day to finish at 2,779.
In futures trade as the new trading week begins, Dow Jones futures are flat at 25,309; the S&P 500 futures are down half-a-point; and the Nasdaq futures are 1.1 points off at 7,149.1.
12.10pm: Inmarsat stock surges on hopes of bidding war
Shares in Inmarsat PLC (LON:ISAT) have jumped again this morning as investors brace themselves for a bidding war after the satellite group knocked back a takeover offer from US rival Echostar.
The stock enjoyed a similar rise on Friday on speculation that a bid was on the cards, with Inmarsat eventually confirming the approach on Friday evening.
It rejected the offer – which was below Friday’s closing price – saying it very significantly undervalued the company.
The market is obviously expecting Echostar to come back with an improved offer with shares up another 13.5% to 537.9p, although Numis analyst John Karidis isn’t so sure.
11.55am: Well, maybe not all retailers
Poundworld looks set to be the latest high street casualty after talks with its only potential buyer, R Capital, collapsed.
The breakdown in talks leaves Poundworld with no other option but to file for administration, although administrator Deloitte still believes a buyer can be found, and no redundancies have been announced yet.
The discount retailer was expanding aggressively on a few years ago, but high inflation, coupled with decreasing footfall on the high street, has hit the bottom line recently.
11.40am: Retailers’ fortunes turning around?
The combination of online rivals and weaker consumer spending has hit Britain’s bricks and mortar retailers in recent months, but the industry got a bit of a lift this morning.
Research from sector specialists Springboard showed that footfall in May dipped 0.4% compared with a year earlier, but this was a marked improvement from March’s 6% decline and April’s 3.3% fall.
High Streets saw footfall rise 0.6% last month and out-of-town retail parks enjoyed a gain of 0.5%, Springboard said. However, the number of people visiting shopping centres fell by 2.9%.
The data has boosted some retail stocks, including Marks and Spencer Group PLC (LON:MKS) (up 2.1% to 296.1p) and J Sainsbury PLC (LON:SBRY) (up 1.7% to 309.9p).
In contrast to the prevailing news of last week of struggling #bricks and #mortar retail, #footfall rose by +1.6% against the same week last year https://t.co/pCa5IHlkiW
— Springboard (@Springboard_) June 11, 2018
11.15am: ‘Rotten’ data weighs on pound
The pound is down against most major currencies this morning, including the dollar and the euro.
Sterling has dropped 0.5% versus the euro to €1.133, while it is down 0.3% to US$1.336.
“The UK’s manufacturing production data was rotten and it casts doubts about the UK’s economic health,” said Think Markets UK’s chief analyst Naeem Aslam.
“These kind of numbers would make the Bank the Of England question about their current strategy and this is the key reason that we have seen a massive sell-off for sterling.”
Awful batch of UK economic data. Industrial and manufacturing output plunge in April and trade deficit widens to £14 billion, the second widest deficit on record. pic.twitter.com/CczseULL5R
— Jamie McGeever (@ReutersJamie) June 11, 2018
11am: Webuyanycar owner rejects bid approach
BCA Marketplace PLC (LON:BCA) shares were also up this morning after the Webuyanycar.com owner rejected a takeover proposal from private equity investment group Apax Partners LLP.
The FTSE 250 group said Apax had approached the firm with a conditional all-cash offer of 200p for each share – a 5.2% discount to the BCA share price of 211p on Friday.
Investors, hoping for Apax to come back with a better offer, pushed the stock up almost 10% to 231.5p.
10.50am: Weak pound helping blue-chips
UK traders were in chipper mood on Monday morning, brushing off any worries of a potential trade war between the US and its ‘allies’.
After reaching agreements with fellow G7 leaders on issues such as women’s education and Iran’s nuclear weapons development, Donald Trump tweeted he had “instructed … US reps not to endorse the communiqué” because of comments made by Canadian prime minister Justin Trudeau.
That prompted some angry responses from Germany, France and Canada while Trump was in the air on his way to a historic meeting with North Korea leader Kim Jong-un.
Still, the UK’s largest companies were by-and-large unaffected by the war of words, helped by a weaker pound, which has dipped against both the dollar and euro on the weak economic data earlier this morning (see below).
NMC top riser
Shares in NMC Health PLC (LON:NMC) are almost 5% to the good at , leading the Footsie, after announcing the formation of a joint venture – in which it will have a majority stake and operational control – with Hassana Investment Co.
“This helps further extend a 2016 move into Saudi Arabia (built upon in 2017), a rather significant geography for growth, especially … for a health group focused on the Middle East but predominantly present in the Emirates,” said Accendo Markets head of research Mike van Dulken.
Advertising giant WPP PLC (LON:WPP) is up 1.7% to £12.37, despite former boss Martin Sorrell denying reports over the weekend that he was being investigated for using company money to pay prostitutes.
A couple of retailers are also on the rise: Marks and Spencer Group PLC (LON:MKS) has gained 1.8% to 295.1p, while J Sainsbury PLC (LON:SBRY) is up 1.7% to 309.8p.
10.30am: KPMG fined for Quindell failures
Accountancy giant KPMG has been fined £4.5mln by the Financial Reporting Council for failings in its audit of Quindell PLC, after the legal services firm twice restated its accounts, leading to heavy losses.
In a statement, the FRC said KPMG and accountant William Smith - who was himself fined £120,000 - both failed to ensure that Quindell's financial statements for 2013 and 2014 were free from material mis-statement.
Once close to being a blue chip financial firm, AIM-listed Quindell – now transformed into insurance technology firm Watchstone Group PLC (LON:WTG) following the sale of its legal arm to Australian firm Slater Gordon - saw its market value collapse in 2015 after regulators launched probes into its financial accounts.
10am: Trade deficit widens
Among the slew of ONS announcements this morning was the UK’s goods and services trade deficit, which widened to £5.28bn in April from £3.22bn a month earlier.
The goods trade deficit was the main culprit, widening to £14bn – the biggest such deficit since September 2016.
£1.9bn widening in the total trade deficit to £9.7bn in the 3-months to April, mainly due to falling exports of both goods and services https://t.co/QjNgvcVIam pic.twitter.com/q5SfSuJ0Pz
— ONS (@ONS) June 11, 2018
9.45am: Manufacturing output fell in April
The UK’s manufacturing ouput fell by 1.4% in April compared with March – the biggest month-on-month fall since October 2012.
The Office for National Statistics added that the wider measure of industrial output also fell, dropping by 0.8% in April.
"International demand continued to slow and the domestic market remained subdued," said ONS statistician Rob Kent-Smith.
0.5% fall in manufacturing in the 3-months to April, with electrical machinery and steel for infrastructure projects seeing reduced production https://t.co/FRmCC49kNi #GDP pic.twitter.com/LdFGwHc7jD
— ONS (@ONS) June 11, 2018
9am: markets ignore trade worries
Traders seemed to be willing to ignore worries over a potential extension of US trade tariffs and the acrimony around the G7 Summit of world leaders as the FTSE 100 opened up 33 points at 7,714.01.
Top riser, up 3.4%, was NMC Health (LON:NMC) after news over the weekend that it is teaming up with the Hassana Investment Company to create a "new healthcare platform" in Saudi Arabia.
Rolls-Royce's (LON:RR.) plan to cut 4,000 jobs was met with a degree of caution with the shares off 1.4%.
Moving down to the FTSE 250, a rejected bid approach from Echostar Corporation propelled shares in satellite specialist Inmarsat (LON:ISAT) 10% higher with the market betting Echostar might come back to the table with better terms.
Also on the up was Ocado (LON:OCDO) with its stock rising 3.2%. Ahead of its official elevation to the Footsie, Bernstein has upgraded its recommendation to 'outperform' from 'underperform'.
Proactive news headlines:
BATM Advanced Communications Limited (LON:BVC) said it has been awarded a ‘significant’ contract by a government defence department to supply enhanced cyber communication technology.
Highlands Natural Resources PLC (LON:HNR) has updated investors on its project to explore for nitrogen gas resources, to support its DT Ultravert well services technology. It plans to re-enter and re-complete a well in Kansas. The programme is expected to deliver data that will inform future phases of exploration and de-risk future activities from a safety perspective (the area is seen to be under high pressure).
KEFI Minerals PLC (LON:KEFI) has secured US$30mln of new investment at the project level for its Tulu Kapi gold mine development in Ethiopia. "KEFI has now assembled the proposed full project funding consortium, including contractors, equity and non-equity capital and is expected to move towards full financial close later this year," said chairman Harry Anagnostaras-Adams.
PCG Entertainment PLC (LON:PCGE) has completed a fundraising through the placing of new shares as it issued an update on its current business. The AIM-listed gambling group said it had raised a total of £303,000 before expenses through the placing of around 202mln new shares at a placing price of 0.15p each.
Keyword Studios PLC (LON:KWS) has completed its fifth acquisition of the year, snapping up fellow video games services provider Blindlight in a deal worth up to US$10mln (£7.5mln).
Echo Energy PLC (LON:ECHO) has released details of what it described as “very positive” well testing results, following the successful work-over of the CSo-85 well at the Fracción D asset, Argentina. A maximum flow rate of 2.5mln cubic feet of gas per day was measured in the well during a 16-day period of stabilised gas production.
Summit Therapeutics PLC (LON:SUMM) has discovered a second series of “promising” compounds which it believes could be used to treat gonorrhoea.
Harvest Minerals PLC (LON:HMI) is to raise £9mln to strengthen its balance sheet while it ramps up operations at the Arapua fertiliser project in Brazil. Shares will be issued at 18.5p to institutional investors through a bookbuild exercise.
Pembridge Resources PLC (LON:PERE) has secured US$30mln in off-take finance from a major Japanese trading house. The deal allows Pembridge to sell copper from its Minto mine at the mine gate, thus eliminating the mine's historic need for the significant working capital reserves to tide it over when shipping isn't possible in the winter.
WideCells Group PLC (LON:WDC) has reconfirmed it has received commitments for its shares placing of at least £1.8mln, and anticipates being able to close the fundraiser before the end of the month. The sum expected to be raised is in excess of the £1.5mln it requires to continue as a going concern.
PowerHouse Energy Group PLC (LON:PHE) has highlighted the potential for its DMG System to harness the energy contained in plastic waste by converting it to clean hydrogen, as a mechanism to reduce the impact of plastics on the oceans.
MaxCyte Inc (LON:MXCT) said it has entered into an R&D agreement with the US National Institutes of Health (NIH) to develop treatments for sickle cell disease. They will do so using next-generation CRISPR/Cas9-based single-nucleotide correction technologies enabled by MaxCyte's cell engineering platform.
New data for Motif Bio PLC’s (LON:MTFB) has confirmed that its next generation antibiotic iclaprim was better tolerated and safer than a rival drug in two recent late-stage studies.
Avacta Group PLC (LON:AVCT) has announced the appointment of Dr Eliot Forster as non-executive chairman to the board with immediate effect. The AIM-listed firm said Dr Trevor Nichols, who has acted as chairman of the board since January 2014, will remain on the Board as non-executive director.
Vast Resources PLC (LON:VAST) has recommended that shareholders approve a possible equity funding as it set the date for a general meeting, to be held on June 25 in London. The mining investor, in a letter to shareholders, said that it has identified an additional funding requirement of US$2.18mln – which would fund additional dewatering at the Baita Plai mine, pay for equipment at the Manaila mine and provide seed capital for new projects.
Chaarat Gold Holdings Ltd (LON:CGH) ended the year to December 2017 with just over US$7mln in the bank, after booking a pre-tax loss of US$18mln The loss included a US$10mln impairment charge for assets under construction, as Chaarat continues to advance its Tulkubash gold project in Kyrgyzstan. The company subsequently made a bold and unsolicited offer for Centerra's Kumtor mine.
Active Energy Group PLC (LON:AEG) has signed a Memorandum of Understanding (MOU) with Young Living Farms for a compost producing plant utilising its PeatSwitch technology. The two firms agreed a partnership deal in February and the plant will be built on the site of YLF's lavender farm and essential oil distillery located near Mona, Utah.
6.45am: Muted start predicted
The FTSE 100 looks set to make a muted start to the trading week amid growing concerns over an escalation in trade hostilities between the US and the rest of the world after the G7 summit ended in acrimony.
The index of blue-chip shares will open 12 points higher at 7,693.07, according to spread betting firms, mirroring the tentative start experienced by the main Asian markets.
"Trump leaving the summit early, back tracking from the painstakingly negotiated G7 communique and threatening further trade tariffs on the US’s closest allies ensured a risk off start to trading as the new week began," said Jasper Lawler, analyst at London Capital Group.
The US President's decision to beat a hasty retreat from Quebec, coupled with his stinging rebuke (via Twitter of course) for the Canadian Prime Minister Justin Trudeau left market commentators worrying about Washington's next move.
Business confidence and spending are at risk if tensions continue through the summer, economists said.
Back here in the UK, investors will be given an update on how the hostilities in the grocery market are affecting the big players when Morrisons (LON:MRW) and Tesco (LON:TSCO) update on Thursday and Friday respectively.
Fashion retailers old school and new also have progress reports with Ted Baker (LON:TED) and Boohoo.com (LON:BOO) reporting this week.
Around the Markets:
- Pound worth US$1.3410
- Gold US$1,302.40 an ounce, down 30 cents
- Brent crude US$76.23, down 23 cents
City Headlines:
Financial Times
- Rolls-Royce set to cut thousands of jobs
- Car bosses round on Trump over threat of tariffs
- Indian jeweller flees to UK claiming political asylum: Nirav Modi is at centre of alleged US$2bn bank fraud and is wanted by Indian police
- Broadcasters agree Freeview deal to combat Netflix: BBC, ITV and Channel 4 collaborate in response to changing viewer habits
Times
- Legal & General's investment arm has taken action against companies worldwide that it believes are not fighting climate change, in one of the most interventionist policies by an investment house
- Inquiry into TSB’s IT failure to examine role of outsourcer
- Persimmon faces legal challenge over Jeff Fairburn’s £75m bonus
Telegraph
- Facebook faces EU block on reading private messages
- Reforms flop will hit world economy, says ex-PM Brown
- New Petropavlovsk boss appeals for support ahead of crunch vote
Guardian
- Martin Sorrell denies paying for sex worker using funds from WPP