FTSE 100 closes down 71
British pound rallies
BoE rate unchanged, economist turns hawkish
‘Trade war’ fears rumble on
FTSE 100 closed firmly lower as the pound firmed as speculation swirled about an August rate rise.
Today, the Bank of England voted to keep rates on hold at 0.5%, which had been widely expected, but an unexpected hawkish change to the vote splot (6-3, with three members of the committee voting to hike) bolstered sterling.
The rise in sterling hits the dollar- earning constituents of the FTSE 100, which closed nearly 71 points lower at 7,556.
"The tone of the meeting shows the BoE are wanting to hike should the data allow it," said Fiona Cincotta, Senior Market Analyst at City Index.
"We therefore expect to see more volatility than usual surrounding high impacting data releases across the start of the summer; July which can often be a quiet month on the markets promises a bit more action this year."
FTSE 250 also fell today, shedding over 197 points at 20,729.
The pound added 0.34% aganst the Euro and was up 0.58% against the US dollar.
For the second day running, Ocado Group (LON:OCDO) was top riser on Footsie, up 3.84% to 1,040p. Top laggard was United Utilities Group (LON:UU.) down 6.17% to 739.20p.
2:40pm: Dow Jones opens lower while S&P 500 and Nasdaq move higher
The Dow Jones was down more than 70 points, 0.26%, in Thursday’s opening deals in New York at 24,584.
At the same time, the S&P 500 and Nasdaq were both moving positively, up 0.17% and 0.14% respectively.
In London, meanwhile, the FTSE 100 was down 48 points or 0.64% changing hands at 7,578 down 48 points or 0.63%.
2:20pm: FTSE 100 struggles continue as attentions turn back to global trade
The FTSE 100 was down 40 points or 0.53%, at 7,587, as the market narrative moved on from the Bank of England policies back to global trade tensions.
“We’re continuing to see risk aversion in the markets on Thursday, as the trade spats between the US and others ramp up,” said Craig Erlam, senior market analyst at OANDA.
“The week started with the US and China announcing tariffs against one another which will come into effect on 6 July, and it will end with the European Union announcing counter-tariffs against the world’s largest economy in response to those already imposed.
“While much of what has been announced this week was already anticipated, the rhetoric between these huge trading partners is heating up and that’s a major concern for investors.”
1:35pm: FTSE 100 remains negative as Wall Street futures point lower
The FTSE 100 remained in negative territory as investor attentions turned back towards the United States and the international trade tensions that dogged equity markets through the early part of the week.
At 7,574 the City benchmark was down 52 points or 0.69%.
Wall Street futures are indicating a softer start for the Dow Jones, with the benchmark seen 72 points lower to 24,598.
The S&P 500 and Nasdaq, meanwhile, both are pointing slightly lower.
12:45pm: FTSE 100 rally evaporates as pound jumps on Bank of England voting
The FTSE 100 carried further lower with a stronger pound weighing on the London index’s multi-national dollar earning blue-chips.
Changing hands at 7,576 the City benchmark was down 52 points or 0.7% - after starting the day firmly on the front foot.
Whilst the Bank of England kept the UK rate unchanged, at 0.5%, an unexpected shift in the voting prompted a rally in the pound, which was some way weaker prior to midday.
Ben Brettell, Hargreaves Lansdown senior economist, in a note, said: “there was a small element of surprise in the voting, with the Bank’s chief economist Andy Haldane joining Michael Saunders and perma-hawk Ian McCafferty in calling for an immediate rate rise.
“Economists had expected a 7-2 split, but in the event a forecast uptick in inflation was enough to split the committee 6-3.”
“Sterling jumped on the news, gaining almost a cent against the dollar as traders factored in a bigger chance of a move in August.”
He added: “But on balance I still think we might not see a rate rise for the rest of the year - policymakers will at the very least want confirmation that the weak first-quarter growth figure was just a blip before raising borrowing costs.”
12:05pm: Bank of England leaves rate unchanged
Somewhat unsurprisingly, the Bank of England has confirmed that at its June meeting, it decided to leave the UK interest rate unchanged at 0.5%.
Policy makers voted six to three in favour of the ‘hold’ – revealing that one additional economist had moved to a hawkish stance and now wanted to raise the rate.
“Today’s meeting was seen by many as having very little chance of delivering a material change in policy with the focus on any signals for the next meeting and there’s been several strong hints towards an August hike,” said David Cheetham, chief market analyst at online trading firm XTB.
“As well as the change in voting pattern, a key line from the accompanying statement which read that all members are more confident that the Q1 slowdown is temporary have caused a pretty strong hawkish reaction in the markets with the Pound bouncing strongly from its lowest level in 7 months.”
The FTSE 100 turned negative, losing 22 points or 0.29% to trade at 7,605, as the British Pound rallied into positive territory gaining 0.23% to US$1.3202.
11:00am: Borrowing stats a boost for UK economic outlook
In the immediate lead up to today’s Bank of England announcement, there was an apparent boost as public sector borrowing stats showed a lower deficit.
EY highlighted that it was “welcome news” public finances continued their encouraging start to the fiscal year. It boosts hopes that the economy has gained significant momentum, EY added.
“Public Sector Net Borrowing excluding Banks (PSNBex) came in at £5.0bn in May, clearly down from a shortfall of £7.0bn in May 2017,” said Howard Archer, EY economic advisor.
“This followed on from the April deficit falling to a downwardly revised £6.9bn (from £9.0bn a year earlier), which was the lowest April shortfall since 2004.
“Consequently, the budget deficit amounted to £11.8bn in April/May which was down 25.8% from £16.0bn in the first two months of fiscal year 2017/18.”
10:45am: FTSE 100 hangs on to positive territory ahead of Bank of England rate call
By late morning, the FTSE 100 was holding only a sliver of a lead after beginning the session higher.
Changing hands at 7,628, the index of London’s top 100 shares was up just 1 point or 0.013%.
“European equity markets have been drifting lower this morning as trade fears persist,” said David Madden, analyst at CMC Markets.
“The FTSE 100 is in positive territory as consumer and healthcare stocks are stronger, but continental markets are lower.
“The standoff between the US and China has worried investors that the EU could be in line for similar treatment.”
9:50am: FTSE 100 stays cautiously on front foot ahead of Bank of England rate decision
The FTSE 100 stayed higher through Thursday morning, up 16 points or 0.22% at 7,643, as investors kept it cagey ahead of the Bank of England's announcement.
As the market awaits the rate call, the pound was weakening - down 0.46% at US$1.3111.
“The Bank of England is back in the limelight today and is widely expected to keep rates unchanged given that the recent set of economic indicators has been mixed and also given that the Brexit uncertainty is continuing to prevent any meaningful economic recovery,” said Fiona Cincotta, senior market analyst at City Index.
“Having pulled back from raising rates in May, the question now is will the Bank opt to increase rates in August or will it postpone the decision for later this year.”
At the same time, fears over international trade are still rumbling in the background so it is likely that attention will turn back to the United States and Wall Street after the Bank of England.
8:45am: FTSE 100 opens in positive territory; Dixons Carphone results bad, but not as bad as anticipated
Trade war worries continued to fade with the City's wheeler-dealers instead focusing on Bank of England rate decision later.
"No hike is expected but the Monetary Policy Committee might start to guide the market towards one happening later in the year," said Neil Wilson, chief market analyst at Markets.com.
"An August hike still looks too soon based on the economic data we've had and the MPC may therefore be a tad more cautious."
The index of blue-chip shares nudged up 32 points to 7,659.00 as an air of calm swept over London.
The latest results from struggling retailer Dixons Carphone (LON:DC.) were nothing to write home about, but clearly better than expected as the shares advanced 1.8% early on.
"The company has much to prove in a difficult environment and the general market consensus of the shares is likely to remain stuck at a hold, albeit a strong one,” said Richard Hunter, head of markets at Interactive Investor.
Shire (LON:SHP) rose 2% after it received a label extension for its drug CINRYZE, for an acute skin condition called angioedema. The treatment will now be available for children as young as six.
Ocado (LON:OCDO), up 3%, continued to stage a recovery from the sell-off that market its entry to the FTSE 100.
Gaining some airplay is a broker note comparing the online grocer with Microsoft, suggesting Ocado's technology could become the industry standard.
Proactive news headlines:
Echo Energy PLC (LON:ECHO) has told investors that “significant hydrocarbons” have been identified in the EMS-1001 through the interpretation of well data. Specifically, the Argentina-focused exploration company, in a statement, said that a “significant light oil column” was encountered by what is its third well.
OptiBiotix Health PLC (LON:OPTI) has signed a license agreement to commercialise food supplements containing its LPLDL strain in the Italian market.
Solo Oil PLC’s (LON:SOLO) part-owned Tanzania specialist gas business Helium One has raised US$2mln in a pre-IPO funding round. The capital injection was supported by investors from Australia, Asia and Africa.
App monitoring service AppScatter Group PLC (LON:APPS) has raised just over £3mln at a significant premium to last night’s closing price. The fundraise is unusual because most companies, particularly those on AIM, will generally raise money at a discount.
Highlands Natural Resources PLC (LON:HNR) has reported “significant flow rates” from the Barret 1-14b well at its Kansas nitrogen project.
SDX Energy Inc (LON:SDX, CVE:SDX) has spelt out a number of key details from its largely successful recent operations in Egypt and Morocco ahead of an event at which it will be presenting to sell-side and industry analysts. Importantly, the growing oil and gas producer highlighted a positive record – three successful wells out of four in Egypt, and, seven successes out of nine wells in Morocco.
Horizonte Minerals PLC (LON:HZM, TSE:HZM) has announced that it has completed the aero survey for the powerline and awarded contracts for Araguaia ferronickel project to the leading Brazilian consultants.
Bluebird Merchant Ventures Ltd (LON:BMW) has announced it has received ‘excellent’ results from vat leach metallurgical test work conducted on an ore sample from Adit 4 at the Gubong mine in South Korea.
Medical devices maker Tissue Regenix Group PLC (LON:TRX) has won an award at an industry conference over in the United States. Group purchasing organisation Premier awarded Tissue the Supplier Horizon award, which recognises suppliers that have been contracted with Premier for less than three years for exceptional local customer service and engagement, value creation through clinical excellence and commitment to lower costs.
Taptica PLC (LON:TAP), a global leader in advertising technologies for performance-based mobile marketing and brand advertising, is hosting a Capital Markets Day in London today. The group said no material price-sensitive information will be disclosed and no new information relating to current trading will be provided.
Silence Therapeutics PLC (LON:SLN) has made two key appointments that will respectively strengthen the board and the business. Dave Lemus, currently chief operating officer and chief financial officer of Proteros Biostructures, has been appointed an independent director.
Alba Mineral Resources PLC (LON:ALBA), the diversified mineral exploration and development company, announced the appointment with immediate effect of Feroz Sultan as Alba's Technical Director - Oil & Gas. This follows the announcement on 9 April that Sultan had joined Alba as a special adviser in relation to the company's oil investments.
Eland Oil & Gas PLC (LON:ELA), the oil & gas production and development company operating in West Africa with an initial focus on Nigeria, has confirmed the appointment of Nicholas Gay as a non-executive director of the company effective from 22 June 2018.
6.45am: Modest gains seen
The FTSE 100 is expected to start Thursday modestly higher as the market looks to a Canadian to distract from America’s ‘trade war’ with China.
Mark Carney’s Bank of England holds its latest monthly policy meeting at midday.
“Having passed up the opportunity a few weeks ago to raise interest rates in May its highly unlikely that the Bank of England will do so today despite the fact that the data we’ve seen since that May meeting has been a significant improvement on the data that we saw in Q1,” said Michael Hewson, analyst at CMC Markets.
“It wasn’t too much of a surprise to see the central bank back pedal on market expectations in May as Governor Mark Carney had indicated as much a few weeks before at the IMF meetings in Washington a few weeks before, despite hinting heavily in February that rates could well be moved higher in the coming months.”
After closing Wednesday 23 points higher at 7,627, the FTSE 100 is this morning predicted to start about 30 points higher.
CFD and spreadbetting firm IG Markets is calling the index at 7,667 to 7,671 with more than an hour to go until the open.
In New York, the Dow Jones ended a volatile session down 42 points or 0.17% at 24,657.
The S&P 500 closed in positive territory, rising 0.17% to 2,767, meanwhile, the Nasdaq finished the day up 0.72% at 7,781.
In Asia, Japan’s Nikkei rose 0.76% to 22,727 while Hong Kong’s Hang Seng shed 0.66% to 29,500 and the Shanghai composite was off 0.54% at 2,899.
Significant announcements expected on Thursday:
Bank of England interest rate decision
Finals: Dixons Carphone PLC (LON:DC.)
Interims: Chemring Group PLC (LON:CHG)
Trading update: Saga PLC (LON:SAGA)
Ex-dividends: To clip 2.6 points off FTSE 100 - Compass Group PLC (LON:CPG), Experian PLC (LON:EXPN), Land Securities PLC (LON:LAND), United Utilities PLC (LON:UU.)
Around the markets:
- Sterling: US$1.3147, down 0.19%
- Gold: US$1,264 an ounce, down 0.5%
- Brent crude: US$74.30 a barrel, down 1.05%
- Bitcoin: US$6,755 per coin, down 0.05%
City Headlines:
- Lloyds Banking Group axes 450 jobs - Reuters
- Iran resists Saudi-led push to increase oil output – Financial Times
- The Pound Needs a Helping Hand. Mark Carney May Not Provide It – Bloomberg
- MPs tell Asda and Sainsbury's merger was 'financial fix' – Guardian
- BT fined for five million spam emails – BBC News
- Fury as British Airways cancels scores of tickets 'it sold too cheaply' – Evening Standard
- Deutsche Bank fined over ‘improper’ forex conduct – Financial Times
- Tesla sues former employee for allegedly stealing gigabytes of data – CNBC
- Tinder parent company buys majority stake in dating app Hinge – CNN
- Facebook is testing paid monthly subscriptions for Groups - Engadget