FTSE 100 crashes 2.26% lower
Trump trade war concerns mount
No celebration for Carnival, which tanks
FTSE 100 crashed over 173 points lower, or 2.26%, on Monday and joined global equities to make a terrible start to the new trading week.
Investors are fretting about a trade war between the US and China and OPEC's decision to increase oil supply
In the latest twist, America is now anticipated to announce plans this week to restrict Chinese investment in the USA.
Treasury secretary Steven Mnuchin said the restrictions will apply to ‘all countries that are trying to steal our technology’, but dealers believe the move is largely aimed at Beijing, said analyst David Madden at CMC Markets.
In London, FTSE 100 closed down 173 points on Monday at 7,508, while FTSE 250 was also lower, off over 235 points, or 1.12% to 20,774.
On Wall Street, the Dow Jones Industrial Average lost 340 points at 24,239. The S&P 500 shed around 35 at 2,714.
Top laggard on Footsie was cruise giant Carnival Corp, which tanked over 11% to 4,215p as it announced second-quarter earnings, which sailed past Wall Street estimates for earnings and revenue.
The cruise ship operator reported earnings of US$0.68 per share on revenue of US$4.4bn compared with US$ 0.52 EPS on revenue of US$3.94bn in the previous year’s second quarter.
Top riser on the UK premier index was ITV (LON:ITV), which added 0.23% to 177p.
3.45pm: Eutelsat considers bid for Inmarsat
Inmarsat Plc (LON:ISAT) shares are up 4% to 630p after French satellite company Eutelsat said it is considering an offer for its British rival.
Eutelsat said is it “currently evaluating a possible offer for Inmarsat" but there was no certainty an offer would be made.
Earlier this month Inmarsat said it had rejected a takeover approach from US-based EchoStar, which has been building a stake in the UK firm.
3.30pm: New US home sales beat expectations in May
New US home sales rose more than expected in May, driven by strong demand in the South.
The Commerce Department said sales rose 6.7% to a seasonally adjusted rate of 689,000 units last month, the highest level since last November and beating analysts’ expectations for a 0.8% increase.
However, April’s sales pace was revised lower to 646,000 units from the previously reported 662,000.
2.30pm: US stocks open lower
US stocks have opened in the red after President Donald Trump continued to stir the pot about trade tensions.
The Dow Jones Industrial Average dropped 153 points to 24,427, the S&P 500 declined 16 points to 2,737 and the Nasdaq shed 78 points to 7,613.
Trump on Sunday warned trading partners on Twitter to remove trade barriers and tariffs and goods or “be met with more than reciprocity by the US”.
Harley-Davidson Inc (NYSE:HOG) said EU trade tariffs on the company’s motorcycles have increased to 31% from 6%, sending its shares lower.
Education Realty Trust Inc (NYSE:EDR) shares gained as the owner of college housing communities said it has entered into a definitive merger agreement to be taken over by Greystar Student Housing Growth and Income Fund, LP. for about US$4.6bn.
1.40pm: Uber appeal over London licence ban begins
Uber’s appeal against the Transport for London’s decision not to renew the taxi-hailing app’s licence in the City has started today.
Tom de la Mare QC, representing Uber, said Uber accepted TfL’s decision last September was right at the time but the company has since made several improvements.
Such improvements, including reporting to TfL for any convictions or other matters that stop a driver being available, shows the "change of a business that grew very fast to one that has grown up", the lawyer argued.
The hearing at Westminster Magistrates Court into whether Uber is "fit and proper" to hold an operator licence in London is expected to last several days.
12.40pm: US stocks set to open lower
US stock futures are lower following a drop in oil prices and another threat from President Donald Trump on trade tariffs.
Dow Jones Industrial Average futures fell 173 points to 24,428, S&P 500 futures slipped 16 points to 2,743 and Nasdaq futures declined 44 points to 7,178.
Trump took to Twitter on Sunday to tell trading partners to remove their “trade barriers and tariffs or be met with more reciprocity by the US”. His remarks came after the EU started implementing tariffs on US$3.2bn in US imports.
The United States is insisting that all countries that have placed artificial Trade Barriers and Tariffs on goods going into their country, remove those Barriers & Tariffs or be met with more than Reciprocity by the U.S.A. Trade must be fair and no longer a one way street!
— Donald J. Trump (@realDonaldTrump) 24 June 2018
In response, Trump has threatened 20% tariffs on European cars entering the US. He is also expected to announce restrictions on Chinese investment in US technology firms and a stop on further additional tech exports to Beijing.
“Investors may be feeling very uneasy about the approach being taken by the US President, but Trump is showing no sign of shying away from a trade war, instead threatening more tariffs on those that retaliate to those already imposed,” said Oanda’s Craig Erlam.
“It’s very much the relaxed manner in which Trump and others appear willing to allow this to escalate that makes investors so nervous.”
12.00pm: Trade war fears and slump in commodities drag on FTSE
The FTSE 100 is down 94 points in midday trading to 7,587, led by mining and oil shares.
“The FTSE was one of the worst performers at the start of the week,” said Connor Campbell, financial analyst at Spreadex.
“Not only was the UK index dealing with the same trade war fears gripping its peers, it also had to process Brent crude’s 1.2% decline, a move that took the black stuff back towards $74.50 per barrel and left Shell and BP down 1.1% and 1.8% respectively.
“This in turn forced the FTSE 90 points lower, taking the index back under 7600 and only 50 points away from last Thursday’s 7 week nadir.”
Oil prices fell after the Organization of the Petroleum Exporting Countries said at the weekend that it would increase production by one million barrels per day in the second half of the year.
Mining shares Anglo American PLC (LON:AAL), Glencore PLC (LON:GLEN), Antofagasta PLC (LON:ANTO) and Fresnillo (LON:FRES) were also among the biggest fallers as metal prices dropped.
On the upside, AstraZeneca PLC (LON:ASTRA) gained after UBS raised its target price on the stock while fellow pharmaceutical giant Shire PLC (LON:SHP) was also higher.
11.30am: Morrisons joins war on plastic
WM Morrison Supermarkets PLC (LON:MRW) is bringing back traditional brown paper bags for loose fresh fruit and vegetables to help fight the war on plastic waste.
The supermarket chain said the move would prevent 150 million small plastic bags from being used every year.
It will also reward customers who bring their own containers to Morrisons butchers and fishmongers counters with 100 loyalty card points.
The changes are in response to growing concern about the impact of large volumes of plastic waste on the environment.
11.00am: Banks ill-prepared for hard Brexit, says EBA
Banks in the European Union are ill-prepared for a ‘hard Brexit’, the European Banking Authority has warned.
The EU banking regulator said financial institutions need to speed up contingency plans in case the UK leaves the EU without a deal in March 2019.
"Firms cannot take for granted that they continue to operate as at present nor can they rely on as yet unrealised political agreements or public policy interventions," EBA chair, Andrea Enria, said.
"Risks, capacity and legal implications must be examined and addressed."
The pound is down 0.17% versus the dollar at US$1.3239.
10.00am: German business sentiment deteriorates
German business confidence has weakened this month amid concerns about a trade war with the US.
The IFO business climate index fell to 101.8 from 102.3 in May, in line with analysts’ expectations.
“Companies were less satisfied with their current business situation. Their business expectations, by contrast, remained slightly optimistic,” said IFO chief Clemens Fuest.
“The tailwind enjoyed by the German economy is calming down.”
German IFO June Press Release https://t.co/l3iSRhI48D
— LiveSquawk (@LiveSquawk) 25 June 2018
9.30am: Old Mutual shares suspended
Old Mutual PLC's (LON:OML) shares have been suspended this morning as its wealth management division Quilter floats on the London Stock Exchange.
The initial public offering price of Quilter is 145p a share, valuing the company at £2.76bn.
The IPO is part of Old Mutual's break-up plan that it announced in 2016 after admitting that the company was too costly and complex to run.
8.45am: FTSE 100 falls at open
The Footsie defied expectations and dropped back in opening deals on Monday as traders focused on weakness in Asian markets today amid US trade war worries and ignored a pre-weekend leap by US stocks.
Around 8.45am, the FTSE 100 index was 56 points lower at 7,627, having closed 125 points stronger on Friday.
Falls by Chinese stocks led the declines in Asia on Monday after President Trump delivered another blow against the country's companies by proposing to limit their investment in US technology companies.
Rebecca O’Keeffe, head of investment at interactive investor commented: “The US has until the end of the week to finalise the list of Chinese tariffs and confirm the investment restrictions that will apply to Chinese businesses and fears are rising that we are now reaching the point of no return in a global trade war.”
She added: “The People’s Bank of China has cut their required reserve ratio for banks, freeing up money that the banks can lend in an attempt to stimulate the market and mitigate the effects of the technology and trade dispute between it and the US.
“This quantitative easing is a clear demonstration that China will do whatever they have to in order to protect their market from the present dangers. However, the size of the cut left some investors disappointed and Chinese markets fell slightly, but there is no doubt that Chinese policymakers stand ready to step in should the situation deteriorate any further.”
Among the movers, estate agency group Countrywide PLC (LON:CWP) was one of the market’s biggest fallers, down 22% to 60.7p after warning that its adjusted earnings will be lower in the first half compared to the same period in 2017, as it announced an equity raising to cut debt.
But there was good news from smaller resources stocks, with Greatland Gold PLC (LON:GGP) leaping 24% higher to 1.145p after the explorer said its first drill hole, HAD001, at its Havieron licence in Western Australia has produced “exceptional” results.
And Galantas Gold Corp (LON:GAL) (CVE:GAL) gained 8% at 6.5p after the Northern Ireland-based firm said it has now reached the main gold-bearing vein in underground development work at its Omagh mine.
Proactive news headlines:
Greatland Gold PLC (LON:GGP) said its first drill hole, HAD001, at its Havieron licence in Western Australia has produced “exceptional” results.
MySQUAR Limited (LON:MYSQ), the Myanmar-language mobile apps developer, has made a giant stride toward launching its cross-border money transfer (remittance) service. Last week, beta remittance tests were conducted and successfully completed between MySQUAR and its partners along the Singapore to Myanmar remittance corridor.
Galantas Gold Corp (LON:GAL)(CVE:GAL) has now reached the main gold-bearing vein in underground development work at its Omagh mine in Northern Ireland. Limited production will now begin, with greater output expected in a couple of months when larger scale stoping work begins.
Internet domain names specialist Minds + Machines Group Limited (LON:MMX) continues to sees exceptionally strong demand for its .vip domain in China.
Tissue Regenix Group PLC (LON:TRX) has been granted a Human Tissue Authority licence which will allow it to import and distribute its US-made products in the UK market.
Richland Resources Ltd (LON:RLD) has raised £300,000 via a convertible loan. The money will be used as working capital while the company seeks to secure further funds to allow mining to recommence at its Capricorn sapphire project in Australia.
Allergy Therapeutics PLC (LON:AGY) has announced the publication of positive data in the journal Immunotherapy, demonstrating the long-lasting efficacy of Pollinex Quattro grass in patients with grass pollen allergy.
Haydale Graphene Industries PLC (LON:HAYD) has been selected as a core tier one partner of the University of Manchester's recently completed £60mln Graphene Engineering Innovation Centre (GEIC). Under the partnership, the company will install and commission one of its HT60 plasma reactors into the new facility in Manchester.
Chaarat Gold Holdings Ltd (LON:CGH) has reshuffled its board. Chief executive Robert Benbow moves to become chief operating officer, reflecting his role as the prime mover in developing the company's Tulkubash gold project in Kyrgyzstan. Artem Volynets, previously in charge of the company's expansion strategy, becomes chief executive. And Martin Andersson, one of the company's major investors moves from being chairman to executive chairman.
Columbus Energy Resources PLC (LON:CERP) has signed a sale and purchase agreement to buy out Touchstone Exploration Inc’s (LON:TXP) 50% stake in their Icacos field joint venture project in the South West Peninsula of Trinidad.
United Oil & Gas PLC (LON:UOG) is continuing to evaluate new opportunities following a busy year which saw the explorer acquire five new licenses expanding its portfolio into Jamaica, as well as operations in Italy and the UK.
Asiamet Resources Ltd (LON:ARS) has purchased the shares in Beutong Resources Pte Ltd that it does not already own for A$4.375mln. The AIM-listed company bought a 50% stake in Beutong, which wholly-owns the Beutong copper-gold deposit in Indonesia, by exercising its option agreement with PT Media Mining Resources.
Weichai Power has received relevant approvals from the People's Republic of China (PRC) for its proposed equity investment in Ceres Power Holdings PLC (LON:CWR).
Highlands Natural Resources PLC (LON:HNR) said it has made an application to acquire leases in Arizona that are prospective for commercial volumes of carbon dioxide (CO2).
Eco Atlantic Oil & Gas Ltd (LON:ECO, CVE:EOG) has been granted a one-year extension of its PEL50 licence which covers the Tamar Block in the Walvis oil basin, offshore Namibia.
AfriTin Mining Limited (LON:ATM) has announced it has achieved ‘excellent recoveries’ in the Dense Medium Separation (DMS) test work on a bulk sample of 2 tonnes which is a potentially representative sample of the V1, V2 pegmatite bodies.
Belvoir Lettings PLC (LON:BLV), the UK's largest property franchise, announced that Andrew Borkowski stepped down as a non-executive director of the company as of today and Paul George is joining the board as a non-executive director, with immediate effect. The group noted that George is currently Executive Director of Corporate Governance and Reporting at the Financial Reporting Council.
6.40am: Gains predicted
The FTSE 100 is expected to push higher again in early trade on Monday, extending Friday’s strong rally following pre-weekend strength on Wall Street, although Asian markets were weaker today amid ongoing US trade war worries.
Spread betting firm IG expects the UK blue chip index to open about 36 points higher at 7,646, having closed around 125 points stronger on Friday, driven by US gains.
Pre-weekend on Wall Street, the Dow Jones jumped 119 points to close at 24,580, bouncing back after recent falls, although the tech-laden Nasdaq Composite ended lower, unsettled by President Trump's threat to limit investment by Chinese companies in the technology sector.
But Asian markets fell back on Monday led by Chinese stocks after Trump's latest blow against the country's companies, with a move by the People's Bank of China to halve liquidity requirements for lenders to try and alleviate the trade war impacts widely anticipated.
Oil prices, meanwhile, were lower after OPEC's production increase following Friday's meeting of the cartel.
Jasper Lawlor, head of research at London Capital Group commented: "Going into the meeting expectations were running high that there would be some agreement to raise oil production, with figures of 6000,000 – 800,000 barrels per day extra being tossed around.
"The reality is that 1.8 million barrels per day is significantly more than what the market was expecting, which explains the steep sell-off in oil as trading begins at the start of the new week. Expectations are that this level of increase will now push oil production back into surplus territory after being approximately -0.2 million barrels per day in deficit."
On currency markets, the pound held fairly steady overnight against both the dollar and the euro with little key economic data due over the next week to provide any direction for sterling aside from the third and final reading for UK Q1 GDP growth on Friday, although no revision to weak earlier readings are expected.
Corporate news thin on the ground
On the corporate front, there will also be little on Monday to excite, though investors will be looking ahead to blue chip updates from the likes of Whitbread PLC (LON:WTB), Carnival PLC (LON:CCL) and Bunzl PLC (LON:BNZL) later in the week.
First-half results from Porvair PLC (LON:PRV) on Monday are unlikely to contain any major surprises as the specialist filtration and environmental technology group came out with a trading update on 6 June, though profits are expected to be ahead of last year.
In a preview of the Porvair numbers, Graham Spooner, investment research analyst at The Share Centre said: “Around 54% of revenue comes from North America where aviation and metals filtration has been strong. Any new contract wins will be worth noting as will the benefits of expanding its facilities both in the UK and US.”
Significant announcements expected on Monday June 25:
Interims: Porvair PLC (LON:PRV)
Finals: D4t4 Solutions PLC (LON:D4T4), Polar Capital Holdings PLC (LON:POLR), Sutton Harbour Holdings PLC (LON:SUH)
Economic data: German IFO business climate; US new home sales
Around the markets:
- Sterling: US$1.3259, down 0.1%
- Gold: US$1,268.70, an ounce, down 0.1%
- Brent crude: US$68.36 a barrel, down 0.3%
City Headlines:
- Hedge fund investors have made a £1bn bet against WPP as the advertising agency grapples with the fallout from the exit of Sir Martin Sorrell.- The Times
- Uber will present its case to operate ride-hailing services in London on Monday to repeal the ban imposed by Transport of London in September 2017 – Financial Times
- Motor insurer Hastings has had to reimburse 21,000 customers after becoming the latest financial services company to face software problems – Daily Telegraph
- The US has approved UK-based GW Pharmaceuticals’ drug to treat childhood epilepsy, the first of its kind medicine that is derived from cannabis. – Financial Times
- Ineos is seeking financial support from the British government for a new manufacturing plant in Hull, with an intention to “tilt the scales” against the plan of building the facility in Belgium – Financial Times
- The former chief executive of Oleg Deripaska’s energy giant EN+, Artem Volynets, is expected to be named AIM-listed Chaarat’s chief executive early this week. – Daily Telegraph
- Pension funds are re-examining their relationship with KKR amid anger over the investment group’s treatment of workers at the bankrupt Toys R Us. – Financial Times
- China is cutting the amount of reserves the country's banks are required to keep on deposit at the central bank freeing more than $100 billion to help cushion the impact of US tariffs.- Financial Times
- Turkey's President Recep Tayyip Erdogan has won the presidential and parliamentary elections triggering a change to a powerful presidential system that places unprecedented powers in his hands. – Financial Times
- The merger and acquisition market has recorded its worst quarterly performance in at least 10 years disappointing companies that opened their war chests this year – Daily Telegraph
- Businesses that earn most of their profits abroad have benefited since the Brexit vote at the expense of domestic companies that rely on sales in the UK, according to two separate analyses of the London stock market – The Guardian