FTSE 100 closes at 7,615
Confusion over Trump plans for curbs on Chinese investment
Shire top Footsie gainer
BoE's Cunliffe warns on worrying household debt levels
FTSE 100 closed around six points lower on Thursday as European indices generally lagged as sentiment was dented due to trade and political tensions.
US stocks are mixed at the time of writing, with the S&P 500 off around 13 points at 2,709 but the Dow Jones Industrial Average up almost 56.
FTSE 100 closed down 6.06, or 0.08%, at 7,615.
FTSE 250 closed just shy of 160 points lower at 20,684, while the FTSE Small cap market shed around 25 points to 5,896.
"Optimism from the previous session quickly evaporated as the markets opened and investors positioned themselves in response to more conflicting messages from the White House and ahead of the potentially contentious EU Summit," said analyst Fiona Cincotta, at City Index.
Meanwhile, eyes are on the EU summit, where Brexit was due to have been a hot topic, but the UK failing to publish a key white paper on UK – EU post Brexit relationship demands means little or no progress is expected.
"Instead EU leaders will focus on the migrant crisis dividing the EU. German Chancellor Angela Merkel is under mounting pressure domestically to find a solution to the asylum crisis that satisfies her coalition partners," added Cincotta.
Top gainer on FTSE 100 was drugs firm Shire Plc (LON:SHP), which added 3.10% to 4,221.50p
It came after a group of Takeda Pharmaceutical shareholders trying to de-rail the £48bn (US$62bn) merger failed to get a proposal passed at the Japanese drugmaker’s annual general meeting (AGM).
The biggest laggard on Footsie was Micro Focus International (LON:MCRO), which shed 3.70% to 1,274p, while resource stocks were down as the gold price continued south. Glencore PLC (LON:GLEN) lost 2.80% to 358.80p.
3.50pm: EasyJet and Ryanair shares in turbulence as IAG expands Level airline
Shares in easyJet PLC (LON:EZY) and Ryanair Holdings PLC (LON:RYA) dropped following news that the owner of British Airways is launching its expanding its low-cost long-haul airline Level.
International Consolidated Airlines Group (LON:IAG), which started the Level brand more than a year ago, is launching short-haul routes from Vienna, Austria.
Four planes will serve 14 destinations including Gatwick and Barcelona.
This means more competition for budget carriers easyJet and Ryanair.
EasyJet shares fell 1.6% to 1,661p while Ryanair declined 2.5% to 15.45p.
3.30pm: BoE's Haldane says vote to raise interest rates 'hardly surprising'
Bank of England chief economist Andy Haldane has said his unexpected vote to hike interest rates this month should not be considered "surprising".
Haldane was one of three policymakers to vote for a rate increase this month but they were outvoted by the other six Monetary Policy Committee members to keep borrowing costs on hold.
"Some context is important here. Voting for a 25 basis point rise, a full decade after monteary policy was first placed on an emergency setting, is hardly surprising or radical," he said in a speech to the Academy of Social Sciences in London.
He added: "A Bank Rate rise of 25 basis points would still leave monetary conditions in the UK extraordinarily accommodative by any historical metric. And the aim in doing so is to lower the risk of needing to tighten policy less gradually in future and cause a sharper adjustment in the economy."
Haldane said he would have voted to raise rates at the MPC’s May meeting had data on the economy "held firm" but weak figures on consumer spending stopped him from doing so. Since then data on the consumer has "virtually without exception, bounced back strongly", he said.
His comments come after fellow MPC member Jon Cunliffe played down the prospect of interest rates rising sharply soon and voiced concerns about the high level of household debt.
2.50pm: US stocks lower as investors digest US GDP
US stocks have opened in the red as investors weighed a downward revision to first quarter US GDP growth and uncertainty over trade policy.
The Dow Jones Industrial Average fell 100 points to 24,020, the S&P 500 dropped 3 points to 2,696 and the Nasdaq declined 10 points to 7,435.
In company news, Walgreens Boots Alliance Inc (NASDAQ:WBA) and CVS Health Corp (NYSE:CVS) slumped after Amazon.com (NASDAQ:AMZN) announced that it has agreed to buy online pharmacy PillPack.
2.10pm: Homebase to cut 300 head office jobs
Struggling DIY retailer Homebase is to axe more than three hundred jobs at its support centre in Milton Keynes.
The business, which was recently sold by Wesfarmers to restructuring specialist Hilco for £1, said about a third of head office staff at the centre would go by the end of 2018.
The news comes amid speculation that Homebase would undergo a company voluntary arrangement (CVA), a type of insolvency process that usually involves store closures.
In April the company posted a 13.5% drop in sales to £211mln in the three months to the end of March.
1.40pm: US GDP revised lower
US gross domestic product for the first quarter has been revised down to 2.0% from 2.2%, reflecting lower spending on healthcare and a smaller buildup in inventories.
Economists had expected the figure to remain unchanged.
Consumer spending was revised down while fixed investment was higher than previously reported.
Now US stock futures have moved into the red. Dow Jones futures fell 55 points, S&P futures dropped 3 points and Nasdaq futures shed 11 points.
1.00pm: US stock futures edge higher
US stock futures are pointing to a higher open as investors await data on first quarter economic growth and weigh the latest news on the Trump administration’s trade policies.
Dow Jones Industrial Average futures increased 73 points to 24,208, S&P 500 futures added 8points to 2,713 and Nasdaq futures gained 25 points to 7,023.
US stocks declined on in the previous session, driven by fears that trade tensions could hurt the US economy.
Donald Trump seemed to back away from imposing tough restrictions on Chinese investment in the US on Wednesday but concerns about what he might do next has meant investors are still cautious.
“With Trump picking fights on multiple fronts and no sides showing any willingness to back down, we may have to get used to this risk adverse environment in the near-term. Markets have a tendency to move on though if we go a few weeks without any further escalation and gradually become less sensitive to the rants and reactions of those involved,” said Oanda’s Craig Erlam.
12.10pm: FTSE 100 shares slump, pound falls amid Brexit worries
FTSE 100 declined 17 points to 7,604 in midday trading and the pound fell to its lowest level since November against the US dollar.
“Concerns about a more pessimistic Brexit outlook from the country’s businesses, a lack of faith in Theresa May heading into Thursday’s EU summit, and disappointment at a dovish message from MPC member Jon Cunliffe left the pound in a sorry state,” said Spreadex financial analyst Connor Campbell.
Afternoon Market Comment: Sterling miserable, final US Q1 GDP still to come... https://t.co/tx8URSSctD
— Connor Campbell (@ConnorSpreadex) 28 June 2018
A survey from the Bank of England showed overall UK businesses expect around 3% to be wiped off their sales as a result of Brexit.
The most pessimistic 10% of businesses expected a reduction in sales of more than 10% due to Brexit. The most optimistic 10% of respondents expected an increase of just 1% or more.
Meanwhile, Theresa May is heading to Brussels for Brexit negotiations with European leaders but the market is not expecting much progress.
Earlier, Bank of England policymaker Jon Cunliffe warned about worrying levels of household debt and played down the prospect of interest rates rising sharply soon.
On the company front, Greene King (LON:GKN) shares have now lost their fizz after reporting a slide in full year profits.
Hunting PLC (LON:HTG) shares have also reversed, heading down after the energy services company took a cautious view on the market’s recovery rate.
Stagecoach Group PLC (LON:SGC) shares moved into positive territory after it said pre-tax profits on a reported basis surged last year despite taking a hit following its failed Virgin Trains East Coast franchise.
Just Eat PLC (LON:JE. was a top riser on the FTSE 100 following a slump in the previous session when it warned that profits could be subdued due to high investment costs.
Shire PLC (LON:SHP) shares jumped after a group of investors trying to block Takeda’s US$62bn takeover of the UK pharmaceutical giant were defeated at the Japanese firm’s annual general meeting over a proposal that would require shareholders to be consulted over large acquisitions.
11.20am: SSE compensates customers over delay to tariff switch
SSE PLC (LON:SSE) has paid £190,000 to compensate customers who lost money due to a delay in switching over to a new tariff.
The company withdrew from a partnership with social enterprise Ebico and took almost six months to move customers onto another tariff. Suppliers have 49 days to switch customers onto a new tariff if the one they are on is withdrawn.
“Some customers who were switched ended up on a cheaper tariff, but lost money they would have saved due to the delayed switch,” SSE said.
SSE has also made a goodwill gesture payment of £475,000 to customers who were switched but ended up paying more on the tariff.
SSE is in the process of merging with Npower, which is being investigated by the Competition and Markets Authority.
10.30am: WPP hires lawyers to investigate source of leaked emails
WPP PLC (LON:WPP) has hired two law firms to find the source of intimidating emails that were sent to current and former employees after Martin Sorrell resigned as chief executive following allegations of personal misconduct and misuse of company funds, the Financial Times has reported.
The anonymous emails contained messages between current and former staff of the advertising giant, including some that discussed Sorrell's travel arrangements and the company's bonus plan. One of the emails was written by a senior WPP executive to a junior member of staff.
NEW: WPP has hired two law firms to hunt down the source of intimidating emails sent to employees that contain exercpts of private messages between those employees https://t.co/Vb1Sy5eCXU
— Matthew Garrahan (@MattGarrahan) 28 June 2018
The messages were sent from a Proton account, an encrypted email service based in Switzerland that is commonly used by individuals seeking to protect their privacy.
WPP has hired Slaughter and May and Milbank to investigate the leak of the messages.
9.40am: Pound weakens after dovish remarks from BoE's Cunliffe
The pound has fallen 0.30% versus the dollar to US$1.3074, its lowest point since November 2017, after the Bank of England’s Jon Cunliffe played down the prospect of interest rates rising sharply soon.
Speaking on the BBC radio in response to a question about whether rates could hit 2.5% in a few years, Cunliffe said the City expects gradual increases.
“Financial markets are assuming that interest rates go up by another three-quarters of a percentage point over the next couple of years,” he said.
“We do our forecasting on the basis of where the financial markets have those interest rates and we think we have inflation at target at those sorts of levels.”
He also voiced concerns that some households have run up high levels of debts, which could see them in peril if Britain falls into recession.
UK household debt stands at £1.8trn, with about 75% of that being mortgage debt and the rest mostly in consumer credit.
Connor Campbell, financial analyst at Spreadex, said: “With the Bank of England concerned about household debt, and investors doubtful about the smooth progress of Brexit despite Theresa May’s attempts at reassurance ahead of the day’s key EU summit, sterling fell 0.4% against the dollar, taking cable under $1.31 for the first time since early November last year.”
8.20am: FTSE 100 opens lower
The FTSE 100 opened in negative territory, tracking losses on Wall Street and most Asian indices, amid uncertainty over US President Donald Trump’s plans to restrict Chinese investments.
The London index fell 16 points to 7,604 around 8.20am.
The Trump administration on Wednesday backed off a plan to impose aggressive new curbs on Chinese investment in the US.
Instead, it supported the expansion of the Committee on Foreign Investment to give the government body more power to crack down on a wider variety of investments from China, including minority stakes in American firms and real estate transactions near military bases or other national security facilities.
Greene King PLC (LON:GNK) shares edged higher as the pub operator reported declines in full year revenues and profits but maintained its dividend.
Hunting PLC (LON:HTG) shares jumped after the energy services company said it “remains comfortable” with the market consensus for the 2018 full year.
Stagecoach Group PLC (LON:SGC) shares are under pressure as it rebased its full year dividend following a decrease revenue and pre-tax profit.
Proactive news headlines:
Data from the ongoing Phase II study of Synairgen PLC’s (LON:SYN) drug, SNG001, has suggested it is having the desired effect in boosting the antiviral defences of chronic obstructive pulmonary disease (COPD) sufferers.
Faron Pharmaceuticals Ltd (LON:FARN) said it plans to file a clinical trial application for Clevegen after a successful study into the safety and efficacy of the cancer treatment. Clevegen showed no toxicologically relevant changes in any subject in dose escalation studies.
Arc Minerals Limited (LON:ARCM) has reported a 3mln ounce gold mineral resource at the Akyanga Deposit, part of its Casa project, located in the eastern part of the Democratic Republic of Congo.
Kibo Mining PLC (AIM:KIBO) has finalised the joint venture agreement with Mozambique energy company Termoeléctrica de Benga SA regarding the development of the Benga Independent Power Project (BIPP).
Bushveld Minerals Limited (LON:BMN) said it has successfully completed the second phase of the three-phased expansion project at Bushveld Vametco, on time and within budget The AIM-listed firm said this will allow the company to take advantage of the high vanadium price which has persisted in the first half of 2018.
Live Company Group PLC (LON:LVCG) said its sUBSidiary, Bricklive Touring Limited, has signed a show licence agreement with Oracle Projects International Co. Limited and Live Digital, Inc. Limited to stage and promote its BRICKLIVE Animal Paradise shows.
Cradle Arc PLC (LON:CRA), the owner of the Mowana copper project in Botswana, said in its full-year results, it is encouraged by the long-term pricing fundamentals for copper.
Amur Minerals Corporation (LON:AMC) has reported that RPM Global has completed open pit optimisation analyses on the company’s Ikenskoe/Sobolevsky and Kubuk deposits located within its Kun-Manie mining licence in Russia.
Ariana Resources PLC (LON:AAU) has unveiled a Joint Ore Reserves Committee (JORC) exploration target for its Salinbas gold project in Turkey.
Eco Atlantic Oil & Gas Ltd (LON:ECO, CVE:EOG) has announced the dates for public meetings to discuss its Environmental Clearance Certificate application in Namibia.
Tlou Energy Limited (LON:TLOU ASX:TOU) said it is currently planning a drilling programme for production wells at its Lesedi coal bed methane (CBM) project to start in the third quarter of this year.
Jersey Oil & Gas PLC (LON:JOG) has told investors that the 3D seismic survey over the P.2170 licence area, which covers the Verbier discovery and Cortina prospect, has been completed. The AIM-quoted firm expects to receive the final imaged data from Petroleum Geo-Services in the first quarter of 2019.
Commercial properties specialist Circle Property PLC (LON:CRC) hailed another successful year, with its net asset value per share rising 25% in the year to the end of March.
StatPro Group PLC (LON:SOG) has appointed Gordon Bloor, as the CEO of its data services divisions, Source:StatPro ahead of the firm’s restructuring next year. The AIM-listed provider of cloud-based portfolio analytics and asset pricing services noted that Bloor was previously CEO of Tenfore, a real-time data provider covering both Exchange traded and OTC markets.
Echo Energy PLC (LON:ECHO), the South and Central American focused upstream gas company, has appointed Shore Capital Stockbrokers Limited as its joint corporate broker with immediate effect. The firm said Shore Capital will work alongside Smith & Williamson Corporate Finance Limited and Hannam & Partners as the company's nominated adviser and joint broker respectively.
Metal Tiger PLC (LON:MTR), the AIM-listed investor in strategic natural resource opportunities, yesterday announced that Alastair Middleton had resigned from his position as Technical Director with immediate effect. The group said Middleton resigned to pursue other interests.
i3 Energy PLC (LON:I3E), the independent oil and gas company with assets and operations in the UK, announced that a copy of its new corporate presentation is now available on the company's website.
6.40am: Softer start expected in London
A soft start was expected in London on Thursday after US stocks suffered heavy losses on Wednesday.
After rising 84 points yesterday to close at 7,622, the FTSE 100 was expected to give back more than a third of those gains at the outset, opening at around 7,593.
US stocks had a switchback ride yesterday, with the main indices, from a position of strength early in the session, finishing deep in the red, as traders banked gains in banking and technology stocks.
The tech-heavy Nasdaq Composite crashed 1.5%, or 117 points, to 7,445, while the old warhorse – the Dow Jones average – closed 0.7% lower (166 points) at 24,118. The S&P 500 finished 23.4 points lower at 2,699.6.
“Despite an early burst higher for the Dow following Trump’s turnaround on Chinese restrictions, the index surrendered its biggest daily gain in four months,” observed Jasper Lawler of London Capital Group.
In Hong Kong and Shanghai, there was still some enthusiasm for stocks engendered by news that President Trump will back away from his plans to slap restrictions on Chinese companies investing in US technology.
Hong Kong's Hang Seng index was up 111 points at 28,467 while the Shanghai Composite was up 2 at 2,815.
In Tokyo, the Nikkei 225 was 10 points higher at 22,281.
Back in Blighty, corporate news flow will be centred around the oil sector, with a bit of pub gossip thrown in for good measure.
There’ll likely be a healthy focus on oil prices and margins as Tullow Oil PLC (LON:TLW) releases its trading update, not least because it follows the OPEC meeting on June 22.
In a recent note, analysts at UBS said that attention will be on Tullow’s growth project, specifically on its drilling in Ghana where four wells are in the schedule.
John Wood Group PLC (LON:WG.) will report first-half trading news, its first update since completing the acquisition of Amec Foster Wheeler earlier this year, so focus will likely be on progress of the integration of Amec.
Fellow oilfield services group Hunting PLC (LON:HTG) will also issue a first-half trading update, with the FTSE 250-listed firm having already flagged that it had a strong start in 2018 driven by high activity levels within the onshore North American completions market.
On the beer front, investors already have a fairly good idea of what to expect from brewing and pUBS group Greene King, thanks to a trading update in April just before the end of its financial year.
Attention will, therefore, be on the start of the current financial year and the outlook, as pub groups battle higher costs and squeezed household incomes, which have put pressure on their top and bottom lines.
The recent warm weather should have provided some respite, while the World Cup also traditionally provides a boost for the industry, especially if the England team manages to avoid embarrassing itself, which it has so far.
Significant announcements expected
Trading updates: Tullow Oil (LON:TLW), Hunting PLC (LON:HTG), John Wood Group PLC (LON:WG.)
Finals: Greene King PLC (LON:GNK), Stagecoach Group PLC (LON:SGC), BCA Marketplace PLC (LON:BCA), James Latham PLC (LON:LTHM), Redcentric PLC (LON:RCN), XPS Pensions Group PLC (LON:XPS)
Ex-dividends: To knock 6.18 points off FTSE 100 - British American Tobacco PLC (LON:BATS), British Land PLC (LON:BLND), Burberry Group PLC (LON:BRBY), Coca-Cola HBC PLC (LON:CCH), International Consolidated Airlines Group PLC (LON:IAG)
Economic data: US weekly jobless, US Q1 GDP final reading
Around the markets
- Sterling: US$1.3083, down 0.3 cents
- 10-year gilt: yielding 1.249%
- Gold: US$1,253.00 an ounce, down US$3.30
- Brent crude: US$77.39 a barrel, down 23 cents
- Bitcoin: US$6,100.43, down US$26.72
Business headlines
The Times
Europe’s financial regulators are not able to create the cross-border banking system for an orderly Brexit
Facebook has reversed a ban on bitcoin advertisements in an apparent attempt to recapture sales in the lucrative market for digital currency ads.
The Guardian
The African low-cost airline Fastjet has given a notice to investors that it was at risk of going bust
Global ticketing group Ticketmaster has revealed a major data breach that has affected tens of thousands of people
The Financial Conduct Authority is investigating allegations of insider trading at the building and services contractor Carillion before its spectacular collapse in January.
The Daily Telegraph
The Crown Estate is considering expanding its investment in industrial property to capitalise on booming demand from online sellers.
Apple and Samsung have come to an agreement in their patent infringement dispute, bringing a seven-year-long battle to a close.