FTSE 100 closes up around 21 pts
US Treasury Secretary labels Trump WTO comments story "fake news"
Strong start on Wall Street as US stocks close out tough week
BAE Systems up 2.34%
FTSE 100 closed in positive territory on Friday, as US stocks also gained, but the UK blue-chip benchmark was lower in the week.
"Stock markets are higher as trade tensions have wound down a little," said David Madden, at CMC Markets UK.
"The US and China are not any closer to resolving the trade spat, but the language from Washington DC is certainty less aggressive than it has been in recent weeks, and this has encouraged traders to snap up equities."
On Wall Street, equity markets were aided today by cooling trade tensions, bullish company updates and respectable economic indicators, said Madden.
FTSE 100 closed around 21 points higher at 7,636, the FTSE 250 added nearly 147 points at 20,830.
The FTSE 100 was down around 0.60% though on the week as whole.
Top riser on Footsie on Friday was Micro Focus International (LON:MCRO), which added 3.89% to 1,323.5p, while the top loser was cruise operator Carnival Corp (LON:CCL), which sank 1.54% to stand at 4,347p.
BAE Systems PLC (LON:BA.) added 2.34% to 646.80p after it landed an A$35bn (£20bn) contract to build frigates for the Australian navy.
The group beat rival bids from Italy’s Fincantieri and Spain’s Navantia for the contract. Under the agreement, BAE will design and build nine Hunter class frigates for the Australian navy, replacing the current Anzac class frigates.
3.30pm: Mnuchin eases fears
US Treasury Secretary Steve Mnuchin has said that a report by news site Axios that Trump had repeatedly told White House officials he wanted the US to exit the World Trade Organisation (WTO) was incorrect.
Speaking to the Fox Business Network, Mnuchin called the report “fake news”, saying it was “not right”.
He added: “The president has been clear, with us and with others, he has concerns about the WTO, he thinks there’s aspects of it that are not fair, he thinks that China and others have used it to their own advantage, but we are focused on free trade. That’s what we’re focused on - breaking down barriers.”
2.45pm: US stocks open higher as markets close out week, month, and quarter
Wall Street opened higher on Friday in the final day of the second quarter, led by gains in several bank stocks.
The Dow Jones Industrial Average was up 220 points at 24,441 shortly after the open, while the S&P 500 was up 19 points at 2,736 and the Nasdaq was up 51 points at 7,556.
1.45pm: Wall Street expected to make strong start
US stocks are looking to start in positive territory on Friday, with gains expected to be led by banking stocks and boosted by a rally in European equities.
The session could mark a high finish for the market after being tossed around this week by fears of a global trade war, with signs China may be trying to ease tensions as it relaxed restrictions on foreign investment in sectors such as agriculture and banking yesterday.
There was also good news from the financial sector, with several banks including JP Morgan Chase & Co (NYSE:JPM) announcing plans to return capital to shareholders after passing the Federal Reserve’s stress tests.
Mike van Dulken, head of research at Accendo Markets, commented: “Firstly, Chinese stocks have bounced strongly in Asia overnight. Beijing also looks set to loosen foreign ownership rules, something which help Tech shares already finding support after the recent pullback. Furthermore, financials will like news that the Fed has approved their dividend/buyback plans, even if some weren’t allowed to increase what they paid out last year,”.
The US will also be taking a lead from European markets, which rallied after EU leaders reached a deal over the crisis of migration in the early hours, taking pressure off German Chancellor Angela Merkel who had been pushing hard for an agreement.
Italy had threatened to veto any agreement unless a new solution was found, given the country has seen a heavy influx of migrants. The fact the leaders were able to reach agreement on a contentious issue also removes some danger of the EU splitting up altogether.
1.00pm: Trump repeatedly tells aides he wants to quit the WTO
A report by news website Axios has said US president Donald Trump has repeatedly told White House officials that he wants the US to leave the World Trade Organization (WTO).
Citing people who had discussed the issue with Trump, Axios said the president had repeatedly told advisers: “I don’t know why we’re in it. The WTO is designed by the rest of the world to screw the United States.”
The revelation follows a US challenge to the global trade body last Friday when it told the WTO that appeals rulings in trade disputes could be vetoed if they took longer than the allowed 90 days.
12.00pm: FTSE 100 posts solid gains as sterling boosted by upward GDP revision
As the market moved toward midday the FTSE 100 has managed to hold on to a solid set of gains, with the pound receiving a boost from a surprise upward revision in the UK’s first quarter GDP growth.
Craig Erlam, senior market analyst at OANDA, said: “The upward revision [of GDP] goes some way to confirming the view of the Bank of England that the first quarter wasn’t as bad as it initially appeared and gives further reason to follow through on plans to raise rates even if that may come a few months after initially intended.
He added: “The data comes on top of improvements to other economic indicators for the UK and the meeting last week in which Andy Haldane became the third policy maker to vote in favour of a hike. Markets are currently pricing in a 56% chance of a rate hike at the next meeting in August, something that should increase if we continue to see these improvements in the data before then.”
In company news, FTSE 100 miner BHP Billiton PLC (LON:BLT) has agreed to pay US$211mln to the Renova Foundation, which was set up to support victims of the Samarco mining disaster in Brazil.
In November 2015, a dam at the Samarco mine co-owned by BHP and Brazilian company Vale burst, leaving 19 people dead and destroying two villages.
Of the total financial support BHP is to provide the Renova Foundation, US$158mln will go towards funding remediation and compensation programmes identified under an agreement with Brazilian authorities.
BHP’s shares were up 1.9% at 1,717p in late morning trading.
Meanwhile, further afield, Chinese mobile phone company Xiaomi has announced its initial public offering (IPO) ahead of a float on the Hong Kong stock exchange on 9 July.
The IPO is expected to give the company a market value of US$55.7bn, with Peter Garnry, head of equity strategy at Saxo Bank, saying: “Overall, the valuation is still high compared to its peers but the company is uniquely positioned to become a behemoth in emerging markets on smartphones.”
11.30am: Eurozone inflation pushes past ECB target in June
Inflation in the 19-member eurozone rose past the European Central Bank’s (ECB) target in June, according to data from Eurostat.
During the month inflation rose to 2% from 1.9% the month before as a big surge in energy costs offset a subdued rise in the price of services and industrial goods.
The ECB targets inflation at just under 2%, with the figures expected to slow again as the energy cost spike passes through the numbers, with inflation not expected to hit the target again until 2020.
In a clear sign that underlying inflation is still muted, price growth excluding volatile food and energy costs, an item closely watched by policymakers, even slowed last month, easing to 1.2% from 1.3%, as services inflation slowed sharply.
11.00am: Sterling jumps on positive UK GDP data
The pound has been lifted against the dollar following the surprise upward revision on the UK’s first quarter GDP to 0.2% from 0.1%.
In mid-morning trading, the pound was up 0.57% at US$1.3151 against the dollar.
Jacob Deppe, head of trading at Infinox, commented: "The last revision to GDP is generally a damp squib, but not this time round as the Pound jumped on the surprise upward revision. We've by no means witnessed an economic volte face but against a backdrop of impending Brexit, every little helps. Sterling responded accordingly, with the Dollar taking most of the impact.”
John Dolan, senior dealer at Fexco Corporate Patments, added: “Many marketwatchers had written off the UK’s first quarter as a bust, so this eleventh hour upward revision caught them off guard. While the scale of the increase is modest – from glacial to merely slow growth – in the current context it must count as an injury time equaliser for the British economy. On this basis there is still momentum in Britain’s economy, even if the construction sector remains on life support. Either way the positive surprise has helped sterling end a disappointing week with a spring in its step.”
10.30am: UK Q1 GDP revised up as services sector output rises in April
The British services sector gained momentum in April according to the latest figures from the Office for National Statistics (ONS), while the final reading of the UK’s first quarter GDP was revised upwards.
The new data showed that services output rose by 0.3% on the month in April, the fastest growth since November last year and is 1.6% higher than a year earlier.
For the GDP figures, the initial reading of 0.1% growth was unexpectedly revised up to 0.2% after the ONS scaled back its estimate of the decline in construction output for the quarter.
For the year as a whole, GDP growth forecasts were unchanged at 1.2%, the weakest annual growth rate since the second quarter of 2012 and in line with earlier estimates from the ONS.
The Bank of England predicts GDP growth will pick up to 0.4% on a quarterly basis in the three months to the end of June, as the economy rebounds from February and March’s snowy weather.
10.00am: UK housing market creeps up in May but consumers more cautious
The UK housing market ticked upwards in May according to new figures from the Bank of England (BoE), however consumer data painted a more cautious picture.
The central bank said the number of mortgages for house purchases had risen to a four-month high of 64,526 in May, up from 62,941 in April.
However, there were signs that the British consumer economy remained subdued despite a modest pick-up in wage growth, with the data showing the growth rate in unsecured consumer lending slowing to 8.5% in the year to May, down from 8.7% in April.
Earlier this week the BoE said consumer credit continued to expand rapidly but measures already taken to stop overheating were having an impact, with banks reporting a significant tightening of unsecured credit.
9.30am: European funds body says EU retail fund rules misleading investors
The top asset management trade body in Europe has voiced concerns that new European Union fund disclosure rules are causing “serious detriment” to retail investors.
The EU’s Packaged Retail Investment and Insurance Products (PRIPPS) directive, which came into force in January, aims to give investors a better idea of a fund’s likely performance and costs through a so-called ‘Key Information Document’, or KID.
The European Fund and Asset Management Association (EFAMA) said that evidence from its members to see how the rules were affecting the industry proved they were failing to meet the aim of being “clear, fair and not misleading”.
Specifically, EFAMA said the method used to calculate transaction costs was producing confusing and unreliable figures, with costs consistently over- or under-estimated and sometimes even showing a negative figure.
As a result, asset managers were being forced to make claims about their products that hindered investors’ ability to understand them.
The intervention follows comments from the UK’s Financial Conduct Authority, which said it planned to investigate the impact of PRIPPS after its head, Adnrew Bailey, said he was “concerned” about the impact of the new rules.
8.40am: London stocks track gains in Wall Street
The FTSE 100 has opened in positive territory, rising 75 points to 7,691, led by a rally in mining shares.
Rio Tinto PLC (LON:RIO), BHP Billiton PLC (LON:BHP), Anglo American PLC (LON:AAL) and Glencore PLC (LON:GLEN) were among the top risers on the back of higher metal prices.
BAE Systems PLC (LON:BA) shares gained after landing a £20bn contract to build frigates for the Australian navy.
John Laing Group PLC (LON:JLG) was on the front foot after maintaining its full year guidance for investments at £250mln, saying it has identified a “strong pipeline” of opportunities.
Outsourcer Serco Group PLC (LON:SRP) slumped after lowering its range of expected revenues, saying market conditions are “less than ideal”.
Across the pond, the US market closed higher, supported by gains in tech, telecoms and financials while Chinese stocks rebounded from a recent sell-off over trade war fears.
Proactive news headlines:
Action Hotels PLC (LON:AHCG) looks set to go private with two existing directors backing a group that has made an indicative cash offer 50% above last night's closing share price.
Diversified Gas & Oil PLC (LON:DGOC) shares soared 30% higher on Friday as trading in the stock resumed after news it has raised US$250mln via an oversubscribed placing priced at 97p per share to part fund the recently announced US$575mln acquisition of additional assets in the Appalachian Basin.
Anglo Asian Mining PLC (LON:AAZ) has said that 2017 was a year of delivery for the company as it has implemented a wide-ranging optimisation and expansion strategy to provide long-term sustainable production growth at Gedabek contract area.
AppScatter Group PLC’s (LON:APPS) chairman Clive Carver will chart the progress made by the app monitoring service over the past year at its annual general meeting later today The AIM-quoted firm also confirmed that finance director Manish Kotecha has stepped down to pursue other business interests.
Highlands Natural Resources PLC (LON:HNR) has reported high nitrogen purity levels from tests at its Barret 1-14B well in Kansas. The AIM-listed oil and gas producer said flow tests had indicated initial nitrogen purity levels of over 99.59%, above purity levels for nitrogen used as a preserving agent by food and beverage companies and could therefore be used by this industry immediately.
Kibo Mining PLC (LON:KIBO) has issued a rebuke to press speculation around the status of its negotiations with the Tanzania Electric Supply Company (TANESCO) over the development of the Mbeya Coal to Power Project.
Strat Aero PLC (LON:AERO) has announced that strong new business prospects at Geocurve Limited and Gyrometric Systems Limited allow the board to look forward to the future with optimism.
A new basin modelling study commissioned by Sound Energy PLC (LON:SOU) has suggested the possibility of a “potentially significant oil play” at its Anoual permit area in eastern Morocco.
Bushveld Minerals Limited (LON:BMN) has announced that 2017 was a transformational year, which saw the company ‘significantly progress’ the development of each of its platforms.
ECR Minerals PLC (LON:ECR) reported a narrower loss in its half-year results as it turned its focus squarely on projects in the Australian state of Victoria.
Ariana Resources PLC (LON:AAU), the exploration and development company operating in Turkey, has said it continues to expect its gold production figures for the full year “to be in line with expectations.”
Itaconix PLC (LON:ITX) has had trading its shares suspended on AIM with immediate effect, pending clarification of its financial position, as it has, as previously announced, a requirement for further funding. In a brief statement, the speciality polymers maker said: “Whilst the Company has been, and continues to explore all funding and other options, there is no guarantee that a fund raise will be successfully concluded.”
European Wealth Group Limited (LON:EWG) saw a 13% increase in assets under management (AUM) in 2017 to £1.7bn.
Latin America-focused junior oiler Echo Energy PLC (LON:ECHO) has appointed Martin Hull as its new chief financial officer.
Amphion Innovations PLC (LON:AMP), the developer of medical, life science, and technology businesses, announced the appointment of Philip Tansey as a non-executive director of the company, effective immediately.
SDX Energy Inc. (LONLSDX) (TSXV:SDX), the Egypt-focused oil and gas company, has appointed Timothy Linacre as an independent non-executive director with immediate effect. The group said Linacre will become chairman of its Audit committee and join the Compensation Committee.
Tekcapital PLC (LON:TEK), the UK intellectual property (IP) investment group focused on creating marketplace value from university technology, announced that finnCap Limited has been appointed as its nominated adviser and joint broker with immediate effect.
Real Good Food PLC (LON:RGD) said yesterday that, following negotiations its three major shareholders have agreed to extend the final repayment dates of each of their funding agreements to 30 June 2020 with no change to the interest rate payable by the company.
6.45am: FTSE 100 to open higher
The Footsie is expected to open higher at the end of the week, month, and first half of the year, but uncertainty over global trade and political friction continued to dampen sentiment.
Spread betting firm IG expects the FTSE 100 index to open around 40 points higher at 7,655 after closing 6 points lower yesterday at 7,615 as sentiment evaporated over Brexit concerns and mixed policy messages from the US government.
Brexit was expected to be a hot topic at an EU summit that ended just before dawn today, but with the UK failing to publish a key white paper on UK /EU post-Brexit relationship demands, the issue fell by the wayside and was replaced by an agreement between member states on migration into the bloc.
Michael Hewson, chief market analyst at CMC Markets UK, said: “The shambolic approach adopted by the UK government, as well as the failure of the opposition to hold the government to account, has raised concerns about the calibre of the political class in adopting any type of orderly Brexit process, as we head towards the business end of the negotiation process.”
The Dow Jones Industrial Average closed up 98 points yesterday at 24,216, while the S&P 500 was up 16 points at 2,716 and the Nasdaq closed up 58 points at 7,503, with stocks driven higher by a rally in financial and tech companies despite weaker-than-expected US GDP growth for the first quarter.
In Asia today, the Japanese Nikkei 225 was up 6 points at 22,276, while Hong Kong’s Hang Seng was up 335 points at 28,835 as markets digested a backpedal from the White House on a potential crackdown on Chinese investment in the US.
On currency markets, the pound was up 0.3% at US$1.3115 against the dollar and down 0.4% at €1.1253 against the euro as investors awaited the final reading of the UK’s first quarter GDP and the April Index of Services data.
Serco and Reach up to close out the week
As the markets prepare for the weekend (and the next round of World Cup matches), most eyes will be on trading updates from outsourcer Serco and media group Reach (formerly known as Trinity Mirror).
Investors will be hoping for more positive news from Serco following an announcement at the start of the month that it had secured a US$900mln contract from the US Department of Health and Human Services to help determine healthcare eligibility of citizens on Federal Health Insurance Exchanges.
Meanwhile, Reach’s update will be eyed for any potential surprises ahead of its interim results due next week in addition to any progress on the firm's acquisition of the Daily Express and Daily Star after the £127mln takeover was approved by the UK government last week.
Significant announcements expected:
Friday June 29:
Trading updates: Serco PLC (LON:SRP), Reach PLC (LON:RCH)
Finals: 7Digital Group PLC (7DIG), European Wealth Group Ltd. (LON:EWG)
Economic data: UK GfK consumer confidence; UK Q1 GDP final reading; UK BoE consumer credit, money supply, mortgage approvals; US personal income & consumption; US PCE index; US Chicago PMI; University of Michigan consumer confidence
Around the markets:
• Sterling: US$1.3115, up 0.3%
• Gold: US$1,247.8 an ounce, no change
• Brent crude: US$77.76 a barrel, down 0.12%
City Headlines:
• The Times: Amazon's deal to buy an online drug distributor PillPack wiped billions of dollars off American pharmacy chains’ market value
• The Daily Telegraph: The International Monetary Fund has warned that the outlook for the global economy has worsened, with major cracks now “closer” than it had anticipated
• Financial Times: Italy has stalled an EU leaders' summit demanding “concrete” help to deal with migration, escalating tensions at a gathering that could decide German Chancellor Angela Merkel's fate