FTSE closes higher
US markets mixed going into holiday
Construction PMI at seven-month high
FTSE 100 closed in positive territory as investors came back to equities after being fearful over trade wars.
The UK blue-chip benchmark closed up over 45 points higher at 7,593, while FTSE 250 added over 59 points at 20,665.
On Wall Street, the picture is more mixed though as stocks head towards an early finish ahead of the July 4 holiday.
The S&P 500 is up over six points at 2,724, while the Dow Jones Industrial Average is down nearly five points to 24,303.
"Stocks are higher as improved political relations in Germany and constructive trade comments from China has lifted investor sentiment," said David Madden, at CMC Markets.
"Angela Merkel has brokered a deal with Horst Seehofer which will keep their alliance intact. The positive mood might not last long though, as the Social Democrats need to inspect the agreement.
"An official from the People’s Bank of China announced they will not use the yuan as a tool in the trade spat with the US, and traders are taking this as a step in the right direct for global trading relations."
Top laggard on Footsie was commodities giant Glencore (LON:GLEN), which shed over 8% to 321p after the US Department of Justice (DoJ) requested information from the company regarding its businesses in Nigeria, Venezuela and the Democratic Republic of Congo.
BT Group (LON:BT.A) was the top gainer on the blue chip excahnge and added 2.84% to stand at 223p.
3.50pm: FTSE 100 doubles its gains
The FTSE 100 continued to gain as the afternoon progressed, rising above the 7,600 mark.
“The Index was able to double its gains in large part thanks to the fact Glencore, which was at one point down 10% after news broke it was under investigation by the US Department of Justice for money-laundering, halved its own losses as the day went on.
"As for the pound, it slipped from its US$1.32-teasing peak against the dollar, but still rose 0.4% thanks to a 7 month high UK construction PMI,” said Connor Campbell, financial analyst at Spreadex.
2.45pm: US opens with early gains
FTSE 100 continues to rise, reaching the highest point of the day, and is up 59 points at 7,608.
Meanwhile US stocks opened higher on Tuesday, with major indexes up for the fourth straight day.
Dow Jones opened 114.14 point higher at 24,421 and S&P opened 7 points higher at 2,733 while Nasdaq up 4 points at 7,572. The stock market will be closed on Wednesday for the 4 July holiday.
1.45pm: FTSE 100 continues to inch higher
FTSE 100 continues to inch higher and is up 38 points at 7,586
“The FTSE 100 is back around its highs of the day, flirting with a breakthrough to confirm a bullish reversal from a poor start to the new week, month and quarter,” said Mike van Dulken, head of research at Accendo Markets.
“Sentiments still dented by trade war concerns and political uncertainty. While the latter has reduced in Germany, it’s still alive in the UK, especially given Brexit’s potential impact on UK-EU trade, “ he said.
12.15pm: US to open 120 points higher
After a hit in the early morning, FTSE 100 continued to climb and was up 38 points at 7,586.
“The FTSE would have likely been higher, however, if it weren’t for a couple of factors, “ said Connor Campbell, financial analyst at Spreadex.
“Firstly, the pound benefited from the best construction PMI for 7 months, the 53.1 reading sending sterling up half a percent against the dollar – with cable teasing US$1.32 – and 0.1% against the euro.
Secondly, and perhaps more pertinent, was the situation over at Glencore,” he concluded.
Commenting on construction PMI, Howard Archer, chief economic advisor to the EY ITEM Club, said: “All construction sectors saw growth in June, led by the house building sector. There was a pick-up to a 4-month high in commercial activity. However, Civil engineering activity growth slowed.”
“Most encouragingly, new orders growth improved to a 13 month high. Adding to this improved picture, confidence in the sector also picked up from May's 7 month low while employment growth was at a one year high.
“However, one area of concern saw input costs pick up at the sharpest rate for 9 months.”
Over in the US, Dow Jones is expected to open 118 points higher at 24,425, and S&P 500 expected to open 10 points up at 2,736, said David Madden, market analyst at CMC Markets UK.
11.00am: Glencore hit by US subpoena regarding money laundering
Glencore PLC (LON:GLEN) shares slumped as it received a subpoena from the US Department of Justice to produce documents and other records with respect to compliance with the Foreign Corrupt Practices Act and US money laundering statutes.
They said the requested documents related to its business in Nigeria, the Democratic Republic of Congo and Venezuela from 2007 to present.
Joshua Mahony, market analyst at IG, said: “The fear for investors is that the firm will likely be hit by a substantial fine if found guilty of fraud and money laundering, the size of which will be subject to significant speculation.”
READ: Glencore investors likely to proceed with caution after US subpoena, says analyst
10.10am: Construction PMI at seven-month high
FTSE 100 plummeted early morning on the news that Glencore PLC (LON:GLEN) received a subpoena from the US Department of Justice regarding money laundering, but rebounded, helped by the strong construction PMI index.
The IHS Markit/CIPS UK construction Purchasing Managers Index (PMI) revealed that construction output growth reached seven-month high in June.
The construction PMI index rose to 53.1 in June, up from 52.5 in May and above the 50.0 no-change value for the third month running.
June data revealed that house building remained the best performing area of activity, and new order volumes rose at the fastest pace since May 2017.
The survey reported that the average cost burdens increased at a sharp and accelerated pace in June, and was steepest for nine months.
Duncan Brock, group director at the Chartered Institute of Procurement & Supply, said: “With the fastest rise in new orders since May 2017, it appears the brakes are off for the construction sector. Despite being hampered by economic uncertainty, firms reported an improved pipeline of work as clients committed to projects and hesitancy was swept away.”
1. UK construction PMI up to 53.1 in June from May's 52.5. As per usual, residential construction was the best performing area. Markit reporting more new work in June and also builders getting their input purchases in the face of sharply rising prices. pic.twitter.com/TP4dzqSOsO
— Rupert Seggins (@Rupert_Seggins) July 3, 2018
8.40am: FTSE 100 tracks US gains
The FTSE 100 opened higher following a positive close on Wall Street even as US President Donald Trump fuelled trade war concerns.
The Trump administration said on Monday that it does not want China Mobile to provide telecom services within the US due to national security concerns following cyber attacks.
“This understandably adds to fears of a US-China trade war stepping up another level (£34bn US tariffs on Chinese goods due Friday), putting at risk the rare occurrence of synchronised global growth,” said Mike van Dulken, head of research at Accendo Markets.
On the company front, ASOS PLC (LON:ASC) shares gained after announcing the appointment of former ITV chief executive Adam Crozier as its chairman.
St Modwen Properties PLC (LON:SMP) rallied after hiking its interim dividend and leaving its full year guidance unchanged.
McBride PLC (LON:MCB), on the other hand, was under the cosh after saying pre-tax profit for the year is now expected to be “marginally below” the lower end of analysts' forecasts.
In economic data, the Markit/CIPS UK construction purchasing managers’ index will be released at 9.30am followed by Eurozone retail sales data at 10am and the US factory orders report at 3pm.
Proactive news headlines:
Eurasia Mining PLC (LON:EUA) has received approval for its Monchetundra platinum group metals mine from the Russian Ministry of Economic Development (MOED). The mine permit application, for the Monchetundra project, which contains more than two million PGM ounces, is now awaiting sign off at the Ministry of Natural Resources. The application process remains on track to be completed by late summer.
Kibo Mining PLC (LON:KIBO) has signed a Strategic Development Agreement (SDA) with China-based SEPCOIII, one of the world's largest power engineering, procurement and construction contractors, to work with Kibo towards enhancing its strategy and the development of its portfolio of energy projects. As part of the SDA, SEPCOIII has committed to a two-stage equity investment into Kibo, endorsing the company's strategy and its position in the African power market.
Echo Energy PLC (LON:ECHO) told investors it has begun drilling on its fourth and final well in its Argentina programme, with the spudding of the CSo-2001d well at the Fracción D asset. The well is targeting a prospect that was identified on 2D data and it is due to have a 1,514 metre measured depth.
Bango PLC (LON:BGO), the mobile commerce company, has partnered with Pandora (NYSE:P), the largest music streaming service in the USA. The arrangement will see Bango’s technology used to power subscriptions through Pandora’s reseller partners.
Shefa Yamim Ltd (LON:SEFA) has boosted the number of carats recovered from bulk sampling at Kishon Mid-Reach Zone 1 in Israel. The recovery from 6,384 tonnes of ore sampled in Zone 1 now stands at approximately 9,778.15 carats. A total of 2,176.77 carats of garnets were recovered.
App monitoring service AppScatter Group PLC (LON:APPS) has completed the £13.5mln acquisition of German firm Priori Data.
Motif Bio PLC (LON:MTFB) (NASDAQ:MTFB), a clinical-stage biopharmaceutical company specialising in developing novel antibiotics, announced that Robert Bertoldi, president and CFO of Amphion Innovations PLC (LON:AMP), has informed the company of his decision to resign as a director with effect from July 16, 2018.
Mporium Group PLC (LON:MPM), the technology firm delivering event-driven marketing, announced that finnCap Ltd has been appointed as its nominated adviser and broker with immediate effect.
Arc Minerals PLC (LON:ARCM) announced that it will be hosting an Investor presentation in London on 11 July 2018 at Prince Philip House, 3 Carlton House Terrace, St James', London SW1Y 5DG from 6pm-8pm.
Vast Resources PLC (LON:VAST), the AIM-listed mining company with operating mines in Romania and Zimbabwe, announced that Andrew Prelea, the company's CEO, will be presenting at an investor evening hosted by Turner Pope Investments Ltd on Monday 16 July 2018, in London EC2, at 5pm.
6.45am: FTSE 100 to open slightly higher
The Footsie is expected to open slightly higher this morning, however an escalation of US trade disputes with China and the EU continue to make markets skittish.
Spread betting firm IG expects the FTSE 100 index to open around 13 points higher at 7,560 following an 89-point decline on Monday to finish at 7,547 after Canada slapped retaliatory tariffs on US goods at the weekend while Trump yet again criticised the European car industry.
However, there may be some reprieve for the European markets after news from Germany that Chancellor Merkel’s CDU party had reached a compromise over migration with its Bavarian CSU sister party, avoiding the resignation of Interior Minister Horst Seehofer and a potential split.
The Dow Jones Industrial Average closed up 35 points yesterday at 24,307, while the S&P 500 was up 8 points at 2,726 and the Nasdaq closed up 57 points at 7,567 as early losses were reversed by higher than expected US manufacturing data and a rally in technology stocks, offsetting worries over US trade policy.
In Asia today, the Japanese Nikkei 225 was down 234 points at 21,576, while Hong Kong’s Hang Seng was down 754 points at 28,200 after China’s official manufacturing purchasing index showed a fall in demand for Chinese exports yesterday in addition to the start date of US tariffs edging ever closer.
Jasper Lawler, head of research at London Capital Group, said: "Trade war fears are sending traders out of riskier assets, compounding the problem for China as an emerging market. The timing of the tariffs comes just as the Chinese economy is taking its foot off the pedal; quite the opposite to the US, where the economy appears to be going at full throttle."
On the currency markets, the pound was flat at US$1.313 against the dollar and stable at €1.1289 against the euro.
Construction in focus
The construction sector will be drawing the most attention on Tuesday as Costain Group PLC (LON:COST) releases a trading update.
For economic data, builders will once again be in focus as the UK construction PMI is released, particularly as the recent upward revision to the UK’s first quarter GDP reading last week was contingent on a better than expected performance for the sector.
Michael Hewson, chief market analyst at CMC Markets UK, said: “Today’s construction PMI for June is expected to remain subdued as the sector continues to absorb the aftershocks of the Carillion collapse in January, though the data has picked up since a fairly weak Q1, with expectations of a repeat of the previous two months at 52.5, which would still be a significant improvement on how the sector fared at the beginning of the year.”
Significant announcements expected on Tuesday July 3:
Trading update: Costain Group PLC (LON:COST)
Interims: Harwood Wealth Management Group PLC (LON:HW.), RM PLC (LON:RM), St Modwen Properties PLC (LON:SMP)
Finals: Cohort PLC (LON:CHRT), Solid State PLC (LON:SQU)
Traffic stats: Wizz Air PLC (LON:WIZZ)
Economic data: UK construction PMI; US factory orders
Around the markets:
• Sterling: US$1.3130, unchanged
• Gold: US$1,238.6 an ounce, down 0.26%
• Brent crude: US$77.73 a barrel, up 0.55%
City Headlines:
• The Times: The US Chamber of Commerce, which is typically pro-Republican, has called on President Donald Trump to reverse course on his protectionist trade tariffs that could lead to a full-blown trade war, directly threatening 2.6 million jobs
• Financial Times: Europe's two largest supermarket groups, Tesco and Carrefour, have joined forces to purchase own-brand products and other goods to fight German discount grocers
• The Daily Telegraph: The UK’s shadow banking sector surpasses the annual output of the British economy and is almost as big as RBS’s balance sheet before the financial crisis in 2008