FTSE 100 closes higher
Dow Jones and other US benchmarks up
ABF top Footsie loser
BoE governor confident UK economy can bounce back
FTSE 100 closed higher as Wall Street shares were on the up and traders seemed less worried on trade.
The UK index of leading shares closed up around 30 points at 7,603, with miners making good ground.
On Wall Street, the Dow Jones Industrial Average is up over 153 points at 24,328 at the time of writing, while the S&P 500 is ahead by over 12 at 2,725. The tech heavy Nasdaq is up by over 54 at 7,068.
The FTSE 100 was buoyed by the weaker pound, which was down 0.39% to 1.1310 against the Euro, and down 0.02% to 1.3230 against the US dollar.
"Equity markets are in positive territory as it was reported that the US might not impose a 20% tariff on EU cars," said David Madden, at CMC Markets.
"This was met with a positive reaction, and it was reported that Angela Merkel might give her support to lower the EU’s tariff on US cars.
"Traders welcomed the news as it suggests the trade talks are moving in the right direction."
Top gainer on Footsie was steel maker Evraz (LON:EVR), which added 3.06% to 505.20p, while Associated British Foods (LON:ABF), the conglomerate, was the top loser, off 4.16% to 2,604p, in the back of a results statement.
Weak EU sugar prices were cited for the 17% drop in revenue at the sugar division, while Primark posted a 6% rise in nine month like-for-like (LFL) same-store sales.
SuperDry up on special dividend news
2.40pm: US stocks open higher
The FTSE 100 held firm in early afternoon trading, up 36 points at 7,609.
As expected, Wall Street opened higher on the return after the July 4th holiday, with the Dow Jones Industrial Average ahead 173 points at 24,350, recouping most of Tuesday's slide, while the S&P 500 opened 16 points higher at 2,729 and Nasdaq was up 51.82 points at 7,552.
However, traders were awaiting the release of minutes from the last FOMC meeting later today, plus the June US payrolls data and the start of the US tariffs on China on Friday.
1.05pm: FOMC meeting minutes due tonight
The FTSE 100 continued to gain in lunchtime trading, holding above the 7,600 mark, even though the pound remained strong after getting a boost from Mark Carney’s upbeat comments on the UK economy which raised rate hike expectations.
US markets are set to open higher on the return to trading following the Independence Day holiday on Wednesday.
CMC Markets UK expected the Dow Jones industrial to open up 126 points at 24,300, with the S&P 500 index up 14 points at 2,727 with the FOMC meeting mintes due to be released at 7.15pm BST. The Fed hike interest rates by 25 basis points to 1.75%-2.00% last month.
David Morrison, senior market strategist at GKFX said: “Fed Chairman Jerome Powell also sounded relatively upbeat when he held his subsequent press conference and reiterated that the US central bank was comfortable with inflation rising above the Fed’s 2% target."
He added: "Some interpret the Fed rate increases as a positive response to an improving economy. However, there’s also a view that the central bank under Powell is now keeping a close eye on asset valuations and may look to tighten monetary policy if prices appear bubbly."
FOMC Minutes In The Limelight Today - Nordea Markets
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On Thursday, the minutes of the most recent FOMC meeting will be published and will be a key release for markets, according to analysts at Nordea Markets.
Key Quotes
“The Fed lifted its....
— Forex for All (@FxInfo24) July 5, 2018
11.45am: Carney believes economic slowdown in the first quarter was temporary
The FTSE continued to gain as the morning progressed, climbing above the 7,600 level after Bank of England governor Mark Carney said in a speech on Thursday in Newcastle that he believes the economic slowdown in the first-quarter was temporary after severe winter weather, and is confident the UK economy can bounce back.
The pound was given a boost as Carney’s speech boosted UK rate hike changes, with sterling up 0.12% against the US dollar to US$1.3252.
BoE Governor Mark Carney Comments In Speech In Newcastle, U.K.
- Protectionism Will Damp Growth, Stoke Inflation
- Global Protectionism Will Have Brexit-Like Effects
- He's More Confident That Q1 Slowdown Was Temporary
— LiveSquawk (@LiveSquawk) July 5, 2018
11.15am: EDF Energy to raise prices by 6%
EDF Energy today announced a 6% increase to igas and electricity prices for its UK dual-fuel customers from August 31, its second hike this year.
The French-owned energy firm said its standard variable dual fuel tariff will increase to £1,228, adding £70 a year for 40% of its customers.
EDF Energy blamed a rise in the cost of wholesale energy prices, saying the prices have increased 18% since the last year, and 13% since April.
In June, the energy company hiked prices by 1.4%, blaming pressures with energy, policy and costs of installing smart meters.
10.20am: UK car sales fall
After opening at 7,594 points, the FTSE 100 moved higher in morning trading, reaching 7,600 despite trade war tensions.
Data from the Society of Motor Manufacturers and Traders revealed that UK car sales fell by 3.5% in June, impacted by a sharp fall in sales of diesel cars which dropped by 28.2%, although demand for electric and hybrid cars rose 45%.
On the corporate front, ahares in SuperDry PLC (LON:SDRY) continued to surge after announcing a special dividend on the back of its third successive year of double digit growth in full year revenues and profits.
David Madden, chief market analyst at CMC Markets, said: “The company is making inroads into the US and China. The two largest economies in the world could be a major money spinner for SuperDry.”
He added: “Iconic British brands such as Burberry and Mulberry have proven to be popular with international customers, and SuperDry could look to emulate their success.”
READ: Superdry announces special dividend as it bucks the trend with strong sales and profits
Bank of England governor Mark Carney speaks in Newcastle later this morning and traders will be watching for any hints on possible interest rate hikes at the monetary policy committee meeting on August 2.
Chris Scicluna, head of economic research at Daiwa Capital markets said: “In recent meetings, Carney has repeatedly voted for no change to Bank Rate, and given the Brexit uncertainty and some softer wage numbers, we currently think he’ll stick to that view despite strong evidence of a firmer economic growth performance in the second quarter.”
8.30am: FTSE 100 opens higher despite US-China trade tensions
The FTSE 100 rose 21 points to 7,594 at the start of the session despite concerns about US and China trade tariffs.
The US and China are expected to impose trade tariffs on Friday. But China said on Thursday that it would only implement its own tariffs on US products after the US tariffs take effect.
“With just one day to go until trade tariffs are expected to kick in, the markets were showing signs of anxiety overnight,” said Jasper Lawler of London Capital Group.
“Wall Street was closed for Independence Day on 4th July, meaning Asian markets were short on incentive, causing them to wobble overnight.”
Closer to home, investors are awaiting a speech from Bank of England Governor Mark Carney at 11am in Newcastle. Any remarks on interest rates could impact sterling.
In company news, Bovis Homes Group PLC (LON:BVS) shares rose 1.4% to 1,138p after saying it expects a "significant step up in profitability" in the first half.
Fellow housebuilder Persimmon PLC (LON:PSN) edged up 1.7% to 2,524p after reporting a 5% rise in first half revenues, boosted by an increase in completions and higher average selling prices.
SuperDry Dry PLC (LON:SDRY) shares jumped 8.5% to 1,269p after announcing a special dividend on the back of double digit growth in full year sales and profits.
Primark owner Associated British Foods PLC (LON:ABF) shares fell 3.3% to 2,624p after saying it now expects a drop in profits from its sugar business due to lower EU prices.
Purplebricks PLC (LON:PURP) shares slumped 5% to 302.5p after reporting a wider pre-tax loss for the year.
Proactive news headlines:
Amur Minerals Corporation (LON:AMC) has announced it has completed approximately 50% of the 2018 planned programme at its wholly owned Kun-Manie nickel copper sulphide project and is “extremely pleased” with the results.
Bacanora Lithium Ltd (LON:BCN) has agreed a US$150mln loan for the construction of the first phase of the mine at Sonora in Mexico. RK Mine Finance is putting up the money, which will cover a sizeable chunk of the cost of an initial 17,500tpa lithium carbonate operation.
SDX Energy Inc (LON:SDX, CVE:SDX) has now spudded the SD-3X well at the South Disouq project in Egypt. It is the second of two planned appraisal wells for South Disouq, both of which are precursors to production.
Seeing Machines Limited (LON:SEE) has signed an agreement to supply its Guardian fatigue and distraction prevention technology to a fleet of US trucks.
Exploration activities at Alba Mineral Resources PLC's (LON:ALBA) Thule Black Sands and Inglefield Land Projects in north-west Greenland are scheduled to commence this month.
Erris Resources PLC (LON:ERIS) has revealed positive results from exploration drilling at the Abbeytown metals deposit in County Sligo, Ireland. Specifically, one hole encountered high grade zinc, lead and silver mineralisation.
Keywords Studios PLC (LON:KWS) has launched an investment arm, known as Keywords Ventures (KWV), to support “innovative technologies and services” that benefit its clients. The group also announced that it was making its first investment through KWV with £300,000 for a 45% stake in pre-revenue company AppSecTest Ltd.
Forestry management and agriculture group Obtala Limited (LON:OBT) produced a record amount of sawn timber in the last three months. Output from its Gabon sawmill was 3,800 cubic metres with June’s average 30% higher than the first three months of the year.
Lansdowne Oil & Gas PLC (LON:LOGP) has announced the appointment of Brandon Hill Capital Limited as its joint broker with immediate effect. The group noted that Brandon Hill has specialised in advising natural resources companies for over 15 years and has been a long-term supporter of the company.
6.40am: Quite start in London expected
Ahead of tomorrow's US jobs data and with no US market activity yesterday to give a lead, a quiet start was expected to London trading.
After sliding 20 points yesterday – Independence Day in the USA – to close at 7,573, spread betting quotes pointed to the FTSE 100 index opening at around 7,567 on Thursday morning.
Although not always a reliable guide to the market-moving US non-farm payrolls data (out on the first Friday of each month), traders will be waiting on jobs data from payroll processing firm ADP stateside today.
The US central bank is also set to release the minutes from the most recent meeting of its policy-makers, where the benchmark US interest rate was hiked by a quarter of a point.
“Policy makers raised the FFR to 1.75-2.00% and nudged slightly higher the median expectation for rates this year and next, while also simplifying its forward guidance to underscore the uncertainty of the policy outlook,” noted Daiwa Securities.
This morning has been a grim one for Asian markets with the Nikkei 225 in Japan down 240 point at 21,477 and Hong Kong's Hang Seng index down 399 at 27,842.
Back in the UK, watch out for Mark Carney, the governor of the Bank of England (BoE), who is giving a speech today at 11.00, advises Kathleen Brooks at Capital Index.
“He can sometimes err on the side of being dovish, so there is an outside chance that he may dampen expectations of a rate hike, especially with so much Brexit uncertainty flying around; however, as with the other major central banks in the world, the tail tends to wag the dog when it comes to rate hikes. Thus, the fact that the market seems to have made up its mind that an August rate hike from the BOE is incoming, could temper Carney’s dovish instincts,” she suggested.
In terms of expected corporate results, the schedule is dominated by house-builders and clothes sellers.
Bovis Homes and Persimmon both have a bit of baggage to offload; Bovis wants to grow margins while shedding a reputation for shoddy workmanship on its houses and Persimmon wants to grow profits without drawing attention to the long-term incentive plans for its executives.
As for the clothes sellers, you could hardly get two more different beasts than Primark, owned by Associated British Food, and SuperDry.
Investors will be looking for any commentary surrounding Primark’s roll-out in the US. It currently only has eight stores across the pond but the potential is massive, so any signs that the brand is gaining traction there is likely to be cheered.
As for SuperDry, analysts believe the focus will be on any comments about current trading, brand performance and the balance sheet.
Significant announcements expected
Trading updates: Associated British Foods PLC (Q3) (LON:ABF), Bovis Homes Group PLC (Q2) (LON:BVS), Persimmon PLC (H1) (LON:PSN), Empiric Student Property PLC (LON:ESP)
Finals: SuperDry PLC (LON:SDRY), Purplebricks PLC (LON:PURP)
Ex-dividends: To clip 0.55 points off FTSE 100 index - Next PLC (LON:NXT)
Economic data: Halifax UK house price index; US weekly jobless claims; US Challenger job cuts; US ADP employment; US ISM non-manufacturing; US services PMI; US composite PMI; FOMC meeting minutes
Around the markets
- Sterling: US$1.3225, down 0.05 cents
- 10-year gilt: yielding 1.275%
- Gold: US$1,255.40 an ounce, up US$1.90
- Brent crude: US$77.72 a barrel, down 52 cents
- Bitcoin: US$6,592.75, down US$94.27
Business headlines
The Times
The World Trade Organisation has warned that rising trade tensions threaten to derail global economic growth and signs of a slowdown have started to emerge.
Mike Coupe, chief executive of J Sainsbury, faced down criticism that his planned £7.3 billion takeover of Asda was distracting the management from the running of the day-to-day business after the supermarket chain reported lacklustre growth in underlying grocery sales.
The Bank of England might raise interest rates next month after the dominant services sector grew at its fastest rate since October last year, suggesting the economy may be strong enough.
Aviva Investors has shifted its focus from emerging market equities to the US and British shares amid risks of a growing trade war that could result in “mini crashes” in the months ahead.
The Daily Telegraph:
National Express Group has signed a 15-year, €1 billion deal to run bus services in three of the Morocco’s cities, becoming the country’s largest public transport operator.
Premier Foods' largest investor, noodle maker Nissin, has been urged by activist investor Oasis Management not to vote on the future of chief executive Gavin Darby at the upcoming annual general meeting.
Sir Paul McCartney has pressed MEPs to vote through a controversial EU copyright law, accusing tech giants of exploiting musicians for their own profit.
Daily Mail
Pentland Group, the family business that owns swimwear brand Speedo, registered a £328 million profit following a wave of swimming mania in China.
Topps Tiles suffered a 2.4% fall in sales so far this year in recent weeks due to “weaker consumer environment” and “challenging” market conditions.
The Guardian
Telegraph Media Group, the publisher of the Daily Telegraph and Sunday Telegraph, has reported a 50% decline in annual profits.