FTSE 100 closes higher amid Brexit chaos
Secretaries of State David Davis and Boris Johnson resign
Pound reverses after second cabinet resignation
Miners gain
FTSE 100 closed the day firmly higher as the pound went into reverse, while miners gained, on what was a tumultuous day for British politics.
Not since 1979 have two cabinet members resigned within 24 hours of each other but that's what happened as the Brexit fallout continued.
First David Davis, responsible for negotiating with the EU, then Foreign secretary Boris Johnson walked out, despite the cabinet seemingly reaching consensus about strategy at the weekend.
The UK blue-chip index closed around 70 points higher, or 0.92% to 7,687, while the FTSE 250 did even better - adding over 202 points, or 0.98%, to close at 20,821.
Chris Beauchamp, Chief Market Analyst at IG said noted the Footsie's gain was outshone by the near 1% rise for the FTSE 250, "in no small part due to the hopes of a very soft, if not the softest-possible, Brexit now looks likely, if we get one at all, that is".
"Equities in the US are surging as well, building on Friday’s strength," he said.
The pound is down 0.75% against the Euro at 1.1249 and down 0.76% against the US dollar at 1.3217 as the market worried about an unstable government.
Theresa May may yet survive for the same reasons she became PM in 2016 - Tory MPs fear a worse alternative and an early general election.
— George Eaton (@georgeeaton) 9 July 2018
Fiona Cincotta, senior market analyst at City Index, said UK politics was at a crossroads with a few possible outcomes, including Theresa May clinging to power and a soft Brexit approach, or she may be ousted by her party through a vote of no confidence.
"The political instability and the risk that Labour’s Jeremy Corbyn could slip into power make this path particularly damaging to the pound," she noted.
Top riser on Footsie was copper giant Antofagasta (LON:ANTO), up 3.39% to 976p, while top laggard was utility Severn Trent plc (LON:SVT), down 3.14% to 2,003p.
Helal Miah, of broker The Share Centre, urged private investors not to panic: "The events of the last 24 hours have greatly increased the fears for businesses and investors which justifies sterling’s fall.
"The stock market however, has risen, with the FTSE 100 rising by 1% so far on the day.
"This gain is more likely a reaction to sterling’s fall than investors taking a view that today’s events are positive for shares following the same trend we have seen since the initial referendum, as a weaker sterling makes UK assets cheaper for international investors."
3.25pm: FTSE 100 extends gains
With the pound falling back slightly in the wake of the BoJo resignation, the FTSE 100 has extended its gains.
The index of blue-chip shares is currently up 35.9 points to 7,653.2.
Just Eat PLC (LON:JE.) has held onto top spot for most of the day, climbing 2.5% to 840.8p, possibly boosted by England’s World Cup success encouraging more people to order food in.
A couple of retailers are also up there on the back of some decent numbers from Matalan. Next Plc (LON:NXT) is up 2.1% to 5,922p while Marks and Spencer Group Plc (LON:MKS) has gained 1.9% to 313p.
Water companies Severn Trent PLC (LON:SVT) (down 1.7% to 2,032p) and United Utilities PLC (LON:UU.) (down 1.6% to 771p) are the top FTSE 100 fallers.
3.05pm: BoJo goes
Boris Johnson has resigned as foreign secretary following the resignation of Brexit secretary David Davis late last night.
Several Brexit-backing MPs are said to have told on Sunday evening ministers that it was still not too late to withdraw their support for Theresa May’s Brexit strategy.
According to the Daily Mail, BoJo actually denounced the proposal with a “four-letter expletive” during a Cabinet meeting at Chequers over the weekend before agreeing to support it.
The pound has given up some of its gains against the dollar and euro, although it is still up on both for the day at US$1.331 and €1.132.
Boris Johnson has just resigned as foreign secretary. Our new Conservative members survey indicates he would lose in a head to head contest for party leader against...
Rees Mogg: 56% vs 44% for Boris
Javid: 55% vs 45%
Gove: 55% vs 45%
Davidson: 54% vs 46%https://t.co/UCngzUeSzG pic.twitter.com/lw88RxtIqN
— YouGov (@YouGov) July 9, 2018
3pm: 200-point gain for Dow Jones at the open
Wall Street is off to a flier as it continues to recover some of last month’s losses.
The Dow Jones Industrial Average has added almost 200 points in early deals to reach 24,650 – its highest level for a couple of weeks.
The broader S&P 500 has added 15.5 points to 2,776.3, while the Nasdaq Composite is up 34.2 points to 7,722.7.
2.45pm: Goldman Sachs predicts World Cup winner (again)
Goldman Sachs has had another stab at predicting which country will win the World Cup and it is mixed news for England.
The investment bank’s number crunchers now expect England to beat Croatia on Wednesday evening and make it through to the final.
Unfortunately, they don’t think football is coming home though as they expect the Three Lions to get beat by Belgium on Sunday.
Remember though, this was the same bunch which initially predicted that Brazil would overcome Germany to lift the trophy.
2.35pm: Sirius Minerals’ Redcar port deal ‘de-risks Woodsmith mine’
Sirius Minerals PLC’s (LON:SXX) deal to access port facilities previously used by Tata Steel has been described by a City analyst as “very good news”.
The company has signed an agreement with Redcar Bulk Terminal Limited which opens up the capacity to ship 10mln tonnes of POLY4 fertiliser product per year.
It is, according to Sirius, going to reduce construction risk and lower capital requirements, and, significantly, it is expected to be beneficial for the project’s Stage 2 financing.
Shore Capital’s Yuen Low said: “We expect that these arrangements will reduce the complexity - and hence construction-related risks (e.g. fewer contractors to mobilise and manage, berth pocket dredging could potentially release environmental ‘nasties’ in the mud) - in Sirius’s initial construction programme, provide greater flexibility in storage and port operations (alleviating operational risk), and simply the Stage 2 financing plan (reducing financing quantum and associated risk).”
2.15pm: Starbucks to ditch plastic straws
US coffee shop giant Starbucks (NASDAQ:SBUX) is to do away with plastic straws from all of its stores around the world as it becomes the latest company to become more environmentally friendly.
The Seattle-based company will instead use straws made from other materials while it plans to also bring in lids which don’t need straws at all.
Fast food chain McDonald’s Corporation (NYSE:MCD) is another to have recently unveiled plans to ditch plastic straws, while JD Wetherspoon PLC (LON:JDW) has stopped handing them out as well.
We're removing plastic straws in our stores globally by 2020—reducing more than 1 billion plastic straws per year from our stores.
— Starbucks Coffee (@Starbucks) July 9, 2018
1.25pm: Trump tweets
What did I just write about it being a quiet Monday in the US? President Trump has been on Twitter complaining about NATO and revealing when he will announce his choice for Supreme Court Justice …
The United States is spending far more on NATO than any other Country. This is not fair, nor is it acceptable. While these countries have been increasing their contributions since I took office, they must do much more. Germany is at 1%, the U.S. is at 4%, and NATO benefits.......
— Donald J. Trump (@realDonaldTrump) July 9, 2018
...Europe far more than it does the U.S. By some accounts, the U.S. is paying for 90% of NATO, with many countries nowhere close to their 2% commitment. On top of this the European Union has a Trade Surplus of $151 Million with the U.S., with big Trade Barriers on U.S. goods. NO!
— Donald J. Trump (@realDonaldTrump) July 9, 2018
I have long heard that the most important decision a U.S. President can make is the selection of a Supreme Court Justice - Will be announced tonight at 9:00 P.M.
— Donald J. Trump (@realDonaldTrump) July 9, 2018
1.10pm: Just Eat leads footsie higher
In mid-afternoon trading, the FTSE 100 was up 20.3 points to 7,638.0.
Online takeaway food marketplace Just Eat PLC (LON:JE.) still sits at the top, up 2.6% to 841.4p, while high street retailer Next isn’t too far behind, having risen 2.2% to 5924p.
Next’s rise is likely to do with some decent figures from fellow clothes chain Matalan, which reported a 5% rise in sales during the 13 weeks to May 26.
Among the fallers was telecoms group Vodafone Group PLC (LON:VOD (down 1.1% to 188.8p) and Standard Chartered PLC (LON:STAN) (down 1.1% to 686.8p).
12.55pm: Wall Street to open higher
Wall Street looks set to follow London stocks higher when trading begins later this afternoon on what should be a quiet start to the week.
The Dow Jones Industrial Average index is seen 110.5 points higher at 24,563.9; the tech-heavy Nasdaq is called 33.0 points in the black at 7,240.3; while the broader S&P 500 is expected to open 11.4 points to the good at 2,770.6.
“The Dow Jones it looking at its own half a percent rise when the bell rings on Wall Street, a move that would leave the US index just short of 24600, its best price in a fortnight. There’s not too much US-specific stuff to deal with this Monday, so, Trump-intervention aside, should be able to keep hold of that growth.
12.25pm: Are markets being complacent?
Rather than rocking the markets, David Davis’ resignation late last night seems to have given traders more confidence that the UK and Europe will eventually agree on a ‘soft’ Brexit.
But are City traders being complacent? Jacob Deppe, head of trading of online trading platform Infinox, thinks so.
"The possibility that [Davis’] resignation will topple Theresa May and put a more aggressive Brexiteer at the helm of Government, resulting in a teak-hard Brexit, appears to have been dismissed.
"The markets may have called this correctly, but equally it could prove to be a moment of spectacular hubris given the unpredictable flow of events.
“Yes, Mr Davis may now be on the sidelines but such a key resignation at such a point in time has the potential to strengthen the resolve of those seeking a hard Brexit.”
He concludes: “There's arguably a complacency in markets at present that could come back to haunt them.”
12.10pm: England to boost ITV H1 revenues
England’s strong run at the World Cup and the continued success of Love Island should see ITV PLC (LON:ITV) beat forecasts with its first-half advertising performance, according to City broker Liberum.
The free-to-air TV firm has had England’s first two knockout games on its channel which have brought in an average of 15mln+ viewers each time – likely far more when pub and fan zone viewers are factored in.
ITV also has the semi-final versus Croatia on Wednesday, while it is due to co-host the final with BBC on Sunday.
“ITV’s planning on the World Cup would have been predicated on England only reaching the second round,” said analyst Ian Whittaker.
“The fact that England are in the Semi-Finals means at least an extra eight days where TV advertising spending is boosted by England remaining in the World Cup.”
11.40am: BP card payment issues resolved
Oil supermajor BP PLC (LON:BP.) has been in the red all day after a problem with its card machines meant customers could only pay with cash on Sunday evening.
Customers trying to pay by card were either turned away or directed to cash machines.
BP said all sites have now returned to normal services and it is launching a “full investigation” into what caused the issue, which lasted between 7-10pm yesterday.
Shares are down 0.5% to 575.7p.
We are pleased to say all our UK retail sites are now fully operational. Sorry for any disruption to our customers last night. Thanks for bearing with us! ???? pic.twitter.com/hLxqWT9TZy
— BP United Kingdom (@BP_UK) July 9, 2018
11.25am: Dominic Raab appointed new Brexit sec
Housing secretary Dominic Raab has been announced as the new Brexit secretary, replacing David Davis who resigned overnight.
A statement from Downing Street read: “The Queen has been pleased to approve the appointment of Dominic Raab MP as Secretary of State for Exiting the European Union.
"This follows the departure from Government of the Rt Hon David Davis MP.”
So let's take a look at that Dominic Raab chap eh. Surely can't be any worse than David D-
Oh. Oh god no. pic.twitter.com/exEW6sllMU
— Jonathan O'Callaghan (@Astro_Jonny) July 9, 2018
11.05am: Nissan admits to falsifying emissions tests
Nissan shares have fallen in Japan after the car giant became the latest manufacturer to admit to falsifying emission tests at most of its Japanese factories.
The company didn’t disclose how many cars were involved but did say emissions and fuel economy tests had “deviated from the prescribed testing environment”.
Nissan added that it rechecked “reliable” data and found that only its GT-R sports car failed to conform to Japanese safety standards.
Last month, Volkswagen was fined €1bn by German prosecutors for selling more than 10mln cars between 2007 and 2015 that had test-cheating software installed.
10.50am: Is it coming home?
We're (fairly) sure this isn't genuine, but thought it might tickle you anyway ...
David Davis, you diabolical genius pic.twitter.com/VXLPpPfUrz
— Mallow News (@MallowNews) July 9, 2018
10.35am: Mothercare dips on fundraising plans
Mothercare PLC (LON:MTC) shares are down 6% this morning to 26.8p as the struggling toddler toys and clothes retailer unveiled plans to launch a £32.5mln equity raise and close more stores as part of a restructuring designed to keep it afloat.
The company, worth only £50mln or so, said it will now shut 60 stores by June next year instead of the 50 previously earmarked for closure.
It has also renegotiated the rent for 19 other stores, having received backing from creditors to go ahead with the turnaround strategy, something known as a company voluntary arrangement (CVA).
"How long-standing shareholders must wish their board had accepted a 300p bid from US peer Destination Maternity back in 2014," said Russ Mould, AJ Bell investment director.
“Claims that bid undervalued the business and its ‘attractive prospects’ look pretty laughable now.”
10.15am: City likes idea of softer Brexit
David Davis’ resignation has soothed fears among some in the City that the UK would seek out a hard Brexit and potentially damage trade links with the EU.
The FTSE 100 is up 18.2 points, or 0.2%, to 7,635.9 despite the pound rising to US$1.334 against the dollar and to €1.113 versus the euro – something which would normally weigh on the blue-chips.
A spate of green among the heavyweight miners is certainly helping, with copper producer Antofagasta PLC (LON:ANTO) climbing 2.1% to 963.8p, while BHP Billiton PLC (LON:BLT) has added 1.6% to 1,691.6p.
Just Eat PLC (LON:JE.) is the top riser though, jumping 2.2% to 838.6p, presumably getting a nice tailwind from the World Cup football over the weekend and the fact England still have at least one more game to play.
It won’t come as much of a surprise that takeaway orders surge during big events like the World Cup, particularly when England are doing well and people start having parties.
Housebuilders were among the heaviest fallers, albeit even they weren’t suffering too much. Persimmon PLC (LON:PSN) dropped 0.9% to 3,448p and its peer Barratt Developments PLC (LON:BDEV) slipped 0.7% to 479.8p.
8.50am: FTSE 100 finds gains
The Footsie pushed higher in early trade on Monday markets supported by gains in heavyweight miners after Asian markets rose today despite the start on Friday of the US/China trade war.
Meanwhile, on currency markets, the pound stayed fairly steady despite the resignation of two members of the UK government over ‘soft’ Brexit moves.
By around 8.50am, the FTSE 100 index was about 32 points firmer at 7,650, having closed 14 points higher on Friday as US stocks rose as mixed US jobs data offset Trump trade war issues.
David Madden, market analyst at CMC Markets UK: “The tense trade standoff between the US and China failed to discourage buying as traders have come to terms with the latest round of tariffs.”
He added: “David Davis resigned as Brexit secretary and the pound is holding up relatively well on the back of it. This will put severe pressure on Prime Minister May, and there are questions being asked about how long she will last in the top job.”
Among the blue-chips, Chilean copper miner Antofagasta PLC (LON:ANTO) was the biggest gainer, up 3,3% at 975.2p, while peer BHP Billiton PLC (LON:BLT) gained 2.4% at 1,704.6p, and Anglo American PLC (LON:AAL) added 2.1% at 1,736.6p.
Elsewhere, in the absence of much corporate news on Monday, broker comment was the other main focus, with aerospace parts firm Meggitt (LON:MGGT) taking on 2,5% at 556p as Berenberg hiked its rating on the stocks to ‘buy’.
But investment platform firm Hargreaves Landown PLC (LON:HL.) was the top blue chip faller, down 0.6% at 1,988.5p as JPMorgan cut its stance on the stock to ‘underweight’.
Proactive news headlines
Echo Energy PLC (LON:ECHO) this morning told investors that the fourth and final well in the current Argentina drilling campaign has encountered a ‘notable gas column’. The well, referred to as CSo-2001(d), is located within the Fracción D project area. It was drilled down to a depth of 1,511 metres and it encountered the targeted Upper Jurassic Tobifera formation, with observations of extensive gas and light hydrocarbon shows.
Metal Tiger PLC (LON:MTR) has logged significant visible copper sulphides in core from the latest diamond drill hole testing the A4 Dome on the company’s Botswana joint venture with MOD Resources (ASX:MOD). The mineralisation was intersected in veins over a 67 metre downhole interval from 232 metres to 299 metres downhole depth.
Sirius Minerals PLC (LON:SXX) has unveiled a deal that will allow it to access port and ship loading services at the existing Redcar Bulk Terminal. It means the company’s Yorkshire fertiliser mine development project will now see reduced construction risk and lower capital requirements, and, significantly, it is expected to be beneficial for the project’s Stage 2 financing.
Kibo Mining PLC (LON:KIBO) and Sanderson Capital Partners Limited have settled the outstanding balance of £1.1mln on the forward payment facility provided by Sanderson on 20 December 2016. Accordingly, Sanderson will be issued 21,239,375 new ordinary Kibo shares at a price of 5.25p each, a 13% premium to the closing price of 4.65p on Friday 6 July 2018.
The English Patient by Michael Ondaatje, and published by the Bloomsbury Publishing PLC (LON:BMY) has won the prestigious Golden Man Booker Prize. The Golden Man Booker Prize is a special one-off award to commemorate the Man Booker Prize's 50th anniversary and was awarded to the book deemed to be the best work of fiction from the last five decades of the prize.
Southend Airport owner Stobart PLC (LON:STOB) is looking at ways to diversify its shareholder base after seeing off a boardroom rebellion. Chairman Iain Ferguson who narrowly his kept his job at Friday’s AGM said talks have already started with potential investors.
Amryt Pharma PLC’s (LON:AMYT) Lojuxta Homozygous Familial Hypercholesterolaemia (HoFH) treatment is to be made available to NHS patients in England. HoFH is a rare life-threatening disorder that causes abnormally high levels of low density lipoprotein (LDL) cholesterol.
Dr Jeremy Lea is the new chief operating officer (COO) of WideCells Group PLC (LON:WDC), replacing Lopes Gill, who is stepping down for personal reasons. Dr Lea will be responsible for leading the group's next phase of growth as it builds revenues and drives the global uptake of its innovative portfolio of stem cell services, including: CellPlan, the world's first stem cell healthcare insurance plan; WideCells, which is focused on stem cell storage services, and Wideacademy, the group's education and training division.
Greka Drilling Ltd. (LON:GKD) shares resumed trading on London’s AIM market this morning following the publication of its 2017 financial results after the market’s close on Friday. The results themselves revealed annual revenue of US$11.6mln, up from US$7.2mln in the preceding year. Losses before tax narrowed significantly to US$1.4mln, from US$9.6mln in 2016.
Berkeley Energia LTD (LON:BKY) has announced that the capital cost review initiated by the company has identified a number of opportunities to reduce the initial capital expenditure at the Salamanca mine, required to bring it into production. The company said potential saving of up to €9mln arise from optimisation of plant capacities, outsourcing of peripheral infrastructure and reducing initial throughput for production from the Retortillo deposit.
Tharisa PLC (LON:THS) produced a record 39,500 ounces of platinum group metals during the three months to June 2018, up 3.4% on the previous quarter. Production of chrome concentrate also hit a record, at 376,300 tonnes, up 2.6% on the quarter.
Erris Resources PLC (LON:ERIS), the European focused mineral exploration company with a portfolio of zinc and base metals projects in Ireland and gold projects in Sweden, announced that its CEO,, Merlin Marr-Johnson, will be presenting at an evening investor event hosted by Turner Pope Investments Ltd. The event will be held on Monday 16 July in Central London and will start at 5.30pm.
Arc Minerals Limited (LON:ARCM) announced that its executive chairman Nick von Schirnding will be presenting at the Mining Report Zambian Mining Investment Conference on 10 July 2018 at the Le Meridien Hotel, Piccadilly, London.
6.45am: Firm start predicted
The FTSE 100 is seen starting higher on Monday tracking gains by Asian and US markets following favourable US jobs and as expected trade war responses, while the pound was cautious after two members of the UK government resigned over Brexit, putting the future of prime minister Theresa May in doubt.
Spread betting firm London Capital expects the UK blue chip index to open up around 40 points at 7,651, having closed 14 points higher on Friday.
Pre-weekend on Wall Street, the Dow Jones Industrials closed nearly 100 points higher at 24,456 after the mixed US June jobs data raised question marks over the pace of future Federal Reserve interest rate hikes.
Meanwhile in Asia today, Japan’s Nikkei 225 index rose 1.4% and Shanghai shares gained 1,9% as the imposition on Friday of US tariffs against China and some tit-for-tat retaliation by the country were largely as expected.
Jasper Lawler, head of research at London Capital Group: “Wall Street; a rally which was not necessarily expected. US indices pushed higher at the end of the last week, despite the firing of the trade war gun, as US trade tariffs on Chinese imports got underway and Beijing, promptly retaliated announcing tit for tat measures.”
“Whilst fears over a trade war were being fanned, actual data showed the US economy was soaring with a healthy labour market; the number of jobs created in June beat expectations paving the way for further gradual rate hikes by the Fed and giving plenty for traders to be distracted by.”
Hard-line Brexiteers resign
On currency markets, meanwhile, sterling was flat against the dollar and easier versus the euro on news late yesterday that Brexit Secretary David Davis and Brexit Minister Steven Baker had both resigned from Mrs May’s Cabinet.
The loss came just two days after a meeting at Chequers, the prime minister’s country residence supposedly sealed a cabinet deal on Brexit and underlines the deep divisions in the ruling Conservative Party over Britain’s departure from the European Union.
London Capital’s Lawler said: “The pound jumped higher, to $1.3319 at the start of trading as investors continued to digest the softer Brexit stance pushed through by Theresa May, on Friday, at a crunch meeting with her waring Brexit cabinet. 3 resignations since, by hard line Brexiteers including Brexit Secretary David Davis has cast some doubt on May’s ability to ride this one out, pulling the pound lower shortly after the initial, softer Brexit inspired jump.
“Today and the next few days will be key for Theresa May’s survival and the buoyancy of the pound. The pound has fallen away from its opening high versus the US dollar, but not actually swung lower on the day, suggesting that investors believe she will keep hold of the reins.”
On the corporate front, the news diary is fairly bare on Monday, with all eyes on a batch of blue-chip updates late this week notably from high street stalwart Marks & Spencer PLC (LON:MKS).
A production update from the Egypt-focused miner Centamin PLC (LON:CEY) will be released on Monday which could make for dull reading, with the FTSE 250-listed firm having reported a sharp decline in output from its Sukari Gold Mine in April.
Back then production was 109,187 ounces of yellow metal in the three months to March 31 – a 20% quarter-on-quarter decline and down 13% year-on-year.
However, despite that decline, City broker Numis Securities upgraded its rating for Centamin to ‘buy’ from ‘add’ at the end of May because it thought the shares had been oversold “as Sukari remains a low-cost long life asset and CEY retains a very strong balance sheet with US$426mln of cash and no debt at the end of Q1 [first quarter].”
Significant announcements expected on Monday July 9:
Trading update: Centamin PLC (Q2) (LON:CEY)
Economic data: US consumer credit
Around the markets:
- Sterling: US$1.3291, up 0.1%
- Gold: US$1,258.20, an ounce, up 0.3%
- Brent crude: US$74.11 a barrel, up 0.4%
City Headlines:
- Brexit secretary David Davis resigned last night, in an apparent attempt to throw Theresa May’s approach to Brexit off the path, precipitating the worst crisis since the prime minister lost her government majority – The Times
- BlackRock and Citigroup are joining other Wall Street groups in expanding their Paris operations ahead of Brexit – Financial Times
- A “hard Brexit” may force Philips to shift production out of Britain, the Dutch electronics firm said, adding it was “deeply concerned about competitiveness” of its operations there- The Guardian
- Neil Woodford, Stobart's second largest shareholder, has slammed its management for firing former boss Andrew Tinkler from its board just hours after being appointed by investors – The Daily Telegraph
- A damning report from the Public Administration and Constitutional Affairs Committee has said that Carillion’s collapse “could happen again” as the Government has not yet learned how to outsource work effectively – The Daily Telegraph
- Weaker sterling and restructuring costs led to 48% decline in profits in 2017 at the consulting and IT services group Capgemini – Financial Times
- Two separate US-based sports investors, Rocco Commisso and the Ricketts Family, are preparing bids to buy AC Milan, which is on the verge of being taken over by Elliott Management – Financial Times
- China is offering preferential treatment to the EU and speeding up investment negotiations with the economic bloc to form a united front against American trade policies - Financial Times
- Private equity fund NorthEdge Capital has raised £120mln to invest in start-up businesses – Financial Times