FTSE 100 plunged into the red on Monday as Wall Street shares lacked impetus and traders were put off by global growth concerns and political worries in the UK.
The blue-chip benchmark closed around 61 points lower at 7,600, while mid-cap cousin FTSE 250 was also lower - down around 12 points.
In the US, benchmarks got off to a slow start. The Dow Jones Industrial Average is up around 11 points at 25,030, while the S&P 500 is up around two points.
Ocado Group plc (LON:OCDO), which only recently made its debut on Footsie, was the top gainer on the UK blue-chip exchange, with shares up over 2.4% to 1,054.5p, as it continued its good run.
Micro Focus International plc (LON:MCRO) was top loser, down 2.89% to 1,241.5p.
The share drop came after heavyweight broker and bank Credit Suisse put the boot into shares, downgrading its rating for the blue-chip software company to ‘underperform’ from ‘neutral’ following recent results.
Credit said: "Management delivered a poor interim results update, offering limited comfort on the medium-term future.”
Oil majors took a hit as US crude went over 4% lower. BP (LON:BP. shed 2.33% to 557.50p, while Royal Dutch Shell plc (LON:RDSB) glugged 2.14% lower to 2,672.50p.
It came after the US appeared to be softening its stance on oil supply from Iran.
Fiona Cincotta, market analyst at City Index, said: "The price of oil had previously rallied hard over concern of aggressive US policy to remove Iranian oil from the market; furthermore, Saudi Arabia had also upped its production to cover shortages from Iran, which could now be less than initially planned."
3pm: Footsie looks to finish lower
The FTSE 100 looks set to finish the day deep in the red, weighed down by oil giants, BP and Shell.
The FTSE 100 was making a decent stab at rising back above 7,600; it was down 65 at 7,597.
“A sharp slide from Brent Crude left the FTSE far and away the worst performer on an otherwise somnambulant start to the week,” said Connor Campbell, in a review of the performance of European markets.
“Down 3% as investors fret over what will be discussed between Trump and Putin, namely whether or not the US President will encourage Russia to up its oil production once more, Brent Crude found itself in trouble the wrong side of $73 per barrel,” he noted.
Royal Dutch Shell PLC ‘B’ (LON:RDSB) shares – the class more widely held by UK investors – were off 2.4% at 2,665p while BP PLC (LON:BP.) was 2.7% lower at 555.6p.
Elsewhere in the resource sector, the US dollar’s weakness was sapping demand for miners such as BHP Billiton plc (LON:BLT) and Glencore PLC (LON:GLEN), down 2.3% and 1.9% respectively.
Two companies that has their AIM listings restored today were in the wars.
Shares in Itaconix Plc (LON:ITX) returned from suspension 4.6p lower at 2.15p after the speciality polymers group’s heavily discounted share issue last week.
Personal health care company Integumen PLC (LON:SKIN), meanwhile, was trading at 0.685p after being suspended at 0.855p after a share issue priced at 0.75p.
2.00pm: Footsie off the bottom ahead of US open
US markets look set to open marginally higher, which has helped the Footsie shave some heavy losses.
The FTSE 100 dipped to 7,565 in lunchtime trading before recovering to 7,591, down 71 points.
In futures trade today, the Dow Jones was up 12 points; the Nasdaq index was ahead by six points and the S&P 500 shed 0.50 points.
“Weighing on investor sentiment is mixed China data overnight where Q2 GDP slowed as expected, Industrial Production slowed more than forecast but Retail Sales growth actually accelerated,” commented Mike van Dulken and Artjom Hatsaturjants at Accendo Markets.
“Traders are also awaiting the outcome of the Trump-Putin summit in Helsinki, more Q2 results from US Banks and watching Brexit-induced rumbling in Westminster,” they added.
Away from the big caps, Nostra Terra Oil & Gas Company PLC (LON:NTOG) added a tenth to its market value after it announced a significant production increase at its Pine Mills asset.
#NTOG , is pleased to announce a significant production increase at Pine Mills. Pine Mills is Nostra Terra's wholly owned and operated producing oil field in Texas, USA. "Significant" AIM loves a good watchword ????
— TheLongerGame (@TheLongerGame) July 16, 2018
Brave Bison Group PLC (LON:BBSN) thundered higher after entering into a strategic consultancy with golf’s European Tour.
The shares rose 7.7% to 2.1p, still well short of their 5.125p peaking 2016 but up from 0.9p at the end of last year.
Noon: Footsie slides, weighed down by Hargreaves Lansdown and Micro Focus
Having braced themselves for a morning of subdued action, traders then had to watch the Footsie slide towards a 50-point fall.
Just before noon, the FTSE 100 was down 50 at 7,612.
Wealth management and private investor-focused Hargreaves Lansdown PLC (LON:HL.) led the retreat after the Financial Conduct Authority published an interim report on its investigation into investment platform providers.
The FCA found that competition is not working as well as it should do for some consumers; the FCA concluded that those consumers who would have benefited from switching platforms found it costly or difficult to do so.
Shares in Hargreaves Lansdown were down 4.1% at 1,973p.
The second worst-performing blue-chip was legacy software specialist Micro Focus International PLC (LON:MCRO), which was 3.8% lower after Credit Suisse downgraded the stock to ‘under-perform’ from ‘neutral’.
Shareholders in language translation services provider SDL PLC (LON:SDL) were quietly humming “Word up” to themselves after the market reacted favourably to its acquisition of Donnelley Language Solutions for £60mln.
SDL shares were up 4.9% at 465p.
10.00am: Equities searching for direction ahead of BoJo's big speech
Leading equities were searching for direction in mid-morning trading, waiting for developments on the usual hot issues of trade wars and Brexit.
The FTSE 100 index was down 10 points at 7,651.
“Brexit talks continue but the talk today is about a potential second referendum,” declared Neil Wilson, at markets.com.
“Theresa May is assailed on all sides and the only thing that we really confidently say is that this is heading nowhere fast. Her compromise risks a split in the Tory part, and it probably won’t be approved by the EU anyway. So we face the very real prospect that we are heading for another referendum, or at the least, another General Election,” he speculated.
“Looking ahead, the Trump-Putin summit could have an impact on risk assets as the US president continues to show a willingness to disrupt the established world order. After calling the EU a ‘foe’ on trade, European leaders in particular will be wary about just how much Trump cosies up to Putin, which may dampen risk appetite, but at the very least it deflects attention away from Chinese trade wars for the time being,” Wilson added.
The Footsie may be on a gentle decline but there have been some big movers further down the food chain, and none bigger than the 32% added by speciality pharmaceuticals company Indivior PLC (LON:INDV) after it was granted a preliminary injunction by a US court against Dr Reddy Laboratories (DRL).
Sublocade approval likely to be a game changer in the U.S. fight against opioid addiction - Clarivate https://t.co/bV8PMYMSev
— Prescription Opioid Addiction (@OpioidHelpNow) July 15, 2018
India’s DRL is seeking to sell a generic version of buprenorphine/naloxone sublingual film, which is used for the treatment of opioid addiction; the injunction gives a boost to Indivior opioid addiction treatment, SUBLOCADE.
$INDV Indivior wins preliminary injunction preventing Dr Reddy’s from selling Suboxone copycat https://t.co/MopaOae0ko via @proactive_UK #INDV #brighterir #AndrewScottTV #CapitalNetwork1
— Proactive Investors (@proactive_UK) July 16, 2018
Operators in the world of infrastructure investment would probably be happy with the description “reassuringly dull” but there was a bit of excitement this morning created by a bid approach for John Lain Infrastructure Fund (LON:JLIF).
The shares rose 22p to140.2p, which is just a couple of pence or so below the mooted level of the potential cash offer.
Nice one on #JLIF takeover sir - I note things have been very quiet on Takeover front and it's visible in IC Takeover Page which gets sparser each week !! The Contrarian would say doesn't suggest a Market Top ...
— WheelieDealer (@wheeliedealer) July 16, 2018
8.45am: FTSE 100 defies expectations of a negative start
The FTSE 100 defied predictions of a negative start to open the session 11 points higher at 7,661.87.
That said, it could be a topsy-turvy day for sentiment with former foreign secretary Boris Johnson set to deliver his resignation speech ahead of MP’s voting on the Customs Bill, which could prompt a Tory rebellion.
“Having set out a radical plan to seek what she believes is the best possible deal for the UK economy, Theresa May must now try to sell the deal to parliament this week,” said Rebecca O’Keeffe, head of investment at Interactive Investor.
“The hard-line Brexiteers have already indicated their objections, but they could also instigate a direct challenge to May’s leadership if they can secure the 48 Tory MP signatures necessary for a leadership ballot.
“After months of failed negotiations and an increasingly divisive government, this week is pivotal for Theresa May.”
On the market, Debenhams (LON:DEB) came under early selling pressure after the weekend, even after it sought to head off concerns over its financial health. The stock drifted 6%.
The roadside recovery group AA (LON:AA.) fell 3.4% after Barclays Capital downgraded the stock to ‘equal weight’ from ‘overweight’.
Proactive news headlines:
Strat Aero PLC (LON:AERO) flew higher on Monday morning after announcing two new contracts wins for its Geocurve subsidiary. Geocurve, a specialist surveying company, has been awarded an initial contract with hydraulic engineering group Hesselberg Hydro.
Braveheart Investment Group PLC (LON:BRH) said it has entered into detailed discussions with a large UK financial organisation in preparation to launch a new Mezzanine Fund targeting enhanced income returns to the fund's investors.
CentralNic Group PLC (LON:CNIC) has entered into a conditional agreement to acquire the entire share capital of KeyDrive for an initial consideration of US$35.8mln.
Sativa Investments PLC (AQSE:SATI) said it has signed an IP sharing agreement with Canada’s Veritas Pharma Inc, which it hopes will help its efforts in the UK’s emerging cannabis market.
Hydrogen fuel cell group AFC Energy PLC (LON:AFC) will focus on the commercialisation of its technology over the next 12 months. Adam Bond, chief executive, said the company has appointed FTI Consulting to carry out a review and go-to-market strategy.
Flying Brands Ltd (LON:FBDU) has raised £500,000 through a share placing to support the commercial roll-out of its kidney stone medical imaging software StoneChecker.
The recent production test at SDX Energy Inc’s (LON:SDX CVE:SDX) SD-4X appraisal well South Disouq in Egypt was successful, the North Africa-focused oil and gas explorer has confirmed.
Seeing Machines Limited (LON:SEE) said Ken Kroeger, currently its chairman and interim CEO, will become CEO on a permanent basis following the appointment of Jack Boyer as its chairman designate.
MaxCyte Inc (LON:MXCT) said it had received the green light to embark on its first ever clinical trial as it told investors the commercial arm of the business was trading in line with forecasts. The US Food & Drug Administration has given the company investigational new drug clearance for MCY-M11, a chimeric antigen receptor that targets solid tumours.
Iodine producer Iofina PLC (LON:IOF) expects to produce between 575 and 605 tonnes of crystalline iodine in 2018, in line with the market’s expectations and a sharp increase on last year's output of 503 tonnes.
Europa Metals Ltd (LON:EUZ)(ASX:EUZ) has secured a combined reverse circulation and diamond drilling rig for mobilisation to its Toral lead-zinc-silver project in the Province of Leόn, northern Spain. Mobilisation will take place in August.
Erris Resources PLC (LON:ERIS) has hit three metres of 10.22 zinc plus lead combined, as well as 41.45 grammes per tonne silver in ongoing drilling at the Abbeytown project in Ireland. The intersection came at a depth of between 95 metres and 98 metres and within a wider seven-metre interval grading 8.33% zinc and lead and 37.36 grams silver.
Alba Mineral Resources PLC (LON:ALBA) has agreed to acquire a further 41% stake in Gold Mines of Wales. Once the deal formally goes through, AIM-listed Alba will own 90% of the Clogau gold project, which is located in the Dolgellau gold belt in Wales.
Savannah Resources PLC (LON:SAV) has delivered further encouraging results from the ongoing reverse circulation and diamond drill programme at the Mina do Barroso lithium project in Portugal.
Metal Tiger PLC (LON:MTR) has boosted the indicated resource at the T3 copper project in Botswana by 13% to 417,000 tonnes of copper and 18.6mln ounces of silver.
RM Secured Direct Lending PLC said its net asset value (NAV) per share at the end of June was 97.85p, taking the NAV total return for the first half of 2018 up to 2.95%. RM Secured Direct Lending PLC (LON:RMDL) said its net asset value (NAV) per share at the end of June was 97.85p.
Frontier IP Group PLC (LON:FIPP) announced that portfolio company Tarsis Technology, a spin-out from the University of Cambridge, has entered into a collaboration agreement with one of the world's leading manufacturers of crop-protection products.
Chagala Group Limited (LON:CGLO) saw its underlying earnings (EBITDA) and revenue decline in 2017, impacted by an economic slowdown in Kazakhstan. The London-listed investor in specialist services and facilities providers to the oil and gas industries in Kazakhstan saw its EBITDA fall to US$6.4mln for the year ended 2017, down from US$7.7mln a year earlier, as revenue declined to US$19.1mln, down from US20.3mln.
Coinsilium Group Limited (AQSE:COIN), the blockchain technology backer, said financial markets veteran Malcolm Burne has been appointed as a project advisor to its TerraStream subsidiary.
Itaconix PLC (LON:ITX) dropped on Monday as trading in shares of the designer and manufacturer of speciality polymers resumed on AIM following its £4.3mln fundraising. Trading in the stock was suspended at the end of June pending funding news, with the company last week, unveiling a placing at 2p a pop – the shares were suspended at 6.75p – to raise at least £2.1mln, supplemented by £1.2mln raised through a share subscription at the same price. Itaconix shares fell to 2.45p.
Block Energy PLC (LON:BLOE), the exploration and production company focused on the Republic of Georgia, announced that the company's new corporate presentation is now available to view on Block's website.
6.40am: Subdued start predicted
The FTSE 100 looks set to get off to a subdued start with world trade fears yet again haunting the market.
The index of blue-chip shares is predicted to open down seven points at 7.667.87 after Donald Trump described the EU as a ‘foe’ at the end of an eventful presidential visit to the UK.
Meanwhile, the resignation speech by former foreign secretary Boris Johnson and the Commons vote on the Customs Bill should make for another interesting day in the life of the Prime Minister.
“We should have a better understanding of the extent of the anger in the Conservative party over Theresa May’s softer stance to Brexit,” explained Jasper Lawler, analyst at London Capital Group.
“Whilst May continues to fight for her political life, hard line Brexiteers will attempt to make the PM change her approach to leaving the EU, as they vote in Parliament on amendments to the government’s post Brexit customs regime.
“She is not expected to lose the vote; however, a high number voting against her will continue to undermine her already shaky authority. Markets will be sensitive to further doubt on Mrs May's ability to remain at the helm and push through her soft Brexit plan.”
They also remain sensitive to the fortunes of the world’s second-largest economy. Softer-than-expected data from China cast a shadow over Asia’s main markets with the economy growing at ‘just’ 6.7%.
Around the Markets:
- Pound worth US$1.3244
- Gold worth US$1244.70 an ounce, up US$3.50
- Brent crude changing hands for US$74.86 a barrel, down 47 cents
City Headlines:
Financial Times
Trump arrives in Helsinki for Putin summit
US rejects Europe’s hopes of Iran sanctions relief
Premier Foods under pressure for activist funds
Times
Boards must give themselves discretion to override formulaic executive pay deals, the watchdog that sets boardroom rules has decided in the wake of the Persimmon fiasco
Mike Lloyd, the head of the AA insurance business who was punched by the group’s former chairman in an altercation last year, is leaving the company
MPs are urging the government to move quickly to draw up rules that will pave the way for a completely new type of pension scheme being pioneered by Royal Mail
Telegraph
'The rest of the world believes in us. It's time we did too,' says Boris Johnson in op-ed
Theresa May pledges to boost UK aerospace amid Brexit concerns
Goldman Sachs to fill new London HQ despite Brexit fears
Debenhams denies it faces cash crisis after insurer setback
Guardian
Global workforce will be decimated by fourth revolution, says Siemens boss
Airbus ‘in a holding pattern’ waiting for the nuts and bolts of Brexit