FTSE 100 closes lower
Boss of Amazon's UK arm says no-deal Brexit could cause 'civil unrest' in Britain
Foreign investment in UK nudges upwards in first full-year after Brexit vote
Top loser on Footsie is Taylor Wimpey
FTSE 100 closed in the red on Monday as geopolitical worries continue to weigh.
Euoropean markets were generally lower while Wall Street was mixed.
In London, FTSE 100 shed 23 points to 7,655, while FTSE 250 shed over 155 points at 20,770.
In the currency markets, the pound is up 0.01% against the Euro and down 0.20% against the US dollar.
"Stocks are broadly lower as dealers remain nervous about the state of global trading relations," said David Madden, at CMC Markets.
"European equities have lost ground as the prospect of a full-blown trade war is weighing on investor confidence."
On Footsie, the top riser was online grocery group Ocado Group (LON:OCDO), which added 5.45% to 1,143p. WPP (LON:WPP), the advertising giant, was also up - up 5.54% to 1,143p.
The group could sell a minority stake in its Chinese unit to two of the country’s biggest conglomerates, Alibaba and Tencent, Sky News reported at the weekend.
Citing unidentified sources, Sky News said the two firms, along with China Media Capital Holdings, were in early-stage discussions about buying roughly 20% of WPP China in a deal that would value the business between US$2bn and US$2.5bn.
Top laggard on the UK blue-chip index was house developer Taylor Wimpey plc (LON:TW.), which shed 3.95% to 170.20p, joining other housebuilders lower. Three of the top five laggards on Footsie were developers.
4pm: Civil unrest in Britain?
Doug Gurr, manager of the UK arm of retail giant Amazon Inc (NASDAQ:AMZN), has reportedly warned the Brexit secretary, Dominic Rabb, that a no-deal scenario could lead to ‘civil unrest’ in Britain within weeks of the exit date.
Gurr reportedly made the comment during a meeting between Raab and a group of senior business executives last Friday, although Amazon declined to confirm that the remarks had been made.
Amazon is one of a number of businesses to warn about the prospect of a no-deal Brexit, in which the UK leaves the EU without an agreement in place governing matters such as trade tariffs.
Several other major employers, including the aerospace giant Airbus and the UK’s largest carmaker Jaguar Land Rover, have warned they could be forced to move jobs and investment overseas.
Dublin based budget airline Ryanair has added tension to the situation by saying that it believed the risk of a no-deal Brexit was being “underestimated”.
3.15pm: Foreign investment in UK ticks upwards in first full year after Brexit
Foreign direct investment in the UK has inched upwards in the first full-year following Britain’s vote to exit the European Union.
Data from the Office for National Statistics (ONS) showed long-term investment in the UK by foreign businesses and residents stood at around £1.56 trillion, 0.8% higher than in 2016.
The growth figures, despite the rise, were the weakest since the global recession of 2009, and much smaller than an uptick of almost 15% in 2016 which was boosted by a handful of major takeover deals. However, the ONS said the rise was not far off increases seen in 2013,2014, and 2015.
The ONS also said British companies and investors saw the first net increase in their foreign direct investment since 2011 last year, reflecting an increase in oil and commodity prices and a pick-up in the global economy.
2.45pm: Wall Street opens in the red amid geopolitical tensions
US stocks have opened lower across the main indices as several comments from President Trump brought geopolitical tensions back to the forefront.
The Dow Jones Industrial Average was down 27 points at 25,033 shortly after the open, while the S&P 500 was off 3.5 points and the Nasdaq lost 29 points.
Despite the slow start, Alec Young, managing director of global markets research at FTSE Russell, said that “strong corporate fundamentals” in addition to a more cautious Federal Reserve attitude toward interest rate hikes “will support risk appetite even if negative trade headlines remain”.
He added: “The degree to which we have a negative reaction to trade is related to the degree to which it erodes fundamentals. However, so far there’s little evidence that it is having an impact on earnings or revenue, or data or business sentiment”.
1.30pm: US headed for cautious start as Trump Iran tweet dredges up trade worries
Wall Street looks set for a somewhat cautious start on Monday morning after Trump’s strong rebuke of Iran and comments on Chinese exports sent global markets into reverse.
In an all-caps tweet on Sunday evening, the US president warned Iranian president Hassan Rouhani to “NEVER EVER THREATEN THE UNITED STATES AGAIN”, hours after Rouhani had cautioned Trump against pursuing a hostile policy towards Iran.
The US tech sector is also looking particularly weak after electric car-maker Tesla Inc (NASDAQ:TSLA) saw losses in pre-market trading amid reports it had asked for refunds from its suppliers.
Investors will also be bracing for the second quarter earnings update from Google parent company Alphabet Inc (NASDAQ:GOOG), which is expected to have its profits for the period demolished by a US$5.07bn antitrust fine from the EU which it would account for in its earnings despite appealing the ruling.
12.30pm: European Commission says Juncker will not bring trade offer to talks with Trump
The European Commission has said that its president, Jean-Claude Juncker, will not arrive in the US for trade talks with US president Donald Trump with a specific offer.
The announcement precedes the talks due to take place on Wednesday as the EU seeks to reduce trade tensions between itself and the United States.
Commission spokesman Margaritis Schinas told a news conference: “I do not wish to enter into a discussion about mandates, offers because there are no offers. This is a discussion, it is a dialogue and it is an opportunity to talk and to stay engaged in dialogue.”
The EU will be hoping to reduce tensions following a series of tit-for-tat duties imposed after Trump slapped tariffs on US imports of steel and aluminium in June, with the EU responding with €2.8bn of its own tariffs on US products such as bourbon whiskey, motorcycles, and orange juice.
12.00pm: FTSE 100 recovers some losses but remains stuck in the red going into lunchtime
As Monday morning drew to a close, the Footsie remained stubbornly in negative territory and a potential escalation in the US-China trade spat pulled focus away from an upcoming earnings season.
Donald Trump's recent threats to slap tariffs on all Chinese imports, equating around US$500bn, have rattled markets as the prospect of an escalation rears its head despite the somewhat off-cuff nature of the comment.
Craig Erlam, senior market analyst at OANDA said that while it isn’t the first time Trump has suggested escalating tariffs “it does seem he is becoming increasingly frustrated with the process and that he is not getting the results he expected when he first started down this path”.
Erlam added that while markets had shown some resilience in the face of the first bout of tariffs and retaliations from the US and various other countries, this “may not last once tariffs start to take their toll on the economy, with price increases for consumers sure to have an impact”.
Trump has also (perhaps inadvertently) been putting his finger on the oil price scale this morning after his Twitter outburst against Iran earlier today was followed by a 1.5% jump in the Brent crude price to US$74.22 a barrel.
The circumstances were summed up by Joshua Mahony, market analyst at spread-betting firm IG, who said: “Donald Trump once again remains the main player within global markets, as the ability to disrupt market stability means that his temperamental tweeting can often take precedence over traditional economic releases.”
11.15am: Theresa May’s Brexit plan receives backing from German interior minister
Stephan Mayer, a German interior minister, has backed the Brexit plan produced by UK prime minister Theresa May, saying it is a “very appealing and very interesting approach”.
Mayer, who is a member of the CSU party, a coalition partner of Chancellor Angela Merkel’s Christian Democrats, is the second senior politician in Germany to back the UK in recent weeks.
He said it would be important for the UK to stay close to the EU for all parties involved, especially Germany, adding that the country wanted “a very stable and close relationship to the UK even after Brexit”.
Mayer’s comments follow a revelation at the start of July that fellow interior minister Horst Seehofer, one of the Chancellor’s most senior cabinet members, had written to the European Commission to complain about the hardline stance taken against the UK in Brexit talks and their potential repercussions.
10.45am: China says it won’t devalue yuan to help exports amid trade spat
China has said that the value of its currency is driven by market forces and that it would not devalue the yuan to help its exports.
The statement followed comments by US Treasury Secretary Steven Mnuchin that Washington was monitoring the currency’s weakness as the trade row between the two countries escalated.
At a daily news briefing, Geng Shuang, spokesman for the Chinese Foreign Ministry, said the value of the yuan was subject to the forces of supply and demand, and that healthy economic performance offered support for its current level.
He added that China had “no intention to use means like the competitive devaluation of its currency to stimulate exports”.
The comments may be taken with a pinch of salt however, as the Foreign Ministry has no say on currency matters, but is the only government department that holds news briefings that can be attended by foreigners, with neither the People’s Bank of China and the State Administration of Foreign Exchange responding to requests for comment on Mnuchin’s remarks.
10.00am: Capita has contract suspended by MOD as Serco challenges award
The UK’s Ministry of Defence (MOD) has suspended a contract with FTSE 250-outsourcer Capita PLC (LON:CPI) after its rival, Serco Group PLC (LON:SRP) issued a legal challenge against the award.
Capita beat Serco for the contract last month but the MOD confirmed yesterday that the outsourcing process would be suspended until “a legal challenge to the procurement is resolved”.
The legal claim stems from a risk assessment carried out on the companies by CompanyWatch on behalf of the government, in which Capita scored 10 out of 10, the riskiest possible rating, while Serco scored just 7 out of 10.
The contract itself concerns the delivery of fire and rescue services for the MOD and would involve the transfer of over 2,000 staff at 78 defence fire stations around the world.
In mid-morning trading, Capita shares were down 2% at 161.5p, while Serco's shares were up 0.4% at 99.6p.
9.30am: EU rejects UK government proposal for City access … again
The European Union has rejected the UK’s plan for a future relationship between the City and the EU markets once again, saying the proposal would reduce the bloc’s autonomy.
A report from the Financial Times said the EU’s chief Brexit negotiator, Michel Barnier, told European affairs ministers that May's white paper's proposals would prevent the EU from withdrawing access unilaterally, amounting to “system of generalised equivalence that would in reality be jointly run by the EU and UK”.
The white paper had proposed an “expanded equivalence” model while also rejecting existing models as they were “not sufficient to deal with a third country whose financial markets are as deeply interconnected with the EU’s as those of the UK are”.
This was a step down from a previously suggested model of mutual recognition, which had been supported by the City but was rejected by the EU in January as too ambitious.
In other news, the UK’s largest labour union, Unite, said around 40 rig workers have begun a 24-hour strike on the Alwyn, Elgin, and Dunbar oil and gas platforms in the British North Sea in response to a failure by platform operator Total to resolve a dispute over work shifts and pay.
8.45am: Weak start for Footsie
As predicted, the FTSE 100 started on the back foot, falling 36 points to 7,642.52 following a rather fractious meeting of G20 finance ministers that did little to allay growing fears of a trade war.
Among a handful of early risers was GlaxoSmithKline plc (LON:GSK), which nudged up just under 1% amid reports it is considering a move to break itself up.
Among the fallers was Hargreaves Lansdown (LON:HL.), which dropped 1.6% after being downgraded to ‘underperform’ by American bank Jefferies.
The budget airlines flew in to turbulence caused by French air traffic control strikes and cancellations with Ryanair (LON:RYA) off 5.7% and easyJet (LON:EZJ) off 2.6%.
In an update for the three months to June, Ryanair posted a fall in profits and gave a rather dour assessment of prospects.
The receding footfall on Britain’s high streets claimed another casualty after McColl’s Retail Group (LON:MCLS) sounded the earnings alarm. The shares slumped 13%.
Proactive news headlines:
Instem PLC (LON:INS), the developer of software used by the life sciences industry to collate and transmit data, said first-half trading was in line with market expectation. The highlight was the performance of its SEND product, with the value of contracts won thus far in 2018 exceeding the total for all of last year.
The commercialisation partner for Futura Medical PLC’s (LON:FUM) TPR100 fast-acting pain relief gel has filed the product’s marketing authorisation application with UK regulators.
Kromek Group PLC (LON:KMK) has been awarded two new contracts from the US’s Department of Homeland Security (DHS) and the Defense Threat Reduction Agency (DTRA), an agency of the Department of Defense.
Midatech Pharma PLC (LON:MTPH) said its US arm has signed a deal that gives it the exclusive right to promote a cancer care product in the US. It has inked a co-promotion agreement with Bausch Health Companies for NeutraSal for oncology customers in the US.
Keywords Studios PLC (LON:KWS) has acquired Yokozuna Data, a developer of artificial intelligence (AI) and machine learning technologies based in Japan.
Sound Energy PLC (LON:SOU) has detailed administrative changes related to its eastern Morocco assets which see partner Schlumberger taking a direct interest in the projects.
SDX Energy Inc (LON:SDX) has announced another new discovery at the South Disouq project, in Egypt. The SD-3X well was drilled down to a depth of 7,842 feet and it encountered 32.6 metres of net conventional natural gas pay, in the Abu Madi and Kafr el Sheik horizons.
Cabot Energy PLC (LON:CAB) told investors that its new executive management team is confident there will be an improved performance, through its planned 2019 work programme. Scott Aitken was appointed as the new Cabot chief executive in June, and, in the subsequent weeks has met with operations teams in the UK, Italy and Canada.
Amur Minerals Corporation (LON:AMC) has entered into a Memorandum of Cooperation with GEFCO LLC, a global expert in supply-chain solutions with a strong presence in Russia, being 75% owned by JSC Russian Railways.
Galileo Resources PLC (LON:GLR) will start a second drill progamme at the Star Zinc project in Zambia after an independent review of historical gravity geophysics data matched well with its own results. Colin Bird, chief executive, said there was good correlation with known zinc mineralisation at Star Zinc.
Shefa Yamim ATM (LON:SEFA) has appointed PPM, a South African project management and engineering company to provide working and capital cost estimates for bringing the Kishon Mid-Reach alluvial precious stones deposit into production.
Rosslyn Data Technologies PLC (LON:RDT), a leading global big data technology company, has announced that James Appleby will be joining its board as a non-executive director with immediate effect. He will be replacing Ed Stacey, who has been on the board since the IPO in April 2014.
6.45am: Footsie to set off in reverse gear
The FTSE 100 looks set to open its account in negative territory, taking its cue from Asia’s main markets.
The index of blue-chip stocks is called around 30 points lower by the spread betting firms which reckon it will start trading around the 7,649 mark.
President Donald Trump’s negativity towards US Federal Reserve chair Jerome Powell and the President’s attempt to talk down the value of the dollar made their mark overnight.
Trade tension continued to build at the G20 meeting of finance ministers from the world’s largest economies over the weekend.
Analysts said it will be interesting to see what transpires when EU Commission President Jean-Claude Juncker meets Trump at the White House on Wednesday after he referred to the European Union as a “foe”.
Back here in the UK, it is a busy week for scheduled news with no fewer than 15 FTSE 100 companies reporting and a welter of second-tier firms updating on progress.
Key among them will be reports from drinks maker Diageo (LON:DGE), ITV (LON:ITV), BT (LON:BT.A) and GlaxoSmtihKline (LON:GSK).
Around the Markets:
- Pound worth US$1.3143
- Gold changing hands for US$1,232.50 an ounce, up US$1.40
- Brent crude US$73.01 a barrel, down 6 cents
City Headlines:
Financial Times
Brussels rejects UK’s financial services Brexit plan
Hammerson poised to announce asset sales
Discount pioneers race to save remains of Poundworld - hopes for deal administrators to retain around half of discount chain’s stores
Times
Trade war has begun already, warns France
Glaxo to put faith in blockbuster cancer drug: Boss Emma Walmsley is set to put oncology at the heart of the turnaround of Glaxosmithkline’s core pharmaceuticals division
Countrywide’s rights issue set to suffer postal delay
Telegraph
Remote areas first in line for broadband subsidies under plans to upgrade internet infrastructure
Johnston Press 'will listen to rescue proposal from Ager-Hanssen'
Guardian
New Tesco discount chain could launch as early as September
United Utilities to pay out almost £181m in dividends to investors: Water firm’s biggest payout in a decade will be made two days before it imposes hosepipe ban