FTSE 100 closes higher
BoJ leaves policy unchanged
Big miners biggest winners
FTSE 100 closes higher on Tuesday as global shares rallied and big miners made big gains.
"The energy sector was given a lift by strong results from BP, and the prospect of a trade war between the US and China has diminished, and that has boosted the mining sector," noted David Madden, at CMC Markets.
The Footsie finished up almost 48 points at 7,748, but FTSE 250 fell, dropping 0.38 at 20,877.
In the US at the time of writing, the Dow Jones Industrial Average is up 143 points at 25,450. The Nasdaq is ahead by nearly 60 points and the S&P 500 added 1.12 at 2,819.
Oil titan BP (LON:BP.) shares added 1.38% to 573.30p after a quarterly earnings beat and
its overall value has increased by over a quarter in the last year.
3.40pm: Easing US-trade tensions?
The FTSE 100 is up 60 points to 7,760 in late afternoon trade as mining shares were boosted by reports that the US and China are seeking to restart talks to defuse a trade war.
Representatives of US Treasury Secretary Steven Mnuchin and Chinese Vice Premier Liu He are in private talks to find ways to negotiate again, Bloomberg reported, citing sources. The prospect of easing trade tensions pushed up shares in Anglo American, BHP Billiton, Fresnillo and Evraz.
“The UK index had spent most of the day chugging along with some fairly mild growth, prevented from taking off by a slew of disappointing earnings from some of its constituents,” said Connor Campbell, financial analyst at Spreadex.
“However, the latest suggestion that the world’s biggest superpowers are trying to avoid a full-blown trade war lifted the FTSE’s commodity and banking stocks, sending the index itself 60 points higher and allowing it to hit a fresh month and a half peak.”
Evening Market Comment: US/China trade talks update sends FTSE to fresh month and a half peak... https://t.co/nf46sIRowp— Connor Campbell (@ConnorSpreadex) 31 July 2018
2.40pm: Tech rebound lifts US stocks
Technology-laden benchmark, Nasdaq, gained 46 points to 7,677 while the Dow Jones Industrial Average added 111 points to 25,417 and the S&P 500 increased 10 points to 2,813.
Apple Inc (NASDAQ:APPL) shares climbed ahead of reporting its third quarter results after the close.
Meanwhile, economists are digesting the PCE deflator data and looking ahead to the Federal Reserve’s interest rate announcement on Wednesday.
1.50pm: US PCE deflator unchanged
The Federal Reserve’s preferred measure of inflation remained unchanged in June.
The core US personal consumption expenditure deflator, which strips out volatile items like food and fuel, rose at an annual rate of 1.9% in June. Economists were expecting a rate of 2.0%.
Compared to a month ago, the core PCE edged up 0.1%, as expected, down from 0.2% in May.
PCE Core (M/M) (Jun): 0.1% (est 0.1%, prev 0.2%)— LiveSquawk (@LiveSquawk) 31 July 2018
PCE Core (Y/Y) (Jun): 1.9% (est 2.0%, prevR 1.9%)
The Fed, which announces its interest rate decision on Wednesday, is targeting an annual rate of inflation of 2%.
The data also showed consumer spending rose 0.4% in June, as predicted by analysts.
1.00pm: US stock futures gain
Dow Jones Industrial Average futures rose 31 points to 25,317, S&P 500 futures increased 7.3 points to 2,810 and Nasdaq 100 futures grew 21 points to 7,222.
Apple release its quarterly earnings after the close and investors will be keen to see how well the iPhone X has been selling. Its results follow earnings misses from fellow tech stocks Facebook, Twitter and Netflix.
Elsewhere, market participants are looking ahead to the Federal Reserve’s policy decision on Wednesday. The Fed is expected to keep interest rates unchanged so the focus will be on any hints about future tightening.
12.00pm: FTSE 100 led higher by Fresnillo, RBS
The FTSE 100 rose 44 points to 7,745 at the midday mark as investors waded through a raft of corporate earnings.
Royal Bank of Scotland Group PLC (LON:RBS) gained after the Financial Conduct Authority said it would not take disciplinary action against the lender over its mistreatment of small business customers through the Global Restructuring Group unit.
Centrica PLC (LON:CNA) shares fell as the energy group's pledge to maintain its 2018 dividend failed to allay fears over future payout cuts, with the British Gas owner only reporting a slight rise in headline first-half earnings.
Standard Chartered (LON:STAN) was under pressure as it resumed its interim dividend and reported higher profits but said operating expenses jumped.
Meanwhile, traders weighed data on Eurozone inflation and gross domestic product along with the Bank of Japan’s decision to keep monetary policy unchanged.
Later in the session, the US personal consumption expenditure deflator index will be closely monitored as it is the Federal Reserve’s preferred measure of inflation. The Fed announces its interest rate decision on Wednesday.
11.00am: FCA won't discipline RBS over GRG scandal
The Royal Bank of Scotland Group PLC (LON:RBS) has welcomed the Financial Conduct Authority’s announcement that it will take no action to discipline the bank over the mistreatment of struggling small businesses through the Global Restructuring Group subsidiary.
An independent review commissioned by the FCA found no evidence that the bank deliberately transferred customers over to GRG in order to profit from their restructuring or insolvency.
The FCA said: “It is important to recognise that the business of GRG was largely unregulated and the FCA’s powers to take action in such circumstances, even where the mistreatment of customers has been identified and accepted, are very limited.
“Taking action was therefore always going to be difficult and challenging but after carefully considering all the evidence we have concluded that our powers to discipline for misconduct do not apply and that an action in relation to senior management for lack of fitness and propriety would not have reasonable prospects of success.”
RBS said: “The board welcomes the FCA’s confirmation that it has concluded its investigation into the bank and that no further action will be taken. We await the publication of the FCA’s full account and will reflect carefully on its findings to learn any further lessons from what was a hugely challenging time for the bank, its customers and the wider economy.”
10.30am: Eurozone GDP growth slows, inflation rises
Eurozone economy grew at a slower pace in the second quarter, according to official data.
Gross domestic product rose at an annualised rate of 2.1%, compared to 2.5% in the first quarter and forecasts of 2.2%. Quarter-on-quarter GDP growth slowed to 0.3% from 0.4%.
Separate figures showed the Eurozone consumer price index rose 2.1% year-on-year in July, up from 2.0% in June. Economists had expected no change.
Core CPI, excluding volatile fuel and food prices, grew 1.1% in July following a 0.9% increase in June and beating expectations of 1.0%.
Joshua Mahony, market analyst at IG, said while much of the rise in inflation can be attributed to a 9.4% annual rise in energy price, the fact that core inflation jumped means that many of the underlying components are also being affected.
"Eurozone inflation data has pushed pressure back onto Mario Draghi & Co, with headline CPI breaching the 2% target for the first time since 2012," he said.
“With the European Central Bank set to end their quantitative easing programme by the end of the year, markets will be keen to see Draghi’s response should inflation continue to push higher."
10.10am: Movers and shakers
Travis Perkins PLC (LON:RPK) shares are down 11.8% to 1,182p after warning that 2018 operating profit would be in the lower end of market forecasts after a decline in the first half.
9.30am: Bank of Japan leaves monetary policy unchanged
The Bank of Japan left its ultra-easy monetary policy unchanged, saying it expects inflation would take time to reach its 2% target.
The BOJ decided to maintain its short-term interest rate target at minus 0.1% and a pledge to guide 10-year government bond yields around 0% by a 7-2 vote.
"It seems the Bank of Japan will be the last major central bank to pull the trigger on tightening policy as the Japanese economy continues to struggle with stubbornly low inflation levels," said Hussein Sayed, chief market strategist at FXTM.
"This should allow further widening in spreads between Japan’s bonds and other global bonds towards year-end, suggesting that the Yen is likely to remain under pressure for the near future."
08.40am: FTSE 100 opens higher
The FTSE 100 bucked the trend as it posted a 14 point gain in early trade to climb to 7,714.78 when market commentators were predicting it would hold steady, or fall.
Wall Street was off and Asia was mixed overnight amid jitters over the tech sector, with Apple’s upcoming results likely to further mould sentiment.
Here in the UK, the leader of the pack was as far divorced from the world of mobile phones, laptops and tablets as it gets.
BP (LON:BP) was little changed with a quarterly earnings beat making only a marginal impact on the stock price.
But, as Richard Hunter, head of markets at Interactive Investor, pointed out, the oil major’s value has increased by over a quarter in the last year.
“Progress is being made in practically all areas of the business and the company has delivered despite heightened expectations,” he added.
Proactive news headlines
Sirius Minerals PLC (LON:SXX) has expanded its relationship with Archer Daniels Midland Co (NYSE:ADM), the Fortune 500 US-based agri-business. Archer Daniels Midland (ADM) has agreed to supply Sirius with a starch-based binding agent, used in the POLY4 fertiliser production process, for an initial period of five years from the commencement of production with renewal options written into the arrangement.
Westminster Group PLC (LON:WSG) has made progress on ways to move forward its contract for security equipment at an airport in Iran The US$24mln contract was put on hold following the US’s withdrawal from the Iran nuclear pact in May due to the uncertainty among suppliers over possible sanctions.
Rockfire Resources PLC (LON:ROCK) said a ground magnetic survey at the Merengo exploration project in Queensland, Australia, has returned a “surprising, but very pleasing” semi-circular pattern that is thought to be an iron-rich alteration. These geological anomalies are often in close proximity to what are called intrusion-related gold and copper deposits.
Eland Oil & Gas PLC (LON:ELA) said that a land rig has re-entered the Ubima-1, Nigeria, which was discovered 1963 before being suspended. The plan is to assess four different reservoirs as well as carrying out two drill stem tests and acquiring accurate fluid, pressure and production data for each separate, oil-bearing horizons.
Oil producer Range Resources Limited (LON:RRL) exceeded its target of 800 barrels per day in Trinidad towards the end of its latest quarter. Total output in the quarter to June was 60,376 barrels of oil or 663 per day on average, though production rose to more than 800 barrels per day in the second half of the period.
Challenger Acquisitions Limited (LON:CHAL) has agreed a repayment plan regarding its loan to the owner of the previously cancelled Star Sanctum event. The entertainment and leisure investment group said the owner had agreed to repay the full £100,000 loan commencing with a £35,000 payment on or before 30 September 2018, then quarterly payments with the balance on or before 30 June 2019.
Chaarat Gold Holdings Ltd (LON:CGH) has drilled approximately 8,000 metres of its planned 30,000 metre drilling programme at the Tulkubash project in Kyrgyzstan. Eight drill rigs are currently in operation on site. It’s now been confirmed that gold mineralisation continues further along strike northeast of the existing 1mln ounce resource.
Rambler Metals and Mining PLC (CVE:RAB)(LON:RMM) processed a quarterly record volume of 94,589 dry metric tonnes of ore at its Ming copper project in Newfoundland and Labrador in the three months to the end of June. Feed grade during the period averaged 1.10% copper and 0.53 grams per tonne gold. Concentrate recovery improved, and a total of 1,801 tonnes of copper was recovered to concentrate in the first half of 2018, slightly down from the 1,906 tonnes produced in the 2017 first half.
Bluebird Merchant Ventures Ltd (LON:BMV), the resource development group, has completed the report on the feasibility of reopening the Gubong mine in South Korea. The report has been delivered to Bluebird’s partner, Southern Gold, and it means the 50/50 joint venture can now kick-off, with Southern Gold henceforth sharing equally with Bluebird the costs of the mine’s development.
Kore Potash Ltd (LON:KP2) has appointed a third party to refine the definitive feasibility study (DFS) for its Kola potash project in the Republic of Congo. Delivery of the DFS is not scheduled until next month, but Kore has already commissioned an independent review of some aspects of the Engineering, Procurement and Construction (EPC) pricing.
The summary of quarterly activities for Metminco LTD (LON:MNC) showcases how busy the company has been. Among the highlights is the ongoing drilling at the Tesorito gold project in Colombia, where the presence of a gold-bearing porphyry has now been confirmed.
European Metals Holdings (LON:EMH) completed roast optimization testwork in July, in which it was established that improved recoveries could deliver increased lithium carbonate production from the Cinovec project in the Czech Republic. The roast/leach tests have reliably achieved lithium extractions in the region of 94% recovery.
Thor Mining PLC (LON:THR) (ASX:THR) said it has received a binding warrant exercise notice for the conversion of 451,643 warrants at a price of 1.25p each resulting in aggregate gross proceeds being receivable by the company of £5,646.
Tlou Energy Limited (LON:TLOU) said it has released a presentation on the Southern African Power Market, prepared by the company in association with the Mott MacDonald Group. It added that Tlou's executive director Gabaake Gabaake will make a presentation at the 3rd Annual SADC Industrialisation Week being held in Namibia this week, with a copy of the presentation available on the company's website.
Ceres Power Holdings PLC (LON:CWR) announced that Mike Lloyd retires as a non-executive director from today, 31 July 2018. Following Lloyd's retirement, the company said it is reviewing board composition, is currently seeking a non-executive director replacement and will announce further details in due course.
Directa Plus PLC (LON:DCTA), a producer and supplier of graphene-based products for use in consumer and industrial markets, has announced the appointment of N+1 Singer as the company's joint broker with immediate effect. The group said Cantor Fitzgerald Europe remains its nominated adviser and joint broker.
WYG PLC (LON:WYG), the international project management and technical consultancy, today announced that WH Ireland Limited has ceased to act as the company's joint broker with immediate effect. It said N+1 Singer remains as the company's sole broker.
7.00am: Subdued start predicted
The FTSE 100 is set for a subdued start to proceedings following a mixed session in Asia and another down day for Wall Street.
The index of blue-chip stocks will nudge 2.5 points lower to 7,690.60, according to the spread betting companies.
“A miss in earnings will deepen the current tech sector selloff, but at what level will investors start to consider these shares cheap?” asked Jasper Lawler of London Capital Group.
“This will depend largely on how investors perceive future growth for these companies, something which they are reassessing after disappointing outlook and user growth figures.
“A surprise to the upside from Apple could stop this sell off in its tracks; however it might only provide a short-term distraction.”
Here in the UK, oil major BP (LON:BP) could help shape sentiment as it report its quarterlies.
Around the Markets:
- Standard Chartered (LON:STAN) kicks off the banking reporting season.
- Pound worth US$1.3127
- Gold changing hands for US$1,230.90 an ounce, down 60 cents
- Brent crude US$74.70 a barrel, down 27 cents
- Shares in Vodafone increased by 4% yesterday on reports that Elliott Advisors, the American activist investor, has built a stake in the FTSE 100 telecoms group and could shake it up – The Times
- US tech giants lost more than US$50bn in market value yesterday as Wall Street investors fretted over a series of under-whelming results – Daily Mail
- Sports Direct, which owns an 11% stake in House of Fraser, has offered a rescue deal to the ailing department stores group – The Times
- Ryanair is facing fresh strikes after German pilots voted overwhelmingly in favour of industrial action - Daily Telegraph
- Russian gold miner Petropavlovsk lowered production guidance as the new team took charge – Financial Times
- Toshiba is considering plans to shut down its Nugen venture, the multibillion-pound plans to build a nuclear plant at Moorside in Cumbria, within months unless a buyer is found – The Times
- Heineken has cut its profit expectation for the year by 0.2 percentage points as weak margins in its Brazilian market and adverse currency moves affected the sales – Financial Times
- Blue Whale Capital, a new investment firm backed by billionaire co-founder of investment giant Hargreaves Lansdown, Peter Hargreaves, has posted a near-£500,000 loss as it reels in investors – Daily Mail
- Former BP executive Neil Morris has been appointed chief executive of the Faraday Institution, which was set up last year with £78mln of government funding – The Times
- Michel Barnier softened his opposition to Theresa May's post-Brexit plan after the UK concedes Brussels’ ultimate control over financial services access to Europe – Financial Times
- Citigroup analysts have warned that central bankers around the world may be about to knock stock markets off course by raising interest rates, as investors are at risk of becoming “too complacent” around signs that global trade tensions may be easing – Financial Times