- Hopes raised over China/US trade talks
FTSE 100 index closes up 58pts
Asda resurgence lifts grocery sector
Ocado and Sainsbury's ride Asda's coat-tails
FTSE 100 closed higher, joining other global indices, as traders became seemingly less worried about US/China relations.
The UK blue-chip benchmark closed up over 58 points at 7,556, while its mid-cap cousin added almost 142 points at 20,462.
On Wall Street, the Dow Jones Industrial Average closed up over 395 points at 25,555. The Nasdaq added over 53 at 7,407.
The broader-based S&P 500 added around five points at 2,845.
Fears eased as it was confirmed that trade talks between the US and China will resume later this month.
David Madden, at CMC Markets, noted that the recent slump in Chinese stocks and the renminbi could weaken Beijing’s hand in the negotiations.
Larry Kudlow, economic advisor to President Trump, has made it clear the US will be pushing for a good deal, he noted, which has boosted Wall Street shares.
Top riser on Footsie was online grocer Ocado Group (LON:OCD), which added nearly 4% to 1,056.5p after Asda revealed a strong set of sales figures for the second quarter and broker Peel Hunt repeated a 'buy' on Ocado.
On the losing side was steel maker Evraz (LON:EVR), which shed 5.65% to stand at 461.30p, and was the Footsie's biggest laggard.
3.45pm: Ocado tops the blue-chip risers after Asda update
Entering the final hour of trading the FTSE 100 finally cracked the 7,550 barrier, led by groceries delivery outfit Ocado Group PLC (LON:OCDO).
The FTSE 100 was up 54 at 7,552.
Ocado put on a spurt after Asda revealed a strong set of sales figures for the second quarter.
READ Walmart-owned Asda sees second-quarter sales bounce-back as recovery continues ahead of Sainsbury's takeover
J Sainsbury plc (LON:SBRY), which is looking to acquire Asda, rose 2.6% in sympathy.
2.40pm: FTSE still unable to break the 7,550 barrier
The Footsie has traded sideways throughout the afternoon session and despite a strong start on Wall Street, shows no inclination of kicking on.
The FTSE 100 was up 45 at 7,543. In the US, the Dow was close to racking up a 300 point gain while the broader-based S&P 500 was 17 points higher at 2,835.
Among the small caps, Summit Therapeutics PLC (LON:SUMM) showed there can be life after a drugs test failure, as it rose 11.6% to 38.5p on the back of the award of an additional US$12mln under its contract with the US Biomedical Advanced Research and Development Authority (BARDA).
READ Summit Therapeutics awarded additional US$12mln under contract with US BARDA
The drugs developer has been focusing on the Phase 3 development programme for ridinilazole, the company's precision new mechanism antibiotic for the treatment of C. difficile infection, since its “PhaseOut DMD” clinical trial unexpectedly failed in June.
Sector peer Tiziana Life Sciences PLC (LON:TILS) was also going well, surging 10.4% to 51p, after the cancer and immune systems specialist announced an investigational new drug application to the US Food and Drug Administration.
The company wants to demonstrate proof of concept for a new treatment of neurodegenerative diseases, such as multiple sclerosis.
12.45pm: US stocks set to bounce back
The FTSE 100 seems disinclined to rise above the 7,550 barrier, despite expectations of a firm start on Wall Street.
The FTSE 100 was up 45 at 7,543, some seven points below its intra-day high.
In futures trade, the Dow Jones is up 151 points; the tech heavy Nasdaq is ahead by 48 and the S&P 500 is up by over 12 points.
Back in Blighty, Artjom Hatsaturjants at Accendo Markets noted that the index has advanced, even with 12 of its constituents going ex-dividend today, shaving about 17 points off the index.
Investors are looking to recover yesterday's losses on the back of stronger commodity prices and positive developments in the US-China trade war story that saw China prepare a delegation to Washington to discuss trade dispute settlement, Hatsajurants suggested.
DIY goods retailer Kingfisher PLC (LON:KGF) was lurking in the Footsie’s cellar, down 4.9% at 274.2p, after analysts quickly zeroed in on the catalyst for a welcome boost to revenues in the second quarter.
We announced our Q2 trading update to 31 July 2018 this morning. Read more here: https://t.co/lya2rD931q #KGFQ2
— Kingfisher plc (@Kingfisherplc) August 16, 2018
“Despite the huge improvement in the weather from the first quarter of the year to the second, like-for-like sales at the French operations still fell 1% year-on-year on a constant currency basis, the ninth consecutive drop, despite some improvement at the Brico Dépôt operation on the other side of the channel,” commented Russ Mould at wealth management firm AJ Bell.
Meanwhile, Ian Forrest at the Share Centre, said, “DIY retailer Kingfisher today reported a big improvement in sales in the second quarter but the market also spotted a decline in profit margins.”
#Kingfisher PLC#KGF
screwfix is jewel in this one.
group sales = +3.4% (£3,225 mill)
pe = 13x
well priced.
=> watch /hold only pic.twitter.com/IXc3aGRoBk
— darren lefcoe (@dlefcoe) August 16, 2018
11.00am: Footsie consolidating gains
After a brief wobble following the release of the retail sales figures, the Footsie was back on the upward trail in late morning.
The FTSE 100 was up 41 at 7,539, just 7 points below its high for the day.
The Footsie’s top riser was Melrose Industries PLC (LON:MRO), up 2.2%, which won’t please those still frothing at the mouth at the recent reminder of the Melrose chief executive’s £42.8mln pay package last year.
The second biggest risers was Marks and Spencer Group Plc (LON:MKS), which was also up 2.2% in the wake of the retail sales data (see earlier update, below).
The good times for retailers may not last, however, warns Dutch finance house, ING.
“Warmer temperatures gave the high street another welcome boost in July, but as the weather effect begins to fade, we suspect the challenges facing the retail sector will return,” ING Economics’ James Smith opined.
The group’s economist covering developed markets noted that “UK retailers had another decent month in July”.
“Retail sales, excluding fuel, rebounded by 0.9% on the month as warm temperatures boosted sales of food and clothing. Admittedly, the fairly large magnitude of this latest increase possibly says more about the volatility of the retail sales series than anything else, but the underlying details do tally with what Visa and the British Retail Consortium have said about recent trends,” Smith observed.
With the return of the wind and the rain comes a dose of reality, in Smith’s view.
“Disposable incomes remain pressured by the noticeable rise in petrol prices through the second quarter, despite some better news on wage growth this year. Partly for this reason, consumer confidence is subdued, particularly when compared to similar surveys in the US and Europe, which are still flirting with decade-plus highs,” the economist said.
The 0.7% m/m rise in UK retail sales in July was driven by a 4.9% jump in non-store sales. Shows Amazon's power - its Prime Day discount period ran from July 16-17. But with con. confidence low and surveys pointing to slower job growth, the outlook for retailers still looks tough pic.twitter.com/FpwM31Pcde
— Samuel Tombs (@samueltombs) August 16, 2018
The wind and the rain is not bothering shareholders in online travel agent On the Beach PLC (LON:OTB) today, after the company neatly distracted investors’ attention away from suppressed demand for overseas holidays – we’ve all been watching the World Cup and sunbathing in the back garden or on the promenade at Cleethorpes, apparently – with a well-received acquisition.
The shares were up 14.2% after the company stuffed luxury holiday firm Classic Collection into its suitcase, paying £20mln for the privilege.
9.45am: Retail sales up 3.5% year-on-year
The Footsie was hovering around its intra-day high as investors digested generally agreeable retail sales data.
The FTSE 100 was up 47 at 7,545, with yesterday’s bad guys – the miners – doing much of the heavy lifting this morning.
On the retail sales front, in July, the quantity bought increased by 0.7% when compared with the previous month, recovering from a decrease of 0.5% in June 2018.
On a year-on-year basis, sales were up 3.5%, which was comfortably better than the 2.9% increase the market had been expecting.
Spending online continued to increase to reach a new record proportion of all retailing at 18.2% in July 2018, while Mike Ashley’s recent purchase of House of Fraser might not have been as daft as some people think, with strong growth in department stores also reaching a record proportion at 18.2%.
“The latest consumer spending figures for the UK have come in better than expected with retail sales for July rising by just 0.7% month-on-month. Against consensus forecasts for a rise of 0.2% this is a clear beat and unsurprisingly we’ve seen a pop higher in the pound almost immediately,” noted David Cheetham, at the online trading platform, xtb.
“Clothing sales and the good weather both contributed to the improvement, after a 0.5% decline for the previous month with England’s world cup heroics likely boosting sales of beer and waistcoats,” Cheetham quipped.
8.50am: Positive start
The FTSE 100 made a tentative, but positive start to proceedings at it nudged up 12 points to 7,509.53 - albeit with ex-dividend factors knocking 17 points off the gains - ahead of UK retail sales data later and against the backdrop of a further round of Brexit negotiations.
“Any retail sales data, good or bad, could be quickly overshadowed by growing fears of the UK crashing out of the European Union without a deal,” said Jasper Lawler, markets expert at London Capital Group.
“The pound has dived over the past two weeks as investors accept the increasingly likely reality that no deal will be struck before the self-imposed deadline; any headlines supporting this could see the pound fall further. At these levels, the pound still hasn’t fully priced in a hard Brexit.”
After a multi-day sell-off Antofagasta (LON:ANTO), up 2%, led a revival in fortunes for the mining sector, closely followed by BHP Billiton (LON:BLT) and Glencore (LON:GLEN).
But shares in Kingfisher (LON:KGF) fell 2.5% as fears over the stuttering performance of the B&Q owner’s French operation overshadowed a strong showing in the UK bolstered by the heatwave.
In the second division On the Beach (LON:OTB) rose almost 10% after apparently bagging a bargain with the acquisition of a smaller holiday rival.
Proactive news headlines:
Abzena plc (LON:ABZA) has agreed to be taken over by the world’s largest healthcare-focused private equity house in a deal worth £34.4mln. WCAS, which since 1979 has invested US$9bn in 90 companies, is offering 16p a share – a 167% premium to Wednesday’s closing price.
Microbiome skincare company SkinBioTherapeutics PLC (LON:SBTX) said it has successfully managed to scale-up production with no detrimental impact on the effectiveness of its technology.
Shanta Gold Limited (LON:SHG) hailed the success of its cost-cutting programme as it swung into profit at the half-year stage.
Eland Oil & Gas PLC (LON:ELA) told investors that the new Opuama-10 well, in Nigeria, is now complete and is set to be handed over to the production team imminently. Opuama-10 will shortly been tested for initial production rates, though Eland highlighted that it is expected to yield 4,000 to 6,000 barrels of oil per day, in line with expectations. It would bring field production to between 28,000 and 30,000 bopd.
Canadian Overseas Petroleum Limited (LON:COPL) (CVE:XOP) has informed investors of a dispute between its 50% owned Nigerian joint venture company ShoreCan and partner Essar. The company, in a stock market statement, said the disagreement concerns certain aspects of a document that governs the relationship between ShoreCan and Essar.
MySQUAR Limited (LON:MYSQ) has soft launched its cross-border transfer (remittance) service, the first offering on its mobile money platform.
BigDish Plc (LON:DISH) has acquired Looloo, a web and app-based restaurant and travel discovery business focused on the Philippine market.
VR Education Holdings Plc (LON:VRE) will launch its Titanic VR experience on PC, Oculus Rift, HTC Vive and Windows Mixed Reality at 2pm today.
Kibo Energy PLC (LON:KIBO) has said its recent application to secure water permits for the Mbeya Coal to Power Project has been provisionally approved by the Lake Rukwa Water Basin Board.
Amur Minerals Corporation (LON:AMC) said the 2018 drill programme at its wholly owned Kun-Manie nickel copper sulphide project in the Far East of Russia is well advanced. Robin Young, CEO of Amur Minerals, commented: "With our drill programme being over 80% complete and having experienced no down time at the rigs, work is swiftly advancing toward completion of our three key objectives in this year's drill effort.”
Capital Drilling Ltd (LON:CAPD) today reported what it described as “another strong half yearly result”, with the company pleased with both financial performance and the execution of its strategy. The Africa-focused drilling contractor to the mining sector delivered US$54.5mln of revenue, down 4.6% against the 2017 comparative, as a result of lower fleet utilisation amid a relocation of assets to West Africa.
Anglo Pacific Group PLC (LON:APF) (TSX:APY) has acquired a 4.25% stake in Labrador Iron Ore Royalty Corp (TSX:LIF) (LIORC) for an investment cost of C$65.5mln.
Ariana Resources plc (LON:AAU) has reported a jump in quarter-on-quarter (QoQ) gold production at the Kiziltepe mine in Turkey, part of its Red Rabbit joint venture with Proccea Construction Co.
Aminex plc (LON:AEX) has announced that Keith Phair, currently its senior non-executive director will become the company’s interim chairman with effect from 31 August 2018. The oil explorer announced on 12 July 2018 that the company’s founder Brian Hall will step down as its chairman with effect from that same date.
Savannah Resources Plc (LON:SAV) has said the Portuguese Directorate General for Energy and Geology (DGEG) has rejected six of a total of nine exploration licence applications in northern Portugal made by Savannah's subsidiary, Slipstream Resources Portugal LDA. In a statement released after the market close on Wednesday, the AIM quoted resource development company pointed out that the applications were pending at the time that Savannah acquired its shareholding in Slipstream in May 2017.
Falcon Oil & Gas Ltd (LON:FOG, CVE:FO) and partner Origin Energy have agreed to accelerate exploration activity for the Beetaloo shale project. Together they now deem the Stage 1 campaign to be complete, essentially meaning that in light of the 2014 successes – drilling three vertical wells and one horizontal, fracture stimulated well – that it is now appropriate to move ahead.
Peter Addison, the non-executive chairman of Stratex International plc (LON:STI), has announced his retirement from the company while Chris Worcester, an independent non-executive director, is also bowing out.
The infrastructure upgrade programme at Range Resources Limited’s (LON:RRL) Beach Marcelle oil field onshore Trinidad is underway. In a stock exchange announcement, the junior oiler also confirmed the details of the two wells to be drilled at the project later this year.
IronRidge Resources Limited (LON:IRR) has uncovered what it describes as large, coherent gold targets on its project in Chad after a successful trenching programme. The highlights from Dorothe prospect included four metres at almost 19 grams per tonne of the precious metal, including a two-metre section at 36 grams.
Horizonte Minerals Plc (LON:HZM TSX:HZM) has provided an update on progress at its flagship Araguaia nickel project in Brazil. The AIM-listed miner said that the final results of a 43-101 feasibility study for the project were being prepared and are planned to be announced to the market in October 2018, while a final estimate for capital expenditure on the project was being prepared for internal review.
Pan African Resources plc (LON:PAF) has announced the first gold pour at its Elikhulu tailings retreatment plant in South Africa.
Sativa Investments PLC (AQSE:SATI), the UK's first medicinal cannabis investment vehicle, has appointed Jonathan Peter Wearing as an independent non-executive director and Angus Jeremy Kerr as a non-executive director of the company. The group also said Noel Lyons, its independent non-executive director, has resigned from the company.
6.45am: Positive start predicted
The FTSE 100 is set for a positive start to Thursday’s trading, though attentions remain mostly fixed on Turkey and emerging markets.
IG Markets sees the London index some 42 points higher, calling the spread at 7,524 to 7,528 with more than an hour to go before the open - while the index will see around 17 points knocked off the advance by ex-dividend factors.
Early headlines suggest some respite over Turkish volatility, thanks largely to intervention from Qatar, though given the busy and somewhat tetchy international landscape investors will be looking for the next disruption.
Brexit and stalling consumer confidence, for example, provide alternative points of uncertainty.
UK retail sales for July are due later today – they are expected to be positive, but not necessarily exciting even with the anticipated boost from the World Cup and heatwave.
“Whilst hopes had been high that the World Cup and hot weather would have boosted beer and BBQ sales in June, the lift didn’t materialise. July was the knock out phase and although England did well making it through to the semi’s, this is unlikely to have translated into strong retail sales,” said Jasper Lawler, analyst at London Capital Group.
He added: “With the next round of Brexit talks due to begin today, any retail sales data, good or bad could be quickly overshadowed by growing fears of the UK crashing out of the European Union without a deal.
“The pound has dived over the past two weeks as investors accept the increasingly likely reality that no deal will be struck before the self-imposed deadline; any headlines supporting this could see the pound fall further.”
It comes as worldwide investor sentiment is fragile. Wall Street on Wednesday marked another negative close and overnight the major Asian benchmarks remained on the back foot.
The Dow Jones finished Wednesday’s session down 137 points or 0.54% at 25,162. At the same time the S&P 500 was 0.76% lower at 2,818 and the Nasdaq gave up more, losing 1.23% to 7,774.
In Asia, Japan’s Nikkei fared somewhat better, losing 0.06% to 22,187, and Hong Kong’s Hang Seng lost 0.55% to 27,173 while the Shanghai composite was down 0.14% at 2,719.
Around the markets:
- Sterling: US$1.12729, up 0.25%
- Gold: US$1,177 an ounce, up 0.02%
- Brent crude: US$71.19 a barrel, up 0.6%
- Bitcoin: US$6,289, up 0.31%
City Headlines:
- Tesla 'issued with subpoenas as regulators ramp up probe' into privatisation plans - Sky News
- Barclays Trader Faces $19 Million Loss on Turkey Bonds - Bloomberg
- House of Fraser pulls plug on website after warehouse dispute - The Guardian
- Corona beer owner to pour $4bn into weed – BBC News
- Tencent posts rare profit drop as gaming engine stutters – Financial Times
- RBS bankers knowingly sold 'total garbage' toxic mortgages, internal emails show – The Telegraph
- Mayor of London calls for power to limit minicab numbers – BBC News
- New Zealand bans sale of homes to foreign buyers – Independent
Significant announcements due on Thursday August 16:
Trading update: Kingfisher PLC (Q2) (LON:KGF)
Finals: Rank Group PLC (LON:RNK), Filtronic PLC (LON:FTC)
Interims: Kaz Minerals PLC (LON:KAZ), Tribal Group plc (LON:TRB), Bank of Georgia Group PLC (LON:BGEO)
Ex-dividends: To knock 17.13 points off FTSE 100 index - Anglo-American PLC (LON:AAL), Ashtead Group PLC (LON:AHT), Aviva PLC (LON:AV.), Evraz plc (LON:EVR), HSBC PLC (LON:HSBA), Legal & General Group PLC (LON:LGEN), Lloyds Banking Group PLC (LON:LLOY), Pearson plc (LON:PSON), Reckitt Benckiser PLC (LON:RB.), Schroders PLC (LON:SDR), Segro PLC (LON:SGRO), Standard Life Aberdeen PLC (LON:SLA)
Economic data: UK retail sales; US weekly jobless claims; US housing starts; Philly Fed business outlook survey