FTSE 100 closes in red
Pound lower
Asda-Sainsbury's merger to be probed
Miners down
FTSE 100 closed lower, weighed on by trade worries and fears of a no-deal Brexit, which outweighed more positives.
The UK index of leading shares finished Thursday down around 11 points, or 0.15%, at 7,563.
FTSE 250 went the other way though, adding around 22 points, at 20,665.
In the currency markets, the pound was down 0.40% against the Euro, and down 0.73% against the US dollar.
Fiona Cincotta, senior market analyst at City Index, summed up: "Despite briefly spiking above 7600, the FTSE was unable to retain its strength and moved into negative territory towards the end of the session.
"An escalation of trade tensions between the US and China hit metal prices pulling miners lower, overshadowing a boost to retailers following stronger than forecast CBI sales data."
She also noted that attention of investors now turns to the Jackson hole banker sympsium to consider, and Fed chair Jerome Powell’s speech on “Monetary policy in a changing economy”.
"Whilst there has been a lot of drama in recent weeks with the Turkish lira crisis, Trump political issues and escalating trade tension, for Jerome Powell not much has changed; the US economy remains strong at 4.3% GDP in Q3, inflation is on target and unemployment below 4%," she said.
NMC Health (LON:NMC) was the biggest loser on Footsie, which shed 2.76% to 3,800p.
3.30pm: Footsie flat
The FTSE 100 has pared the gains made this morning, although it has recovered from its mini-slump at the beginning of the afternoon session.
With 30 minutes or so left in the trading day, the index of blue-chip shares is down 0.8 points to 7,573.4.
Online grocer Ocado Group PLC (LON:OCDO) continued its recent run, climbing 1.7% to 1,121p.
High street retailers have also been put in the basket after a report suggested retail sales had been “above average” over summer thanks to the warm weather.
Marks and Spencer Group Plc (LON:MKS) (up 1.6% to 306.4p) has enjoyed a day in the sun, as has Primark owner Associated British Foods plc (LON:ABF) (up 1.5% to 2,371p) and Next Plc (LON:NXT) (up 0.6% to 5,485p).
Companies going ex-dividend were heavy weights for the footsie today. Imperial Brands PLC (LON:IMB) (down 2.3% to 2,858p), Fresnillo PLC (LON:FRES) (down 1.5% to 932p) and Prudential PLC (LON:PRU) (down 1.3% to 1,727p) are all trading without entitlement to their latest dividend.
Miners have also been hit by the falling copper price, which now sits at below US$6,000, just above its 12-month low.
Anglo American PLC (LON:AAL) is down 1.6% to 1,551p, while fellow mining giants Antofagasta PLC (LON:ANTO) (down 0.5% to 811.5p), Rio Tinto PLC (LON:RIO) (down 0.6% to 3,668p) are also on the back foot.
3.15pm: '80% of news is FAKE!'
— Donald J. Trump (@realDonaldTrump) August 23, 2018
3pm: US stocks open lower
US stocks slipped on Thursday as President Trump’s potential legal quagmire and the trade spat between the US and China weighed on the markets.
Early in the trading session, the Dow Jones Industrial Average index shed nearly 60 points to hover at 25,677, led lower by Caterpillar Inc, Exxon Mobil, Chevron and Walgreens Boots Alliance.
After trading in the red, the S&P 500 moved into positive territory and held its course at 2,862, pushed up by Synopsys, Advanced Micro Devices, Nielsen Holdings PLC and Lowe’s Companies Inc.
The tech-laden Nasdaq also reversed its course to add 17 points and climb to 7,906, helped by its best performer Synopsys, which gained 5% after the software company’s quarterly results and outlook topped Wall Street estimates.
2.45pm: Copper price hits London’s diggers
Copper prices have fallen once again today, down 1.3% to US$5,940 a tonne, which is weighing on the mining sector.
Most of the fall is down to trade war concerns between the US and China, the world’s largest consumer of raw materials.
Because of its widespread use in everything from electrical wiring to rooftops, it is also often seen as a bellwether for the global economy.
Anglo American PLC (LON:AAL) is down 1.6% to 1,551p, while fellow mining giants Antofagasta PLC (LON:ANTO) (down 0.9% to 809.4p), Rio Tinto PLC (LON:RIO) (down 1.1% to 3,658p) are also on the back foot.
2.30pm: US jobless claims fall again
The number of people claiming state unemployment benefits in the US fell by another 2,000 last week to 210,000.
That’s a third straight week of declines. In July, claims fell to their lowest level for almost half a century.
US jobless claims - No #recession in sight! pic.twitter.com/Tc2RvZ0yaN
— jeroen blokland (@jsblokland) August 23, 2018
2.10pm: Monzo to be ‘the next UK unicorn’
Monzo is reportedly planning to raise £20mln from customers through an equity crowdfunding round ahead of a traditional fundraising that would value the online bank at more than US$1bn.
The mobile-only bank used the Crowdcube platform for its first crowdfunding in 2016 when it raised £1mln in 96 seconds.
The latest crowdfunding round comes as Monzo seeks to raise about US$150mln of funding from investors, including Silicon Valley’s Accel Partners, which was an early investor in Wonga.
That fundraising is expected to value Monzo at up to US$1.5bn, giving the bank so-called “unicorn” status alongside privately held technology companies such as Deliveroo and Skyscanner valued at US$1bn or more.
The valuation is about four times the £280mln value placed on the bank when it last raised money in November 2017.
1.40pm: Sandwiches are safe
"You will still be able to enjoy a BLT" - Brexit secretary @DominicRaab shoots down fears of a potential "sandwich famine" in the event of a #NoDealBrexit ???? https://t.co/DKjbptXXpT pic.twitter.com/9PaH7TOqpI
— BBC Politics (@BBCPolitics) August 23, 2018
1.20pm: UK publishes ‘no-deal’ Brexit paper
Brexit secretary Dominic Raab has laid out his plans and advice should the UK leave the European Union without a deal.
The guidance includes instructions for businesses on what they might need to do, such as filling out more paperwork and preparing for customs checks.
Raab said the government expects and wants to agree a deal with the EU, but added “we must be ready to consider the alternative”.
In the 25 documents, which cover almost every industry from medicine to finance to farming, the government says in the event of a no-deal:
- The cost of card payments between the UK and EU will "likely increase"
- Businesses trading with the EU should start planning for new customs checks
- Britons living elsewhere in Europe could lose access to UK banking and pension services
- Pharmacists have been told to stockpile an extra six weeks' worth of medicine
- The UK would continue to accept new medicines that have been tested in the EU
1pm: Footsie slips
The pound has recovered some of this morning’s losses to get back to the US$1.29 handle.
That has caused the FTSE 100 to pare most of its early gains and the index is now up by just 1 point to 7,575.2.
High street stocks are in demand after a report from the Confederation of British Industry said high street sales were “above average” over the summer months thanks to the good weather.
Primark owner Associated British Foods plc (LON:ABF) is the top riser on the FTSE 100, up 2% to 2,387p, although Marks and Spencer Group Plc (LON:MKS) (up 1.8% to 307.2p) and Next Plc (LON:NXT) (up 1% to 5,502p) aren’t too far behind.
Royal Bank of Scotland Group PLC (LON:RBS) (down 1.3% to 243.5p) and the world’s largest silver miner Fresnillo PLC (LON:FRES) (down 1.4% to 934.2p) are two of the biggest hit blue-chips as their shares go ex-dividend today.
12.50pm: Regulators to formally investigate Asda-Sainsbury’s merger
The UK’s Competition and Markets Authority has kicked off a formal investigation into the proposed merger of J Sainsbury plc (LON:SBRY) and Walmart Inc’s (NYSE:WMT) Asda.
Sainsbury’s and Asda announced in April a £12bn deal to create the UK’s largest supermarket, overtaking current market leader Tesco PLC (LON:TSCO).
The competition watchdog confirmed it is to begin a phase 1 probe to assess how the deal could affect competition for customers. The investigation will look at whether the merger could lead to a worse deal for customers or suppliers.
“About £190bn is spent each year on food and groceries in the UK so it’s vital to find out if the millions of people who shop in supermarkets could lose out as a result of this deal,” said CMA chief executive Andrea Coscelli.
The two supermarket groups have asked the CMA to fast-track the investigation to the more in-depth Phase 2 stage. The CMA said it expects to accept the request unless it receives any valid objections.
12.35pm: Mixed start expected on Wall Street
US stocks are poised for a mixed open as the Trump turmoil continues and a second wave of tariffs on US$16bn worth of Chinese goods comes into force.
It comes against the backdrop of trade talks taking place between the two economic superpowers, but commentators seem to think these discussions won't lead to much.
On Wednesday, an increasingly under pressure Donald Trump insisted that payments to two women did not break election campaign rules, hours after his former lawyer Michael Cohen had pleaded guilty to violating laws during the 2016 presidential election over his handling of the hush money.
Last night, Wall Street benchmarks closed mixed with the Dow Jones Industrial Average down around 88 at 25,733, the S&P 500 broadly flat at 2,861.8 and the Nasdaq 29 points up at 7,889.1.
In futures trade today, the Dow is up just one, the Nasdaq futures are off 2.75, while spreadbettors see the S&P 500 opening up 0.25 points in the black.
“With the US-China trade war heating up with the latest bout of tit-for-tat tariffing just as talks get back underway, the Dow Jones isn’t looking like it fancies doing much when the bell rings on Wall Street,” said Spreadex analyst Connor Campbell.
12.20pm: Heatwave keeps high street sales riding high
Some of Britain’s biggest high street retailers are on the up today after a report from the Confederation of British Industry found the hot weather and World Cup helped to boost sales over the summer.
The report said “retail sales grew at an above-average pace in the year to August” thanks to the heatwave.
Any good news for the troubled bricks-and-mortar retailers is always well-received by investors and that was the case today.
Primark owner Associated British Foods plc (LON:ABF) is the top riser on the FTSE 100, up 2.1% to 2,383p, although Marks and Spencer Group Plc (LON:MKS) (up 1.5% to 306.5p) and Next Plc (LON:NXT) (up 1% to 5,502p) aren’t too far behind.
The CBI cautioned that the “outlook is less positive”, although it seems the market is ignoring this for now.
12.05pm: Ryanair soars as it strikes deal with pilots’ union
Shares in Ryanair Holdings PLC (LON:RYA) jumped on Thursday after the budget airline reached an agreement with the trade union representing its Irish pilots.
Forsa, the pilot’s union, said the agreement would go to ballot with a recommendation of acceptance after a gruelling 22-hour negotiation session ended early on Thursday morning.
The negotiations with around 350 of Ryanair’s 4,000 pilots have been among the most difficult as the no-frills airline continues to try and quell protests by its staff across Europe.
Earlier this month Ryanair was forced to ground around 15% of its flights after a coordinated 24-hour strike over pay disputes led to pilot pickets in Ireland, Germany, Belgium, Sweden, and the Netherlands.
The strikes have also taken their toll of the company’s shares, which have fallen around 20% since late May. They are up today though, climbing almost 7% to €14.04.
11.40am: Tesla ‘hires crisis communications specialist’
Tesla Inc (NASDAQ:TSLA) is reportedly trying to repair its bruised image by hiring crisis communications company Joele Frank.
The electric car maker has come under fire in recent weeks after chief executive Elon Musk unveiled plans to take the company private on Twitter.
SCOOP--to help repair its image @tesla retains crisis communications firm Joele Frank more later on @FoxBusiness $TSLA
— Charles Gasparino (@CGasparino) August 22, 2018
Fox News, which broke the news that Joele Frank had been retained, also said Tesla is turning to Wall Street as it prepares to make a run at privatisation and restructuring of the company.
Musk’s announcement earlier this month that he wanted to take Tesla private jolted the markets, but he reckons he has secured a funding plan with the Saudi Arabian sovereign wealth fund rumoured to be supporting him.
Investment bankers are now faced with a dilemma: overlook concerns about the feasibility of the deal or, alternatively, risk missing out on what could be the year's biggest and most high-profile acquisition.
11.05am: To list or not to list?
Saudi Aramco’s much-hyped IPO is on the rocks, according to Reuters.
The Saudi Arabian state-owned oil giant has been eyeing up a listing in New York, Hong Kong or London over the past year or so, with each city keen to get the company on board in what could be a multi-trillion-dollar IPO.
But four sources quoted by Reuters said the float had been halted, at least for the time being, as Saudi Aramco focuses instead on snapping up a strategic stake in a local petrochemicals maker.
Saudi energy minister Khalid al-Falih has denied plans have been shelved plans altogether though, saying in a statement: “The government remains committed to the IPO of Saudi Aramco at a time of its own choosing when conditions are optimum.”
Exclusive: Aramco IPO halted, oil giant disbands advisers - sources https://t.co/yQn7ky91UX
— Reuters Top News (@Reuters) August 23, 2018
10.40am: Construction firm CRH shrugs off ‘Beast from the East’
CRH PLC (LON:CRH) has reported a rise in sales and earnings in the first half of its financial year despite issues surrounding weather conditions and difficulties in the Philippines.
The FTSE 100 construction giant reported underlying earnings (EBITDA) for the period of €1.1bn, 1% ahead of the same period last year, while revenues also grew 1% to €11.9bn.
In terms of like-for-likes (LFLs), EBITDA for the period was ahead by 1%, while LFL sales were up 2% for the group. CRH also increased its interim dividend by 2% to 19.6 euro cents.
The share price started the day on fire but has quickly cooled off and is now flat at 2,610p.
10.25am: FTSE boosted by weaker pound
The FTSE 100 has taken advantage of the pound’s fall today to inch higher, with the blue-chips currently up 18.0 points to 7,592.2.
A host of high street retailers are at the top of the index on a report from the Confederation of British Industry which said retail sales have been strong over summer thanks to the hot weather.
Marks and Spencer Group Plc (LON:MKS) is the day’s top riser so far, up 2% to 307.2p, while Primark owner Associated British Foods plc (LON:ABF) (up 1.7% to 2,381p) and Next Plc (LON:NXT) (up 1.3% to 5,521p) are also on the rise.
Fulham Shore PLC’s (LON:FUL) bullish trading update, which said it had seen “encouraging” revenue growth at its Franco Manca and The Real Greek restaurants, is also likley to have helped a little.
Royal Bank of Scotland Group PLC (LON:RBS) (down 1.7% to 243.1p) and silver mining giant Fresnillo PLC (LON:FRES) (down 1.5% to 935p) are the two biggest fallers, both of which are trading without entitlement to their latest dividend pay-out.
10.10am: Rough ride for restaurants over?
It’s been a rough ride for Franco Manca owner Fulham Shore PLC (LON:FUL) and most of the restaurant industry, truth be told, over the past year or so.
A combination of rising competition, falling high street footfall, and squeezed household incomes has left many restaurant chains nursing losses and forced them to shut stores.
Fulham Shore was one of those to warn on the industry’s outlook, but things seem to have turned a corner, with the group, which also owns The Real Greek, reporting an “encouraging” increase in revenue in the first half of its financial year. Shares are up 5.7% to 12p.
The likes of Jamie’s Italian, Byron and Prezzo – all of which have been forced to ask creditors for help over the past few months – will be hoping it’s a sign of a turnaround.
Signs of life again at Fulham Shore #FUL. Franco Manca a great biz model offering great value for money. Growth conservatively managed by an experienced BOD - even if debt a little too high for my liking #francomanca
— Harry Burton (@hipsterocrisy) August 23, 2018
9.40am: Dollar strong
Despite the political risks associated with Donald Trump and the ongoing trade war with China, the US dollar has somehow managed to claw back some of its recent losses.
Sterling is down 0.4% against the greenback to US$1.287, while the euro has shed 0.3% to €1.156.
BREAKING: U.S., China impose tariff hikes on additional goods in escalation of battle over Beijing's technology policy.
— The Associated Press (@AP) August 23, 2018
9.15am: Tit-for-tat tariffs
Donald Trump has brought in a second wave of tariffs on Chinese goods worth US$16bn.
The US and China have been in a trade war since July, when Trump complained that the US imports far more from China than it exports to it.
Goods affected this time round include motorcycles, trucks and aerials: any of those coming into the US from China will be hit with a 25% import tax.
China has immediately imposed retaliatory tariffs on the same value of US products, including coal, cars and buses.
The US$16bn could be a drop in the ocean though, with Trump previously claiming he was ready to tax all of the US$500mln worth of Chinese imports into the US.
Low-level talks between White House and Chinese officials are taking place in the US this week, although analysts aren’t convinced they will leady to any resolution.
8.45am: Footsie opens flat
The FTSE 100 opened flat with dealers undecided which way to jump amid the political uncertainty in the US and against the backdrop of heightened trade worries.
Overnight Donald Trump insisted payments to two women did not break election campaign rules.
His comments came after his ex-lawyer Michael Cohen pleaded guilty to violating laws during the 2016 presidential election over his handling of the hush money.
Interviewed by Fox & Friends, Trump said the money had come from him personally, not from the campaign.
Traders on Wall Street, in Asia and here in London didn’t and don’t know which way to jump on the issue.
“There has been a lot of negative news on Trump over the past 36 hours,” said Jasper Lawler of London Capital Group.
“The job of markets will now be to decide whether Trump can ride the storm, or whether the double blow is likely to damage the Republican Party’s election prospects at the mid-terms in November and result in the extension of a criminal investigation, which is already overshadowing Trump’s Presidency.
“The reality is that the market’s reaction so far has been limited and contained, suggesting that traders believe, at least for now, that Trump can move past this.”
On the market, building materials CRH (LON:CRH) rose 3% on the back of better than expected results, dragging rival Ferguson (LON:FERG) with it.
Dropping down a division, telecoms group TalkTalk (LON:TALK) rose 8.5% after an upgrade from Barclays Capital.
6.45am: Back foot start predicted
The FTSE 100 is seen starting Thursday on the back-foot as macro matters, largely involving the United States, continue to dominate otherwise quiet summer markets.
CFD and spreadbetting firm IG Markets predicts the London index will be down around 15 points, calling the price at 7,559 to 7,563 with just over an hour to go until the open.
As the dog days continue, bona fide stock specific stories or trading triggers remain relatively few and far between, though, frankly, the macro features – not least the US-vs-China trade ‘war’ – don’t show signs of dissipating.
So called ‘low level’ talks are underway between the two economic super powers though the tariff tit-for-tat continue, some US$16bn of new import charges imposed today. Given the timing, it fires a fresh barb into investor perceptions of risk (as many traders had eyed a de-escalation, in sentiment at least).
In the meantime, the market remains intently focused on inflation and US monetary policy after minutes from the latest Federal Reserve rate meeting gave a ‘big hint’ that it would soon be necessary to tighten policy due strong economic growth and the prospect of tariff-led increases to import costs.
“The Fed are very aware that their relatively low interest rates in recent years has brought about ‘elevated’ asset prices, but broadly speaking, corporations have ‘easy’ access to credit,” said David Madden, analyst at CMC Markets.
“The protectionist policies of Donald Trump could bring about higher inflation on account of increased import costs.
“Policy makers expressed concern that a prolonged trade spat with China could curtail business investment and spending. Overall, the Fed were optimistic in their outlook and seem as if they are content to remain in their hiking cycle.”
On Wall Street, the Dow Jones closed Wednesday down 88 points or 0.34% at 25,733 while the S&P 500 dipped only 0.04% to 2,861, whereas the Nasdaq was trading positively rising 0.38% to close at 7,889.
In Asia, Japan’s Nikkei climbed 55 points or 0.25% to 22,516 and Hong Kong’s Hang Seng was down 0.3% at 27,834 while the Shanghai Composite moved 0.4% higher to 2,725.
Australia’s ASX 200 was off 0.24% at 6,251.
Around the markets
Sterling: US$1.2876, down 0.27%
Gold: US$1,191 an ounce, down 0.38%
Brent crude: US$74.64 per barrel, up 2.7%
Bitcoin: US$6,432, up 1.18%
Significant announcements expected
Finals: Arcontech Group PLC (LON:ARC)
Interims: CRH PLC (LON:CRH); Playtech PLC (LON:PTEC), Anglo Pacific Group PLC (LON:APF), John Laing Group PLC (LON:JLG), Macfarlane Group PLC (LON:MACF), OneSavings Bank PLC (LON:OSB), Phoenix Group Holdings PLC (LON:PHNX), Premier Oil PLC (LON:PMO), Sportech plc (LON:SPO)
Ex-dividends: Carnival PLC (LON:CCL), Croda International PLC (LON:CRDA), Imperial Brands PLC (LON:IMB), London Stock Exchange Group PLC (LON:LSE), Mondi Plc (LON:MNDI) , Paddy Power Betfair plc (LON:PPB), Prudential PLC (LON:PRU), Royal Bank of Scotland Group PLC (LON:RBS)
Economic data: CBI distributive trades survey; US weekly jobless claims; US new home sales; US flash composite PMI
Proactive news headlines
Stobart Group Ltd (LON:STOB) has reshuffled its board, as the Southend Airport owner had promised after seeing off a shareholder rebellion at last month’s annual general meeting.
Anglo Pacific Group PLC (LON:APF) has reported increased earnings in the first half of its financial year, boosted by a record showing from its Maracás Menchen mine in Brazil.
The latest definitive feasibility study (DFS) for Thor Mining PLC’s (LON:THR) Molyhil project in Australia projects revenue in excess of A$500mln over seven years. BP Jan
Shefa Yamim ATM (LON:SEFA) has started talks with jewellery designers over a branded range. The Israel-focused gemstone miner wants to build a vertically integrated exploration, development, mining, design and marketing business.
Falcon Oil & Gas Ltd (LON:FOG) revealed on Thursday that is in a strong financial position to advance its projects. The oil and gas company ended the first six months of the year debt free with cash of US$7.7mln.
Aminex plc (LON:AEX) told investors that it is preparing for the drilling of the Chikumbi-1 (CH-1) well in Tanzania.It will be a follow-up to the successful wells of the Ntorya project, with CH-1 located up-dip from both the Ntorya-1 and Ntorya-2 wells.
United Oil & Gas Plc (LON:UOG) told investors that talks with potential partners can now start, as its new North Sea asset awards have now been confirmed. “Confirmation of the award enables us to pursue farm-out discussions with potential partners with whom we can work to take these licences forward,” said Brian Larkin, United chief executive.
Block Energy Plc (LON:BLOE) told investors that it is on-track for the start of a phase three work programme which will aim to scale up production in Georgia. The programme, due to start in the near-term, will target production growth up to 900 barrels of oil per day within 18 to 24 months.
Amur Minerals Corp. (LON:AMC) has issued 3,766,649 new ordinary shares of no par value of the company to Cuart Investments PCC Ltd and YA II PN Ltd in settlement of US$165,101 of principal and accrued interest.
Business news headlines
3,453 days and $18tn later, the US bull market hits record run - Financial Times
Exclusive: Aramco listing plan halted, oil giant disbands advisors – Reuters
Saudi Arabia insists it is 'committed' to Aramco float despite reports – BBC News
Superdrug targeted by hackers who claim to have 20,000 customer details – The Guardian
Xiaomi reports strong profits after rocky six months – Financial Times
Stanlow oil refinery in Cheshire evacuated after fire – Sky News
SEC Rejects 9 Bitcoin ETF Applications – CoinTelegraph
Alcohol firms would lose £13bn if drinkers in England stuck to limits – The Guardian