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FTSE 100 journey in the red continues as it closes down around 47 points

Last updated: 17:17 30 Aug 2018 BST, First published: 06:50 30 Aug 2018 BST

Globe in plastic bag
  • FTSE 100 closes down around 45 points 

  • FTSE 250 also lower 

  •  Vodafone biggest loser 

 

 

FTSE 100 closed in the red, where it had stayed all day, as various macro factors plagued investor sentiment.

FTSE 250 was also lower, down around 45 points, at 20,691.

The UK blue-chip benchmark however closed down around 47 points at 7,516.

David Madden, at CMC  Markets, summed it up thus: "Stocks are firmly in the red as rising Italian government bond yields, a slide in emerging market currencies, and continued uncertainty about US-China trade tensions have weighed on markets.

"Those topics have been bubbling away in the background, and now they are at the forefront of dealers’ minds."

In the currency markets, the pound is down 30% against the US dollar, while the pound is up 0.26% against the Euro.

On Wall Street, the Dow Jones Industrial Average is down around 102 points at the time of writing, while the S&P 500 added nearly nine points.

3.45pm: British government to consider doubling plastic bag charge

The UK government said today that it is considering doubling the charge for single-use plastic bags from 5p to 10p.

A consultation is scheduled to be launched later this year that will set out plans to double the charge, which was originally introduced in October 2015.

In addition to doubling the price, the consultation will also seek to extend the requirement to small and medium-sized businesses, which are currently exempt from the charge but supply an estimated 3bn plastic bags each year.

In a statement, UK prime minister Theresa May said that with plastic waste in the seas set to treble, people needed to do more to protect the environment and “eliminate harmful waste”.

3.15pm: US consumer spending creeps up in July

US consumer spending increased in July, indicating strong economic growth for the third quarter, according to new data.

The US Commerce Department said consumer spending, which accounts for two-thirds of economic activity in the US, was up 0.4% in July after growing by a similar margin in June, with households spending more on restaurants and accommodation.

Other data also pointed to an increase in new applications for unemployment benefits last week, although the underlying trend pointed to a more robust labour market.

The consumer spending figures will be expected to take the edge off an anticipated widening of the US’s trade deficit as well as a weakening housing market in the third quarter.

The data will also be a positive for the Trump administration, as the latest figures show no obvious signs that the ongoing trade war with China, as well as tariff disputes with the EU, Mexico, and Canada, are hurting the US labour market.

2.35pm: Wall Street opens in the red as four-day rally peters out

US stocks have opened lower as expected as the inevitable comedown from this week’s four-day rally bit into the main indices.

The Dow Jones Industrial Average was down 60 points at 26,063 shortly after the open, while the S&P 500 was down 5.7 points at 2,908 and the Nasdaq was down 8.6 points at 8,102.

Meanwhile, the FTSE 100 was still dragging and was down 48 points at 7,514.

1.20pm: US stocks set for lower open ahead of jobless claims data and spending figures

Wall Street is expected to open slightly lower on Thursday morning as markets come down from the rally highs that pervaded at the start of the week.

Recent developments in US trade policy and a potential trilateral agreement between the US, Canada, and Mexico has boosted markets in recent days as a key headwind for market growth appears to be abating somewhat.

However, the trade concerns have not gone away completely, as upcoming US tariffs on China appear to be predicting a further deterioration in relations between the two countries, which will act as a dampener on risk appetites.

Investors will also be looking toward the latest weekly jobless claims figures in addition to July’s personal spending and income figures for the US with the hope that it can align with the positive second-quarter GDP revision to 4.2% earlier in the week.

In London, the FTSE 100 was still sluggish, down 48 points at 7,514.

12.05pm: Severn Trent to purchase organic waste recycler in bid to expand renewables business

FTSE 100 utility firm Severn Trent PLC (LON:SVT) is to buy organic waste recycler Agrivert Holdings for £120mln as part of a plan to expand its renewables business, which is largely shielded from rising energy costs.

The company said Agrivert’s operations would be added to its Green Power business, with the purchase taking its investment in energy and renewables to around £300mln by 2020.

Liv Garfield, chief executive of Severn Trent, said: “Renewable energy is strategically important to Seven Trent and the UK as a whole as we work towards achieving our decarbonisation targets and delivering attractive shareholder returns.  Agrivert UK strengthens our established presence in anaerobic digestion where we have been leaders in the water sector for many years”.

Severn Trent shares were down 0.2% at 1,967.5p in lunchtime trading, while the FTSE 100 was down 48 points at 7,514.

11.35am: FTSE 100 in the red as morning closes; UK car production falls 11%

The blue-chip index was still firmly in the red as the morning neared its end as the pound seemed relatively unmoved from its newly strengthened position.

The FTSE 100 was down around 57 points at 7,506 following comments by chief EU negotiator Michel Barnier on Wednesday that seemed to signal a more conciliatory approach to a post-Brexit trade deal with the UK.

In response, the pound spiked up to an almost monthly high of around US$1.30 against the dollar, causing a retreat from British equities that continued into Thursday morning.

However, Connor Campbell, financial analyst at Spreadex, said that the currency "can't take all the responsibility for the index's troubles", adding that the reason for the decline was hard to pinpoint, although the lack of distractions from Brexit, despite Barnier's bullish comments, could have had an impact.

However, there was gloomier news for the UK economy this morning after a report from the Society of Motor Manufacturers showed British car production had fallen 11% year-on-year in July as model changes, seasonal adjustments and preparations for tougher emission standards all dragged on output.

Output stood at 121,051 units in the month, with demand at home falling 35% while exports declined 4.2%.

The sector is heavily reliant on European and global supply chains and has raised concerns that any loss of free trade with the EU, its biggest export market, following Brexit could raise costs and lead to delays at ports.

10.15am: BoE data shows UK consumer lending growth at weakest level since November 2015

New data from the Bank of England (BoE) has shown that British consumers borrowed at the weakest pace in almost three years in July.

Consumer credit growth last month slowed to an annual rate of 8.5% from 8.8% in June, the slowest since November 2015, while net consumer lending dropped mon-on-month to £817mln from £1.52bn.

Mortgage approvals for house purchases also dropped to 64,768 from 65,374 in June, which when twinned with the lacklustre consumer borrowing will likely raise concerns of a soft economy ahead of Brexit next March.

In other lending news, embattled payday loan provider Wonga said this morning that it has stopped accepting new loan applications as it teeters on the brink of collapse.

The suspension followed a £10mln fundraise from investors this month amid a surge in compensation claims related to loans taken out before 2014, with its latest accounts reporting a £66.5mln loss for 2016.

David Cheetam, chief market analyst at XTB, commented: "The latest problems represent a pretty spectacular fall for Wonga, who were exploring a stock market flotation just over 5 years ago that was expected have valued the company somewhere in the region of US$1bn."

The FTSE 100 was down 56 points at 7,506.

--Adds analyst comment--

9.30am: Trump and Trudeau upbeat on prospect of NAFTA deal ahead of Friday deadline

The US president and Canadian prime minister have expressed optimism that a new deal around the North American Free Trade Agreement (NAFTA) could be reached by the deadline on Friday as negotiators prepared for what was shaping up to be an all-night session.

The Canadian foreign minister, Chrystia Freeland, said on Wednesday that the talks were currently at a “very intense moment” but that there was goodwill between the two teams of negotiators.

The comments followed a warning from US president Donald Trump that he could try and proceed with the NAFTA overhaul without Canada after the US clinched a deal with Mexico earlier this week and would instead levy tariffs on Canadian-made cars if the country did not cooperate.

“They [Canada] want to be part of the deal, and we gave until Friday and I think we’re probably on track. We’ll see what happens, but in any event, things are working out very well.” Trump told reporters at the White House.

His comments were echoed by Canada’s prime minister, Justin Trudeau, who said there was “a possibility” of meeting the Friday deadline, but warned that “No NAFTA deal is better than a bad NAFTA deal”.

However, after being sidelined from talks for more than two months, the Canadians will be under pressure to accept the terms agreed between the US and Mexico in order to make the ratification process easier.

9.00am: Footsie weaker again

The FTSE 100 dropped back in early trading on Thursday as dollar earners suffered again, weighed by sterling strength after Wednesday’s Brexit deal hints from European Union officials.

Around 8.50am, the UK blue chip index was down 46 points at 7,516, having shed 54 points on Wednesday.

The previous session’s falls came after the pound rose back above US$1.30 after EU’s chief negotiator, Michel Barnier commented that the currency bloc was prepared to offer a partnership with Britain that has not been seen with any other country.

Connor Campbell, financial analyst at Spreadex commented: “While the pound didn’t significantly build on Wednesday’s Barnier-boost, the currency was still strong enough to upset the FTSE.”

He added: "With the EU’s chief negotiator stating that the group is prepared to offer Britain a ‘partnership such as there never has been with any other third country’ sterling let out an almighty sigh of relief on Wednesday, that bullish comment coming after weeks of ‘no deal’ Brexit chatter.”

Among the biggest blue-chip fallers was mobile telecoms giant Vodafone PLC (LON:VOD), down 2.2% as a reported downgrade in rating to ‘neutral’ by BofA Merrill Lynch offset news the firm’s Australian business and local rival TPG Telecom Limited have agreed to merge into a single A$15bn telecommunications company.

On the second line, a broker upgrade boosted housebuilder Bellway PLC (LON:BWY), up 1.9% to 2,945p as Deutsche Bank raised its rating to ‘buy’.

Engineering contractor Hunting Plc (LON:HTG) was the top FTSE 250 gainer, ahead 10.9% at 841p after it swung to a profit in its half-year results as strong activity in US shale basins and offshore sentiment improvements boosted its revenues.

But staffing mid cap Hays plc (LON:HAS) lost 3.4% at 196p after its latest results failed to excite.

There was excitement among the small cap oil minnows, however, with Solo Oil PLC (LON:SOLO) jumping nearly 16% higher to 2.55p after it struck a deal with UK Oil & Gas Investments PLC (LON:UKOG) over its 15% stake in the Horse Hill ‘Gatwick Gusher’ which will see Solo receive £4.5mln of cash and 234mln UKOG shares (4.2% of the company).

Proactive news headlines:

Solo Oil PLC (LON:SOLO) has agreed to cash out of the Horse Hill discovery whilst an extended well testing programme is ongoing. It has struck a deal with UK Oil & Gas Investments PLC (LON:UKOG) which will see Solo receive £4.5mln of cash and 234mln UKOG shares - 4.2% of the company.

Metminco Limited (LON:MNC) has confirmed a mineralised porphyry system at the Tesorito gold prospect in Colombia. Results from drilling indicate a significant near surface porphyry which is located only 800 metres from the gold reserves and resources at Metminco’s Miraflores deposit.

Challenger Acquisitions Limited (LON:CHAL) saw its shares jump on Wednesday following news that the firm has cancelled £544,556 in convertible loan notes and will record a gain on the transaction and the related interest savings. The group said it had executed a Convertible Note Purchase Agreement with two existing and independent convertible note holders.

African Battery Metals PLC (LON:ABM) has decided to discontinue its activities in Sierra Leone after a review of its assets following the acquisition of two new nickel and cobalt projects in Cameroon and Cote d'Ivoire.

Symphony Environmental Technologies plc (LON:SYM) has reported increased revenues for the first half of the year as its d2p range of products began to contribute to its balance sheet.

The chief executive of OptiBiotix Health plc (LON:OPTI) has hailed the past six months as an “exciting period of growth” for the life sciences group.

An increase in contractor demand boosted tech recruiter Harvey Nash PLC’s (LON:HVN) first half revenues. Billings in the half year to July rose 25% to £527mln, while gross profit or sales were 11% higher at £51.7mln.

Event-driven marketing specialist Mporium Group PLC (LON:MPM) saw revenues increase by one-tenth year-on-year in the first half of 2018.

The first half saw income investors’ favourite Chesnara Plc (LON:CSN) generate more than sufficient cash to fund its dividend strategy.

IXICO Plc (LON:IXI) has expanded its contract with a biopharmaceutical company, taking the total value to €1.3mln.

i3 Energy Plc (LON:I3E) has contracted Gardline Limited for a survey over the Liberator field ahead of a development programme. The survey sets out to cover the areas of two planned production wells, which are pencilled in for the Phase I development, in addition to the planned export pipeline route and possible drill location for the Liberator West appraisal well.

Cadence Minerals Plc’s (LON:KDNC) investee company Auroch Minerals has significantly expanded its footprint across the Arden and Bonaventura projects in South Australia. Big Pic in February.

Base Resources Limited (LON:BSE) (ASX:BSE) has said the latest company presentation, which was presented today at the Africa Down Under Conference in Perth, Western Australia, is available from the company’s website.  www.baseresources.com.au

LIVE Company Group PLC (LON:LVCG) announced late yesterday that Simon Bennett has resigned as a non-executive director of the company, with immediate effect, in order to pursue other opportunities. The group said it is currently in advanced discussions over the appointment of two additional independent non-executive directors, and a further announcement in this regard will be made in due course.

6.50am: Dull start predicted

The FTSE 100 is set to start Thursday on the back foot as US stock market positivity doesn’t appear to be translating on this side of the Atlantic.

CFD and spread-betting firm IG Markets sees the FTSE 100 down about 15 points, calling the London index at 7,546 to 7,550 with just over an hour to go until the start of trading.

Wall Street equity benchmarks continued to rise into last night’s close as investors welcomed Donald Trump’s apparent trade deal success, with a new and improved deal with Canada and Mexico now anticipated.

“It was another stellar session last night for US stocks,” said David Madden, analyst at CMC Markets.

“The S&P 500 and NASDAQ racked up all-time highs again, as optimism about a trade deal with Canada and positive broker recommendations for certain tech stocks drove the indices higher.”

Madden added: “The preliminary US GDP reading for the second quarter was 4.2%, and no doubt Mr Trump will be boasting about that.”

New York’s Dow Jones gained 60 points or 0.23% to finish Wednesday’s session at 26,124 while the S&P 500 added 0.57% to 2,914 and the Nasdaq climbed nearly 1% to end at 8,109.

In Asia, Japan’s Nikkei was slightly higher, adding 0.09% to 22,869. At the same time, Hong Kong’s Hang Seng was firmly on the back foot, losing 0.8% to 28,179, and the Shanghai Composite was also in negative territory, giving up 0.79% to 2,747.

Significant announcements for Thursday, August 30:

Trading update: WH Smith Plc (LON:SMWH)

Finals: Hays plc (LON:HAS)

Interims: Churchill China PLC (LON:CHH), Hunting Plc (LON:HTG), Amigo Holdings PLC (Q1) (LON:AMGO), AFI Development PLC (LON:AFRB), Arrow Global Group PLC (LON:ARW), ASA International Group PLC (LON:ASAI), Eddie Stobart Logistics PLC (LON:ESL), Chesnara Plc (LON:CSN)

Ex-dividends to clip 0.6 points off FTSE 100 index: InterContinental Hotels Group PLC (LON:IHG), St James’s Place PLC (LON:STJ)

Economic data: UK consumer credit, money supply numbers; US weekly jobless; US housing starts; Philly Fed business outlook survey

Around the markets:

  • Sterling: US$1.3025, up 0.03%
  • Gold: US$1,202 per ounce, down 0.37%
  • Brent crude: US$77.19 a barrel, up 1.6%
  • Bitcoin: US$6,976, down 0.84%

City Headlines:

  • Government proposes energy drinks ban for children – BBC News
  • Dyson to build UK site to test electric vehicles – Financial Times
  • British Gas pays out £2.65m for overcharging and 'invalid' exit fees – Sky News
  • Data breach complaints up 160% since GDPR came into force – The Independent
  • Argentina seeks emergency release of $50bn in IMF funds amid financial crisis – The Guardian
  • Vodafone in $11bn Australian merger – BBC News
  • Bitcoin Survey Suggests Bright Future For Cryptocurrency – Forbes
  • Salesforce results top Wall Street estimates but third-quarter earnings outlook doesn’t – MarketWatch
  • Google, Facebook, Twitter chiefs called back to Senate Intelligence Committee – TechCrunch
  • Papa John rips top execs, dishes on ‘frat club’ behaviour – New York Post

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