FTSE 100 closes down 83 pts
Sterling dips below US$1.30 amid profit-taking
US markets post mixed open amid trade tension but Apple lifts Nasdaq
FTSE 100 closed 1.11% lower on Friday as tech and telecoms shares weighed, alomng with continues worries over trade.
The UK blue-chip benchmark finished around 83 points lower, at 7,432 on the day, and down around 1.7% on the week.
The decline in FTSE 250 was nothing like so sharp, but it still shed nearly three points at 20,689.
European benchmarks also took a big hit, while on Wall Street, the Dow Jones Industrial Average is down around 80 points and the S&P 500 is off around 20 at the time of writing.
Michael Hewson, chief market analyst at CMC Markets, said: "European stocks have limped into the end of a disappointing month in the wake of last night’s comments from President Trump that the EU needs to do much more to come to an agreement with the US on trade, and dismissing its proposal to remove tariffs on all motor vehicles."
He added: "German automakers BMW, Volkswagen and Daimler have all slipped back modestly in the wake of President Trump’s rejection of the EU’s proposal, with the EU pushing back by saying it would retaliate if the US President reneges on his promise not to impose car tariffs."
Top laggard on Footsie was Sage Group (LON:SGE), which lost almost 8% to stand at 595.4p, afer chief executive Stephen Kelly announced he was stepping down.
The company repeated its full year guidance and assured that a new chief would be in place as soon as possible
Top riser on FTSE 100 was Whitbread plc (LON:WTB), which shot up over 14% to 4,596p
2.30pm: Sterling drops back from monthly high amid profit-taking following spike
The pound has dropped below its brief one-month high as investors sought to capitalise on the renewed optimism over Brexit negotiations.
In late-afternoon trading sterling was down 0.32% at US$1.296 against the dollar, below its previous high of around 1.303 earlier in the week as the pervading risks of Brexit still outshone the recent comments from EU chief negotiator Michel Barnier that a bespoke trade deal with the UK could be possible.
In other negotiation-esque news, struggling DIY retailer Homebase has received creditor approval to close 42 of its stores in a bid to stave off collapse, putting 1,500 jobs at risk.
The proposed closures are the latest instalment of a series of high-street retailers either narrowly avoiding or collapsing into administration as online competition bites into customer traffic.
The FTSE 100 was down 34 points at 7,481.
2.40pm: US stocks open mixed amid trade jitters as Apple boosts Nasdaq
As expected, Wall Street saw its major indices post a mixed open on Friday, with the tech-heavy Nasdaq receiving a boost from a record breaking share price from Apple Inc (NASDAQ:AAPL).
The Dow Jones Industrial Average was down 43 points at 25,943 shortly after the open, while the S&P 500 was down 2.9 points at 2,898.
The Nasdaq however, was up 6.5 points at 8,094 following news that Apple will hold an event on 12 September where it is expected to announce its new iPhone lineup, which drove its shares briefly to an all-time high of US$227.9 before dropping back slightly to US$227.1.
The FTSE 100 was down 38 points at 7,477.
2.00pm: Wall Street looks to lower open as trade concerns resurface
The US markets are expected to open lower on Friday morning as the spectre of a trade war between the US and various other world powers once again spooked investors.
A Bloomberg report on Thursday that Trump wants to move forward with an extra US$200bn in tariffs on Chinese goods, as well as his threats to withdraw from the World Trade Organisation (WTO), have served to drive global markets lower over the course of the day, and the US looks to be no exception.
There is also the outcome of the US's trade negotiations with Canada, with the deadline for an agreement set for the end of Friday and both sides seemingly confident that one will be reached as the week ends.
Although there will be other distractions besides the rumbling trade upheaval for traders to keep an eye on, with the August purchasing managers index due to be released as well as the August reading on consumer sentiment.
In London, the FTSE 100 was down 39 points at 7,476.
12.30pm: CMA launches court action against Viagogo
The UK’s Competition and Markets Authority (CMA) has launched legal action against online ticket reseller Viagogo after it failed to offer to make changes following an investigation by the watchdog into the secondary ticketing sector.
The CMA said it would seek a court order to make sure Viagogo does not “repeat historic failures to make its customers aware of the face value of tickets on sale through its site", as well as an interim enforcement order to stop some of Viagogo’s practices pending a full trial.
The CMA began enforcement action against four ticketing websites last November, with three of the sites, StubHub, GETMEIN!, and Seatwave all offering formal commitments to overhaul their practices.
Viagogo, being the only site to not make the changes, would therefore be brought before the High Court, the CMA added.
The FTSE 100 was down 33 points at 7,482.
12.00pm: Trade war concerns outweigh Whitbread performance as FTSE 100 drags into midday
With lunchtime approaching the FTSE 100 was stuck around the same rate of decline that had started the morning, down 35 points at 7,481.
The index couldn’t even pull some gains from the decent performance of Whitbread plc, as its deal to sell Costa to Coca-Cola announced this morning boosted its shares 15.8% to 4,658p.
Connor Campbell, financial analyst at Spreadex, said that the index “hit its worst intraday level for more than a fortnight, and is on track for a 4 month low close”.
He added that despite trade optimism earlier in the week, reports that president Trump is looking to impose additional tariffs on China, his threat to pull the US out of the WTO and the tense, terse situation with both the EU and Canada, have all put the market “back to fretting about his next move”.
The sentiment was echoed by Craig Erlam, senior market analyst at OANDA, who said that the recent comments from Trump and Juncker around auto tariffs suggested “talks have much further to run” despite the apparently positive meeting between the two last month.
Erlam added that while the decline in the Argentinian Peso may be rattling markets more, Trump was still in the picture as “higher interest rates in the US and the impact that’s had on the dollar has clearly contributed to it”.
11.30am: Juncker says EU will retaliate if Trump imposes auto tariffs
The president of the European Commission, Jean-Claude Juncker, has said the EU will respond in kind if US president Donald Trump goes back on a pledge to not impose car tariffs, in the latest sign of a re-escalation of tensions between the US and the bloc.
Speaking to German broadcaster ZDF, Juncker said that if the US decided to impose auto tariffs, the EU would do so as well, adding that the bloc would not have its trade policies determined by others.
The comments followed a report from Bloomberg that Trump had rejected an offer by the EU to eliminate tariffs on cars on Thursday, saying the EU’s trade policies were “almost as bad as China”.
In another dispute somewhat closer to home, industry officials in both France and the UK are trying to strike a new deal on the dredging of scallops following violent skirmishes between British and French fishermen in the channel.
On Tuesday, French boats rammed British trawlers off the Normandy coast, hurling projectiles and insults in a dispute which erupted after a previous agreement broke down.
French fishermen accuse the British of catching scallops in the Baie de Seine in the summer months when French boats are banned from doing so under rules imposed by the French government to conserve shellfish stocks.
The FTSE 100 was down 39 points at 7,4796.
10.45am: Argentina’s central bank ups interest rate to 60%
There were a few moans and groans earlier this month when the Bank of England put interest rates up to 0.75%, making mortgage and other loan repayments more expensive.
Spare a thought for the Argentinians, then. The central bank there whacked rates up to 60% to try to curb rampant inflation.
The US dollar has continued to climb against the peso in recent due to a reported distrust of government policies.
Argentina raises interest rate to 60%, fails to stem peso's plunge https://t.co/Le8x7mUOsK pic.twitter.com/ENRFkkUeTp
— Bloomberg Economics (@economics) August 31, 2018
10.20am: Sage Group CEO steps down
Accountancy software giant The Sage Group PLC (LON:SGE) is looking for a new chief executive officer (CEO) after Stephen Kelly stepped down from the role.
While the search for a successor is in progress, the chief financial officer, Steve Hare, will act as the chief operating officer on an interim basis; he will have full executive authority to run the business until the appointment of the new CEO.
Kelly’s departure came after a profit warning in April, with the group blaming “inconsistent operational execution” for the cut in full-year guidance.
Sage shares are down 6.2%, making it the biggest faller on the FTSE 100 so far this morning.
10am: Homebase creditors to meet today
DIY chain Homebase could fall into administration if its creditors don’t agree to its turnaround plan later today.
The retailer’s owner wants to shut 42 stores and slash rents on the others as it tries to revive its fortunes through what is called a company voluntary agreement.
Some landlords are reportedly planning on voting against the plans though, saying it penalises them too much.
If the CVA isn’t approved, owner Hilco Capital, which bought the chain for £1 in June, has said it is “very likely” Homebase will go into administration.
@Homebase_uk have only themselves to blame. Its difficult to see how core deliverables of DIY firms can be seriously impacted by the Internet. That said, when I often went into Homebase it was like pulling teeth trying to ask for help. I switched to @BandQ and got just that.
— Eddie Dillon (@EdKings) August 31, 2018
9.40am: Right time to sell Costa?
“The timing of the deal by Whitbread will be seen by many as being astute, given that Costa Coffee was bought for £19mln 23 years ago and sold at what could be a peak in the cycle after a couple of decades of strong growth in coffee market and the rise of the coffee culture,” says The Share Centre analyst Helal Miah.
“However, some others will say that Whitbread may be too premature in selling given that Costa Coffee in China is set to experience strong growth in the next few years.”
Miah adds that the sale is a “quicker and cleaner process” that should allow Whitbread to sooner on expanding its Premier Inn business.
As for Coca Cola, the drinks giant adds a global coffee brand to its business – a string that had previously been missing from its bow before. Given its massive distribution networks, it should also be better at growing the Costa brand in new markets around the world.
9.20am: House prices fell in August
House prices grew at their joint slowest annual pace in more than five years in August, according to the latest Nationwide house price index.
The mortgage lender said prices across the UK were on average 2% higher than in August last year.
On a monthly basis, prices were down 0.5% compared with July.
“Subdued economic activity and ongoing pressure on household budgets is likely to continue to exert a modest drag on house price growth and market activity this year, though borrowing costs are likely to remain low,” said Nationwide’s chief economist Robert Gardner.
“Overall, we continue to expect house prices to rise by around 1% over the course of 2018.”
House prices fall 0.5% in Aug - biggest monthly fall since July 2012, according to our latest House Price Index. Annual growth softened from 2.5% to 2%. Full report, incl commentary from our chief economist, Robert Gardner, on the Help to Buy scheme: https://t.co/fJEuxLQtb8
— NBS External Affairs (@NationwidePress) August 31, 2018
8.40am: Footsie sees Friday fall
The FTSE 100 fell back in early trade on Friday reflecting declines by global markets as US trade policy jitters continued to weigh, although Whitbread plc (LON:WTB) was the standout gainer after agreeing the sale of its Costa Coffee business to The Coca-Cola Co. (NYSE:KO) for £3.9bn.
Around 8.35am, the UK blue chip index was 20 points lower at 7,496, having shed 47 points on Thursday.
Whitbread shares soared 18% higher to 4,745p after the leisure group, which also owns the Premier Inn hotel chain, unveiled the surprise Costa disposal having announced plans in April to split off the business into a separate entity after receiving pressure from activist investors Elliott Advisors and Sachem Head.
Neil Wilson, chief market analyst for Markets.com commented: “The price looks like investors will get more bang for their buck than they would have done with a simple demerger. However, the growth story needs to be looked at because Whitbread has decided to change tack, shifting away from a demerger that it said would let the coffee and hotel chains grow more rapidly in favour of a quick sale.”
He added: “Clearly Coca-Cola sniffed an opportunity to gain an attractive brand with a fast-growing global presence. It’s a pretty good return too on the £19m Whitbread paid for the coffee chain over 20 years ago.”
While Whitbread was the blue-chip index’s top riser, accounting software firm Sage Group PLC (LON:SGE) topped the fallers list, down 9% at 585.80p on news it is looking for a new chief executive officer (CEO) after Stephen Kelly stepped down from the role.
While the search for a successor is in progress, the chief financial officer, Steve Hare, will act as the chief operating officer on an interim basis; he will have full executive authority to run the business until the appointment of the new CEO.
The market’s biggest mover, however, was Midatech Pharma Plc (LON:MTPH) which soared 40% higher at 36.50p after first in-human data for the biotech firm’s MTD201 drug has suggested it is better than a rival product made by Swiss pharma giant Novartis.
MTD201 is being developed as a treatment for a hormonal disorder called acromegaly as well as for carcinoid cancer.
Proactive news headlines:
The first in-human data for Midatech Pharma Plc’s (LON:MTPH) MTD201 drug has suggested it is better than a rival product made by Swiss pharma giant Novartis.
Metal Tiger PLC (LON:MTR) has closed its oversubscribed Sprott Offering and has raised £2.6mln to help fund its joint venture project in Botswana. The AIM-listed natural resources investment group said the funds would be added to those raised by a placing earlier in August, of around 93.4mln new shares issued at a price of 2.8p each, to give a total of around £6.2mln in combination.
ExxonMobil Corporation has made its ninth new discovery in the Stabroek block, offshore Guyana, with the Hammerhead-1 well - which provides yet more encouragement to Eco (Atlantic) Oil & Gas Ltd (LON:ECO) (CVE:EOG). Hammerhead is located just seven kilometres from the boundary to the Orinduik licence, where Eco has a 40% stake, is partnered with Tullow Oil and is set to farm-out to Total.
Echo Energy Plc (LON:ECHO) has revealed a deal that’s sees the explorer potentially take up a new project, located onshore Bolivia. It has signed a letter of intent (LOI) for a one year technical evaluation of the Rio Salado licence area.
Sound Energy PLC (LON:SOU) has announced the signing of a new 8 year petroleum agreement which pulls together the Tendrara and Matarka exploration areas. It spans some 14,500 square kilometres surrounding the Tendrara gas discovery. Sound will hold 47.5% of the area, alongside Schlumberger which has 27.5% and the state’s ONHYM vehicle which retains a 25% stake.
Premier African Minerals Limited (LON:PREM) has commenced the diamond drilling programme at the open pit at the RHA tungsten mine.
Security services specialist Westminster Group PLC (LON:WSG) has raised £500,000 through a placing at 10p. Westminster has a US$24mln contract for an airport security system in Iran that is currently on hold due to the US withdrawal from the nuclear pact with the country. The money raised will be used to prepare for the eventual start of that work, said the company
One-off costs and disruptions to Hollywood productions knocked annual numbers at film finance and services specialist FFI Holdings Plc (LON:FFI). Pre-tax profits to March fell 49% to US$5.3mln largely due to the US$9.5mln cost of listing on AIM in June 2017.
RYVL, the trading name of The Marketing Group (NASDAQ OMX:TMG), has reported net revenues and underlying earnings (EBITDA) for the growth for the first half, but has cautioned on a potentially challenging second half for some of its subsidiaries.
Abzena plc (LON:ABZA,), the life sciences group providing services and technologies to enable development and manufacture of biopharmaceutical products, announces the appointment of N+1 Singer as its nominated adviser and sole broker with immediate effect.
6.35am: Weak start progress
The FTSE 100 is set to open lower after a disappointing finish yesterday as yet more concerns over US trade policy have appeared to cause jitters among investors.
Spread betting firm IG expects the FTSE 100 to open around 28 points lower this morning, continuing a slide which saw the index close down 47 points yesterday at 7,516.
Michael Hewson, chief market analyst at CMC Markets UK, said that while the US markets are set to close the month positively, fears over yet more tariffs on Chinese imports by the US, which could total an extra US$200bn according to Trump, as well as his renewed threats to withdraw from the World Trade Organisation have led to “increasing investor reluctance to commit new money into global equities”.
The US markets yesterday saw a relatively disappointing finish compared to the four-day rally that boosted the indices to record highs earlier in the week, with the Dow Jones Industrial Average closing down 137 points at 25,986, while the S&P 500 closed down 12.9 points at 2,901 and the Nasdaq closed down 21.3 points at 8,088.
Hewson said that the lower close may have been linked to the potential escalation of the US-China trade dispute, however he added that “the sweet spot of a US economy that appears to be on cruise control and the prospect of an agreement on NAFTA in the coming days” has driven gains for the markets.
The prospect of more tariffs was also reflected in the performance of the Asian markets today, with the Japanese Nikkei 225 sliding 25 points to 22,844 while Hong Kong’s Hang Seng slumped 254 points to 27,913.
On the currency markets, the pound was relatively flat at US$1.302 against the dollar and flat at €1.114 against the euro as the currency reached a plateau following a jump yesterday caused by renewed Brexit optimism.
UK weather extremes in focus as Restaurant Group reports
Restaurant Group PLC (LON:RTN), the owner of Frankie & Benny’s, reports its first-half results on Friday and investors will be hoping recent extremes in the weather had little impact on its performance.
In May, the company said the so-called Beast from the East, which brought heavy snowfall and icy temperatures from Siberia to the UK and Continental Europe in late February and early March, had kept customers away from its restaurants. Like-for-like sales in the 20 weeks to May 20 fell 4.3% and total sales dropped 3.1%.
Despite the decline in sales, the group said it expected its full-year results to meet market forecasts.
Since then the UK has experienced a heatwave and seen England reach the semi-finals of the World Cup, meaning people spent much of their time at the pub watching the football and drinking in the sunshine rather than eating at restaurants.
The company has also had to contend with tough competition and weaker consumer confidence in the UK.
At the interim results, the focus is likely to remain on cost-cutting initiatives given the absence of any new strategy for its restaurants.
A possible bright spot could come from the Pubs and Concessions business, which has been expanding.
Significant announcements due:
Interims: Restaurant Group PLC (LON:RTN), EMIS Group PLC (LON:EMIS), BBGI SA (LON:BBGI)
AGM: Stagecoach Group PLC (LON:SGC)
Economic data: US leading indicators; University of Michigan final consumer sentiment survey
Around the markets:
• Sterling: US$1.302, up 0.07%
• Gold: US$1,204.5, up 0.4%
• Brent Crude: US$77.77 a barrel, no change
• Bitcoin: US$6,985, no change
City Headlines:
• Financial Times: Argentine peso slumped 12% further despite the central bank increasing interest rates to 60%, a 15 percentage point rise, to arrest currency plunge.
• The Daily Telegraph: Wonga, the payday lending giant, was placed into administration after being flooded with fresh compensation claims.
• The Times: WPP is set to anoint Mark Read, the former head of its digital division, as the successor to Sir Martin Sorrell.