FTSE 100 closes positively
Michel Barnier says Brexit deal possible within weeks
Miners slump, banks rally
FTSE 100 closed the day in positive territory, as a potential Brexit deal and the state of the UK economy appeared to cheer the market.
The UK's index of leading shares added 1.6 points, or 0.02% , to finish at 7,279, while sterling was up 0.32% against the Euro and up 0.80% against the US dollar.
FTSE 250 was also up - adding around 50 points to stand at 20,259.
Brexit is never far from the headlines, but things yet again, appeared to point in a new direction today.
"It’s been a good day for the pound all round. Not only is the UK economy bouncing along at a stronger pace than forecast, but, according to EU Chief Negotiator Michel Barnier there is also real scope for a Brexit deal to be achieved in the next 6 -8 weeks," said Fiona Cincotta, senior market analyst at City Index.
"This was sufficiently exciting news to put pound bulls back in control after several weeks of flagging."
In other news, the UK economy grew 0.3% month-on-month in July, thanks to the World Cup and the warm weather, data from the Office for National Statistics (ONS) showed.
The gross domestic product (GDP) data was ahead of the 0.2% growth expected by analysts and last month’s 0.1% gain.
Top company riser on Footsie was London Stock Exchange Group (LON:LSE), which gained 1.77% to stand at 4,726p.
3.40pm: Aston Martin names first female chair
Aston Martin Lagonda has named former Coca-Cola executive Penny Hughes as its first female chair and confirmed its intention to float on the London stock market.
Andy Palmer, the Aston Martin chief executive, said the appointment of Hughes was “a significant milestone in our history and of the successful turnaround of the company”.
Hughes has experience on the boards of FTSE 100 firms including RBS, Vodafone and Morrisons.
The company plans to float in October.
3.20pm: Snap's shares drop after resignation of chief strategy officer
Snap Inc (NYSE:SNAP) shares fell 1.5% to US$9.7 after announcing chief strategy officer Imran Khan will step down.
The news marks the latest executive departure as Snap, the parent company of the Snapchat app, comes under pressure to stem user declines.
Khan has been chief strategy officer since 2015 and played a key role in taking Snap public in March last year.
3.00pm: Pound rallies after positive Brexit comments
Sterling is up 0.74% against the dollar to US$1.3016 after EU's chief Brexit negotiator Michel Barnier said a deal is possible within as soon as six weeks.
Barnier told a forum in Slovenia: "I think that if we are realistic, we are able to reach an agreement on the first stage of this negotiation - which is the Brexit treaty - within 6 or 8 weeks."
Oanda's Craig Erlam said the comments "provide some hope that both sides are fully committed avoiding a no deal scenario, something that at times hasn’t always appeared the case".
"Assuming these comments aren’t denied and this is the case, it’s possible that things could be really looking up for the pound after what has been quite an awful summer for the currency, having fallen more than 10% against the dollar at one stage," he added.
"The pound is also vulnerable to these comments being clarified or a caveat being attached that a no deal is also still very possible, as we’ve seen when previously – apparently – positive reports appeared."
2.30pm: US stocks open higher
US stocks opened higher, recovering from declines last week despite renewed concerns about trade tensions between the US and China.
The Dow Jones Industrial Average rose 71 points to 25,992, the S&P 500 increased 10 points to 2,882 and the Nasdaq grew 15 points to 7,917.
Shares in Apple dropped 1.4% to US$218 each in early trading after US President Donald Trump urged the company to bring manufacturing from China to the US.
Apple prices may increase because of the massive Tariffs we may be imposing on China - but there is an easy solution where there would be ZERO tax, and indeed a tax incentive. Make your products in the United States instead of China. Start building new plants now. Exciting! #MAGA
— Donald J. Trump (@realDonaldTrump) September 8, 2018
Tesla Inc. (NASDAQ:TSLA) gained after chief executive Elon Musk announced a management shake-up late Friday.
1.40pm: Debenhams insists it is not going bust
Following reports that Debenhams has called in restructuring specialists KPMG to assess its options, the department store chain has issued a statement to soothe investor concerns.
Debenhams said it expects to report pre-tax profit of £33mln this year, within the market range of £31mln to £36.5mln, excluding one-off costs.
The company said it has continued to strengthen its financial position to ensure “maximum flexibility amidst volatile market trading conditions”.
“The early weeks of the new season have shown more positive trends and any sustained upturn would result in a rebound in our profit performance,” it added.
Shares were down 15% to 10.8p in afternoon trading after reports Debenhams was considering closing stores through an insolvency process known as a company voluntary arrangement following a string of profit warnings.
12.50pm: US stock futures rise, Apple in focus
US stock futures are pointing to a higher open after a sell-off last week amid worries about trade wars.
Dow Jones Industrial Average futures rose 84 points to 26,043, S&P 500 futures added 10 points to 2,885 and Nasdaq futures gained 39 points to 7,478.
The trade dispute between the Trump administration and Beijing could heat up after data showed the China’s trade surplus with the US reached a new record high.
Apple Inc (NASDAQ:APPL) will be in focus after US President Donald Trump posted a tweet calling for the iPhone maker to move its manufacturing to the US. The comment put pressure on Asian tech stocks.
12.10pm: FTSE 100 led higher by banking shares
The FTSE 100 rose 28 points to 7,306 at the midday mark, led by banking shares, as traders weighed better-than-expected UK economic growth data.
Among the biggest risers were Royal Bank of Scotland PLC (LON:RBS), Barclays PLC (LON:BARC) and Lloyds Banking Group PLC (LON:LLOY), after gains by Italian counterparts.
Italian banking shares were lifted after the country’s government bonds gained.
“A perky banking sector, inspired by positive movements from their Italian equivalents, helped push the UK index higher, as did the fact the pound gained very little from the day’s data,” said Connor Campbell, financial analyst at Spreadex.
Afternoon Market Comment: Pound gets little from 2018-best GDP reading, FTSE knocking on door of 7300... https://t.co/tx8URSSctD
— Connor Campbell (@ConnorSpreadex) September 10, 2018
The UK’s gross domestic product rose more than forecast in July, although analysts said Brexit uncertainty presents risks to the economic outlook.
Many analysts still see the Bank of England leaving interest rates unchanged on Thursday despite the solid GDP data.
On the company front, Morrisons shares jumped after HSBC raised its rating on the stock to ‘buy’ from ‘hold’.
On the downside, mining stocks such as Fresnillo PLC (LON:FRES), Antofagasta and Glencore continued to drop after data showed China’s trade surplus with the US hit a record high, adding to worries about tensions between the two nations.
Associated British Foods declined after warning that volatility in the pound would hurt earnings.
11.40am: Calls for Brexit referendum
The Trades Union Congress has warned it will demand a “popular vote” on the final Brexit terms unless the government struck a deal that working people need.
The People's Vote campaign, which calls for a referendum on the final Brexit deal, has the backing of some MPs from the two main parties.
Craig Erlam, senior market analyst at Oanda, said: “While growing support for a ‘people’s vote’ suggest Brexit isn’t quite final yet, the exit door is drawing ever nearer and more and more it seems as though the best way to deal with some of the stickier points is going to be to kick the can down the road and deal with it another day.
“That’s certainly the message we’re getting recently if reports are to be believed which in a way will come as a relief to businesses as it suggests leaders will do whatever it takes to avoid a cliff-edge scenario.”
He added: “The flip side of that is that it means negotiations are now going to drag on for another two years with officials squabbling in public over various issues. In the near-term though, this may be positive for the pound and the economy if it gives business peace of mind and even potentially allows them to invest with some confidence. Of course, that may just be an overly optimistic view.”
11.20am: GDP figures 'mildly pleasing', says analyst
The UK’s economic growth data for July was solid but not spectacular, according to XTB Online Trading’s chief market analyst David Cheetham.
“The most recent GDP figures are mildly pleasing with the latest rise in the ONS release indicating that the UK economy grew by 0.6% in the 3 months to July,” he said.
“These figures were broadly in line with the corresponding PMI data points and suggest that 3rd quarter growth likely top the 0.4% increase seen in Q2.
“This data does come with a bit of a lag however, but the PMI figures for August, released just last week, were ok overall and the general feeling remains one of solid but not spectacular growth.”
He added that Brexit negotiations continue to be a “major potential wildcard” and the pound has been sensitive to comments for and against reaching a trade deal.
EY Item Club said if a Brexit transition deal is agreed by March 2019 and the economy grows about 0.4% quarter-on-quarter thereafter, it expects the Bank of England to raise interest rates to 1.0% in August 2019.
The Bank will announce its latest rate hike decision on Thursday but is widely expected to announce no changes.
#UK #economy saw robust start to Q3 with #GDP growing 0.3% m/m in July led by #services output (up 0.3% m/m) & #construction output (up 0.5% m/m). World Cup & warm weather helped. Industrial production rose 0.1% m/m) although #manufacturing output disappointingly dipped 0.2% m/m.
— Howard Archer (@HowardArcherUK) September 10, 2018
EY had expected GDP growth to be stable at 0.4% quarter-on-quarter in the third quarter but said the July data means there is “a very real chance it could improve to 0.5% quarter-on-quarter in the third quarter”.
11.00am: Dignity shares depressed after rival Co-op cuts prices
Dignity PLC (LON:DTY) shares have fallen 6.2% to 968p after rival funeral operator the Co-operative Group pledged to cut its prices to beat competitor quotes.
The Co-op, the biggest provider of funerals in the UK, said it would reduce the cost of a “simple funeral” by £100 to £1,895.
Dignity cut the price of its simple funeral in January to match the Co-op’s 2016 offer of £1,995.
The latest move by Co-op is likely to fuel a price war between funeral operators.
Adding to Dignity’s woes, the Competition and Markets Authority in June announced an investigation into the funerals market to ensure consumers were not getting a bad deal.
The results of the probe will be published next summer but an interim report is expected before the end of this year.
10.20am: Outlook for investment remains poor amid Brexit uncertainty, says ING
ING Economics said the latest figures from the ONS on GDP, industrial and manufacturing production, and trade "suggest there is still life in the UK economy despite all the negative political headlines and the pressures faced by the household sector."
"However, the UK is still expected to be battling it out with Japan and Italy as to who is the worst performing developed market economy this year and next," said ING chief international economist, James Knightley.
Wow... look at these UK growth and trade figures. Despite all the Brexit and political gloom, July's numbers are greathttps://t.co/i2LRsC4xsn
— ING Economics (@ING_Economics) September 10, 2018
Knightley said the UK jobs report on Tuesday is likely to show a renewed slowdown in employment gains while real wage growth is likely to remain depressed by inflation.
"Furthermore, the outlook for investment remains poor given the ongoing uncertainty over the UK’s future trading relationships," he said.
"Given this tough and uncertain environment, we think it highly unlikely that the Bank of England will raise rates before the UK leaves the EU on 29 March next year."
10.10am: Chance of BoE rate hike 'extremely slim'
The Bank of England is still expected to keep interest rates unchanged at its next policy announcement on Thursday despite the better-than-expected UK GDP data.
Stronger-than-expected monthly growth in both the services and construction sectors in July leaves 3m/3m UK GDP growth at 0.6%, its fastest rate since February last year. Some reassurance for the MPC, but the possibility of a rate rise on Thursday still extremely slim. pic.twitter.com/Bjl1t8VK85
— Capital Economics (@CapEconUK) September 10, 2018
The pound is up 0.19% against the dollar at US$1.2944 and up 0.3% versus the euro at €1.1185.
10.05am: UK trade deficit narrows
The UK's trade deficit narrowed by £1.4bn to £3.6bn in the three months to July, the ONS has revealed.
The goods trade deficit declined to £9.9bn in July from £10.6bn in June. Economists had predicted a deficit of £11.7bn.
10.00am: Industrial and manufacturing output fall
While GDP grew more than expected, industrial and manufacturing production slipped in the three months to July.
The ONS said industrial output dropped 0.5% as warm weather in May and July hurt demand for electricity and gas.
Manufacturing dipped 0.1% due to lower demand for machinery and metal products.
In July, manufacturing output dropped 0.2% month-on-month compared to analysts’ expectations for a 0.2% while industrial production rose 0.1%, missing forecasts for a 0.2% gain.
9.40am: UK GDP beats forecasts
The UK economy grew 0.3% month-on-month in July, thanks to the World Cup and the warm weather, the Office for National Statistics said.
The gross domestic product (GDP) data was ahead of the 0.2% growth expected by analysts and last month’s 0.1% gain.
In the three months to July, GDP rose 0.6% following a 0.4% rise the previous quarter. Economists expected quarterly growth of 0.2%.
ONS head of GDP Rob Kent-Smith said: “Growth in the economy picked up in the three months to July. Services grew particularly strongly, with retail sales performing well, boosted by warm weather and the World Cup. The construction sector also bounced back after a weak start to the year.”
9.20am: Debenhams shares plunge on reports of possible CVA
Shares in Debenhams are down 12.8% to 11.16p after news that the department store chain has brought in advisors from KPMG to assess its options to turnaround the struggling business.
KPMG is reportedly looking at a company voluntary arrangement – a form of insolvency proceedings that can be used to close stores and renegotiate rent – as a possible option.
Debenhams, which has issued three profit warnings this year, said: "Like all companies, Debenhams frequently works with different advisers on various projects in the normal course of business," the department store said in a statement.”
A CVA is being talked about, but given the weakness in the share price and the recent acquisition of House of Fraser, we must consider the possibility that Mike Ashley’s Sports Direct – which has a near 30% stake in DEB - will swoop.
Neil Wilson, chief market analyst at Markets.com, said: "The rationale for combining the two to create the House of Debenhams is compelling enough. As previously noted, combining the two businesses, reducing overheads and at a stroke removing a key leg of competition, seems like the only viable solution for the two ailing department stores. The fact is the market is screaming for restructuring and consolidation looks a sensible route to take given the well documented structural pressures on the sector.”
High street retailers in the UK have come under pressure from online competition and weaker consumer confidence with House of Fraser entering administration and Marks and Spencer saying it would close 100 shops.
8.40am: FTSE opens in negative territory
The FTSE 100 opened slightly lower as renewed concerns about a trade war between the US and China sent mining shares into the red.
Mining stocks were among the biggest fallers on the FTSE 100, including Glencore PLC (LON:GLEN), Antofagasta (LON:ANTO) and Anglo American PLC (LON:AAL) as worries over US-China trade tensions overshadowed stronger-than-expected Chinese inflation data.
Chinese inflation rose to an annual rate of 2.3% in August from 2.1% the previous month, ahead of analysts’ expectations for an unchanged reading.
But China’s trade surplus with the US grew to a record level in July, which may add to US President Donald Trump’s argument that there is a trading imbalance between the two nations.
The surplus hit US$31.05bn in August, up from US$28.09bn in July.
Primark owner Associated British Foods PLC (LON:ABF) slumped after warning foreign exchange headwinds would have a £20mln negative impact on full-year profits.
Going the other way, WM Morrison Supermarkets PLC (LON:MRW) shares jumped ahead of its interim results on Thursday after receiving an upgrade from HSBC.
Shares in RPC Group PLC (LON:RPC) surged after saying it is in preliminary talks with alternative investment manager Apollo Global Management and private equity firm Bain Capital about a takeover offer for the UK plastics packager.
Proactive Investors:
Savannah Resources PLC (LON:SAV) has boosted the resource base at the Grandao lithium deposit in Portugal by 64% to 16.4mln tonnes grading 1.04% Li₂O. Total contained lithium rings in at 171,400 tonnes.
Rockfire Resources PLC (LON:ROCK) has commenced reverse circulation drilling at the Marengo gold-copper project in Queensland, Australia.
OptiBiotix Health PLC (LON:OPTI) has signed a non-exclusive licence agreement with Taiwanese probiotics firm Bened Biomedical Ltd to produce and market products containing its cholesterol and blood pressure-reducing LPLDL strain in the country.
Sareum Holdings PLC (LON:SAR) has selected a candidate molecule to take through the clinic which it thinks has the potential to become a new, "potentially best-in-class" treatment for autoimmune diseases.
Flying Brands Ltd (LON:FBDU) has a “high expectation” that US regulators will give the thumbs-up to its kidney stone medical imaging software StoneChecker.
Feedback PLC (LON:FDBK) has announced that its operating company Feedback Medical Ltd has received an order from its South Korean distributor for its patented image texture analysis technology, TexRAD for the Samsung Medical Centre in Seoul. The specialist medical imaging technology company said the order came via its South Korean distributor, Korea Computer Motion ISG.
Flying Brands Ltd (LON:FBDU) has a “high expectation” that US regulators will give the thumbs-up to its kidney stone medical imaging software StoneChecker.
The US Food and Drug Administration has granted investigational new drug clearance for AP101 - Amryt Pharmaceuticals PLC’s (LON:AMYT) skin disorder treatment.
Property investment firm Custodian REIT PLC (LON:CREI) has purchased an industrial unit in the Hilton Business Park in Derby, which it has leased to aircraft maker Daher Aerospace Limited.
Commodity trading software group Brady PLC (LON:BRY) cut its losses as the benefits of restructuring measures taken last year started to come through. “We are doing exactly what we said we would, including an investment in new products, the removal of costs, creating long-term solutions with the customer at the centre and a continual transition away from the group's legacy contract model,” said Ian Jenks, executive chairman.
Cradle Arc PLC (LON:CRA) has entered into a joint venture with Mukuyu Resources (Mali) LTD for the exploration and development of Cradle Arc's 137 square kilometre Kossanto West gold project in western Mali.
W Resources PLC (LON:WRES) has highlighted progress on its Iberian tungsten and gold assets during commentary attached to interim results. La Parrilla is fully funded to production, and construction is now well underway.
Columbus Energy Resources PLC (LON:CERP) told investors that a licence extension has been granted for the Cory Moruga block, which will now run to 2032. The block is owned by Steeldrum Oil Company which is being acquired by Columbus, due for completion later this year.
Block Energy PLC (LON:BLOE) has agreed a deal with a drill contractor for a new programme of well drilling and well workovers in the Republic of Georgia. It has entered into a non-binding memorandum of understanding with JSC Norio Oil Company (NOC) for the programme which will span the group’s three licence areas – Norio, Satskhenisi and West Rustavi.
US Oil & Gas PLC (LON:USOP) told investors that preparations are underway for flow testing at the Eblana-3 well at the Hot Creek Valley project in Nevada. The company, in a stock market statement released on Friday evening, provided a detailed update on operations as it works to clear two of six zones in the well for testing.
Metal Tiger PLC (LON:MTR), the London Stock Exchange AIM-listed investor in strategic natural resource opportunities, announced that it has purchased, on market, 94,178 shares in MOD Resources Limited (ASX:MOD) at an average price of A$0.425 per share. Metal Tiger’s holding in MOD is 13,974,220 representing 6.1% of the issued share capital in MOD.
hVIVO PLC (LON:HVO) said it has been notified that Woodford Investment Management Ltd has increased its shareholding in the company to 28.00% from 27.94%.
6.30am: FTSE 100 headed for subdued start
The FTSE 100 looks set to make a subdued start to the week with trade worries dominating sentiment.
The spread betting firms are expecting the index of blue chip shares to rise 17 points to 7,294.70.
“China stocks were lower overnight as the trade concerns hung over the markets, and the data that was released over the weekend only puts further strain on the trading relationship between Beijing and Washington DC,” said David Madden of CMC Markets.
It was revealed that China’s trade surplus with the US grew to a record level in July.
This, according to analysts, will add weight to President Trump’s argument there is a trading imbalance between the two nations.
“In Mr Trump’s eye, China is taking advantage of the US, and it is up to him to redress the situation,” added Madden.
The Square Mile is braced for another busy week on the corporate news front with updates expected from Morrions Supermarkets (LON:MRW), Primark owner Associated British Foods (LON:ABF) and pub chain JD Wetherspoon (LON:JDW).
Around the markets
- Pound worth US$1.2914
- Gold changing hands for US$1,198.20 an ounce, down US$2.20
- Barrel of Brent crude costs US$77.17, up 34 cents
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