FTSE 100 closes higher
Pound volatile amid Brexit uncertainty
Tobacco giants shares light up
Nasdaq lower
FTSE 100 joined other European indices to close higher on Wednesday, boosted by the state of sterling, which saw turbulent trading.
The UK blue-chip index closed up nearly 40 points at 7,313, with miners and tobacco firms leading the way, while the FTSE 250 added over 154 at 20,380.
Fiona Cincotta, analyst at City Index, said: "Having started the day with its head barely above water the FTSE performed a U-turn and rallied nearly 0.67% during the afternoon trading, tracking US markets higher and benefiting from a renewed weakening of the pound."
On Wall Street stocks are mixed at the time of writing, with the Dow Jones Industrial Average up 97 points and the Nasdaq down around 31 points.
It comes ahead of Apple's launch of the latest iPhone, though shares in the tech titan are down 0.74% at US$222.19 following a reported leak from Apple’s website.
On Footsie, British American Tobacco (LON:BATS) fired up almost 6% at 3,763p, while Imperial Brands (LON:IMB) added 3.18% to 2,691.5p.
It came as the as the US Food and Drug Administration threatened to pull certain electronic cigarettes from the shelves if manufacturers did not address concerns around their use by children.
3.40pm: Oil stocks boosted by drop in weekly US crude inventories
Oil prices rose after official data showed a drop in weekly US crude inventories.
The Energy Information Administration said crude inventories fell by 5.3 million barrels last week to 396.2 million barrels.
West Texas Intermediate crude jumped 1.7% to US$70.48 per barrel and Brent crude increased 0.9% to US$79.78 per barrel.
#WeeklyPetroleumStatusReport for week ending 9/07/18 posted https://t.co/0TaZpWoq2s #oil #gasoline #diesel #heatingoil #propane
— EIA (@EIAgov) 12 September 2018
Shares in oil and gas stocks, including BP PLC (LON:BP), Royal Dutch Shell PLC (LON:RDSB) and Tullow Oil plc (LON:TLW), are sitting higher.
3.00pm: Sports Direct 'discussed House of Fraser-Debenhams merger'
A Sports Direct director has rowed back on comments he made about the retailer considering a merger between House of Fraser and Debenhams.
Sports Direct bought House of Fraser last month after the department store went into administration. The athleticwear chain also owns 29.7% of Debenhams.
Simon Bentley, a non-executive director of Sports Direct, had told reporters on the day of the company’s AGM that the board had discussed a potential merger between the two struggling department stores.
But he later clarified his remarks to say: "I was asked a general question about whether or not we discuss our strategic investments, and in particular Debenhams, to which I replied in the positive.
"I made no mention of any merger between House of Fraser and Debenhams, nor did I intend my answer to infer that."
At the AGM, 90.2% of investors voted for the re-election of Mike Ashley as chief executive despite calls from shareholder advisory groups to oust him.
The advisory groups had also urged shareholders to vote against the reappointment of chairman Keith Hellawell but he stepped down ahead of the AGM.
Shares in Sports Direct are up 3.3% to 352p.
2.30pm: US stocks open flat
US stocks have opened broadly flat as concerns about a trade war continue to weigh.
The Dow Jones Industrial Average rose 23 points to 25,993, the S&P 500 increased 0.9 points to 2,888 and the Nasdaq shed 9 points to 7,962.
Traders are exercising caution amid a US-China trade dispute and ahead of the Federal Reserve’s Beige Book later today and US consumer price inflation data on Thursday.
1.40pm: Producer price index falls for first time in 18 months
Wholesale prices for US goods and services dropped in August for the first time since February 2017, the Labor Department has revealed.
US PPI Final Demand (Y/Y) Aug: 2.8% (est 3.2% ; prev 3.3%)
US PPI Final Demand (M/M) Aug: -0.1% (est 0.2% ; prev 0.0%)
— LiveSquawk (@LiveSquawk) 12 September 2018
The producer price index (PPI) declined 0.1% last month, compared to market expectations for a 0.2% rise and June’s flat reading, reflecting lower margins for services such as retail and transportation.
Compared to a year ago, PPI increased 2.8% against forecasts of 3.2%, easing back from the prior month’s 3.3% rise.
US stock futures are now all in the red with the Dow Jones down 22 points, the S&P down 2 points the Nasdaq down 8 points.
12.40pm: US stock futures mixed
US stock futures are mixed as investors weigh growing trade tensions between the US and China and look ahead to consumer price inflation data on Thursday.
Dow Jones Industrial Average futures fell 15 points to 25,986, S&P 500 futures dropped 2 points to 2,887 and Nasdaq futures edged up 3 points to 7,515.
Traders are awaiting producer-price index at 1.30pm BST and the Federal Reserve’s Beige Book report at 6pm ahead of consumer price inflation figures.
Company-wise Apple Inc (NASDAQ:AAPL) shares may move when it launches its new iPhone models later today in Cupertino.
Join us 12 September at 6:00 pm to watch the #AppleEvent live on Twitter. Tap ❤️ below and we’ll send you updates on event day. pic.twitter.com/ufxuu3kt9H
— Apple (@Apple) 10 September 2018
12.00pm: FTSE 100 recovers as pound weakens
The FTSE 100 rose 5 points to 7,278 at the midday mark, recovering from a mid-morning slump, as the pound weakened on reports of a potential leadership challenge.
Tory MPs have reportedly discussed ways to oust Prime Minister Theresa May at a private meeting of hardline Brexiters, sending the pound down 0.29% versus the dollar to US$1.2995.
Meanwhile, worries about US-China trade tensions continue to weigh on investor sentiment. China is reportedly told the World Trade Organization (WTO) on Tuesday it wanted to impose US$7bn a year in sanctions on the US in response to Washington’s non-compliance with a ruling in a dispute over US dumping duties.
“With China involving the WTO in the dispute and the US preparing more tariffs – and threatening an eventual tariff on all imports – it doesn’t appear this threat is going away any time soon and is something we should just get used to,” said Oanda’s Craig Erlam.
On the company front, SSE shares are down 7.6% after a profit warning, dragging sector peers Centrica, Severn Trent and National Grid lower.
Rolls-Royce slumped 1.7% after an in-flight shutdown of one of its engines on an Airbus SE A350 jet during an Iberia flight from New York to Madrid raised concerns that the model may be the latest affected by a design defect.
Shares in Taylor Wimpey and Bovis Homes received a boost with shares both up 1% after Barclays upgraded the housebuilders.
Tesco PLC (LON:TSCO) is on the front foot with shares up 1.3% following reports it will unveil its new discount chain Jack’s next week in a bid to better compete against Aldi and Lidl.
Sports Direct shares gained 3.4% after under-fire chairman Keith Hellawell stepped down and as the company said it expects earnings growth of up to 15%.
11.30am: Pound loses ground against the dollar amid Brexit uncertainty
Tory MPs have reportedly discussed ways to oust Prime Minister Theresa May at a private meeting of those against her Chequers plan for Brexit.
More than 40 hardline Brexiteers attended a gathering of the European Research Group on Tuesday night when Conservative MPs talked about the timing of a possible confidence vote in the prime minister if she did not shelve her Brexit plan, the Guardian reported, citing sources.
News of a possible leadership challenge saw the pound pull back 0.19% versus the dollar to US$1.3008, reversing earlier gains after reports the EU and the UK were closer to reaching a Brexit deal.
Meanwhile, European Commission president Jean-Claude Juncker said in his State of the Union address to the European Parliament on Wednesday that Brussels will work "day and night" to reach a Brexit deal.
“The constant flow of Brexit speculation and reports are continuing to find their way into the media, something that is unlikely to change as we get ever closer to the deadline with a deal,” said Craig Erlam, senior market analyst at Oanda.
“Over the last couple of weeks that’s resulted in a lot of volatility for the pound with traders getting very excited at the release of anything that indicates a move away from the no deal scenario.”
10.45am: Sports Direct chairman steps down
Sports Direct International PLC (LON:SPD) chairman Keith Hellawell has decided to retire from the role ahead of the company's AGM later today when he was expected to face investor revolt.
Three shareholder advisory groups had urged investors to vote against the re-election of Hellawell as chairman and Mike Ashley as chief executive over concerns about corporate governance and poor working practices.
The retailer said Hellawell, who has previously survived former attempts to oust him, will not be putting his name forward for re-election.
Shares in Sports Direct rose 3.9% to 354p.
10.10am: Remortgaging has strongest July in a decade ahead of rate hike
Remortgage approvals jumped in July as homeowners locked in fixed-rate deals ahead of the latest Bank of England interest rate rise, data from UK Finance shows.
The number of remortgages completed in the month rose 23.1% year-on-year to 46,900 at a value of £8.7bn, up 26.1% on the previous year.
Jackie Bennett, Director of Mortgages at UK Finance said the remortgaging market saw its strongest July in over a decade, as homeowners pre-empted the latest Bank of England rate rise in August.
"There was also considerable growth in remortgaging in the buy-to-let sector, showing that while recent tax and regulatory changes are impacting on new purchases, many existing landlords remain in the market," Bennett said.
The residential remortgaging market saw its strongest July in over a decade, today’s Mortgage Trends Update for July 2018 reveals: https://t.co/ib6nqsHyoP pic.twitter.com/4drE2zH8Or
— UK Finance (@UKFtweets) 12 September 2018
First-time buyer mortgages came to 31,400 July, up 1% on the prior year, but the value of these mortgages rose 5.9% to £5.4bn as house prices grew.
"The number of first-time buyers has returned to modest year-on-year growth. However, affordability remains a challenge for many prospective borrowers, underlining the importance of clarity over the future of schemes such as Help to Buy," Bennett said.
Suchit Sethi, the founder of cashbackremortgages.co.uk, said it was "important to consider the fact that new homeowner mortgages are down again compared to last year, painting a concerning picture of the state of the UK housing market”.
“Buy-to-let mortgages are also down, further evidence that the government’s tax changes have led to the sledgehammering of the BTL industry - arguably perpetuating the housing crisis at the worst possible time,” Sethi said.
“The crucial question is will we see any kind of recovery in the housing market before the country gets real clarity over Brexit? Seeing as that might not come until late March, the situation could be grave.”
9.40am: Blaming the weather a 'go-to excuse' for companies, says analyst
SSE plc (LON:SSE) is the biggest faller on the FTSE 100 this morning after warning that profits would be £190mln lower than expected due to the warm weather.
Russ Mould, investment director at AJ Bell, said it was rare to see a profit warning from a utility company as they are meant to have fairly predictable income streams.
He added that blaming the weather is increasingly a go-to excuse for many companies.
“For example, JD Sports yesterday said its outdoor businesses had a tough time earlier this year because of the hot and dry weather – it prefers cold and rainy," he said.
“Pets at Home has previously moaned about mild weather causing a late start to the flea season so its earnings didn’t spring to life; and Bisto-owner Premier Foods blamed warm weather for its sales problems two years ago, despite the fact we all like gravy on our Sunday roast come rain or shine.
“However, none of these excuses is as bad as US sandwich chain Cosi which previously blamed weak sales on the Pope visiting the East Coast of America.”
SSE said still and warm weather affected output from its wind farms and hydro-electric stations while high gas prices also carved into profits.
”You could argue that is a reasonable explanation for missing earnings expectations, but shareholders may be furious with the company given how weak its share price has already been since May. It gets another bashing on today’s profit warning which is also connected to the looming sector price cap,” Mould said.
“Ultimately it is a good reminder that even seemingly defensive companies still have operational and regulatory risks.”
8.40am: Footsie subdued
Continued trade worries put a lid on the FTSE 100 with the blue-chip stocks index adding just 6 points to move to 7,279.84.
“Tensions have ticked up in light of the announcement from China that it will ask the World Trade Organisation’s permission to impose sanctions on the US next week,” explained David Madden of CMC Markets.
Beijing is claiming the US didn’t comply with a ruling on dumping duties in 2013.
It is also said to be dragging its feet over licensing US firms operating inside the People’s Republic.
“Relations between the US and China were strained in advance of this news, and they are likely to deteriorate further,” added CMC’s Madden.
On the market, the big move (downwards) was from energy firm SSE (LON:SSE), which warned the warm weather and price cap will blow a hole in profits.
The stock fell 8% in early deals, dragging with it competitors Centrica (LON:CNA), Severn Trent (LON:SVT) and United Utilities (LON:UU).
Builders Taylor Wimpey (LON:TW. and Bovis (LON:BVS) received boosts of 1.4% and 2.2% respectively after being upgraded by Barclays Capital.
Dunelm (LON:DNLM) topped the second-tier index after it outlined plans to simplify the business.
Proactive news headlines:
Near-surface drill results from Erris Resources plc’s (LON:ERIS) Abbeytown project in County Sligo, Ireland have once again confirmed the presence of high-grade zinc mineralisation.
Research to be published in a leading scientific journal reveals how Clever-1 is important in the process of humoral immunity. Clever-1 is a cell surface receptor shown to control a certain form of immunity. Faron Pharma Oy (LON:FARN) is developing a fully human anti-Clever-1 antibody called Clevegen. It said the efficacy of anti-Clever-1 antibodies in experimental models supported the development of its potential cancer immunotherapy, which is due to enter the clinic later this year.
It was a six month period that began with disappointment for Chariot Oil & Gas Limited (LON:CHAR), but, there’s presently a degree of positivity and optimism with the next ‘high impact’ possibility due to start before the year’s end. Time will tell whether 2018 will be a tale of two halves, and two exploration outcomes.
ReNeuron Group Plc (LON:RENE) will tell investors at its annual meeting that a phase IIb clinical trial of its potentially breakthrough CTX cell treatment for stroke will soon get underway in the US. The first of a group of 110 patients taking part in PICSE III will be enrolled ‘shortly’.
Echo Energy Plc (LON:ECHO) chief executive Fiona MacAulay has told investors she expects the level of activity seen in the first half of the year to continue throughout the rest of the year. In the first half, Echo completed its farm-in deal to secure assets in Argentina and quickly got to work.
Ormonde Mining plc (LON:ORM) has achieved a “major milestone” in the development of its Barruecopardo tungsten project in Spain. In an update for the project, the AIM-listed mining firm said during August commissioning had commenced for the turnkey crush and screen plant, with the first trial of waste rock through the primary crusher having been carried out successfully.
Kazera Global PLC (LON:KZG) said channel sampling has commenced at the Homestead location of the Namibia Tantalite Investment Mine (NTI), with a number of core samples being prepared for assay.
Kore Potash PLC (LON:KP2) has received approval to build a transhipment facility eleven miles offshore from the port at Tchiboula in the Republic of Congo. The permit is for a jetty to transfer potash shipped to the port from its Kola project onto large ships and also covers the Dougou and Dougou extension deposits.
Bluejay Mining PLC (LON:JAY) has updated investors on its bulk sampling programme at the Dundas project in Greenland, where the operation has now stockpiled some 10,000 tonnes of ilmenite containing material. Specifically, in the statement, the company said it has excavated, screened and stockpiled the material. The run-of-mine grade is above 40% ilmenite, and, it is now awaiting delivery instructions for processing and/or testing by interested parties.
6.30am: Subdued start predicted
The FTSE 100 looks set to make a subdued start to proceedings with trade worries keeping the lid on the London market.
The index of blue-chip shares is expeced to nudge seven points higher to 7,280.54 early on, according to the spread betting firms.
Overnight the index measuring the strength of Asian equities fell to a 14-month low as amid concerns over an escalation of hostilities between China and the US.
The former has told the World Trade Organisation it wants to impose US$7bn a year in sanctions on America in a dispute over dumping duties.
Meanwhile, the rhetoric from the Trump camp has been characteristically robust/hostile.
“In thinking of the prospects of the trade war, it is important to distinguish the journey from the destination. The journey will remain very noisy and unsettling. But I suspect the destination will be less so,” Mohamed El-Erian, chief economic advisor at Allianz, told Reuters.
Updates from the soft furnishings retailer Dunelm (LON:DNLM) and the builder Galiford Try (LON:GFRD) top Wednesday’s corporate news agenda.
Around the markets
- Pound worth US$1.3013
- Gold worth US$1,198.80 an ounce, down US$3.40
- Brent crude US$69.87 a barrel, up 62 cents
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