FTSE 100 closes lower
US stocks down
Brent crude on the rise ahead of US sanctions against Iran
FTSE 100 closed in the red, as the trade tariffs kick in; Wall Street stocks also floundering
The UK blue-chip index lost almost 32 points at 7,458.
The FTSE 250 was also lower - off over 102 points to 20,488.
"European equity markets are lower today on account of the continued trade tensions. The latest batch of tariffs from the US and China kick in today, and this has dampened the mood. The Chinese government confirmed they will not re-engage in trade talks while the US continues to threaten them with additional tariffs," said David Madden, at CMC Markets.
"There is a growing sense that the trade spat will drag on, and this is weighing on sentiment."
On Wall Street, the Dow Jones Industrial Index shed 182 points at 26,562, while the S&P 500 lost around 14.
Sky (LON:SKY) was top gainer on Footsie, with shares up 8.61% to 1,712.5p
Sky has recommended to its shareholders that they should accept Comcast’s $40bn takeover offer.
4pm: Equities fell back in London but the Footsie’s fall was cushioned somewhat by demand for the oil majors as oil prices strengthened.
The FTSE 100 was down 34 at 7,456 as investors fretted over the fall-out from deteriorating trade relations between the US and China.
BREAKING: Brent Crude Oil hits $81, highest price in four years.
— The Spectator Index (@spectatorindex) September 24, 2018
Index heavyweights BP PLC (LON:BP.) and Royal Dutch Shell PLC (LON:RDSB) were around 0.75%-1% higher as the price of Brent crude hovered on or around four-year highs, after OPEC indicated it would resist president Trump’s calls to cut the oil price.
Brent Crude Oil Rises More Than $1 To $79.89 Per Barrel As Market Tightens Ahead Of U.S. Sanctions Against Iran
— LiveSquawk (@LiveSquawk) September 24, 2018
Among the FTSE 250 oilers, Tullow Oil plc (LON:TLW) and Premier Oil PLC (LON:PMO) rose 3% and 2.4% respectively.
Elsewhere among the mid-caps, the profit warning from package tours operator Thomas Cook was casting a shadow over online holidays firm On the Beach Group PLC (LON:OTB), which fell 6% to 478.5p.
Power stations operator Drax Group PLC (LON:DRX) was another mid-cap on the slide after it confirmed it was in talks to buy some of Scottish Power’s assets.
The shares were down 1.6%.
1.45pm: UK stock remain in doldrums ahead of US open
With the S&P 500 tipped to open lower, there was little incentive for UK investors to pare the Footsie’s losses over lunch.
Spread betting quotes indicate the S&P 500 will open at around 2923.3, down 6.4 on Friday’s close, on trade war concerns.
Those same concerns have hung over the FTSE 100 all day; the blue-chip index was down 17 at 7,474.
“US equity markets may have had a bumper third quarter, but the final week could yet prove to be a rather more torrid affair,” suggested James Hughes at AXI trader.
“The rhetoric between Beijing and Washington continues to escalate as the latest round of tariffs on Chinese imports to the US kicks in, whilst hostile language from Donald Trump directed at the oil industry is also providing cause for concern. Even if Asian stocks are likely to bear the brunt of any downside from tariffs - and Hong Kong dropped sharply again today with many other markets closed for holidays - read across to Wall Street seems inevitable. As such, US index futures are currently eyeing a softer start to the week, notably reversing the trend we’ve observed in recent days,” Hughes said.
Ethereum regained position as the top 2nd cryptocurrency by market cap, overtaking Ripple by some $2 billion, with a market cap of $24.4 billion at press time. pic.twitter.com/I9EOEdnNYc
— Igor Khmel (@igorkhmel) September 24, 2018
Meanwhile, in the occasionally mysterious world of cryptocurrencies, bitcoin’s trading volume is at its lowest in a year while the Ripple cryptocurrency has taken centre-stage.
Bitcoin transaction volume's at the lowest in a year. pic.twitter.com/3kHJVcsYr2
— Ed van der Walt (@EdVanDerWalt) September 23, 2018
“Ripple is the underdog now and many believed that the whole project was nothing but a sham. The majority of the people I have spoken with said one thing: “There is no comparison between Ethereum and Ripple”. The general consensus has been that Ethereum is real - it is a solution for enterprises and we can see this becoming another form of a new internet but Ripple, on the other hand, is only using all the money it raised to create fake marketing and PR; however, the reality has changed for a short period of time when Ripple, the underdog, whopped Ethereum and secured the place of the second biggest coin by market cap,”commented Naeem Aslam of Think Markets, in a breathless contribution to Forbes magazine’s web site.
“It was short-lived as Ethereum has secured that spot once again. Having said that, it is Ripple which is still pulling the weight for the entire crypto-market - at least for now.
“The growth of Ripple has been astonishing over the last week. The cryptocurrency made a low of $0.25 on the 12th of September and it touched a proud $0.77 on the 23rd of September. That is a whopping 205% gain, moving from the September 12th low to its highest point yesterday,” Aslam said.
What Caused the Ripple (XRP) Price Surge? Announcement of xRapid's Release - Blockonomi (blog) https://t.co/osPJKA4Fkx pic.twitter.com/3ql7zJ9Bho
— Jay Dupuis (@Jay_Profits) September 24, 2018
12.05: Industrial trends survey puts a bit of oomph into the Footsie
The latest CBI Industrial Trends Survey shows that the growth in manufacturers’ output volumes growth slowed in the three months to September.
Output expanded in 10 out of 17 sub-sectors, with growth driven predominantly by the mechanical engineering, food, drink & tobacco, plastic products, and metal products sectors, the bosses’ pressure group revealed.
Manufacturers expect output growth to pick up over the next three months.
#Manufacturing order books weakened slightly, but remained above their long-run average, in September according to the latest #CBI_ITS https://t.co/hqYMjRyY0U pic.twitter.com/NbH5Rslztd
— CBI Economics (@CBI_Economics) September 24, 2018
The CBI’s monthly factory orders balance fell to a four-year low of -1 in September from +7 in August, while the gauge of export orders fell to its lowest level since October of last year.
“While manufacturing order books remain strong and output is still growing, Brexit uncertainty continues to cloud the outlook. Heightened fears of a ‘no deal’ Brexit scenario have prompted some firms to move publicly from contingency planning to action,” said Anna Leach, the CBI’s head of Economic Intelligence.
The FTSE 100 rallied in the final hour of the morning from 7,46 to 7,479 at midday, down 10 points on the day.
11.30: Footsie minds its own bidness
Merger, she wrote … quite often on Monday morning, with Randgold tying the knot with Barrick Gold and Comcast winning the battle for Sky PLC (LON:SKY).
Sky was the top riser, advancing 8.7% to 1,723p after Comcast bid 1,728p a share for control of the FTSE 100-listed firm, trumping a 1,567p-a-share offer by Fox.
Sky’s rise was still not enough to drag the Footsie into positive territory; the top-shares index was down 11 at 7,479, led lower by travel firm TUI AG (LON:TUI), which was down 2.4% at 1,390p after a profit warning from sector peer, Thomas Cook PLC (LON:TCG).
READ: Sky set to be acquired by Comcast for £30.6bn after Fox trumped in sealed-auctions bids
“The end of the battle brings closure to what has been a long period of uncertainty for investors lasting since December 2016,” noted Ian Forrest, at The Share Centre.
“However, the wait has been worth it for Sky shareholders given that at that time the shares were trading at just 755p and they’re now in line to receive more than double that amount. It was not especially surprising to see Comcast come out on top as Disney/Fox originally bid just £10.75 and clearly was not prepared to go much higher than its last bid of £14.00 before the auction process began,” Forrest suggested.
“Sky’s independent committee is recommending that shareholders accept the offer immediately to ensure that it is successful,” Forrest noted.
If the Sky’s the limit for happy shareholders in the pay-TV pioneer, Thomas Cook shareholders were brought to earth with a bump this morning by another profit warning from the travel firm.
“Shareholders in travel operator Thomas Cook got a nasty surprise this morning as its pre-close trading update was brought forward by a day so a stinker of a profit warning could be served up,” said Russ Mould, the investment director of AJ Bell.
“Combine this event with the news that chief financial officer Bill Scott is to stand down after less than a year in post – never a development likely to reassure the market – and you have the perfect recipe for a big sell-off,” Mould asserted.
“Weak sales for Thomas Cook’s package holidays were blamed on the summer heatwave.
“There has been more competition for those booking late getaways and this has had a negative impact on margins.
“Investors might legitimately ask why the firm wasn’t more conservative when it updated on trading at the end of July – surely it could have seen this coming.
“Worryingly the impact is continuing to be felt into Winter trading and all eyes now are likely to be on the guidance given for 2019 when the company reports its results for the 12 months to 30 September on 29 November,” Mould said.
Shares in the FTSE 250 firm were down by a fifth.
Thomas Cook dip in profits due to UK staying home in heatwave. Sad to think holiday firms who hike their prices up during holiday season get hit hard in the pocket. #abouttime
— Paul Selwood (@PaulSelwood5) September 24, 2018
10.00: FTSE 100 weighed down by miners - with Randgold a notable exception
Like a lot of us on a Monday morning, the FTSE 100 was taking time to get its motor running.
The FTSE 100 was down 10 at 7,476, with mining stocks the main party-poopers, after China called off trade talks with the USA.
“Hopes of renewed trade talks between the US and China have been thrown out, with China ruling out further talks amid supposed ‘blackmail’ by the US. For most countries Trump’s policy of forcing trade deals through the imposition of tariffs has worked, yet in China he is facing a substantial stumbling block that is proving a longer haul issue. While markets no doubt believe that the current trade concerns are unlikely to be the beginning of a long-term phenomenon, the latest breakdown in talks highlights the possibility that this will rumble on for some time yet,” suggested Joshua Mahony, a market analyst at spread-betting firm, IG Markets.
“With the US midterms ahead, Trump is unlikely to give any concessions at the risk of seeming less effective, thus lessening any hopes of a breakthrough in the coming months,” Mahony added.
Minerals plays such as Antofagasta PLC (LON:ANTO), Anglo American PLC (LON:AAL) and Glencore PLC (LON:GLEN) were down by around 1.5-2% but elsewhere in the mining sector Randgold Resources Ltd (LON:RRS) was going well with a 5.5% rise after the company’s directors agreed to a merger with Canada’s Barrick Gold Corp (NYSE:ABX).
READ: Randgold Resources and Barrick Gold confirm plans for US$18.3bn merger
The merged company will be called New Barrick Group with Barrick Gold holding a 66.5% stake and Randgold owning the rest of the shares; Randgold’s London listing will be cancelled.
8.50: Trade wars takes the edge off Merger Monday
The FTSE 100 nudged six points lower to 7,484.35 as trade worries kept a lid on the enthusiasm generated by Merger Monday.
Sky PLC (LON:SKY) shares were up 8.5% after Comcast won the bidding war for the satellite broadcaster, while Randgold Resources (LON:RRS) was up 4.5% after it gave the green light to a £14bn all-paper tie-up with rival Barrick Gold Corp (NYSE:ABX).
Outside the blue-chip index, Thomas Cook (LON:TCG) sounded the earnings alarm with the travel group blaming the hot weather for a lack of bookings. The stock slumped 14% and dragged larger rival TUI (LON:TUI) down 2.8%.
Outside the precious metals sector, the mainstream diggers gave up some of last week’s gains as the reality of the Sino-American trade war sank in with the implementation of the first round of US tariffs worth US$200bn.
The exploration groups were the beneficiary of a buoyant oil price, with Brent crude nudging above US$80 a barrel.
Experts believe US$100 oil could be on the cards for the first time since 2014 as the market braces for a loss of supply following White House sanctions on Iran.
Recovery stock Premier Oil (LON:PMO) was at the vanguard with a 3.5% rise, followed by Tullow Oil (LON:TLW) and Petrofac (LON:PFC).
Proactive news headlines:
Eurasia Mining PLC (LON:EUA) saw its shares jump in early trading Monday as its subsidiary and mine contractor agreed to progress with a second open pit at its West Kytlim mine in Russia while the project itself continued to exceed expectations.
Mosman Oil & Gas Ltd (LON:MSMN) has signed a new strategic alliance agreement with Baja Oil and Gas LLC, and, announced the acquisition of stakes in two new opportunities. It builds on the existing relationship between Mosman and Baja, the operator of the successful Stanley-1 well.
Instem PLC (LON:INS), the developer of software used by the life sciences industry to collate and transmit data, swung to a profit in the first half of the year.
Landore Resources Limited (LON:LND) has declared its summer drilling campaign at its Junior Lake property in Ontario a success after it successfully identified a second significant gold mineralised zone 400 metres along strike to the west of the existing BAM gold deposit.
Anglo African Oil & Gas PLC (LON:AAOG) told investors it has completed ahead of schedule the construction of its extended drill pad at the Tilapia field, in the Republic of the Congo. It will be used to drill the TLP-103C well, and, the rig is expected to be in place by next week. Drilling is anticipated to start in the week starting October 8.
Following the £9mln investment in Ceres Power Holdings PLC (LON:CWR) by Bosch, Wiechai Power has pumped in a further £1mln to maintain its stake in Ceres at 10%.
OptiBiotix Health PLC (LON:OPTI) has appointed City veteran Adam Reynolds to chair its spin-out business, ProBiotix Health ahead of a separate stock market listing. The new company will be home to cholesterol and blood pressure reducing bacteria strain, LPLDL.
MaxCyte Inc (LON:MXCT) expects to dose the first patients in its first-ever clinical trial before the end of this year.
With the SIMEC group backing it, sustainable energy projects developer SIMEC Atlantis Energy Limited (LON:SAE) said in its interim results statement, it is positioned for growth.
Minds + Machines Group Limited (LON:MMX) is in “advanced discussions” with the world’s leading Ethereum wallet to integrate its ‘.luxe’ domain into the network.
Strategic Minerals PLC (LON:SML) shares rose in early trading Monday after it identified three additional nickel sulphide prospects at its Hanns Camp prospect in Western Australia.
India-based power utility OPG Ventures PLC (LON:OPG) has written off its Gujarat power station after a series of ongoing disputes. Efforts in future will be directed toward the Chennai power plant and OPG’s growing solar capacity. Profits here for the year to March were £6.2mln while revenues rose by 3% to £140mln. The Gujarat write-down, however, meant a loss for the year of £100.9mln (£23.1mln profit).
Mining royalty specialist Anglo-Pacific Group PLC (LON:APF) has doubled its loan facility to US$60mln to give it more liquidity as it looks for acquisitions. Already this year, Anglo Pacific has acquired copper and iron ore royalty streams to add to its existing coal, vanadium and uranium interests, but is keen to add more.
Ironridge Resources Limited (LON:IRR) has identified a sixth “high-grade, coherent gold anomaly” at its Dorothe prospect in Chad, central Africa.
Block Energy PLC (LON:BLOE) has hired a rig deal for a multi-well programme planned across its asset base in Georgia. The arrangement with Georgian firm JSC Norio Oil Company provides unlimited and exclusive access to two A50 workover rigs and a ZJ40 drilling rig, along with access to a variety of other drilling and workover related equipment.
6.30am: Subdued start predicted
The FTSE 100 looks set to kick off the week in the red with trade worries once again driving sentiment.
The spread betting firms are predicting the index of blue-chip shares will open 14 points lower at 7,476.23.
Over the weekend, the Chinese declined an invitation to a fifth round of talks in Washington after the US pressed on with US$200bn of tariffs directed at the People’s Republic that become effective Monday.
Analysts believe the Chinese decision not to participate in negotiations may have been motivated by a wait-and-see approach to the upcoming mid-term elections in America.
Political pressure may pile up on President Donald Trump if the Democrats make significant headway on November 6, potentially strengthening Beijing’s hand.
Real test of sentiment
The real test of sentiment will come when Wall Street opens this afternoon, said stocks guru Jasper Lawler of CMC Markets.
“US stock market bulls will try to push further into record high territory.
“It has taken the Dow the best part of eight months to make a record high this year.
“The risk is that investors who have ridden out eight months of losses at the hopes of getting back to new highs start to book profits.”
On a quieter week for company news, Next (LON:NXT) will provide an insight into the pain being felt by high street and retail park-focused giants. After that, there is a raft of updates from utility stocks, led by Pennon (LON:PNN).
Around the Markets
- Pound worth US$1.3078
- Gold worth US$1,201.60 an ounce, up 30 cents
- Brent crude changing hands for US$71.69, up 91 cents
Business Headlines
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