FTSE 100 closes lower
Royal Mail biggest Footsie loser - again
US stocks subdued
House prices rise in September
FTSE 100 was in loserville all day and closed down over 21 points at 7,474 with Royal Mail Group (LON:RMG) delivering the sharpest fall, for the second day in a row.
Shares in the postal company slumped over 8% to 358p as the fall-out from yesterday's profit warning continued.
The letters and parcels group also saw 17% wiped from its value on Monday.
The firm has reported that trading conditions in the UK had been extremely challenging, leading its letters volumes to drop by 7% in its first half.
It has slashed its annual profit guidance to £500mln - £550mln - well below the £694mln it reported last year.
FTSE 250 also dropped over 136 points at 20,264.
On Wall Street, the Dow Jones Industrial Average is up around 123 points to 26,773 at the time of writing. The Nasdaq 100 is up over 33 at 7,678.
3.30pm: Miners provide some repsite
With 30 minutes left in the trading day, the FTSE 100 is still in the red, although it has at least recovered some of its earlier losses.
Speculation that Donald Trump is gearing up for another trade war against the EU and China has knocked sentiment in the City and around the world, while comments from Italy’s economics spokesman encouraging the country to drop the euro haven’t helped.
The FTSE 100 is currently down 23.2 points, or 0.3%, to 7,472.5.
Royal Mail PLC (LON:RMG), which rushed out a profit warning this time yesterday, is the biggest drag, down 8.5% to 360.6p. The letters and parcels group also saw 17% wiped from its value on Monday.
Ferguson Plc (LON:FERG), the plumbing and heating products group, isn’t far behind. Shares have gained almost 20% in recent months, so investors have used today’s solid results and dividend hike to crystallise some of their gains. The stock is down 6.2% to 6,141p.
Just Eat PLC (LON:JE.) rounds out the top three after its takeaway platform rival Deliveroo reported a surge in sales and investment yesterday.
Given that Uber is also reportedly interested in taking out Deliveroo, the market is getting a little twitchy about how long Just Eat can maintain its stranglehold on the industry. Shares fell 3.5% to 644.4p.
A smattering of green in the mining sector helped to slightly lift the FTSE 100 index from its mid-morning lull.
Fresnillo PLC (LON:FRES) (up 2.3% to 826p), Randgold Resources Ltd (LON:RRS) (up 1.5% to 5,500p) and BHP Billiton plc (LON:BLT) (up 1.3% to 1,695p) all recorded solid gains in the afternoon session.
3pm: Subdued start on Wall Street
It has been a subdued start to the trading day over on Wall Street, with stocks under pressure from European political uncertainty and reports the Donald Trump could be getting ready for a fresh trade war with China.
The Dow Jones Industrial Average index is has edged 9.5 points higher to 26,660, while the broader S&P 500 is flat at 2,923.5.
As for the tech-heavy Nasdaq, that’s down 16.8 points, or 0.2%, to 8,020.9.
2.30pm: European markets hit by Italy fears
It’s not just the Footsie suffering today, European markets are down too following anti-euro comments from Italy’s economics spokesman.
Claudio Borghi said in a radio interview that most of the country’s problems could be solved by having its own currency.
The comments sent Italian ten-year bonds to four-year highs, although Borghi and Prime Minister Giuseppe Conte later came out and said the euro was “unrenounceable”.
Still, the damage was done, with the German and French stock markets falling 0.6%.
Italy 10yr #bond yield rises to 3.40% as League Economic head Claudio Borghi says #Italy would solve most of its problems if it had its own currency...oh no back to Italexit...just what nervous investors are looking for.
— Karen Tso (@cnbcKaren) October 2, 2018
2pm: Tory divisions hits pound
The pound has a hit a three-week low, with sterling suffering from the growing divisions within the Conservative party.
At the Tory Party Conference in Birmingham, Boris Johnson has given a speech which many have said is a “blatant” leadership pitch, undermining Prime Minister Theresa May.
The pound has fallen to €1.124 against the euro and $1.297 against the dollar.
Corbyn, housing, praise for Thatcher, this is what we would euphemistically call a ‘wide ranging speech’ - a blatant pitch for leadership by Johnson, right in heart of conference where May meant to be in charge
— Laura Kuenssberg (@bbclaurak) October 2, 2018
1.15pm: Ferguson the top faller
The FTSE 100 has been unable to take advantage of a weak pound, which has slipped on the back of a Brexit-concerned drop in UK construction growth.
Normally when the pound is in the red, the blue-chips are higher because of the boost it gives to their overseas earnings.
But the index is down 23.5 points, or 0.3%, to 7,471.9 – compounding Monday’s losses.
Ferguson Plc (LON:FERG) is the biggest blue-chip faller, down 6.4% to 6,123p as investors take profits following a solid set of results.
Royal Mail PLC (LON:RMG) isn’t far behind, with Monday’s profit warning still weighing heavy and pushing the stock 5.3% lower to 371.6p.
Tesco PLC (LON:TSCO) is also in the red, down 1.4% to 233p on reports that it is facing another big equal pay claim (more below).
Reflecting the risk-off approach today, it’s the defensive stocks that are among the handful of risers, with SSE plc (LON:SSE) up 1.2% to 1,142p, United Utilities PLC (LON:UU.) up 1.1% to 712.2p and Imperial Brands PLC (LON:IMB) climbing 1.1% also to 2,672p.
1pm: US shares to open in the red
US shares are seen starting lower on Tuesday as traders continue to fret about global instability, despite the mood being bolstered yesterday by the Canada/ US trade deal.
AJ Bell investment director in London Russ Mould reckons Donald Trump, the man who so often dictates the markets’ movements, is the reason once again.
"Just as one market issue gets solved, with progress towards a new trade deal between the US, Mexico and Canada, so President Trump reopens old wounds with China and the EU," he said.
James Hughes at Axitrader added: "There’s a definite risk-off sentiment emerging right now, with traders seemingly struggling to find much upside."
On Wall Street, stocks finished mixed yesterday, with the Dow Jones Industrial Average adding 192 points to stand at 26,651, while the tech heavy Nasdaq lost around nine points at 8,037.
In futures trade, the S&P 500 is down nearly nine points; the Nasdaq shed over 33 points, while the Dow Jones is down 96 points.
12.50pm: Tesco ‘facing multi-million-pound equal pay claim’
Tesco PLC (LON:TSCO) shares are 1.3% down today on a report in the Retail Gazette that it is facing a multi-million-pound equal pay claim.
Campaigners from the Tesco Action Group have accused the supermarket giant of paying shopworkers – predominantly women – up to £3 less per hour than warehouse and distribution centre workers who are mostly men.
More than 8,000 workers have reportedly signed up to pursue the claims, which Tesco has denied.
A separate claim by law firm Leigh Day demanding up to £4bn in back pay for affected workers was lodged earlier this year. It is unclear if the two lawsuits are linked.
12.30pm: Amazon ups minimum wage in UK and US
Amazon Inc (NASDAQ:AMZN) staff in the UK and US are to get a wage rise.
The minimum wage in the London area is going up to £10.50 an hour, while workers in other parts of the UK will get £9.50.
Over in the States, the ecommerce giant is raising the minimum wage to US$15 per hour.
The rises will apply to all employees including full-time, part-time, temporary and seasonal employees, starting on 1 November.
The new Amazon £10.50 minimum wage for the London area and £9.50 for the rest of the UK will benefit more than 37,000 FT, PT, temp (including those hired by agencies), & seasonal employees https://t.co/7YezPw27Ae
— AmazonNewsUK (@AmazonNewsUK) October 2, 2018
12pm: Mike Ashley sacks House of Fraser management
Mike Ashley has moved swiftly to sack the bosses of House of Fraser; the troubled department store he snapped up in August for £90mln.
“Following the collapse of House of Fraser on August 10 2018, and subsequent calls for an investigation into the circumstances of that collapse, the company today announces that we have dismissed the former directors and senior management of House of Fraser,” Ashley’s Sports Direct said in a statement late on Monday.
Those departing include chief executive Alex Williamson, although it is not clear who will replace him and his team.
Wonder if this "out with the old" approach will work as well for House of Fraser as it did for Homebase and Bunnings. https://t.co/7a47sFAZIi
— Edward Chester (@Ed_Chester) October 2, 2018
11.30am: Construction growth slows unexpectedly
Construction growth unexpectedly slowed in September, according to the latest industry data.
The Markit/CIPS UK Construction purchasing managers' index (PMI) fell to 52.1 last month, down from 52.9 in August. Economists had been expecting a reading of 53.1.
A reading above 50 indicates growth.
“UK construction firms experienced softer output growth during September, with housebuilding, commercial and civil engineering all losing momentum,” said IHS Markit’s Tina Moore.
“A lack of new work to replace completed projects meant that civil engineering saw an overall decline in activity for the second month running and remained the main laggard.”
It was better news for the manufacturing industry, which rose to 53.8 in September from 53.0 a month earlier.
11.10am: Few risers to pick out
As mentioned below, the FTSE 100 is currently down 43.7 points to 7,451.9, with traders seemingly spooked by the threat of more global political and economic instability.
The majority of the risers were defensive stocks – those which people tend to buy into when they aren’t feeling too risky.
Water and energy suppliers such as SSE plc (LON:SSE) (up 0.9% to 1,137.5p) and United Utilities Group PLC (LON:UU.) (up 0.5% to 708.6p) both edged higher, as did tobacco firm Imperial Brands PLC (LON:IMB) (up 0.6% to 2,657p), which also gets a nice kick from a weaker pound.
Royal Mail PLC (LON:RMG) is the day’s biggest faller so far, down almost 10% to 353.5p, on the back of yesterday afternoon’s shock profit warning.
Profit taking is hitting Ferguson Plc (LON:FERG) (down 5% to 6,218p), after the plumbing and heating products group posted a decent set of full-year results and hiked its dividend.
Just Eat PLC (LON:JE.) rounds out the top three losers, down 3.7% to 643.2p, with investors fretting over Deliveroo’s expansion after the rival takeaway ordering platform revealed it spent £100mln developing its business last year.
There are also the recent reports that Uber, and possibly Amazon, is interested in buying Deliveroo.
10.35am: Trump weighing on global markets
Despite a weaker pound – which should boost the FTSE 100 – the UK blue-chip index has shed almost 50 points this morning to 7,450.
AJ Bell investment director Russ Mould reckons Donald Trump, the man who so often dictates the markets’ movements, is the reason once again.
“Just as one market issue gets solved, with progress towards a new trade deal between the US, Mexico and Canada, so President Trump reopens old wounds with China and the EU.
This led to weakness in Asian markets overnight and, combined with ongoing ructions over Italy, means the FTSE 100 is falling despite a weaker pound.”
He explains: “A lower pound helps increase the relative value of overseas earnings which account for around 70% of the total generated by FTSE 100 constituents.”
10.10am: Profit taking hits Ferguson’s share price
Ferguson Plc (LON:FERG), the plumbing products retailer which trades as Wolseley in the UK, has seen its shares fall despite posting what looked like a solid set of full-year numbers.
The FTSE 100 company said its ongoing trading profit rose 14.7% to US$1.51bln in the year to the end of July on revenue 7.5% higher at US$20.75bln.
Ferguson, which has returned over US$2bln to shareholders during the year through dividends and buybacks, hiked the final dividend by 21% to 189.3 cents and re-based future dividends by 10%.
But the stock fell 4.6% to 6,232p on Tuesday Morning, with commentators putting that down to profit taking given that shares have gained 18% over the past six months.
9.40am: England’s run at the World Cup was not good news for Revolution Bars
Revolution Bars Group PLC (LON:RBG) swung to an operating loss for the year as sales were dented by extremes in the weather and the World Cup .
The UK bar operator posted an operating loss of £3.0mln for the year to June 30 (2017: profit of £5.5mln) due to exceptional charges of £11.1mln related to onerous lease provisions, asset impairments and the cost of management changes.
Customers stayed in during the colder months earlier in the year, while they then opted for beer gardens and venues playing the World Cup during the warmer months.
In another drag on the company’s results, Conviviality – owner of Revolution’s principal drinks supplier Matthew Clark – entered administration in April. Shares are down 2.2% to 122.3p.
Poor trading at Revolution Bars Group will encourage Deltic to keep knocking at the door. Wonder if Stonegate might renew its interest?
— Dominic Walsh (@walshdominic) October 2, 2018
9.15am: Regional breakdown of house prices
UK house prices rose 2.0% in the year to September according to Nationwide. The regional breakdown shows the sharpest house price falls were in the North East (-1.7%) & London (-0.7).#ukhousing #housing #Londonhttps://t.co/zaYHGkD1PO pic.twitter.com/X0nKHz0JU1
— Noble Francis (@NobleFrancis) October 2, 2018
9am: UK house prices rise 2% in September
UK house prices rose by a “steady” 2% in September compared with a year earlier, according to the Nationwide House Price Index.
The average price of a UK home is now £214,922.
London house prices fell for the fifth quarter in a row in annual terms, while the north east was the worst performer, with values dropping 1.7%.
Yorkshire and Humberside was the standout performer, with prices 5.8% year-on-year.
Looking ahead, Robert Gardner, Nationwide's chief economist, said: "Much will depend on how broader economic conditions evolve, especially in the labour market, but also with respect to interest rates.
“Subdued economic activity and ongoing pressure on household budgets is likely to continue to exert a modest drag on housing market activity and house price growth this year, though borrowing costs are likely to remain low.
“Overall, we continue to expect house prices to rise by around 1% over the course of 2018.”
8.40am: Royal Mail weighs on Footsie
The FTSE 100 opened in negative territory as political uncertainty replaced trade tensions in the forefront of the minds of the City’s drivers of sentiment.
With worries over Brexit amplified by the Tory party conference, and the jostling to replace Theresa May if she is ejected, the index of blue-chip shares fell 17 points to 7,478.70.
The morning’s biggest mover among the London’s elite was building supplies group Ferguson (LON:FERG), off 5.2% following its interim results.
The figures appeared solid enough with profit-taking cited for the mini sell-off.
Investors who bought in six months have seen the value of the business grow by around a quarter.
Royal Mail (LON:RMG), which surprised the market by sounding the earnings alarm mid-afternoon Monday, took a secondary kicking as it drifted 3%.
Matters weren’t helped by a downgrade by heavyweight broker JP Morgan Cazenove, which flipped its recommendation to ‘underweight’.
Liberum repeated its ‘sell’, but chopped its target price to 215p from 450p.
“We have been bearish on the outlook for productivity improvements, but yesterday's profit warning was shocking in its scale and timing,” analyst Gerald Khoo said.
6.45am: FTSE 100 set for back foot start
The FTSE 100 is expected to start Tuesday in the red, with no respite likely to be found in last night’s stronger session over in New York.
According to CFD and spreadbetting firm IG Markets the London index is due to lose nearly 30 points, it calls the spread at 7,474 to 7,478 with just over an hour to go until the open.
High profile profit warnings, namely from Royal Mail and Ryanair, were a key feature of Monday’s trading, and, whilst some de-escalation of some international trade tensions boosted US stock markets, economic stats out of Asia subsequently soured sentiments.
Amid the recent litany of new trade tariffs manufacturing centres in China, Europe and the United States have seen activity levels wane, according to latest statistics.
London Capital Group analyst Jasper Lawler highlighted that the easing of international trade tensions has dialed back one of the biggest risks for equity markets heading into the fourth quarter and that should open more interest for riskier assets.
“Yet optimism from the US session failed to transfer over to Asian markets overnight,” Lawler said.
He added: “Whilst some progress has been made in trade negotiations, noticeable damage has been done. A quick resolution to US – Sino trade tensions is essential to protect the global economy, where risks have begun to materialise.
“However, any deal between the two powers still looks a long way off.”
Over in New York, the Dow Jones added 192 points or 0.73% to close Monday’s session at 26,651 while the S&P 500 gained 0.36% to 2,924 though the Nasdaq was marked in red, down 0.11%.
In Asia, Japan’s Nikkei edged 0.14% higher to 24,281 while Hong Kong’s Hang Seng reopened, following Monday’s public holiday, with a 2% decline down to 27,218 – the Shanghai Composite remains closed.
Around the markets
Pound: US$1.3018, down 0.18%
Gold: US$1,192.57 an ounce, up 0.46%
Brent crude: US$85.07 a barrel, up 2.75%
Bitcoin: US$6,588, up 0.15%
Significant announcements due:
Finals: Ferguson Plc (LON:FERG), Avacta Group Plc (LON:AVCT), Revolution Bars PLC (LON:RBG), SCS Group PLC (LON:SCS)
Interims: Inspiration Healthcare Group PLC
Traffic figures: Wizz Air PLC (LON:WIZZ)
Economic data: UK construction PMI; Fed chair Jerome Powell speech
Proactive news headlines
Alliance Pharma plc (LON:APH) has launched the UK’s only prescription treatment for vomiting and nausea during pregnancy.
Avacta Group Plc (LON:AVCT) says it has made “significant progress” in its partnering discussions and expects to deliver at least one “substantial” licensing deal before its Affimer technology reaches the clinic.
The order book for Obtala Ltd’s (LON:OBT) trading business remains very healthy at more than US$10mln, the company said in a third quarter update.
Caledonia Mining Corporation PLC (LON:CMCL) has declared a quarterly dividend of US$0.06875 per share. The shares will go ex-dividend on 11 October, and the record date is 12 October.
Tekcapital PLC (LON:TEK) has raised US$1.1mln through a share placing to fund the commercialisation of its portfolio, while also announcing the appointment of a chairman to the board of one of its companies.
Julia Ralston has officially taken up her position as an executive director of Cello Health plc (LON:CLL), the communications and consulting group. Formerly chief executive of the business’ US arm, she joined the company in 2011 following the acquisition of MedErgy. “Julia's presence on the board will ensure appropriate levels of governance and control around Cello's expanding US business,” the company said.
Blockchain and crypto currency investor KR1 Plc (AQSE:KR1) has sold out of two of its investments at healthy prices. The last of KR1’s holding in Golem (GNT) was sold for 22c per token, raising US$134,000.
Bacanora Lithium PLC (LON:BCN) has revealed the findings of an external report commissioned to provide an analysis of the significant beneficial holders of the company's shares as at 11 September 2018. The largest holder is M&G, with 10% of the shares, followed by Blackrock, with 9.8%. Then comes Hanwa with 9.2%, Cadence Minerals and Igneous with 7.4% each.
AfriTin Mining Limited (LON:ATM) is to buy two more tin and tantalum licences to expand its footprint in Namibia.
App management platform appScatter Group PLC has appointed Andrew Bushby as a non-executive director. He brings 25 years of experience in the industry working previously for Oracle Corporation, Sun Microsystems and Novell.
Block Energy Plc (LON:BLOE) has appointed Christopher Brown as a non-executive director to replace Tim Parson. Brown is a consultant with nearly 40 years' experience across the international upstream oil and gas sector.
Busines news headlines
Ashley sacks entire House of Fraser management team – BBC News
Aircraft seized and passengers warned as low-cost airline Primera Air ceases operations – Sky News
Tesla shares rally sharply on Musk settlement – Financial Times
Oil climbs above $85 a barrel as funds wager on Iran sanctions – Financial Times
Deliveroo losses deepen as investment grows – BBC News
Easyjet founder sues Netflix over comedy show Easy – Independent
Pfizer to replace longtime CEO Read with veteran Bourla – Reuters
Lavazza swallows Mars Inc coffee business for around $650 million – Reuters
PwC chairman rejects calls to break up Big Four – Financial Times