FTSE 100 closes higher
ITV rules out Endemol bid
Tesco top Footsie loser
Dow hits fresh all-time high
Mid-cap cousin FTSE 250 also closed in positive territory - up around 35 points to stand at 20,300.
Putting aside the politics and the UK's Dancing Queen PM for a moment to turn to stock markets, Footsie finished the day at 7,510 - up nearly 36 points, or 0.48%.
Meanwhile, in the US, the Dow Jones Industrial Average is surging, up around 133 points at 26,908 and heading for 27,000, while the S&P 500 is up nearly eight points at the time of writing.
On European trading, David Madden, at CMC Markets, said: "Stocks are higher on the day as traders are a little less fearful of the political situation in Italy.
"The coalition government in Rome are planning to run a budget deficit of 2.4%, but reduce it to 2% by 2021.
"Whenever the cost of Italian borrowing for the Italian government goes up, traders get nervous given the size of Italy’s national debt."
FTSE 100's top loser was supermarket supertanker Tesco (LON:TSCO), which lost 8.59% to stand at 215p after it posted mixed first-half results.
Operating profit in the six months rose by 23.9% to £933 million, but analysts were anticipating £992 million.
3.45pm: Make it 103, Donald...
The Stock Market just reached an All-Time High during my Administration for the 102nd Time, a presidential record, by far, for less than two years. So much potential as Trade and Military Deals are completed.— Donald J. Trump (@realDonaldTrump) October 3, 2018
3.30pm: Dow closes in on 27,000
The Dow Jones Industrial Average index rallied by over 100 points to reach a new record while the other US indices jumped in early trading in New York.
Market sentiment was buoyed by a better than expected jobs report, as private companies tacked on 230,000 jobs last month, reaching their highest level since February and far more than the 185,000 predicted.
2.50pm: Tesco still taking a beating
With an hour or so left in the trading day, the FTSE 100 is up 36.7 points, or 0.5%, to 7,511.3.
The weak pound has been the driving force behind this afternoon’s breakout after it was pushed lower by more in-fighting within the Tory party.
Sterling’s fall is often the blue chips’ gain as it makes their overseas earnings worth more when translated back into pounds, while it also makes their products and services cheaper to foreign buyers.
In terms of companies, ITV plc (LON:ITV) was the day’s big Footsie riser, climbing almost 4% to 162.1p after telling investors it would not be lodging a takeover offer for Peaky Blinders maker Endemol Shine.
The market had been worried that the acquisition, which would likely have cost in excess of £2bn, would have been more than the broadcaster can chew.
2.25pm: Could May’s dance moves buy her more time?
Theresa May’s dance moves have already launched hundreds of memes across social media, but Jack Izzard, brand expert at PR agency Rhizome Media, reckons it could buy her some more time.
“The PM's latest shot at accessibility was a PR stunt framed with a Ready Brek glow of desperation.
“These weren’t the rhythmic moves of a relaxed PM but someone scraping the bottom of the public image barrel in an attempt to appear human.”
He added: “There was a tinge of pathos to this self-parodying waltz that might buy Mrs May more time.
“It’s less the PM’s Brexit negotiation skills, and more her outright absurdity, that could eventually keep Boris at bay.”
2pm: Pret to list ingredients on freshly made products
Pret a Manger will list all the ingredients on its freshly made products following the death of a teenage who dies after eating one of its sandwiches.
A technicality meant multinational giants such as Pret weren’t required to list ingredients or allergens on any products made in store.
Natasha Ednan-Laperouse, 15, went into cardiac arrest on a flight after eating a Pret sandwich containing sesame seeds.
"I hope these measures set us on course to drive change in the industry so people with allergies are as protected and informed as possible. Nothing is more important to Pret right now,” said Pret boss Clive Schlee.
High street bakery Greggs is also reviewing how it labels products and will display allergen information on the digital screens in its shops while it comes up with a longer-term solution.
1.25pm: Diane Abbott having none of the niceties
The audience applauded the PM when she stuck up for Shadow Home Secretary Diane Abbott as she touched on abuse in politics.
Abbott was having none of it though, and quickly hit back on Twitter…
Some nice words from Tory leaders like Theresa May and Sajid Javid. Makes you wonder who was responsible for the Tory party’s relentless personal attacks in the general election campaign 2017 #CPC18 pic.twitter.com/w3Ar0dZLkA— Diane Abbott (@HackneyAbbott) October 3, 2018
1pm: Dow Jones set to hit record high
Wall Street is poised for another positive open as the US economy continues to strengthen.
Stocks were mixed yesterday as trade fears resurfaced. Having said that the Dow Jones Industrial Average touched an all-time high of 26,824.78, but eventually settled up around 122 points at 26,773.
But that was still a record close – the 14th of 2018 – and the record looks set to be broken though at the open with Dow Jones futures up 54 points.
The Nasdaq finished down nearly 38 points but futures are today up nearly 21, while the broader based S&P 500 index finished just about one point lower at 2,923. On Wednesday, it is called to start around seven points higher.
“The Dow Jones is on track for another record high when the bell rings on Wall Street,” said Spreadex analyst Connor Campbell.
“A 0.2% increase would send the Dow towards 26850, continuing the fantastic start to October following the USMCA-inspired optimism that Trump and his Beijing counterparts can avoid a costly full-blown trade war. “
12.45pm: Pound falls, FTSE climbs
By all accounts, Theresa May seems to be giving a decent speech as she wraps up the Conservative Party Conference in Birmingham.
This is turning into @theresa_may best speech by a very long way. Clear, passionate and above all Conservative. This is the PM we need to see much more of!— Steve Double MP (@stevedouble) October 3, 2018
But away from the event, another Tory MP has submitted a letter of no confidence in the Prime Minister.
James Duddridge, MP for Rochford and Southend East, has said May is “incapable” of delivering the kind of Brexit people voted for and has called for a leadership election.
News of continued in-fighting has hit the pound, which has now slipped back below US$1.30.
That’s good news for the UK’s blue-chips though – a weaker pound boosts their overseas earnings – and the FTSE 100 has powered on, climbing 46.2 points for the day to 7,520.8.
12.15pm: No words necessary...
Dancing Queen Theresa May makes a dramatic entrance to her conference speech. pic.twitter.com/clYZfpbzXt— Channel 4 News (@Channel4News) October 3, 2018
12pm: Another Unilever shareholder to vote against move
Unilever, which makes a host of products from Ben & Jerry’s ice cream through to Lynx deodorant, wants to scrap its Anglo-Dutch dual listing and relocate to the Netherlands.
Royal London Asset Management is the latest shareholder to publicly state that it intends to vote against the plan. Other opponents include Columbia Threadneedle, Legal &General Investment Management, Aviva Investors, Lindsell Train, M&G Investments, and Brewin Dolphin.
“Many UK Unilever shareholders voting for the upcoming resolution are effectively voting for forced divestment of their holding,” said Mike Fox, head of sustainable investments at RLAM.
“Unilever might be able to convince European shareholders that the move makes sense for the company and for them as investors in the long term, but it's hard for a UK investor to see an incentive to vote in favour.”
11.20am: ITV moves to the top of the Footsie
The FTSE 100 is keeping its head above water, in spite of a buoyant pound which has jumped on the back of the decent services PMI data earlier on.
Sterling has risen back above US$1.30, while it is up against a basket of other major currencies.
That is normally bad news for the blue-chips as it makes their overseas earnings worth less when translated back into pounds, whilst it also makes their goods more expensive to foreign buyers.
Still, the index has edged 14.0 points higher to 7,488.6 points as it looks to recover at least some of this week’s earlier losses.
ITV plc (LON:ITV) is the morning’s top riser after it ruled out making a bid for Endemol Shine, the TV production company behind Peaky Blinders and MasterChef. Shares jumped 3.3% on the news to 160.9p.
After a rough few days, investors decided that Royal Mail PLC (LON:RMG) was worth a punt again. The letters and parcels group was hammered after it rushed out a profit warning on Monday, but shares have perked up this morning, up 2.1% to 366.2p.
Tesco PLC (LON:TSCO) is by far and away the biggest drag on the FTSE 100. The supermarket giant disappointed the market with its half-year profits, although analysts felt, overall, the results were a step in the right direction. The stock is down almost 9% to 215.2p.
The stock fell yesterday and is down another 2.1% today to 5,959p, with analysts blaming the dip on profit-taking given that the shares have gained almost a fifth over the past six months.
11am: ITV rules out bid for Endemol Shine
Last month, investors reacted badly to press reports that the broadcaster was preparing a £3.5bn bid for Endemol, the company behind Peaky Blinders and Big Brother.
ITV moved to rule that out today, stating: "In light of continued press speculation, ITV confirms that it has no current intention of making a bid for Endemol Shine Group."
Carefully worded statement from ITV this morning in response to reports it's interested in TV producer Endemol Shine: It says it "has no current intention of making a bid for Endemol". That doesn't mean it hasn't considered making a bid, though— Ben Martin (@Benjaminwmartin) October 3, 2018
10.30am: New listing Funding Circle also struggling
Official trading in Funding Circle Holdings PLC (LON:FCH) got underway this morning. Having set its flotation price at 440p, the lower end of its indicated range, the peer-to-peer lender’s shares had fallen to 364p in conditional trading by last night
This morning has seen the shares slide a further 15.6p to 348.4p as official dealing started, giving the peer-to-peer (P2P) lender a market capitalisation of around £1.2bn, which is still not bad for a company that has never made a profit.
Market commentators have suggested that the new listings market have been getting a reality check.
“Many IPOs have been a great success this year and you cannot conclude from Aston Martin and Funding Circle’s problems that investors have suddenly gone off new floats,” said AJ Bell investment director Russ Mould.
“Ultimately it looks like both companies have simply been priced on too high a valuation versus their growth prospects, quality of business and financial strength.”
10am: Services sector growth slows in September
Growth in the UK’s dominant services sector slowed in September, according to the latest IHS Market/CIPS UK Services Purchasing Managers’ Index (PMI).
The reading fell to 53.9 last month, down from 54.3 in August and below the 54.0 economists had expected. Any number above 50 indicates growth.
“Resilient demand was reported in September, but a number of firms suggested that political uncertainty had weighed on business confidence and been a factor behind tighter budget setting among clients,” read the report.
All 3 main UK #PMI business sectors reported growth in Sep, but only manufacturing saw faster expansion. Services growth eased to 2nd-lowest since April, while construction grew at slowest rate since the March snow-related downturn. All 3 sectors likely grew by c.0.3-0.5% in Q3. pic.twitter.com/0LzYGgpswD— Chris Williamson (@WilliamsonChris) October 3, 2018
9.40am: Tesco misses profit expectations
The supermarket giant reported a pick-up in margins and like-for-like sales, but it missed expectations with operating profits before exceptionals, Tesco’s preferred measure of profitability.
The consensus estimate for the metric was £978mln; Tesco delivered a 24.4% increase from last year, but to only £944mln. Shares are down 8.5%.
9.20am: Aston Martin slow off the line
The stock had been priced at 1,900p as part of the luxury carmaker’s initial public offering but was changing hands for 1,838p not long after the opening bell.
Only institutional investors who subscribed for shares at the IPO can trade them at the minute; us regular punters will have to wait until Monday (October 8) when unconditional dealing begins.
8.45am: Footsie kicks off in the black
The FTSE 100 got off to a positive start, rising 21 points to 7,495.23, buoyed by Wall Street, which hit a new high.
Sentiment in the UK will likely be guided by the performance of Prime Minister Theresa May, who addresses the Conservative Party Conference later.
Under siege from former Foreign Secretary Boris Johnson, who wants to ‘chuck’ the Chequers Brexit blue-print, her performance needs to be more sure-footed and dynamic than last year’s the car crash, political commentators say.
In the City, traders watched as Royal Mail (LON:RMG) shares sank to a new low following Monday’s shock profit warning.
Off a further 2.2% Wednesday, the stock is now worth 30% less than it was when it closed out last week.
However, sentiment appears to have been de-railed not by the grocer’s performance at home, but the sales slides seen in Central Europe and Thailand in particular.
Its marriage to Wal-Mart-owned Asda is fraught with execution risk and is being cobbled together at a point where the German discounters are making the pips squeak for the rest of the food retail sector.
Perhaps the Tesco results provided a moment of lucidity for trader who have bid up shares in the sector. Sainsbury fell 2%.
6.30am: Dow to set the tone
The Dow Jones might have hit a new high yesterday in the US but in the UK, investors are more circumspect.
Ahead of prime minister Theresa May’s appearance at the Conservative Party conference today, the FTSE 100 was expected to open about 8 points higher after falling 21 points yesterday to 7,475.
“The Dow surged over 100 points higher overnight to strike a fresh record high. Optimism surrounding global trade and a lift from Intel ensured a second straight session of gains for the Dow and another record in 2018,” noted Jasper Lawler at LCG.
“Whilst the Dow pushed boundaries, the Nasdaq dropped 0.5% weighed down by tech after Amazon’s minimum wage rise. More broadly, US markets struggled over growing concerns for Italy,” he added.
The S&P 500 eased 1.2 to 2,923.
Heading into the close in Tokyo, the Nikkei 225 was down 181 at 24,089. In Hong Kong, the Hang Seng index was down 83 at 27,043.
On the home front, apart from spread betting customers punting on how long Theresa May’s ovation will last at the Tory conference – will it last longer than she has time left in the job? - the focus will be on resurgent supermarket group, Tesco PLC (LON:TSCO).
The retailer aims to report an 11th consecutive quarter of like-for-like sales growth in the UK when it reports first-half results.
The supermarket group reported underlying (fiscal) first-quarter UK sales growth of 2.1% and is tipped to keep the trend up this week after a busy 2018 for the retail giant.
British Airways owner International Airlines Group PLC (LON:IAG) reports its traffic figures for September, which should reveal whether the airline industry has been hit by the unseasonably good weather.
Significant announcements expected
Economic data: UK services PMI; US ADP employment report; US ISM non-manufacturing index; US services PMI
Around the markets
- Sterling: US$1.3001, up 0.21 cents
- 10-year gilt: yielding 1.396%
- Gold: US$1,209.90 an ounce, up US$2.90 an ounce
- Brent crude: US$84.88 a barrel, up 8 cents
- Bitcoin: US$6,446.64, down US$85.06
Proactive news headlines
Coal bed methane group G3 Exploration PLC (LON:G3E) has received final approval from China’s National Development and Reform Commission (NDRC) to develop the Chengzhuang Block (GCZ).
Premier African Minerals PLC (LON:PREM) will focus on an underground re-start at the RHA tungsten mine following a study from consultant Bara.
88 Energy Ltd (LON:88E, ASX:88E) is launching a rights issue to raise £7.96mln (A$14.33mln) in order to fund new exploration well operations slated to start in the first quarter of 2019.
Echo Energy Plc (LON:ECHO) has told investors that its programme of well interventions have now been completed for four wells at the Fracción D project.
Falcon Oil & Gas Ltd (LON:FOG) has confirmed that, alongside partner Origin Energy, it has cancelled a 1% royalty that would’ve been tied to future production from the Beetaloo shale gas project in Australia.
Amazon has increased the minimum wage of tens of thousands of its British and US workers, bowing to criticism over low wages.
Royal Mail allegedly handed its current and former bosses huge rewards for failure after a shock profit warning sent shares crashing 25%.
Italian borrowing costs have surged to their highest in more than four years as investors dumped government bonds on fears Italy’s ruling anti-establishment coalition is about to embark on a dangerous spending spree.
Nationwide is forcing customers to pay 2.75% interest on card purchases and cash withdrawals abroad, up from 2%.
Civil Aviation Authority has told thousands of Ryanair customers to claim compensation after their flights were cancelled during strike action last Friday.
Michael Murray, the fiancé of Mike Ashley's daughter and former nightclub owner, has been touted as the next chief executive of House of Fraser.
The Italian deputy prime minister, Matteo Salvini, has accused the EU president of pushing up Rome’s cost of borrowing by likening Italy to Greece.
Toyota chief executive Johan Van Zyl has warned that the car maker would be forced to halt production in the UK if there is a no-deal Brexit; BMW also said it could shift production of the Mini to the Netherlands in the event of a hard Brexit.
Ryanair has issued a profit warning blaming the impact of strikes and rising oil prices; the budget airline said full-year profits will be 12% down.
Shares in the peer-to-peer lender Funding Circle lost nearly a fifth of their value before their official market debut today, thwarting London’s attempt to become a magnet for new technology companies.
Tesla warned that punitive Chinese import tariffs were hurting its business as it said that it had met its Model 3 production target for the third quarter.
The construction industry has registered its slowest pace of growth in six months and confidence has fallen, dampening hopes for broader economic resilience.
Volkswagen has terminated the contract of Rupert Stadler, the suspended chief executive of its premium brand Audi, with immediate effect.
Financial Conduct Authority chairman Charles Randall has warned against loosening financial regulations after Brexit, apparently contradicting the Government position.
The North of England's property prices fell by 1.7%, according to data from Nationwide, with the region becoming the worst-performing in Britain for house price growth in the three months to September.
Columbia Threadneedle, a top 20 shareholder of Unilever, has become the latest investor to join a roster of big City names that have come out against the company’s plan to scrap its Anglo-Dutch structure.