FTSE 100 goes into reverse; closes lower
Benchmark locking in weekly fall
US stock gains muted
Big US banks report
FTSE 100 failed to hold onto gains Friday and finished down as the bank earnings inspired rise on Wall Street didn't really take firm hold.
The footsie closed down around 11 points, or 0.16%, to 6,995.
That was a drop of around 4.4% on the week as a whole.
FTSE 250 though fared better. The index closed out Friday up nearly 146 points at 18,973.
In the currency markets, sterling was down 0.30% against the Euro and off 0.58% against the US dollar.
On Wall Street, the Dow Jones Industrial Average is up over 100 points at 25,160 at the time of writing, while the Nasdaq index is up 116 points but the S&P 500 went lower, shedding around 38 points.
"Equity markets have some bounce in their step again as the onslaught from earlier this week came to an end. Most are trading lower than they did at the beginning of the week, the trend in US equities is to the upside rather than the punishing decline seen Wednesday and Thursday," said Fiona Cincotta, the senior market analyst at City Index.
Earlier, JPMorgan Chase (NYSE:JPM), the first big US bank to report earnings this quarter, zipped past Wall Street’s forecasts its booming retail banking business made up for a slowdown in bond trading.
Its earnings came in at $8.38 billion, or $2.34 per share, which represents a 24% rise from the $6.73 billion it earned in the year-ago quarter.
"JP Morgan’s results are showing the real strength of the US economy and the American consumer, its net income rose 24% on the year particularly on the retail banking side at its Chase division," said Cincotta.
"The earnings didn’t translate into a sustained rally in shares however, and although the banks traded higher after the release of the numbers, Citigroup made only a 0.7% gain in the afternoon and JP Morgan slipped by 0.15%," she added.
Tobacco stocks were the biggest casualties on Footsie, with Imperial Brands (LON:IMB) the top laggard, down 6.03% to 2,516.50p.
4.15pm
Gains for UK stocks dwindled in late afternoon trade Friday, leaving the FTSE 100 to wrap up what will be a losing week near session lows.
The FTSE 100 was up 6 points, or 0.1%, at 7,014. The benchmark had been up by as much as 60.5 points, or 0.9%, during the session. For the week, the index was facing a loss of 4.1%.
Mining shares were still among top advancers Friday but they moved off stronger levels, with Anglo American PLC (LON:AAL) higher by 3.3%. Barratt Developments PLC (LON:BDEV) was up 5.1%, but also pared its gain ahead of the home builder’s trading update next week.
READ: UK house builders in focus next week
US stocks were up in mid-morning trade, with the Dow Jones Industrial Average adding 292 points.
“As for Europe, the region seemed to lose confidence as the day went on,” with the FTSE backing away from the 7070 mark while Germany’s DAX 30 briefly turned lower, said Spreadex financial analyst Connor Campbell.
“With Brexit worries starting to emerge once again – just days after a report suggesting the UK and EU could announce a deal as soon as Monday – and the dollar regaining some of its strength, cable’s week ended on a sour note,” said Campbell.
But sterling’s pullback didn’t help the FTSE 100 retain its advance.The FTSE 100 can rise when sterling falls as pound weakness can boost the value of earnings made overseas by companies on the benchmark.
3.00p Gold's gain a boon for miners this week
The FTSE 100 marched higher Friday afternoon, with gold miners gaining, while US stocks jumped in early trade.
The FTSE 100 rose 44 points, or 0.6%, to 7,050, and the mid-cap FTSE 250 index moved up 244 points, or 1.3%, to 19,081.
On Wall Street, the Dow Jones Industrial Average zoomed up 315 points, the Nasdaq Composite charged up 2.1% and the S&P 500 added 1.6%. Banking giant JP Morgan Chase & Co. (NYSE:JPM) was on the rise after better-than-expected financial results.
The UK’s blue-chips gauge was modestly trimming its weekly loss, to 3.7%. Mining stocks were aiding in the recovery process on Friday. Fresnillo PLC (UK:FRES) topped advancers as it jumped 5.8%, and Randgold Resources (LON:RRS) put on 3.5%. Hochschild Mining PLC (LON:HOC) was up 4.6% to 164.10p on the mid-cap FTSE 250 index, coming off a 52-week low hit Thursday.
Gains for gold miners came alongside a rise in gold prices in recent sessions as investors sought the perceived safety of the precious metal during this week’s worldwide stock selloff. Gold prices this week hit a more than two-month high.
There was inflow of US$300,000mln into precious metals, according to the weekly Flow Show report on Friday from Bank of America Merrill Lynch. While the report - which monitors where money is moving in global markets - called that inflow “small”, it said there was a “massive” weekly redemption of US$14bln from bonds - the biggest outflows since February - while redemptions from equities reached US$1.4bln.
12.45p UK blue-chips move upwards
The FTSE 100 continued to advance in early afternoon trade Friday, as US stock futures suggested there will be a jump when Wall Street opens.
The FTSE 100 rose 49 points, or 0.7% to 7,056. Meanwhile, futures for the Dow Jones Industrial Average rose 154 points, Nasdaq futures climbed roughly 90 points and the S&P 500 futures picked up more than 20 points.
Wall Street appeared set to rise in the wake of better-than-expected financial results from banking giant JP Morgan (NYSE:JPM).
Overall, equity investors have been “breathing a sigh of relief” as the market selloff paused Friday, but “the verdict is still out about current valuations,” said Rebecca O’Keeffe, head of investment at Interactive Investor.
“One major plus point for investors who are viewing the market as oversold and a good time to buy is the VIX index,” she said, referring to Wall Street’s so-called fear index.
O’Keefe said: “Previous sell-offs have fizzled out when the major volatility index reached the high twenties, and yesterday’s high saw the VIX reach 28.84, before falling back. Over the past few years, this level of volatility has typically proved to be a market turning point, the one exception being early-2016.”
In London trade, shares of Royal Bank of Scotland PLC (LON:RBS) climbed 1.9% after the lender paid its first dividend in 10 years, of 2p a share. The dividend was the first since the bank was bailed out during the global financial crisis.
READ: Royal Bank of Scotland pays out first dividend since 2008 financial crisis
10.45am Footsie maintains gains
The FTSE 100 held onto higher ground in mid-morning trade Friday as investors continue to assess the scope of the damage done by this week’s slide in stocks worldwide.
The FTSE 100 rose 39 points, or 0.6%, to 7,047.75. The FTSE 250 mid-cap index also advanced, by 202 points, or 1.1%, to 19,030.
The UK gauge of blue-chips was still looking at a nearly 4% decline for the week, during which the benchmark fell to its lowest since early April.
However, the “market sell-off over the past week hasn’t dragged everything down in price,” wrote Russ Mould, investment director at AJ Bell.
Shares of nine companies managed to increase as of Thursday’s close, said Mould, who looked at data since October 3.
Topping gainers was BT PLC (LON:BT), with the telecommunication firm’s stock advancing 3.6% during the period. Miners Randgold Resources (LON:RRS) and Fresnillo PLC (LON:FRES) picked up 2.5% and 1.7%, respectively.
“BT is at the top of the list amid chatter that it could be broken up. Gold miners Randgold Resources and Fresnillo benefited from resurgence in the gold price as investors flocked to supposedly safe-haven assets during the market sell-off,” he said.
Defensive shares such as utility National Grid PLC (LON:NG). rose as well, as investors appeared to have "bought their shares for generous income," Mould said.
The biggest decliner of the period was Ashtead PLC (LON:ASH). The equipment-rental company fell 17.4% as part of a drop in cyclical stocks.
9.00am: Blue-chips in recovery mode
The FTSE 100 pushed higher early Friday morning, as investors in global equity markets worked to recover sharp losses registered this week stemming from a cocktail of financial and political worries.
The FTSE 100 rose 36 points, or 0.5%, to 7,043.25, with only shares of less than 10 companies losing ground as the market opened.
Mining stocks were among top advancers, with Randgold Resources (LON:RRS) rising 3% to 5,812p. The shares soared 8.4% on Thursday as investors rushed into the perceived safety of gold.
Scottish Mortgage Investment Trust (LON:SMT) climbed 4.1% to 474.35p after shares took a hit of 2.4% during Thursday’s rout.
For the week, the FTSE 100 was facing a 3.8% drop. Major equity indexes were beaten down this week, with analysts pointing to concerns about rising US bond yields and interest rates, the trade spat between China and the US and Italy’s budget battle with the European Union.
The FTSE 100’s advance on Friday was smaller than gains logged in continental European markets, as Germany’s DAX 30 leapt 1.1% and France’s CAC 40 gained 0.9%.
“Having been one of the heaviest hit indices on Thursday, at least in terms of its European peers, the FTSE posted the weakest comeback,” early Thursday, said Connor Campbell, financial analyst at Spreadex.
“Part of the reason why the FTSE’s gains might be a bit lacklustre when compared to its continental cousins is the continued strength of sterling,” in part with cable hitting a three-week high of $1.325, said Campbell.
The FTSE 100 is still down more than 10% from the record close of 7,877.45 notched on May 22.
Biggest losers Friday on the benchmark were tobacco makers Imperial Brands Group PLC (LON:IMB) and British American Tobacco PLC (LON:BATS), down by 2.3% and 1.5%, respectively.
6.45am: FTSE 100 set for opening gain
The FTSE 100 is expected to open higher this morning as the volatility that swept global markets this week seemed to cool off a little.
Spread-betting firm IG expects the FTSE 100 to open around 41 points higher, ending a week-long plunge in equity markets that saw the index close down 138 points at 7,006 yesterday.
David Madden, market analyst at CMC Markets UK, says that a fall in US consumer price inflation to 2.3% in August from 2.7% in August may have calmed some nerves, and investors were now “a little less fearful the Federal Reserve will press ahead with their monetary tightening policy”.
However, he added that the latest trade figures from China, reported overnight, showed a jump in its trade surplus with the US to US$34.1bn, a record high which has “renewed fears” that Trump could impose fresh tariffs in the ongoing trade war.
In US markets yesterday, the Dow Jones Industrial Average closed down 545 points at 25,052, while the S&P 500 dropped 57 points to 2,728 and the Nasdaq fell 92 points to 7,329.
In Asia today, the Japanese Nikkei 225 was down 72 points at 22,518 while Hong Kong’s Hang Seng was up 407 points at 25,672, as US Treasury staff reported that Beijing was not manipulating the Chinese currency.
On the currency markets, the pound was up 0.05% at US$1.323 against the dollar and down 0.09% at €1.14 against the euro after reports the Brexit negotiations were going well and a breakthrough could be achieved by Monday.
Macro data in focus
Amid global equity volatility, the market’s attention is not particularly on single-stock stories – which, for Friday’s market preview report, is just as well because the schedule is looking very light.
Investors may, indeed, look entirely past the finals results coming from British potato and daffodil seed company Produce Investments PLC (LON:PIL).
Mining firm Vedanta Resources PLC (LON:VED) may receive some sector attention as it releases interims, elsewhere, investment manager Ashmore group PLC (LON:ASHM) will also feature with a trading update.
The spotlight will instead be on the next batch of American economic stats which will include import, export and consumer indicators – all of which will naturally feed into the current narrative around the American economic picture and US interest rates.
Significant announcements expected on Friday, October 12:
Finals: Produce Investments PLC (LON:PIL)
Economic data: US import, export prices; US consumer sentiment
Around the markets
Sterling: US$1.323, up 0.05%
Brent Crude: US$81.1 a barrel, up 1.1%
Gold: US$1,221.8 an ounce, down 0.15%
Bitcoin: US$6,222.6, up 0.74%
City Headlines
Financial Times: Theresa May has briefed her cabinet that a historic Brexit deal is close, as Tory Eurosceptics push back on “temporary” customs union plan with EU.
The Daily Telegraph: Johnston Press is up for sale as the beleaguered newspaper publisher makes an attempt to attract a rescuer before it is forced into insolvency by a debt repayment deadline.
The Times: Apple has entered into a $600 million deal with British chip developer Dialog Semiconductor to expand its microchip manufacturing operations.