FTSE 100 closes lower
UK blue-chips back off from winning streak
UK PM in Brussels
FTSE 100 closed in the red on Wednesday despite the weaker pound and as Brexit deal jitters continue.
Footsie finished down nearly five points at 7,054.
The FTSE 250 tanked lower- shedding almost 136 points at 19,013.
The pound fell after inflation data showed it had slowed to its lowest level in 18 months in September.
"Pound traders will now turn their attention towards the EU Leaders Summit," said Fiona Cincotta, at City Index.
"Whilst there is little clarity surround Brexit, what is clear is that no deal has been reached so far..," she said.
After Theresa May's address, EU leaders will then decide if there is sufficient momentum to move ahead with the extraordinary summit in November.
"Given recent headlines and the pounds focus on economic data, market expectations are low," said Cincotta.
4pm Large-caps slide into the red
UK blue-chips swung lower during late afternoon trade on Wednesday, joining US stocks in the red as losses on Wall Street accelerated.
The FTSE 100 dropped 35 points, or 0.5%, to 7,025, relinquishing an intraday gain of nearly 30 points, or 0.4%. The index had been on course during the session to mark a third consecutive win.
UK and continental European stocks were stepping lower as the Dow Jones Industrial Average tallied an intraday loss of 316 points, appearing to revive the selloff that swept global equity markets last week.
Leading loss on the index, budget carrier easyJet PLC (LON:EZJ) fell 5.4% to 1,146p as rival carrier Flybe (LON:FLYB) shares issued a profit warning.
3pm Footsie sticks to higher ground
The FTSE 100 stayed modestly higher Wednesday afternoon, outperforming US stocks which pulled back after their surge in the prior session.
The FTSE 100 picked up 9 points to 7,069.
But equities struggled in choppy action on Wall Street, leading the Dow Jones Industrial Average down 174 points to 25,624. The Nasdaq and the S&P 500 were each falling 0.5%. US benchmarks notched their strongest rises since March on Tuesday, still recovering from last week’s global equity selloff.
During the US trading session, investors will receive minutes from the Fed’s meeting in September.
“Given the events of the last couple of weeks, there is a chance that the minutes are a little outdated, but that won’t stop people pouring over them for clues about where exactly we are in the tightening cycle and how much further there is to go,” said Craig Erlam, senior market analyst at Oanda.
In London trade, a number of multinational companies topped the index as the pound headed lower during the session. British American Tobacco plc (LON:BATS) climbed 3.6% to 3,291p, and drug maker AztraZeneca PLC (LON:AZN) moved up 2.1% to 5,855.00p.
Rentokil Initital PLC (LON:RTO) gained 2.2% to 312.00p following a ratings upgrade of the pest control company to overweight from underweight at JP Morgan.
Meanwhile, EU officials were gathering in Brussels to discuss progress on the Brexit talks.
Before leaving for Brussels, German Chancellor Angela Merkel told lawmakers the German government is preparing “sutiable preparations” in case the UK leaves the European Union without a deal. Merkel also said it is “unfortunate” that there hasn’t been a resolution on the question over how to deal with customs as Northern Ireland will leave the EU with the rest of the UK while Ireland retains its EU membership.
UK Prime Minister Theresa May appeared in the UK parliament before she left for the summit and told lawmakers she plans for a trade agreement to be in place for January 2021.
Now on to the backstop - PM said 'we have made good progress' - saying she intends the trade agreement to be ready for Jan 1st 2021 - implicit message that she doesn't want to extend the transition, but she hasn't rule it out yet
— Laura Kuenssberg (@bbclaurak) October 17, 2018
1pm Blue-chips stay in positive territory
The FTSE 100 was holding tightly to gains Wednesday, while US stock futures suggested a lower open for stocks on Wall Street.
The FTSE 100 rose 13 points to 7,071, enough to keep the index on course for a third consecutive win. The benchmark found some support from a fall in sterling, under pressure after UK September headline inflation rose by a less-than-expected rate of 2.4%.
The pound was down at US$1.3109 in afternoon dealings.
Futures for the Dow Jones Industrial Average dropped 101 points to 25,681, while futures for the S&P 500 declined 0.3%. The Dow on Tuesday rocketed up 543 points, with US stocks powered by better-than-expected earnings at Goldman Sachs (NYSE:GS), among other factors. Netflix (NASDAQ:NI) shares still looked set to jump Wednesday after strong earnings figures.
The Federal Reserve is on the radar for global investors as minutes due from the Fed’s September meeting are expected to underscore market anticipation for a December interest rate hike.
While the Fed appears set to raise rates again this year, analysts say the Bank of England will likely keep the key rate at 0.75% until later in 2019.
“The slower pace of (Bank of England) rate rises will be welcomed by equity investors especially when there is so much political and economic uncertainty caused by Brexit and other geopolitical themes,” said Helal Miah, investment research analyst at The Share Centre.
Around the UK market, Flybe Group PLC (LON:FLYB) shares sank 38% to 20.30p, with the budget airline warning that full-year earnings will be hurt by slowing demand for its domestic and near-continent flights.
READ: Flybe shares plummet as airline guides to wider full-year loss
11.30am Inflationary pressures lurking
While the rate of UK consumer price inflation eased in September, some analysts said it’s likely to resume an upward trend.
The Office for National Statistics said earlier Tuesday consumer price inflation rose to 2.4%. That was below expectations for a 2.6% reading, in part because of a drop in food inflation. The August inflation rate was 2.7%.
But "despite the not-too-hot, not-too-cold inflation number, we are not out of the woods just yet,” said Tom Stevenson, investment director for personal investing at Fidelity International.
“While CPI inflation is expected to ease back closer towards the Bank of England target of 2% towards the end of 2018/mid-2019, there are a number of factors which could keep inflation stubbornly sticky in the short term, most notably the recent surge in the oil price and sterling weakness driven by growing fears of a Brexit no-deal,” he said.
Ben Brettell, senior economist at Hargreaves Lansdown, also said there are signs of inflationary pressures building in the British economy.
“The ONS said yesterday that wage growth reached a ten-year high in the three months to August, and today’s data showed input prices for companies increasing at 10.3%, largely driven by a higher oil price,” he said.
In market action, the FTSE 100 pared gains in late morning trade Wednesday, rising 5 points to 7,063.
On the upside, shares of ASOS plc (LON:ASC) shares surged 15% to 5,700p as the apparel retailer’s full-year profit narrowly topped expectations.
READ: ASOS profit narrowly tops forecasts, maintains current year guidance
10:15am Footsie continues advancing
The FTSE 100 slightly added to gains in mid-morning trade Wednesday after data showed UK inflation rose at a slower-than-expected pace in September.
The FTSE 100 was up 17 points at 7,078, aided by pull back in the pound as multinational companies that crowd the index make most of their revenue overseas. That can lead to a boost in their earnings when profit is translated back into sterling.
The Office for National Statistics said consumer price inflation rose to 2.4%, missing expectations for a rise to 2.6%, in part because of a drop in food inflation. The CPI print was also down from August’s reading of 2.7%.
Sterling fell after the data, buying US$1.3133 compared with around US$1.3166 ahead of the report.
Miles Eakers, chief market analyst at FX specialist Centtrip, said: “UK inflationary pressure has eased after increasing for two consecutive months, dropping to 2.4 per cent. This should be welcome news for the Bank of Englan, as rising prices could trigger an interest rate increase, something the central bank looks set to avoid until after a Brexit agreement has been made.
But the dip in inflation may be short-lived, he added.
“Basic wages grew at 3.1 per cent in August – the fastest pace in nearly a decade. This, in turn, should boost consumer spending, adding to inflationary pressure in the coming months,” said Eakers.
Checking individual shares, Segro PLC (LON:SGRO) rose 4.2% to 617.20p as the real estate investment trust posted growth in quarterly new leasing deals.
READ: Segro logs 43% rise in new leasing deals in third quarter
9.10am: Modest early gains
The FTSE 100 advanced in early moves Wednesday, extending gains into a third straight session, before the release of UK consumer price inflation figures.
The FTSE 100 rose 13 points to 7,072, adding to Tuesday’s gain of 30 points. The index pushed higher as that session wore on, bolstered by a surge in US stocks on encouraging signs about third-quarter earnings from Corporate America.
In the UK, the Office for National Statistics will issue UK inflation numbers for September, with analysts widely expecting a rise to 2.6% in headline inflation. The August reading was 2.7%.
Sterling was buying US$1.3166 ahead of the report.
Investors will also watch for any updates from Brussels, where UK Prime Minister Theresa May will discuss Brexit with EU officials.
“The weekend’s developments, namely surrounding the issue of the Irish border, have made the mood between May and her European Union counterparts decidedly frosty, with Donald Tusk claiming there was ‘no grounds for optimism’ that a deal can be struck on Wednesday,” said Connor Campbell, financial analyst at Spreadex.
“Any updates and comments as the day goes on could play a big role in how the pound performs,” he said.
Among individual shares, Pearson plc (LON:PSON) rose 3.7% to 847.60p after the educational publisher said it remains on track to post underlying profit growth.
Proactive news headlines:
Waste-to-energy technology pioneer PowerHouse Energy Group PLC (LON:PHE) has received an independent endorsement of its technology.
Ariana Resources plc (LON:AAU) said recent exploration and development work at the Salinbas Gold Project has demonstrated that exceptional mineralisation continues to the immediate north of the deposit, over around 500 metres of strike, as predicted in its JORC Exploration Target in June.
ValiRx Plc’s (LON:VAL) VAL201 prostate cancer drug has entered the final stages of its phase I/II clinical trial.
Driver monitoring technology firm Seeing Machines Limited (LON:SEE) has appointed high tech veteran Ryan Murphy as chief operating officer.
Amryt Pharma PLC’s (LON:AMYT) flagship Lojuxta drug will soon be available in all five of the EU’s largest markets after French officials agreed to reimburse patients receiving the ‘bad’ cholesterol treatment.
Berkeley Energia Limited (LON:BKY) has noted media reports that the Spanish Government is intending to deny the company the necessary permits to open the Salamanca project. The company said it has received no official notice in this regard from the Nuclear Safety Council nor any other government department to date but is seeking immediate clarification of these reports and will make an announcement as soon as a response is received.
accesso Technology Group PLC (LON: ACSO), the technology solutions provider focused on the leisure, entertainment and hospitality markets, has entered into a strategic partnership with Groupon.
i3 Energy PLC (LON:I3E) told investors it has appointed FirstEnergy Capital LLP as acquisitions and divestitures advisor to assist the farm-out process for the Liberator oil field, in the UK North Sea.
The Cursor Controls Group, a designer and maker of human-to-machine interface products has been acquired by discoverIE Group PLC (LON:DSCV), the customised electronics products maker. DiscoverIE is paying £19mln upfront in cash and a further payment of up to £4mln could be paid, depending on how the acquired business performs over the next three years.
Europa Oil & Gas Holdings Plc (LON:EOG) is sufficiently encouraged by its progress offshore Ireland that is now actively preparing for a well programme, which could come as soon as next year.
Vast Resources PLC (LON:VAST) and Botswana Diamonds PLC (LON:BOD) are to push ahead with their plans to develop the Heritage concession in the Marange diamond fields of Zimbabwe.
Alba Mineral Resources PLC (LON: ALBA) has found evidence of gold well away from the old mine workings at Clogau in Wales. Soil sampling and geophysical sampling confirmed that gold anomalies occur all along the strike of the existing mine.
Sound Energy PLC (LON:SOU) has confirmed that it has now begun drilling operations for the TE-9 exploration well in Morocco.
Tlou Energy Ltd (LON:TLOU, ASX:TLOU) chairman Martin McIver, in a statement ahead of today’s AGM, told investors the company is excited by the development of a coal bed methane (CBM) gas industry in Botswana.
Red Rock Resources Plc (LON:RRR) has started a soil sampling programme to explore for copper and cobalt in the Democratic Republic of Congo. The licence is in the Copperbelt in the south of the DRC near the Zambian border.
Bushveld Minerals Limited (LON:BMN) expects to start detailed talks about a finance package for the Imaloto coal-fired power station project in Madagascar once the bankable feasible study (BFS) is completed. The study for the power station was completed in June and is under review, while the BFS for the coal mine is due to be finished in the final quarter of this year.
Chariot Oil & Gas Limited (LON:CHAR), the Atlantic margins focused oil and gas exploration company, announced that, the Ocean Rig Poseidon drillship has been released by the group following the safe drilling of the Prospect S well, Namibia. The company also said it now estimates that its 2018 year-end cash position, after all well costs, will be in excess of US$14mln.
6.45am: UK stocks set to rise at the open
After a storming session in the US yesterday, UK equities were expected to put their best foot forward this morning.
The FTSE 100, which rose 30 points to close at 7,059 on Tuesday, was tipped to open at around 7,086.
In the US, the Dow Jones soared 548 points to 25,798 while the S&P 500 advanced 59 points to 2,810.
“Upbeat earnings on Wall Street restored investor faith, driving a rebound in US equities. Impressive corporate earnings from the likes of Goldman Sachs, Morgan Stanley and Johnson & Johnson, plus relative calm in the bond market saw the Dow soar 500 points in its best session since March,” said Jasper Lawler at LCG.
The optimistic theme was continued this morning in Asia where Japan’s Nikkei 225 was up 256 points at 22,805 and Hong Kong’s Hang Seng index was up 17 at 25,462. Only the Shanghai Composite failed to join the party, easing 11 points to 2,536.
“Wednesday promises to be a busy session with inflation data from the UK and Eurozone, the start of the EU leaders’ summit, the ECB potentially throwing more criticism at the Italian budget, more corporate reports from the US and the release of the Fed minutes. Traders will have to remain alert in a session full of market moving events,” Lawler opined.
As for corporate news flow, Barratt Developments PLC (LON:BDEV) is the latest UK homebuilder to give the market a trading update.
Bellway, on Tuesday, told investors that it is looking to increase the number of houses it builds, though it remains wary of a possible Brexit effect on consumer confidence.
Barratt has so far avoided the strain of a slowdown in the housing market, according to analysts.
That’s thanks to low-interest rates and the government’s Help to Buy scheme. Analysts expect Barratt to show a strong order book and an increase in home sales at higher prices.
Property investment group Segro PLC (LON:SGRO) is also due to publish a third-quarter trading update.
The shares have outperformed the market and many other commercial property groups so far this year, largely because of its large warehouses which offer it exposure to the booming online retailing industry.
July’s half-year results showed a 21% rise in pre-tax profits and an 8.5% increase in net asset value per share.
Investors will be focused on the retention rate and any comments on the level of demand for its properties. Segro has a large pipeline of new properties to develop so any update on that, and the amount of capital needed to complete it will also be of interest.
Significant announcements expected on Wednesday:
Trading update: Barratt Developments PLC (LON:BDEV), Segro PLC (LON:SGRO)
Finals: Softcat PLC (LON:SCT), CAP-XX Ltd (LON:CPX)
AGMs: BHP Billiton plc (LON:BLT), Barratt Developments PLC (LON:BDEV), Tlou Energy Ltd (LON:TLOU)
Economic data: UK CPI, PPI, HPI inflation; FOMC minutes; US housing starts
Around the markets:
- Sterling: US$1.3172, down 0.13 cents
- 10-year gilt: yielding 1.472%
- Gold: US$1,224.30 an ounce, down US$6.70
- Brent crude: US$81.32 a barrel, down 9 cents
- Bitcoin: US$6,522.06, up 15 cents
City headlines:
- Uber, the taxi-hailing app developer, is looking to list in the next six months
- Theresa May is being urged to consider extending the transition period for a “few more months” beyond the end of December 2020 to get through the Brexit impasse.
- Netflix attracted significantly more new subscribers than expected in the third quarter on the back of exclusive television shows such as The Crown and Orange Is The New Black.
- US stocks recorded their best daily gains since late March on Tuesday in response to a decent set of financial results from Goldman Sachs, and strong economic data.
- Rio Tinto’s $12 billion copper and gold mine development in the Gobi Desert might get delayed due to challenging conditions on the ground and tensions with the government of Mongolia.
- Goldman Sachs and Morgan Stanley unveiled bumper profits on Tuesday to cap a solid third quarter for America’s big banks.
- Trading in the shares of Patisserie Holdings might get delayed for several weeks as the company rebuilds its accounts after the apparent fraud alleged to have been committed by its finance chief.
- Fund managers are at their most pessimistic on the prospects for the global economy since the financial crash of 2008.
- More than 75% of businesses expect to overcome any disruption triggered by Brexit and to grow over the next three years, a study by Santander reported.
- Audi has been fined €800 million by German prosecutors over “dieselgate” scandal which rocked parent Volkswagen Group.
- Family fashion chain Fat Face has poached Liz Evans, boss of Oasis and Warehouse, to become its new chief executive.
- The Institutional Investors Group on Climate Change, a shareholder group, has warned that pension funds are "unprepared" to meet fresh climate change rules and must take action.
- The Netherlands has led an £80 million rescue package to bankroll the loss-making activities of one of Greater Anglia, Britain’s biggest train networks.