FTSE 100 closes higher
US shares lower
Reckitt and BT rise ahead of results
Theresa May meeting with 1922 Committee
FTSE 100 closed in positive territory, just, as US shares are a sea of red.
Footsie finished Wednesday nearly eight points higher at 6,962.
Mid-cap cousin FTSE 250 was also up - closing around 54 points higher, at 18,406.
It comes as the Dow Jones Industrial Average in New York is off almost 162 points and the S&P 500 index is around 28 points lower.
Barclays (LON:BARC) was among the top five Footsie gainers, up 2.98% to 170.70p after posting results. BT Group (LON:BT.A) took the top spot, adding 4.05% to 250.20p.
"A weaker pound and 23% increase in profits at Barclays lifted the FTSE back over 7,000, until a sharply weaker open on Wall Street saw the UK index give up some of those gains," said Fiona Cincotta, analyst at City Index.
"Bucking the trend in Europe, the FTSE has manged to cling onto its gains to finish in the black," she added.
3.25pm: US stocks edge lower
The Dow Jones index has edged lower in early deals - slipping 67.0 points, or 0.3%, to 25,124.5.
The S&P 500 dipped to 2,727.7, down 13.0 points, or 0.5%, while the tech-heavy Nasdaq is at 7,376.0, a loss of 59.9 points, or 0.8%.
3.10pm: Footsie retreats slightly
The FTSE 100 is well in positive territory as the close of play draws near in London, although the index has retreated slightly from its mid-afternoon highs.
Still, it is up 56.6 points, or 0.8%, to 7,012.0, driven largely by a weaker pound which has fallen 0.4% against the dollar to US$1.293.
A fall in the value of sterling is a positive for the blue-chips as it makes their overseas earnings – about 75% of blue-chips’ earnings are overseas – worth more when converted back, while it also makes their goods cheaper to foreign buyers
Online supermarket Ocado Group PLC (LON:OCDO) sits atop the leader board, up 4.5% to 807.4p as it bounces back from its worst daily performance in two years on Tuesday.
Barclays PLC (LON:BARC) is also up there, climbing 3.2% to 171p thanks to a 23% jump in underlying third-quarter profits which it reported this morning.
Silver miner Fresnillo PLC (LON:FRES), is among the top fallers, down 2.2% to 956p after lowering its full-year production guidance earlier today.
Irish packaging group Smurfit Kappa Group PLC (LON:SKG) takes the wooden spoon though, it is down 3.2% to 2,442p ahead of a trading statement due this time next week.
2.45pm: Clintons and Obama also targeted by mail bombs
You may remember earlier this week that the FBI launched an investigation after an explosive device was mailed to the home of billionaire investor George Soros.
Well two more have been sent out, this time to the Washington DC offices of former US President Barack Obama as well as the home of Bill and Hillary Clinton in New York.
The devices were reportedly similar to the one sent to Soros and were discovered during “routine mail screening” by Secret Service employees.
The motive of the would-be bomber(s) remains unclear, with US press stating that no one has yet come forward to claim responsibility.
2.20pm: GBK seeks a CVA to avoid going under
Gourmet Burger Kitchen has become the latest high street restaurant chain to ask its creditors for help and seek a company voluntary arrangement (CVA).
A CVA is an offer made by a struggling company to its creditors – usually landlords, banks, the tax man etc. – and generally results in store closures, reduced rents and restructured repayments.
It is often seen as a last resort, without which the company risks going bust if creditors don’t agree to it.
The rapid increase in the number of UK restaurants – analysts reckon a net 4,000 restaurants have opened over the past four years – combined with weaker consumer sentiment has caught many chains on the hop recently, including Jamie’s Italian, Prezzo and Byron.
A controversial, attention-seeking & racially-loaded video will turn their fortunes arou- oh, hang on. #currywars #gbk https://t.co/C9SoHPE0Pf
— Picky Glutton (@pickyglutton) October 24, 2018
1.50pm: US rate hike would be a worry for Cineworld, says Barclays
US trading at Cineworld Group plc (LON:CINE) is strong but with US interest rate risers appearing increasingly on trailers, Barclays has cooled on the stock.
Shares in the cinema operator have been downgraded to ‘equal weight’ from ‘overweight’ by the UK bank while the target price has been trimmed to 305p from 310p.
Cineworld shares currently trade at around 275p, down 1.2% on the day.
The way Barclays sees it, there is not much to quibble about in terms of Cineworld’s current US trading and there may be more synergies to be squeezed out of the Regal merger than the US$100mln currently projected but with all of Cineworld’s debt at floating rates – and with around 80% of it US-based – a rise in US interest rates is a worry.
Barclays’ has downgraded its 2019 profit before tax (PBT) and earnings per share (EPS) by around 7% to take into account its interest cost forecasts.
1.15pm: Footsie spurred on by weak pound
A quick check on the FTSE 100 now, and the blue-chip index is up 94.4 points, or 1.3%, to 7,049.9, recovering most of the losses sustained earlier in the week.
It is being helped by a weaker pound, which has fallen below US$1.291 for the first time in almost two months.
“It appears that the currency has been spooked by Theresa May’s impending meeting with the 1922 Committee of Tory backbenchers, with whom the PM hardly has the best relationship with at the moment,” said Spreadex analyst Connor Campbell.
“The outcome of that address may impact how the Brexit negotiations move forward – or don’t, as the troublesome case may be.”
BT Group PLC (LON:BT.A) is the top riser, up 3.5% to 249.1p, ahead of results next week.
Of the handful of stocks in the red, GVC Holdings PLC (LON:GVC) is once again the biggest loser, slumping another 2.9% to 847.3p. Reports last weekend suggested offshore makers will be hit with a tax increase in the upcoming budget.
1pm: ‘First cracks in US boom story’
US stocks are seen continuing the losing streak mid-week as traders await more earnings and digest the numbers from European banking giants.
Meanwhile, President Trump has been at it again with his criticism of the Fed's rise in interest rates.
The Fed chair "almost looks like he's happy raising interest rates," the president reportedly told the Wall Street Journal.
Billions of dollars are, and will be, coming into United States coffers because of Tariffs. Great also for negotiations - if a country won’t give us a fair Trade Deal, we will institute Tariffs on them. Used or not, jobs and businesses will be created. U.S. respected again!
— Donald J. Trump (@realDonaldTrump) October 23, 2018
A whole host of quarterlies are expected before the bell, including AT&T Inc (NYSE: T), Boeing Co (NYSE: BA), Brink's Company (NYSE:BCO), Hilton Hotels Corp (NYSE: HLT), Tupperware Brands Corp (NYSE: TUP) and UPS (NYSE: UPS).
The Dow Jones Industrial Average closed down around 125 points at 25,191, while the Nasdaq index shed around 31 points at 7,437 and the S&P 500 was down around 15 points at 2,740.
The Dow Jones is seen losing a further 156 points; the Nasdaq is called 61 points lower and the S&P 500 is expected to open 19 points in the red.
Fiona Cincotta, analyst at City Index, said of US earnings season: " A flood of results on Wall Street is showing the first cracks in the recent boom story, indicating that a slowdown in the economy may be under way.
"Particularly telling are numbers from big industrials such as Texas Instruments which not only reported lower results but also said they expect weaker semiconductor demand ahead.
"Wall Street analysts are pointing the finger at China arguing that a slowdown in the world’s most populous country is beginning to spill into other markets."
12.40pm: ASA bans ads from three carmakers
Ford, Nissan and Fiat have all had adverts banned by UK regulators for encouraging unsafe driving.
Two ads for Ford Mustang cars fell foul of the Advertising Standards Authority’s (ASA) rules after members of the public complained that they portrayed driving as a way to release anger.
The ASA also ruled against a Nissan Micra ad as well as an ad featuring four Fiat cars, claiming that both put too much emphasis on speed.
Ford said it had intended to show the Mustang as "the antidote to a dull life", while Nissan said its ad did not condone speeding and Fiat claimed its ad did not represent real-life driving conditions.
Any advert promoting motor vehicles which shows empty streets and cars driving freely should be banned under false & unrealistic advertising@ASA_UK https://t.co/PiB9BFkywl
— Andy (@Lets_getcycling) October 24, 2018
12.10pm: IAG flies higher on Deutsch price target hike
Deutsche Bank has upgraded its recommendation European airlines and said British Airways owner International Consolidated Airlines Group PLC (LON:IAG) is its top pick in the sector.
Many carriers have been hit by negative sentiment concerning high oil prices, rising costs and intense competition of late, but analysts reckon the sector has been “oversold” and moved their rating to ‘overweight’ from ‘underweight’.
They picked out IAG as their preferred stock, hiking its price target to 770p (from 750p) in the process.
“We see IAG's multiple airline brands with specific customer offerings as facilitating a level of flexibility and efficiency that should allow it to approach future opportunities and risks from a position of strength,” the analysts said, maintaining their ‘buy’ recommendation on the airline group headed by Willie Walsh.
IAG shares flew 1.7% higher at 570.8p on Wednesday morning.
11.45am: Yu Group latest AIM company in accounting cock-up
Yu Group PLC (LON:YU.), the electricity supplier to small businesses, has said it will swing to a surprise loss this year in the wake of an accounting cock-up which will cost it £10mln.
Essentially, the company thought it would supply more electricity and invoice for money than it actually did.
The ‘aged accrued income’ balance – the difference between expectation and reality – totalled £4.2mln for the year ended December 2017 and £4.3mln in the first half of 2018.
On top of that, lots of small businesses haven’t been paying their bills, forcing Yu to up its bad debt provision, while intense competition and price caps means the firm is guiding for a “significant reduction” to gross margins in 2018 and beyond.
“As founder and majority shareholder, nobody is more disappointed in this development than me,” said chief executive Bobby Kalar.
Yu, whose auditor is KPMG (of Carillion fame…), saw its value plunge more than 80% to 112.5p.
Hope Yu Group isn't going to be the next Utilitywise. Gloomy update today with accounting issues, guidance for much lower gross margin and a big profit warning
— Daniel Coatsworth (@SharesMagDan) October 24, 2018
11.20am: Miners hold FTSE back
The FTSE 100 is up 54.2 points, or 0.8%, to 7,009.4, recovering some of Tuesday’s losses, although it’s still down almost 50 points for the week.
Sterling’s fall below US$1.30 as Theresa May gears up for a crunch meeting with Tory MPs has helped as it makes the blue-chips’ overseas earnings worth more when converted back while it also makes their goods cheaper to foreign buyers.
Consumer goods giant Reckitt Benckiser PLC (LON:RB.) (up 3.2% to 6,795p) and telecoms firm BT Group PLC (LON:BT.A) (up 2.8% to 247.2p) are also dragging the index higher ahead of their results next week.
British Airways owner International Consolidated Airlines Group PLC (LON:IAG) is flying 2% higher at 572.4p after Deutsche Bank hiked their target price to 770p (from 750p).
Silver miner Fresnillo PLC (LON:FRES), which has been on a run over the past couple of weeks, has given up some of those gains after lowering its full-year production guidance. The stock topped the Footsie fallers, dropping 2.2% to 955.8p.
A couple of other mining giants, BHP Billiton plc (LON:BLT) (down 2.8% to 1,497.2p) and Glencore PLC (LON:GLEN) (down 1.8% to 296.5p) are also down on Wednesday morning.
10.50am: Pound falls below US$1.30
Uncertainty over the future of UK Prime Minister Theresa May has sent the pound plunging to a six week-low against the dollar.
Traders are waiting to see if a much-anticipated challenge to May’s leadership will materialise at a meeting with Conservative backbenchers later today.
Reports earlier this week suggested the number of Tory MPs needed to trigger a confidence vote was nearing the figure required to officially launch a challenge.
Some MPs are said to be unhappy with her handling of Brexit negotiations, with the UK and EU unable to agree an exit deal as yet.
All that has weighed on sterling, which has fallen to US$1.292.
10.30am: Tesla to report earnings ahead of schedule
Tesla Inc (NASDAQ:TSLA) have jumped more than 12% overnight after the electric carmaker said it will release its third-quarter earnings earlier than expected.
That fuelled speculation that Tesla will report an upbeat set of results, especially on the back of a U-turn by long-time critic Citron Research, which now reckons the stock will rise in the coming months.
Citron said in a note to clients: “The last time TSLA reported Q3 earnings in October was in 2016, when revenue beat consensus by 21%. Does anybody think that Tesla decided to move up its earnings release date because of bad news?”
$TSLA dropping earnings on top of $F tomorrow might be a bad sign for shorts. After reviewing all recent info on $TSLA dominating its categories, Citron is LONG Telsa for this quarter. Full report https://t.co/eZLSbtL0kg
— Citron Research (@CitronResearch) October 23, 2018
10am: Antofagasta copper production rises in Q3
Antofagasta PLC (LON:ANTO) reported a 15% quarter-on-quarter jump in copper production in the third quarter thanks to improved performances at all of its projects.
The Chilean mining giant produced 188,300 tonnes in the three months through to the end of September, leaving it on track to produce between 705-725,000 tonnes for 2018 as a whole.
Because copper is used in so many construction and industrial projects, its value tends to follow the health of the global economy, particularly that of China, the world’s largest consumer of raw materials.
Despite threats of a trade war between the US and China, Antofagasta said the outlook for next year “remains positive”, when it expectes production to creep up to between 750-790,000.
After opening higher, shares were broadly flat at 757.6p on Wednesday morning.
Antofagasta Q3 copper production -4% YoY (+15.4% QoQ), gold -30.1%. Net cash costs +16.4% YoY. Outlook positive despite trade fears. 2018 copper production guidance narrowed to 705-725Kt, with strong Q4 increase; Capex lower. 2019 guidance increased to 750-790Kt.
— Mike van Dulken (@Accendo_Mike) October 24, 2018
9.30am: Barclays’ profits drop 9.5%
Barclays PLC (LON:BARC) posted a 9.5% drop in pre-tax profit for the first nine months of the year after taking a £2.15bn hit for misconduct and litigation.
Pre-tax profit for the period ended September 30 came to £3.12bn, down from £3.45bn a year ago.
Conduct and litigation costs included a £1.4bn payment to the US Department of Justice to settle a lawsuit over claims Barclays misled investors over the quality of mortgage-backed securities they were sold in the lead up to the financial crisis, between 2005 2007.
It also included £400mln to compensate customers who were mis-sold payment protection insurance (PPI).
Excluding litigation and conduct, pre-tax profit increased 23% to £5.27bn, boosted by an improvement in credit impairment charges, recoveries in wholesale banking and a reduction in operating expenses. Shares are up 0.6% to 166.7p.
"We are well on our way to being prepared for a hard Brexit," Barclays CEO Jes Staley says https://t.co/m6QJyafBYB pic.twitter.com/HXxGWjcyCK
— Bloomberg (@business) October 24, 2018
9am: Early news update
NEWS OF THE DAY -
WEDNESDAY 24th OCTOBER 2018
with @AndrewScottTV#stocks #LSE #FTSE100 #AIM #proactive #investors #news #business #finance https://t.co/Ac83VbERgi pic.twitter.com/K0w23MTzFg
— Proactive News Desk (@UK_Proactive) October 24, 2018
8.30am: Early rally
The FTSE 100 index got off to a positive start – but didn’t quite make the splash predicted with the index of blue-chip shares failing to nudge back over the 7,000-mark.
In the first half hour of trade the benchmark was up 23 points at 6,978.45, with trade fears, Brexit and wrangling over Italy’s budget curbing traders’ enthusiasm.
“After a frightful sell-off in the previous session, equities are on the rebound today,” said Jasper Lawler of London Capital Group.
“We expect the big swings in the market to continue.
“Sentiment is clearly very fragile at the moment meaning that this is unlikely to be the last erratic session.”
The Footsie’s top riser was Antofagasta (LON:ANTO). The shares were up 2.3% after a solid trading update.
The same was true for Barclays (LON:BARC), which advanced 1.6% early on back of its third-quarter trading statement.
There was a knee-jerk reaction Scancell’s news earlier. The shares were marked down 20% after it said it was working with US regulator to iron out some wrinkles ahead of its phase II clinical trial.
Proactive news headlines:
Ethernity Networks Ltd (LON:ENET) has bagged a sUBStantial contract to supply its ENET switch and traffic manager firmware to a North American Tier 1 OEM.
Landore Resources Limited (LON:LND) has unearthed a new gold deposit at the Junior Lake project, in Ontario, Canada. The company, in a statement, said that exploration drilling located one kilometres to the east of the BAM gold deposit encountered “significant” gold mineralisation with grades up to 26.2 grams per tonne over a 1.02 metre section.
Capital Drilling Limited (LON:CAPD) shares rose on Wednesday on news it has been awarded a delineation drilling contract with Canadian-based Sama Resources Inc. at its Yepleu property in Côte d'Ivoire.
Arix Biosciences PLC (LON:ARIX) has seen a significant uplift in the value of its investment in a pre-clinical genome editing company, which recently made its stock market debut on NASDAQ. The UK investor in life sciences opportunities owns a stake 12.9% stake in LogicBio (NASDAQ:LOGC), worth US$30mln, which is US$16mln more than Arix ploughed into the business.
Scancell Holdings Plc (LON:SCLP) said it is working closely with the US drugs regulator to address questions raised ahead of the launch of a phase II clinical study of its cancer immuno-therapy. The UK group is planning to use its SCIB1 in harness with Merck’s Keytruda to treat patients with advanced melanoma.
It looks like the final spin of the wheel for the New York Wheel Project, in which Challenger Acquisitions Limited (LON:CHAL) had a minority stake, with the project developers admitting there appear to be no viable options for financing the balance of the work required to complete the project". Big Pic in September.
Stobart Group Ltd (LON:STOB) expects the number of passengers using Southend Airport to rise to two and a half million in 2019. Passengers rose 37% to 839,000 in the six months to August, but easyJet recently added a fourth plane, while Ryanair will base three aircraft at the airport from next year.
Minerals explorer Erris Resources PLC (LON:ERIS) has delivered another set of “excellent” drilling results at its Abbeytown zinc-lead-silver-copper in County Sligo, Ireland.
Anglo African Oil & Gas plc (LON:AAOG) has agreed a £5mln convertible loan financing with Sandabel Capital. The facility provides ‘future funding flexibility’ to support the ongoing drilling of the TLP-103C well as well as working capital, the company said.
AfriTin Mining Limited (LON:ATM) expects the next six months to see a major step forward in its plans to bring the Uis tin mine in Namibia back into production. The period should see the construction of the pilot plant and a JORC-compliant resource at Uis based upon the 1980s SRK resource statements produced by early 2019.
Canadian copper miner Rambler Metal & Mining PLC (LON:RMM, CVE:RAB) saw a sharp increase in the production of saleable copper in the third quarter.
Sativa Investments PLC (LON:SATI), the UK's first medicinal cannabis investment vehicle, said it has now signed the option agreement to lease a 7.53 acre site for medicinal cannabis production in Wiltshire on which the company intends to build a glasshouse facility. In a separate announcement, Sativa also announced that Mark Blower, currently an executive director of the company, is moving to a non-executive director role with immediate effect.
Minds + Machines Group Limited (LON:MMX) announced that the forthcoming launch of .luxe, the first top-level domain designed to resolve both on the World Wide Web and the Ethereum blockchain, will be marked by the company performing the Market Opening Ceremony at the London Stock Exchange on 26 October 2018.
Solo Oil PLC (LON:SOLO), the natural resources investment company focused on acquiring and developing a diverse global non-operated portfolio of strategic oil and gas assets, said its directors will be hosting an evening for investors on Thursday 22 November, commencing at 6.00pm in a private room downstairs at Williamson's Tavern, 1 Groveland Court, London, EC4M 9EH.
6.40am: Back above 7,000?
The FTSE 100 was expected to rise back above 7,000 this morning after a late rally in the US cut losses stateside yesterday.
Spread betting quotes pointed to the FTSE 100 opening at around 7,009 after it shed 88 points yesterday to close at 6,955.
“The political stand-off between Rome and Brussels continues as the EU commission have rejected the budget proposal from the Italian government. The administration in Rome will have to resubmit its proposals, but Prime Minister Conte has already made it clear there is no ‘plan B’,” said David Madden, a market analyst at CMC Markets.
“Trade tensions between the US and China persist and it is also adding to the bearish sentiment. A Chinese official announced that Beijing are not looking for a trade war, but they do not fear one, and this suggests the country is prepared to dig its heels in over this trade dispute,” he added.
US markets took a bit of a kicking yesterday with the Dow Jones average down 126 at 25,191 and the S&P 500 off 15 points at 2,741.
Possibly taking encouragement from the fact that US markets finished well above their worst levels, Asian markets were buoyant this morning.
In Tokyo, the Nikkei 22 was up 151 at 22,162 while in Hong Kong the Hang Seng index was up 102 at 25,449.
Closer to home, equity traders will be anxiously looking forward this morning to the first update of the third quarter results season for banks.
Barclays opens the batting, and UBS expects it to report an adjusted pre-tax profit of £1.09bn for the quarter, compared to £1.19bn a year ago, on higher costs related to foreign exchange rates and investments. Total income is forecast to fall to £5.02bn from £5.17bn.
“If top-line misses in 3Q18 investors will want to see cost discipline, not investment plans (though we like the move to near shore in Glasgow and New Jersey),” UBS said.
The UK Finance lending figures from the major retail banks will be the only economic data release of note for the UK, noted Daiwa Capital Markets.
“Recent figures from this industry group have suggested that the number of new first-time buyer mortgages completed in August was the highest since June 2017,” Daiwa said. Notwithstanding that, the figures are expected to show that the total number of mortgage approvals eased slightly in the latest month.
Significant announcements expected on Wednesday:
Trading update: Barclays PLC (Q3) (LON:BARC), Antofagasta PLC (Q3) (LON:ANTO), Fresnillo PLC (LON:FRES), Cobham PLC (LON:COB), Serco PLC (LON:SRP), Metro Bank PLC (Q3) (LON:MTRO), Tatton Asset Management Plc (LON:TAM)
Finals: Image Scan Holdings Plc (LON:IGE)
Interims: Stobart Group Ltd (LON:STOB), U+I Group PLC (LON:UAI)
Economic data: UK trade in goods; US new home sales; Fed Beige Book
Around the markets:
- Sterling: US$1,298, down 0.02 cents
- 10-year gilt: yielding 1.336%
- Gold: US$1,235.00 an ounce, down US$1.80
- Brent crude: US$76.71 a barrel, up 27 cents
- Bitcoin: US$6,488.05
City headlines:
- US markets were spooked on Tuesday by third-quarter earnings reports from US industrial companies that suggested they are planning to raise prices.
- Andrew Left, executive editor of Citron Research, one of Tesla’s most vocal critics has unexpectedly praised the company’s progress, sending its shares up by more than 12%.
- The European Commission has ordered Italy to rip up its free-spending budget in an unprecedented financial rebuke of a member state, warning against thinking it could “break free” of eurozone austerity rules.
- The price of oil fell sharply yesterday on reports that American stockpiles rose last week; oil was down 4.7% at $76.10 a barrel in New York last night.
- Kering, which owns brands such as Gucci, Yves Saint Laurent and Bottega Veneta, reported a 27.5% rise in group revenue in the three months to the end of September to €3.4 billion, boosted by a 35% rise in Gucci sales.
- Mark Carney has called for “protections for workers” to ensure that the unfolding technological change does not polarise the labour market as in the Industrial Revolution.
- The UK's taxman has won a £79 million tax avoidance case against Goldman Sachs and Cargill.
- Sir James Dyson has chosen a new production facility in Singapore to produce electric cars as the billionaire inventor’s move into the automotive world gathers pace.
- The Federation of Master Builders, a group representing small construction firms, has warned the Government against close the door to migrant builders after Brexit.
- SoftBank chief Masayoshi Son, one of Saudi Arabia's biggest business partners, has cancelled plans to speak at a major investment conference in Riyadh amid controversy surrounding the alleged murder of journalist Jamal Khashoggi.
- Book publisher Bloomsbury has registered a rise in first-half profits and revenue fuelled by a surge in sales of Anthony Bourdain’s Kitchen Confidential and growing demand for the perennial favourite Harry Potter.
- Premier Inn’s owner, Whitbread, is planning to expand into the German hotels market after the sale of its Costa Coffee business to Coca-Cola.
- Some 16,641 TSB current account holders switched to a rival between April and June following its IT disaster back in April.
- Asos has poached Britvic's head of finance, Mathew Dunn, as a replacement for Helen Ashton who left in March after expressing her 'desire to move on'.