FTSE 100 index closes lower
Theresa May meets with cabinet
UK inflation data 'stubbornly unchanged'
Govt sees “strong and diverse” interest in North Sea
FTSE 100 closed the day almost 20 points lower as jittery investors await the Prime Minister's statement on where the country is with Brexit.
Cabinet ministers are currently giving their view on the draft agreement between the EU and the UK at Number 10.
The UK blue-chip index closed down 19.97 at 7,033, while FTSE 250 shed over 75 points at 18,910.
"The clock is ticking for Theresa May, as she needs to convince her cabinet, and then the majority of the House of Commons to back her draft agreement regarding the UK withdrawal from the EU. Judging by the speculation, there is widespread criticism of the draft, and it sounds like a difficult sell," said David Madden, at CMC Markets earlier.
On Wall Street, benchmarks are lower. The Dow Jones Industrial Average is off 146 points, while the S&P 500 is down nearly 14 points at 2,708. The Nasdaq is lower by around 49 points at 7,151.
3:30pm: GBP uncertain as forex markets watch Brexit shutdown
With the outcomes of this afternoon’s Brexit ‘showdown’ still unknown, currency markets remained uncertain.
“Wednesday’s scatty trading showed no signs of settling after the US open, the UK markets especially all over the place,” said Connor Campbell, analyst at Spreadex.
“With sterling up 0.2% against the dollar, but down 0.3% against the euro, it became increasingly hard to gauge how the pound was feeling as the day went on.
“Cable’s gains, at least, seemed more to do with a greenback wobble than sterling strength, the US currency perhaps disappointed that the latest inflation readings didn’t beat forecasts.
He added: “To be fair to the pound, it is still waiting for the outcome of the Brexit deal-discussing Cabinet meeting.”
2:45pm: FTSE 100 sees positive ground on Brexit hope
Amid all the chatter and potential for volatility around Theresa May and Brexit, the FTSE 100 found some positive territory during afternoon dealing.
The London index was up 15 points or 0.21% changing hands at 7,067.
“Markets have rallied on news that a Brexit deal has been reached but there’s still a long way to go,” analysts at ING said in a note.
“There’s no guarantee Parliament will approve it, which risks dragging the process into the new year.
“We still think ‘no deal’ will be avoided in the end – allowing a re-pricing of the BoE cycle some further GBP strength, but for now, it is too soon to get carried away.”
1:00pm: Theresa May ‘fancied’ to see resignations over Brexit ‘deal’
Theresa May is ‘fancied’ to lose Cabinet ministers as the Prime Minister takes her Brexit withdrawal agreement for sign-off at this afternoon’s meeting.
Betway is giving odds of 7/2 that three or more ministers will resign in the next 24 hours.
Nonetheless, the bookmaker said it is “marginally odds on” for May’s Cabinet to remain united over the proposed Brexit terms – while punters can get 11/4 that there’ll be exactly one resignation, and, 5/1 for two.
It meanwhile offers 3/1 that May will be replaced as Prime Minister prior to the March 2019 ‘Brexit day”, 13/8 that the proposal will be rejected in the commons, but, 2/1 that there’ll be a second Brexit referendum during 2019.
Brexit Live: Two cabinet ministers tipped for resignation
12:45pm: Wall Street futures point lower
US stocks are poised to start in the red on Wednesday after a largely lower finish yesterday as traders continue to fret about a general slowdown of the global economy.
New figures shows that Germany and Japan contracted in the third quarter.
Meanwhile, in the US today, Macy's (NYSE:M) results before the bell will be closely watched and inflation data for October at 8.30am.
In futures trade, the S&P 500 is off one point, while the Nasdaq is down around 17 points and the Dow Jones futures are also around one point lower.
12:15pm: FTSE 100 braced ahead of Theresa May’s Brexit showdown at Number 10
By midday, the FTSE 100 had calmed somewhat, as all attentions turn to Theresa May’s pending Brexit showdown.
Standing at 7,051, the London index was down just one point for the session, albeit volatility was almost inevitable as the afternoon progresses.
At 2pm today, Prime Minister Theresa May will hold an emergency cabinet meeting to sign off on the final Brexit deal, with many figures saying both pro-Brexit and pro-Remain cabinet members should reject the deal and resign.
The meeting is the culmination of months of negotiations and will see whether May can unify her divided cabinet.
Leaked details of the deal are understood to contain an agreement on an independent committee that will arbitrate when a UK-wide customs backstop should be ended, with a review scheduled for July 2020.
The deal has already attracted criticism from both the pro and anti-Brexit factions, with some MPs already saying they will not vote for the deal in Parliament (which would take place early next month, if signed off by the cabinet).
Ken Odeluga, market analyst at City Index, in a note said: “Brexit murk may or may not clear over the next 24 hours.
“Still, the market is sensibly restricting focus to one staging post at a time and there are now enough promising signals that the tortuously worded deal can make it past cabinet approval.”
“Brexit Secretary Dominic Raab has been the most effective cheerleader of an arrangement that could pass Brexiteer muster. Now, with a deeply conflicted draft at his fingertips, it appears his political career faces a blow-up, whether he chooses to endorse it or not.”
SOCIAL ROUNDUP – What’s everyone saying about May’s Brexit ‘deal’
It is fair to say that Brexit is very much in the forefront of investors' minds on Wednesday.
Proactive’s Calum Muirhead is HERE to follow the day’s political ‘action’ and hopefully cutting through the noise and rhetoric.
On Twitter, meanwhile, noise is obviously impossible to avoid.
There were those in the Leave camp (or those wanting May to leave, at the very least).
WATCH | Less than two months ago, Theresa May told us that any deal which sees Northern Ireland remain in the Customs Union "is unacceptable. We would never agree to it. It would mean breaking up our country. No Deal is better than a bad deal."
She is a pathological liar! pic.twitter.com/r5urfL0ajR
— Leave.EU (@LeaveEUOfficial) November 14, 2018
This is the moment of truth. This is the fork in the road. Do we pursue a future as an independent nation or accept EU domination, imprisonment in the customs union and 2nd class status. Cabinet and all Conservative MPs should stand up, be counted and say no to this capitulation.
— David Davis (@DavidDavisMP) November 13, 2018
Sabine Weyand in The Times clear: if agreed, the CU backstop will not be temporary but the minimum basis for our future trading relationship, with high alignment and 'EU control' - this means super-canada impossible.
Cabinet must live up to its responsibilities & stop this deal
— Boris Johnson (@BorisJohnson) November 14, 2018
Brexit Deal Resignation Watch https://t.co/n1vgJdswbP pic.twitter.com/WNM0fTSIkZ
— Euro Guido (@EuroGuido) November 14, 2018
The Remainers, #peoplesvote (or those, at the very least opposed to the present government)
WATCH: The Government has finally cobbled together some sort of #Brexit deal - but they know that this dodgy deal isn't better than the one we currently have inside the EU.
This deal will leave us worse off & with less control - we're #NotBuyingIt https://t.co/qzWgWXdxtW pic.twitter.com/uRaSTfoJLu
— People's Vote UK (@peoplesvote_uk) November 14, 2018
We will look at the details of what has been agreed when they are available. But from what we know of the shambolic handling of these negotiations, this is unlikely to be a good deal for the country. #BrexitDeal
— Jeremy Corbyn (@jeremycorbyn) November 13, 2018
I’m far from a leftist radical. Just think Brexit is not how it was portrayed and ultimately will be awful for our country. https://t.co/8YxaZbEgeW
— Gary Lineker (@GaryLineker) November 14, 2018
Nicola Sturgeon says a Brexit deal which leaves Scotland outside of the single market and "competing for investment and jobs with Northern Ireland" while it effectively stays in would be the "worst of all possible worlds".
— Philip Sim (@BBCPhilipSim) November 14, 2018
William Hague on #r4today: “Did anyone really think we could leave the EU without having to make some compromises?”
Yes, because this is the con Boris Johnson and Nigel Farage sold the country. Now the compromises have emerged, the public must be able to look again. #PeoplesVote
— David Lammy (@DavidLammy) November 14, 2018
And then, those in the "gallows humour" camp
Starting to think the PM's Brexit deal might be a little bit werrr a little bit weyyy pic.twitter.com/EunMwHy9qE
— The Poke (@ThePoke) November 14, 2018
Brexit commemorative mug, made by Bentham Pottery https://t.co/e7Xqyskkg4 pic.twitter.com/oFXrgac6ug
— Dr Paul Coxon (@paulcoxon) November 14, 2018
We now go live to brexit pic.twitter.com/cMMsBNHYwy
— James Felton (@JimMFelton) November 14, 2018
11:30am: UK Government reveals “strong and diverse” interest for new North Sea projects
For a government agency, it is probably a bad day to be putting out good news – even if you’re hoping to subtly make suggestions about a positive future for domestic energy security – nonetheless, the UK’s Oil & Gas Authority has today announced “strong and diverse” interest in new license blocks in the North Sea.
The OGA in a statement, confirmed that the UK’s 31st licensing round had closed last week, on 7 November, and it had received bids for an aggregate area in excess of 370,000 square kilometres.
Perhaps significantly, the OGA highlighted greater interest in exploration compared to the last offshore round, about two years ago (when crude oil prices were lower).
“This is an encouraging set of applications, demonstrating that interest in UK offshore licensing opportunities has increased since the 29th frontier round held in 2016, with an almost 50% increase in the number of blocks applied for,” said Dr Nick Richardson, the OGA’s head of exploration and new ventures.
A total of 35 companies applied for acreage (customarily such processes show multiple partnered ventures to the overall number of companies involved will likely be higher) and the government agency will now carry out a phase of technical evaluation before awarding blocks to oil and gas companies.
License awards are expected to be announced in the second quarter of 2019.
10:45am: Eurozone GDP growth stays slow, while Germany marked negative quarter
Eurozone GDP growth has been confirmed at just 0.2% for the third quarter as Germany marked a negative 0.2% for the same three month period.
“While a small recovery of GDP is expected for Q4, growth momentum has clearly been lost in 2018,” said analysts at Dutch bank ING.
Problems in the German car industry, global trade wars, competition from emerging markets, stagnation in Italy and an economic dampening due to higher oil prices were all among the explaining factors suggested for the European slowdown.
10:30am: FTSE 100 stays on back foot at pivotal time for Theresa May and Brexit
By mid-morning, the FTSE 100 had remained decidedly negative, down 32 points or 0.46% at 7,020, as political narratives continued to steer the pound and market sentiment.
The time for tautologies, rhetoric and sabre rattling soundbites could possibly (but, probably unlikely) be nearing an end as the reported proposed terms of May’s withdrawal agreement from the European Union come to light.
Whether or not the terms can stand-up against conservative in-fighting and May’s Northern Irish alliance with the DUP remains to be seen.
Brexit may soon mean more than Brexit. Meanwhile, uncertainty and a degree of market volatility will likely remain.
9:45am: Stubbornly high inflation for October but Brexit overshadows
Rising rhetoric was the only kind of inflation in focus on Wednesday as Theresa May prepares to bring her proposed terms for a Brexit withdrawal to parliament.
Whatever the reading would’ve been for October’s UK CPI, it would likely be largely overlooked, that the figure was unchanged from September at 2.4%, means it’ll even be easier to pass by.
Nonetheless, those that care to look closer will, perhaps worryingly, see that there’s more going on with price trends than meet the eye – a ‘large’ downward movement in food, (non-alcoholic) drink, and clothing was offset by notably higher fuel prices.
Just like everyone else, monetary policy makers will have to wait and see what comes in terms of the wider macro-economic picture and the looming Brexit.
“Inflation is still above target, but tolerably so for the moment,” said Laith Khalaf, analyst at stockbroker Hargreaves Lansdown.
“Brexit is still the elephant in the room when it comes to the future path of inflation, and consequently of monetary policy.
“That’s because the pound now waxes and wanes with the Brexit negotiations, and that has a big impact on how much UK consumers pay for imported goods.”
Khalaf added: “A disorderly Brexit would see the pound fall and inflation rise, and if you believe Mark Carney, that could mean a rate hike or a cut.
“Meanwhile what the market sees as a positive Brexit deal will deliver a higher pound and lower inflation, and would most likely embolden the Bank of England to raise rates more aggressively.”
8.40am: Weak start
As expected, the FTSE 100 retreated in the first half-hour of trading ahead of a putative Brexit deal, which will be put to Prime Minister Theresa May’s cabinet later Wednesday.
The index of blue-chip shares fell 52 points to 7,002.14, following Wall Street lower, though it was the action on the foreign exchange market that caught the eye.
“We are now at the crunch point for Brexit, meaning we are likely to enter a new phase of volatility for the pound,” said Neil Wilson of Markets.com.
“Implied volatility gauges are spiking as traders hedge against wild swings. Sterling-dollar one-month implied volatility has reached a two-year high and may continue to spike.”
The British currency initially jumped against the greenback but failed to sustain the rally and has been unable to break through the US$1.30 level this morning.
“This indicative of the total sense of uncertainty facing the market with all outcomes still possible,” Wilson added.
On the stock market, there was a Brexit theme with Flybe Group (LON:FLYB), the regional airline, putting itself up for sale, citing uncertainty around the UK’s exit from the EU for the decision. The shares spiked 13%.
On the FTSE 100, the decision by Smiths Group (LON:SMIN) to separate the industrial and medical arms of the business was received well rather than being given rapturous applause as the shares nudged 4.2% higher.
Proactive news headlines:
Digital marketing specialist Mporium Group PLC (LON:MPM) has raised £2.3mln by issuing shares at a premium. Existing investors subscribed for 46mln shares for which they paid 5p apiece – 11% above Tuesday’s closing price of 4.5p.
Wealth Manager Tavistock Investments PLC (LON:TAVI) has received a £1mln cash injection from affinity specialist Lighthouse as part of a strategic alliance. The two companies will develop a range of investment products for Lighthouse’s clients under its Luceo brand.
Redx Pharma PLC (AIM:REDX) has unveiled a new drug candidate, which will enter clinical trials in 2020. RXC006 is a new breed of pill called a porcupine inhibitor and it will be used as a first-in-class treatment for a rare but life-threatening disease called idiopathic pulmonary fibrosis.
The chairman of Seeing Machines Limited (LON:SEE), Jack Boyer, has hailed an “exciting and pivotal” 12 months for the firm in a statement at its annual general meeting (AGM).
MaxCyte PLC (LON:MXCT) has negotiated a clinical and commercial licence deal with Precision Biosciences of the US. Under the terms of the agreement, Precision will use MaxCyte's flow electroporation cell engineering technology alongside its own ARCUS genome-editing platform.
Tekcapital PLC (LON:TEK) said its portfolio company, glasses innovation group Lucyd, has launched an affiliate and reseller programme.
Caledonia Mining Corporation PLC (LON:CMCL) told investors that gold production amounted to 13,978 ounces, down 2.9% versus the comparative period of 2017. Output for the nine-month period measured 39,558 ounces.
Asiamet Resources Ltd (LON:ARS) has begun the additional drilling and geotechnical work at its Beruang Kanan Main (BKM) copper project in Indonesia. The explorer had hoped to have delivered a bankable feasibility study for BKM by now but decided last month to carry out extra work to optimise the mine design and further enhance the project economics.
Arc Minerals Ltd (LON:ARCM) has announced significantly higher grade cobalt results from shallow drilling of the oxide portion of its Kalaba (Zamsort) Cobalt-Copper Project in Zambia. The AIM-listed firm said the reverse circulation drilling results showed cobalt grades of up to 0.35%, intersected together with copper grades up to 1.50%.
Trinidad focused Touchstone Exploration Inc (LON:TXP, TSE:TXP) told investors that crude oil production averaged 1,758 barrels per day in the third quarter as the group successful well programmes continued to deliver. The third quarter production measure represented a 22% improvement against the 2017 comparative.
Regency Mines PLC (LON:RGM) is to take over the legwork at the Mambare cobalt/ nickel project in Papua New Guinea. The renewal application has been recommended for approval by the Mining Advisory Council in Papua New Guinea and awaits Ministerial signature, it added.
Jersey Oil & Gas PLC (LON:JOG) has hired Vicary Gibbs as its new chief financial officer with immediate effect. At the same time, Scott Richardson Brown has stepped down from his current role with immediate effect, to focus on his other directorships and business interests.
Maistro PLC (LON:MAIS) confirmed on Tuesday evening that it had raised £1mln through a placing of 100mln new shares at a placing price of 1p each, a 68% discount to Monday's close price of 3.15p.
BlueRock Diamonds PLC (LON:BRD) announced late on Tuesday that Paul Beck, a founder director of the company, had resigned as a non-executive director of the company with immediate effect.
Base Resources Limited (LON:BSE) (ASX:BSE) said the latest company presentation, which was presented today at the TZMI Congress in Singapore, is available from the company’s website.
Ariana Resources PLC (LON:AAU) said it is hosting two corporate events in London, an Analyst and Investor Day on Thursday 29 November 2018 at the Hilton, Angel Islington, 53 Upper Street, London, N1 0UY between 9:00am and 6:00 pm, and a Shareholder Evening, Presentation and Q&A session on Monday 3 December 2018 at 6:00 p.m., at 1 America Square, 17 Crosswall Street, London, EC3N 2LB.
6.45am: FTSE 100 called lower
The FTSE 100 index is seen falling back on Wednesday, retreating after Tuesday’s fractional gain in line with overnight weakness on the US markets as traders in London await the release of the latest UK inflation data as well as further news on a draft Brexit agreement.
Spread betting firm IG expects the blue-chip index to open around 23 points lower at 7,030, having added just 0.68 points on Tuesday.
Overnight on Wall Street, the Dow Jones Industrials Average closed 100 points lower at 25,286, extending the previous session’s big sell-off as tech stocks remained under pressure and oil majors were knocked by a drop in the price of crude amid weakening global demand and oversupply concerns.
Asian markets were mixed today, with Japan’s Nikkei 225 index adding 0.2%, with exporters boosted by a weaker yen, but Hong Kong’s Hang Seng index shed 0.4% weighed by weak retail sales data from China.
On currency markets, the pound remained fairly steady against both the dollar and the euro as traders sought more news on the draft Brexit deal agreed between the UK and EU on Tuesday, with prime minister Theresa May to brief her cabinet about it later today, and also awaited the October UK inflation numbers, due at 9.30am.
Inflation decline to continue
After Tuesday’s average earnings data showed UK wage growth at 3%, the highest level since the three months to December 2008, the market will be keen to see if the consumer price inflation (CPI) is continuing to go in the opposite direction, benefitting Briton’s wallets and purses.
September’s annual inflation rate eased back to 2.4%, down from 2.7% in the previous month, as price increases from food, transport and leisure activities slowed.
In a preview, Helal Miah, investment research analyst at The Share Centre said investors will want to see the CPI rate heading even closer to the BoE’s target rate of 2%.
But he thinks this may be too much to ask in such a short period, especially given the stronger wage growth and the impact of higher oil prices in the summer months are still feeding through the system.
Real estate issues focus for British Land interims
Interim results from FTSE 100-listed British Land PLC (LON:BLND) should be the main corporate focus on Wednesday, with analysts at Barclays last week turning neutral on the real estate group in a cautious note on the sector.
They downgraded their rating for British Land to ‘equal-weight’ from ‘overweight’, cutting their target price to 580p from 730p, citing concerns that transaction markets have dried up, tenant failures have increased and valuation declines were evident.
Back in May, British Land posted an annual pre-tax profit of £501mln, up from £195mln a year earlier, while revenue increased to £639mln from £589mln, supported by the company’s strategy of targeting high-quality destination shopping centres and mixed-use London campuses.
Meanwhile, FTSE 100-listed insurer Prudential PLC (LON:PRU) has reported a 17% jump in life insurance new business profit for the first nine months of this year, driven by another strong performance in Asia.
FlyBe up for sale?
Away from the blue chips, troubled discount airline Flybe Group PLC (LON:FLYB) will also be a focus after Sky News reported that the firm is looking at a sale or merger with a rival in the wake of a recent profit warning.
The airline, which reports first-half results today, has been hit by weakening demand, higher fuel costs and falls by sterling. Earlier this year it rejected a bid approach from Southend airport owner Stobart Group PLC (LON:STOB), with that likely to be among possible bidders again, according to Sky.
Significant announcements expected on Wednesday:
Interims: British Land PLC (LON:BLND), SSE PLC (LON:SSE), Flybe Group PLC (LON:FLYB), Speedy Hire PLC (LON:SDY), Renold PLC (LON:RNO), Workspace Group PLC (LON:WKP)
Finals: Avon Rubber PLC (LON:AVON), AB Dynamics PLC (LON:ABDP), Grainger PLC (LON:GRI)
Trading update: Cobham PLC (LON:COB), Smiths Group PLC (Q1) (LON:SMIN), Solgold PLC (Q1) (LON:SOLG), JPJ Group PLC (Q3) (LON:JPJ)
AGMs: Seeing Machines Ltd. (LON:SEE)
Economic data: UK CPI, RPI, PPI, HPI inflation; UK construction output; US CPI inflation
Around the markets:
- Sterling: US$1.2997, up 0.2%
- Gold: US$1,1920 an ounce, unchanged
- Brent crude: US$65.21 a barrel, down 0.3%
City Headlines:
- Theresa May challenged her divided cabinet to back a draft Brexit treaty and attempts to face down Conservative Eurosceptics after negotiators in Brussels agreed to Britain’s terms for leaving the EU – Financial Times
- Amazon is to invest US$5bn on new headquarters in New York City and Virginia – The Times
- Google said it would take control of its subsidiary DeepMind’s healthcare division, which used NHS statistics, raising concerns about patients’ data - Daily Telegraph
- Flybe 'up for sale' weeks after profit warning – BBC News
- Prudential's life insurance new business profit rises 17% - Reuters
- Npower, one of the UK’s big six energy firms, has lost half a million customer accounts in 2018 and said it will make a loss for the fourth consecutive year – The Guardian
- Vodafone is reviewing its masts business and is targeting €1.2bn of cost savings as part of his strategy to revive the telecoms company - The Times
- WeWork has secured an additional US$3bn of funding from SoftBank at a US$42bn valuation - Financial Times:
- The five US tech giants have spent more than US$115bn in the first three quarters on buying back their own stock to take advantage of President Trump’s tax reforms - Financial Times
- UK advertisers are cutting almost £44mln from their TV ad campaign budgets in the run-up to Christmas – The Guardian
- The Building Societies Association has urged lenders to consider bringing back controversial 100% mortgages to combat falling home ownership rates among young people – The Times
- John Walden, the former boss of Argos and Homebase, has been appointed the chairman of Holland & Barrett as the health and wellness retailer prepares for a significant digital expansion – The Times
- Elliott Management has levied a series of demands on Hyundai Motor, including returning more than £8 billion to investors and reviewing all of its non-core businesses – Financial Times