FTSE 100 closes lower
US indices open mixed
Melrose top FTSE 100 loser
FTSE 100 closed lower on Friday as there is more political uncertainty hitting global markets.
The UK's premier share index lost around 24 points at 7,013 on the day - and was down 1.29% on the week.
US stocks are mixed but the S&P 500 and Nasdaq are lower.
It has been a tumultuous week, with Brexit, of course taking centre stage and the Prime Minister Theresa May is now battling for her future as she tries to get her draft deal through parliament..
FTSE 250, a more domestic focused UK market, was also lower - down around 73 points at 18,589.
In terms of companies, top laggard on Footsie was turn-about firm Melrose Industries (LON:MRO) which lost 6.05% to 171.45p.
Royal Bank of Scotland (LON:RBS) also saw more losses on the day, off 3.26% to 216.90p.
Fiona Cincotta, at City Index, said: "Losses for RBS across the week stand at over 14% as investors price in the possibility of Jeremy Corbyn taking power and breaking up the bank. That is clearly a trade no one wants to be on the wrong side of."
3:15pm: Footsie trims losses
US indices have opened mixed, prompting the Footsie to trim its losses.
The FTSE 100 was back above 7,000 at 7,010, down 28 points on the day.
In the US, the Dow defied expectations by making early progress but the S&P 500 fell back, as expected.
The tech-heavy Nasdaq Composite was the worst performer of the trio after last night’s disappointing update from graphics chip designer, Nvidia.
“Cult, US-listed stock Nvidia, a firm often bracketed with the better-known FAANG stocks, has blown a massive fuse overnight and left growth-seeking momentum investors in an invidious position,” reported Russ Mould, AJ Bell’s investment director.
“The leading manufacturer of silicon chips has issued a big profit warning for the final quarter of its financial year (the three months to the end of January), citing indigestion in the video consoles market and also a slowdown in demand from makers of Bitcoin mining equipment.
“As a result, a stunning run of increases in quarterly sales and profits is about to come to a crashing end, with founder and chief executive Jensen Huang forecasting a 7% year-on-year drop in sales and a 28% year-on-year plunge in operating profit for the fourth quarter,” Mould added.
The UK does not really have a counterpart to Nvidia but it does have its share of glamour stocks, such as Aston Martin Lagonda Global Holdings PLC (LON:AML).
The cars maker was stuck in reverse despite two brokers initiating coverage with positive ratings.
Deutsche Bank started Aston Martin with a ‘buy’ rating and a 2,000p price target, pointing out that the luxury icon with a 105-year heritage, amplified by its association with the James Bond franchise, has a global reach.
JP Morgan’s analysts agreed with the 2,000p price tag but went with an “overweight” rating.
The shares were down 4.6% at 1,435.4p.
2.00pm: Losses lengthen ahead of what is expected to be a soft opening on Wall Street
With US indices tipped to open lower this afternoon, Footsie has lost more ground.
The FTSE 100 was down 65 at 6,973.
US stocks set to start lower as traders look to industrial data and uncertainty reigns in UK https://t.co/0WZbfWOmR1 via @proactive_uk #brighterir #AndrewScottTV #CapitalNetwork1
— Giles Gwinnett (@Gile74) November 16, 2018
“Index futures are pointing towards a slightly softer start, the idea that trade talks between the US and China were making progress seems to have been side-lined and on top of this, there’s the mounting political uncertainty in the UK surrounding Brexit,” said James Hughes, the chief market analyst at Axi Trader.
“The situation in London is becoming so pronounced that ripples are set to be felt across the Atlantic. Investors are buying UK government gilts as a safe haven play, which in turn is driving up corresponding yields for US Treasuries and in turn will act as a catalyst to see money cycle from stocks into bonds on Wall Street. US economic data is relatively light and – against the overall backdrop - seems unlikely to provide any meaningful direction. Market sentiment has been steadily worsening in recent weeks – there’s no sign of any let-up emerging yet,” Hughes added.
Things may be bad for holders of blue-chip shares but spare a thought for Trakm8 Holdings PLC (LON:TRAK), which lost two-thirds of its market value after a trading update.
The global telematics and data insight provider saw revenue in the six months to the end of September dive to £8.8mln from £14.1mln the year before.
The company fell into the red with an adjusted loss before tax of £2.46mln versus a profit the year before of £363,000.
Worse than that, the group said that the improved financial performance it had looked forward to at the time of its September trading update will not materialise.
“Continuing delays in decisions by customers is preventing the return to the usual levels of success in Fleet and Optimisation, a move to a rental model in the automotive space, and the loss, due to sanctions, of a multi-million-pound contract for the supply of Insurance solutions into Iran, has meant that revenue for the current financial year is now expected to be 20-25% below the FY2018 outcome, and 10-15% below on a like-for-like basis,” the company said.
TRAK @Trakm8
Ooft! ???? Yet another disappointing trading update. TRAK always appears to deliver fantastic innovation...but unfortunately cannot seem to follow through with profitable revenue growth. Not often you see a negative split for EVERY metric????????
I don’t hold. pic.twitter.com/M2RQw66HQF
— Glasshalfull (@Glasshalfull1) November 16, 2018
11.20: The Footsie relinquishes early gains
Much as it did yesterday, the FTSE 100 has wilted after a promising start.
An hour or so before noon, the FTSE 100 was down 7 points at 7,031, with taxpayer-owned Royal Bank of Scotland Group PLC (LON:RBS), the biggest blue-chip faller, down 3.4%.
READ Lloyds, RBS and Barclays shares drop as Theresa May faces no-confidence vote over Brexit deal
The mid-cap FTSE 250 was faring a little better, up 23 at 18,684, but even it was well below its high for the day.
“The pound (£1.2829, +0.24%) is holding on to its early Friday morning gains, on the back of UK PM May’s radio interview in which she said her deal was the best Brexit compromise the UK could achieve,” reported Dean Popplewell at Oanda.
“However, there is speculation that Conservative ministers may have enough votes – 48 are needed – for a letter of ‘no confidence’ that would force a vote in Parliament,” he added,
ING said any “no-confidence” vote would likely take place early next week.
“If a majority backs her, then she cannot face another leadership challenge for 12 months. That is why this is such a gamble for the Brexit hard-liners. They want someone in charge that can deliver a ‘true’ Brexit, but risk being stuck with the status quo if they cannot convince 158 of the 314 Conservative MPs to do the same. If she loses the vote then she is forced out and there is a leadership election in which she cannot contest,” the Dutch finance house explained.
“Political analysts suggest that Theresa May (at this stage) is likely to win. As former Chancellor and pro-remain MP Kenneth Clarke stated yesterday, she is likely ‘doomed to carry on leading us through this mess because there isn't anybody else.’ However, bookmakers are not so sure. Indeed, the pressure is likely to continue building and if her leadership looks doomed this could see momentum build for a change. This could accelerate if the DUP withdraw their ‘confidence and supply’ deal with the Conservatives – headlines this morning suggest they ‘could review it’,” ING said.
“Our view, as it has been for a long time, is that this is going to go down to the wire – British MPs feel that there are several months before the ‘hard’ deadline in March 2019 and as such there is no impending pressure to get a deal done right now; however, there is no majority in the House of Commons for a ‘no-deal’ Brexit and that is why the most likely route of success is to put a simple choice of the UK leaving without a deal or the UK progressing into a smooth transitional arrangement as late as possible to help focus minds. This is obviously at odds with the EU timetable and will anger EU leaders, but it is difficult to see much of an alternative at this stage.
“This will be economically damaging for everyone due to the uncertainty and worry it causes for businesses and individuals, but it will be the UK that is hit hardest,” ING warned.
Ed Fulton, trading spokesman for Sporting Index, said: “Since Theresa May delivered her proposed Brexit deal, pressure continues to mount on her to resign. Ministers and supporters of different political parties have all had their say, and it looks like a matter of time before she departs from No 10 – either by jumping ship or being forced to walk the plank.
“While Theresa May was given a thankless task of negotiating Brexit in the wake of David Cameron’s resignation in 2016, many politicians and experts are adamant that she could have negotiated a better deal for the UK. We think she’ll last another 91 days – which would be a miserable Valentine’s Day departure for the Tory leader,” Fulton said.
I'm not a Tory. I feel for Teresa May. She took over to deliver a deal for us. All the critics saying she did a bad job. Well lets see what they would do. It's easy saying we should have got this and that,dont forget the people we are negotiating with say NO
— Lord Sugar (@Lord_Sugar) November 16, 2018
It is just as well that pundits have the modern day equivalent of “The Perils of Pauline” - “The Tribulations of Theresa”, perhaps – to occupy them as there is not much happening on the corporate news front.
https://www.imdb.com/title/tt0004465/?ref_=nv_sr_1
As such, infrastructure firm Kier Group PLC (LON:KIE) chose a good day to put out a solid trading update.
The shares were up 2.9% as the FTSE 250 group said it is confident it will meet its full-year expectations, with the results being weighted towards the second half of the financial year.
9,45am: Top-shares index in consolidation mode
The Footsie was consolidating gains in mid-morning, while even the battered and bruised FTSE 250 was on the up.
The FTSE 100 was up 18 points (0.26%) at 7,056, while the FTSE 250 was up 74 points (0.40%) at 18,736.
“Brexit-induced panic seems to have faded with the markets in more upbeat mood on Friday. While both the FTSE 100 and FTSE 250 move up, investors will be watching like a hawk for any new indicators of whether parliament is likely to approve or reject Theresa May’s Brexit plan,” said Russ Mould, the investment director at AJ Bell.
“Among the large-cap movers on the London market, miners and tobacco stocks do their best to push ahead, while banks and housebuilders struggle,” he added,
Daiwa Europe proved it had, to paraphrase Basil Fawlty, earned the right to appear on Mastermind, “special subject: the bleeding obvious”.
“Of course, the main focus in the UK today will no doubt remain on politics,” it said.
“At a press conference yesterday evening May reaffirmed her commitment to delivering the best possible Brexit deal. Even if we do see enough letters (48) to trigger a no-confidence vote, she might well win any vote within her party over the near term, allowing her to sign-off the deal at the special EU leaders’ summit scheduled on 25 November,” Daiwa opined.
“This deal has been met with condemnation from both sides of the Brexit argument and the ERG, a group of Tory Brexiteer MPs, the DUP and the Labour party have already implied that they will vote against the deal; however, there is little doubt that European leaders will later this month attempt to crush any hopes of any further meaningful negotiations, making clear that this is the best UK can expect,” Daiwa continued.
“So with May’s deal essentially dead, the choice facing the UK will come down to heading for a no deal Brexit, which will not have the support of parliament, or, perhaps, look to put the decision back to a referendum, giving a choice between May’s deal or remain. So, expect financial markets volatility to remain through to year-end,” it ended, cheerily.
Heading against the flow was drugs giant AstraZeneca PLC (LON:AZN) after it released updated data from the Phase III MYSTIC trial of Imfinzi and tremelimumab in stage IV non-small cell lung cancer (NSCLC).
The shares were down 1.6% at 6,218p as the results disappointed, although Astra was putting a brave face on things.
“AstraZeneca has commented that the ‘data support further analysis in exploratory subgroups’; however, we would note that post-hoc subgroup analysis often leads to spurious results and hence would view the success of such analyses as small at the present time. So although it is encouraging that Imfinzi monotherapy achieved a similar point estimate to Merck’s Keytruda in a similar patient population, we would await replication of the result in larger trials. Particularly given that the point estimate for the Imfinzi plus tremelimumab combination is smaller than that for Imfinzi monotherapy,” said broker, Shore Capital.
8.50am: Footsie, sterling rebound
London traders ignored the meltdown in the Tory Party precipitated by Theresa May’s widely panned Brexit deal to open 44 points to the good at 7,081.63.
Sterling, meanwhile, has recovered some of the ground lost in the recent sell-off, to claw its way up 0.4% to US$1.2826.
“The pound is a bit like Theresa May at the moment. Seriously bruised by the fallout of the Brexit draft deal, shaken by a series of high profile resignations, but, for the time being (and however misguidedly), emboldened by a sense of resilience,” said Connor Campbell, market watcher at Spreadex.
On the stock market, the movements were muted. AstraZeneca (LON:AZN) was among the fallers after it said its drug Imfinzi had failed in a late-stage clinical trial treating end-of-life patients with lung cancer.
On the FTSE 250, Centamin (LON:CEY) rose 2% after Morgan Stanley upgraded the stock in the gold miner to ‘overweight’.
There was a further research out on Aston Martin Lagonda following the deluge earlier in the week as brokers began providing coverage of the luxury car maker. The shares edged up 1%, but they are still around £4 below the £19 listing price.
Proactive news headlines:
IQ-AI Limited (LON:IQAI) has announced the first commercial sale of its StoneChecker kidney stone medical imaging software.
Rapid diagnostics specialist genedrive PLC (LON:GDR) is proposing to raise £6mln through a placing of shares and the issue of convertible loan notes.
Seeing Machines Limited (LON:SEE) has appointed supply chain management specialist Paul McGlone as senior vice president and general manager of the group's fleet division.
Live Company Group PLC (LON:LVCG) has announced the upcoming launch of BRICKLIVE BRICKOSAURS, a new LEGO brick touring show.
Gaming Realms PLC (LON:GMR) wants permission to issue shares if required for a £3.5mln loan owing to mining and casino games group Jackpotjoy. In December last year, Gaming Realms agreed to supply Jackpotjoy with Slingo-based real money services for ten years
Metal Tiger PLC (LON:MTR) has completed the sale of the T3 project in Botswana as well as creating a new joint venture (JV) company formed by itself and partner MOD Resources Limited.
Eland Oil & Gas PLC (LON:ELA) has updated on the field development operations at the Gbetiokun project area, where the initial discovery well has now been re-opened for production. Gbetiokun is to be the second producing oil field within the OML 40 set of assets, following on from the successes at the Opuama well which is currently producing more than the targeted 30,000 bopd.
Iofina PLC (LON:IOF), specialists in the exploration and production of iodine and halogen-based specialty chemical derivatives, announced the appointment of Frank Mermoud as a non-executive director with immediate effect. The group said Mermoud has held senior international, economic and commercial policy positions within the US Government, having served as the Secretary of State's Special Representative for Commercial and Business Affairs at US Department of State from 2002 to 2009.
Horizonte Minerals PLC (LON:HZM) (TSX:HZM) announced that on 15 November, its chief financial officer, Simon Retter purchased 1,000,000 ordinary shares in the company at a price of 2.1p each. Following the purchase, the group said Retter is now interested in 1,000,000 ordinary shares representing 0.07% of the total voting rights of the company.
MaxCyte (LON:MXCT) (LON:MXCR), the global cell-based medicines and life sciences company, said it will host a webinar, entitled "Non-viral cell engineering: enabling a therapeutic revolution," for investors and sell-side analysts between 15:00 - 16:00 GMT on Tuesday 20th November 2018. To attend, interested parties should contact the company via MaxCyte@consilium-comms.com.
6.45am: FTSE 100 called higher
After yesterday’s traumatic day – largely ignored by investors in blue-chip shares – the Footsie was expected to open firmer.
After carving out a 4-point rise on yesterday’s day of ministerial resignations to close at 7,038, the FTSE 100 was expected to open around 20 points higher following a rebound overnight on US markets.
Of perhaps more interest will be the performance of the mid-cap FTSE 250, which unlike the Footsie, is not stuffed full of multi-national companies.
Yesterday, it took a battering, plunging 248 points (1.3%) to close at 18,662.
“The pound had a truly rotten day yesterday, posting its worst day since the October 2016 flash crash, sliding sharply in the wake of a number of key cabinet resignations, as well as the prospect that Prime Minister May might well be subject to a leadership challenge in the next few days. It didn’t take long for the inevitable cabinet splits that many people had predicted on Wednesday to manifest themselves, the most notable of which was the Brexit secretary himself, Dominic Raab,” said Michael Hewson, the chief market analyst at CMC Markets.
Meanwhile, the BBC is suggesting that Michael Gove has rejected the offer of the post of Brexit secretary and could resign today, in what is turning into the Tory party’s take on an Agatha Christie novel.
May is set to take questions from the public this morning – mercifully on radio – in order to put her case directly to the people.
“The problem she has, however, is one of arithmetic as well as trying the political equivalent of fitting a square peg into a round hole.
“The reality is that this deal appears to be hated by all sides but it is also the choice facing MP’s in the next few weeks as they mull the prospect of rejecting an unsatisfactory deal, or going with a no deal Brexit, or no Brexit at all, if Prime Minister Theresa May is to be believed. For now, there doesn’t appear to be any other option,” Hewson opined.
Ok, I’ve kept quite about #brexit and recognizing this is a very serious topic for both UK and EU citizens this one simply made me laugh so loud ???? pic.twitter.com/lz6QA2BNKf
— Heleen Vink (@vink_heleen) November 16, 2018
Meanwhile, on the other side of the Atlantic …
US markets rose on reports that US and China are once again conversing on the thorny issue of trade relations.
The Dow Jones average rose 209 points to close at 25,289 and the S&P 500 stormed 28.6 (1.1%) higher to 2,730.
In Asia, markets were mixed with the Shanghai Composite advancing 11 to 2,679 while Hong Kong’s Hang Seng slipped 48 points to 26,055 and Tokyo’s Nikkei 225 lost 123 points at 21,680.
It does not take a genius to work out that UK investors will be bracing themselves for more Brexit shenanigans today but away from Westminster, the focus will be on a trading update from infrastructure specialist Kier Group PLC (LON:KIE).
Big government contractors such as Kier have faced deeper scrutiny from investors this year as a result of Carillion’s collapse back in January but analysts at Peel Hunt aren’t expecting any shockers in this update, which they think will show that trading is steady, and that progress is being made with its Vision 2020 five-year strategy.
Kier made another non-core disposal on Thursday, selling off its Australian road maintenance for £24mln. Given that this is a key part of management’s strategy, investors will be looking to see if there are any more sales in the pipeline.
Significant announcements expected on Friday:
Trading updates: Afarak Group PLC (LON:AFRK), Kier Group PLC (LON:KIE)
AGM: Eagle Eye Solutions Group PLC (LON:EYE), Kier Group PLC (LON:KIE)
Economic data: US industrial, manufacturing production
Around the markets:
- Sterling: US$1.2801, up 0.27 cents
- 10-year gilt: yielding 1.226%
- Gold: US$1,215.40 an ounce, up 40 cents
- Brent crude: US$67.39 a barrel, up 77 cents
- Bitcoin: US$5,587.38, up US$85.05
City headlines:
Financial Times
- PM Theresa May struggles to rescue her Brexit deal on day of resignations
Daily Telegraph
- Patisserie Valerie chief executive Paul May has quit with immediate effect after accounting scandal; turnaround specialist Stephen Francis has been hired as replacement.
- Investec’s profits surged 96% in the UK after the South African banking giant advised on a string of multi-billion pound deals over the summer.
Daily Mail
- The value of the pound tumbled almost 2% against the euro and the dollar after a day of political plotting in Westminster sparked fears the UK could leave the EU without a deal.
- Supermarket Asda has boosted sales, welcoming 115,000 new customers through its doors as it notched up a 2% increase in same-store sales during the three months to 30 September, its sixth consecutive quarter of growth.
The Times
- QinetiQ is on track for results that match City forecasts as the £1.2 billion defence technology company won several contracts in the US and with the Ministry of Defence.
- Great Portland Estates has insisted it is in a position to spend £1 billion on property in the event of a market downturn.
- Wonga administrators have disclosed that the defunct payday lender’s assets are worth only a fraction of the value estimated when it collapsed over the summer.
The Guardian
- The family of a victim of the Lion Air crash has started legal action against Boeing.
- The UK’s scheme for ensuring power supplies during the winter months has been suspended after a ruling by the European court of justice that it constitutes illegal state aid.