FTSE 100 index jumps closes 133 pts higher
Prudential top Footsie riser
Wall Street highe
FTSE 100 closed out an eventful week , in political terms at any rate, higher, advancing over 133 points to close at 6,968 on the day.
On the week as a whole, Britain's blue chip index closed up 0.72%.
On Friday, sentiment was boosted by reports surrounding the US/China trade spat.
"The markets’ optimistic take on the situation between the US and China led to a super-charged Friday afternoon, ignoring elements of one WSJ report while gorging themselves silly on a follow-up from Bloomberg," noted analyst Connor Campbell at spreadbetter Spreadex.
"Though, it has to be stressed, the news has been disputed, investors were keen to ring the claim that Treasury Secretary Steve Mnuchin wants to ease tariffs on China for every drop of positivity they could. Luckily, Bloomberg produced another booster-shot after the US open, stating that Beijing has ‘offered to make up the trade imbalance’ with the US by upping its intake of American goods."
FTSE 250 was also higher, the index gaining over 225 points to close at 18,762.
Top riser on Footsie was insurer Prudential plc (LON:PRU), which added 4.55% to stand at 1,515p.
3.19pm: Footsie pushes to new heights
The Footsie pushed on to new heights for the day after US indices opened on the front foot.
The FTSE 100 was up 127 points (1.9%) at an intra-day high of 6,962.
Stateside, the Dow Jones was up 168 points at 24,537 and the S&P 500 was 20 points firmer at 2,656.
Lukman Otunuga, a research analyst at FXTM, was not getting carried away, however.
“Renewed optimism over US-China trade talks stimulated global risk sentiment on Friday with Asian stocks ending mostly higher. Although European markets are benefiting from the improved market mood, investors must remain alert and guarded,” Otunuga said.
”Geopolitical risks in the form of Brexit uncertainties, a partial government shutdown in the United States and the unpredictable nature of trade negotiations have left market sentiment fragile. With concerns over slowing global growth adding to the cocktail of fundamental themes impacting risk appetite, stock markets remain vulnerable to downside shocks,” the analyst suggested.
FTSE100 looks bullish before the close. Have a nice weekend everybody! Weekly and Daily charts. #FTSE100 #CFD #spreadbetting #trading pic.twitter.com/abHYaPYX3k
— Justina Nothard (@Justinaces) January 18, 2019
1.45pm: Footsie cranks it up
The Footsie was sitting on a triple-digit gain towards the end of the lunchtime trading session.
The FTSE 100 was up 110 points (1.6%) at 6,945, ahead of what is expected to be a firm opening on Wall Street.
Spread betting quotes suggest the Dow Jones will open at around 24,510 (+140 points) and the S&P 500 at around 2,649 (+13 points).
Sentiment has been boosted by renewed optimism over US-China trade talks.
The possibility of a trade war represents the biggest threat to global growth in 2019, according to a public poll by Deutsche Bank Wealth Management’s Chief Investment Office (CIO).
The CIO’s poll of visitors to its website revealed that 31% of the 700 or so respondents, regard a trade war as the nightmare scenario, with “European politics” a distant second with 19% of the vote.
“Like the survey respondents, we are less worried by threats such as quantitative tightening and policy mistakes,” the CIO said.
Emerging markets in Asia were expected to offer the best equities performance in 2019 by 36% of respondents, while the US was chosen by only 16% of those polled. Defensive stocks got the second-biggest share of the vote at 23%. The other options were emerging markets in Latin America, Japan and cyclical stocks.
DB’s CIO is forecasting that the S&P 500 will have the highest major developed market 12-month returns and it continues to state a global preference for US over European equities and to be overweight US equities.
The FTSE 250 was up 145 points (0.8%) at 18,683, with its performance hampered by a 22% fall in the share price of cybersecurity play Sophos Group PLC (LON:SOPH) on the back of a profit warning.
The trading update from mid-cap Greencoat UK Wind PLC (LON:UKW) hit the spot, however.
The wind farm investor announced a quarterly interim dividend of 1.69p per share for the quarter ended 31 December 2018 and an increase in the target dividend for 2019 to 6.94p per share.
The shares were up 4.5%.
READ Greencoat UK Wind higher as it reports rise in fourth-quarter net asset value, hike in 2019 target dividend
Fresh food preparer Bakkavor Group PLC (LON:BAKK) was little changed after it confirmed guidance for the full year despite weak consumer confidence in the UK.
11.30am: Footsie edging towards a triple-digit gain
London’s index of leading shares was close to its intra-day high as the bulls stampeded back into the market.
The FTSE 100 was up 85 points (1.2%) at 6,920, just four points below its high-point for the day.
Just eight index constituents were in decline, among them packaging group, Mondi PLC (LON:MNDI), which was 12.5p lower at 1,793.5p after UBS cut its price target to 2,200p from 2,400p.
Housebuilders Barratt Developments PLC (LON:BDEV) and Persimmon PLC (LON:PSN) were the top two performers, up 3.6% and 3.5% respectively.
US-focused tool hire firm Ashtead Group PLC (LON:AHT) advanced 2.7% to 1,919.5p even though RBC trimmed its price target to 2,400p from 2,800p.
“Oil prices have rallied over +1% overnight after an OPEC+ report showed its production levels fell sharply last month, easing fears about prolonged oversupply. Also aiding crude prices is trade related optimism,” reported Dean Popplewell at Oanda.
Oil giants BP PLC (LON:BP.) and Royal Dutch Shell (LON:RDSB) were up 1.1% and 1.6% respectively.
10.00am: December's days as a big month for retail maybe drawing to a close
UK retail sales for December were not expected to be good – and they weren’t.
In the three months to the end of December, sales volumes fell 0.2% from a year ago with declines seen across all the main sectors except fuel.
When compared with the previous month, the quantity bought in December 2018 decreased by 0.9%, as all sectors except food stores and fuel stores declined on the month.
Once upon a time December was the big month for retail sales. These days, thanks largely to Black Friday, it is November. From today’s retail sales data which showed a 0.2% fall in Dec volumes https://t.co/PDkvoxQwtr pic.twitter.com/A52wTlyHB0
— Ed Conway (@EdConwaySky) January 18, 2019
Online retailing accounted for 20% of sales, with volumes up 13.9% year-on-year.
For the whole of 2018, the Office for National Statistics reported that sales increased by 2.7% year-on-year in the quantity bought.
The FTSE 100 responded to the release by breaking through the 6,900 barrier, rising to 6,908, up 73 points on the day.
Online shopping technology leader Ocado Group PLC (LON:OCDO), down 0.6%, was among the few blue-chips to lose ground, as was Primark owner Associated British Foods PLC (LON:ABF), down 0.2%.
#UK #retailsales twice worse than expected at core - M/M excl. fuel -1.3% vs -0.6% est. But headline M/M just 10th of % point worse than fcast at -0.9% . Looks like deeper cratering was priced: hasn't materialised so #GBPUSD actually attempts bounce off support/Fri lows ^KO pic.twitter.com/jzVNChnNy2
— City Index (@CityIndex) January 18, 2019
9.15am: The Footsie eyes return to above 6,900
With less than a dozen index constituents in the red, the FTSE 100 made a solid start to the day.
The blue-chip index was up 53 points (0.8%) at 6,888 and girding its loins for another assault on 6,900.
“European markets and US futures are trading sharply higher today building on the optimism around the US-China trade talks. We have seen significant increase in the numbers of investors who have added risk assets in their portfolio on the back of this,” revealed Naeem Aslam at Thinkmarkets.
“Just to put things in perspective, the S&P 500 broke its 50-day moving average, a signal that bulls are back in the race and perhaps a bottom is in place as long as we do not move this critical moving average. This all happened after a report which mentioned that the US Treasury secretary Steven Mnuchin has proposed easing Chinese tariffs. Although, the Treasury didn’t confirm this but the market has bought this for now and if this turns out to be a junk, the sell-off would be intense,” Aslam opined.
Airline stocks were friendless after the latest profit warning from Ryanair Holdings PLC (LON:RYA) sent a chill through the sector.
READ Ryanair descends after profit warning as lower winter fares offset rise in traffic
Ryanair’s shares fell 1.3%, dragging down sector peers easyJet PLC (LON:EZJ) and British Airways owner International Consolidated Airlines (LON:IAG); the former was down 2%, not helped by a broker downgrade, and the latter 0.9%.
READ: easyJet knocked by JPMorgan downgrade, as sector roiled by another Ryanair profit warning
"Ryanair delivered a profits warning that has rattled investors across the airline sector just as uncertainty over the outlook for carriers is at a high,” said Neil Wilson at markets.com.
“It's been a tough winter for the airline with fares considerably lower than previously expected. Winter fares skidded -7% against a previous forecast of -2%. The sector seems to be doing its best to compete away margins, as is its habit.
“Therefore Ryanair is cutting full year profits guidance by a little less than 10%, slashing the range from €1.1bn-€1.2bn to €1.0bn-€1.1bn.
“That's a tough pill to swallow but there was a further sting in the tail as management warned it could not rule out further cuts to air fares or a reduction in guidance,” he added.
Ryanair issued a profit warning on Friday, its second in four months, with winter fares expected to fall more than previously forecast https://t.co/uJa5Opw3Au
— The Irish Times (@IrishTimes) January 18, 2019
“But there are positives – traffic growth of 9% to 142mln was ahead of forecast. Also ancillary sales and better unit costs should offer some comfort.
“Nevertheless this is a problematic warning as it comes at a time of great uncertainty for the sector.
“We note shares in Ryanair are starting to look rather cheap having declined by roughly half since August 2017, when the scheduling issues started,” Wilson opined.
8.45am: Footsie bounces-back
The FTSE 100 opened firmly in positive territory after the mood music accompanying the Sino-American trade stand-off suddenly became more upbeat, driving the index of blue-chip stocks 55 points higher to 6,889.40.
Overnight, Wall Street surged higher on reports that US Treasury Secretary Steven Mnuchin is pushing for the roll-back some tariffs levied on Chinese imports.
“Talk of easing tensions were helping lift riskier assets,” said Jasper Lawler of London Capital Group.
“It seems almost impossible to sensibly gauge where US–China relations stand. Yet the market hangs on each headline, highlighting just how sensitive it is to the ongoing trade issue.”
Movements on the Footsie were muted, with ITV (LON:ITV) up 2.5% and regaining some of the ground lost on Thursday after a downgrade by BofA Merrill Lynch was refuted by Liberum Capital in a note.
Shares in copper miner Antofagasta (LON:ANTO) held fast in the face of a downgrade to ‘sell’ by American broker Goldman Sachs.
Among the mid-caps, cyber security expert Sophos (LON:SOPH) lost 28% of its value as it said trading had been subdued and reported that its cash earning had gone into reverse gear.
“There are a lot of problems in this announcement, not least the fact that management guidance once again has proven overly optimistic," said Nicholas Hyett, analyst at Hargreaves Lansdown.
"The networks business looks like it’s running into real problems – and while there’s some positive noises on recent product launches, there’s little in the numbers to back that up."
Proactive news headlines:
Kodal Minerals PLC (LON:KOD) is considering a larger mine at its Bougouni lithium mine in Mali following another strong set of drill results. The junior is now eyeing an initial 1.2M tonnes a year processing plant, expanding to 1.5Mtpa as the operation moves into a steady production phase.
LoopUp Group PLC (LON:LOOP), the remote meetings technology company, has signed a contract renewal with leading global law firm, Clifford Chance, worth £2.34mln over a three-year period. The minimum total contract value of £2.34 million in aggregate over the three-year term is for the provision of conference calls across Clifford Chance's global operations, spanning 32 major financial centres in the Americas, Asia Pacific, Europe, the Middle East and Africa.
Providence Resources PLC (LON:PVR) told investors that the acreage hosting the Avalon prospect will be upgraded from a licence option to a frontier exploration licence. The Irish offshore explorer, in a statement, said that the Minister of State at the Department of Communications, Climate Action and Environment in Dublin has approved the change effective from 1 February.
Greencoat UK Wind PLC (LON:UKW) saw its shares rise on Friday as the wind farm investment group revealed that its unaudited net asset value increased to £1,392.8mln, or 123.1p per share as of 31 December 2018. The FTSE 250-listed firm said this represents an increase of 8.1p per share for the fourth quarter - in addition to dividends paid of 1.69p.
Kazera Global PLC (LON:KZG) told investors that its drill programme at its Namibia Tantalite Investment (NTI) mine project continues to produce highly encouraging results. The company noted that it has so far drilled 22 of 33 planned holes at NTI, and, assays have been produced for 432 core samples and 72 channel samples.
Active Energy Group PLC (LON:AEG) said it intends to transition its nominated adviser (NOMAD) role from Northland Capital Partners to SP Angel Corporate Finance following the merger of the two firms. The firm said this process is progressing and SP Angel conducted a site visit to North America this week as part of the take-on process, and added that a further announcement will be made as appropriate.
Shefa Yamim (ATM) Ltd (LON:SEFA) has highlighted several key milestones achieved by the firm in the second half of 2018. In a corporate update late on Tuesday, the Israel-based precious stones exploration firm said a technical economic evaluation (TEE) had been completed for its Kishon Mid-Reach project, and the results will be announced in January.
FairFX Group PLC (LON:FFX), the low-cost multicurrency payments and e-banking service, said it has appointed Canaccord Genuity as its joint broker alongside Cenkos Securities with immediate effect. It added that Cenkos remain as its nominated advisor (NOMAD) and joint broker.
Westminster Group PLC (LON:WSG) announced the appointment of Charles Enea Cattaneo, a partner at corporate finance firm Cattaneo LLP which he founded in 2005, as a non-executive director of the company with effect from 17 January 2019. It also announced the appointment of James Sutcliffe to the post of chairman of its International Advisory Board, with Sutcliffe to step down from the group’s board.
Shanta Gold Limited (LON:SHG) has announced that Rukwa Limited, a wholly-owned sUBSidiary of the group, has repurchased 325,000 of the company's' outstanding unsecured subordinated convertible loan notes due April 2019 from El Oro Limited for a total consideration of US$276,250. The group said this implies an 18% discount-to-value of the Convertible Loan Notes based on their par value plus interest accrued to date. Following this transaction, Shanta added, the value of the remaining outstanding convertible loan notes not held directly or indirectly by the company is US$14,675,000.
6.45am: Trade talks take on more optimistic tone
Optimism over the outcome the US-Sino trade talks was set to spark a solid start for the Footsie that should see all of yesterday's losses recouped.
After closing 28 points lower at 6,835 yesterday, the FTSE 100 was tipped to open 28 points higher this morning.
US markets had a good day yesterday with the Dow Jones average advancing 163 points to 24,370 and the S&P 500 climbing 20 points to 2,636.
Asian markets were also on the up this morning. In Hong Kong, the Hang Seng index was 308 points firmer at 27,064 while in Tokyo the Nikkei 225 was up 264 points at 20,666.
“Watch out for any headlines on US-China trade talks after The Wall Street Journal' s story that the US administration is considering reduce tariffs on Chinese imports,” was the advice of Danske Bank.
“The story was probably not as interesting as the headlines suggested, as the story states that the proposal comes from Treasury Secretary Steven Mnuchin (a China dove), while the US Trade Representative Robert Lighthizer (China hawk) opposes the idea. Nonetheless, we still interpret the story as another sign that a US-China trade deal is moving closer and markets probably do as well,” the bank added.
In the UK, a quiet day is expected for company results so the focus will likely be on the latest UK retail sales figures, where expectations are not high.
Retailers are facing their worst December performance since the 2008 financial crisis, with analysts pencilling in a 0.8% drop compared to the same month a year earlier.
A combination of Brexit uncertainty, weakening consumer confidence and stagnant real-terms wage growth are all starting to hit retailers.
Elsewhere, mining Rio Tinto PLC (LON:RIO) reports fourth-quarter production results, while food firm Bakkavor Group PLC (LON:BAKK) will publish a pre-close trading update.
Significant events expected on Friday:
Trading updates: Bakkavor Group PLC (LON:BAKK), Henry Boot PLC (LON:BOOT), Rio Tinto PLC
AGMs: Ironveld PLC (LON:IRON), Kazera Global PLC (LON:KZG), Management Resource Solutions PLC (LON:MRS)
Economic data: UK retail sales; US industrial, manufacturing production; University of Michigan preliminary consumer sentiment index
Around the markets:
- Sterling: US$1.2968, down 0.18 cents
- 10-year gilt: yielding 1.227%
- Gold: US$1,291.20 an ounce, down US$1.10
- Brent crude: US$61.91 a barrel, up 73 cents
- Bitcoin: US$3,655.70, up US$5.64
City headlines:
Financial Times
- Japanese company Hitachi has called off plans to build a nuclear power station in Wales
Daily Telegraph
- Theresa May will face mass resignations if MPs are barred from trying to stop a no-deal Brexit, cabinet ministers have warned.
The Times
- Two tobacco groups – Japan Tobacco International and Imperial Brands – that supported Palmer & Harvey will receive less than 33% of the amount that they paid to shore up the wholesaler before it collapsed into administration.
- Taiwan Semiconductor Manufacturing, which supplies Apple, Huawei and other smartphone makers, warned that revenue would fall sharply in the first quarter.
The Guardian
- Netflix added 8.8 million paid sUBScribers in the last quarter, up 34% compared with the year-earlier period.
- Philips plans to close its last manufacturing plant in the UK, putting 430 jobs at risk.
Daily Mail
- Online estate agency Emoov is set to relaunch under new management just one month after going into administration.