FTSE 100 closes in the red as global market unease continues

Britain's blue-chip index closed over 58 points lower at 6,642, while the FTSE 250 was also down

Procter & Gamble, which makes Pampers nappies, is leading the Dow Jones higher
  • FTSE 100 closes down 58

  • Ex-Tesco exec cleared of fraud

  • US stocks mixed at time of writing

FTSE 100 joined other European benchmarks to close lower on Wednesday as the global unease continues.

Wall Street shares are mixed at the time of writing.

Britain's blue-chip index closed  over 58 points lower at 6,642, while the more UK company-focused FTSE 250 was also down, shedding over 98 points to 18,582.

David Madden, at CMC Markets, earlier, before the close, noted: "The FTSE 100 is in the red as there is a broad based sell-off in the London market.

"Energy stocks are the worst performer, and there are losses in financials, miners and consumer goods too."

On Wall Street, the Dow Jones Industrial Average is up around 17 points, while the S&P 500 is down around nine points at the time of writing.

3.45pm: UK stocks set to finish in the red

UK stocks have dropped even further this afternoon, dragged lower by a stronger pound, which dents the blue-chips overseas earnings and makes their goods more expensive to foreign buyers.

Sterling is up sharply against all the major currencies and is at a ten-week high versus the dollar at US$1.307. It is up to €1.159 against the euro.

Analysts are putting the gains down to the likelihood of a no-deal Brexit coming to fruition.

The pound’s gain has been the FTSE 100’s pain, and the index is down almost 1%, or 66.0 points, to 6,835.4.

Leading the fallers is packaging group DS Smith PLC (LON:SMDS), which is down 5.6% to 316.6p with only 20 minutes or so left in the trading day.

Easyjet PLC (LON:EZJ) is the day’s big gainer, up 3% to 1,272.5p after a coupe of investment banks upped their price targets for the stock.

3.30pm: Wall Street cheers positive earnings

US stocks opened higher Wednesday getting a boost from strong corporate earnings and rebounding from the previous session's sharp selloff.

The Dow Jones Industrial Average gained 247.87 points, or 1.02% to 24,652.35 led higher by Procter & Gamble and United Technologies.

Dow component IBM also had a positive impact on the Big Board. The technology giant rallied 9.2% after it posted fourth quarter earnings that beat estimates and issued an outlook for the year that was higher than forecasts.

Procter & Gamble posted modestly stronger-than-expected second-quarter earnings and raised its full-year sales guidance. The stock soared 6.1%.

Meanwhile, the S&P 500 ran up 19 points or 0.72% to 2,651.95 led higher by Waters Corp and Synchrony Financial.

The Nasdaq Composite gained 58.22 points, or 0.83% to 7,078.58 after the opening bell.

3.15pm: Flybe investors bet on bigger offer

Flybe PLC (LON:FLYB) shares soared once again on Wednesday as investors bet big that a bigger offer will be forthcoming for the struggling airline.

Earlier this month, Flybe bosses agreed a deal with a consortium backed by Virgin Atlantic which would see the carrier sold for 1p a share – a steep discount to the market value of the stock.

Then last week, the deal was restructured so that the consortium – Connect Airways – would buy the trading assets for £2.8mln, leaving the holding company as a shell for which Connect would continue to pay a nominal sum.

Investors have been up in arms about the deal and major shareholder Hosking Partners said on Monday it had instructed lawyers to look for ways to block the sale.

Shares are up by another 45% today to 5.9p – a sign that investors are either anticipating a better offer or for the bid to be scrapped altogether.

2.45pm: Anglo American and Restaurant Group due up on Thursday

Thursday looks sets to be a busy day for updates, with the likes of Anglo American PLC (LON:AAL), Daily Mail & General Trust PLC (LON:DMGT), Fevertree Drinks PLC (LON:FEVR) and Restaurant Group PLC (LON:RTN) all due to report news of one kind or another.

A shutdown at Anglo American’s Minas-Rio iron ore operation in Brazil hit third-quarter copper equivalent production and given that things only restarted towards the end of December, a similar drop is expected in the final quarter.

As for Restaurant Group, all eyes will be on its new addition, Wagamama, which has divided opinion in the City.

Take a look at the more in-depth look-ahead here.

2.10pm: Who wants a piece of Patisserie Valerie?

After last night’s news that KPMG has been brought in to oversee the sale of Patisserie Valerie after its parent company failed to reach a rescue with its lenders, who could be interested in buying the collapsed cake shop chain?

Analysts at Shore Capital have hinted that there could be a few interested parties given that its failure is down to “significant fraud” rather than declining high street footfall or the public falling out of love with cakes and pastries.

Retail supremo Mike Ashley, who has been buying up struggling UK retailers in recent years, has been linked with a takeover, but Hargreaves Lansdown senior analyst Laith Khalaf isn’t convinced.

“It would be a new departure for him into a different kind of retail,” Khalaf told Proactive.

Read more here.

1.40pm: Santander to shut 140 high street branches

Banco Santander said it plans to shut almost a fifth of its branches in Britain in response to the increasing uptake of online banking.

The Spanish lender’s UK arm will close 140 branches, bringing the total number across the country down to 614.

It expects to be able to redeploy only a third of the 1,270 staff affected, meaning there would be about 840 redundancies. The group said it would try to find alternative roles for staff where possible.

Santander joins other major UK high street banks, including Lloyds Banking Group PLC (LON:LLOY), Royal Bank of Scotland Group plc (LON:RBS) and Barclays PLC (LON:BARC), in shutting branches to cut costs and concentrate on building up digital banking operations to fend off competition from online rivals.

1.05pm: Pound’s gain is the Footsie’s loss

The pound has surpassed the US$1.30 ‘psychological barrier’ for the first time since November on expectations that Labour will back a deal that will stop the UK from leaving the EU without a deal.

That’s good news for British holidaymakers as they’re money will go a little further when they’re abroad, but it’s not good news for the UK’s bigger companies for a couple of reasons.

Firstly, a strong pound makes their overseas earnings – which account for about 75% of total FTSE 100 earnings – worth less when converted back into sterling. It also makes exporters’ products more expensive to foreign buyers.

With that in mind, the FTSE 100 index tends to move in the opposite direction to the pound, especially when it’s volatile like it has been for the past couple of years.

So it’s of little surprise then that the blue-chip index is down 0.3%, or 19.0 points, to 6,882.0 so far today.

It hasn’t been helped by the CBI’s industrial trends survey which has pointed to a struggling manufacturing sector amid heightened Brexit uncertainties.

As for company news, broker notes are responsible for two of the biggest movers at either end of the spectrum.

British Gas owner Centrica PLC (LON:CNA) has lost almost 2% to 131.7p after Swiss banking giant Credit Suisse downgraded the stock to ‘neutral’ amid concerns over the dividend.

Flying high, though, is easyJet PLC (LON:EZJ), up 2.4% to 1,264, thanks to target hikes from JP Morgan and UBS. British Airways owner International Consolidated Airlines Group PLC (LON:IAG) has risen on the back of that, too, up 1.7% to 629.8p.

Middle East-focused private healthcare operator NMC Health plc (LON:NMC) is the top blue-chip faller, down 4% to 2,700p, while Russian miner Evraz Holdings PLC (LON:EVR) is the biggest gainer, up 2.6% to 459.3p.

12.40pm: US stocks set for strong open

US stocks are seen recouping losses at the New York bell on Wednesday.

Wall Street stocks tumbled around the globe yesterday on growth fears and jitters over Britain's withdrawal process from the EU. The Financial Times also reported that the US had cancelled preparatory trade discussions with Chinese officials.

But Larry Kudlow, head of the National Economic Council, told CNBC that there has been no cancellation.

The Dow Jones Industrial Average closed down 301 points at 24,404 and futures are today up 103 points.

The S&P 500 finished nearly 38 points off at 2,632, while futures are up Wednesday at 8.50 points. The tech-heavy Nasdaq lost over 136 points at 7,020, while futures are pointing up 22.5 points.

12.20pm: Ex-Tesco finance chief blasts supermarket and SFO

The former UK finance boss of Tesco PLC (LON:TSCO) has been acquitted of fraud related to the supermarket giant’s profit overstatement back in 2014.

Carl Rogberg is the last of three former Tesco executives to be acquitted after the Serious Fraud Office offered no evidence in the case.

Last month, Rogberg’s former colleagues, Christopher Bush and John Scouler, were also cleared by a criminal court of fraud and false accounting.

The investigation was sparked by an announcement by Tesco in September 2014 that its profits were overstated by £250m.

“For their part, the SFO uncritically adopted Tesco's approach,” Rogeberg said outside court.

“They failed to carry out a professional investigation and made fundamental errors. They refused to see the truth, preferring instead to drive on blindly with the prosecution.

“Indeed, they pressed the case through two long trials and even mounted a hopeless appeal against the judge's decision to stop the case. This was all a dreadful waste of tax payers' money.”

11.45am: Pounds surpasses US$1.30

The pound has jumped above US$1.30 for the first time since November. Cable – the dollar-sterling exchange rate – is up 0.5% to US$1.302.

“There’s been further steady gains seen in the pound this morning, with the market moving up to its highest level of the week and breaking above the psychological US$1.30 level,” said XTB chief market analyst, David Cheetham.

“Reports that the Labour party are set to back an amendment designed to eliminate the prospect of a no-deal Brexit has provided more good news for sterling bulls, and the market is back trading at its highest level since November.”

11.15am: FTSE 250 struggling 

Like its blue-chip brother, the FTSE 250 opened lower this morning, although it hasn’t been able to recover any of those losses since.

It is still down 0.4%, or 76.2%, at 18,605.4.

Metro Bank PLC (LON:MTRO) (down 30% to 1,545p) is the biggest drag after it issued a profit warning, while the departure of Sanne Group PLC’s (LON:SNN) CEO has knocked 16.5% off the fund administration services provider’s share price.

IT infrastructure specialist Computacenter PLC (LON:CCC) was trying to lift the index though, surging 8.3% to 1,102p after confirming it “materially outperformed” expectations in 2018.

10.50am: Credit Suisse downgrade hits Centrica

Easyjet PLC (LON:EZJ) is leading the blue-chip’s resurgence this morning.

The FTSE 100 kicked off proceedings sharply lower, but it has since recovered most of those losses and is now 8.9 points down at 6,892.5.

Target hikes from JP Morgan and UBS was the reason behind the orange-and-white-liveried airlines 2.2% jump to 1,262p.

British Airways owner International Consolidated Airlines Group PLC (LON:IAG) was swept higher with it and is up 1.9% to 631p.

Two of Britain’s Big Four grocers are also in demand; Tesco PLC (LON:TSCO) has gained almost 1% to 222.4p, while rival WM Morrison Supermarkets PLC (LON:MRW) is up 2% to 234.2p.

But a broker note has left British Gas owner Centrica PLC (LON:CNA) in the doldrums. Swiss giant Credit Suisse downgraded the stock to ‘neutral’ amid concerns over the dividend.

10.20am: Patisserie Valerie investor considering legal action

Patisserie Valerie owner Patisserie Holdings PLC (LON:CAKE) could face legal action from angry investors after the cake chain fell into administration last night.

Speaking to BB Radio 4’s Today programme, Fundamental Asset management co-founder Chris Boxall said considering court action was his “moral duty” to investors.

“We’re very, very angry…This business has gone from half a billion [pounds] to nothing in a matter of months,” he said.

Boxall had questions for former directors, as well as for the banks and auditors that oversaw the accounts.

Patisserie shares have been suspended since October after a £40mln black hole was found in the accounts. Ex-finance chief Chris Marsh was arrested and later released on bail without charge.

9.40am: Christmas was good, but not good enough for ‘Spoons

JD Wetherspoon PLC (LON:JDW) saw sales surge over the Christmas period, but the low-cost pub chain warned again that higher costs mean this growth won’t filter down to the bottom line.

Like-for-like sales growth of 7.2% over the past two-and-a-bit months hasn’t been enough to offset soaring costs, which include an unplanned £30mln wage hike back in November.

“Sales growth has been strong since our last update,” said chief executive Tim Martin.

“Costs, as previously indicated, are considerably higher than the previous year, especially labour but also in other areas, including interest, utilities, repairs and depreciation.”

He added: “Profit before tax in the first half is expected to be lower than the same period last year. Our expectations for the full year are unchanged.”

Shares in the FTSE 250 group are down 1.2% to 1,182p this morning.

9.15am: Profit warning from Metro

Challenger bank Metro Bank PLC (LON:MTRO) also stumbled on Wednesday morning, losing a third of its value after a profit warning shocked the market.

The FTSE 250 group warned that full-year profits will be below expectations after a “soft” end to 2018, as well as a mistake in the way it had accounted for some commercial loans.

Metro, which is among a flock of banks taking on the traditional high street lenders, raised £300mln last summer, but the warning added to concerns that it may have to tap the market for more money soon.

Metro Bank seems to have no problem attracting new customers, helped by its branches having prime locations on the high street and being open seven days a week,” said AL Bell investment director Russ Mould.

“However, banking remains a highly competitive industry and this issue is certainly going to be a key reason behind the profit warning.”

8.35am: Another big fall

The FTSE 100 fell 69 points to 6,901.39 as traders began to digest the impact the Sino-American trade war was having on global growth with China flagging and the International Monetary Fund downgrading its economic forecasts.

While this isn’t and wasn’t news for most of the developed world, it seemed to surprise the US, which fresh from celebrating Martin Luther King Day with a winter holiday, belatedly reacted to news that had been in the market for the best part of two days.

So, we opened Wednesday with the Square Mile reacting to Wall Street, which in turn was reacting to old news.

Anyhoo, the day’s big mover was Fresnillo (LON:FRES), with the world’s largest quoted silver miner dropping 2.5% in the wake of the Mexico-focused group’s latest progress report.

On the up were Tesco (LON:TSCO) and Sainsbury (LON:SBRY) as defensive stocks remained popular.

On the FTSE 250, Metro Bank (LON:MTRO) shares tanked 23% after the group said profits would undershoot forecasts after a “soft” end to the year.

Proactive news headlines:

Block Energy Plc (LON:BLOE) told investors it has now begun sidetrack operations at the West Rustavi field, in the existing 16a wellbore. It is the first of an initial two well programme at West Rustavi as the company aims to increase production up to 650 barrels of oil per day by the end of the first half.

Pawnbroker H&T GROUP PLC (LON:HAT) enjoyed a solid 2018, with all of its core businesses delivering growth last year.

ClearStar Inc (LON:CLSU) shares moved up in early deals on Wednesday after it expected its “highest ever” revenues and positive underlying earnings (EBITDA) in 2018.

Scancell Holdings Plc (LON:SCLP) said it had received “significant scientific endorsement” of its technology after it and a group of collaborators were shortlisted for major award. It teamed up with BioNTech, Genentech and ISA Pharmaceuticals to form Project Blueprint for Cancer Research UK’s Grand Challenge.

StatPro Group PLC (LON:SOG) has seen its earnings rise by around a third in 2018, boosted by “robust” sales of its services in the fourth quarter.

December was a record month for VR Education Holdings Plc (LON:VRE) in which the virtual reality firm launched its showcase Titanic experience as well as its ENGAGE learning and training platform.

Tlou Energy Ltd (LON:TLOU), in its third quarter report, highlighted that progress at its Botswana coal bed methane project where drilling began recently. The company said excellent progress has so far been made with the drilling operation.

Strategic Minerals PLC (LON:SML) is confident it can expand the mineral resource at the Redmoor tin/tungsten deposit in Cornwall after strong results from the final four assays in the latest drill programme. Average tin grades for the whole programme were significantly higher than the existing resource, said Strategic.

Base Resources Limited (LON:BSE) has updated the mineral resource estimates for the Ranobe deposit, which forms part of the Toliara project. The deposit is now seen to comprise some 1.3bn tonnes containing 5.1% heavy minerals.

Bluebird Merchant Ventures Ltd (LON:BMV) expects production from its Gubong and Konchang gold mines in South Korea to start by the end of this year. The intention is to re-open both the old mines simultaneously and use one processing plant to save on costs.

Mirada PLC (LON: MIRA), a leading provider of integrated software solutions for digital TV operators and broadcasters, said it will be presenting at the Growth and Innovation Forum on 29 January 2019, which will be held at the Business Design Centre, 52 Upper Street, Islington, London, N1 0QH.

6.45am: Market set to open in reverse gear

The FTSE 100 is expected to open lower on Wednesday morning as a series of disappointing data points set a gloomy outlook for the global economy.

Spread-betting firm IG expects the FTSE to open around 14 points lower after finishing down 69 points yesterday at 6,901.

The grim outlook for the global economy was kicked off earlier in the week by Chinese GDP numbers for 2018, which showed the country’s economy had grown 6.6%, its slowest annual rate in 28 years.

This was followed on Tuesday by a downgrade of the global economic outlook by the International Monetary Fund (IMF).

Michael Hewson, chief market analyst at CMC Markets, said: “Unfortunately for the IMF they’ve arrived a little late to the party on this one as most investors had already started to price this in towards the end of last year, hence the sharp declines. In its latest update on the health of the global economy, the fund also cited a no deal Brexit, a China slowdown and trade tensions as risks to their downgraded outlook over the remainder of the year.”

The fragile mood was not helped by reports on Tuesday evening that the US government had cancelled a planned trade meeting with Chinese officials, throwing the trade picture back into contention.

In the US markets yesterday, the Dow Jones Industrial Average closed down 302 points at 24,404, while the S&P 500 closed down 38 points at 2,632 and the Nasdaq was down 137 points at 7,020.

In Asia, the Japanese Nikkei 225 was down 29 points at 20,594 while Hong Kong’s Hang Seng was down 19 points at 26,985 after the Bank of Japan cut its inflation forecast whilst warning of growing risks to the economy from weakening global demand. 

On the currency markets, sterling was relatively flat at US$1.295 against the dollar and down 0.1% at €1.139 against the euro.

Blue-chip heavy into mid-week as Burberry and Antofagasta report

The blue-chips will be out in force again on Wednesday with luxury clothing giant Burberry set to report alongside mining heavyweight Antofagasta.

There will also be action from the FTSE 250 as WH Smith and Computacenter deliver trading updates.

For economic data, there will be the latest trade in goods data from the UK as well as industrial trends data from the CBI.

Across the Atlantic, there will be a few morsels in the form of the US house price index and the latest Richmond Fed manufacturing index.

Significant announcements expected on Wednesday:

Trading updates: Burberry PLC (LON:BRBY), WH Smith PLC (LON:SMWH), Antofagasta PLC (LON:ANTO), Computacenter PLC (LON:CCC), CYBG PLC (LON:CYBG), Great Portland Estates PLC (LON:GPOR), Fresnillo PLC (LON:FRES), Petropavlovsk PLC (LON:POG), Brewin Dolphin PLC (LON:BRW)

Finals: McCarthy & Stone PLC (LON:MCS)

Interims: Harwood Wealth Management Group PLC (LON:HW.)

Economic data: UK trade in goods data; CBI quarterly industrial trends survey; US house price index; Richmond Fed manufacturing index

Around the markets:

  • Sterling: US$1.295, down 0.05%
  • Brent crude: US$61.76 a barrel, up 0.42%
  • Gold: US$1,283.7 an ounce, down 0.07%
  • Bitcoin: US$3,582, up 1.6%

City headlines:

  • Financial Times: Billionaire James Dyson, the prominent UK inventor and outspoken Brexit supporter, is relocating his business headquarters from Britain to Singapore.
  • The Times: Patisserie Valerie collapsed into administration yesterday, putting more than 3,000 jobs at risk and closing months of speculation about the future of the café chain.
  • The Daily Telegraph: Pay growth in the UK posted its fastest rise in a decade and unemployment returned to its joint-lowest level since the 1970s at a rate of 4%.

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