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FTSE 100 closes lower as trade worries dent global equities; Ocado top Footsie gainer

A deceptively dull start by the Footsie gradually turned into something a bit more dramatic

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Tomorrow is another day ... but it may be much like this one
  • FTSE 100 index closes lower

  • US markets giving back Friday's gains

  • Ocado top riser on Footsie

FTSE 100 closed down around 62 points at 6,747 on  Monday as markets continue to be hit by China, US trade worries.

The German Dax lost 71 points, while France's CAC 40 is down around 37. On Wall Street, the Dow Jones Industrial Average has tanked 353 points at 24,381 at the time of writing.

"The two sides will sit down to discuss trade later this week, and seeing as the sentiment has been less than optimistic recently, dealers are a little on the nervous side," said David Madden, at CMC Markets in a note today.

On the rising front, however, on Footsie was online grocer Ocado (LON:OCDO), which added over 2% on reports at the weekend that it was in talks with Marks and Spencer (LON:MKS) over a possible partnership.

Madden noted: "Marks and Spencer have a limited delivery services in terms of geographical reach, and a deal with Ocado could potentially help the company tap into expanding client base of online shoppers. More and more of all shopping is done online and M&S need to adapt to the new environment."

FTSE 250 shed 108.9 points to stand at 18,534.

3.55pm: Blue-chips stop the rot

Heading into the last half-hour of trading, the Footsie showed signs of having bottomed out.

After hitting an intra-day low of 6,735, the blue-chip index rallied to 6,742, down 67 points on the day (1.0%).

Further down the food chain, energy consultant Utilitywise plc (LON:UTW) was the worst performing share in the whole market, losing more than two-thirds of its market value after it put itself up for sale after failing to raise new finance from investors.

The top performer was customer engagement specialist PCI-PAL PLC (LON:PCIP), which surged 51% to 26.5p after an upbeat trading statement.

The second half of 2018 saw the group achieve like-for-like indicative revenue growth of at least 25% from the corresponding period of 2017.

 

2.35pm: Footsie's losses lengthen as Dow takes a bath

The Dow Jones suffered a 300 point fall (1.2%) at the outset as investors fretted over Chinese economic growth.

New figures show that Chinese industrial profits fell in December for a second month running, further fuelling fears that the world's second-biggest economy is slowing down.

The US economy is also seen to be potentially in trouble as new survey data has shown that just 47% of American companies reported rising sales in the last quarter of 2018, down from 61% in the third quarter last year.

On this side of the pond, the FTSE 100’s fall was less spectacular than the Dow’s but nonetheless lengthening. The index was down 67 points (1.0%) at 6,742.

The mid-cap FTSE 250, focused as it is more on the UK economy, fared better with a 77 point (0.4%) decline to 18,566/

TI Fluid Systems PLC (LON:TIFS) was doing its bit to support the FTSE 250, rising 4.2% on the back of a reassuring trading update.

READ TI Fluid's CFO to leave group in strong financial position

Bus and trains operator National Express PLC (LON:NEX) was also wanted, rising 1.1% to 383.8p after Liberum Capital Markets upgraded the stock to ‘buy’ from ‘hold’, raising the target price to 470p from 410p in the process.

1.05pm: Oils weigh on Footsie

Oil prices were under pressure on Monday, weighing on index heavyweights BP and Shell.

The FTSE 100 was down 26 at 6,783, with BP PLC (LON:BP.) off 1.1% and Royal Dutch Shell (LON:RDSB) down 0.9%, as crude prices shed around 1.6%.

The black stuff lost some of its allure on Friday after the weekly rig count among US companies rose for the first time this year, signalling a possible increase in output.

“A higher US production rate continues to eat away at OPEC+’s efforts to support crude prices,” said Dean Popplewell at Oanda.

“US crude oil production rose to a record +11.9M bpd [barrels per day] in Q4 2018 and there is evidence that US production rates will increase further, especially when you see data from Baker-Hughes showing that US energy firms raised the number of rigs looking for new oil for the first time this year to +862 – an addition of 10 rigs. The US is now the world’s largest oil producer.

“A global economic slowdown supported by a persistent weakness in Chinese data and egged on by a trade dispute between US and China is also weighing on fuel demand-growth expectations,” he added.

Cruise ship operator Carnival PLC (LON:CCL), however, was revelling in the lower oil price, rising 1.4%, helped by more share buybacks as part of its equity repurchase programme.

12.10pm: US markets to open lower as shut-down suspension elation fades

It looks as if the euphoria over the suspension of the US shut-down has faded quickly, with US benchmarks expected to open lower.

The FTSE 100 was largely indifferent to the direction of US indices contracts on the futures markets, drifting down to 6,789, down 20 points (0.3%).

“Wall Street may have been quick to applaud the breakthrough in terms of the US government shut-down on Friday, but index futures were just as swift to find reverse gear and have been posting steady declines through the Asian session,” observed James Hughes at Axi Trader.

“The short-lived cheer appears to be a consequence of an incredibly congested calendar in the week ahead, which will see the latest round of trade talks between the US and China, the FOMC’s latest call on monetary policy and a slew of high profile earnings releases. Any of these items in isolation has the potential to drive short term sentiment for equities but combined the outcome could be even more pronounced,” Hughes continued.

“Critically, the US government reopening is only a temporary measure. The timing may help with progressing the trade talks, whilst the resumption of some data points such as the aggregate CFTC positions will also be keenly awaited by the market as it looks to play catch up, but the risk remains that government may once again grind to a halt by mid-February anyway,” Hughes said.

Axi Trader was expecting the Dow Jones to open 122 points lower at 24,615 and the S&P 500 to kick-off 14 points lower at 2,651.

11.20am: Benchmark index back below 6,800, feeling a bit fagged out

London’s benchmark index was hovering around the 6,800 mark like a nervous seventeen-year-old outside the tobacconist's.

Having made it back to last night’s closing level, the FTSE 100 took fright and dipped down to 6,799, down 10 points (0.15$) on the day.

Fags makers Imperial Brands PLC (LON:IMB) and British American Tobacco plc (LON:BATS) were among the top three blue-chip losers, with the former off 2.6% and the latter down 2.3%.

The whisper – presumably interspersed with a smoker’s cough – is that US regulators are getting more agitated about e-cigarettes. The UK’s parliamentary vote on the Brexit deal might also be causing some nervousness.

Mobile phones network operator Vodafone PLC (LON:VOD) clawed back some of Friday’s heavy losses, which came in the wake of its fourth quarter trading update.

The shares were up 1.2% at 138.64p after Kepler Cheuvreux upgraded the stock to ‘buy’ from ‘reduce’ even as it cut its target price to 160p from 180p.

Credit Suisse also engaged in some pruning, cutting its target price for Voda to 210p from 225p.

10.30am: Top-shares index back at square one

UK shares were mixed with the blue-chip index unchanged after a soft opening.

“Among the top London risers however was Russian steel producer Evraz, up over 3%, after the US decided to lift sanctions on another Russian metals producer Rusal,” noted Fionia Cincotta, the senior market analyst at City Index.

Evraz’s shares were up 2.4% at 484.6p.

“The US government shutdown was starting to cause serious concerns for some US businesses, particularly those that depend on US government contracts. It also blocked any planned IPOs as one of the agencies paralyzed by the closure was trading regulator the Securities and Exchange Commission. The SEC and other agencies now have three frantic weeks to catch up on lost time and to prepare to go into hibernation again when the three-week respite granted by Trump expires,” Cincotta noted.

Legacy software giant Micro Focus PLC (LON:MCRO) was 23.5p lower at 1,469.5p after Goldman Sachs downgraded the stock to ‘neutral’ from ‘buy’.

 

9.30am: Strength of resource stocks ameliorates the Footsie's losses

The FTSE 100 remained in the red despite the strength of mining stocks.

The FTSE 100 was down 24 at 6,785, having bottomed out around 9.00am at 6,773.

“Commodities, still heading for their best monthly performance since April 2016, have recorded strong gains so far this months in both energy and industrial metals. These two sectors have both managed to rally despite the current focus on slowing growth and with that, the risk of a slowdown in demand,” commented Ole Hansen, the head of commodity strategy at Saxo Bank.

“This highlights the importance of not only focusing on macroeconomic prospects but also looking out for tightening fundamentals. The Opec+ agreement to cut oil production has supported the sentiment change in energy. Industrial metals have found support from the progress being made on the trade front while pockets of looming shortages and rising demand have helped offset the almost daily dose of headline risks,” he added.

A fellow traveller of the oil sector, John Wood Group PLC (LON:WG.), the oilfield support services group, was not feeling much love this morning, however, despite raising a pile of cash from selling off non-core assets for US$28mln.

READ Wood Group sells off another US$28mln of joint venture interests

In the market as a whole, Flybe Group PLC (LON:FLYB) was the top performer, up more than a third, as major shareholder Hosking stepped up its efforts to derail the takeover by a consortium led by Virgin Atlantic.

9.15am: The Footsie weakens despite strength of commodity stocks

The FTSE 100 remained in the red despite the strength of mining stocks.

The FTSE 100 was down 24 at 6,785, having bottomed out around 9.00am at 6,773.

“Commodities, still heading for their best monthly performance since April 2016, have recorded strong gains so far this months in both energy and industrial metals. These two sectors have both managed to rally despite the current focus on slowing growth and with that, the risk of a slowdown in demand,” commented Ole Hansen, the head of commodity strategy at Saxo Bank.

“This highlights the importance of not only focusing on macroeconomic prospects but also looking out for tightening fundamentals. The Opec+ agreement to cut oil production has supported the sentiment change in energy. Industrial metals have found support from the progress being made on the trade front while pockets of looming shortages and rising demand have helped offset the almost daily dose of headline risks,” he added.

A fellow traveller of the oil sector, John Wood Group PLC (LON:WG.), the oilfield support services group, was not feeling much ove this morning, however,despite raising a pile of cash from selling off non-core assets for US$28mln.

READ Wood Group sells off another US$28mln of joint venture interests

https://www.proactiveinvestors.co.uk/companies/news/213399/wood-group-sells-off-another-us28mln-of-joint-venture-interests-213399.html

<blockquote class="twitter-tweet" data-lang="en"><p lang="en" dir="ltr">Wood Group rolling in post-disposal cash, TI Fluid Systems sees decent growth</p>&mdash; Mehrdad Yousefi (@MY21_Oracle) <a href="https://twitter.com/MY21_Oracle/status/1089794301779955714?ref_src=twsrc%5Etfw">January 28, 2019</a></blockquote>

<script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>

8.30am: Footsie weak

The FTSE 100 fell 23 points to 6,786.41 as the stronger pound exerted its pull on the index’s exporters.

However, it was the risers’ list that caught the eye with Ocado (LON:OCDO) and Marks & Spencer (LON:MKS) up 5% and 2.2% respectively amid weekend speculation the two may be attempting to batten down some sort of deal.

The miners, meanwhile, continued their resurgence with Anglo American (LON:AAL) up 2.5%, leading the charge.

Dixons Carphone (LON:DC.) was the top FTSE 250 riser after Morgan Stanley upgraded the electricals retailer to 'overweight' from 'equal-weight' on valuation grounds. 

Dropping down a division, the Morocco update from gas exploration group Sound Energy PLC (LON:SOU) was warmly received as the stock jumped 10% to just a tad under 27p.

Investors who bought in a year ago will be hoping the promised news flow ignites further interest given Sound was worth 50p a share at that point.

Proactive news headlines:

Kavango Resources PLC (LON:KAV) will commence drilling at the Ditau prospect in early February. Ditau forms part of the Kalahari Suture Zone, which is highly prospective for base metals.

Futura Medical PLC (LON:FUM) is set to share data further confirming its erectile dysfunction drug is safe for female sexual partners. Tim Holland, the company’s director of clinical development, will be making a poster presentation at the European Society for Sexual Medicine (ESSM) Congress in Slovenia next month.

The revenue picture is getting brighter at Kromek PLC (LON:KMK), the supplier of detection technology, after it bagged a medical imaging contract.

Sound Energy PLC (LON:SOU) has sketched in some interesting detail drawn from its TE-10 well in the Tendrara area of Morocco. It confirmed Monday it is likely to “revise up” the net pay estimate of sands found under the main TAGI play, which currently stands at 10.5 metres.

Top level domains (TLD) registry company Minds + Machines Group Limited (LON:MMX) expects full-year underlying earnings will be marginally ahead of market expectations.

SDX Energy Inc (LON:SDX) (CVE:SDX) is to delist from Toronto’s TSX Venture Exchange and move its corporate residence to the UK from Canada.

BATM Advanced Communications Ltd (LON:BVC) has signed an investment agreement to fund the development of a molecular diagnostics product by its joint venture, Ador Diagnostics.

Rainbow Rare Earths LTD (LON:RBW) is raising up to US$7.75mln through a combination of a US$750,000 unsecured convertible security and a 24 month equity facility of up to US$7.0mln.

Rockfire Resources PLC (LON:ROCK) has raised £500,000 through the placing of 58.8mln new shares at a placing price of 0.85p each, with a 1-for-1 attaching warrant exercisable at 1.5p. The placing is subject to shareholder approval at a general meeting of the company.

Canadian Overseas Petroleum Limited (LON:COPL) hopes to complete financing for an appraisal drilling programme at OPL226 in Nigeria by the middle of 2019. COPL said talks are underway with three large groups that can provide both oil services and finance.

Highlands Natural Resources PLC (LON:HNR) has started gas sales from the East Denver project following completion of a pipeline. The company holds a 7.5% interest in each well on the acreage.

European Metals Holdings Limited (LON:EMH) has revealed results from its ongoing eight core-hole resource drilling programme at the Cinovec lithium project. Drilling of five of the eight holes has been completed.

Eurasia Mining plc (LON:EUA) has agreed a contract for the 2019 season that will allow for Russian company Uralmetmash to carry out mining of platinum group metals and gold at the company’s West Kytlim mine in Russia.

Sure Ventures PLC (LON:SURE) has hailed the progress of its portfolio companies to date despite what it said were “poor and volatile” market conditions weighing on its Net Asset Value (NAV).

EQTEC Plc (LON:EQT) has appointed a new nominated advisor (Nomad) while also updating on the consolidation of two loans from Altair Group Investment Limited and Ecofinance (GLI) Limited.

Avacta Group PLC (LON:AVCT), the developer of Affimer biotherapeutics and reagents, has announced the appointment of Dr Sam Williams as a non-executive director with immediate effect. The group noted that Williams is currently managing partner and head of life sciences at IP Group Plc, the FTSE 250 investor in Life Sciences and Technology.

BB Healthcare Trust PLC (LON:BBH) announced that it has renewed and amended its multi-currency revolving credit facility with Scotiabank. Under the amended terms, the firm may draw down loans up to an aggregate value of US$100mln, and the facility also has an uncommitted accordion option which provides the group with the flexibility to increase the facility by a further US$50mln. The new facility will expire in January 2021.

SigmaRoc PLC (LON:SRC), the AIM-listed buy-and-build construction materials group, announced that the £10mln unsecured convertible loan notes that were redeemed by the company on 23 January 2019 have been successfully delisted from the official list of The International Stock Exchange.

ECSC Group PLC (LON:ECSC) has received an Award for Excellence at PCI London for its work within the payment card industry, the third year in a row that the firm has received this accolade. The 2019 award is for ECSC's implementation of 24/7/365 cyber security monitoring from its global PCI certified Security Operations Centres, utilising the company's Artificial Intelligence Kepler technology.

6.30am: FTSE 100 set to start in the red

The FTSE 100 looks set to kick off the week on the back foot with a resurgent pound expected to exert a drag on the blue-chip stocks.

With sterling around the US$1.32 mark and seemingly discounting a ‘no-deal’ Brexit, the index’s overseas earners are set to suffer.

In Asia the momentum was positive, with region’s main markets buoyed by the growing prospect of a trade deal between the US and China.

Looking ahead, MPs vote on Tuesday on a series of amendments to the Prime Ministers plans that could shape the future direction of the UK’s exit from the EU.

According to the Times, Conservatives who backed Theresa May’s Brexit plan when it was heavily defeated this month are preparing to abandon her and push for a softer agreement if parliament blocks a no-deal exit tomorrow.

False hope?

The upward movement of sterling may offer false hope that Westminster can untangle itself, said CMC Markets analyst Michael Hewson.

“Markets seem to have a lot more faith in politicians than many think they deserve,” he added.  

“Nonetheless the pound hit eighteen-month peaks against the euro on the basis that an article 50 extension could well find its way into an amendment when Parliament meets to debate the latest attempt to break the deadlock over the UK’s withdrawal agreement and political declaration tomorrow.”  

In the City, there’s a welter of results from some of the Footsie’s big companies this week, including updates from BT Group (LON:BT.A), Unilever (LON:ULVR), Diageo (LON:DGE) and Royal Dutch Shell (LON:RDSA).

Around the markets: Pound worth US$1.3190; gold up US$3.10 an ounce at US$1307.10; Brent Crude US$60.97 a barrel, down 67 cents.

Business Headlines 

Financial Times

Unions seeks urgent talks with Tesco over job fears - retailer could cut workforce by 15,000 to reduce costs, claims report

China’s EU envoy hits out at Huawei security ‘slander’ - ambassador warns that attacks on Chinese tech group could hamper new 5G mobile networks

MEPs push to relax aviation rules if no-deal Brexit goes ahead

London property transactions drop to decade low

Vale under scrutiny after second mine disaster in Brazil

Times

The banking industry will come together with leading business groups to issue emergency Brexit advice to small and medium-sized companies

Flybe is to consider a demand by its largest shareholder to oust its chairman of five years amid a wrangle over a planned deal by the low-cost airline to sell itself

Dyson, the technology group relocating its headquarters from Britain to Singapore, has received £67mln in tax breaks over the past two years

Lid is lifted on £40mln black hole at heart of Patisserie Valerie

Daily Telegraph

Marks & Spencer is in talks about a takeover of Ocado’s supermarket ­operations in a belated attack on the online grocery market

Former BP boss Lord John Browne and Russian billionaire Mikhail Fridman are poised to kick-start a £23bn float of a new energy giant that will go toe-to-toe with some of the world’s top oil explorers

Openreach to recruit 3,000 engineers to hit full-fibre broadband target

Scottish Power is lining up against foreign infrastructure investment funds in the race to buy a £2bn electricity network operator

City tycoon and Brexit-backer Peter Cruddas has tried to soothe bankers’ concerns about Brexit by arguing that the sector is “certainly prepared” for a no-deal scenario based on World Trade Organisation trade terms

Guardian

No-deal Brexit: UK firms 'praying' for article 50 extension, says KPMG

Huawei's problems deepen as western suspicions mount

Future of digital journalism in question as BuzzFeed and HuffPost lay off 1,000

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