FTSE 100 closes higher
British American Tobacco higher
US shares mixed
FTSE 100 closed higher on Tuesday, outshining other European benchmarks.
The UK's blue-chip benchmark finished over 86 points higher at 6,833, while FTSE 250 closed nearly 168 points higher at 18,702.
The German DAX added around eight points, while the French CAC 40 gained over 39
Top riser on Footsie was British American Tobacco (LON:BATS), which lit up 5.68% to stand at 2,510p, having slumped back yesterday.
David Madden, analyst at CMC Markets, said: "FTSE 100 is the standout performer in Europe today, and the rally is spread across consumer, financial, energy and mining stocks.
"The British equity benchmark has lagged behind its Continental counterparts lately, and the stability in the commodity space helped it outperformer today."
15.30pm: US markets mixed
US markets opened mixed, with the Dow on the rise, the S&P 500 barely changed and the NASDAQ Composite on the slide.
The Dow Jones was up 69 at 24,596 but the NASDAQ was off 21 points at 7,065. The S&P 500 was down a point at 2,643.
The FTSE 100, meanwhile, meandered higher to 8,850, up 103 points, ahead of tonight’s Brexit debate in parliament.
The prime minister, Theresa May, has pledged to hold more talks with EU officials over the thorny issue of the Northern Ireland border.
May said today’s parliamentary vote would be a chance to "send a clear message" to EU on the backstop; meanwhile, the EU’s message to May remains that it will not change the legal text previously agreed with May relating to the Irish border.
Despite the prospect of the UK waking up tomorrow even more confused by Brexit – not to mention sick to death of it – leading shares were pretty much higher across the board this afternoon.
Cigarette makers British American Tobacco plc (LON:BATS) and Imperial Brands PLC (LON:IMB), both of which were among the worst performing blue-chips yesterday, were among the best performers today, rising 4.7% and 2.9% respectively.
On the foreign exchange markets, sterling was making headway against the greenback, rising 0.23 cents to US$1.318.
2.15pm: Clock ticks down on Brexit votes
London’s leading shares remained mostly firmer ahead of tonight’s vote on the Brexit Plan B in the House of Commons.
The FTSE 100 was up 89 at 6,836.
“Last week’s growing confidence that Brexit would either be delayed – or softened – propelled sterling on a stellar run but that fleeting certainty is now a distant memory, as the markets are once again flooded with doubts about the course of Brexit,” opined JR Zhou, a market analyst at Infinox.
Sentiment towards sterling is, according to Zhou, being battered by two conflicting developments from Westminster.
“On one hand, the Labour Party’s decision to back a plan to prevent a ‘no-deal’ exit – and give MPs the power to demand an extension to the Brexit deadline – raises hopes that the can will be kicked down the road.
“Meanwhile the Prime Minister’s announcement that she is to ask the EU to reopen discussions about her stalled Brexit deal underlines just how deadlocked the UK Government’s strategy is,” the analyst added.
Meanwhile, the US and China meet tomorrow in an attempt to cut a trade deal but Dutch finance house ING thinks the chances are that protectionism will get worse before it gets better.
“US demands are too ambitious for quick fixes. The negative effects of higher tariffs are starting to kick in and economic growth will not provide much support to world trade either. Trade growth will drop to 1.3% in 2019,” the bank predicted.
For now, UK investors are happy to hope for the best and are buying stocks. Packaging giant DS Smith PLC (LON:SMDS) led the Footsie higher, rising 4.7% to 334p after JPMorgan resumed coverage with an ‘overweight’ recommendation and a price target of 400p.
1.00pm: Blue-chip index trades sideways at higher level
The Footsie has traded sideways throughout the lunchtime trading session, consolidating some sharp gains.
The FTSE 100 was up 85 points (1.3%) at 6,832.
“The UK index set aside any Huawei or Brexit-related fretting to re-cross 6800, hitting 6835 for the first time in almost a week. Most of its major sectors were in the green, including its rebounding oil stocks, a decent showing from its miners, and a strong performance from Imperial Brands and BAT, both of which looked smoked on Monday,” said Connor Campbell at Spreadex.
“Sterling, meanwhile, sat twiddling its thumbs, unwilling to do much of anything ahead of this evening’s latest Parliament Brexit vote. Though there is potentially plenty of volatility in store given the number of amendments jostling for dominance, at the moment the pound is merely down 0.1% against both the euro and the dollar,” he reported.
The stock was competing with Royal Mail Group PLC (LON:RMG) for the wooden spoon among FTSE 250 constituents as it revealed adjusted profit before tax for the full year is now expected to be towards £70 million driven by conditions in Nigeria, including an estimated £5.5 million impact as a result of significant port disruption.
Shore Capital said the half-year results were in line but the outlook, particularly in Nigeria, remains challenging.
The shares were down 10.5% at 187.6p.
Royal Mail, meanwhile, was down 10.7% at 268.4p after its trading update covering the first nine months of its fiscal year.
Liberum Capital Markets said structural problems persist and it reckons the dividend, which is generating an 8.1% yield, is unsustainable with thin earnings cover of 1.1.
Russ Mould, the investment director of AJ Bell, went on a trip down Memory Lane that would not be enjoyed by Vince Cable, the minister in charge of the controversial privatisation of the parcels and letters delivery firm.
“The 330p issue price from Royal Mail’s IPO is no longer looking either the bargain or scandal which different voices argued it was back in 2013.
“Shares in the delivery firm haven’t traded above that level since November last year and today’s update is only sending the share price further into the doldrums,” he noted.
“Letter volumes are declining even faster than expected amid business uncertainty, but this problem also reflects structural changes as an increasing amount of communication moves online and, at the same time, the company is really struggling to deliver the efficiencies in its operations it hoped for despite the progress it made in getting the unions on side last year,” Mould said.
11.45am: Blue-chip index sees its handsome gains pared
Ahead of what is expected to be a soft opening on Wall Street, the Footsie has seen its handsome gains trimmed.
The FTSE 100 was up 91 points (1.4%) at 6,839, 12 points below its intra-day high.
“Hopes are also running high that some progress can be seen in the US-China trade talks his week – that profit warning from Apple laid bare the fact that the impasse is proving damaging on both sides of the Pacific but again the latest update from Treasury Secretary Mnuchin showed there were still some considerable gaps to bridge,” said James Hughes at Axi Trader, in a preview of trading on Wall Street.
“The US consumer confidence reading for January is set for release shortly after the opening bell so again this could offer some fresh insight. The market is expecting to see a meaningful decline here, but anything more dramatic could again give traders reason to reach for the sell button,” he added.
Axi Trader is expecting the Dow to shed 34 points at 24,494 at the open and the S&P 500 to fall 3 points to 2,641.
Back in the UK, safety-focused engineering conglomerate Halma PLC (LON:HLMA) was one of the few Footsie constituents in the red after Berenberg downgraded the stock to ‘hold’ from ‘buy’ and lopped 10p off its 1,560p target price.
Halma shares dipped a penny to 1,399p.
10.45am: The Footsie sports a triple-digit rise
It has been a while since the Footsie has notched up a triple-digit rise but it managed it this morning.
The top-shares index was up 101 points (1.5%) at 6,848, with just five index constituents in the red.
Curiously, the analytical team at Hargreaves Lansdown have not put out a comment piece on the trading update.
“Following a quick sell-off after the market opened this morning Tesco shares are trading flat as the company revealed it would cut 9,000 jobs across the country. The cost-cutting exercise will mainly consist of reorganising the chain’s meat, fish and deli counters and stopping its offering of hot food,” commented Fiona Cincotta at City Index.
“The retailer’s shares have been rising since early January after the company posted the best Christmas trading numbers in almost ten years but the company’s growth remains too low-key from investors’ perspective. Christmas provided a brief respite for the UK supermarket chains, which have been under pressure from falling sales, partially caused by Brexit concerns and partially by lower income,” she added.
Tesco shares were up 1%.
Tesco has announced another major shake up in the company, with 700 of the largest stored being streamlined and up to 9000 job losses expected, not long after they announced their new Jack's store format last year - will they get their retail format right this year? pic.twitter.com/bmTrteBUMX— Red Tiger Consulting (@redtigerconsult) January 29, 2019
9.40am: The Footsie storms back above 6,800
The blue-chip index has established a beachhead above 6,800, ahead of this evening’s parliamentary vote on a rehashed Brexit proposal.
The FTSE 100 was up 75 points (1.1%) at 6,822 – its high point for the day (so far).
“So, all eyes in the UK today will be on this evening’s Brexit votes in the House of Commons,” predicted Daiwa Capital Markets.
“Theresa May’s strategy was revealed last night when she sought to persuade Conservative MPs to back an amendment, tabled by Tory backbencher Sir Graham Brady, which would endorse her deal subject to negotiating alternative arrangements to avoid a hard border in Ireland in place of the current draft backstop agreement,” the City firm reported.
“Of course, the EU has long made clear that it has no intention to renegotiate the backstop or anything else in the Withdrawal Agreement. Moreover, it’s already evident that, if it is selected for a vote, the Brady amendment will face defeat. Certainly, several notable Brexiters of the ERG are refusing to back it, thus revealing (as we might have guessed) that their support cannot be bought simply by tweaking the backstop,” Daiwa asserted.
“Assuming the Brady amendment is indeed selected for a vote, however, the magnitude of defeat could be instructive as to what might be required if a version of May’s deal is eventually to make it through the Commons,” it suggested.
The mid-cap FTSE 250 tried to keep pace with the Footsie, rising 142 points (0.8%) to 18,677.
UDG Healthcare PLC (LON:UDG) topped the FTSE 250 leader board with a 10.4% gain following a trading update, with Intermediate Capital PLC (LON:ICP) in the silver medal position, up 5.9%, after its fiscal third-quarter trading statement.
Down in the FTSE 250 basement, Domino’s Pizza PLC (LON:DOM) saw its share price sliced to 258.5p from 273.9p overnight after its fourth-quarter trading statement included a lowering of earnings expectations.
“Pizza takeaway group Domino’s is stuck between a rock and a hard place. UK growth is proving harder to come by in a competitive and arguably over-saturated market and its overseas operations are still experiencing problems.
“In a sense, the company is proving a victim of its own success and even reduced roll-out ambitions in the UK risk cannibalising existing sales as the density of Domino’s outlets increases,” opined Russ Mould, the investment director at AJ Bell.
Liberum Capital Markets reiterated its ‘sell’ recommendation, saying the cut to profit before tax guidance of between 2% and 3% will weigh on the shares.
8.50am: Never mind the Brexit vote
The FTSE 100 was actually in chipper mood ahead of what could another politically charged day with the Brexit debate once again returning to the Commons.
With myriad different permutations, traders chose to ignore the confusion and take the positives from a retreating pound, which provided a boost to the Footsie’s major dollar earners.
“Today’s vote is by no means the end of the Brexit saga,” said Jasper Lawler, referring to Theresa May’s return to Parliament.
“In fact, it will open the door to further debate and discussion, as a result, the impact on the pound could be limited.
“As we have seen before, any hint of a move away from a no deal Brexit will be considered pound positive.”
British American Tobacco (LON:BATS) and Imperial Brands (LON:IMB) rebounded from Monday’s sell-off, rising 4.2% and 2% respectively. Yesterday’s declines came amid worries of a tougher US stance on e-cigarettes.
On the FTSE 250, Royal Mail’s latest update failed to pass muster. The shares fell 9%.
“The update provides further recognition of, rather than a solution to, Royal Mail’s ongoing issues,” said Richard Hunter of Interactive Investor.
“The profit warning in October was something of a hammer blow from which the shares have not recovered.
“Indeed, in the last three months alone the price has drifted another 16%. The productivity assessment which did such damage a few months ago remains ongoing, although rather more positively the cost avoidance target seems achievable.”
Proactive news headlines:
ANGLE PLC’s (LON:AGL) has found a potential new application for its liquid biopsy. Dr Bernhard Polzer and his team at the Fraunhofer Institute for Toxicology and Experimental Medicine, in Regensburg, Germany, found ANGLE’s Parsortix system streamlines the analysis of lymph nodes in melanoma.
Kore Potash PLC (LON:KP2) has revealed the results of a definitive feasibility study for the Kola potash project in the Republic of Congo. The project’s post-tax NPV at a 10% discount rings in at a chunky US$1.45bn.
Victoria Oil & Gas PLC (LON:VOG) has provided a production update and clarified its funding position. The former first: grid power customer ENEO resumed consumption, taking average gas output to 10mln standard cubic feet a day including gas condensate sales. At 12mln cubic feet, which was achieved last week (19-25 Jan), monthly revenues would be US$2mln, the Cameroon-focused producer said.
Metallurgical test work from the Mina do Barroso project owned by Savannah Resources PLC (LON:SAV) continues to show that a conventional 6% Li₂O, low-impurity concentrate can be produced with high recoveries.
ARC Minerals Limited (LON:ARCM) has updated on the construction of a commercial-scale demonstration plant at its Zamsort copper-cobalt project in Zambia.
Comprehensive field evaporation trials at the Lake Way project owned by Salt Lake Potash Ltd (LON:SO4) are successfully producing sUBStantial volumes of potassium harvest salts, validating the modelled salt production process.
Tower Resources PLC (LON:TRP), the AIM-listed oil and gas company with its focus on Africa, said it will be providing an Investor Update at the Oil Capital Conference in London on Thursday 31 January 2019.
6.45am: FTSE 100 expected to bounce back
The FTSE 100 index is seen rallying early on Tuesday, recovering some of Monday’s falls, in spite of weakness overnight on US and Asian markets, with dollar earners to be helped by slight weakness in the pound ahead of a second parliamentary vote today on Theresa May’s Brexit deal.
Spread betting firm IG expects the blue-chip index to open around 25 points higher at 6,772, having shed 62.12 points yesterday.
Overnight on Wall Street, the Dow Jones Industrials Average ended 208 points lower at 24,528, although that was less than earlier even heftier falls, impacted by profit warnings from the likes of Caterpillar and Nvidia Corp. which cited the impact of a softening in demand from China amid trade war uncertainties.
The mood was just as glum in Asia, with Japan’s Nikkei 225 index and Hong Kong’s Hang Seng index both losing 0.3% as hopes for an end to the US/China trade battle took a knock after the United States lodged criminal charges against Chinese telecoms giant Huawei.
On currency markets, the pound slipped back against the US dollar and the euro after recent strength as investors awaited the latest twist in the Brexit saga, with a parliamentary vote due on the UK prime minister’s Plan B, following Plan A’s rejection earlier this month.
Theresa May has vowed to seek changes from the European Commission to the Irish ‘backstop’ measures regarding the border between Northern Ireland and the Irish Republic after the UK leaves the EU.
However, few other details about how her deal would be changed have emerged so far before the latest vote and the key factor will be what amendment votes MPs can win.
Investors hope Royal Mail can deliver
On the corporate front, Royal Mail Group PLC (LON:RMG) will be the main focus as the privatised mail delivery firm issues its latest trading update having posted a disappointing first half performance which saw it miss cost savings target and struggle with an ongoing decline in letter volumes.
The FTSE 250-listed firm’s pre-tax profit fell to £33mln in the 26 weeks to September 23, down from £77mln a year earlier although revenue rose modestly as 9% growth in its European business, Global Logistics Systems offset a 1% drop in the UK parcels, international and letters division.
Analysts at UBS expect to see a similar trend when the postal operator reports its results for the nine months ended December 23.
Market conditions key for Hargreaves Lansdown
In a preview, analysts at Peel Hunt pointed out that consensus estimates for the FTSE 100-listed firm’s first-half profits stand at around £156mln, implying growth of around 6%, based on net new business of £2.6bn, and period-closing assets under administration of £88bn.
The analysts think it is inevitable that full-year consensus estimates will move lower given the market conditions, however, they believe the great attraction and strength of HL is its ability to continue to attract assets, even in periods of increased volatility.
Significant events expected on Tuesday:
Economic data: US consumer confidence; US goods trade balance; US Case-Shiller house prices; US consumer confidence
Around the markets:
- Sterling: US$1.3149, down 0.1%
- Gold: US$1,193.71 an ounce, down 0.1%
- Brent crude: US$60.28 a barrel, up 0.3%
- Theresa May faces fresh Commons defeat as Conservative Brexiteers have vowed to defy the prime minister and vote down an amendment to her Brexit deal that she hopes will help her to secure crucial concessions in Europe – The Times
- The bosses of several major supermarkets and fast food chains have warned of higher prices and gaps on shelves if the UK leaves the EU without a deal in March – Daily Telegraph
- The owner of the off-licence business Oddbins has appointed advisers to look at options for the future after an “extremely tough” Christmas – The Guardian
- American prosecutors have unveiled criminal charges against Huawei, accusing it of violating sanctions against Iran and stealing trade secrets – Daily Telegraph
- Saudi Arabia has cut its stake in Tesla less than four months after the carmaker’s chief executive settled fraud charges over claim the kingdom was ready to back a management buyout - Financial Times
- The American microchip maker Nvidia has warned of a sharp economic slowdown in China as it blamed “extraordinary dynamics” for a $500mln hole in its revenues – Daily Telegraph
- Brazilian mining company Vale’s shares fell by as much as 24% on Monday as investors reacted to the deadly dam burst in Minas Gerais – Financial Times
- Former Autonomy boss Mike Lynch has quit the board of a Cambridge-based fraud detection company, Featurescape, after it raised US$25mln in new funds – The Times
- Dutch firm Philips is seeking to go deeper into the technology of healthcare with more connected devices that harness artificial intelligence and data analysis – Financial Times
- Nissan has confirmed it is being investigated by the US Securities and Exchange Commission, undermining its efforts to move on from the arrest of former chairman Carlos Ghosn – The Guardian
- President Trump’s sweeping tax cuts are doing little to boost investment or hiring by companies a year after they were enacted, according to the National Association of Business Economics’s influential quarterly business conditions survey – The Times
- The all-time top 20 best-performing hedge fund managers delivered $23.2bn to their investors last year, while the rest of the industry lost $64.2bn – Financial Times