FTSE 100 index closes up
Wall Street shares highr
Whitbread unveils extra £2bn in share buybacks
FTSE 100 closed higher on Wednesday, while Wall Street also climbed as traders were buoyed by improved prospects for a US/China trade deal.
The UK's premier share index added around 57 points at 7,190.
The more UK-company focused FTSE 250 was also higher, gaining over 147 points to close at 18,972.
According to reports, the Chinese president Jinping is scheduled to meet US trade representative Robert Lighthizer and US Treasury Secretary Steven Mnuchin during talks in Beijing.
David Madden, market analyst at CMC Markets in London, said: "Stocks are higher this afternoon as traders are hopeful about the US-China trade talks that are taking place. US treasury secretary, Steve Mnuchin, said the talks were going well.
"President Trump will potentially ease up on the March deadline, and that is seen as a positive sign. Overall, we have heard very little about the discussions, but importantly, what we have heard has been positive, so traders are happy to buy into the market."
4pm: Barclays reveals Brexit preparation bill of up to £200mln
The UK chairman of investment bank Barclays PLC (LON:BARC), Gerry Grimstone, has revealed the bank has spent between £100mln-£200mln to move its operations and staff out of the UK in preparation for Brexit, according to a Reuters report.
The bank has already moved its European headquarters and around €200bn in assets to Dublin over the last year, while also relocating around 50 investment banking jobs to the German financial hub of Frankfurt.
The comments followed an admission by the vice chairman of Bank of America, Anne Finucane, that her own bank had spent US$400mln on Brexit prep.
In late-afternoon, Barclays shares were up 0.3% at 158.5p, while the FTSE 100 was up 62 points at 7,195.
2.45pm: Wall Street starts on the front foot amid trade hopes
The main US indexes started in positive territory on Wednesday morning as optimism continued around the prospect of a trade breakthrough between the US and China.
Shortly after the open, the Dow Jones Industrial Average was up 161 points at 25,586, while the S&P 500 was up 14 points at 2,759 and the Nasdaq was up 43 points at 7,458.
In London, the FTSE 100 was up 57 points at 7,190.
2.10pm: Whitbread announces £2bn in additional share buybacks
FTSE 100 Premier Inn owner Whitbread plc (LON:WTB) has unveiled a further £2bn of share buybacks in an announcement from its capital markets day.
After netting £3.9bn from its sale of the Costa Coffee chain to Coca-Cola Co (NYSE:KO) last year, Whitbread said that it aimed to return a total of £2.5bn to shareholders.
The £500mln buyback began in January and would run until April, with the company saying it would begin a programme to repurchase the other £2bn in shares afterwards.
The announcement helped boost the shares 2.5% to 4,883p in mid-afternoon trading, while the FTSE 100 itself was up 57 points at 7,190.
1.50pm: US inflation flat in January as sharp drop in fuel prices offsets rises in other goods
The US consumer price index came in flat for January, with a sharp drop in fuel prices offsetting increases in other areas.
While prices were up across clothing, rent, medical care, and household furnishings, these were offset by declines in fuel, new automobiles, and plane tickets.
The cost of living also slowed its growth over the last 12 months, falling to 1.6% from 1.9% last month.
Naeem Aslam, chief market analyst at Think Markets UK, said that the data had caused “no real drama” and that the numbers would keep the Federal Reserve “out of the picture for the foreseeable future” as falling inflation had already pushed the central bank to stop raising interest rates.
In London, the FTSE had increased its gains and was up 38 points at 7,172.
12.30pm: US markets expected to gain as trade rally continues
Wall Street is expected to start of the front foot on Wednesday morning as the wave of optimism regarding a possible breakthrough in trade negotiations between the US and China continued to wash over traders.
Comments from Trump around potentially throwing out a 2 March deadline to increase tariffs on Chinese good buoyed the main US indexes to their highest levels this year on Tuesday, and came ahead of a planned meeting between a US delegation and Chinese president Xi Jinping on Friday.
There is also likely to be a continuation a bounce on the back of a deal signed late on Monday to avoid another shutdown of the US government.
There will also be anticipation ahead of the US's consumer prices, which will be released at 8.30am Eastern Time.
"Optimism continues to grow that a way ahead can be found in terms of those US – Chinese trade talks, but critically there’s still no commitment to be flexible on the March 2nd deadline for tariff increases. Arguably there’s going to be a need for some very clear signaling here if the optimism is to be sustained in the next couple of weeks", said James Hughes , chief market analyst at Axitrader.
The FTSE 100 was up 14 points at 7,147.
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11.45am: FTSE 100 in positive territory into lunchtime, UK house prices edge up in December
As the morning drew to a close the FTSE 100 had added to its opening gains and was up 42 points at 7,175.
Housebuilders were some of the key leaders among the blue-chips, with Persimmon PLC (LON:PSN), Barratt Developments PLC (LON:BDEV), and Taylor Wimpey PLC (LON:TW.) all up in late-morning trading on the back of renewed hope of a Brexit delay.
Among the highest risers were packaging firms DS Smith PLC (LON:SMDS) and Smurfit Kappa Group PLC (LON:SKG) as the latter’s earning and dividend hike provided a welcome boost to the stock.
Meanwhile, data from the ONS has revealed that UK house prices ticked up 0.2% in December after falling over the previous three months, with the market still under pressure from a downturn in London prices and Brexit uncertainty.
Howard Archer, chief economic advisor at the EY ITEM Club, said that the group expected prices to gain around 2% over 2019 if the UK managed to exit the EU with a deal at the end of March, as the reduced uncertainty could help the market “pick up”.
However, he added that if a ‘no deal’ Brexit occurred house prices could fall by as much as 5% over the year with “heightened uncertainty and weakened economic activity”.
“The fundamentals for house buyers currently remain challenging. Consumers have faced an extended squeeze on purchasing power, which is only gradually easing. In addition, housing market activity remains hampered by fragile consumer confidence and a limited willingness to engage in major transactions.”
10.50am: Eurozone industrial production drops for second consecutive month
Industrial production in the eurozone fell 0.9% between November and December, the second month in a row after dropping 1.7% the previous month.
Statistics agency Eurostat added that industrial production dropped by 0.5% across the EU’s 28-member states over the same period compared to a 1.2% fall the month before.
For the whole of 2018, average industrial production rose by 1.1% in the eurozone and 1.3% in the wider EU.
The biggest falls were in Ireland, Malta, and the Netherlands, which fell 13.4%, 5.2%, and 3.2% respectively, while the highest increases were in Denmark, Luxembourg, and Latvia with increases of 11.6%, 3.5%, and 3.3%.
The region has been marred over the last year by sluggish global demand and political uncertainty in the form of Brexit and a budget standoff between the EU bureaucracy and Italy’s populist government.
The FTSE 100 was up 28 points at 7,161.
10.15am: UK inflation drops below 2% BoE target
The UK’s inflation rate fell to 1.8% in January, down from 2.1% in December and below the Bank of England’s 2% target.
The office for national statistics (ONS) said that the largest contribution to the downward trend in the consumer prices index (CPI) came from electricity, gas, and other fuels with prices falling between December and January compared to rising a year ago.
UK inflation rate falls to 1.8% in January, down from 2.1% the previous month, Office for National Statistics says https://t.co/81wnyBYZQC
— BBC Breaking News (@BBCBreaking) February 13, 2019
The drop in prices also coincided with the introduction of an energy price cap by regulator Ofgem.
However, the drop was partially offset by airfares, which fell at a slower rate than they did a year ago.
Emma-Lou Montgomery, associate director for Personal Investing at Fidelity International, said that while inflation had hit the “sweet spot”, the data meant any expectations for an interest rate hike later this year “are likely to be put to bed”.
“To compound matters for the BoE, the recent GDP figures showing productivity fell by 0.4% in December and ongoing Brexit uncertainty will put further pressure on the MPC to leave current monetary policy unchanged.”
Analysts at investment bank ING added that while inflation numbers would affect the interest rate outlook, what really mattered was the outcome of Brexit as the uncertainty would at the very least “keep hiring and investment on hold, keeping a lid on growth. In the meantime, the Bank of England will remain firmly on the sidelines”.
Shortly after the data release, sterling was down 0.05% at US$1.288 against the dollar and flat against the euro at €1.138.
The FTSE 100 was up 30 points at 7,163.
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9.55am: IEA says ex-OPEC crude production to increase more than expected
The International Energy Agency (IEA) has said production growth from non-OPEC oil producers will increase more than expected in 2019.
The IEA said the growth in crude supply outside OPEC, led by US shale, will stand at 1.8mln barrels a day (bpd) in 2019 from 1.6mln bpd previously, while demand growth remained unchanged at 1.4mln bpd.
The agency said that despite a fall in production from major producers such as Saudi Arabia, Iran, and Venezuela, markets were still working off a surplus from the second half of 2018 which was keeping oil prices hovering around US$63 a barrel.
The non-OPEC production levels also meant demand from the cartel would be around 30.7mln bpd in 2019, less than the blocs January production levels of 30.8mln bpd.
In mid-morning Wednesday, brent crude was up 1.3% at US$63.2 a barrel.
The FTSE 100 was up 30 points at 7,163.
8.35am: Footsie bounces back
After a fairly lacklustre late session on Tuesday the FTSE 100 opened 33 points to the good at 7,166.14, with optimism growing that the US and China may be able resolve their trade stand-off.
“With the ongoing negotiations in Beijing paving the way for Thursday’s top tier tete-a-tete between treasury secretary Steve Mnuchin and trade representative Robert Lighthizer on one side, and vice premier Liu He on the other, the pressure may have been taken off oh so slightly following some interesting comments from Donald Trump overnight,” said Connor Campbell, analyst at Spreadex.
“Still yet to sign the shutdown-avoiding deal agreed on by Democrats and Republicans – the announcement of which was the other major market-booster on Tuesday – the President claimed that if the US and China were close to a ‘real deal’ then he could let plans to immediately hike tariffs on March 1 ‘slide for a little while’.
There was no respite for TUI (LON:TUI), which ended yesterday in the dog-house after it weighed in with results the bore the scars of last year’s barbecue summer and the weak pound. There was follow-though selling as the stock lost another 2.8% early on.
On the FTSE 250 it was another tough day for the spread betting firm Plus500 after its profit warning. The shares fell a further 2.9%.
Rolls-Royce (LON:RR.) saw its shares advance 1.8% after the influential capital goods team at Credit Suisse upgraded stock in the jet engine maker to ‘outperform’.
Clinigen (LON:CLIN), one of AIM’s largest companies, saw its stock rise 12% after it agreed a US$210mln deal to buy the US rights to a Novartis cancer drug.
Proactive news headlines:
Anglo African Oil & Gas PLC (LON:AAOG) told investors it plans to start production in April from the TLP-103C well, at the Tilapia licence in the Republic of the Congo. The company, in a statement, explained that it aims to begin production from TLP-103C’s upper reservoirs through comingling the R2 and the Mengo intervals, through a double completion in the well.
Clinigen Group PLC (LON:CLIN) has struck a deal that will cost it up to US$210mln to acquire the US rights for a cancer drug from Swiss giant Novartis. The growing speciality pharma group already sells Proleukin outside America.
Recruiter Norman Broadbent Plc (LON:NBB) posted its highest revenues for a decade as net fee income hit a record. Turnover in 2018 was up 40% at £9.2mln while losses were more than halved at £900,000.
MTI Wireless Edge Ltd (LON:MWE) announced that Ginat Wave India Private, its offset manufacturing company in India, has secured its first large scale orders, with two contracts, totalling US$900,000, from two different customers. The AIM-listed technology group said the contracts are for the supply of antenna and cable harness.
ECR Minerals PLC (LON:ECR) has started drilling at the Black Cat target within the Bailieston gold project area in the state of Victoria, Australia.
OptiBiotix Health plc (LON:OPTI) has seen significant commercial traction for its innovative new products to tackle obesity, heart disease and diabetes. The latest trading statement revealed the company signed 18 deals in the 12 months ended last November, eight more than it did the year before. And 2019 has started with a flurry of new tie-ups around the globe.
Bacanora Lithium PLC (LON:BCN) chief executive Peter Secker highlighted the rapid progress as it continues to advance the Sonora mine development project in Mexico. The company, in its interim results statement today, highlighted that in the second half it expects to finalise its financing package for the Sonora project whilst also bring forward its second lithium project, Zinnwald, where a feasibility study is anticipated.
Pan African Resources plc (LON:PAF) said it expects its earnings per share (EPS) for the second half of 2018 to be higher year-on-year.
Greencoat UK Wind PLC (LON:UKW) said it raised gross issue proceeds of £131mln from the share placing it announced on 1 February 2019 in combination with plans to acquire stakes in the Stronelairg and Dunmaglass wind farms from FTSE 100-listed utilities group SSE PLC (LON:SSE).
6.45am: FTSE 100 poised for a positive start
The FTSE 100 is poised to open higher this morning as a wave of optimism over better prospects for a trade deal with China and a deal avoiding a second US government shutdown carried over from yesterday’s session on Wall Street.
Spread-betting firm IG expects the FTSE 100 to open around 31 points higher after closing up just 4 points yesterday at 7,133.
Jasper Lawler, head of research at London Capital Group, said comments made by US president Trump on Tuesday that the 2 March deadline regarding tariff increases on Chinese goods could be postponed if the two sides were close to deal was “music to the ears of the market”.
“Whilst there have been positive reports regarding the trade talks investors were getting nervous of the nearing deadline and no solid evidence of progress. Negative sentiment is unwinding, and investors are showing that they are prepared to put risk back on the table. For sentiment to remain positive we will need to see evidence of a deal in March. However, for now markets are willing to let this pass.”
For the shutdown deal, Lawler added that an agreement on border security funding, while not as much as Trump would have wanted and missing money for the infamous wall, had “downplayed the likelihood of a second shutdown” and that as a result investors were “moving their money out of safe havens and back into riskier assets”.
In the US market yesterday the main indexes closed at their highest level so far this year on the back of the shutdown deal and renewed trade optimism.
The Dow Jones Industrial Average closed up around 373 points at 25,426, while the S&P 500 closed up 35 points at 2,745 and the Nasdaq was up 107 points at 7,415.
The positivity around the potential for a US-China trade deal also carried into trading on the Asian markets today, with the Japanese Nikkei 225 up 283 points at 21,147 while Hong Kong’s Hang Seng was up 316 points at 28,487.
On the currency markets, sterling was up 0.2% at US$1.291 against the dollar and up 0.1% at €1.139 against the euro as traders awaited the latest inflation figures from the UK economy.
“Whilst inflation remaining at or around 2% is good news for the pound, the reality is that Brexit is driving sterling right now. Inflation data is likely to play second fiddle to Brexit headlines” Lawler said.
Inflation figures to take focus on Wednesday while corporate results tick over in the background
The main UK inflation indexes will be the big draw on Wednesday, particularly after UK GDP data on Monday for the final quarter of 2018 dropped to its weakest level since 2012 with 0.2% growth as the Brexit effect began to bite, while for December GDP actually contracted by 0.4%.
The first consumer price index reading for 2019 is expected to continue the downward trend from December 2018 and potentially hit the 2% year-on-year target of the Bank of England’s Monetary Policy Committee, which was last reached back in early 2017.
In the corporate diary, there will be divi talk as Tullow Oil releases its full-year results while some Christmas overhang will be hoped for at Dunelm as its releases its interims after a strong Christmas.
Significant announcements on Wednesday February 13:
Finals: Tullow Oil (LON:TLW), Smurfit Kappa Group PLC (LON:SKG)
Interims: Dunelm Group PLC (LON:DNLM), Galliford Try plc (LON:GFRD), Oncimmune Holdings PLC (LON:ONC)
Economic data: UK CPI, RPI, PPI, HPI inflation; US CPI inflation
Around the markets:
- Sterling: US$1.291, up 0.2%
- Brent crude: US$63 a barrel, up 1%
- Gold: US$1,314 an ounce, up 0.6%
- Bitcoin: US$3,615, up 1%
City headlines:
- Daily Mail: Regulators are probing explosive new claims that Lloyds wrecked small businesses for a profit during the financial crisis.
- The Daily Telegraph: A second major shareholder, Dutch hedge fund Farringdon Capital Management, which holds a 6.2% stake in Interserve, has come out against its proposed £480 million rescue deal.
- The Times: The government has rejected Cuadrilla’s plans to explore for shale gas at a second site in Lancashire on safety concerns, dealing a blow to the fracking industry.