FTSE 100 closes in the red as US stocks take a hit; Centrica tanks

Risers on the Footsie were outnumbered 3 to 1 by fallers

Proactive Published 21/02/2019

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US stocks in the red

FTSE 100 closes 61 pts down

RELX defies the trend with solid full-year results

FTSE 100 closed in the red as Wall Street shares also lagged, while the top loser was utility firm Centrica (LON:CNA).

Footsie closed down around 61 points at 7,167, while mid-cap cousin FTSE 250 went the other way, adding nearly 35 points at 19,236.

The British Gas owner Centrica shares tanked 11.7% to 121.15p after it warned its financial performance this year would be hamstrung by the energy regulator's price cap.

The energy provider lost almost three-quarters of a million customers last year in the UK.

On Wall Street, the Dow Jones Industrial Average is down nearly 64 points at 25,890 at the time of writing, while the tech heavy Nasdaq exchange is off around 17.

3.50pm: Day of red for the Footsie

The UK's leading shares had a thin time of it on Thursday with the FTSE 100 sporting around three losers for every gainer.

The FTSE 100 was down 74 points at 7,155.

One of the few blue-chips to buck the trend was Anglo-Dutch publishing group RELX PLC (LON:REL), which rose 4.5% to 1,760p after saying it was confident of another year of growth in 2019 after it posted a 3% increase (in constant currency terms) in adjusted profit before tax for 2018.

RELX CEO Erik Engstrom comments on our ongoing strategy pic.twitter.com/qyl75GjLEX

— RELX (@RELXHQ) February 21, 2019

3.00pm: Sainsbury's in the wars again as brokers sharpen their knives

As anticipated, US markets opened lower – and a bit worse than expected, sending the Footsie deeper into the gloom.

The FTSE 100 was down 76 points (1.0%) at 7,153, half a dozen points above its low point for the day.

In the US, the Dow Jones industrial average was down 100 points (0.4%) at 25,854 and the S&P 500 was off 13.3 points (0.5%) at 2,771.4 after the Philadelphia Fed manufacturing index for February turned negative.

The February reading of -4 was the first negative print since May 2016 and followed on from January's +17 level.

In the UK, supermarkets group J Sainsbury PLC (LON:SBRY) was in the wars again following the shoeing it took yesterday after UK regulators hinted they are swaying towards blocking the supermarket giant's proposed £10bn merger with Asda.

Berenberg responded by cutting its rating for Sainsbury's to 'hold' from 'buy' and slashing the target price to 338p; JPMorgan cut the price target to 190p from 230p while HSBC lopped 20p off its 230p target price.

Sainsbury's shares were down 3.1p at 231.4p.

Sector peer Wm Morrison Supermarkets PLC (LON:MRW) defied the trend, rising 1.75p to 229p despite Berenberg cutting its price target by 20p to 265p.

1.35pm: All change; futures now point to a lower start on Wall Street

The blue-chip index's losses lengthened in the lunchtime session, reflecting a change in direction on the futures market for the Dow Jones index contract.

Having previously expected the Dow to open firmer, traders are now expecting the index to open its account 27 points lower at 25,927 and the broader-based S&P 500 to kick off 7.1 points lighter at 2,777.6.

In London, the FTSE 100 was down 69 points (0.95%) at 7,160, about four points above its intra-day high.

Elsewhere on the futures markets, the price of oil came off its recent20 cents at US$66.94 a barrel.

That has not stopped Argos Resources Limited (LON:ARG) occupying the top slot on the London stock market with a rise of 35% at 3.7p.

The company said that it has now regained a 100% working interest in licence PL001 in the North Falkland Basin, as per the announcement way back in October in which its previous partners, Noble Energy Falklands and Edison International, served notice to withdraw from the partnership.

Perhaps more pertinently, from an Argos share price perspective, the company said it has sufficient cash reserves to meet its ongoing requirements.

Anyone remember the ballsy call from @anthonycodling this time last year..! His 94p price target for #PURP doesn't look so ridiculous now, does it? https://t.co/iScFcbU2b0 via @proactive_uk #PURP

— Tom Howard (@proactivetom) February 21, 2019

At the bottom end of the greasy pole was hybrid estate agency Purplebricks Group PLC (LON:PURP) after it parted company with the bosses of its UK and US operations and revealed expansion had not gone as well as hoped in the US.

The shares were down 30% at 114.7p.

12.15pm: Wall Street expected to open modestly higher

Futures markets suggest the Dow Jones might limp back above 26,000 when trading starts this afternoon on hopes of improved US-Sino trade relations.

UK investors did not seem overly impressed, however, and the Footsie continued to bumble along between 7,175 and 7,185, as it has down since about 9.30 am.

At present, the index is down 43 points (0.60%) at 7,185.

“Though it is only looking at a 50 point increase after the bell, that small rise would be enough to lift the Dow Jones back above 26000, the, admittedly limited, positivity relating to Trump appearing to downplay the trade ceasefire deadline, claiming March 1st is ‘not a magical date’,” said Connor Campbell at Spreadex.

Investors were also largely underwhelmed by news that the UK government posted its largest budget surplus for a single month in January.

The Office for National Statistics said the government brought in £14.9bn more in tax and other revenues during the month than it spent, which was the largest surplus for a single month since records began in 1993.

The FTSE 250 index has just about managed to keep its head above water, up 22 points (0.11%) at 19,224, helped by the positive reponse to trading updates from Playtech PLC (LON:PTEC) and Serco Group PLC (LON:SRP).

The former was up 6.4% and the latter was 5.1% but both were put in the shade by Georgian bank, TBC Bank Group PLC (LON:TBCG), which rose 6.7% after an update on the National Bank of Georgia’s inspection of certain transactions involving TBC Bank that took place in 2007 and 2008.

READ TBC’s inspection report update

Me when my Uber eats driver says he’s on my road but can’t find my flat pic.twitter.com/fZtDK81IK9

— Tobias (@imcharlieboy) February 21, 2019

Online food ordering specialist Just Eat PLC (LON:JE.) was the worst performing mid-cap after rival Uber Eats announced it was cutting commission rates.

Liberum Capital Markets, which has a target price of 1,320p for Just Eat, said the move was “too little, too late”. Just Eat’s shares were down 5.8% at 692p.

10.15am: Sterling's strength puts a crimp on the Footsie

A resurgent sterling on forex markets has put a crimp on the Footsie this morning.

The FTSE 100, home to a large contingent of foreign currency earners, was down 49 points (0.68%).

“Worries over Brexit have failed to stifle the pound, which outperforms a euro falling in the wake of a mixed set of PMI surveys. Meanwhile, markets look to ... the US-China trade talks for direction,” commented Joshua Mahoney at IG Group.

“A week of gains for sterling has done little to help the FTSE, with the sharp deterioration in EURGBP highlighting the uphill battle faced by UK listed stocks. While the headlines of ‘constructive’ talks in Brussels and Hammond talking up a potential second meaningful vote in the coming days might suggest movement, the Brexit outlook remains bleak as the EU remain unwilling to budge on the Irish backstop.

“The UK parliament has shown itself unable to converge upon a specific form of Brexit that would garner enough votes, and thus while May keeps asking the EU for concessions over the backstop, there is no guarantee it would even receive support from parliament to avert a no-deal Brexit,” he added.

Meanwhile, Fiona Cincotta at City Index wonders whether attempts to end the months-long trade tit-for-tat between the US and China may finally have yielded some progress.

“Negotiators from the two sides are reportedly in the process of drawing up memorandums of understanding to cover the thorniest of talk issues such as forced technology transfer and cyber theft, intellectual property rights, currency issues and agriculture trade. The potential end to the trade war has boosted Asian markets and helped Wall Street close higher, but the picture in Europe was more mixed. While the DAX made fresh ground on the news, particularly because German car makers are set to benefit from a resolution of the trade dispute, the FTSE and the CAC headed south,” she noted.

9.30am: FTSE 100 out of step with European indices

London's blue-chip index found itself out of step with its European counterparts, sliding into the red in the wake of yesterday's US central bank release.

The FTSE 100 was down 42 points (0.58%) at 7,187.

"FOMC minutes showed largely what we were expecting following the January meeting. Patience is the order of the day, confirming the dovish pivot in recent months. It looks like there is a fairly low chance that the Fed will raise rates in the near-term but dollar bulls were comforted by the minutes showing there is yet a willingness to raise rates should the economy be robust over the coming months,” said Neil Wilson at markets.com.

Wilson also noted that “Australia’s dollar has been on a wild ride again” and that this could have an impact on mining stocks in London today.

In fact, the likes of Glencore PLC (LON:GLEN), Fresnillo PLC (LON:FRES) and BHP Group PLC (LON:BLT) are indeed faring worse than the market average, shedding between 1% and 1.6%.

Results from Barclays PLC (LON:BARC) have provided some cheer, with the shares up 3.4%.

“These numbers have been well received on the basis of 'jam tomorrow', as the bank continues to suffer from litigation and conduct fines, whilst growing strongly excluding these charges,” commented Richard Hunter, the head of markets at interactive investor.

“The increase to the dividend, where the projected yield is around 5%, was accompanied by a pledge for future returns to shareholders. In particular, share buybacks should become a feature as the bank throws off the shackles of its legacy regulatory misdemeanours,” he added.

While the Footsie was in the wars, its baby brother, the FTSE 250, was on the up – just – rising 7 points (0.03%) to 19,209, despite recruitment firm Hays PLC (LON:HAYS) weighing on the index like a lead brick.

The shares were off 7.9% after the company reported slowing growth in its German business and highlighted the adverse impact foreign exchange rate movements are likely to have on its business this year.

Strong Hays Asia performance, with net fees up 19%, @HaysSEAsia, including a record half in China, up 31%, and excellent growth in Malaysia, up 25%. Read more at: https://t.co/sMvIfQdc4u #Haysresults #recruitment #stocks

— Hays PLC IR (@haysplcIR) February 21, 2019

8.30am: Expectations of a modestly firm start confounded by shocking updates from Centrica and BAE

Those looking for a positive start were disappointed as utility company Centrica PLC (LON:CNA) led the Footsie lower.

The top-share index was down 21 points (0.3%) at 7,208, with Centrica losing a tenth of its value after the British Gas owner warned its financial performance this year would be hamstrung by the energy regulator's price cap.

The company lost almost three-quarters of a million customers last year in the UK.

Results from defence firm BAE Systems PLC (LON:BA.) were barely received any more warmly than those from Centrica, with the shares off 6.2%.

The group warned that the current German government position on export licensing may affect BAE's exports to Saudi Arabia, “which may have a consequential impact on the group's financial performance and relationships”.

On the plus side, results from Barclays PLC (LON:BARC) got the thumbs-up from the bank's fans in the City.

The shares rose 4.5% to 168.16p as the company said it intends to supplement dividends with additional cash returns, including share repurchases.

Proactive news headlines:

Faron Pharmaceuticals Ltd (LON:FARN) says early results from a proof of concept trial for immunotherapy cancer treatment Clevegen are encouraging. There were noticeable increases in the body’s natural killer cells in the first two patients treated and no toxicity increase.

Sunrise Resources PLC (LON:SRES) told investors that a major international cement company has successfully completed tests using its natural pozzolan material, taken from the CS pozzolan-perlite project in Nevada. The company highlighted that, in the test work, its natural pozzolan replaced 20% of the cement in the concrete mix.

Tertiary Minerals PLC (LON:TYM) has added a new project to its portfolio, picking up the Paymaster exploration area in Nevada, USA. Existing exploration data for the area included grab samples with up to 21% zinc, 6.5% lead, 3.3% copper and 253 grams per tonne silver, plus ‘high levels’ tellurium and cobalt which are described by Tertiary as “high-tech metals”.

InnovaDerma PLC (LON:IDP) said the second-half had started well after the beauty and personal care group navigated a tricky first six months. Chairman Haris Chaudhry said: “Our revised engagement strategy is delivering a marked improvement and we are therefore confident that the second half of the year will be disproportionately higher than in previous years.”

Avation PLC (LON:AVAP) has made good on its forecasts as it reported record profits and revenues for the first half of its financial year.

Keywords Studios PLC (LON:KWS), the technical services provider to the global video games industry, has got the cheque book out again and has acquired GetSocial, a Dutch company that operates a cloud-based software platform.

United Oil & Gas PLC (LON:UOG) told investors that its Colibri exploration prospect, offshore Jamaica, has been estimated independently to host some 229mln barrels of oil potential. A new review of the Walton-Morant licence by consultant ERC Equipoise has upgraded the view of the exploration partnership with Tullow Oil.

OptiBiotix Health PLC (LON:OPTI) said its cholesterol product had been generally recognised as safe (GRAS) by an independent expert panel in the US. The company, which is developing products to tackle obesity, cardiovascular disease and diabetes, said sign-off for its Lactobacillus plantarum LPLDL probiotic strain represented a significant milestone.

Tekcapital PLC’s (LON:TEK) shares jumped in early deals Thursday as its portfolio firm, Lucyd, planned to launch a line of designer sunglasses in partnership with Richard Sherman, an NFL cornerback for the San Francisco 49ers.

Oriole Resources PLC (LON:ORR), the exploration company operating in Africa and Europe, has received a £40,000 R&D rebate from the tax-man.

Scancell Holdings PLC (LON:SCLP) announced that, following the conclusion of a formal tendering process, the company has appointed BDO LLP as the company's independent auditor for the financial year ending 30 April 2019, effective immediately.

Base Resources Limited (LON:BSE) (ASX:BSE), the African mineral sands producer which is scheduled to release interim results on Monday, 25 February 2019, said its managing director, Tim Carstens, and CFO, Kevin Balloch, will host two investor and shareholder conference calls to discuss the results with investors and shareholders that day.

6.45am: London expected to open modestly higher

The FTSE 100 is set to start Thursday on the front foot as global equities got a boost from positive US sentiments and indications that trade tensions are closer to a resolution.

London’s top index seen up about 10 points, with CFD firm IG Markets calling the price at 7,219 to 7,222 with just over an hour to go until the open.

Sentiments were buoyed after the latest Federal Reserve minutes indicated a supportive outlook from the American central bank.

“There was something for everyone in the January Fed minutes,” said Jasper Lawler, an analyst at London Capital Group.

“The minutes showed that the Fed were comfortable adopting the more patient approach to hikes. The Fed saw no problems arising by keeping rates on hold in the face of headwinds such as trade tensions and slowing global growth.”

The analyst added: “Renewed signals of a trade agreement harvested a risk on sentiment overnight, putting fresh legs on the risk-on rally which had been showing signs of slowing.”

On Wall Street, the Dow Jones closed out Wednesday up around 63 points or 0.24% at 25,954 while the S&P 500 finished about 0.18% higher at 2,784, and, the Nasdaq was only very slightly higher at 7,489.

Asian stock benchmarks were mostly positive too.

Japan’s Nikkei added 32 points or 0.15% to 21,464, while Hong Kong’s Hang Seng edged 0.07% higher to 28,535, but, the Shanghai Composite was in negative territory, down 0.24% at 2,754.

Significant announcements expected today:

Finals: Barclays PLC (LON:BARC), Centrica PLC (LON:CAN), BAE Systems PLC (LON:BA.), Anglo American PLC (LON:AAL), RELX PLC (LON:REL), Serco PLC (LON:SRP), Playtech PLC (LON:PTEC), KAZ Minerals PLC (LON:KAZ), Morgan Sindall PLC (LON:MGNS), Macfarlane PLC (LON:MACF), Rathbone Brothers PLC (LON:RAT), RPS Group PLC (LON:RPC), Vitec Group PLC (LON:VTC)

Interims: Hays PLC (LON:HAS), Go-Ahead Group PLC (LON:GOG), Avation PLC (LON:AVA), InnovaDerma PLC (LON:IDP), McBride PLC (LON:MCB), Wilmington PLC (LON:WIL)

Ex-dividends to knock 7.2 points off FTSE 100: Carnival PLC (LON:CCL), GlaxoSmithKline PLC (LON:GSK), Imperial Brands PLC (LON:IMB)

Economic data: UK public sector finances; US weekly jobless claims; US existing homes sales; US Philly Fed manufacturing index

Around the markets:

Sterling: US$1.3030, down 0.15%
Brent crude: US$67.16, up 1.05%
Gold: US$1,338.57, down 0.35%
Bitcoin: US$3,929, up 1.29%