FTSE 100 closes 32 pts down
Pound sees 4-month high on Brexit delay hopes
Builders positive
Silver miner Fresnillo drops after warning on outlook
FTSE 100 closed in the red on Tuesday as sterling surged, which weighed on the blue-chip index, on news of a potential Brexit delay.
Footsie closed down around 32 points at 7,151, while the FTSE 250, the more UK company focused index, added 23 at 19,270.
Kallum Pickering, analyst at German bank Berenberg, said the UK Prime Minister Theresa May was now bending to the will of parliament, which supports the low chance Berenberg puts on her withdrawal deal being passed - at 10%.
"We raise the chance of a customs union plus single market for goods (to 35% from 30%) and keep the chance of a comprehensive Norway-plus arrangement at 15%," he suggests in a note.
But Pickering adds that a hard Brexit risk is not yet completely 'off the table' as it remains the default option now, or at the end of any extension "unless a deal is agreed by the UK and
the EU or unless the UK unilaterally withdraws its decision to leave the EU".
In the US, stocks are mixed at the time of writing. The Dow Jones Industrial Average is down nearly four, but the S&P 500 is up around one point. In other European benchmarks, stocks are higher.
3:35pm: FTSE 100 recaptures earlier losses after May’s Brexit vote promises
The FTSE 100 had recaptured much of the day’s earlier losses heading towards Tuesday’s close.
Standing at 7,166 the London index was down just 17 points or 0.24%.
It comes after the pound rally somewhat lost its way, in the wake of Theresa May’s appearance in parliament.
“The Prime Minster promised, not one, not two, but three votes for MPs to bicker about,” said Connor Campbell, analyst at Spreadex.
“First up is the already announced ‘meaningful’ vote by March 12th, one that’ll be make or break time for whatever deal May can muster; if that fails, then March 13th MPs sees a vote on leaving with no deal; if no deal is rejected, another vote will be held on March 14th covering a 3 month extension to Article 50.
“All this around 2 weeks before Britain is meant to be crashing out of the EU.”
“That May clearly isn’t a fan of delaying Brexit, combined with the knife-edge nature of her latest proposal, pulled sterling back from its early highs.”
3:20pm: Dow Jones and S&P 500 start Tuesday’s trading higher
Wall Street started Tuesday slightly lower with the Dow Jones down 45 points or 0.17%, at 26,046, while the S&P 500 dipped 0.15% to 2,792.
The Nasdaq, however, began the day into positive territory albeit only slightly – at 7,555.
US attentions will be on the Federal Reserve as chairman Jerome Powell will be testifying before the Senate's banking committee.
Investors will also be keen this morning to pour over housing starts data for last month (December) and consumer confidence stats to see if any of it sheds more light on the state of the US economy and the direction of travel.
1:45pm: FTSE 100 recoups some lost ground after Theresa May’s latest Brexit comments
At 7,127, the FTSE 100 had recouped some of the day’s earlier losses but was still down 56 points or 0.78%.
Brexit continues to be the main point of conversation, as Theresa May’s comments in parliament supported expectations that Britain’s exit from the European Union would likely be delayed rather than proceed in a ‘no deal’ scenario.
May this afternoon pledged that MPs would be given a vote to delay Brexit or rule out no-deal, in the event that the 12 March ‘meaningful vote’ on her agreement with the EU fails to pass.
Back in the market, economists at Dutch bank ING considered the potential implications of a delayed Brexit.
“A shorter extension might have short-term political and practical advantages, but it would likely be more damaging for the economy and could easily write off a Bank of England rate hike until much later in the year or beyond,” ING economist James Smith said.
“A longer extension, while potentially more politically awkward for the UK government, could see growth recover a touch in the near-term as the imminent ‘no deal’ threat recedes.”
12:30am: FTSE 100 can’t shake off early losses as Brexit optimism boosts pound
At midday, London’s FTSE 100 could not shake off the morning’s decline, which was triggered by a rallying pound amid new Brexit optimism.
Standing at 7,112, the FTSE 100 was down 71 points or 1%.
Analysts at City Index whilst highlighting the strength of the pound rally and evident positivity connected with the latest Brexit twist - that a delay is now more likely than a ‘no deal’ exit – cautioned that material uncertainties are still in play.
“Whilst huge uncertainty remains, sterling against the dollar has done severe damage to a range it has been contained in for about a week,” said City Index analyst Ken Odeluga.
“This demonstrates that the market is becoming convinced that a softer-Brexit is on firmer ground.
“Still, with cable up more than a percentage point in less than two days and sterling stronger against the euro than at any time since last April, the key risk for markets is an overestimation of remaining momentum and perhaps an underestimation of remaining risks to the upside.
“A delayed Brexit does not equal a cancelled Brexit after all.
“Clues from options trades around 29th March remain ambivalent at best, a sign that the possibility of market mayhem from some sort of political upset has yet to be priced out.”
12:01pm: Rich got richer whilst poor got poorer in 2018 – stockbroker says
Breaking capitalism news from stockbroker Hargreaves Lansdown: “The rich got richer and the poor poorer in 2018”, it said in a note.
Commenting on analysis of National Statistics data, Hargreaves personal finance analyst Sarah Coles noted the worsening of income inequality last year, highlighting that the top fifth of UK households saw a 7.5% rise in disposable income whilst the poorest fifth saw household income reduce by 1.5%.
“The gulf between the richest and poorest in the UK is growing, with the wealthiest fifth of the UK enjoying a boom in disposable income, and the poorest fifth facing a cut,” Coles said in a note.
She added: “Overall we’re not getting any better off. The average (median) disposable income is £28,400, which is roughly the same as last year when you take inflation into account.”
Hargreaves DID NOT include stock market suggestions such as taking bearish positions for betting shop operators or Weatherspoons, nor did it make bullish recommendations for shares like Burberry and Aston Martin - traders will have to make their own conclusions about what the economic trends and demographics mean for their investment strategies.
11:20am: Sterling is fancied higher still if Brexit delay is confirmed
The British pound on saw a four-month high on Tuesday morning, and, ahead of lunch, was up 0.76%, trading at US$1.3197 against the dollar.
Against the Euro, the pound was similarly stronger - up 0.68% to €1.1609.
“Sterling has rallied overnight and now trades at its highest levels in a month against both the dollar and the euro,” said Michael Brown, senior analyst at Caxton FX.
“Though a delay is simply pushing back the exit date, and doesn’t solve anything itself, markets are taking solace in the fact that such a move would delay a ‘cliff-edge’ no-deal scenario.
“Confirmation of such a delay would likely strengthen the pound further in the near-term, though political headwinds remain including the opposition Labour Party calling for a 2nd Brexit referendum.”
11:10am: FTSE 100 extends losses as Brexit optimism triggers pound rally
As the supposed Brexit deadline now nearly a month away, it is perhaps not surprising that it continues to be a dominating stock market conversation.
Whilst triggering a rally in sterling, Brexit was the primary factor in the FTSE 100’s more than 1% decline on Tuesday.
London’s top stock index was down 83 points or 1.16%, changing hands at 7,100, as its multinational, dollar-earning blue-chip constituents were broadly marked down.
Attentions remain fixed on Westminster, and, whilst there’s still plenty of debate and opinion, there are now increasing expectations that a ‘worst case scenario’ of no-deal Brexit can be avoided before the end of the next month.
“No deal seems, finally, to have been pushed off the table, and while we can debate the merits of this for the UK’s negotiating position, it does at least remove this huge element of uncertainty. Markets and businesses can be forgiven for breathing a sigh of relief this morning,” said Chris Beauchamp, chief market analyst at IG.
“Now the battle moves on to whether the PM can round up enough support for her deal for another try on 12 March.
“She could have reason for optimism, since some in the ERG might shift position for fear of losing Brexit altogether, while some Labour MPs from Leave constituencies will worry about their seats now that Labour has, in Corbyn’s usual roundabout way, moved to backing a second referendum.”
10:40am: Macroeconomic move gold and oil whilst Brexit continues to distract London equities
As the pound and Brexit moved London’s premier stock index, attentions were also on the commodities markets which are being steered by bigger picture macro-economics rather than domestic politics.
In London, the FTSE 100 remained more than 1% lower, at 7,099.
The price of gold was down slightly, 0.23%, at US$1,326 while Brent Crude Oil picked up 0.6% to trade at around US$65 per barrel.
“Gold has traded relatively flat in recent days, with softness in the dollar not propelling it higher on this occasion,” said Craig Erlam, analyst at Oanda.com.
“Perhaps this is a sign that gold has become a little overbought and is prone to a correction, which wouldn’t come as a surprise with the yellow metal having been on a solid run since the summer and suffered only two negative weeks in the last ten.”
Erlam added: “Oil prices have stabilised after Trump-inspired sell-off on Monday, as the US President once again complained about high oil prices and urged OPEC to ‘relax and take it easy’.
“Trump has never been shy about voicing his opinions on oil prices but this particular tweet came at a time when the market was quite overextended to the upside having enjoyed a very good run since late last year.”
9:48am: FTSE 100 drops 1% as pound rallies on Brexit delay hopes
Such is the topsy-turvy relationship between the pound and the FTSE 100 – with most constituents in the latter being big multinational, dollar-earning companies – the prospect of ‘good’ Brexit news is sending London’s primary share index lower.
The FTSE 100 was down 75 points or 1.05%, at 7,108 by mid-morning, as traders position for a possible delay to Brexit or even an agreement over Brexit.
London’s somewhat more colloquial FTSE 250 index, made up of more domestically-focused ‘mid-cap’ companies, meanwhile, was only slightly in the red – down 5 points or 0.02% at 19,241.
“You have to wonder what the FTSE will hit if the pound ramps to around $1.40 on a positive Brexit deal - are investors prepared for this?,” asked Neil Wilson, analyst for Markets.com.
“Sterling has rallied on movements in the political space that have encouraged the bulls.”
Wilson added: “If no deal is abandoned, it would likely entail a delay to Brexit, and whilst assuaging concerns about crashing out without a deal in place, it would not remove all the uncertainty. A key cabinet meeting today will reveal all – we hope.”
8.45am: Weak start for Footsie
The FTSE 100 began the day firmly in negative territory as optimism around Sino-American trade talks wore off and Brexit worries bubbled to the surface.
The index of blue-chip shares shed 56 points to 7,127.63 as the focus in the City turned to the housebuilders in the wake of Persimmon’s (LON:PSN) annual results.
After a sharp sell-off, the numbers and more likely, the appointment of interim chief executive David Jenkinson as full-time boss, steadied nerves.
Shares rose 2%, dragging with them stock in rivals such as Barratt Developments (LON:BDEV) and Taylor Wimpey (LON:TW.).
As Persimmon’s profits topped £1bn, analysts questioned the sustainability of such numbers if incentives such as the government-backed Help to Buy Scheme ends.
Shares in the precious metals miner Fresnillo (LON:FRES) fell 8% after it said 2019 was likely to be a challenging year.
Gold digger Centamin (LON:CEY) saw its shares recover 5% of the ground lost after Monday’s production warning wiped more than a quarter from its value.
Proactive news headlines:
Amur Minerals Corporation (LON:AMC) has revealed details of a pre-feasibility study for its Kun-Manie nickel project in Russia’s Far East. Two scenarios were outlined, both capable of delivering cash flow of more than US$2bn over the life of the mine.
Ormonde Mining PLC (LON:ORM) is now in the commissioning stages at the Barruecopardo tungsten project in Spain, in which it holds a 30% interest.
Europa Oil & Gas Holdings PLC (LON:EOG) has highlighted a new prospect inventory for its priority exploration area in the Slyne Basin, off Ireland’s west coast. The Inishkea gas targets remain the company’s primary focus, and the new inventory confirms some 1.5 trillion cubic feet in prospective resources.
Block Energy PLC (LON:BLOE) has announced a deal that sees it take full ownership of the West Rustavi licence in Georgia. The company already owns 25% of West Rustavi and the new agreement with Georgian Oil and Gas Limited (GOG) will increase the stake up to 100%.
Corero Network Security PLC (LON:CNS) has announced the largest contract to date for its DDoS Protection as a Service (DDPaaS) product as it unveiled three new orders totalling US$1.6mln.
Kromek Group PLC (LON:KMK) has secured a contract to supply its CZT radiation detectors to a new customer, an original equipment manufacturer (OEM), for use in the nuclear security market.
A collection of pieces designed by celebrity jeweller Yossi Harari using gemstones recovered by Israeli miner Shefa Yamim (ATM) Ltd (LON:SEFA), has been completed.
SigmaRoc PLC (LON:SRC) has gained the exclusive licensing of the Road Zipper System - T-shaped moveable barriers that are connected to form a continuous wall – after agreeing a partnership deal with Lindsay Corporation (NYSE:LNN). The AIM-quoted buy-and-build construction materials group pointed out that the Road Zipper System is used globally and accepted by many highways agencies, including Highways England.
88 Energy Ltd (LON:88E) revealed it is approaching its target in the Winx exploration well in Alaska. The explorer, in a statement, said that the drilling of Winx-1 was now entering the interval where the primary Nanushuk targets are anticipated.
ImmuPharma PLC (LON:IMM) said peer-reviewed journal Nature Communications has carried an article assessing the potential of Urelix, a technology developed by its sUBSidiary Ureka. The periodical has described for the first time, the unique properties of oligourea foldamers as tools to improve the pharmaceutical properties of peptides.
Iain Clarkson, the chief financial officer at WYG PLC (LON:WYG), has resigned with immediate effect. The project management and consultancy group has begun its initial search for a replacement.
Echo Energy PLC (LON:ECHO) has told investors that a 3D seismic survey has been completed for the eastern portion of the Tapi Aike project onshore Argentina. Equipment is now being mobilised to the western portion, in order to complete the programme.
Premier African Minerals Ltd (LON:PREM) is to recommence drilling at the wholly-owned Zulu lithium and tantalum project in Zimbabwe. Mobilisation will commence immediately, and drilling is expected to commence as soon as mobilisation is complete and seasonal rains permit.
Life sciences and technology incubator Amphion Innovations PLC (LON:AMP) said £6.56mln of promissory notes due in December 2018 have been rolled over for a year. Under the terms of an amended arrangement, the notes can be converted into shares at 3p. The coupon will be 10% if the interest payments are made in cash or additional notes, or 12% if they are satisfied by shares.
Tekcapital LON:TEK), the UK intellectual property (IP) investment group focused on creating marketplace value from university technology, announced the publication of a research note update by Align Research which is available from: https://www.alignresearch.co.uk/cpt-company/tekcapital/.
Tekcapital also announced that it will host an investor and analyst conference call at 17:00 UK local time on 14 March 2019, hosted by its chief executive officer, Clifford Gross, followed by a question and answer session to which investors are invited to submit questions via email to tekcapital@yellowjerseypr.com.
G3 Exploration Ltd (LSE:G3E), announced that, following the recent announcement of a Dividend in Specie Declaration and Asset Sale Update, the company's management will be hosting an investor conference call at 9.30am UK time on Thursday 28 February 2019, where they will provide investors with an opportunity to ask questions on recent developments. Further information is available on the company's website. https://www.g3-ex.com/
Ariana Resources PLC (LON:AAU), the exploration and development company with gold mining operations in Turkey, announced that its registered office has changed, with immediate effect to 2nd Floor, Regis House, London EC4R 9AN.
6.45am: Lower start predicted
The FTSE 100 index is expected to start lower on Tuesday, falling back after modest gains on Monday in tandem with retreats by Asian markets as optimism over US/China trade negotiations ebbed and flowed, and as the pound gained on Brexit delay possibilities.
Spread betting firm CMC Markets expects the blue-chip index to open down around 45 points at 7,138, having added 5.14 points on Monday.
Overnight on Wall Street, the Dow Jones Industrials Average closed 60 points higher at 26,091 but was well off earlier peaks, and US stock futures moved lower today reflecting the declines from five months highs in Asia.
Hong Kong’s Hang Seng index dropped 0.6% and Japan’s Nikkei 225 index lost 0.4% as investors took some profits, waiting to see whether Washington and Beijing can really strike a trade deal.
On currency markets, sterling spiked higher against the US dollar and the euro as investors awaited the latest twists in the Brexit saga.
MPs will vote again tomorrow on Theresa May’s current deal with the EU, however, the opposition Labour Party has said it will back another referendum if the prime minister’s plan is defeated once more, raising the possibility Brexit could be delayed past March 29, the current exit date.
Standard Chartered wraps up recent flurry of big bank results
On the corporate front, Standard Chartered PLC (LON:STAN) has said it will cut US$700mln in costs and exit smaller businesses, as part of the lender’s new three-year strategy overhaul to boost growth.
The pledge came in a strategy update which accompanied the emerging markets-focused lender’s 2018 results, which saw it post a 5.5% rise in 2018 pre-tax profit, pulled down by US$900mln in provisions set aside to cover any impact from regulatory investigations in the United States and Britain.
Before the provision, restructuring and other charges, StanChart reported a profit of US$3.9bn, in line with the consensus forecast.
Help to buy, CEO succession a focus for Persimmon
Full-year results from Persimmon PLC (LON:PSN) could be overshadowed after weekend press reports suggested that the FTSE 100-listed housebuilder might be stripped of its right to participate in the government’s Help to Buy scheme amid complaints about the quality of the company’s homes.
The other focus will be on the permanent successor for chief executive Jeff Fairburn who was asked to resign in November following a furore over the award to him of a nine-figure bonus, which was reduced to £75mln after the group received criticism from shareholders and the public.
In a preview of Persimmon’s full-year numbers, analysts at UBS said: “The most likely (is) outcome that the current interim CEO is appointed as the new permanent CEO.”
In a trading update last month, Persimmon disclosed its sales volumes and average sale prices during the year and said it expected 2018 pre-tax profit to be modestly ahead of the market consensus forecast.
Significant announcements expected on Tuesday:
Finals: Standard Chartered PLC (LON:STAN), Persimmon PLC (LON:PSN), Meggitt PLC (LON:MGGT), Croda International PLC (LON:CRDA), Travis Perkins PLC (LON:TPK), Derwent London PLC (LON:DLN), Drax Group PLC (LON:DRX), Morgan Advanced Materials plc (LON:MGAM), Augean PLC (LON:AUG), Lighthouse Group PLC (LON:LGT), Synectics PLC (LON:SNX)
Interims: Town Centre Securities PLC (LON:TOWN), Green REIT PLC (LON:GEN)
Trading update: Babcock International Group PLC (Q3) (LON:BAB)
Economic data: US housing starts; US house price index; US consumer confidence
Around the markets:
- Sterling: US$1.3137, up 0.1%
- Gold: US$1,325.90 an ounce, unchanged
- Brent crude: US$64.68 a barrel, down 0.1%
City Headlines:
- Jeremy Corbyn announced last night that he will back another vote if he cannot get the Brexit deal he wants, in a bid to stem the exodus of MPs from Labour – The Times
- The identity of the mystery buyer who acquired a 30% stake in the Evening Standard’s parent group has been revealed as Sultan Mohamed Abuljadayel, a Saudi investor - Financial Times
- Vodafone boss Nick Read has sought evidence from the US about Huawei so Europe can take a common view about whether to use the Chinese group's technology - The Daily Telegraph
- Karren Brady has stepped down as chair of Taveta Investments, the holding company for Philip Green’s Arcadia empire - Financial Times
- General Electric’s new chief executive has agreed to a US$21bn all-cash deal to sell most of its life sciences business and signalled more disposals were in the pipeline - Financial Times
- The rising scale and declining quality of corporate debt securities across the world is potentially more dangerous than it was at the outset of the Lehman crisis, the OECD has warned - The Daily Telegraph
- The Competition and Markets Authority chairman Lord Tyrie has outlined a far-reaching plan to broaden the regulator’s power, under which company directors could be disqualified for serious breaches of consumer laws - The Times
- Huawei, the Chinese telecoms group facing intense scrutiny from the West, has vowed to continue operating in Europe - The Times
- BSG Resources, the mining group controlled by the controversial tycoon Beny Steinmetz, is to walk away from a massive iron ore project in Guinea to settle a long-running corruption dispute - The Guardian
- The Financial Reporting Council is gearing up to fine KPMG millions of pounds for its work supervising the Co-operative Bank’s accounts - Daily Mail
- Spotify’s international expansion plans have run into trouble in India where it is being sued by Warner Music Group - Financial Times