FTSE 100 closes down on week but higher on Friday as trader optimism returns

FTSE 100 index closes higher

US stocks and European benchmarks higher

Top Footsie riser is WPP

FTSE 100 closed Friday higher joining other global markets in going higher as optIMIsm appears to have returned - at least for now.

Footsie closed the day 32 points up, or 0.45% at 7,106. On the week as a whole, the premier index was lower though, shedding around 1%.

FTSE 250 also did well on the day - surging more than 218 points at 19,399.

"A growing sense of optIMIsm surrounding US-China trade has lifted stocks," said analyst David Madden, at CMC Markets.

"Yesterday, we heard from a few influential individuals on the US side, Steven Mnuchin and Larry Kudlow, both issued upbeat statements, but more work needs to be done."

In Europe, the German DAX added around 86 to 11,601 and the French CAC 40 gained over 24.

On Wall Street, the Dow Jones Industrial Average is up over 51 points at the time of writing, while the S&P 500 is around eight points to the good.

Top riser on Footsie was advertising giant WPP (LON:WPP), whose shares added around 4.9% to 866.20p as 2018 profits sank but its guidance for the new fiscal year was better than analysts had expected.

Profit before tax was down 30.6% to £1.5bn last year on revenue of £15.6bn, down 1.3% on a reported basis or up 1.5% at constant exchange rates. On a like-for-like basis, revenue increased by 0.8%.

George Salmon, analyst at Hargreaves Lansdown, said stronger momentum in Europe and emerging markets provides "some welcome relief after a torrid 2018".

3.00pm: US stocks open on the front foot

US markets opened in convincing fashion, providing a bit of support to a FTSE 100 that was already comfortably in positive territory.

The Dow Jones industrial average was up 130 points ((0.5%) at 26,046 while the S&P 500 was 14 points (0.5%) to the good at 2,799.

In the UK, the FTSE 100 was 40 points higher at 7,115.

2.00pm: Leading shares in consolidation mode

The Footsie traded within a narrow range through the lunchtime session ahead of what is expected to be a buoyant start on Wall Street.

The FTSE 100 was up 35 points (0.5%) at 7,110.

The mid-cap FTSE 250 was doing better still, up 174 points (0.9%) at 19,355, led by Jupiter Fund Management PLC (LON:JUP), which was up 7.6% despite posting a 7% fall in profits in 2018.

Sector peer Man Group PLC (LON:EMG) was at the opposite end of the FTSE 250 leader-board, down 5%, after it reported an increase in redemptions in recent weeks.

Man’s fall was topped by the 7,9% fall by industrial yarns firm Coats Group PLC (LON:COA), which saw its 2018 profits hit by chunky one-off charges.

Noon: Solid morning for blue-chips

Risers among FTSE 100 constituents outnumbered fallers by more than five-to-one in what was a decent trading session for equity bulls.

The FTSE 100 had come off its intra-day highs by noon, however, at 7,110, up 35 points, or 0.5%.

The Bank of England has revealed that mortgage approvals for house purchases rose to a three-month high in January of 66,766 from 64,468 in December.

British mortgage lending rises and consumers take on more debt to finance a New Year spending splurge https://t.co/YBmNsr7ZHE via @brianswint #tictocnews pic.twitter.com/5IV7sW8HHv

— Zoe Schneeweiss (@ZSchneeweiss) March 1, 2019

“January’s rise in mortgage approvals is at odds with recent data and surveys, which had suggested that Brexit and economic uncertainty could be having a dampening effect on housing market activity,” declared Howard Archer, the chief economic advisor the EY ITEM Club.

“Housing market activity has also been impacted by still relatively lIMIted consumer purchasing power (despite some recent improvement), fragile consumer confidence and, very possibly, wariness over higher interest rates. Although there are varying performances across regions with the overall national picture dragged down by the poor performance in London and parts of the South East,” he added.

Futures markets point to a firm start for Wall Street, with the Dow Jones predicted to open around 170 points higher, which would have it nudging 26,100.

10.15am: Equities shrug off decline in UK manufacturing activity

The IHS Markit/CIPS UK manufacturing purchasing managers’ index (PMI) clocked in at a four-month low in February.

The reading was 52.0, down from a revised 52.6 in January; a reading above 50 indicates expansion.

The PMI is currently at its second-lowest level since July 2016 – the month following the EU referendum.

London’s leading shares shrugged off the fall, with the FTSE 100 advancing to 7,124, up 50 points.

“With Brexit day looming, UK manufacturers continued to implement plans to mitigate potential disruptions. Stockpiling of both inputs and finished products remained the order of the day, with growth in the former hitting a fresh record high,” said Rob Dobson, the director of IHS Markit, which compiles the survey.

“The current elevated degree of uncertainty is also having knock-on effects for business confidence and employment, with optIMIsm at its lowest ebb in the survey’s history and the rate of job losses accelerating to a six-year high.

"Official data confirm that manufacturing is already in recession, and the February PMI offers little evidence that any short-lived boost to output from stock-building is sufficient to claw the sector back into growth territory,” he added.

ING Economics said it was sceptical this stock-building activity will do much to boost overall economic growth.

“Warehousing availability in the UK is relatively scarce, having been utilised by the rapid growth in online shopping over recent years. Where there is capacity to build supplies of inputs/finished goods, by definition much of this is likely to involve additional imports, so the impact on domestic demand growth is likely to be fairly modest. More broadly, the challenges facing the manufacturing sector are likely to grow over coming weeks,” said ING’s developed markets economist, James Smith.

All that being said, most companies in the FTSE 100 have interests that extend far beyond the UK and the mood in equity markets continued to be set by the Chinese PMI data this morning and rising hopes of a trade deal between the US and China.

“US-China concerns continue to dominate market sentiment, yet with conflicting reports from Lighthizer, and now Kudlow, it comes as no surprise to see significant volatility playing out through the week. One market move that has been a core driver in morning has been the return of the US dollar, with the greenback recovering sharply overnight,” noted Joshua Mahony at IG Group.

WPP continued to top the leader-board after its results for 2018 while results from London Stock Exchange PLC (LON:LON) were also well received, with the shares hardening to 135.25p from 131.1p overnight.

8.40am: Footsie starts firmer

Do not adjust your set. Dog stock WPP was leading the Footsie higher in early deals.

The FTSE 100 crawled back above 7,100, to 7,103 – up 28 points with advertising giant WPP Group PLC (LON:WPP) leading the way with a 6% rise after it maintained its dividend despite falling profits in 2018.

READ WPP expects challenging 2019 after client losses last year in difficult ad market

“A lot was working in the FTSE’s favour on Friday. Its miners – well, not those with a heavy interest in gold – were on the rebound after yesterday’s losses, while sterling pulled back another 0.2% against the dollar to sit the wrong side of $1.325,” commented Connor Campbell at Spreadex.

The response to the results from Rightmove PLC (LON:RMV) was almost the polar opposite to the one for WPP’s update.

The shares slumped 6.4% to 451.13p after the property listings website operator posted full-year results.

Interesting line from @rightmove results: 'This creates significant headroom for Rightmove to grow product revenue as we leverage data to increase the penetration of existing products, evolve their value and pricing, and continue to innovate and introduce new digital solutions'.

— Malcolm Barnard (@PropertyEcho) March 1, 2019

The numbers were solid but the shares have been on a good run this year.

Proactive news headlines:

IXICO PLC (LON:IXI) has been chosen as a small-to-medium enterprise (SME) partner in the London Medical Imaging & Artificial Intelligence Centre for Value-Based Healthcare. The data analytics company focused on delivering insights in neuroscience said the newly established centre, launched on 28 February, is part of the UK Government's Industrial Strategy Challenge Fund.

Life sciences group MaxCyte Inc (LON:MXCT) has extended its relationship with Kite – the multi-billion-dollar cancer drug developer owned by US giant Gilead Sciences. Under the terms of this latest agreement, Kite will use MaxCyte’s Flow Electroporation technology to help it develop “multiple” CAR-T drug candidates for up to ten targets.

88 Energy Ltd (LON:88E) told investors that the Winx-1 exploration well observed oil shows but prelIMInary analysis indicates that they were “at the lower end of the range required for commerciality.” The shows were observed in the Nanushuk formation which was the well’s primary target, meanwhile, no oil shows were present in a shallower secondary target.

Curzon Energy PLC (LON:CZN) issued a statement on Friday confirming a £95,000 equity raise which is described as a foundation for the advancement of a US natural gas development strategy. Specifically, the proceeds will support the company as it progresses an agreed deal for a ‘multi-TCF’ onshore natural gas project in Texas.

Stobart Group PLC (LON:STOB), the Aviation, Energy and Civil Engineering group, has announced the appointment of David Blackwood as a non-executive director with effect from 1 March 2019. It said Blackwood is currently a non-executive director at Dignity PLC and Scapa Group PLC and was previously chief financial officer of Synthomer PLC until 2015.

NQ Minerals PLC (LON:NQMI) (OTCQB:NQMLF), the mineral processing, exploration and mining company, has announced the resignation of Adrian Lungan from its board of directors with immediate effect.

Alba Mineral Resources PLC (LON:ALBA), the diversified mineral exploration and development company, has said its executive chairman, George Frangeskides, will be attending the PDAC Mining Convention, being held in Toronto, Canada from 3-6 March 2019, including the Greenland Day being hosted by the Government of Greenland on 4 March.

6.30am: Chinese manufacturing data set to give the Footsie a boost

London’s leading shares index was set to claw back all of yesterday’s losses after some strong manufacturing data overnight from China.

Spread betting quotes indicated the FTSE 100 index, which yesterday closed 32 points lower at 7,075, would open at around 7,112.

“Chinese PMI manufacturing from Caixin for February surprised to the upside and gave the clearest sign so far that a bottom is forming in the Chinese business cycle,” reported Danske Bank.

“The index jumped 1.6 points from 48.3 to 49.9 and the new orders index increased from 47.3 to 50.2. It follows the official PMI manufacturing yesterday, which also showed a decent rise in new orders despite a decline in the overall index,” it added.

The 49.9 reading came in just below the 50-point level that marks the cut-off between expansion and growth but on the other hand, the level was better than the 48.5 economists had been tipping.

Chinese stocks were boosted by the news from China, with the Hang Seng up 99 points at 28,732 while elsewhere in Asia, the continued weakness of the yen was working its magic on Japanese equities, propelling the Nikkei 225 218 points higher to 21,603.

Trading in the US yesterday, by contrast, was not so bright despite stronger-than-expected gross domestic product numbers with the Dow Jones shedding 69 points to close at 25,916 and the S&P 500 falling 7.9 points to close at 2,784.5.

Busy day on the news front

“Today traders will be focusing on US consumer spending PCE numbers, and the core PCE data, the Fed’s favourite gauge for inflation. Additionally, ISM manufacturing figures will also be under the spotlight providing traders with a clearer picture of the US economy,” said Jasper Lawler at LCG.

“PCE is expected to increase by 0.2%; however, manufacturing activity is expected to have dropped to 55.5. Whilst this is a slight decline from January, it would indicate that manufacturing activity was still expanding, and strongly compared to Europe, or more specifically Germany where manufacturing is in contraction,2 he added.

In the UK, Danske Bank expects PMI (Purchasing Managers’ Index) manufacturing to have declined to 51.0 in February. “This is still higher than the equivalent euro area index due to stockpiling (Brexit preparations),” it noted.

As for corporate news flow, this is set to be surprisingly busy for a Friday, with ad giant WPP PLC (LON:WPP), online property portal Rightmove PLC (LON:RMV), bookmaker William Hill PLC (LON:WMH) and The London Stock Exchange Group PLC (LON:LSE) itself all set to publish their final results for 2018.

Investors in WPP will be paying close attention to the progress being made on the strategy set out by new boss Mark Read.

As for Rightmove, it is dealing with a cooling housing market and although its subscription-based model means fewer housing transactions and lower property prices don’t have a direct impact on revenues, analysts think the group won’t completely escape a downturn.

Significant events expected on Friday:

Finals: WPP PLC (LON:WPP), William Hill PLC (LON:WMH), London Stock Exchange PLC (LON:LSE), Rightmove PLC (LON:RMV), Jupiter Fund Management PLC (LON:JUP), Robert Walters PLC (LON:RWA), IMI PLC (LON:IMI), Essentra PLC (LON:ESNT), Man Group PLC (LON:EMG)

Interims: Revolution Bars PLC (LON:RBG)

Economic data: UK manufacturing PMI; US manufacturing PMI; US ISM manufacturing; US personal income, consumption

Around the markets:

• Sterling: US$1.3254, down 0.07 cents
• 10-year gilt: yielding 1.175%
• Gold: US$1,313 an ounce, down US$3.10
• Brent crude: US$66.02 a barrel, down 37 cents
• Bitcoin: US$3,836.52, down 89 cents

City Headlines:

Financial Times

• Barclays shareholders enraged after reports that activist investor Edward Bramson funded most of his 5.5% stake with a $1.4bn loan from Bank of America
• Norway’s sovereign wealth fund has almost halved its €1bn stake in Volkswagen
• Manchester City FC has signed a shirt sponsorship deal with Puma worth up to £600 million.

The Daily Telegraph

• Political turmoil and market volatility have not stopped the financial powerhouses from increasing their shareholdings in the UK in a show of faith in the economy’s fundamental strengths.
• The International Monetary Fund head Christine Lagarde has launched a blistering attack on “bad bankers” saying bumper bonuses, campaigns against regulation and irresponsible investing are all signs the banking industry has not learned from the financial crisis.
• The outgoing boss of British American Tobacco Nicandro Durante has reassured investors about the impact of more stringent regulations in the US and hailed a near-doubling of revenues from vaping

The Times

• Aston Martin Lagonda fell into the red on the back of a £61 million management payout and other flotation costs, sending its stock down 21.4%.
• Tesla has dropped the price of its most popular car Model 3 to $35,000, moving closer to becoming the first manufacturer to offer an electric vehicle for the mass market.
• Brussels has accused Britain of enabling tax avoidance by big business, drawing particular attention to dividend tax arrangements, which it claimed made the country attractive for “treaty shopping” and “aggressive tax planning”.
• Patisserie Valerie’s former chief executive has launched a lawsuit against the café chain’s new owners and accused them of being “inexperienced”.

The Guardian

• The London estate agent Foxtons slumped to its first annual loss since its stock market debut six years ago.
• Cyprus has announced the discovery of a huge reservoir of natural gas offshore, highlighting the Mediterranean island’s prospective role as an alternative source of energy to Europe.

Daily Mail

• The Co-operative Bank's adjusted loss before tax increased from £140.3 million to £140.7 million in the last year