FTSE 100 index closes higher
MPs have rejected Theresa May’s withdrawal agreement for the third time, by 344 votes to 286 - a majority of 58.
Sterling loses ground
FTSE 100 closed up with big miners making gains, while US shares also were higher at the time of writing.
It comes after MPs voted against PM Theresa May's Brexit withdrawal agreement - for a third time - throwing the exit process into yet more chaos.
Footsie closed at 7,279, up nearly 45 points on the day. Over the week as a whole, the UK's premier share index was also up - adding 0.99%.
The mid-cap FTSE 250, more UK company focused, finished almost 209 points higher, at 19,117.
The EU commission said the UK was likely now to crash out of the bloc on April 12, which is now the default position, unless both sides agree an extension.
Sterling fell as low as $1.2977 against the dollar after the vote, while housebuilders saw shares lag as due to concerns of a 'no-deal’ Brexit.
In the US, the Dow Jones is up 151 points, while the Nasdaq is ahead by around by nearly 45 points.
3.30pm: The Footsie looking to set end the week on a high note
The FTSE 100 looked set to end the week on a high note, which is more than can be said for the prime minister, Theresa May.
The index of blue-chip shares was up 34 points (0.5%) at 7,268, some 18 points below its intra-day high on a day when Theresa May’s attempts to sneak her Brexit deal past the House of Commons at the third time of asking failed again.
“We make three key observations,” said Kalum Pickering of the German bank Berenberg.
“1) The default outcome is a hard Brexit (15% risk) on 12 April unless the UK and EU can agree to a lengthy extension and a path forward;
2) The onus to find a Brexit solution on the UK side is now on parliament which is due to hold the second round of so-called ‘indicative votes’ on Monday;
3) The UK is potentially heading for a lengthy delay that could end with a snap election and/or second referendum,” Pickering said.
“As the situation is in flux, we make no change to our probabilities for the potential Brexit outcomes; hard Brexit (15%); May’s deal (10%); customs union model (35%); Norway model (15%); and no Brexit (25%); however, the uncertainty around these calls is high,” he conceded.
3.00pm: It was a closer result but not a close result
The FTSE 100 reacted phlegmatically to confirmation of the defeat in the House of Commons of the latest Brexit deal.
The index continued to hover around 7,275 – up 40 points (0.6%) - pretty much where it was before the vote took place, proving that the outcome was a foregone conclusion.
“Despite making some progress, the government has once more come up short in getting a Brexit deal through parliament with the most recent attempt showing a losing margin of 58. The switch of high profile Conservative MPs such as Boris Johnson and Jacob Rees Mogg raised hopes going into the vote, but without the DUP support this was always likely to prove a fruitless endeavour,” suggested David Cheetham at xtb.
“Even if the 10 DUP MPs supported the government, the size of the margin still would represent a significant hurdle to overcome. In terms of procedure, the next event to watch is another round of indicative votes scheduled for Monday, but at the risk of sounding sceptical, hopes of a breakthrough there look wishful to say the least!” he added.
2.30pm: Voting has begun; PM unlikely to have a bottle of champagne on ice
The FTSE 100 was up 41 points (0.6%) at 7,275 as MPs vote on the prime minister’s Brexit deal.
Early indications, based on tweets from journalists in the palace of Westminster, there have not been may abstentions but general indications are that “not enough Labour” MPs voted in favour of the proposal for Theresa May to avoid another humiliating defeat.
Govt set to lose this by 46, one MP suggests.— Paul Waugh (@paulwaugh) March 29, 2019
1.32pm: US markets off to a flyer
The FTSE 100 was up 36 points (0.5%) at 7,270 as US marketsd opened sharply higher.
The Dow Jones industrial average was up 140 points (0.5%) at 25,858. The broader-based S&P 500 was up 16 points (0.6%) at 2,831.
(Note: The clocks go forward in the UK on Sunday so the US stock market open will return to being 2.30pm, UK time)
12.30pm: Blue-chips trading sideways at higher levels
The FTSE 100 has mostly traded sideways in the lunchtime session, waiting for US markets to open.
The FTSE 100 was up 22 points (0.3%) at 7,286 as investors wait for the next developments in the Brexit saga.
According to Sporting Index, the prime minister’s latest Brexit deal offering to the House of Commons is set to get the sort of short shrift served up to the previous proposals.
The spread betting firm predicts the nays will have it, with 320 MPs tipped to vote against the motion and 260 to vote in favour.
“While there have been key amends made to Theresa May’s Brexit deal this time around, we don’t envisage there being enough movement for the next motion to pass in Parliament,” said Ed Fulton, the political trading spokesman for Sporting Index.
“Opposition from inside the Tory party, as well as Labour and most crucially the DUP, means that the PM is likely to be frustrated for a third time – and we predict 320 MPs will reject this round of the breakaway motion,” Fulton said.
If spread betting is a bit too new-fangled for you, Betway has come with more traditional odds and they say five will get you one (plus your five back) if you bet on the motion being rejected and it does indeed get the elbow from MPs.
“Less than 48 hours ago we had a situation where the latest withdrawal agreement was in the balance at 5/6 to get passed by the House. Fast forward to March 29th – the intended Brexit deadline – and it’s now just 1/5 for another deal to be shunned by Parliament,” said Betway’s Alan Alger.
Meanwhile, economists have been poring over the latest gross domestic product data for the fourth quarter. Growth slowed to 0.2% quarter-on-quarter, which was the weakest performance since the first quarter of 2018 when the “Beast from the East” was doing its thing.
“Year-on-year growth eased back to 1.4% in the fourth quarter (revised up from 1.3%) after improving modestly to 1.6% in the third quarter from 1.4% in the second quarter and 1.3% in the first quarter, which had been the weakest annual growth performance since the second quarter of 2012,” reported Howard Archer, the chief economic advisor to the EY ITEM Club.
“Overall GDP growth came in at 1.4% in 2018, which was down from 1.8% in 2017 and was the equal weakest performance (with 2012) since 2009,” he added.
On top of that, business investment fell again and consumer spending growth slowed.
“Disappointingly and worryingly, business investment fell 0.9% quarter-on-quarter, which was a fourth successive decline and caused it to be down 2.5% year-on-year. This followed quarter-on-quarter declines of 0.6% quarter-on-quarter in the third quarter, 0.4% in the second and 0.6% in the first quarter and marked the first time that business investment had fallen for four successive quarters since the steep downturn of 2008/9. The steeper decline in business investment in the fourth quarter strongly suggests that already cautious businesses were even more reluctant to commit to capital expenditure as doubts mounted as to whether the UK would leave the EU with a ‘deal’ in late-March and companies looked for greater clarity over the UK’s likely long-term relationship with the EU,” Archer said.
“Overall investment contracted 0.6% quarter-on-quarter in the fourth quarter and was down 1.1% year-on-year. Despite the sharp drop in business investment, the overall decline in investment was helped by a rise in government investment (up 0.5% q/q).
“Consumer spending growth slowed modestly to 0.3% quarter-on-quarter in the fourth quarter from 0.4% in the third quarter. There was evidence of improved consumer spending power in the fourth quarter as real household disposable income rose 1.0% quarter-on-quarter and 2.2% year-on-year. The savings ratio improved to 4.5% from 4.1%; however, the upside for consumer spending appeared to be limited by increased caution amid heightened Brexit and economic uncertainties as consumer confidence weakened to be at its lowest level since July 2013 in December,” the economist declared.
11.00am: Shares recover from mid-morning slump
The FTSE 100 had a bit of a mid-morning slump but has started to head north again.
The Footsie was up 29 points (0.4%) at 7,253.
“European markets are in the green this morning, with optimism over the direction of US-China trade talks helping raise sentiment as we close out the week. Huge gains in Chinese stocks overnight highlighted optimism over the pathway of talks, with constructive talks in Washington set to continue into next week. This positivity has been reflected in the FTSE 100, with the commodity focused index seeing mining firms provide the top four gainers in early trade,” reported Joshua Mahony at IG Group.
The number of risers among FTSE 100 constituents exceeds the fallers by three-to-two. One stock not participating in the advance was utility SSE PLC (LON:SSE), which was down 0.7% at 1,194p, despite Credit Suisse bumping up its target price to 1,260p from 1,225p.
Housebuilders were most lower – a notable exception was Barratt Developments PLC (LON:BDEV), which was up 1.5% - as was property listing websites Rightmove PLC (LON:RMV) after this morning’s release of the Nationwide House Price Index.
The Nationwide reported that house prices were up 0.7% year-on-year in March and 0.2% month-on-month.
Prices in London and the south-east continued to fall, which might cause some consternation to absentee landlords in the Cayman Islands and other tax havens.
“Northern Ireland remained the strongest performing home nation in Q1, although annual price growth softened to 3.3%, from 5.8% last quarter. Scotland saw a slight pick up in annual price growth to 2.4%, while Wales saw a marked slowing in growth to 0.9% (from 4.0% last quarter),” said Robert Gardner, Nationwide’s chief economist.
“London was the weakest performing region in Q1, with prices 3.8% lower than the same period of 2018 – the fastest pace of decline since 2009 and the seventh consecutive quarter in which prices have declined in the capital. This trend is not entirely unexpected, however, as it follows several years of sustained outperformance which left affordability more stretched,” Gardner continued.
“Policy changes that have impacted the Buy to Let market in recent years are also likely to have exerted more of a drag in London, given that the private rental sector accounts for a larger proportion of the housing stock in the capital than elsewhere in the country,” he added.
Marc von Grundherr, a director of London estate agent Benham and Reeves, who is either unaware of the “several years of sustained outperformance” or who prefer to overlook it, said a seventh consecutive quarterly drop and the fastest rate of decline in a decade “really paints a dire picture of the current situation across the London property market”.
Nationwide House Price Index September 2018. The stable headline figure of growth falls squarely within market expectations for 2018 as per forecasts from the beginning of this year. #PropertyNews #MortgageNews #HousePrices #Property https://t.co/I3kK7WvMhf— MAB - Swindon (@MAB_Swindon) October 15, 2018
Howard Archer, the chief economic advisor to the EY ITEM Club, said: “The underlying softness of house prices was highlighted by a drop of 0.1% in the three months to March compared to the three months to December 2018. This followed a drop of 0.4% in the three months to February 2019, which had been the largest three-month/three-month drop since September 2012.”
“With Brexit now set to be delayed until sometime in the second quarter – or conceivably later – further uncertainty is likely to weigh on the housing market in the near term at least,” Archer predicted, possibly causing palpitations for von Grundherr.
“This has caused us to trim our forecast for house price growth over 2019 to just 1%. This assumes that the UK does ultimately leave with a deal and that there is some reduction in uncertainty. The housing market should gain some support from modestly improved consumers’ real income growth, as well as high employment and still low interest rates (it looks increasingly unlikely that the Bank of England will raise interest rates this year). Meanwhile, a shortage of houses on the market will also likely offer some support to prices,” Archer stated.
“A prolonged Brexit delay could very well see house prices stagnate over 2019 or even fall slightly due to persistent uncertainty
“If the UK leaves the EU without a ‘deal’ during the second quarter, house prices could fall by around 5% in 2019 amid heightened uncertainty and weakened economic activity,” Archer predicted.
9.45am: Miners drive the Footsie higher
The FTSE 100 continued to occupy positive territory on the back of the strength of miners.
The index of leading shares was up 33 points (0.46%) at 7,267, with Antofagasta PLC (LON:ANTO), Anglo American PLC (LON:AAL), BHP Group PLC (LON:BHP), Glencore PLC (LON:GLEN) and Rio Tinto PLC (LON:RIO) all sporting gains in excess of 2%.
Glencore announced this morning it had rolled over its short-term credit facilities. The short-term facilities were initially launched at US$8 billion and closed substantially oversubscribed, raising US$ 10.55 billion.
“Shanghai’s SSE Composite index jumped 3.2% on hopes that the US and China were making progress with trade talks. This optimism also gave a boost to the London-listed natural resources sector with mining shares topping the list of FTSE 100 risers,” said AJ Bell’s quotemeister, Russ Mould.
“Continued strength with oil prices also gave support to the FTSE with BP and Royal Dutch Shell up on Friday,” he added.
Sentiment has been boosted by a strong showing by Asian benchmarks this morning. after US Treasury Secretary Steve Mnuchin said that officials had a “very productive” working dinner on Thursday evening – presumably the pancake rolls arrived promptly and no one double-dipped in the soya sauce.
Package tours operator TUI AG (LON:TUI) ran into heavy turbulence after saying it expects to take a one-off hit to profits of around €200mln in connection with the grounding of the Boeing 737 MX aircraft.
The shares were down 8.1%.
“Astra’s been thinning its portfolio for some time, as it looked to boost near term cash flows and keep the dividend ticking over while the pipeline matured. That strategy seems to have paid off, with product sales showing signs of long term growth last year; however, Astra clearly felt that pipeline was need of a shot in the arm, and this deal represents a major boost to the oncology portfolio,” opined Nicholas Hyett, an equity analyst at Hargreaves Lansdown.
“It's a higher risk deal though, the drug in question has yet to make it out of the labs and hasn’t been approved in any markets. There’s always the risk that the drug falls at the final hurdle and ends up being worth nothing at all, but then that’s a fundamental part of the pharmaceutical industry. The risk of failure probably goes a long way to explaining why Astra have decided to fund the deal with an equity raise rather than debt, there’s no obligation to pay shareholders if things don’t work out as expected, whereas lenders demand their pound of flesh regardless. Astra’s also taken the opportunity to knock a little extra off the debt pile, which is no bad thing, and the continuing commitment to a progressive dividend is welcome too,” he added.
8.35am: Strong early gains
The FTSE 100 started the day in fine fettle, rising 50 points to 7,284.05 amid renewed optimism over Sino-American trade talks.
Despite recent stutters, the index of blue-chips is up 7.5% in the year to date, while Wall Street is set for its best opening-quarter in 21 years with a 12.3% gain.
Now, Westminster on a Friday is normally a ghost town as MPs head back to their constituencies.
But these are now ordinary times with parliament set to vote on the Brexit withdrawal agreement minus the political declaration that sets out the parameters for future UK-EU relations.
In doing this the aim is to extend the departure deadline out to May. The problem, of course, is the Prime Minister still doesn’t have the backing for this watered down option.
“Can she pull a rabbit out of the hat?” asks Neil Wilson of Markets.com.
“We’re either heading to a no-deal exit, or a long delay with a General Election and/or second referendum.”
Against this backdrop, the pound has been under pressure but has managed to keep just above the US$1.30 level.
The early risers were the foreign currency earners such as the miners, which were provided some further help from apparent thawing of American and Chinese trade relations.
A rebasing (downgrading) of earnings forecasts sent travel firm TUI (LON:TUI) 8% lower.
Proactive News Headlines:
Eco Atlantic Oil & Gas Ltd (LON:ECO) and its partners at the Orinduik Block offshore Guyana have selected the location of the second well of the 2019 drilling programme. Spudding at the Joe prospect, which is estimated to host up to 150mln barrels of oil equivalent, is set to begin in mid-July.
CentralNic Group PLC (LON:CNIC) said it will receive around 680,000 domain names as part of a bulk transfer from a former registrar.
SkinBioTherapeutics PLC (LON:SBTX) is to appoint Smith & Nephew PLC’s (LON:SN.) former sales and marketing boss Stuart Ashman as its new chief executive. Regulatory due diligence checks still need to be carried out, SkinBio said, but the plan is for the 52-year-old to replace Cath O’Neill following a “period of transition”.
Shanta Gold Limited (LON:SHG) is to float its Singida gold mining asset in Tanzania on the Dar es Salaam stock exchange. The gold miner wants to raise US$20mln to develop Singida, with the IPO expected to take between 6-12 months.
Horizonte Minerals PLC, (LON:HZM, TSE: HZM), the nickel development company focused on Brazil, said in its full-year results statement that the nickel market continues to demonstrate compelling fundamentals.
African Battery Metals PLC (LON:ABM) executive director Paul Johnson has hailed a “well funded” and debt-free business following what he said was a “challenging period” for the exploration firm in its latest full year.
Ariana Resources PLC (LON:AAU) has announced a positive update on the exploration and development activities at its projects within Turkey. The AIM-listed exploration and development company with gold mining operations in Turkey highlighted the successful completion of 746 metres of infill resource diamond-drilling at its 100% owned Kizilcukur Project.
Concepta PLC (LON:CPT) has confirmed its agreement to supply the myLotus product for women's fertility and hormone testing to Boots UK, a member of Walgreens Boots Alliance. The group said the Boots supply agreement represents the first commercial partnership forming part of its EU roll-out plans.
hVIVO PLC (LON:HVO), an clinical development services business pioneering human disease models based upon viral and allergen challenge, has confirmed that the company and its joint venture, Imutex Limited, will present at the Influenza Vaccines for the World (IVW 2019) conference on 2-4 April 2019 at the Royal College of Physicians of Edinburgh, Edinburgh, Scotland, UK.
Redx Pharma Plc (LON:REDX), the drug discovery and development company focused on cancer and fibrosis, announced that the two abstracts submitted by the Company have been accepted for presentation as posters at the 2019 American Association for Cancer Research (AACR) Annual Meeting in Atlanta, Georgia, taking place between 29 March and 3 April 2019. Both posters relate to the Company's lead oncology candidate, RXC004, a selective, orally bioavailable porcupine (PORCN) inhibitor which targets the Wnt signalling pathway.
6.45am: FTSE 100 to add to Thursday's gains
The FTSE 100 looked set to add to yesterday’s gains as trade talks between the US and China resume.
The top-shares index, which yesterday rose 40 points to close at 7,234, was expected to open around 24 points higher at 7,258.
“It was reported that Beijing made ‘unprecedented’ proposals to the US in relation to forced technology transfers and that it is a major step forward, as the trade talks were never just about China buying more US goods,” said David Madden at CMC Markets.
“Westminster will remain in focus as there is talk that MPs will be asked to vote on the withdrawal agreement, but not the ‘political declaration’. Should the vote take place, it stands a slim chance of being passed as the DUP are staunchly opposed to the prospect of Northern Ireland being treated differently to Great Britain post-Brexit, and if the DUP vote it down, the anti-EU ERG are likely to follow suit,” Madden added.
Last night, US benchmarks finished higher with the Dow Jones up 92 points at 25,717 and the S&P 500 10 points to the good at 2,815.
The party mood was continued this morning in Asia, where Japan’s Nikkei 225 was up 149 points at 21,183 and Hong Kong’s Hang Seng was 283 points heavier at 29,058.
On today’s agenda in the UK, the final fourth-quarter UK gross domestic product (GDP) reading is expected to be up 0.2% quarter-on-quarter, and the yearly reading is tipped to be up 1.3%.
There’s not much to get excited about in terms of scheduled news from the FTSE 350 heavyweights, leaving the stage clear for some of the smaller names.
CVS, which owns over 500 vet surgeries throughout the UK, Ireland and Netherlands, had a shocker back in January when it warned a shortage of vets would put a big dent in full-year earnings.
“Key news will be on like-for-like sales growth, which had slowed to 2% in November and December, and labour cost increases,” said analysts at Peel Hunt.
“Like-for-likes should be better given milder weather and price increased. Labour costs have continued to rise as the company has increased wages to retain staff and had to pay higher locum costs.”
GAN went the other way with its January update as it lifted guidance ahead of Friday’s full-year results.
Revenue is expected at between £10.5-11.3mln for 2018, compared with £9.1mln in 2017.
Not only did bosses say that last year was good, but this year is expected to be just as good, if not even better.
Significant events expected on Friday:
Economic data: Nationwide house price index; UK quarterly GDP; University of Michigan US final consumer confidence index; US Chicago PMI; US personal income & spending
Around the markets:
- Sterling: US$1.3079, up 0.38 cents
- 10-year gilt: yielding 1.00%
- Gold: US$1,293.50 an ounce, down US$1.90
- Brent crude: US$68.00 a barrel, up 18 cents
- Bitcoin: US$4,041, up US$4.24
- A UK watchdog has sounded the alarm over the security risks posed by Huawei, the Chinese telecoms company.
- Wow Air, the Icelandic budget airline, has gone belly-up and has cancelled all its flights.
- The European Union is preparing to force Britain either to accept a delay lasting as long as a year or to crash out without agreement; the House of Commons will be asked today to vote in favour of a stripped-down version of Theresa May’s deal.
- US economy expanded at an annual rate of 2.2% in the last three months of 2018, well below the Trump administration’s projections and closing a strong year on a more worrying note.
- The embattled billionaire Philip Green is quietly working on a plan that will enable his retail group Arcadia, which includes Topshop and Dorothy Perkins, to close its worst-performing outlets and slash rent costs.
- Goldman Sachs has been fined £34.4 million by the City regulator for misreporting millions of transactions over a decade.
- The Amazon rainforest could be the greatest casualty of the trade war between the US and China, warns a paper published in Nature.
The Daily Telegraph
- The International Monetary Fund has warned that the eurozone has made political errors that were “not acceptable” and have left it dangerously exposed to economic storms.
- A new study from McKinsey has revealed that the UK’s share of global trade in services slipped from 9% in 2007 to about 7% a decade later due to the aftermath of the 2008 financial crisis.
- Royal Bank of Scotland faces a shareholder rebellion before its annual general meeting as investor groups raise red flags over a pay policy that involves the chief executive receiving £350,000 per year in pension payments.
- Shares in upmarket yoga clothing retailer Lululemon surged to a record high after revenues rose by 25% from £2 billion to £2.5 billion.
- Revenue at Eddie Stobart Logistics surged by 35% to £843.1 million in the last year, the group's latest results reveal.