FTSE 100 closes in red
UK manufacturing PMI weak
Sainsbury's up after results
Sirius Minerals drops on funding details
FTSE 100 closed in the red Wednesday as investors took risk off the table.
The UK's premier share index finished down nearly 33 points at 7,385. The mid-cap FTSE 250 shed around 11 at 19,813. The latest rumblings on a potential Brexit deal also firmed up the pound, weakening London’s blue-chips.
Conversely in the US, stocks are higher, with the Dow Jones Industrial Average up around 50 points at the time of writing at 26,650.
Among the top Footsie risers in London was Sainsbury's (LON:SBRY), which gained 3.91% to stand at 231.20p after it reported that its underlying pre-tax profit rose by 7.8% to £635mln helped by synergies from the Argos general merchandise business it purchased in 2016.
David Madden, at CMC Markets, noted: "Energy, consumer and health care stocks are among the biggest fallers in London. Volatility has been low as most European markets are closed as it is May Day."
3:50pm: FTSE 100 weakens ahead of close as rumoured May-Corbyn Brexit deal helps pound
A stronger pound kept the FTSE 100 and its dollar earning multinational stocks on the back foot, as markets increasingly price-in the latest predicted version of Brexit – a CON-LAB agreement for a ‘customs union’ based exit deal.
At US$1.3082, Sterling was 0.38% higher late in Wednesday afternoon.
In London, the FTSE 100 was down 35 points or 0.48% changing hands at 7,382.
In New York, stocks stayed higher, though attentions increasingly focus the Federal Reserve meeting.
“With the month’s Federal Reserve meeting looming, the Dow Jones added around 40 points, half of what was promised by the futures,” said Connor Campbell, analyst at Spreadex.
“It appears that, if the Dow is to reach last October’s all-time highs, it is going to have to grind out those gains.”
2:45pm: FTSE 100 on the back foot, Wall Street starts higher
The FTSE 100 was down 20 points, changing hands at 7,399, as Wall Street made a positive start to trading.
In opening deals the Dow Jones began some 64 points or 0.24% higher at 26,657 while the Nasdaq added 0.44% to 8,131, driven in part by a 5.4% rally in Apple’s price.
The S&P 500, meanwhile, was only very slightly higher at 2,945.
2:35pm: UK M&A stats show Brexit impacts, April activity revealed as lowest for six years
Brexit-adjacent statistics aren’t exactly in short supply, nevertheless, amid all the crossed words and controversy one clear message can be interpreted: uncertainty over Brexit negatively impacts business activity.
Another example came to this afternoon as a study of last month’s deal numbers revealed the weakest month for mergers and acquisitions for a number of years.
Transactions involving UK companies totalled US$5.8bn in April, which is the lowest since September 2017.
Moreover, the spring months typically see heightened activity, and, in that context it is perhaps notable that last month marked the weakest April by total deal-value since 2013.
The year-to-date M&A totals don’t tell a better story either – there were some US$46.6bn of deals in the first four months of 2019, representing a 64% decline on the same period of 2018 and it marks the softest comparative period for three years.
For context, European M&A totalled US$73.2bn in April making it the best month for the block since last July, and, the United states saw US$177.2bn of deals which marked it the second best April of the past decade.
2:00pm: FTSE 100 hovers in positive territory whilst Wall Street is set for a good start
By mid-afternoon the FTSE 100 was again trading in positive territory, though the London index doesn’t look like it is going to replicate the strength seen in New York presently.
Standing at 7,419 the FTSE 100 was up by just about a point.
Pre-market indicators point to a 94 point improvement as the Dow Jones starts Wednesday, with future’s pitched at 26,680, meanwhile, the S&P 500 and Nasdaq are both also seen on the front foot ahead of the opening bell.
Unsurprisingly, Apple is the big early highlight with early trading showing a US$10.29 or 5.13% gain following last night’s financials which beat expectations for revenue and earnings. The iPhone maker’s outlook was also ahead of Wall Street consensus expectations.
“The tech giant delivered a very clear message: the demand for iPhones is reviving. Apple's premium for its phone was getting out of proportion and given that the company has decided to trim that premium, this has helped its iPhone sales,” said Naeem Aslam, market analyst at TF Global Markets.
“Strong earnings from California based company is helping the equity markets to start the month of May on a positive note and extend their historic gains from last month.”
Aslam added: “Nonetheless, the focus for today is going to be the Fed’s statement. We know that Donald Trump has tried several times to push the Fed hand towards cutting the interest rate. In his most recent comments, he has called for a 1% interest rate cut.
“However, in light of the most recent data, especially the US GDP data, it has become extremely arduous for the Fed to comply with such a request.”
12:30pm: FTSE 100 turns negative as traders look to Brexit latest and New York open
The FTSE 100 turned negative into the afternoon dealing, with the London index edging 6 points or 0.08% lower to 7,412.
It feels like we’ve had a break from frantic Brexit activity, though increasingly there’s chatter that a deal between the major UK parties is now close.
There are naturally, market implications – mainly added stability in the British pound.
“With the papers full of reports that Theresa May is closing in on a Brexit deal with Labour, one that’d potentially include a permanent customs union, the pound held firm, adding 0.3% against the dollar – where it’s now at a 2-week peak – and 0.1% against the euro,” Spreadex analyst Connor Campbell highlighted in a note.
Eyeballs are now pointing towards New York, where last night’s Apple results have helped the market pass time until the Federal Reserve policy committee meet later today.
Early indications suggest investors can expect a positive start for stocks.
Campbell added: “after Apple managed to navigate the steepest drop-off in iPhone sales in the product’s history by lifting its outlook for the third quarter, the Dow Jones is set to jump 80 points when the bell rings on Wall Street.
“That’d push it back above 26650, and leave it 200 points adrift of last October’s all-time highs.
“With a Federal Reserve meeting on the horizon, however, it’ll be interesting to see how active the index ends up being this afternoon.”
11:40am: No deal Brexit fears dented April mortgage activity
In April, fears over no-deal Brexit overshadowed the new support for the government’s ‘help to buy’ scheme.
The Bank of England today reported that mortgage approval numbers for the month dropped to a 15-month low of 62,341, which also marked a fall-out of a range (63,000 to 68,000) that had held for almost three years.
“March’s dip in mortgage approvals suggests that housing market activity was hampered by heightened Brexit uncertainties amid fears that a disruptive ‘no deal’ UK exit from the EU could occur late in the month,” said Howard Archer, economic advisor at EY.
“This seemingly outweighed the recent help to the housing market that has come from improved consumer purchasing power and robust employment growth.”
11:00am: FTSE 100 flattens outs as early impetus eases
The FTSE 100’s positive start flattened out as the morning progressed, standing at 7,417 the London index was down 0.01%.
Retailers and housebuilders were among the early market features, along with UK manufacturing stats, but, the day’s main event comes much later – as traders turn to focus on the US Federal Reserve rates meeting.
J Sainsbury PLC (LON:SBRY) provided some impetus for London’s grocery and food retail stocks, as its shares climbed 4.3% after it reported a second straight quarter of underlying sales decline although full-year profit beat forecasts.
Meanwhile, the corporate narrative is about accelerate investment in its stores and technology, in the wake of its failed attempt at taking over Walmart Inc (NYSE:WMT) owned rival Asda.
WM Morrison Supermarkets plc (LON:MRW) followed, rising 1.16% to 218.4p, while Tesco plc (LON:TSCO) shares were up 0.41% at 250.84p, and, Marks and Spencer Group PLC (LON:MKS) climbed 1.4% to 289.9p.
Elsewhere, Just Eat plc (LON:JE. shares fell 12.8p or 1.83%, to 686.2p, as the takeaway ordering app firm continues to struggle with investor sentiment following the departure of its chief executive earlier this year.
Housebuilders were also on the back foot, with Persimmon plc (LON:PSN) losing more than 1.11% to trade at 2,211.15p.
Persimmon was cautious in this morning’s market update, released ahead of today’s AGM, flagging rising costs.
Sector peers saw mixed trading with Redrow plc (LON:RDW) and Bellway plc (LON:BWY) both receding, down 0.97% to 0.64%, meanwhile, Barratt Developments Plc (LON:BDEV) and Taylor Wimpey plc (LON:TW. were in positive ground, rising 0.66% and 0.36%.
9:45am: Footsie stays positive; manufacturer’s Brexit boost slows
The FTSE 100 held slightly higher as trading settled down following opening deals, with the London index up 13 points at 7,431.
Economic stats were in focus on Wednesday morning as the previously seen upturn in the UK PMI manufacturing activity index slowed, in step with a drop off in export and stockpiling that occurred ahead of the now extended Brexit deadline.
“A central theme at UK manufacturers during recent months has been stockpiling activity in advance of Brexit, and this process continued into April,” said Rob Dobson, director at IHS Markit.
“Companies noted that the delay to the scheduled Brexit date meant they had to ensure levels of key inputs remained sufficiently large to cover as broad a range of outcomes as possible in coming months.”
He added: “Brexit uncertainty continues to weigh on plans, as some firms remain concerned about future growth prospects and the likely impact on output and demand from the unwinding of inventory positions later in the year.”
8:40am: FTSE 100 nudges higher; Sirius down sharply
The FTSE 100 got off to a positive start with the Square Mile reasonably calm ahead of the US monthly review of interest rates. The Federal Reserve looks likely to defy calls from President Trump for a cut to the cost of borrowing and instead stand pat.
The index of blue-chips was up 23 points at 7,441.22 on what was a busy morning for corporate news.
There was an air of relief around prelims from Sainsbury (LON:SBRY), up 5%, though the underlying picture wasn’t a pretty one.
“As previously noted, there is a need for a big overhaul in the core grocery division,” said Neil Wilson of Markets.com. “Management has taken its eyes off the ball as they have first successfully integrated Argos and then failed to takeover Asda.
“When inflation is rising gently and real incomes are improving, supermarkets ought to be performing well – as the rest of the pack. The trouble for Sainsbury’s is that it’s been left behind by Tesco and Morrisons as they have turned things around, whilst simultaneously being caught up from by discounters.”
With the shares up 23% in the year to date it was hardly surprising the first quarter trading update from Next (LON:NXT) failed to register – even if the numbers looked reassuring. The shares were flat.
Dropping down to the FTSE 250, Sirius Minerals (LON:SXX) lost a further 8% as the market continued to digest its fundraising plans.
Proactive news headlines:
Sirius Minerals PLC (LON:SXX) has priced its large equity raise at the bottom end of the anticipated range, selling new shares to institutional investors at 15p – a 32% discount to pre-funding levels. Yesterday, the company launched a US$400mln share placing as part of a US$3.8bn project funding plan, and, it said the equity sale would price between 15p and 18p.
Motif Bio PLC (LON:MTFB) has partnered up with Scottish biotech Lamellar Biomedical to develop a treatment for lung infections in patients with cystic fibrosis.
ECR Minerals PLC (LON:ECR) has classified its Blue Moon prospect in Victoria, Australia as a gold discovery after the final assays from latest drilling indicated more good grades. Craig Brown, chief executive, said the drilling results show that gold mineralisation intensifies further west and have given ECR a clear action plan to follow the system.
TLOU Energy Ltd (LON:TLOU) revealed that the Botswana's Department of Environmental Affairs has approved the company’s environmental impact statement (EIS) for its planned coal bed methane project.
Bushveld Minerals Limited (LON: BMN) has doubled its vanadium processing capacity in South Africa with the acquisition of Vanchem for US$68mln. Fortune Mojapelo, chief executive, said the deal cements Bushveld’s position as a leading global vanadium producer.
Sound Energy PLC (LON:SOU) told investors that talks are continuing over the gas sales agreement for the Tendrara project, and, an offer has now been received from the Moroccan government. The non-binding offer envisages Tendrara’s gas being purchased by the Office National de l'Electricité et de l'Eau Potable (ONEE), Morocco’s state power firm.
Kromek Group PLC (LON:KMK) has received increased orders for an ongoing contract that has added US$2.7mln to its value.
Respiratory specialist Circassia Pharmaceuticals PLC (LON:CIR) said it made a strong start to 2019 with revenues up 38% year on year. Annual results, meanwhile, charted a period of consolidation and operational progress.
Westminster Group PLC (LON:WSG) has expanded its geographic coverage with the acquisition of French aviation security and support services company, Euro Ops International SRL for an expected maximum cost of £30,000.
Locations Sciences Group PLC (LON:LSAI) is now working with the UK’s largest independent media agency to verify the accuracy and quality of its location-based advertising campaigns. the7stars, which runs campaigns for huge global brands such as Pap Johns and Nintendo, has already enjoyed “excellent results” from using Verify – Location Sciences’ location verification product. Big Pic in April.
Iofina PLC (LON:IOF) shares bounced higher on Wednesday after it delivered a “record year” on the back of increased iodine production at its IOsorb plants in Oklahoma. The iodine and chemicals manufacturer reported record earnings (EBITDA) for the year ended 31 December 2018 of US$2.6mln, 89% higher than the prior year, while revenues climbed 15% to US$24mln.
Bould Opportunities PLC (LON:BOU) has launched a discounted share placing to raise £660,000 to help it evaluate potential opportunities for a reverse takeover.
OptiBiotix Health PLC (LON:OPTI) said it is launching its weight management product SlimBiome Medical on May 7. Its commercial debut will be made at a conference called Vitafoods Europe 2019, being held in Geneva.
Malawi-focused Mkango Resources Ltd (LON:MKA) closed 2018 with cash of US$2.4mln, a figure boosted by its collaboration with Noble Group division Talaxis. Since then, the junior has received a further US$9mln from Talaxis following completion of a technical report on the Songwe Hill rare earth project. Big Pic in October.
Richland Resources Ltd (LON:RLD) shares were lifted on Wednesday after it extended its £400,000 and US$150,000 secured convertible loan facility to 31 May 2019.
Pembridge Resources PLC (LON:PERE) said it expects it will soon update investors on its talks to renegotiate the February 2018 agreement to buy the Minto project from the Capstone Mining Corporation. The project was put on ‘care-and-maintenance’ back in October and shortly thereafter the company began discussions with Capstone.
Base Resources Limited (LON:BSE) is to press ahead with a feasibility study for the North Dune deposit to see if it stacks up as an extension to the Kwale mineral sands mine. North Dune contains an estimated 171 million tonnes of heavy minerals (HM) at an average grade of 1.5% or 2.6Mt using a 1% cut-off grade. Big Pic in March.
KRM22 PLC’s (LON:KRM) chief executive and chairman Keith Todd has subscribed for 235,295 new shares in the company at a price of 85p each, totalling £200,000.
MaxCyte Inc (LON:MXCT) has been showing off its CARMA cell therapy platform at an industry conference in Washington DC.
Rockfire Resources PLC (LON:ROCK), the gold and base metal-focused resource company, has announced the appointment of Nicholas Walley as a non-executive director with immediate effect. It noted that Walley has a business background spanning multiple industries including agriculture, property, construction, plant hire, food and beverage packaging, leisure and charitable work, and importantly has critical skills in logistics, infrastructure, organisational management and sales.
6.45am: FTSE 100 tipped to rise
The FTSE 100 is expected to open higher on Wednesday as investors look ahead to the Federal Reserve’s interest rate decision.
Spread-betting firm IG expects the FTSE 100 to open around 35 points higher after closing 22 points lower on Tuesday at 7,418.
“Last week it was reported that the US economy grew by 3.2% in the first-quarter, but a closer look at the report shows that inventories were relatively high, and investment was soft. Earlier this week, the core PCE [inflation] reading dropped to 1.6% - its lowest level since January 2018. The Fed’ inflation target is 2% ,and seeing as the cost of living in going in the opposite direction, the central bank are likely to keep rates on hold, and use neutral to dovish language in their update”, said David Madden, market analyst at CMC Markets UK.
US markets had a mixed performance overnight, with the Dow closing 0.15% higher and the S&P 500 eked out its third consecutive record close and was up 0.1%. The Nasdaq, meanwhile, closed 0.8% lower following a sell-off of shares in Google parent Alphabet Inc (NASDAQ:GOOG).
Shares in Apple Inc (NASDAQ:AAPL) performed strongly in after-hours trading, rising nearly 5% as the tech giant reported results that were ahead of expectations alongside an encouraging forecast for its current quarter.
The Asian markets were closed due to public holidays.
On the currency markets, the pound was 0.07% at US$1.304 against the dollar following a rally yesterday amid renewed optimism over a Brexit deal between the Conservative government and the Labour party as well as some softness in the greenback.
Will Next spring a surprise in its first quarter trading update?
FTSE 100-listed clothing retailer Next PLC (LON:NXT) will kick off May with a first quarter trading update on Wednesday.
Given that its shares have recovered strongly since a slump at the end of 2018, comfortably outperforming the market, shareholders will be watching to see if the group still expects its full-year profits to drop to £715mln.
While Next said in January that it expected high street trading to remain challenging, there have been some more positive indicators for retail sales since then.
Investors will also be expecting a strong number for the company’s online business, which has been growing in recent years.
Simon Wolfson, Next’s chief executive, may also provide a dash of pro-Brexit comment as one of the few executives to have been more upbeat about the impact of the UK’s exit on the business.
Plan B eyed at Sainsbury’s
Staying on the high street, J Sainsbury PLC (LON:SBRY) is to report its full year results in the wake of the supermarket group abandoning its plans to merge with Asda after the UK competition regulator rejected the deal.
The aftermath of the failed deal is likely to overshadow the results with investors more interested in Sainsbury’s next steps.
Analysts at Jefferies expect Sainsbury’s to post a 1.5% fall in like-for-like (LFL) sales, excluding fuel, for the fourth quarter after a 1.1% decline in the third quarter.
The underlying -1.1% LFL decline reflects much weaker grocery sales (-0.8% total in Q4), offsetting improved general merchandise sales (total +0.5%) and a weather-induced recovery in clothing (at +1.5%),” the analysts said.
“Inevitably, the focus will be on outlook tone for the year ahead, given the extent to which SBRY's sales lag is starting to look well entrenched.”
Significant events expected on Wednesday May 1:
Federal Reserve interest rate decision
Trading update: Next PLC (LON:NXT), GlaxoSmithKline PLC (LON:Q1), London Stock Exchange PLC (LON:LSE), Persimmon PLC (LON:PSN), Inmarsat Plc (Q1) (LON:ISAT), IWG PLC (LON:IWG), Rank Group PLC (LON:RNK)
Finals: J Sainsbury PLC (LON:SBRY), Circassia Pharmaceuticals PLC (LON:CIR)
Interims: Avon Rubber PLC (LON:AVON), Connect Group PLC (LON:CNCT)
Economic data: UK manufacturing PMI; US ADP employment; US ISM manufacturing; US construction spending; US manufacturing PMI
Around the markets:
- Sterling: US$1.3040, up 0.07%
- Brent crude: US$71.58 a barrel, down 0.67%
- Gold: US$1,279.89 an ounce, down 0.23%
- Bitcoin: US$5,318.4, up 3.35%
City headlines:
- Apple beat Wall Street’s profit and revenue forecasts for the three months to 30 March, defying its sharpest fall in iPhone sales and lifting shares by 5.1% in after-hours trading yesterday – Times
- Tesco has urged the government to impose a 2% online sales tax to help pay for a cut in business rates for shops – Guardian
- Eurosceptic ministers fear that Theresa May is preparing to cave in to Labour demands on Brexit after they were told an “unpalatable” outcome would be better than a “disastrous” one - Telegraph
- Sirius Minerals unveiled a make-or-break US$3.8bn financing package for a giant fertiliser mine in the North York Moors – Times
- Four Seasons has appointed administrators to push through a sale in a last-ditch attempt to save the UK’s second biggest care home operator – Financial Times
- Barclays allegedly pressured a former senior trader in the United States to ignore internal risk controls and then forced him out when he raised complaints, according to a public court document – Reuters
- Santander UK’s profits plunged by more than a third as it warned of a deterioration in economic growth due to “ongoing Brexit uncertainty” – Telegraph
- The future of Sir Philip Green’s empire is hanging in the balance as industry insiders say a planned rescue may struggle to win approval from landlords – Guardian
- Donald Trump has dropped a key demand from trade discussions with China that it halt alleged instances of commercial cyber theft, in order to end a long-running tariff dispute - FT