FTSE 100 index closes in red
US markets lower
BoE leaves rates unchanged at 0.75%
FTSE 100 joined other major indices to head lower on Thursday on what has been a lacklustre trading week so far.
The UK blue-chip index finished down nearly 34 at 7,351, while its mid-cap cousin FTSE 250 lost over 127 points at 19,686.
Big retailers were among the notable laggards in London with Marks & Spencer (LON:MKS), the Highstreet bellwether, down 4.42% to 1,758p and Sainsbury (LON:SBRY) shedding 3.76% to 222.50p.
David Madden, market analyst at CMC Markets, said: "In London, the FTSE 100 is being weighed down by consumer and mining stocks. It has been a lacklustre week for European markets, partially because of the May Day holiday, but also a lack of any major macro-economic news. The DAX is outperforming in Europe, despite the dreadful manufacturing numbers."
On Wall Street, the Dow Jones Industrial Average is down around 198 points at the time of writing, while the S&P 500 is down nearly 15 points.
Also today, the UK central bank kept interest rates on hold.
3.55pm: FTSE 100 still in the doldrums in late afternoon; BoE rate hold puts pressure on sterling
As the market entered its last hour of trading the FTSE 100 was still languishing in the red and was 18 points lower at 7,365. Despite a breif flirt with gains in mid-morning, mining stocks continued to weigh despite a positive performance from oil major Shell.
Meanwhile, sterling was also on the ropes after the Bank of England’s unanimous decision to keep rates on hold at 0.75% sent currency traders back towards Brexit developments and the ongoing local elections.
Sterling was down 0.21% at US$1.3021 against the dollar and 0.06% lower at €1.1646 against the euro.
Despite the neutral performance from the central bank, Kallum Pickering, senior economist at Berenberg, said the prospect for an August rate hike was “still on the table”.
“Although the BoE kept its key polices on hold today it continued to signal a policy normalisation over the medium-term ‘The market curve is unequal to meeting the task of the BoE’s remit’. Seldom do central banks say so clearly – in their own somewhat contorted words - that the market has got it wrong, in their view. At the time the BoE collected the data for its May forecast round the market was pricing in just one rate hike by the end of 2021. The BoE signalled it expects a steeper normalisation path than this.”
“If the UK government sorts the Brexit mess out soon – thus dodging the hard Brexit risk – or is clearly on such a path, a rate hike as soon as August remains on the cards.”
2.45pm: Wall Street sees mixed open
The US markets were mixed shortly after the opening bell on Thursday as traders digested a dovish Fed and new economic data.
The Dow Jones Industrial Average was down 0.1% in early trading, while the S&P 500 was up 0.02% and the Nasdaq rose 0.1%.
The mixed open did little to support the FTSE 100, which was 21 points lower at 7,363 going into late afternoon.
Fresh data over US jobless claims released before the open were at a three-month high of 230,000 in April, while the number of people already collecting unemployment benefits ticked up by 17,000 to 1.67mln.
Meanwhile a report from the US Bureau of Labor Statistics said productivity among US workers had risen by 3.6% in the first quarter, the highest level since 2010, while companies increased the amount of goods and services produced by 4.1%.
1.40pm: US markets tipped higher as traders look to earnings and economic data
Wall Street is pegged to open higher on Thursday morning as markets look to the latest batch of US jobless claims and factory orders ahead of Friday’s job figures.
There will also be more earnings news for traders to get their teeth into, with Kellogg Co (NYSE:K), travel site Expedia Group Inc (NASDAQ:EXPE) and media group CBS Corp (NYSE:CBS) all expected to deliver results.
Traders will also be hoping to forget yesterday’s sell-off, which saw the Dow sink 0.6% after the Federal Reserve kept interest rates unchanged and chair Jerome Powell effectively poured cold water on any speculation over an interest rate cut.
James Hughes, chief market analyst at Axitrader, said that the goods order data today “could provide further support” for the Fed’s dovish stance, although the market would find optimism in the hope of a resolution to the US-China trade dispute with “some reports suggesting progress could be seen by the end of next week”.
Axitrader has called the Dow to open 10 points higher and the S&P 500 to open up 1 point.
In London, the FTSE 100 was 13 points lower at 7,371.
12.30pm: Bank of England leaves interest rates unchanged
The Bank of England has left its interest rates unchanged at 0.75% in a unanimous vote.
We have kept interest rates at 0.75%. Find out why in our visual summary: https://t.co/NErJey2wDI #InflationReport pic.twitter.com/e66OrM3Owm
— Bank of England (@bankofengland) May 2, 2019
The central bank also raised its growth forecast for the UK, predicting GDP growth of 1.5% in 2019 as opposed to February’s forecast of 1.2%, with the threat of an immediate no-deal Brexit having been removed.
However, the bank said that the economic outlook would “depend significantly” on the nature and timing of the UK’s exit from the EU, particularly trading arrangements, the abruptness of the transition, and how markets, households, and businesses responded.
“Some speculation that [monetary policy committee] member [Michael] Saunders would dissent proved misplaced as the rate-setting committee voted unanimously to keep the official rate unchanged at 0.75. The accompanying statement provided little real new information as to the future path of monetary policy with increases in the growth forecasts tempered by a sizable cut to next year’s inflation forecast in what overall amounts to a fairly balanced update”, said David Cheetham, chief market analyst at XTB.
“With the announcement of a further and longer extension to Brexit deadline since the bank last met, there was some suggestion that this would allow for a more hawkish approach but this hasn’t really transpired. The chances of a rate hike anytime soon remain remote at best and it seems that Governor Carney and his fellow MPC members continue to operate in wait-and-see mode.”
The pound dropped in the wake of the announcement, down 0.08% at US$1.3039 against the dollar and 0.16% lower at €1.1634 against the euro.
Meanwhile, the FTSE 100 was down 3 points at 7,381.
11.45am: FTSE 100 slips back again as miners weigh; analyst says BoE could signal rate hike later this year
Into late-morning, the FTSE 100 had slipped back into the red after its brief flirt with some gains, dropping 6 points to 7,378.
Miners were once again forming a weight on the index after copper prices dropped to a two month low, taking the shares with it.
BHP Group PLC (LON:BHP) was down 1.7% at 1,767p while Anglo American PLC (LON:AAL) slipped 1.8% to 1,937.2p, Rio Tinto PLC (LON:RIO) dropped 1.4% to 4,375p and Glencore fell 1.1% to 298.6p.
Meanwhile, traders will be beginning to focus on the Bank of England, which is expected to deliver its interest rate decision around midday.
While a rate hike is not the expected outcome from meeting today, one analyst has said the central bank could suggest a rate hike later in the year.
“Given the data, I wouldn’t be surprised if the BoE retains a hawkish stance and maybe even suggests there could be a hike later in the year once everything has settled down”, said Craig Erlam, senior market analyst at OANDA.
“Brexit has already delayed the tightening cycle considerably, I don’t think it will want this to continue.”
Ahead of the central bank's announcement the pound was broadly flat against the dollar at US$1.3047.
10.40am: FTSE 100 turns positive
The FTSE 100 has returned to positive territory into mid-morning, eking a small gain of 1 point taking it to 7,386.
Despite an initial plunge at the open on the back of lacklustre results from Lloyds Banking Group PLC (LON:LLOY) and Paddy Power Betfair plc (LON:PPB), the blue-chip index recovered some ground after shares in Royal Dutch Shell PLC (LON:RDSA, LON:RDSB) were given a boost as the oil supermajor reported a 2% increase in income attributable to shareholders at US$6bn from US$5.89bn a year ago.
Another index constituent, drinks bottler Coca-Cola HBC (LON:CCH), also got a lift, rising 3.3% to 2,815p after unveiling a special dividend of €per share, equating to a total of around €730mln.
In other news, figures released by the investment association showed that £12bn in investors funds had been pulled out of Britain since the Brexit vote in June 2016, with £445mln of outflows in March alone.
“Any resolution on Brexit seems further away than Liverpool’s chances of reaching the Champions league final”, said Laura Suter, personal finance analyst at AJ Bell.
“Overall investors pulled more than £200mln from funds in March, marking the sixth consecutive month of outflows, with equity funds seeing chunky outflows of £630mln, far higher than the previous month’s £450mln.”
9.50am: UK construction sector returns to growth in April
The UK’s construction sector saw a marginal expansion in April, according to new data.
In April, the UK’s Construction PMI rose to 50.5 from 49.7 in March, taking it above the 50 threshold that indicates sector growth.
Pretty much the same story in the UK construction PMI this month as last month. Headline indicator is up a touch from 49.7 to 50.5 in April, but the split is still residential construction growing, commercial and civil falling. pic.twitter.com/3rxEV9Ccla
— Rupert Seggins (@Rupert_Seggins) May 2, 2019
House building was by far the strongest performing area as the data revealed solid expansions in residential work with the growth rate at its highest level since December.
Commercial construction, meanwhile, was the weakest area as a number of firms linked Brexit-related uncertainty and delays with client spending decisions with the lack of new activity.
Civil engineering activity also fell, with some companies commenting on a lack of new work to replace completed infrastructure projects.
“A return to growth would normally be considered a positive month for the UK construction sector, but the weakness outside of house building gives more than a little pause for thought”, said Tim Moore, associate director at IHS Markit, which compiles the survey.
Duncan Brock, group director at the Chartered Institute of Procurement & Supply, added that although the sector had moved into growth, there was “a huge question mark” over whether there would be any more improvements in the coming months.
“With the fastest rise in input costs since November 2018, material shortages, and stagnating workloads, the sector is slowly coming to terms with this new landscape of Brexit stalemate and its impacts with business optimism going through its worst phase since 2013."
While housebuilding activity has risen, the fall in commercial and civil construction may deter any thoughts of interest rates rises from the Bank of England later today.
Shortly after the data was released, the pound was 0.12% higher against the dollar at US$1.3065 and down 0.07% at €1.1645 against the euro.
In the markets, the FTSE 100 had recovered most of its losses and was down around 3 points at 7,381.
--Adds tweet--
8.45am: Weak start from Footsie
The FTSE 100 index took its cue from Wall Street overnight as it started Thursday on the back foot, falling 35 points to 7,350.24.
As expected the US Federal Reserve kept interest rates on hold, ignoring calls from the White House for a cut. And in fact, it appears unlikely, based on the most recent commentary, the Fed will cut anytime soon. This may explain why American traders took fright and the Dow Jones ended the session 162 points lower.
Later today the Bank of England is also likely to stand pat. David Madden, analyst at CMC Markets said: “The fact that Brexit has been delayed until possibly as late as October means the BoE are highly unlikely to make any major changes to monetary policy between now and then.”
Quarterly results from blue-chips Paddy Power Betfair (LON:PPB) and Lloyds Banking Group received a rather negative response, with the shares down 3.2% and 1.8% respectively.
Lloyds’ top-line disappointed, while the group also took more charges for payment protection mis-selling and for untangling itself from a fund management contract with Standard Life Aberdeen (LON:SLA).
“Compensation for customers mis-sold PPI continues to gnaw away at Lloyds profits, whilst it missed on top line revenues in what’s probably not the best quarter for the bank,” said Neil Wilson of Markets.com. “Net interest income remains ok but we wonder if there is enough in here to continue the rally in the shares.”
On the up with a 3.9% rise was hip replacement specialist Smith & Nephew (LON:SN.), again following the release of quarterly figures.
Proactive news headlines:
Haydale Graphene Industries PLC (LON:HAYD) has started to produce ceramic blanks for the cutting tool industry in commercial quantities. The company has spent US$1.5mln in its own production facilities in the US and will now use internally-produced engineered ceramic blends to manufacture and sell sintered ceramic blanks.
Echo Energy Plc (LON:ECHO) managing director Martin Hull has told investors that the South America focussed explorer sees the remainder of 2019 as “very exciting” as it aims to advance the Tapi Aike project. In its financial results statement, for the year to 31 December 2018, the company highlighted the acquisition and initial advancement of the asset, located in Argentina.
ValiRx Plc (LON:VAL) has unveiled a double deal – an acquisition and an outline joint-venture agreement. The company is buying for a nominal sum patents and intellectual property formerly owned by a Finnish company called FIT Biotech. It has also signed a letter of intent with corporate financier Alpha Blue Ocean outlining the terms of a therapeutic and diagnostic-based collaboration.
Personal Group Holding PLC (LON:PGH) is eyeing an improved performance of its software-as-a-service (SaaS) business over the rest of 2019 after a solid start to the year. In a statement to be read at its AGM on Thursday afternoon, Mark Winlow, chairman of the employee benefits firm, said trading so far had been “in-line with expectations” and that the company was on course to meet its expectations for the full year.
accesso Technology Group PLC (LON:ACSO) said its software will be deployed at the St Louis Aquarium and entertainment complex at Union Station in the US city. It is teaming up with zoOceanarium Group, a zoo and aquarium developer, and Lodging Hospitality Management, a hospitality group, for the roll-out.
Greencoat UK Wind PLC (LON:UKW) is to raise around £660mln to grow further its burgeoning portfolio of UK-based renewable energy projects. Through the facility, up to 500mln of new shares can be issued in tranches over the next 12 months. The initial issue will be priced at 133p, a 6% discount to yesterday’s 142p close.
Solo Oil PLC (LON:SOLO) has highlighted management changes at its 13.8% owned Helium One business, where Ian Stalker will now be hired as managing director. Stalker is an well regarded mining executive who among his previous roles was chief executive of Uramin Inc which was sold for US$2.5bn to Areva in August 2017.
African Battery Metals PLC (LON:ABM) said samples have been taken from 248 termite mounds at its Kisinka copper-cobalt project in the Democratic Republic of Congo. It follows the restart of activities on April 12.
W Resources PLC (LON:WRES) completed the first T2 mine blast at its La Parrilla tungsten project in Spain at the end of April.
OptiBiotix Health PLC (LON:OPTI), the life sciences business developing products to tackle obesity, high cholesterol and diabetes, announced that Stephen O'Hara, its CEO will be presenting at an investor evening hosted by Turner Pope Investments Ltd on Monday, 13 May 2019 in the City of London, which will commence at 5pm.
Shield Therapeutics PLC (LON:STX), a commercial stage pharmaceutical company with a focus on addressing iron deficiency with or without anaemia via its lead product Feraccru, announced that it will be presenting at the ShareSoc Growth Company Seminar in London on Wednesday 8 May, 2019. The event, at which Shield’s CFO Tim Watts will deliver a presentation detailing the company's strategy, will commence at 5.30pm at the offices of Link Asset Services, 65 Gresham Street, London, EC2V 7NQ.
Anglo Asian Mining PLC (LON:AAU), the AIM listed gold, copper and silver producer focused in Azerbaijan, said an updated corporate presentation, is now available on the company's website.
WideCells PLC (LON:WDC) announced yesterday that, further to the financing agreement, announced on 27 September 2018, with European High Growth Opportunities Securitization Fund, it has signed a deed of variation in which the two parties have agreed to set a minimum conversion price for the bonds at the greater of £0.004, or 90% of the lowest closing volume-weighted average price of ordinary shares in the 15 trading days prior to conversion. The group also announced that Peter Presland has stepped down from the board as a non-executive director with immediate effect in order to pursue his other business interests.
6.45am: FTSE 100 called lower
The FTSE 100 is expected to start Thursday lower ahead of an interest rate decision from The Bank of England. IG Markets sees the London benchmark down by 27 points, calling the price at 7,350 to 7,353 with just over an hour until the open.
Last night, the US Federal Reserve chose to leave rates alone – keeping them on hold between 2.25% and 2.5% - which was expected.
“The Fed pointed out that inflation, and in particular the cost of items excluding food and energy remained below their 2% target,” said David Madden, analyst at CMC Markets.
He added: “Going into the Fed meeting, President Trump had been calling for a rate cut, and given the Fed’s assessment of the growth rate, it seems that the prospect of a rate cut in the future has diminished. The US dollar pushed higher in the wake of the Fed’s announcement, while the gold market came under pressure from the firmer greenback.”
Wall Street indices all closed in the red, with the Dow Jones ending the session down 162 points or 0.61% at 26,430. The S&P 500 meanwhile finished 0.75% lower at 2,923, and, the Nasdaq gave up 0.57% to end the day at 8,049.
In Asia, Hong Kong’s Hang Seng this morning traded 187 points or 0.63% higher amid reports that a US-China trade deal could be done next week.
UK investors will be mindful of the imminent Bank of England rate decision, at midday, albeit economists do not expect any change. It is anticipated that ongoing Brexit concerns will continue to be a factor and consensus is that another unanimous 9-0 vote will keep rates at the current level of 0.75%.
In a preview of the BoE Monetary Policy Committee (MPC) meeting, Howard Archer, chief economic advisor to the EY ITEM Club said: “Under normal circumstances, likely GDP growth of 0.4-0.5% quarter-on-quarter in the first quarter, a tight labour market with still robust employment growth and recent firmer earnings growth could prompt the MPC to hike interest rates from the very low level of 0.75% to 1.00% on Thursday.”
“However,” he added, “these are far from normal circumstances, and the MPC is likely to hold off from hiking interest rates until the Brexit situation becomes clearer and it can see how the economy is responding.
Indeed, the MPC may see the extension of Brexit as prolonging the uncertainties facing the UK economy and increasing downside risks.
Significant events anticipated for Thursday:
Bank of England rate decision
Trading update: Lloyds Banking Group PLC (LON:LLOY), Royal Dutch Shell PLC (LON:RDSA), Paddy Power Betfair plc (LON:PPB), Reckitt Benckiser PLC (LON:RB.), Smith & Nephew PLC (LON:SN.), Indivior PLC (LON:INDV), Coca Cola HBC AG (LON:CCH), Lancashire PLC (LON:LRE), Schroders PLC (LON:SDR), Equiniti Group PLC (LON:EQN), International Personal Finance PLC (LON:IPF), Howden Joinery PLC (LON:HWDN), James Fisher & Sons plc (LON:FSJ)
Finals: Morses Club Plc (LON:MCL)
Ex-dividends to clip 4.45 points off FTSE 100 index: London Stock Exchange PLC (LON:LSE), RELX Group PLC (LON:RELX), Rightmove PLC (LON:RMV), Unilever plc (LON:ULVR)
Economic data: UK construction PMI; US Challenger job cuts; US weekly jobless claims; US factory orders
Around the markets:
- The pound: US$1.3052, up 0.02%
- Gold: US$1,273 per ounce, down 0.6%
- Brent crude: US$71.92 per barrel, down 0.19%
- Bitcoin: US$5,323, up 0.1%
City Headlines:
- US Fed defies Trump and holds interest rates – BBC News
- Oil prices dip on record US output, but global market tense – CNBC
- Railway arches sale overlooked tenants, says watchdog – BBC News
- US lobbies mobile phone firms in anti-Huawei campaign - The Guardian
- Fireworks expected at Barclays annual meeting – BBC News