FTSE 100 closes higher as US president talks up trade deal

The UK index of leading shares closed up around ten points at 7,271, while the FTSE 250 added 66 points at 19,531

donald trump figurine
Trump is confident the US and China will strike a trade deal

FTSE 100 closed higher on Wednesday as European and US stocks rallied as President Trump talked up a possible trade deal with  China.

The UK index of leading shares closed up around ten points at 7,271, while the FTSE 250 added 66 points at 19,531

The German DAX is up around 87 at 12,179, while the French CAC 40 is up nearly 22. On Wall Street, the Dow Jones Industrial Average is up 11 points at the time of writing.

Adding to gains on Footsie was pressure on sterling from yet more uncertainty swirling around Brexit. Prime Minister Theresa May is coming under increasing pressure to map out her resignation plans but she said she had no plans to set out a timetable until she has delivered a Brexit deal.

"After all the excitement of the previous two sessions, things have calmed down in New York as the major indices have barely budged today. China’ vice premier, Liu He, will be involved in trade talks tomorrow and Friday. President Trump is content to keep collecting tariffs on Chinese imports, but he is also open to idea of striking a deal," said David Madden, analyst at CMC Markets.

3.40pm: World’s biggest sovereign wealth fund invests in Sirius Minerals

It’s been a rough week or so for Sirius Minerals PLC (LON:SXX) investors after the polyhalite miner unveiled plans to raise US$425mln at a hefty discount to the market price.

That has, understandably, knocked the shares lower, but news that the Norwegian sovereign wealth fund has taken a 3.5% stake in the FTSE 250 company has pushed the stock higher today.

The Norwegians have snaffled 166.5mln shares in Sirius, held under the name of Norges Bank – the country’s central bank which manages the wealth fund.

Also helping to boost the stock was a Berenberg research. Analysts cut their price target to 35p from 40p, but said, “fundamentally, we remain positive on the project’s longer-term credentials”.

Sirius shares are up 4.9% to 16.0p.

3.15pm: Trump’s China tweet moves the markets

The FTSE 100 has been nursing losses for much of the day, as have its global peers.

US-China trade relations were behind the negative sentiment, with a Reuters report claiming that China will demand wholesale changes to a draft agreement when officials meet tomorrow.

Before the markets opened in New York, there was a feeling that this would also weigh on US stocks.

But Donald Trump has come to the rescue with another of his tweets, declaring that the Chinese Vice Premier is “coming to the US to make a deal”.

As a result, US stocks are broadly flat. The Dow Jones is down 22.6 points, or less than 0.1%, to 25,942.5; the tech-heavy Nasdaq is off 5.1 points, or 0.1%, to 7,960.3; and the broader S&P 500 is 3.8 points, or 0.1%, in the red at 2,880.3.

Footsie boosted by Trump tweet

Trump’s declaration has also lifted some of the gloom over here in London, with the FTSE 100 now down 5.2 points to 7,253.8.

Imperial Brands PLC (LON:IMB) is still leading the fallers, puffing 6% lower to 2,180p. The cigarette maker reported a 6.9% fall in first quarter tobacco volumes, while industry volumes were only down 4.5%.

ITV plc (LON:ITV) is the other big faller, dropping a similar percentage to 124.3p, after the broadcaster reported a steep drop in ad revenues.

Total external revenue fell 4% to £743mln in the first quarter, driven by a 7% tumble in ad revenues. For the first half of the year, bosses expect ad revenue to be 6% down year-on-year.

easyJey tumbles on broker note

Airlines are also struggling: easyJet PLC (LON:EZJ) is down 2.8% to 1,053p, after Irish broker Davy claimed the budget airline was seeing softness in ticket yields across Europe, with macro and Brexit uncertainty dampening consumer demand.

Following their peer, BA owner International Consolidated Airlines Group PLC (LON:IAG) has fallen 2.6% to 588.6p, while TUI AG (LON:TUI) is almost 5% in the red at 809.7p.

Events and publishing group Informa PLC (LON:INF) remains the top riser, up 3% to 782.6p.

2.45pm: Pound drops on more Brexit uncertainty

The Great British pound is down today against a basket of global currencies, not helped by more reports of bickering amongst MPs.

ITV political editor Robert Peston is claiming talks between Labour and the Conservatives over a Brexit compromise are “very close to being terminated”.

“There are more talks between the two sides this evening,” he explains. “But those involved tell me they have no expectation a breakthrough will be seized from the jaws of futility.”

The news has weighed on the pound, which is down 0.5% against the dollar to US$1.301, and by 0.6% against the euro to €1.161.

2.30pm: Standard Chartered braces for shareholder revolt  

Standard Chartered PLC (LON:STAN) faces a potential shareholder revolt over its executive pay plan for 2019 at the lender’s upcoming annual meeting in London.

Investor advisory firms Glass Lewis and ISS have told StanChart shareholders to vote against an increase in pension payouts for chief executive Bill Winters.

StanChart has proposed a pension allowance of £474,000 for Winters, up from £460,000 last year, on top of a fixed salary of £2.4mln in cash and shares.

Glass Lewis argued that StanChart has failed to cap pension contributions as a percentage of base salary, putting it at risk of being excessive. The lender has instead calculated the contributions against a larger total base salary, it pointed out.

2.05pm: Top Asda exec to take over at Joules

Joules Group PLC (LON:JOUL) has appointed the former commercial director of ‘big four’ supermarket Asda, Nick Jones, as its new chief executive.

Jones, who also served as a director at FTSE 100 high street retailer Marks and Spencer Group PLC (LON:MKS) for 15 years, will take up the position before the end of the year and replace Colin Porter, who in April announced his retirement from the upmarket fashion chain after eight years in the role.

 “Nick's extensive retail, brand and strategy credentials, as well as a clear alignment with the Joules values, made him the outstanding candidate for the role”, said Ian Filby, Joules’ non-executive chairman.

1.40pm: BT to headline busy Thursday in London

Tomorrow is set to be the busiest day of this shortened week, with BT Group PLC (LON:BT.A) a likely highlight as it reported its full year numbers. There is a lot of investor expectation already resting on the shoulders of BT’s new chief executive Philip Jansen as he makes his public debut alongside the results.

Brought in to turn things around with the shares having halved over the past three years, the ex Worldpay boss got his feet under the desk in February and one big decision he and the board have to make is over the dividend. Some analysts are adamant that a cut is crucial while others see it as unnecessary.

The average analyst forecast currently points to a total dividend of 15.4p for the 2018/19 financial year, for which management said in January will see EBITDA “around the top” of its prior £7.3bn-£7.4bn range.

However, the City is expecting the fourth quarter to see EBITDA tumble 9% to £1.86bn as underlying revenues decline 2.8% to £5.78bn, giving an estimated full-year top line of £23.38bn, with £7.41bn of EBITDA and adjusted earnings per share of 26.6p.

1.10pm: Liverpool owners praised

This makes for sad reading as a Manchester United fan...

12.45pm: Dow Jones set for 100+-point drop

The Dow Jones Industrial Average is set for a 100-point-plus drop when it opens in New York later this afternoon.

Unsurprisingly, the heightened tensions between the US and China ahead of tomorrow’s talks are weighing on investor sentiment, with traders fearing that a draft trade agreement may now be ripped up.

“A report from Reuters claims that the sudden souring of relations between the US and China stems from the latter backtracking on a number of trade pledges, heavily editing a 150-page draft agreement in a move that undoes months of negotiations,” said Spreadex’s Connor Campbell.

“This suggests that Trump’s threats are serious, and not a ‘call my bluff’ bit of bluster, and has done little to help the market’s mood.”

Having fallen on Tuesday, US stocks are set to open lower once again on Wednesday.

The Dow is seen 103 points lower at 25,862, the tech heavy is tipped to open 31.6 points in the red at 7,609.6, while the broader S&P500 is expected to fall 10.5 points to 2,874.1.

12.15pm: House prices picked up in April

UK house prices picked up in April, according to Halifax, the country’s biggest mortgage lender.

According to its data, property prices rose 1.1% in April compared with March, when prices fell almost 1.3%.

The annual rate of growth almost double, with house prices up 5% compared to a year earlier.

The average UK home is now worth just shy of £237,000. That’s £82,000 more than a decade ago – an equivalent of a 4.3% average annual increase.

11.45am: City broker downgrades Wagamama owner

Wagamama owner Restaurant Group PLC (LON:RTN) shares are fairly valued following a jump in the price, Peel Hunt said as it downgraded its recommendation on the stock.

Peel Hunt cut its rating to ‘hold’ from ‘add’ but raised its target price to 145p from 135p.

The broker’s previous ‘add’ stance was on the basis that it thought the shares were cheap, the company has been rescued by shareholders in a rights issue last November and Wagamama should flatter like-for-like sales for “a while”. 

 “However, following a bounce in the share price, Restaurant Group’s shares, on almost 7 x enterprise value/EBITDA December 2019, are now fairly valued in our view,” Peel Hunt said.

Restaurant Group shares are down 2% to 139.1p in late morning trading.

11.15am: Imperial Brands’ dividend hike catches the eye

Imperial Brands PLC (LON:IMB) is the top blue-chip faller this morning after the cigarette maker underperformed its peers in the first half of its financial year.

Tobacco volumes fell 6.9% in the six months to 31 March, while industry volumes were only down 4.5%.

The results have come under fire from those in the Square Mile and the stock is down almost 5% to 2,217p. But one commentator has pointed out that Imperial is now the 12th biggest dividend payer on the London Stock Exchange.

“Tobacco is supposed to be a boring, slow growth business, but it’s hard to characterise Imperial Brands’ 10th consecutive 10% hike in its dividend as anything of the sort,” said Link Market Services COO Michael Kempe.

“It is now the 12th largest dividend payer in the UK, and will dole out £1.9bn to its shareholders this year. Smoking might be in decline, but with big price increases and a following wind from its vaping business boosting profits, investors can enjoy the headrush of such consistently rising payouts.”

10.50am: China has backtracked on ‘nearly all aspects’ of US trade deal - reports

Another day, another twist in the seemingly never-ending rollercoaster that is the relationship between the US and China.

The two economic superpowers command so much attention from investors around the world because of their sheer size. If they sneeze, the rest of the world catches a cold.

The pair have been bickering for a while, hitting each other with tit-for-tat levies. Chinese Vice Premier Liu He is due in Washington tomorrow to continue trade talks.

But clouds have already been cast over the meeting, with Reuters claiming that China has backtracked on “nearly all aspects” of a proposed trade deal.

Citing government sources, Reuters said the changes to the 150-page agreement “would blow up months of negotiations” between the two countries.

“The document was riddled with reversals by China that undermined core U.S. demands,” Reuters’ sources said.

That has put the markets on edge: Wall Street closed lower on Tuesday and Asian markets were in the red overnight.

London’s FTSE 100 has followed suit, dropping 20.9 points, or 0.3%, to 7,239.5.

Leading the fallers is Imperial Brands PLC (LON:IMB) after the cigarette maker underperformed its peers in the first half of its financial year.

Tobacco volumes fell 6.9% in the six months to 31 March, while industry volumes were only down 4.5%. Shares are down 4.8% to 2,217p.

ITV plc (LON:ITV) is the other big faller, dropping a similar percentage to 125p, after the broadcaster reported a steep drop in ad revenues.

Total external revenue fell 4% to £743mln in the first quarter, driven by a 7% tumble in ad revenues. For the first half of the year, bosses expect ad revenue to be 6% down year-on-year.

Events and publishing group Informa PLC (LON:INF) is the top riser, up 2.7% to 780.2p.

10.30am: ‘Spoons down on margin concerns

JD Wetherspoon PLC (LON:JDW) shares have frothed lower despite the no-frills pub chain enjoying a boom in third-quarter sales.

Like-for-like sales, which strip out the impact of new and closed stores, soared by 7.6% in the 13 weeks to the end of April, while total sales jumped 8.4%.

But shares in the FTSE 250 group are down almost 5% to 1,287p as bosses failed to lift guidance, prompting further concerns that margins are being hammered by soaring costs.

“[Sales were] ahead of expectations and yet there is no change to expectations implying that operating margin, already low at 7.8% FY18 and 8.9% at 1H19E, remains under significant pressure, particularly from labour costs,” said City broker Liberum in a note to clients.

10.05am: KPMG fined (again)

KPMG has been fined £5mln for misconduct relating to its audit of the Co-operative Bank almost 10 years ago.

The big four audit giant admitted its conduct fell short in an audit following Co-op Bank’s merger with Britannia Building Society in late 2009.

The Financial Reporting Council (FRC) said it had “severely reprimanded” KPMG because it failed to adequately audit fair value adjustments to commercial loans the bank bought from Britannia.

The regulator said KPMG and one of its partners, Andrew Walker, did not obtain enough audit evident and failed to show “sufficient professional scepticism” over the loans.

Barry Tootell, who was chief financial officer of Co-op Bank at the time, has previously admitted misconduct and has been banned from the Institute of Chartered Accountants in England and Wales for six years.

A KPMG spokesperson said: “We note the FRC’s announcement regarding our audit of the Co-op Bank for the year ended 31 December 2009.

“We regret that some of our audit work around specific elements of the Bank’s Fair Value Adjustments did not meet the appropriate standards."

9.40am: ITV shares slide as ad revenue dives

Shares in ITV plc (LON:ITV) are down almost 4% after the broadcaster reported a steep drop in ad revenues.

Total external revenue fell 4% to £743mln in the first quarter, driven by a 7% tumble in ad revenues. For the first half of the year, bosses expect ad revenue to be 6% down year-on-year.

“Advertising revenues is under a whole heap of pressure both cyclically and structurally,” said Markets.com analyst Neil Wilson.

“We always knew 2019 would be tough but there are also structural problems in terms of the cord cutters gobbling up viewers and the shift towards digital ad spend over traditional TV. The question is to what extent is this just down to Brexit uncertainty etc or is actually the new normal.”

9.15am: Direct Line stumbles as first-quarter premiums fall

Shares in Direct Line Insurance Group PLC (LON:DLG) are lower this morning after it reported a drop in first-quarter premiums in what bosses said remains a “tough” and “highly competitive” industry.

Competition has kept premiums low, while the amount insurers are having to pay in compensation is on the rise. The problem is being felt most by those with a presence in the motor insurance market, such as Direct Line.

In the three months to the end of March, total premiums fell 2.1% to £753.9mln (Q1 18: £769.9mln). The number of in-force policies also slipped, but only by 0.7% to 14,920 (Q1 18: 15,032).

Much of the fall in premiums was down to the motor division, which suffered a 4.2% drop to £386.9mln (Q1 18: £404.0mln).

“The motor market remained highly competitive, with market premiums failing to keep pace with claims inflation,” said chief financial officer Penny James, who will replace outgoing chief executive Paul Geddes tomorrow (Thursday).

“The home market has been slightly less challenging than motor but remained competitive.”

8.45am: US-China trade worries dominate market sentiment

The flight rather than fight mechanism appeared to be at work in London as the FTSE 100 compounded 120-point loss on Tuesday to open 10 points in the red at 7,250.64.

Worries that America and China are about to descend into an economically-damaging tit-for-tat series of trade sanctions led to a sharp sell-off on Wall Street, which appeared contagious as Asia’s main markets succumbed too.

“The overriding fear here is that global growth will take a hit should the US and China fail to hash out a trade deal and do so sooner rather than later,” said Jasper Lawler of London Capital Group.

“Just as the global economy was starting to show tentative signs of stabilising, a bigger slowdown is now back on the cards.

“The focus now will be on the two days of talks in Washington scheduled to take place between US and Chinese officials.

“Given the continued signs of risk aversion in the markets, investors are not holding their breath for any serious progress in these talks. The chances of the two powers resolving their issues over the coming two days of talks appears unlikely.”

ITV was the Footsie’s biggest faller after its first-quarter trading update revealed advertising revenues remained under pressure. The stock fell 2.2%.

A positive start to the year “despite uncertain market conditions” powered builders’ merchant Travis Perkins (LON:TPK) 4.9% higher and gave B&Q owner Kingfisher (LON:KGF) a 2% boost.

Shares in publican JD Wetherspoon (LON:JDW) were about as appetising to the investing public as a leftover and cloudy pint of Old Stoat (or some other made up brew) as the stock fell 3% in the wake of its latest trading update.

6.45am: FTSE 100 tipped to open slightly higher 

The FTSE 100 is tipped to open slightly higher on Wednesday, with gains likely to be held back by a darkening trade picture that led to heavy losses overnight.

Spread-betting firm IG is expecting the FTSE 100 to open around 3 points higher after closing down 120 points at 7,260 on Tuesday.

It was also a day of heavy losses for Wall Street on Tuesday, with the Dow closing 1.8% lower while the S&P 500 was down 1.6% and the Nasdaq down 2%.

The sell-off was sparked by news on Monday that the Trump administration would raise trade tariffs on US$200bn worth of Chinese goods from early Friday.

“The focus now will be on the two days of talks in Washington scheduled to take place between US and Chinese officials. Given the continued signs of risk aversion in the markets, investors are not holding their breath for any serious progress in these talks. The chances of the two powers resolving their issues over the coming two days of talks appears unlikely”, said Jasper Lawler, head of research at London Capital Group.

“Once again, we are starting to see the market price in the US – China trade dispute as both an immediate and long-term risk factor, rather than an issue that was on the brink of being resolved.”

The renewed trade tensions continued to rattle the Asian markets on Wednesday, with the Japanese Nikkei 225 down 1.8% while Hong Kong’s Hang Seng was 0.7% lower.

On the currency markets, the pound was down 0.02% against the dollar at US$1.3071.

ITV takes spotlight in Wednesday’s blue-chip updates

Advertising revenue will be taking centre stage when FTSE 100 broadcaster ITV plc (LON:ITV) delivers a first quarter trading update on Wednesday, with investors watching closely for any deviation from the predicted drop of 4%.

There has been a glimmer of hope, with some analysts pointing to a read-across from Scottish broadcaster STV, which reported a better-than-feared drop in national advertising revenue in its own first quarter update on 23 April.

Aside from advertising, investors will also be keeping a close eye on the group’s content production arm, ITV Studios, as the group is attempting to wean itself off its reliance on advertising in favour of producing content for license.

Any updates on ITV’s new partnership with the BBC to launch Britbox, a joint-streaming venture that was announced earlier this year, will also be eyed.

Significant announcements expected for Wednesday May 8:

Trading updates: ITV plc (LON:ITV), Direct Line Group PLC (LON:DLG), JD Wetherspoon PLC (LON:JDW), Travis Perkins PLC (LON:TPK), SIG PLC (LON:SHI), OneSavings Bank PLC (LON:OSB), Rathbone Brothers PLC (LON:RAT), Apax Global Alpha LIMIted (LON:APAX)

Interims: Imperial Brands PLC (LON:IMB), Elegant Hotels Group PLC (LON:EHG)

Finals: CyanConnode Holdings PLC (LON:CYAN. Keystone Law Group PLC (LON:KEYS), Osirium Technologies PLC (LON:OSI), Smartspace Software Plc (LON:SMRT), Vertu Motors PLC (LON:VTU)

AGMs: Cello Health PLC (LON:CLL), Caledonia Mining Corp. (LON:CMCL)

Economic data: US MBA mortgage applications

Around the markets:

Sterling: US$1.3071, down 0.02%

Brent crude: US$69.47 a barrel, down 2.48%

Gold: US$1,286.9 an ounce, up 0.27%

Bitcoin: US$5,815, down 1.35%

Proactive news headlines:

UK medicinal cannabis firm Sativa Investments PLC (NEX:SATI) has decided to allow an option over a farm in Wilshire to grow its own produce to lapse in July. The company also announced that it plans to change its name to Sativa Group alongside an amended strategy. 

MaxCyte Inc (LON:MXCT) has started dosing the second cohort of patients in the phase I clinical trial of its MCY-M11 cancer immunotherapy. 

Healthcare-focused consultancy Cello Health PLC (LON:CLL) is confident its second quarter will continue the “very good” start made to 2019. 

BigDish PLC (LON:DISH) is aiming to launch its restaurant booking platform in four more towns and cities by the end of May, having already gone live in Exeter and Basingstoke at the start of the month. 

Argo Blockchain PLC (LON:ARB) shares surged on Wednesday after it forecast breakeven earnings (EBITDA) in the second half of the year and brought new units online to boost its cryptocurrency mining capacity. 

Circassia Pharmaceuticals PLC (LON:CIR) said findings from a recent clinical trial of one of its key drugs will appear in a prestigious scientific publication. 

Tower Resources PLC (LON:TRP) has chosen to put back the start date of the planned NJOM3 well, at the Thali block in Cameroon. 

Telit Communications PLC (LON:TCM) has settled its VAT dispute with the Italian authorities for the 2004-2007 tax years. 

Sound Energy PLC (LON:SOU) has told investors that the initial phase of TE-10 well testing is now largely complete. 

AfriTin Mining Limited (LON:ATM) has signed a deal with Namibia Power over grid electricity for the pilot plant at the Uis tin mine. 

ReNeuron Group PLC (LON:RENE) revealed it is in a strong financial position as it heads into a pivotal 18 months both clinically and commercially. 

EQTEC Plc (AIM: EQT) shares shot up in Wednesday’s early deals after announcing an agreement to develop the Billingham waste-to-energy project in county Durham. 

Mosman Oil And Gas Ltd (LON:MSMN) shares rose in Wednesday’s early deals after announcing a farm-out deal for the Champion project, in east Texas, with  ASX-listed Xstate Resources Limited (ASX:XST). 

April was a record month for sales and production from the Hellyer Mine in Tasmania, reported NQ Minerals PLC (LON:NQMI). 

Plexus Holdings PLC (LON:POS) said the High Court of Justice in England and Wales has confirmed the cancellation of the company's share premium account, allowing for the reduction of capital.

Kodal Minerals PLC (LON:KOD) has appointed Mark Pensabene, the general manager of Mineral Resources Ltd, as an independent non-executive director.

Shield Therapeutics PLC (LON: STX) has appointed finnCap Ltd as its joint broker with immediate effect.

City headlines:

Global markets continued to fall sharply last night amid renewed fears of an escalation in President Trump’s trade war with Beijing – The Times

Downing Street has set 1 August as its latest Brexit target after Theresa May’s hopes of an early cross-party Brexit deal with Labour faded on Tuesday – Financial Times

Schroders, one of Provident Financial’s largest shareholders, has publicly rejected an all-share £1.2 billion hostile takeover offer from Non-Standard Finance for the doorstep lender – Times

The Bank of England has cautioned that China’s debt-fuelled plans to prop up economic growth could push its already high debts up to dangerous levels – The Telegraph

Fears are mounting that the rush to buy clean, environmentally friendly electric cars is about to squeeze the supply of metals and minerals that have become vital to the automotive industry – Times

The fashion retailer Select is set to collapse into administration on Wednesday, putting 2,000 jobs at risk – Guardian

Lloyds has been slammed for giving a stealth pay rise to its boss Antonio Horta-Osorio – Daily Mail

Facebook has picked London as the centre for a push into payments on its WhatsApp messaging service - FT

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