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FTSE 100 closes higher and global stocks rally as trade fears seem to ease

On Wall Street, the Dow Jones Industrial Average is up 287 points at the time of writing

Rising chart on a dollar background
US stocks opened on the front foot
  • FTSE 100 closes up

  • Next shops to be used as pick-up points for Amazon purchases

  • Pound sags

FTSE 100 joined other global indices to go higher Tuesday as trade war fears seemingly eased.

Stocks bounced back from the sell-off. Footsie closed nearly 78 points higher at 7,241, while the FTSE 250 added over 240 points at 19,367.

On Wall Street, the Dow Jones Industrial Average  is up 287 points at the time of writing, while the S&P 500 is also up around 32.

It comes after President  Trump said late on Monday that it should be clear in “three or four weeks” if a U.S. delegation’s recent trip to China to discuss trade was successful or not.

Big cap miners benefited from the uplift in sentiment. Evraz (LON:EVR), a sharp faller yesterday, added 4.31% to 580.40p.

3.36pm: Footsie higher

London's index of heavyweight shares is close to its intra-day high, as sterling falls back against the dollar.

The pound currently buys 1.2918 US dollars, down from 1.2957 overnight. That's perceived as a good thing for the many multinational companies in the Footsie and as a result the index is up 72 points (1.0%) at 7,236.

Mining stocks were doing most of the heavy lifting, with investors encouraged that trade relations between the US and China have not got any worse.

Fashion retailer Next PLC (LON:NXT) was up 1.8% after it partnered with e-commerce giant Amazon.com Inc (NASDAQ:AMZN).

Amazon has struck a deal that will allow its customers to collect their parcels from Next’s high street stores.

3.00pm: US stocks off to a flyer

US stocks opened a tad less brightly than expected but not enough to upset the Footsie Apple cart.

The FTSE 100 was up 61 points (0.9%) at 7,225, with steel maker Evraz plc (LON:EVR) leading the advance with a 5% gain.

In the US, the Dow Jones was up 113 points (0.4%) at 25,438 while the broader-based S&P 500 was up 14.5 points (0.5%) at 2,826.4.

Ken Odeluga at City Index subscribes to the “what goes down, must come up” philosophy and reckons today’s rally is “likely to be a relatively short-lived reappearance”.

“Resurgent upside momentum also drowns out the reality of further unsatisfactory earnings from European heavyweights,” Odeluga grumbled.

“Even after reporting its second consecutive multibillion euro annual loss, missing revenue forecasts and slashing its dividend 40%, Vodafone shares managed to advance almost 5% but they only erased Monday’s slump of a similar magnitude temporarily, eventually trading 3% lower. The hope is that reduced pay outs will leave more cash available for 5G, retaining market share, though flawless execution will be needed,” Odeluga predicted.

Among the UK tiddlers, Edenville Energy PLC (LON:EDL) was the best performing stock, more than doubling after it said it had received the funds from its recent share issue and was now cranking back into action, developing the Rukwa coal project in Tanzania.

Microsaic Systems PLC (LON:MSYS) had some good news for shareholders at its annual general meeting today.

The company, which develops and markets chip-based mass spectrometry instruments. said orders received year-to-date have been significantly above orders received by the company in the whole of the first half of 2018.

The shares were up 19% at 1.6p.

1.00pm: US markets set to bounce back

Encouraged by the prospect of a rebound on Wall Street, UK stocks were holding on to gains in the afternoon session.

Spread betting quotes indicate the Dow Jones industrial average will open 140 points or so higher at around 25,464, after it plunged 617 points yesterday.

The broader-based S&P 500 is expected to rise about 16 points to 2,828.5 when trading starts in just over an hour's time.

In the UK, the FTSE 100 was up 65 points (0.9%) at 7,230, as investors continue to pore over this morning's jobs and earnings data.

“Analysts have been expecting a bit of deterioration in the official UK labour market data for a while given heightened levels of uncertainty for businesses and indications from business surveys of fading employment intentions,” said Melanie Baker, a senior economist at Royal London Asset Management, setting the scene.

“The Q1 headlines were solid – particularly the lower unemployment rate; however, there were signs of deterioration under the surface and earnings growth slowed again, which will help contain any pressure on the BoE to raise rates,” she added.

Howard Archer, the chief economic advisor to the EY ITEM Club, called it a “very decent report” but added that the labour market is not showing quite the overall strength that was apparent at the start of the year.

“This has to be expected given prolonged Brexit uncertainties, lacklustre UK economic activity, a difficult domestic political environment and a challenging global economy.

“It is notable that recent surveys that have indicated that a growing number of employers are now adopting a 'wait and see' approach on employment given the current heightened uncertainties,” he said.


 

11.30am: Footsie kicks on again, supported by mining stocks

The Footsie was trading close to its intra-day high, helped in part by enthusiasm for mining stocks.

The likes of Evraz, Glencore, Fresnillo, Antofagasta and Anglo America were high among the best performers although all had to eat the dust of engineer, Spirax Sarco PLC (LON:SPX), after market makers pumped up the share price by 360p to 8,420p following the inclusion of the stock in an MSCI index series.

The FTSE 100 was up 61 points at 7,224, despite sterling more or less rallying to par against the dollar.

Away from equities, there has been what Craig Erlam at Oanda called a “FOMO rally” - a “fear of missing out rally” - in the price of Bitcoin, with the price up 2.3% at US$8,009.60.

10.10am: Another solid set of jobless numbers

The UK unemployment rate was estimated at 3.8% for the first three months of 2019 while average weekly earnings rose 3.3% year-on-year.

The Office for National Statistics noted that the unemployment rate has now been lower since the October – December quarter of 1974.

The overall employment rate, unchanged at 76.1%, was the joint highest on record.

Including bonuses, average weekly earnings for employees in Great Britain were estimated to have increased by 3.2%, before adjusting for inflation, and by 1.3%, after adjusting for inflation, compared with a year earlier.

“Just how low can it go?” asked Ben Brettell, a senior economist at Hargreaves Landsown, referring to the unemployment rate – not weekly average earnings.

“Unemployment fell again in the three months to March, to 3.8% - the lowest rate since 1974. Wage growth weakened slightly, but remains robust, with pay excluding bonuses rising 3.3%, down from 3.4% a month earlier.

“The UK labour market has been remarkably resilient in the face of Brexit-related uncertainty. These are really strong numbers given the headwinds the economy is currently facing,” he added.

“But the ‘British disease’ of low productivity is a spectre which continues to haunt us. There are valid concerns that UK firms are hoarding labour instead of much-needed capital expenditure. Why would you invest large sums in new plant or machinery in such uncertain times, when you could hire an extra worker and get broadly the same result? The ONS report today says that output per hour declined in the first quarter, the third quarterly decline in a row,” Brettell said.

Tom Stevenson, the investment director for Personal Investing at Fidelity International, said wages are still the bright spot of the UK economy.

“The extension of Brexit uncertainty may have played a part in today’s 3.3% rise in average weekly earnings in the three months to March. The murky outlook is leading businesses to hire now with the option to fire later rather than make irreversible investments in new kit. Perhaps it is still too soon to get ahead of ourselves, though - a week before new inflation data, there’s a question mark over how real the earnings growth is. Rising wages are bound in due course to feed through into wider price rises,” Stevenson said.

“Wages are still outstripping inflation. That’s good news for households, but considering the decade of lost wage growth, it could be a while until we see a meaningful impact. The UK economy is still bound by uncertainty, and we are looking at a low interest rate environment for the foreseeable future,” Stevenson said.

 

The jobs and earnings data was met with a giant shrug of the shoulders by the market. The FTSE 100 remains anchored around the 7,215 level, up 48 points (0.7%) at 7,212.

9.15am: Yesterday's losses wiped out - and then some - as sterling loses ground on forex markets

Helped by a decline in the value of sterling, London's index of leading shares has clawed back all of yesterday's losses and more.

The FTSE 100 was up 52 points (0.7%) at 7,216, with DCC PLC (LON:DCC) leading the advance after its well-received full-year results.

The Dublin-headquartered sales, marketing and support services group reported on a year of good growth and said it expected another one to come, prompting market makers to push the shares 3.1% higher.

There was a positive response to the decision by the board of Vodafone PLC (LON:VOD) to bite the bullet and cut the dividend.

“The reduction to the dividend is prudent, given the enormous constraints on cash flow, not to mention that dividend cover had slipped to unsustainable levels. Even after the cut, the yield will remain punchy and the group has committed to returning to a progressive policy,” said Richard Hunter, the head of markets at interactive investor.

Shares in the mobile phones network operator were up 2.2%.

Loitering at the wrong end of the Footsie leader-board was real estate investment trust Land Securities PLC (LON:LAND).

READ Land Securities posts wider loss as tough retail market weighs on portfolio

The shares dipped 0.4% as the owner of the Bluewater shopping centre in Kent said it sees no near-term improvement in retail market conditions with company voluntary arrangements likely to continue.

8.45am: FTSE 100 bounces back

The FTSE 100 made a stronger-than-expected start to the trading day, rising 42 points to 7,205.68 as the market took some consolation from the comments of President Trump hinting a potential settlement to trade hostilities in “three to four weeks”.

Wall Street climbed a wall of worry after hours Monday as it shed more than 600 points. It was factoring in the economically punishing impact of tit-for-tat embargoes on American and Chinese goods.

In Asia there was a partial reversal of fortunes in the wake of the Trump comments that mitigated the worst of the losses. It was telling the Chinese markets were the most resilient.

“Risks for now seem very much skewed to the downside until we see some kind of equilibrium achieved again,” said Neil Wilson, analyst at Markets.com.

“The market is seeing the window for a deal closing tightly, although with tariffs not taking effect yet we could yet see some improvement in relations. If this is the third shoulder of a giant triple top in the market there is a hell of a long way to go lower. But we are probably not at that stage yet.”

There appeared to be demand for supermarket stocks with Sainsbury (LON:SBRY) up 2.2% and finding some support after the recent sell-off, which was precipitated by the collapse of its takeover of Asda. Morrisons (LON:MRW), up 1.2%, also gained some traction.

The big mover of the second-tier was Greggs (LON:GRG), the Newcastle-headquartered purveyor the steak bake. Its shares pushed up 13% as its sales performance, buoyed by the addition of the vegan sausage roll, wowed.

Proactive news headlines:

Sunrise Resources PLC (LON:SRES) has had its permit submission for exploration at the NewPerl perlite project in the USA approved by the Bureau of Land Management. The work programme is designed to test the Knoll prospect at NewPerl.

Billboard advertising giant JCDecaux UK is to use Location Sciences Group PLC’s (LON:LSAI) location data as it looks to make its customers’ campaigns “more impactful”.

Eckoh PLC (LON:ECK), the provider of secure payment products and customer contact solutions, said trading in the year just ended was in line with expectations.

Faron Pharmaceuticals Ltd (LON:FARN) has raised around €1.34mln (£1.15mln) from a share subscription by an existing shareholder to extend the company's working capital into mid-fourth quarter 2019 following on from a share placing in March.

Ariana Resources PLC (LON:AAU) has been granted forestry permits for its Salinbas gold project in Turkey.  It’s also had its licence to operate at Salinbas approved for ten years.

Iodine producer Iofina PLC (LON:IOF) is contemplating tapping the market for at least £5mln.

VR Education Holdings Plc (LON:VRE) is to bring its virtual reality (VR) learning platform ENGAGE to South Korea after a deal with digital content firm D'Carrick Co Ltd.

KR1 PLC (LON:KR1) has said it is generating “significant revenues” from its investment in Cosmos, a major ‘proof-of-stake’ network in its portfolio.

Tekcapital PLC’s (LON:TEK) shares got a boost on Tuesday after its portfolio firm, Lucyd, launched Loud 2.0, a new range of its Bluetooth-enabled glasses.

OptiBiotix Health PLC (AIM: OPTI) has signed an exclusive distribution deal for its weight loss product in Thailand. The three-year agreement with Primo Trading will see the Thai company buy a minimum of 500kg of SlimBiome in the first 12 months, rising to 5,000kg by year-three. It has already made an initial 100kg purchase.

Concepta PLC (LON:CPTA) coupled annual results with news of early successes for its myLotus fertility product for couples in the early stages of trying to conceive. The self-test product went on sale last year and a supply agreement was struck with Boots in the UK in March.

Physiomics Plc (LON:PYC) believes revenues from a tool it has developed as part of a project funded by Innovate UK could potentially be just around the corner.

Savannah Resources PLC (LON:SAV) has welcomed the establishment by France and Germany of a European cross-border battery cell consortium. The consortium will develop next-generation batteries for electric vehicles (EVs).

Mosman Oil And Gas Ltd (LON:MSMN) has raised £750,000 of new capital and has agreed to drill two wells at the Champion project, in Texas. The wells follow the capture of 3D seismic data and the company expects they will provide an increase in production and revenues.

Touchstone Exploration Inc (LON:TXP) told investors that production in the first quarter averaged 2,121 barrels per day. That represents a 37% improvement on the comparative period of 2018, and, a 15% rise on the preceding quarter.

US Oil & Gas PLC (USOP) told investors it has decided to focus on plans for new wells rather than frack the previously drilled Eblana-3 well. The decision comes after a technical review of the project.

Scotgold Resources Limited’s (LON:SGZ) chairman and major shareholder Nat Le Roux has transferred a batch of options to Rhodara, a Jersey-based investment company for a nominal sum. Le Roux informed the Scottish gold miner that due to his current holding being almost 50% he was unlikely to take up the options, which are over 1.745mln shares and exercise at 40p.

SIMEC Atlantis Energy Limited (LON:SAE), the sustainable energy generation project developer, has entered into a technology partnership with US titan, General Electric Company (NYSE:GE).

Eden Research PLC’s (LON:EDEN) chairman, Lykele van der Broek will hail the key milestones and good progress made with the commercialisation and regulatory clearance of its products at the biopesticides firm’s annual general meeting to be held on Tuesday as the group moves to benefit from changes to agchem industry.

Caledonia Mining Corporation Ltd (LON:CMCL) produced 11,948 ounces in the first quarter of 2019, approximately eight per cent below the first quarter of 2018.

Strategic Minerals PLC (LON:SML) (USOTC: SMCDY) generated a profit of US$1.47mln in the year to December 2018. That was marginally down from the profit of US$1.59mln generated in 2017.

As investors in Canadian Overseas Petroleum Limited (LON:COPL) look forward to drilling at the OPL 226 asset offshore Nigeria, the company has released quarterly financial results. The pre-revenue explorer reported a US$1.12mln loss for the period, and, told investors that it ended March with US$899,000 of cash and equivalents. Big Pic in May.

Sound Energy PLC (LON:SOU) said that non-executive director David Clarkson is to step down from the board after completion of the company's ongoing operational programme in Eastern Morocco, which is expected to complete towards the end of the first half of 2019.  The group said Clarkson will remain on the board, to assist the company during the transitional period around the appointment of a new non-executive director, until 13 August 2019. It added that the firm has commenced the process of identifying a new independent non-executive director and anticipates making an announcement shortly.

Adamas Finance Asia Limited (LON:ADAM), the pan-Asian diversified investment vehicle, said it will be exhibiting at the Mello Investment Trusts & Funds event on Wednesday 15 May 2019 at the Clayton Hotel Chiswick, London, W4 5RY.

Malvern International PLC (LON:MLVN), the global learning and skills development partner, also announced that it will be attending the Mello 2019 investor conference.

6.35am: FTSE 100 set to open in positive territory 

Incredibly, given the carnage on Wall Street late Monday, the FTSE 100 looks set to open in positive territory.

The Dow Jones closed down 617 points amid growing fears the Sino-American stand-off will descend into a full-blown and economically-punishing trade war with China threatening retaliation to America’s hike to tariff’s on certain goods.

Every constituent member of the tech-focused NASDAQ finished in the red after a bloody session for companies such as Apple, which had its worst day since 2013, and the new floats such as Uber, Lyft, Pinterest and Zoom Video.

The contagion spread to Asia as markets there slumped, though there was a recovery of sorts after comments from President Trump, which appeared to leave the door open for a deal in “three to four weeks”.

“This pullback from the lows is likely to see European markets open slightly higher this morning, but it is unlikely to change the prospect of further volatility in the days ahead,” said Michael Hewson of CMC Markets.

Sentiment improving 

With sentiment improving the UK index of blue-chip shares will open 12 points to the good at 7,175.68, according to the spread betting firms.

Later we’ll get an insight into the general health of the UK economy with jobs data, which are expected to show the unemployment rate remained static at 5%.

On the corporate front there are updates from Land Securities (LON:LAND) and Premier Foods (LON:PFD).

Significant announcements expected on Tuesday:

Finals: Land Securities PLC (LON:LAND), Premier Foods PLC (LON:PFD), Concepta PLC (LON:CPT), Braemar Shipping Services PLC (LON:BMS), Great Eastern Energy Corp Ltd. (LON:GEEC)

Interims: On The Beach Group PLC (LON:OTB), Stock Spirits Group PLC (LON:STCK), ITE Group PLC (LON:ITE), TUI AG (LON:TUI)

AGMs: Eden Research PLC (LON:EDEN), IWG PLC (LON:IWG), Capita PLC (LON:CPI)

Economic data: UK jobs, average earnings; US export, import prices; US import, export prices

Around the markets:

  • Pound worth US$1.2959
  • Gold down US$1.70 an ounce at US$1,310
  • Brent crude US$70.47, up 24 cents a barrel

City Headlines:

  • Financial Times
  • WhatsApp voice calls used to inject Israeli spyware - messaging app discovers vulnerability that has been open for weeks
  • Regulators cut banks some slack on Libor shift
  • Autonomy finance chief sentenced to five years for HP fraud
  • Bayer ordered to pay $2bn in Roundup cancer case
  • Times
  • Hedge funds have made more than £500mln betting against Metro Bank in the past year
  • Hundreds of managerial and white-collar jobs are to go at Ford UK, many at its Dunton operation near Basildon in Essex
  • The largest shareholder in First Group has launched a furious attack on the board of the train and bus operator after calling for an extraordinary general meeting in an attempt to remove half of the directors
  • Telegraph
  • Honda confirms closure of Swindon plant with loss of 3,500 jobs
  • Imran Khan's Pakistan forced to swallow IMF medicine in return for $6bn bailout
  • Cambridge surgical robot operates on humans for the first time
  • Guardian
  • City investors push for BP to be more open on climate change policy
  • Boots profits plunge as high-street slump hits chemist chain

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