FTSE 100 closes up as Wall Street shares surge as Fed chair settles investor nerves

Fed chair Jerome Powell also settled nerves by saying that the central bank could cut interest rates if necessary

It's a tad dull but there's always the cricket on the telly
  • FTSE 100 index closes up

  • US stocks make strong gains

  • Hargreaves Lansdown caught in Woodford fund fall-out

FTSE 100 closed higher on Tuesday as Wall Street shares also headed north as trade fears eased a shade.

Financial stocks made good gains with Standard Life Aberdeen PLC (LON:SLA) top riser on the Footsie, up nearly 5.5% to 275.30p.

The UK index of the top 100 shares closed up around 36 points at 7,221.

Meanwhile, the mid-cap FTSE 250 added over 110 points at 18,987.

Across the Pond, Fed chair  Jerome Powell also settled  nerves by saying that the central bank could cut interest rates if necessary amid worsening trade  disputes.

"The major indices are firmly higher this afternoon as the worries about trade tensions have cooled a little, and the update from Jerome Powell, the head of the Federal Reserve encouraged investors too," said David Madden, market analyst at CMC Markets UK.

"The fact that trading relationship between the US and China hasn’t gotten any worse in the past day has lifted investor confidence a little. Mr Powell said he will ‘act as appropriate’ to

sustain economic growth, and dealers viewed that as a sign that we would consider cutting rates should he feel it was required."

On Wall Street, the Dow Jones Industrial Average is up 431 points at the time of writing, at 25,247, while the Nasdaq is up over 152 points at 7,485.

3.45pm: Footsie surrenders some gains

The Footsie gains were slowly dissipating in the final hour of trading.

The index of heavyweight shares was up 14 points (0.2%) at 7,199, some 25 points below its intra-day high.

The index’s worst performer was funds supermarket Hargreaves Lansdown PLC (LON:HL.), which has taken collateral damage from the potshots aimed at Neil Woodford and his Woodford Equity Income Fund.

READ Neil Woodford suspends trading in flagship fund after investor withdrawals

Hargreaves Lansdown, regarded as a cheerleader for Woodford’s funds, was down 4.7% after it removed the unit trust from its top 50 recommended funds after the fund said it would suspend redemptions.

St James’s Place PLC (LON:STJ), another backer of Woodford, was down 0.2% at 1,026p.

2.45pm: US stocks bounce back

US stocks got off to a flyer on Tuesday with a triple-digit (and then some) gain for the Dow Jones industrial average.

The 30-share benchmark index was up 237 points (1.0%) at 25,057 while the broader-based S&P 500 was 22 points (0.8%) to the good at 2,767.

In the UK, the FTSE 100 was up 31 points (0.4%) at 7,216, bolstered by a return to fashion of travel stocks such as British Airways owner International Consolidated Airlines (LON:IAG), and easyJet PLC (LON:EZJ) and TUI AG (LON:TUI), all of which were up by around 3%.

Among the minnows, eServGlobal Limited (LON:ESG), the digital transactions technology company, is to sell its core business, effectively leaving it as a cash shell.

The shares were up 9.6% at 6.3p, valuing the company at £69.5mln.

1.30pm: FTSE 350 advances modestly on minimal news flow

Both the FTSE 100 and the FTSE 250 were in the pink in lunchtime trading.

The Footsie was up 17 points (0.2%) at 7,202 while the mid-cap FTSE 250 was up 54 points (0.3%) at 18,931.

Online gaming platform operator 888 Holdings PLC (LON:888) was prominent among the mid-cap movers, rising 4.7% to 138.3p after it revealed like-for-like revenues in the year-to-date were up 6% year-on-year.

Further down the food chain, Vianet Group PLC (LON:VNET), which provides information from machines connected to the Internet of Things, rose 4.7% to 132.5p after it posted a 30% year-on-year increase in half-year post-tax earnings.

Paragon Entertainment Limited (LON:PEL), the attractions design, production and fit-out business, was boosted by the appointment of Center Parcs veteran Damien Latham as its chief executive officer (CEO).

The serial profit warner has been without a CEO since September of last year.

12.15pm: US markets tipped to rebound

Ahead of what is expected to be a firm opening on Wall Street, the FTSE 100 was consolidating its hard won gains.

The index of the UK's heavyweight shares was up 14 points (0.2%) at 7,199, having briefly risen above the 7,200 level to hit 7,208.

“The Dow Jones is looking at a big rebound when the bell rings on Wall Street, despite arguably little reason to do so. The futures have the index jumping nearly 190 points, a move that’d leave it within touching distance of 25,000. A speech from Fed chair Jerome Powell could have bearing on the Dow’s performance as the session goes on,” reported Connor Campbell at Spreadex.

News flow pertaining to blue-chips has been thin in London.

GlaxoSmithKline PLC (LON:GSK) was 1% lower at 1,533.2p despite announcing that the European Medicines Agency's Committee for Medicinal Products for Human Use had issued a positive opinion recommending two new methods for administering its Nucala treatment to patients with severe eosinophilic asthma.

11.00am: Footsie moves cautiously into the black

Having scrambled back to square one, the FTSE 100 has now edged tentatively into positive territory, helped by sterling relinquishing early gains on forex markets.

The FTSE 100 was up 12 points (0.2%) at 7,197, with cigarette makers Imperial Brands PLC (LON:IMB) and British American Tobacco PLC (LON:BATS) – both big dollar earners – to the fore. The former was up 3% at 1,927.4p and the latter was up 2.1% at 2,825p.

Offsetting these gains were the two oil leviathans, BP PLC (LON:BP.) and Royal Dutch Shell (LON:RDSB), which were down 0.4% and 0.7% respectively as the oil price lost ground on the futures markets.

“Oil prices are back at below US$61 following a blip higher yesterday and seem to be confined to a relatively narrow channel. Against the background of uncertainty over US tariffs on China, Mexico and now possibly India, the market is waiting for new clues before making any decisive trade moves,” suggested Fiona Cincotta at City Index.

Shell's strategic update failed to set the heather on fire this morning.

Royal Dutch Shell’s strategy update including the potential to return US$125 billion through dividends and share buybacks between 2021 and 2025 failed to provide the energy required to boost the FTSE 100. As the index’s biggest constituent, Shell’s share price has a major influence on the direction of the UK market,” noted Russ Mould at AJ Bell.

Graham Spooner, an investment research analyst at The Share Centre, stuck with his “buy” recommendation for Shell.

“With many attracted to the 5+% yield of the stock, the obvious positive is the improved outlook of cash flow to around US$35bn based on US$60 per barrel which should continue to underpin good dividends or share buybacks. The proposed increase in capital expenditure to around US$30bn a year may act as a balance to the above,” Spooner said.

9.45am: Construction activity index declined in May

The IHS Markit/CIPS UK Construction Total Activity Index for May slipped below the 50 point level in May.

The index reading for May was 48.6, down from 50.5 in April, representing the third time in the last four months that the index had fallen below 50 points – the threshold that represents the crossover from expansion to contraction.

Far from being dismayed by the news, the FTSE 100 perked up from the 7,174 level to 7,186, up a couple of points on the day.

Commercial building was the weakest area of construction activity in May, with output falling to the greatest extent since September 2017. IHS Markit reported.

Survey respondents widely commented that clients had opted to hold back on major spending decisions in response to Brexit uncertainty and concerns about the economic outlook.

May data also revealed a decline in civil engineering activity for the fourth consecutive month. Construction companies cited constrained client budgets and a headwind from domestic political uncertainty.

There was mixed news for housebuilders, with the survey revealing that residential work continued to expand in May, albeit at the weakest pace for three months.

Meanwhile, on the other side of the world, in a widely expected move, the Reserve Bank of Australia has cut policy cash rates from 1.5% to 1.25%.

“The move away from the previous record low of 1.5% has stirred mixed reactions in the market. The prospect of a potential recession clearly wasn’t topic of discussion during the recent election campaign, with parties instead focussing on promising a ‘recovering economy’.

"The other concern is that pulling the trigger early on rate cuts in order to kick-start the economy reduces the effectiveness of this tool in the future should it be required. You don’t have many silver bullets,” commented Hugo Cusani, an associate director at JCRA, a hedging and debt advice specialist.

8.50am: Weaker start for Footsie

The FTSE 100 opened 32 points in the hole at 7,152.46 amid continued worries over trade wars and following sharp falls among tech stocks on Wall Street after the close.

The likes of Google owner Alphabet and Facebook tumbled amid worries the Federal Trade Commission and the Department of Justice may be looking to break up the big tech firms. The NASDAQ index fell 1.6%.

“Whilst it’s far too early to say if any would, or could, be ripe to be broken up, there’s a real threat this will depress multiples and mean we need to reset expectations,” said Neil Wilson of Markets.com.

“Given the Faangs [Facebook, Apple, Amazon, Netflix and Google] have been at the front of the market expansion in recent years, this will act as a drag on sentiment as well.”

Back here in the UK, the day’s big faller was a FTSE 250 constituent in the form of the Woodford Patient Capital Trust (LON:WPCT). Run by the former star fund manager Neil Woodford, it fell 12% amid reports he has placed a block on redemptions from the Woodford Equity Income Fund, another fund his company manages.

Financial services firms were in the dog house as a result, with Hargreaves Lansdown (LON:HL.) down 6% after the company’s prelims failed to pass muster. Rival AJ Bell (LON:AJB) was off 1.8%.

Proactive news headlines:

EQTEC PLC (LON:EQT), the waste gasification to energy project specialist, is to jointly develop a biomass gasification power project in California, USA. It is the first agreement to result from the framework agreement, announced last month, with California-based firm Phoenix Biomass Energy to develop biomass gasification power plants in the US.

Oncimmune Holdings PLC (LON:ONC) said a large-scale lung cancer study it was a pivotal part of was a success. The company’s EarlyCDT-Lung test was used alongside x-rays and CT scans to check for the killer disease.

discoverIE Group PLC (LON:DSCV) has upped its final dividend following a strong uplift in profits for its latest full year. The custom electronics maker reported an underlying pre-tax profit for the year ended 31 March of £27.2mln, 24% higher than the year before, while revenues climbed 13% to £438.9mln.

Digital marketing and services group Be Heard Group PLC (LON:BHRD) has won the best contract in the world (probably) with Carlsberg UK.

Tissue Regenix Group PLC (LON:TRX) said current trading was in line with expectations as it confirmed it had secured a US$20mln credit facility that would allow management to invest in growth. MidCap Financial Trust is providing a US$15mln, five-year loan, a three-year revolving line of credit and further US$2mln revolver if needed.

Coinsilium Group Limited (LON:COIN) is to provide advisory services to blockchain business data platform OASISBloc in relation to an initial exchange offering (IEO).

Chaarat Gold Holdings Ltd (LON:CGH) has boosted reserves at the Tulkubash gold project in Kyrgyzstan by 39% to 22.2mln tonnes. Chaarat’s new feasibility study for Tulkubash envisions production running at 94,000 ounces of gold per year, at an all-in sustaining cost of US$819 per ounce.

Pembridge Resources PLC (LON:PERE) has signed a definitive share purchase agreement with Capstone Mining Corp for the acquisition of the Minto copper, gold and silver mine in the Yukon, Canada. The consideration comprises up to US$20mln in total payments due to Capstone.

Alba Mineral Resources plc (LON:ALBA) has raised £500,000 of new capital to support the maiden drill programme at the Amitsoq graphite project in Greenland. Funds will also be directed to ongoing operations at the Clogau gold project in north Wales and the Limerick base metals project in the Republic of Ireland. Alba sold 250mln new shares, priced at 0.2p, in order to raise the funds.

BlueJay Mining PLC (LON:JAY) closed out the year ending 31 December 2018 with £8.85mln of cash, after booking losses before tax of £10.7mln. During the period the company continued to make progress on the development of its Dundas Ilmenite project in Greenland.

Providence Resources PLC (LON:PVR) told investors that a proposed well site survey for the Dunquin South exploration prospect won’t go ahead in the 2019 work programme. The company and its partners in the Frontier Exploration Licence 3/04 made a decision to defer the survey.

Tower Resources PLC (LON:TRP) says 2019 will be a crucial year for the company in many ways. The company, in its financial results statement, highlighted that it is realising plans for the Thali license in Cameroon which could transform the group, meanwhile, it said that assets in Namibia and South Africa are attracting lots of industry attention.

Horizonte Minerals PLC (LON:HZM)(TSE:HZM) has completed test work on samples of limonite ore from the Vermelho nickel-cobalt project in the Carajás mining district of Pará state, northern Brazil. The company was able to produce a high purity product containing 21.8% cobalt, exceeding the reference grade used for sulphate pricing.

Active Energy PLC (LON:AEG) expects its new CoalSwitch manufacturing plant at Lumberton, North Carolina to begin operations 'shortly'. All the key equipment is en route from its previous site in Utah to its new location and should arrive this week.

Wishbone Gold PLC (LON:WSBN) has revealed a delay in the publication of its annual accounts due to a requirement from its Australian auditors for a valuation of the group’s mineral properties in Australia. The AIM and NEX-listed group said this has resulted in an increase in value in the properties which will be fully explained in the accounts when issued. Big Pic in March.

Amur Minerals Corporation (LON:AMC), the nickel-copper sulphide mineral exploration and resource development company focused on the far east of Russia, said that, under the convertible loan agreement entered into on 22 March 2019, it has today issued 4,025,034 new ordinary shares in the company to Cuart Investments PCC Ltd and YA II PN Ltd in settlement of US$108,153 of principal and accrued interest.

6.45am: FTSE 100 set to fall 

The FTSE 100 index is expected to fall back on Tuesday, reversing Monday’s gains, with US tech stocks dropping sharply overnight amid ongoing concerns over the impact of Donald Trump’s trade battles and anti-trust issues.

Spread betting firm IG expects the UK blue-chip index to open about 25 points lower at 7,160, having gained around 24 points on Monday following a late rally thanks to a strong start by US stocks.

However, although the Dow Jones industrial Average managed to close just under 5 points higher at 24,819, the Nasdaq Composite shed 120 points as tech issues suffered a big sell-off on talk of possible anti-trust probes into the behemoth companies such as Apple and Amazon.

That fed through to caution today in Asia, with Japan’s Nikkei 225 index off 0.1% and Hong Kong’s Hang Seng index losing 0.3%, though both were off earlier lows.

On currency markets, the pound was steadier as traders await further political twists in the ongoing Tory party leadership and Brexit saga, as well the latest UK construction PMI data.

A survey released overnight showed British shoppers cut back on their spending last month by the most in more than 20 years, with retail sales dropping 2.7% year-on-year, the biggest fall - excluding distortions caused by the timing of Easter - since the British Retail Consortium’s records began in 1995.

However, the BRC said May’s fall should be seen in the context of an unusually strong jump of 4.1% in May 2018, when sales were boosted by sunny weather and the marriage of Prince Harry and Meghan Markle which encouraged consumers to hit the shops.

Will things be all white for AO World?

Full-year results from FTSE All-share-listed AO World PLC (LON:AO.) will provide the main corporate excitement on Tuesday, with the online retailer having already warned that it will swing to a loss this year as it battles to recover under its founder, John Roberts who recently returned to the business.

The white goods specialist said in a trading update in April that earnings would be hit by one-off costs related to a restructuring of the management team, a loss-making contract in Germany and the acquisition of Mobile Phones Direct at the end of last year.

As a result, it said, adjusted underlying earnings (EBITDA) will likely be at the “lower end of market expectations” for between a £0.4mln underlying loss to a £2.0mln profit.

The focus of the full-year results is likely, however, to be on Roberts’ plan for turning around the business.

Significant events expected on Tuesday June 4:

Finals: AO World PLC (LON:AO.), BlueJay Mining PLC (LON:JAY), DiscoverIE Group PLC (LON:DSCV), Chamberlin PLC (LON:CMH), Palace Capital Plc (LON:PCA), Vianet PLC (LON:VNET), Vp PLC (LON:VP)

Interims: Driver Group PLC (LON:DRV), Gooch & Housego PLC (LON:GHH)

AGMs: Rockrose Energy PLC (LON:RRE)

Economic data: UK construction PMI; US factory orders

Around the markets:

  • Sterling: US$1.2671, up 0.1%
  • Gold: US$1,193.71 an ounce, down 0.05%
  • Brent crude: US$61.06 a barrel, down 0.03%

City Headlines:

  • Neil Woodford's flagship equity income fund has suspended trading after becoming overwhelmed by customer withdrawals – The Guardian
  • Britain's biggest fund supermarket Hargreaves Lansdown yesterday removed Neil Woodford's funds from its best-buy list in a major setback for the once-feted stock picker - Daily Mail
  • The under-fire fund manager Neil Woodford suffered another blow as shares in Kier crashed by 41% after a profit warning - Daily Mail
  • Some of America's biggest technology firms lost more than £118mln in market value amid fears over a major regulatory crackdown - Daily Mail
  • Tesla is “structurally unprofitable”, analysts have said, as Elon Musk’s electric car company battles with a slowing in demand and increased competition - The Daily Telegraph
  • America’s manufacturing industry suffered the sharpest slowdown last month since the depths of the global financial crisis, prompting calls for emergency rate cuts – Daily Telegraph
  • Britain’s retailers are warning of a fresh wave of job losses and store closures after consumer spending fell the most in almost a quarter of a century last month - The Guardian
  • Tencent, the owner of China’s largest social network, is set to pump tens of millions of dollars into a five-year-old British financial technology start-up - The Times
  • Fashion retailer Matalan has registered a 50% rise in profits, defying the gloom in the sector - The Times
  • BP is under fire for an 'indefensible' deal that will see it pay more than £7bn to a controversial City figure Frank Timis, who is embroiled in corruption claims - Daily Mail
  • Safety regulators in the US have identified a further problem in Boeing’s grounded 737 Max model and the generation of planes that preceded it - The Guardian
  • Chemicals group Ineos is investing £1.6bn in Saudi Arabia to build three manufacturing plants on part of a major petrochemical site - Daily Mail
  • Thirteen of the world’s biggest banks are preparing to launch digital versions of major global currencies in 2020 - Financial Times

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