FTSE 100 closes Thursday in red as tensions mount ahead of G20

Footsie retailers did well, with B&Q owner Kingfisher (LON:KGF) top dog on the exchange

London skyline
The FTSE 100 was down 13 points in late-afternoon
  • FTSE 100 closes in red

  • Kingfisher top Footsie gainer; has new boss

  • Latest US jobless claims rise more than expected

FTSE 100  closed Thursday in the red as traders fret over potential US, China tension.

The UK's premier share index closed down around 14 points at 7,402, while FTSE 250 - a more UK Company focused measure -  went the other way, gaining over 54 points at 19,314.

"The G20 meeting begins tomorrow, and on Saturday, Donald Trump will meet with Xi Jinping, and that will be closely watched by traders," said David Madden, at CMC Markets.

"There was talk that both sides had agreed a ‘truce’ in terms of the trade spat on the run up to the meeting, he said, but noted that there were US concerns on national security about the Chinese tech firm Huawei.

"It was reported that some Huawei employers worked on Chinese military projects, but the tech group denied there is cooperation with the armed forces. US negotiators are likely to be even more sceptical of China in light of the news," said the analyst.

Footsie retailers did well, with B&Q owner Kingfisher (LON:KGF) top dog on the exchange. Shares gained over 4% on news of its new CEO Thierry Garnier- head of Carrefour's Asia division.

Kingfisher said Garnier had a track record of implementing business transformation in the face of “significant competitive pressure and sector disruption”.

3.40pm: FTSE 100 stays negative into final hour

As the end of the London trading day approached, the FTSE 100 hadn’t really recovered from its late-morning tumble and was down around 13 points at 7,403.

Staying at the top of the blue-chip pile throughout the day was B&Q owner Kingfisher, which was up 3.9% at 213.9p on the news of its new CEO Thierry Garnier.

The biggest blue-chip faller, meanwhile, was house listing site Rightmove, which crumbled 3.8% to 533.1p after UBS downgraded the stock to ‘sell’ from ‘neutral’.

Meanwhile, the markets biggest riser into late-afternoon was E-Therapeutics PLC (LON:ETX), which shot up 31.4% to 2.3p after a share overhang created by Woodford Investment Management’s need to liquidate some assets was further cleared.

The day’s biggest faller was XPS Pensions Group PLC (LON:XPS) after predictions that a one-off increase in costs would “temporarily impact” profit growth in the next 12 months drove the shares down 38.5% to 98.4p.

2.40pm: Wall Street opens in the green

US markets kicked off their Wednesday session on the front foot as traders managed to hold some optimism ahead of talks at the G20 meeting in Japan.

Shortly after the opening bell the Dow was up 0.04% at 26,546, the S&P 500 was 0.4% higher at 2,925 and the Nasdaq rose 0.53% to 7,951.

Traders may have also taken some heart form the confirmation of the US GDP growth figure of 3.1% for the first quarter, while also seemingly shrugging off higher than expected jobless claims for the seven days ending 22 June.

Despite the rise in jobless claims, chief economist at Pantheon Macroeconomics Ian Shepherdson said there was “no reason” to expect a sustained increase unless the G20 summit was a disaster and the US imposed more tariffs on Chinese consumer goods.

“We expect claims to trend in a 210-to-220K range over the next few months, though the annual auto retooling shutdowns can trigger temporary chaos in July”, he added.

However, the positive start in the US failed to provide much lift for the FTSE 100, which in mid-afternoon was down 18 points at 7,398.

1.45pm: US markets poised for mixed open as first quarter GDP held, jobless claims hit seven week high

Wall Street seems set for a mixed to lower open on Thursday as jitters over the US-Chinese meeting on trade continued to persist.

Futures for the Dow were lower in pre-market trading while S&P 500 and Nasdaq futures were slightly higher.

Particular attention is being paid to shares in aircraft maker Boeing Co (NYSE:BA), which was down 2.6% at US$365 in pre-market trading after discovering a new software problem in its troubled 737 MAX aircraft that could delay its return to the skies.

Meanwhile, US GDP for the first quarter for the year has been held, as expected, at its previous figure of 3.1%, driven by strong defence spending by the US government, although growth in consumer spending had been revised lower while business investment in intellectual property was stronger than previously estimated.

“Investors will be heartened by this confirmation of a strong first quarter but at this point we’re waiting with baited breath for the Q2 figures. It’s near-unanimous that growth is slowing, but the extent of that slowdown is still to be seen in light of the ongoing trade tensions and the impact of weakness in the global economy", said Nancy Curtin, chief investment officer at Close Brothers Asset Management.

“It’s clear that Powell is realistic about the increased risks to the economy and will be pursuing a further accommodation; he has made it clear that the Fed’s objective it to ‘sustain the expansion’. As we move into the second half of the year, his focus will be on data and how many rate cuts are required to achieve this goal”, she added.

The US weekly jobless claims, however, increased by more than expected, rising to a seven week high of 227,000 in the week ended 22 June.

The figures may raise concerns around the impact on the US-China trade war on American employment, while temporary closures of US auto factories for retooling over the summer could push claims higher in the coming months.

Back in London, the FTSE 100 was still stuck in a rut and was down 19 points at 7399.

11.45am: FTSE 100 goes into reverse as morning ends

As markets in London entered the last hour of the morning session, the FTSE 100 had stuck itself firmly in reverse and had shed around 30 points to fall to 7,386.

Despite a slightly higher start and a flirtation with a double digit gains in mid-morning, traders seemed to have gone into caution mode as US president Trump arrived in Japan for the G20 summit tomorrow, although most are focusing on a meeting between the president and his Chinese counterpart, Xi Jinping, amid hopes the two countries could finally iron out a deal to end their ongoing trade spat.

“Investors will recall that equities rallied in the wake of the November G20, but then dropped sharply – there will be fears that a rerun of this is in the offing, particularly if Trump comes away from Osaka determined to impose a significant round of new tariffs on the Chinese economy. If anything is likely to drive the Fed towards a rate cut in July, it is an intensification of the US-China trade war”, said Chris Beauchamp, Chief Market Analyst at IG.

Leading the risers among the blue chips were a mixture of UK-focused companies including Next PLC (LON:NXT), which was up 2% at 5,598p, British Airways owner International Consolidated Airlines Group (LON:IAG), which rose 1.9% to 457.9p and high street giant Marks and Spencer Group PLC (LON:MKS), which was 1.3% higher at 208.7p.

Meanwhile, key weights on the index included ex-dividend stocks British American Tobacco PLC (LON:BATS), which was down 2.5% at 2,738p, and British Land PLC (LON:BLND) which slipped 2.1% to 526.2p.

However, the key blue-chip faller was Rightmove PLC (LON:RMV), which had slumped 3.5% to 534.7p after UBS downgraded the stock to 'sell' from 'neutral' citing weakness in the UK's housing market.

The fall in equities also hadn’t been helped by a slight strengthening of the pound, which was up 0.12% at US$1.2703 against the dollar in late-morning, breaking the psychologically important US$1.27 barrier.

Elsewhere, cryptocurrency Bitcoin seemed to have stalled in its recent share price surge and was trading 8.3% lower at around US$11,467 in late-morning.

Craig Erlam, senior market analyst at OANDA, said that the recent plunge had been widely attributed to a crash at crypto trading website Coinbase on Wednesday.

“Perhaps this was just a convenient opportunity to lock in some profits or maybe it's a reminder just how influential one exchange is and therefore how sensitive prices are to these kinds of outages”, Erlam added.

10.15am: FTSE 100 adds to gains as brighter trade picture boosts HSBC, copper prices lift miners

Into mid-morning, the FTSE 100 managed to add some gains from its initially slow start as a brighter trade picture and metal prices lifted some of the big hitters.

Just after 10am shares in banking giant HSBC Holdings PLC (LON:HSBA) were 0.9% higher at 655.6p following a report from the South China Morning Post that said the US and China had agreed to a tentative truce in their trade spat as world leaders began together in Japan for this week’s G20 summit.

Life assurance group Prudential PLC (LON:PRU), which is also listed on the Hong Kong Stock Exchange, was also lifted 1% to 1,696.5p.

Meanwhile, blue-chip miners Rio Tinto PLC (LON:RIO) and BHP Group PLC (LON:BHP) were boosted by a rise in global copper prices.

Shares in Rio were up 1.2% at 4,886p while BHP rose 0.9% to 2,023.5p.

Meanwhile, sterling was relatively flat against the dollar at US$1.2695 as traders seemed to be awaiting the UK’s own GDP figures, due on Friday after today’s US data.

Alessandro Capuano, global head of brokerage and business development at Italy’s Fineco Bank, said the UK’s figures were “unlikely to change” given recent weeks of weakness in the currency and continued political turmoil.

“The current figures are reflective of the wider European economic difficulties continuing to complicate and stall growth, with the German economy being a key driver. In addition, Boris Johnson’s leadership campaign so far is doing little to alleviate the threat of a no deal Brexit.

“Consequently, a prolonged period of a weak pound might start to drive down activity and will start to have a more incisive impact on GDP figures. If the UK has a firmer hold on its next steps in Brexit negotiations, once a new prime minister is in place we should expect further tension on the currency market and this might lead at a further slowdown of the economy at least in the short term”, Capuano said.

The FTSE 100 was up 12 points at 7,428.

8.40am: Footsie opens slightly higher

The FTSE 100 started the day pretty much as expected and was 3.5 points higher in early deals at 7,420.

Taking an early lead among the blue-chips was B&Q owner Kingfisher PLC (LON:KGF), which jumped 2.8% to 211.5p following news it has appointed Thierry Garnier, the former head of supermarket giant Carrefour’s Asia division, as its new chief executive.

Garnier will replace Véronique Laury, who announced in March that she was stepping down after just four years in charge as she has struggled to turn around the performance of the business.

Kingfisher said Garnier has a track record of implementing business transformation in the face of “significant competitive pressure and sector disruption”.

Meanwhile, leading the mid-caps was FTSE 250 outsourcer Serco PLC (LON:SRP), which surged 6.2% higher to 144.2p after saying it expects a return to revenue growth in the first half of the year to drive underlying profits at least 20% higher.

The mid-cap index itself was 29 points higher at 19,289 shortly after the open.

On currency markets, the pound was up 0.1% at US$1.2701 against the dollar in early deals, although US GDP figures due later today could provide some catalyst for movement.

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Allergy Therapeutics PLC (LON:AGY) blew higher on Thursday after the vaccines maker revealed full-year earnings will be ahead of forecasts. There was more good news for investors, who were also told that the AIM Company has received a multi-million-dollar settlement over a botched clinical trial back in 2016.

ITM Power PLC (LON:ITM) has announced the opening on Wednesday of the Hystock green hydrogen plant in Veendam near Groningen in the Netherlands, managed by Dutch natural gas infrastructure and transportation Company Gasunie.

Tekcapital PLC’s (LON:TEK) portfolio firm, Guident Ltd, has acquired a new IP from Florida International University to remotely control autonomous cars and drones.

ARC Minerals Ltd (LON:ARCM) has updated investors on its maiden drill programme at the Cheyeza East project in Zambia. The explorer noted that the first two holes have now been completed and visible mineralisation was intersected in both holes.

Nektan PLC (LON:NKTN) has launched a new mobile-first bingo product across its business-to-customer white label casino network of sites. The new product, provided by Pragmatic Play, is aimed specifically at mobile players and includes a unique in-game lobby system.

BlueJay Mining PLC’s (LON:JAY) Dundas minerals sands project in Greenland is worth US$83mln over a nine-year mine life according to a pre-feasibility study. Costs to build the mine and infrastructure are estimated at US$245mln.

Argo Blockchain PLC (LON:ARB) had extended a multi-year agreement with GPU.one, a Canadian data centre provider that will allow it to expand its cryptocurrency mining capacity and cut costs.

Crossword Cybersecurity Plc (LON:CCS) told investors that its Rizikon Assurance business has been selected by the Nursing and Midwifery Council (NMC). Rizikon will automate supplier onboarding process and manage ongoing supplier risk for the group, which represents more than 690,000 nurses, midwives and nursing associates in the UK.

Integumen PLC’s (LON:SKIN) turnaround under new boss Gerry Brandon has been reflected in the cosmetics testing group’s full-year results. Revenue, including sales from discontinued operations, doubled to £501,000 in the 12 months ended 31 December 2018 (2017: £238,000).

Graphene specialist Directa Plus PLC (LON:DCTA) has been awarded a patent in the US for its manufacturing process that just uses water with no chemicals, solvents or surfactants. Directa said this sustainability was already proving attractive to US companies.

Haydale Graphene Industries PLC (LON:HAYD) has switched on its plasma functionalisation reactor at the Graphene Engineering and Innovation Centre (GEIC), based at The University of Manchester. Haydale's HDPlas reactor is a rapid way to apply graphene and other carbon-based materials to other surfaces.

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Erris Resources PLC (LON:ERIS) has highlighted that it has been active over the first half of this year as it advanced projects in Finland, Sweden and Ireland. The Company, in its half yearly project update, noted that field work has started in Finland as part of its strategic alliance with Centerra Gold. Centerra has also funded mapping and prospecting on new targets in North Sweden.

AdEPT Technology Group PLC (LON:ADT) has appointed Richard Bligh, the former chief operating officer of Gamma Communications PLC as a non-executive director of the Company with immediate effect and named a chief operating officer.

FairFX Group PLC (LON:FFX), the e-banking and payments group, has changed its name to Equals Group Plc (LON:EQLS) with effect from the start of trading on Thursday. Big Pic in May.

SigmaRoc PLC (LON:SRC) announced that David Barrett, its executive chairman of SigmaRoc, purchased 440,000 ordinary shares in the Company at a price of 44.0p each, taking his total holding to 1,687,836 ordinary shares, representing 0.97% of the Company’s total voting rights. The group added that its CEO Max Vermorken has also purchased 60,000 ordinary shares at a price of 44.0p each, taking his total interest in the Company to 391,983 ordinary shares, representing 0.23% of the total voting rights. And it said Tim Hall, a non-executive director purchased 150,000 ordinary shares at a price of 44.0p each taking his total interest in the Company to 150,000 ordinary shares, representing 0.09% of the total voting rights.

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6.50am: Stocks seen a little higher

The FTSE 100 is seen just a little higher on Thursday as traders brace for whatever new ‘trade war’ twist may arise in the coming days.

Notably though ex-divs knock around 6 points from the London index with shares such as British American Tobacco PLC (LON:BATS), British Land Company PLC (LON:BLND), and Experian PLC (LON:EXPN) among those deducting for their shareholder payouts.

IG Markets sees the FTSE 100 around 3 points higher, making the price 7,422 to 7,425 with just over an hour to go until the start of deals.

The upcoming G20 meetings this weekend, and, specifically Donald Trump’s scheduled face to face with Chinese premier Xi Jinping loom for traders – with all mindful that the rendezvous could swing market sentiments one way or the other.

“The G20 summit which kicks off tomorrow is on traders’ minds,” said David Madden, analyst at CMC Markets. “On Saturday, the meeting between China’s Xi Jinping, and Donald Trump could determine the next big move in global equity markets.

“The Huawei ban and the question of intellectual property protection is likely to be a sticking point from the US side.

“Equity markets in Asia posted modest gains overnight as traders in the Far East seem to be hopeful ahead of the US-China trade talks.”

On Wall Street last night, the Dow Jones was down slightly at 26,536 while the S&P 500 was 0.12% lower at 2,913 yet the tech-heavy Nasdaq ended up 0.32% higher at 7,909.

In Asia, Japan’s Nikkei advanced 185 points or 0.88% to trade at 21,272 while Hong Kong’s Hang Seng rose by 1.04% to 28,515 and the Shanghai Composite added 0.77% to 2,999.

Significant announcements due Thursday:

Finals: Greene King PLC (LON:GNK), Itaconix Plc (LON:ITX), Liontrust Asset Management PLC (LON:LIO), James Latham PLC (LON:LTHM), Manolete Partners PLC (LON:MANO), SDCL Energy Efficiency Income Trust PLC (LON:SEIT), XPS Pensions Group PLC (LON:XPS)

Trading updates: Serco Group PLC (LON:SEP); Gama Aviation PLC (LON:GMAA)

AGMs: BlueJay Mining PLC (LON:JAY), Columbus Energy Resources PLC (LON:CERP), Erris Resources PLC (LON:ERIS), Immupharma PLC (LON:IMM), Immotion Group PLC (LON:IMMO), Metal Tiger Plc (LON:MTR)

Ex-dividends to knock 6.18 points off FTSE 100 index: British American Tobacco PLC (LON:BATS), British Land Company PLC (LON:BLND), Burberry Group PLC (LON:BRBY), Experian PLC (LON:EXPN), JD Sports PLC (LON:JD.)

Economic data: US weekly jobless claims; US GDP; US pending home sales; US PCE inflation

Around the markets

  • The pound: US$1.2682, down 0.06%
  • Gold: US$1,407 per ounce, down 0.29%
  • Brent crude: US$66.30 per barrel, up 1.88%
  • Bitcoin: US$12,808, up 2.34%

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