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FTSE 100 closes firmly higher as trade optimism boosts sentiment

The Footsie closed up over 61 points at 7,559. The FTSE 250 closed up around 24 points higher at 19,659.

Sterling symbol
Feeling lower than a paper pound
  • FTSE 100 closes around 61 points up

  • Pound loses ground against the US dollar and the euro

  • TomCo Energy soars a day after receiving permit for a field test programme in Utah

FTSE 100 closed higher Tuesday, joining European markets  in heading higher as optimism on trade boosted sentiment.

The Footsie closed up over 61 points at 7,559.

The FTSE 250 closed up around 24 points higher at 19,659.

"Global trade remains at the forefront of traders’ minds, after President Trump said that talks with China were back underway as of yesterday," said David Madden, analyst at CMC Markets UK.

"The US has sent another warning to the EU in relation to trade, and it ear-marked an additional $4 billion worth of EU goods that could face tariffs, and the threat stems from subsidies to the aircraft industry. Donald Trump has maintained a tough stance in relation to China, and some investors fear he will turn up the heat on the EU once the Chinese situation is sorted out."

On Wall Street though, stocks were dragging their heels. The Dow Jones Industrial Average is down around 20 points at the time of writing, while the tech heavy Nasdaq exchange shed around 14 points.

3.45pm: The Footsie finishes with a flourish as sterling takes a tonking

A bad day for the pound was behind a good day for the Footsie on Tuesday.

The pound was down almost half a cent against the US dollar on a day when the trade-weighted US dollar index actually declined, to 89.92 from 89.98 overnight.

The FTSE 100 was 64 points (0.9%) higher at 7,562, despite a wishy-washy start on Wall Street.

“The pound was down 0.4% against both the dollar and the euro, knocked for six by a truly alarming construction PMI that saw the sector post its worst reading for a decade,” reported Connor Campbell at Spreadex.

“This meant cable spent the day dipping under $1.259, continuing to reverse the gains made during the dollar’s dovish Fed-led losses in mid-June, leaving it at a 2-week low. Against the euro, meanwhile, it was back lurking near a 6-month nadir, only a few cents separating it from the €1.112 levels struck at the end of last month,” he added.

TomCo Energy Plc (LON:TOM) was the day's best performer, still basking in the warm glow following the receipt yesterday of permit approval for a field test programme at its Holliday A Block in Utah.

The oil shale explorer's shares were up 71% at 5.8p.

Lighting firm Dialight PLC (LON:DIA) was decidedly dimmer on Tuesday after the group issued a warning that weakening order intake in its second quarter may continue for the rest of the year.

The shares slumped 37% to 311.05p as the company added that the chief executive, Marty Rapp, will be leaving soon to resume his retirement.

2.35pm: US benchmarks open mixed

US indices opened mixed, confounding expectations of a soft opening.

The S&P 500 was more or less unchanged while the Dow Jones dipped 34 points (0.1%) to 26,676.

In the UK, the FTSE 100 was up 40 points (0.5%) at 7,537.

Flutter Entertainment PLC (LON:FLTR), the company formerly known as Paddy Power Betfair, was among the blue-chips not going with the trend.

The shares slipped 0.9% to 6,118p after Deutsche Bank initiated coverage of the stock and others in the bookmaking sector. Deutsche rates Flutter’s shares as no more than a hold, with a 5,750p target price.

The FTSE 250 managed to eke out a 3 point gain (0.0%) despite peer-to-peer lender Funding Circle PLC (LON:FCH) slumping 28% to 117p following a profit warning.

1.15pm: Blue-chips come off the top

The Footsie has come slightly off the top, reflecting a rally by sterling on foreign exchange markets.

The FTSE 100 was up 39 points (0.5%) at 7,536.

In small cap news, Arc Minerals Limited (LON:ARCM) surged 6.5% to 3.30p after it revealed recent drilling at the Cheyeza East prospect had intersected 25 metres grading 1.05% copper, including 1.7% copper over 9.3 metres.

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ITM Power PLC (LON:ITM) was wanted after it announced the completion of a techno-economic feasibility study for the large-scale centralised production of renewable hydrogen in British Columbia.

Shares in the cleantech company powered 4.9% higher to 36.66p.

11.45am: Stocks extend gains despite expectations of a soft start on Wall Street

Nice and easy does it seems to be the philosophy as London's index of leading shares continues its sedate climb.

The FTSE 100 was up 48 points (0.6%) at 7,545, despite expectations of US indices opening in the red.

“Wall Street looks set to give back most of yesterday’s gains as markets digest both the news of progress in US-Chinese trade talks and the fact that some better than expected US economic data is once again calling into question the idea that the Fed will show as much willingness to relent over interest rate policy in the second half of the year as the market had been hoping for,” said James Hughes at Axi Trader.

“With US data releases set to take a breather today and the week ahead potentially subdued a little by the 4th July holidays, there may now be justification for a period of consolidation in the near term, although further detail of what any trade compromise may look like – and specifically whether US companies stand to gain from the outcome – has the potential to initiate another round of selling,” he added.

Corporate news has been sparse leaving the field open to broker commentary to shift share prices.

UBS has certainly done its bit; the two biggest fallers on the FTSE 100 – Croda International PLC (LON:CRDA) and Intercontinental Hotels Group PLC (LON:IHG) – are both stocks that have been downgraded by the Swiss bank.

Croda was off 4.8% at 4,848p after UBS moved to ‘neutral’ from ‘buy’, despite the target price shifting up to 5,500p from 5,300p.

IHG slipped 3% to 5,165p after UBS downgraded the hotels group to ‘sell’ from ‘neutral’; the target price was raised to 4,700p from 4,500p.

10.30am: Leading shares firmer on balance but housebuilders get left behind

The Footsie has extended early gains, helped by a return to favour by utility stocks, which have recently been hit by renationalisation fears.

London's index of leading shares was up 26 points (0.3%) at 7,523, despite some iffy data from the construction industry.

The IHS MARKIT/CIPS UK construction purchasing managers' index (PMI) for June fell at the steepest rate since April 2009, declining to 43.1 from 48.6 in May, a value below 50 indicates a contraction.

“June data revealed a sharp loss of momentum for the UK construction sector, with business activity and incoming new work both falling at the fastest pace for just over 10 years. The slide in construction demand was mainly attributed by survey respondents to risk aversion among clients in response to heightened political and economic uncertainty,” Markit said.

“All three broad categories of activity recorded a decline in output during June. The fall in house building was the largest reported for three years, which construction companies linked to weaker demand conditions and concerns about the outlook for residential sales,” Markit added.

On the subject of houses, the Nationwide building society’s seasonally adjusted measure of house prices rose by 0.1% month-on-month in June. Year-on-year growth declined to 0.5%, from 0.6% in May, matching the consensus.

“Nationwide’s data continue to show that house prices have little momentum, with Q2’s 0.3% quarter-on-quarter increase only just reversing Q1’s 0.2% drop. Prices likely will continue to flat-line in Q3, given that Rightmove reported that asking prices were unchanged year-over-year in June,” predicted Samuel Tombs, the chief UK economist at Pantheon Macroeconomics.

“Nonetheless, households’ disposable incomes are rising at a solid pace this year, largely thanks to the recent pick-up in wage growth. In addition, the recent fall in banks' wholesale funding costs—for instance, the 5-year LIBOR swap rate has fallen by 30bp over the last two months—should at least partially feed through to mortgage rates in Q3, improving affordability further. Meanwhile, the stability of mortgage lending this year has demonstrated that households are fairly relaxed about the possibility of a no-deal Brexit, even if in reality it would be very damaging for house prices.”

“So provided a no-deal Brexit is avoided, we still expect year-over-year growth in house prices to recover to about 1.5% by the end of this year,” he added.

Commenting on the figures, Robert Gardner, Nationwide's chief economist, said: “UK annual house price growth remained below 1% for the seventh consecutive month in June, at 0.5%.

“Survey data suggests that new buyer enquiries and consumer confidence have remained subdued in recent months. Nevertheless, indicators of housing market activity, such as the number of mortgages approved for house purchase, have remained broadly stable,” he added.

“Prices also fell in London for the eighth quarter in a row, though the annual pace of decline moderated to 0.7%, from 3.8% last quarter,” Gardner observed.

Housebuilders Barratt Developments PLC (LON:BDEV), Berkeley Group Holdings PLC (LON:BKG), Persimmon PLC and Taylor Wimpey PLC (LON:TW.) were among the minority contingent of FTSE 100 constituents in the red.

8.30am: Footsie still in demand

After yesterday's Osaka-fuelled excitement, progress for the FTSE 100 index has been a bit more sedate this morning.

Despite Footsie constituents on the rise outnumbering those on the slide by around four-to-one, the UK blue-chip index was up just 15 points (0.2%) at 7,512, which does at least mean it has broken through the 7,500 barrier.

Sterling was getting its rear-end kicked again on the foreign exchange markets, thus providing a tailwind to big dollar earners such as the tobacco companies, British American Tobacco PLC (LON:BATS), which was up 4.1% at 2,861.5p, and Imperial Brands PLC (LON:IMB), up 2.3% at 1,888.4p.

Confirmation last night that private equity firm Bain Capital is in exclusive talks to buy a majority stake in WPP PLC's (LON:WPP) market research business, Kantar, initially lifted the FTSE 100 stock to 1,017p this morning but WPP is now down 10.5p (1.0%) at 1,001.5p.

Heavily-followed FTSE 250 stock Sirius Minerals PLC dipped 0.7% to 14.89p after confirming the US$3.8bn stage 2 financing is on track to complete by the end of September.

Proactive news headlines:

The financing and construction of Sirius Minerals PLC’s (LON:SXX) huge Woodsmith fertiliser mine in North Yorkshire is progressing to plan. Back in May, the FTSE 250 group raised US$825mln from investors as part of a wider US$3.8bn stage 2 financing that would fund the project through to completion.

Recent drilling undertaken by Arc Minerals Ltd (LON:ARCM) at the Cheyeza East prospect has intersected 25 metres grading 1.05% copper, including 1.7% copper over 9.3 metres. An additional hole drilled 200 metres to the south also shows significant mineralisation.

InnovaDerma PLC (LON:IDP) is expecting its pre-tax profits to more than double after strong trading in its last financial year. In a trading update for the 12 months ended 30 June, the maker of beauty and personal care products said revenues had increased by 21% to £13mln, and as a result, pre-tax profits were expected to have more than doubled from the £670,000 reported in 2018.

H&T GROUP PLC  (LON:HAT), the UK's leading pawnbroker, is to acquire 65 stores from its competitor, The Money Shop, for an initial consideration of around £10.6mln.

Discount dining platform BigDish PLC (LON:DISH) is to launch in Brighton next week. In the same announcement, the company confirmed non-executive director Jonathan Morley-Kirk is set to become non-executive chairman, while BigDish founder, Aidan Bishop, is moving from executive chairman to executive director.

Argo Blockchain PLC (LON:ARB) shares surged higher on Tuesday after the performance of its crypto mining activities beat expectations for the second quarter. In an update for June, the group said mining yields from its existing hardware had improved in line with the “strongly rising” Bitcoin price, and as a result it now expected to generate 161 Bitcoins, worth around £1.38mln and 101% higher than its mining results for May.

Oracle Power PLC (LON:ORCP) has submitted a collective payment of approximately US$50,000 to the Private Power Infrastructure Board (PPIB) of the Pakistani Government, as the registration fee for processing an application for a Letter of Intent (LOI) in relation to the group’s proposed mine and power plant at Block VI in Thar.

appScatter Group PLC (LON:APPS), the app management and data intelligence platform, has signed an agreement with Bango PLC (LON: BGO), the mobile commerce company. Through the partnership, appScatter plans to grow in-app revenues for its customers through the Bango Marketplace.

AfriTin Mining Ltd (LON:ATM) booked a loss of just over £1mln in the year to 28 February 2019, equating to a loss per share of 0.23p. Although AfriTin has not yet commenced commercial production from its Uis tin mine in Namibia, the company did book £27,000 of sales from the sale of sand at Zaaiplaats.

Bluejay Mining PLC (LON:JAY) has identified 20 large scale drill-ready targets on its 2,776 square kilometre Disko-Nuussuaq nickel-copper-platinum project in West Greenland. A new work programme has been designed to refine both new and previously defined drill targets by reprocessing and validating historical data and acquiring new geophysical and geochemical data.

Caledonia Mining Corporation PLC (LON:CMCL) has declared a quarterly dividend of six and seven eighths United States cents (US$0.06875) on each of the company's common shares. It said that it is expected that the current dividend of twenty-seven and a half United States cents per annum, paid in equal quarterly instalments, will be maintained.

Oncimmune Holdings PLC (LON:ONC.L) announced that Adam Hill, its chief executive officer will be presenting at the Proactive Investors One2One Investor Forum on Thursday 11 July 2019, which will be held at the Chesterfield Mayfair Hotel, London, from 18:00-20:00 BST.

6.30am: FTSE 100 seen extending gains but Woodford fund remains frozen

The FTSE 100 index is expected to inch higher on Tuesday, extending gains for a third session amid an upswell in market confidence on the back of the positive meeting on trade between the US and Chinese leaders at the weekend.

The UK blue chip was being called 12 points higher to 7,515, according to spread betting firm IG, having climbed back above the 7,500 mark for the first time since April after adding 71.87 points on Monday.

Overnight on Wall Street, the Dow Jones industrial Average closed 117.5 points or 0.4% higher at 26,717.43 as the feel-good factor from the talks between Presidents Trump and Xi continued to make its way around markets, and US stock futures pointed to even bigger gains to come later today.

Equity markets in Asia were mixed, however, with the Nikkei 225 index up 0.1% but the Shanghai Composite down 0.3% as protests rumbled on in Hong Kong.

Traders may become more cautious as the week goes on, however, as they look to Friday’s important US non-farm payrolls report, which could help decide whether the Federal Reserve cuts or leaves interest rates unchanged later in the month. 

Woodford, regeneration and construction 

On the domestic front, the hubbub is likely to continue around former star fund manager Neil Woodford, as it was confirmed overnight that his flagship Equity Income fund will remain gated for at least another month.

Investors in the £3.7bn fund, which was suspended on 3 June as it was unable to handle a wave of redemptions, will not be able to withdraw their cash for at least another month, after the initial 28-day suspension expired.

Link Fund Solutions, the authorised corporate director of the Woodford Equity Income fund, said that its decision to continue with the suspension was to “ensure investors’ interests are protected” as Woodford and his team try and transform the fortunes of the portfolio. 

Link will continue to review the situation at least every 28 days until it decides the fund can be reopened.

Tuesday morning should see a more positive update from a company that has been transforming itself over the past year or so, brownfield site developer St. Modwen Properties PLC (LON:SMP), where the shares are trading close to a one-year high.

Investors will be hoping for some positive news on developments for the company and the sector from the FTSE 250 company’s interim results, though Brexit is continuing to prove a weight on the wider property sector’s performance.

There may be an update on the next phase of St. Modwen’s development strategy as it looks to build a high-quality industrial and logistics business as well as leveraging the group’s regeneration reputation to grow residential and housebuilding activity.

Amid a transformation under boss Mark Allen that saw £529mln of properties sold last year, analysts at Peel Hunt are expecting a 20% increase in profit to around £42.3mln on an adjusted pre-tax basis for the six months to the end of May.

Later in the morning, there will be some macro data in the form of the UK construction purchasing managers’ index, which is expected to remain in contraction territory, below 50.0, like the manufacturing sector PMI released on Monday.

House price data from Nationwide is also expected to remain gloomy, receding to 0.5% from 0.6% on the year, while Bank of England governor Mark Carney is due to speak later in the day.

Significant events expected on Tuesday:

Interims: St Modwen Properties PLC (LON:SMP)

Finals: Cohort PLC, HML Holdings plc (LON:HMLH), Solid State PLC (LON:SOLI)

Economic data: UK construction PMI; US factory orders

Around the markets:

  • Sterling: US$1.2636, down 0.03%
  • Gold: US$1390.05 an ounce, down 1.6%
  • Brent crude: US$65.03 a barrel, down 0.1%

City Headlines:

  • Investors will be locked into Neil Woodford’s flagship fund for at least another month after a block on withdrawals was extended. - Guardian
  • Increased political uncertainty is set to drive investors out of stock markets and into safer assets, setting the stage for a strong and prolonged rally in bonds, major banks predict. - Telegraph
  • The Opec oil cartel has agreed to keep a lid on its production levels for a further nine months to avoid a global oil price crash. - Guardian
  • The UK’s biggest listed companies have cut contributions to their defined benefit pensions schemes by 10% since the financial crisis but ramped up shareholder payouts by 140% in the same period, raising fresh fears of "short-termist" management at British blue chips. - Telegraph
  • The UK is to explore introducing a mandatory requirement for listed companies and pension funds to disclose climate-related risks from 2022, as part of a wide-ranging strategy to harness the City of London in efforts to curb carbon emissions. - FT
  • Philip Hammond has delivered a stinging public rebuke to both Conservative leadership candidates, warning them to “stop and think” before engaging in a “bidding war” of tax cuts and spending pledges. - Guardian
  • Shoe retailer Office is the latest name on the high street to eye a rescue plan, adding to the woes afflicting the sector. - Telegraph
  • Billionaire investor Warren Buffett and Walmart’s founding family scion Jim Walton have given $5bn in shares to Bill Gates’ charitable foundation. - Telegraph
  • Patent panic is giving the green light to pharma companies to carry out mega deals. - FT
  • The introduction of London's ultra-low emission zone is leading to a further collapse in sales of diesel cars. - FT

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