FTSE 100 index closes higher
US stocks hit records ahead of Independence Day
Sainsbury's declines on trading disappointment
FTSE 100 closed higher on Wednesday as investors were in a good mood and European shares gained ground, as did Wall Street.
The UK's premier share index closed around 50 points higher at 7,609.
Meanwhile, the FTSE 250 gained 131.5 points to finish at 19,790.
In the US, where traders are preparing for the July 4 holiday, the Dow Jones Industrial Index added over 125 points at 26,912, while the S&P 500 gained over 18 points at 2,991.
"The bullish mood in Europe continues, and the picture appears to have become clearer in regards to European politics," said analyst David Madden, at CMC Markets, in an note earlier.
Madden also highlighted news that Christine Lagarde of the IMF had been nominated as head of the European Central Bank (ECB), and equity traders reacted well as she is deemed to be dovish in terms of monetary policy.
3.55pm: Rare good news for Woodford
Some positive news for Neil Woodford today, or more likely a few crumbs of comfort after several weeks of bad press for the woeful performance and then suspension of his flagship Equity Income fund.
The Woodford Patient Capital trust has been the most bought investment trust over the past month on the Interactive Investor platform, the online broker announced today.
Demand from "discount opportunists" saw PatCap end the Scottish Mortgage Investment Trust’s almost uninterrupted five-year reign as the most bought trust on the platform.
“After a torrid time for ‘Brand Woodford’ and investors in both Woodford Equity Income Fund and Woodford Patient Capital Trust, it’s no surprise to see the discount on the Woodford Patient Capital Trust widen sharply, now standing at over 30%," said Moira O’Neill, head of personal finance at Interactive Investor.
“While there remain lots of questions about Woodford’s stock selection and valuation, some of our investors are clearly taking the view that some of the companies held in this trust may be big winners in the future, and that the current huge discount is therefore potentially attractive.”
She acknowledged that some people will suggest these bargin hunters are playing with fire and should potentially wait until the situation is more stable, but added that other would argue that "it is exactly when others are running away from certain investments that you can benefit the most" and time will tell whether these new investors were "catching a falling knife or whether they have bought in at a great time".
It was revealed at the start of the week that Woodford Equity Income remains suspended indefinately.
3.25pm: Dow and S&P climb to new peaks
Wall Street stocks were setting new record highs on Wednesday, even though the day's jobs data was weaker than expected.
The Dow Jones Industrial Average was up 0.3% to 26,859.46 in early trading in the half-day session ahead of the Independence day holiday, bypassing its previous peak from 3 October, while the S&P 500 was also setting new records just above 2,982.
With the Nasdaq Composite up 0.4% to 8,142.53 and closing in on its 3 May zenith of 8,164, President Trump was understandably feeling in the holiday mood, noting that the 19% gains since the start of the year as he fired off a few celebratory tweets.
China and Europe playing big currency manipulation game and pumping money into their system in order to compete with USA. We should MATCH, or continue being the dummies who sit back and politely watch as other countries continue to play their games - as they have for many years!
— Donald J. Trump (@realDonaldTrump) July 3, 2019
Investors were ruminating over the earlier ADP private payrolls report that seemed to point to deteriorating labour market conditions, with 102,000 jobs added last month after an even weaker 41,000 in May.
This suggests that “the deterioration in the broader economy has now spread to the labour market”, said Capital Economics’ Paul Ashworth.
However, given its loose relationship with the official employment data, Ashworth said the ADP report does not change his below-consensus estimate for June’s non-farm payrolls of 125,000.
“Even with the US-China trade talks back on track (for now at least) the evidence of a slowdown in employment growth should still be enough to persuade the Fed to cut rates in either July or September, but expectations of a 50bp cut seem misplaced.”
Meanwhile, in London, the FTSE 100 was giving up some earlier gains, up 0.7% at 7,610.09.
2pm: US stocks seen higher, but only a half-day
The FTSE 100 index held near to session highs in afternoon trading awaiting an expected firmer open on Wall Street.
Around 2pm, the UK blue-chip index was up 52 points at 7,611, just holding off the earlier session peak of 7,621.02.
Futures for the Dow Jones Industrials Average pointed to solid early gains of around 50 points as well in New York, with the benchmark having added 69 points on Tuesday.
However, volumes are likely to be pretty thin in New York with markets set to close early for a half-day today ahead of the US Independence Day holiday on Thursday.
Some caution could also set in ahead of Friday’s June US non-farm payrolls report, particularly after the ADP measure of private payrolls – released today – saw a below-forecast 102,000 rise in June, against the consensus estimate for 140,000.
Ian Shepherdson, chief economist at Pantheon Macroeconomics pointed out: “ADP’s number is generated by a model which incorporates data from firms which use ADP’s payroll processing services but also includes the previous month’s official measure, because payrolls tend to mean-revert.
“May’s modest 90K increase in private payrolls, therefore, constrained the June ADP measure. The official numbers, however, are based only on survey data for the reference month, so Friday’s numbers should be stronger than ADP.”
He added: “The bigger picture here is that payroll growth had to slow this year because the economy is no longer being boosted by last year’s tax cuts. More recently, however, payroll growth has been unusually sluggish as a result of the hit to business confidence from the drop in stock prices in Q4.
“But the key private sector survey measures of hiring, notably the ISM surveys and the NFIB survey, have substantially recovered. We look for job gains of 175K or so in Q3. But in the meantime, we think June private payrolls will be reported up 150K, with the headline up 160K.”
good morning to everyone - except people that buy negative yielding bonds
— StockCats (@StockCats) July 3, 2019
12.15pm: Flying Flutter leads FTSE gains
London’s blue chip benchmark is pushing to new 10-month highs around on Wednesday, with Flutter Entertainment PLC (LON:FLTR) leading the way on the back of M&A speculation.
The company formerly known as Paddy Power Betfair was up more than 17% to above 7,300p late on Wednesday morning despite there being no concrete news about.
Even the mighty Bloomberg was casting about for reasons for the bookmaker’s surge, citing the FT’s Alphaville website as a key spark.
FT Alphaville’s daily markets chat mooted “a number of ideas” underpinning Flutter's flying share price, “the most interesting (needless to say) is speculation about a buyout/take private”, with no named suitor rumoured.
Helping fuel anticipation of a bid was the Lego-Blackstone offer for Merlin last week, which alluded to the sentiment in the private equity market for companies that the public markets might be undervaluing.
Flutter’s advisers were not, it was reported, close to putting out any announcement, taking some of the wind out from under the shares' wings as they dropped to 6,864p, still up 12% for the day so far.
The FTSE 100, up 0.8% to 7,616.98, was hitting levels not seen since late August last year.
10.50am: PMI signals continued low rates
The dismal services sector data earlier has made market watchers more confident there will be no interest rate hike from the Bank of England this year and even fuelled talk that a cut is more likely.
With the report indicating that new business orders have ground to a halt in the service sector, economists at ING said this suggested that underlying economic momentum is “unlikely to increase imminently”.
Companies will increasingly now be turning back to contingency planning for a possible ‘no deal’ Brexit in October, ING added, saying that the BoE is “unlikely” to hike interest rates this year.
Howard Archer at the EY Item Club added that the surveys “will likely fuel growing market belief that the Bank of England’s next move could actually be to cut interest rates”.
This was not dousing the market's enthusiasm for London's blue chip stocks, with the Footsie extending its gains 7,613.36, up 0.7% on the day.
9.50am: Markets shrug off gloomy services data
The pound and FTSE 100 shrugged off news that the UK economy last month endured its second-steepest fall in output since the height of the global financial crisis in 2009.
Activity in Britain’s services sector was lower than expected for June, according to the IHS Markit purchasing managers’ index, which showed a decline to 50.2 from 51.0 the month before.
This reading suggests the services sector is on the verge of contraction, while the all-sector composite PMI fell below the no-change level of 50 for the first time since July 2016.
June’s reading alone indicates the economy contracted at a quarterly rate of 0.2% and that GDP in the second quarter of the year shrank 0.1%. The PMI surveys indicated that the UK economy slipped into contraction in June, registering the second-steepest fall in output since the height of the global financial crisis in 2009.
The FTSE 100 was up 0.6% to 7,603.13 and the pound, having already anticipated a disappointing service PMI report, was actually erasing earlier losses, down 0.1% against the dollar to 1.2577.
8.30am: Footsie positive early on
The FTSE 100 made a stronger-than-expected start to the trading day, advancing 30 points to 7,589.62 as it built on Tuesday’s momentum.
There appeared to be little panic around the last UK purchasing manager’s data of the month, due at 9.30am, which should provide a barometer of state of the dominant service sector.
The weaker pound, meanwhile, provided a modest bump to the nation’s foreign currency earners among the blue-chips.
On the FTSE 100, a further sales slide for Sainsbury (LON:SBRY) led to a 1.5% share price fall.
Counterbalancing the grocer’s poor stock market performance was JD Sports PLC (LON:JD.), seller of “on fleek” trainers, which advanced 1.2% after saying it was confident it would hit its profit forecasts.
Stepping down a division, gold diggers Centamin (LON:CEY) and Acacia (LON:ACA) were in demand with the price of the precious metal stable at around US$1,430 an ounce and some technical analysts suggesting it might be bound for US$1,700.
Proactive news headlines:
Thor Mining PLC (LON:THR) (ASX:THR) has outlined the next steps for the development of the Jervois Vanadium Project in Australia’s Northern Territory. These include resource drilling at the Casper, RD, and Coco deposits; the drill testing of new targets; and the assessment of the gold, and platinum group element (PGE) potential of property.
Anglo African Oil & Gas PLC (LON:AAOG) has drummed up £8.25mln of new funding as it looks to extend one well at its Tilapia project in the Republic of Congo into a potentially prolific deeper layer.
OptiBiotix Health PLC (LON:OPTI) continues to gain commercial traction for its healthcare products focused on the human microbiome. Its latest deal is with the Japanese group Tenshindo, a manufacturer of functional foods and cosmetics, which has signed a licence deal for the UK group’s Lactobacillus plantarum (LPLDL) bacteria strain.
LoopUp Group PLC (LON:LOOP) has said that it continues to see “strong demand” for its conference call services despite a tricky first half afflicted by macro-economic headwinds.
Rainbow Rare Earths Ltd (LON:RBW) is looking to raise at least US$5mln (£4mln) of new cash to invest in increasing production growth at its Gakara rare earth project in Burundi. The AIM-listed company, which will issue shares in an institutional placing at a price of 3p per share, wants US$1.6mln of the cash for mine development and exploration costs to bring additional mining areas into production, with another US$1.8mln to purchase a new mining fleet.
Landore Resources Limited (LON:LNDO) has raised gross proceeds of £250,000 through a share subscription by James Hudleston, an existing investor in the company. The junior gold explorer said the subscription is for 35,714,286 new ordinary shares at a price of 0.7p each. Landore shares closed trading on Tuesday at 0.69p.
US Oil & Gas PLC has raised US$577,295 in a share placing with private investors to fund its drilling operations.
Mineral and Financial Investments Limited (LON:MAFL) announced late afternoon on Tuesday that it has increased its investment in Ascendant Resources Ltd by acquiring 190,000 shares, and now owns 2,242,000 shares, or 2.91% of Ascendant's shares outstanding. Ascendant is a Toronto-based mining company focused on its 100%-owned producing El Mochito zinc, lead and silver mine in west-central Honduras and its high-grade polymetallic Lagoa Salgada VMS Project located in the prolific Iberian Pyrite Belt in Portugal.
6.45am: FTSE 100 set for subdued start
The FTSE 100 has been tipped to open slightly higher on Wednesday as the momentum from the start of the week begins to fade.
Spread-betting firm IG expects the FTSE 100 to open around 5 points higher after a strong performance on Tuesday that saw the blue-chip index close up 62 points at 7,559.
UK equities are currently being supported by dovish expectations from the Bank of England and a softer pound, although the latest set of UK services PMI data, due later today, could put more pressure on the currency as it is widely expected to show the British economy continuing its Brexit-inspired slowdown.
Sterling is currently 0.02% lower against the dollar at US$1.2588.
The US markets yesterday recorded fairly timid gains, with the Dow closing up 0.26% at 26,786 while the S&P 500 was 0.29% higher at 2,973 and the Nasdaq up 0.22% at 8,109 as the post-G20 boost continued to wear off and the reality of the US and China sorting out a trade deal began to set it.
In Asia today trade-deal uncertainty helped drive the Japanese Nikkei 225 0.79% lower, while ongoing protests in Hong Kong and a slowdown in Chinese export orders in June sent the Hang Seng down 0.2%.
Sainsbury’s trading update in the spotlight
After the Competition and Markets Authority scuppered plans for a £7bn merger with Wal-Mart Inc (NYSE:WMT) owned Asda earlier this year, the performance of J Sainsbury PLC 's (LON:SBRY) core grocery business will be in focus in Wednesday’s trading update.
Boss Mike Coupe had pinned his hopes on the merger to drive growth and improve margins, but he will now have to come up with ways to do this organically.
That’s not an easy task in the current retail climate, with discounters Aldi and Lidl relentlessly chipping away at the Big Four’s market share.
Significant announcements expected for Wednesday:
Trading update: J Sainsbury PLC (LON:SBRY), Electrocomponents PLC (LON:ECM), Topps Tiles PLC (LON:TPT)
Finals: Purplebricks PLC (LON:PURP)
Economic data: UK services PMI; US ISM non-manufacturing; US services PMI
Around the markets:
- Sterling: US$1.2588, down 0.02%
- Brent crude: US$62.56 a barrel, up 0.26%
- Gold: US$1,425.97, up 1.52%
- Bitcoin: US$11,501.5, up 16.61%
City headlines:
- JD Sports faces the prospect of an investor rebellion at its annual meeting on Wednesday as it seeks shareholder approval for a £6m cash bonus for Peter Cowgill, its executive chairman – Financial Times
- European leaders have agreed to back Christine Lagarde to lead the European Central Bank and Ursula von der Leyen to be president of the European Commission – Telegraph
- Trade tensions triggered by Donald Trump’s tariff policies could “shipwreck” the global economy and are having a chilling effect on growth, the governor of the Bank of England has warned – Guardian
- Clifford Chance has achieved a fourth consecutive year of rising revenue, with the “magic circle” law firm recording 4.3% growth to nearly £1.7 billion last year – Times
- British shop prices fell in early June for the first time since October last year, an industry survey showed, offering a bit of relief for consumers whose spending has helped the economy during the Brexit crisis - Reuters
- House prices have dropped in London for the eighth quarter in a row, pushing the average value of a home in the capital down 2.6% over the past two years to £465,722 – Guardian
- Credit Suisse wealth management head Iqbal Khan has quit after power struggle at the Swiss bank - FT