FTSE 100 closes a shade lower
British Airways owner IAG hit by massive data breach fine
US stocks down
FTSE 100 closed slightly in the red on Monday as global shares headed south as traders had little to prompt them into action.
The UK's premier share index finished nearly four points lower at 7,549. Its mid-cap cousin dropped nearly 74 points at 19,581.
On Wall Street, the Dow Jones Industrial Average is down around 153 points at the time of writing, while the S&P 500 is off around 18 points.
"Stocks are largely lower this afternoon as dealers are mindful of the poor finish to last week," noted analyst David Madden, at CMC Markets.
"It has been a quiet day in term of macroeconomic news, and the better-than-expected jobs report from the US on Friday continues to hang over stocks. Ordinarily, a strong set of employment data would normally lift global equity sentiment, but seeing as a large portion of the rally was driven by the belief that the Federal Reserve will cut rates this month, equity markets are broadly lower today."
The top faller on Footsie was online delivery giant Ocado (LON:OCDO), which shed 4.45% to 1,170.50p, seemingly nervous ahead of tomorrow’s trading statement, with the shares down 2.6% at 1,193p.
3.45pm: The Footsie bobs along with the tide
As it has been for most of the day, the Footsie was searching for direction in the final hour of trading.
London’s index of leading shares was up 5 points (0.1%) at 7,558, thanks largely to the tobacco and mining sectors.
The ICO has issued a notice of its intention to fine
British Airways £183.39M for infringements of the General Data Protection
Regulation (GDPR).https://t.co/TdUYIDWqBf
— ICO (@ICOnews) July 8, 2019
Going against the trend was International Consolidated Airlines (LON:IAG), down 1.4%, after its British Airways division was fined a gobsmacking £183.4mln – 1.5% of the airline’s worldwide turnover in 2017 – for the theft of customer data from the airline’s website.
"British Airways will be making representations to the ICO [Information Commissioner’s Office] in relation to the proposed fine. We intend to take all appropriate steps to defend the airline's position vigorously, including making any necessary appeals,” said Willie Walsh, the chief executive of IAG.
“£183m will make a pretty big dent in next year’s numbers, but IAG should be able to withstand its impact as it’s less than 10% of expected net profits and could yet be reduced on appeal; however, further breaches could be more costly,” warned George Salmon at Hargreaves Lansdown.
“The ICO has the power to impose fines of as much as 4% of a business’ revenue – which would have been close to £500mln in this case,” he added.
“Given that airlines’ profits are particularly exposed to a disorderly Brexit, a repeat simply can’t be tolerated. With that in mind, investors will be grateful to see the ICO confirm IAG has already tightened up its security arrangements,” Salmon said.
2.40pm: US indices open on the back foot
It has been a quiet start to the week with the Footsie rarely straying far from Friday’s close.
The FTSE 100 was down 8 points (0.1%) at 7,545, helped in part by sterling easing about one-sixth of a cent against the US dollar to US$1.2509.
Across the pond, investors have been a bit more decisive, with the Dow Jones industrial average down 158 points (0.6%) 26,764 and the S&P 500 off 15.5 points (0.5%) at 2,975.
Among the mid-caps, Acacia Mining PLC (LON:ACA), up 2.4% at 174.9p, was among the stand-outs in a buoyant mining sector after one of its top shareholders, Legal & General, complained about Barrick Gold Corp.'s (NYSE:GOLD) plan to buy out the Tanzanian miner.
READ Acacia posts higher quarterly output as top shareholder opposes Barrick Gold takeover
Fellow FTSE 250 stock Syncona Limited (LON:SYNC) was 1.6% lower at 221p after presenting 52-week data from the first cohort of two patients in the ongoing B-AMAZE FLT180a Phase 1/2 trial in Haemophilia B.
1.20pm: US benchmarks expected to open lower
The Footsie has moved back to square one ahead of what is expected to be a soft opening on Wall Street.
London’s index of blue-chip shares was more or less unchanged at 7,551.
Stateside, the Dow Jones industrial average was expected to open at around 26,817 – a fall of just over a hundred points – while the broader-based S&P 500 was tipped to open about 10 points lighter at 2,980.6.
Groceries delivery firm Ocado Group PLC (LON:OCDO) continues to show nervousness ahead of tomorrow’s trading statement, with the shares down 2.6% at 1,193p.
“Ocado has been a stock market darling until now, and has leapt 200% since the start of 2018. Its position as an online retailer provides insulation against the headwinds faced by traditional bricks and mortar supermarkets, while investment in technology and retail partnerships - both at home and abroad - means that many retail investors are still bullish on the stock despite its already sky-high valuation,” according to Adam Vettesse, an analyst at eToro.
“However, the UK grocery sector has taken somewhat of a kicking recently, with Morrisons and Sainsbury’s stocks stuck in the discount aisle. Retail investors will be watching very closely to see if Ocado’s numbers look more like those from its fellow food retailers, or are more reflective of the tech company that Ocado believes it is,” he added.
While Ocado is down in the Footsie basement, precious metals miner Fresnillo plc (LON:FRES) is in the penthouse, up 2.7% at 904.4p, reflecting firmer gold and silver prices.
The price of gold has increased by US$5.80 (0.4%) to US$1,405.90 an ounce while silver was trading at US$15.11 a pound, up 0.8%.
12.15pm: Ocado and Schroders drag the Footsie into the red
The Footsie has drifted into the red, as traders try to get fathom what Friday’s US jobs data means for US interest rates.
The index of blue-chip shares was down 9 points (0.1%) at 7,544, with groceries delivery technology firm Ocado Group plc (LON:OCDO) leading the retreat as the stock is once again in the cross-hairs of short-sellers ahead of results tomorrow.
According to IHS Markit, for the first time since July of last year, more than 5% of Ocado’s shares have been sold short – the practice of borrowing shares from an institutional investor and selling them in the hope of buying them back later at a cheaper price.
It’s not the first time the technology firm has been in the grip of the short-sellers but last time it confounded them with a number of big deals that marked a change in focus from delivering groceries ordered online to providing its technology to other online grocers.
The shares have risen from 1,034p at the end of September to 1,224p on Friday night but were down 1.9% at 1,201.5p today.
Broker commentary hit fund management firm Schroders PLC (LON:SDR), sending the shares 1.6%% lower at 3,054p.
Barclays downgraded the money manager to ‘equal weight’ from ‘overweight’ while Jefferies shifted to ‘hold’ from ‘buy’ and lopped 487p off its price target, which moved to 3,100p.
Elsewhere, Shore Capital’s head of research, Clive Black, has been wondering whether the UK economy is already in recession.
Black said the “R” word “is starting to filter into the economic narrative and if it becomes mainstream it will do little to improve business or consumer confidence”.
“A rudderless political ship now possibly faces the most choppy economic waters since the UK-EU Referendum, which makes us all the more worried still about de-rated and unloved UK equities albeit international earners and those that benefit from sterling weakness could do better,” Shore suggested.
“The new British Prime Minister needs to gain a grip and soon to deliver clarity on the UK’s relationships with the EU and set in-place short and long term policies to foster an improved business investment climate, we worry about the potency of monetary policy, otherwise a lot of dark clouds could merge to form torrents of rain that fall for a considerable period of time,” he added, cheerfully.
Then again, it is a Monday …
9.45am: Tobacco and mining stocks hold the fort
The FTSE 100 was holding on to early gains thanks to miners and fags makers.
London’s index of heavyweight shares was up 10 points (0.1%) at 7,563.
Imperial Brands PLC (LON:IMB) was the top blue-chip riser, advancing 2.7% to 2,014p after announcing a change to its dividend policy.
“Imperial Brands’ large, stable and growing dividend has been the stock’s main attraction for decades. Recently though that hasn’t been enough to support the share price, which is down over 50% since 2016 despite dividends rising by 10% a year. With the dividend yield now over 10%, management have clearly decided enough is enough, and while payments to shareholders will continue to grow going forwards, share buybacks and debt reduction have moved up the list of priorities,” said Nicholas Hyett, an equity analyst at Hargreaves Lansdown, in response to news from the cigarettes producer that it would merely commit to increasing the dividend each year, with any surplus cash invested in what it sees as growth opportunities.
Sector peer British American Tobacco PLC (LON:BATS) was up 1.7% at 3,034p.
#ImperialBrands announced plans to buy back shares worth c. £200m & said it would revise its div. policy from next year. Reaffirmed a 10% increase in final dividend & said policy would be more progressive & payouts would grow annually from the next year. https://t.co/GHsCYuhUg4
— Robert Barron, MCSI (@RobBarronInvest) July 8, 2019
Sinking to the bottom of the Footsie greasy pole were utility companies Severn Trent PLC (LON:SVT), Centrica Plc (LON:CNA) and United Utilities PLC (LON:UU.), which were down by between 1% and 1.5%, with risk averse investors preferring the allure of gold, which was up US$8.10 at US$1,408.20 on the futures market.
Among the small caps, Trakm8 Holdings PLC (LON:TRAK), the global telematics and data insight provider, shifted sharply into reverse following its full-year results, which revealed a 35% decline in revenue in the year to the end of March, leading to a loss before tax of £3.6mln versus a profit the year before of £453,000.
8.40am: Stocks firmer on balance
The FTSE 100 defied early, slightly gloomy predictions to open 18 points to the good at 7,571.17.
Traders largely ignored the negativity from Asia, sparked, counter-intuitively, by better than expected jobs and wage data from the US, which nixed any chance of an imminent rate cut Stateside.
Still, there was a more defensive feel to trading with sin stocks in demand. Imperial Brands (LON:IMB) and British American Tobacco (LON:BAT) led the Footsie with rises of 2% and 1.7% respectively.
The miners also continued their recovery, led by Rio Tinto (LON:RIO), up 1.4%.
A weekend of further negative news flow for former star stock picker, Neil Woodford, hit the performance of his quoted vehicle, Woodford Patient Capital Trust (LON:WPCT), which was off 6.4% in early trade.
Among the minnows, Providence Resources (LON:PRV) and Landsdown Oil & Gas (LON:LOGP) surged 25% and 40% respectively following a positive funding update on the Barryroe oilfield in Irelands Celtic Sea.
6.11am: FTSE 100 set for subdued start
The FTSE 100 is set for subdued start with the spread betting firms predicting the index will open six points lower at 7,547.33.
Asia’s main markets remained in the red as they reacted to the better than expected jobs and average earnings figures posted by the US on Friday.
These helped temper expectations of an imminent cut to American interest rates.
“Some investors have fallen into the bad habit of viewing bad news as goods news, in that bad news for the economy is good news for the stock market,” said David Madden, analyst at CMC Markets.
“The respectable headline figures from the US jobs report, and the decent earnings number underlines the strength of the US economy.”
Closer to home, it’s a big week for corporate news from the building sector with Barratt Developments (LON:BDEV) and Bovis (LON:BVS) following in the wake of Persimmon (LON:PSN) update last week, which was slightly weaker than expected.
Marks & Spencer (LON:MKS), Dunelm (LON:DNLM) and Superdry (LON:SDRY), meanwhile, will provide some indication as to the health of the retail sector, while Ocado’s (LON:OCDO) interims will chart its continued transformation from grocery deliver to a fulfilment technology firm.
Around the markets: Pound worth US$1.2529 (up 0.06%); gold changing hands for US$1,401.8 an ounce, up U$1.70; Brent crude US$64.28 a barrel, up 5 cents
Monday’s significant announcements
Finals: Abbey PLC (LON:ABBY), Mercia Technologies PLC (LON:MERC)
AGMs: Aveva Group PLC (LON:AVV)
Economic data: US consumer inflation expectations; US consumer credit
Proactive news headlines
BlueRock Diamonds PLC (LON:BRD) has achieved record grades and production from the Kareevlei diamond mine in South Africa. Some 3,516 carats were produced after the amount of tonnes processed in its second quarter rose 130% to 78,759 tonnes at a grade of 4.46 carats per tonne (cpht).
appScatter Group PLC (LON:APPS) has expanded its Priori Data brand into Asia after signing a joint venture (JV) with Japanese on-demand internet consultancy interarrows Inc. The app management and data intelligence group said the JV would initially base its Priori Data platform in Japan, which boasts one of the world’s largest app markets valued at around US$13.7bn in 2017.
Impax Asset Management Group PLC (LON:IPX) saw the value of its assets under management (AUM) rise by 10% in the April-June quarter.
Integumen PLC’s (LON:SKIN) revenues soared by over 1,000% in the first half of the year as blue-chip customers continue to sign up for its cosmetics testing services.
Corero Network Security PLC (LON:CNS), the network security company, has bagged new orders worth US$1mln.
Braveheart Investment Group PLC (LON:BRH) shares advaqnced on Monday after it purchased a 33% stake in Pharm2Farm Limited (P2F), a plant nutrients firm.
Premier African Minerals Ltd (LON:PREM) has agreed to lend US$1.35mln to MN Holdings Ltd, the owner and operator of the Otjozondu manganese mining project in Namibia.
Active Energy Group PLC (LON:AEG), the biomass-based renewable energy business, has raised £3.44mln through a loan note issue.
Chaarat Gold Holdings Ltd (LON:CGH) has waived the requirement for major shareholder Labro to make a mandatory offer for the company on the acquisition of a further 4mln shares. Labro already holds 139,841,969 shares, amounting to approximately 34.8 per cent of Chaarat's issued share capital.
Pensana Metals Ltd (ASX:PM8) has hit high grade intersections at the Longonjo neodymium-praseodymium project located in an infrastructure-rich region of Angola.
Block Energy PLC (LON:BLOE) has secured the equipment for its next phase of drilling at the highly prospective West Rustavi prospect.
Anglo African Oil & Gas PLC (LON:AAOG) has highlighted to investors that it has received multiple new funding offers, and, a competitive process is now underway.
SDX Energy Plc (LON:SDX) told investors that the South Disouq field development continues on schedule and on budget.
Physiomics Plc (LOB:PYC), developer of the virtual tumour software platform, has landed a deal with Bicycle Therapeutics and Cancer Research UK (CRUK).
Providence Resources PLC (LON:PVR) told investors it has received communication from HSBC regarding a US$10mln transfer of funds via joint venture partner APEC.
BATM Advanced Communications Ltd (LON:BVC) said it expects to join the premier TA-90 index after its shares debut on the Tel Aviv Stock Exchange (TASE) on Thursday (July 11).
Victoria Oil and Gas Plc (LON:COG) said John Bryant has resigned as an independent non-executive director of the company with immediate effect.
Business Headlines
Financial Times
- Deutsche to exit equities trading in radical overhaul - Germany’s largest lender to cut 18,000 jobs and create €74bn ‘bad bank’
- Boeing loses US$5.9bn order for 737 Max planes
- Investors braced for global recession - survey of fund managers shows highest expectations of recession in four years
- Spanish group emerges as potential Bombardier Northern Ireland buyer
- LED maker Dialight keep its hazards flashing - botched attempt to outsource manufacturing in 2012 has taken longer and cost more to unwind than expected
Times
- Brexit forces confidence to its lowest since crisis
- Victims of the £1bn HBOS Reading branch fraud may receive higher payouts after an independent review of the compensation scheme being run by Lloyds
- Draftkings’ takeover of SBTech set to deliver US$800mln windfall
- The former boss of Stobart Group is calling for the removal its current chief executive
Daily Telegraph
- Turkey sacks central bank chief amid economic crisis
- Amey boss: 'It was a mistake to sign £2.7bn roads contract with Birmingham Council
- Acacia and Barrick dial up war of words as takeover deadline looms
- Allied Minds’ ‘free bets’ bonus scheme angers investor
Guardian
- Pensions watchdog could go after Philip Green’s overseas assets
- UK car industry future hinges 'not on Brexit, but on batteries'
- Breakfasters divided again with relaunch of Marmite extra old