FTSE 100 closes up
But US stocks down at time of writing
Sterling takes a tonking
FTSE 100 closed higher Monday, while US shares lagged as traders asd the propspect for China stimulus measures boosted investor confidence.
The UK's premier share index finished almost 26 points higher at 7,531, while FTSE 250 gained over 32 points at 19,584.
Elsewhere in Europe, the German DAX gained around 64 points and the French CAC 40 added around five.
"Chinese GDP data showed that the economy grew by 6.2% its lowest level of growth in almost a decade. However, rather than depressing the market, hopes of stimulus for the world’s second largest economy have boosted risk appetite, lifting demand for riskier assets such as stocks," said Fiona Cincotta, analyst at City Index.
"After a brief stint in the red the FTSE has powered higher on Monday as risk on dominated. Better than expected results from Citigroup boosting Wall Street and the prospect of stimulus for China lifted the FTSE at the start of the week," said Fiona Cincotta, analyst at City Index.
Top gainer on Footsie was take-away app giant Just East (LON:JE.), which saw its shares add 4.28% to 638.20p as traders tucked in. It came as news emerged that the firm has entered the B2B catering market place by buying City Pantry, which delivers food for office meetings, team lunches and events.
Top loser was Micro Focus (LON:MCRO), which lost 5.66% to 1,664p after the legacy software giant's chairman Kevin Loosemore sold shares in the group worth almost £12mln,
The firm confirmed on Monday that, at the end of last week, Loosemore cashed in 650,000 shares at 1,777.3p each.
The 60-year-old, who has faced a challenging year after investors voted down the remuneration report following heavy criticism of a £110mln bonus scheme, said the sale was part of efforts to “diversify” his personal investments.
4pm: Footsie solidifies gains
Heading into the final half-hour of trading, the Footsie was holding on to gains after an up-and-down day.
The FTSE 100 was up 31 points at 7,537, with mining stocks to the fore, along with packaging companies such as Mondi Plc (LON:MNDI) and Smurfit Kappa Group PLC (LON:SKG).
Among the small caps it was a tough day for two technology plays: Mobile Streams PLC (LON:MOS) and Gfinity PLC (LON:GFIN).
The former was down by a third after reporting a sharp drop in half-year revenues while the latter slumped 1.8p to 4.7p after unveiling plans to raise £5.25mln through a placing of shares at 4.5p a pop.
2.45pm: US indices open lower
US stocks defied expectations and opened lower as the second-quarter earnings season got underway but Footsie nevertheless extended its gains.
The FTSE 100 was up 30 points (0.4%) at 7,536, just a handful of points below its high point for the day. Sentiment towards the multi-national blue-chip companies that form the bulk of the Footsie was boosted by sterling's travails on the foreign exchange markets; sterling was four-tenths of a dollar down against the greenback, at US$1.2536.
In the US, the Dow Jones industrial average was down 18 points (0.1%) at 27,314 while the broader-based S&P 500 was off a couple of points (0.1%) at 3,012.
“The US market overall has re-rated significantly in recent months, on the back of the sugar rush provided by hopes of Fed easing, and valuations are looking on the high side once again. The P/E [price/earnings] ratio for the US is now close to 30% higher than elsewhere, double the premium it has traded on average in the past,” said Rupert Thompson, the head of research at Kingswood.
“This is not to say the relatively high valuation of the US necessarily spells problems. Rather, with the markets already on a Fed-related sugar high, it suggests that earnings growth will be needed to drive further sustainable gains.
“The second-quarter reporting season for the US starts today and, just as in the first quarter, earnings are likely to see minimal growth but the market knows this and most likely earnings will beat expectations – as they almost always do. More important will be the corporate guidance and whether or not this appears to validate the consensus expectation of a marked pick up in earnings growth later this year,” he added.
12.30pm: Back in the blue
A late surge saw the Footsie end the morning in positive territory as traders eyed a potentially firm start on Wall Street.
The FTSE 100 was up 14 points (0.2%) at 7,520, with much of the heavy lifting being done by members of the mining sector, after China's gross domestic product growth in June turned out to be not as bad as feared.
“China's GDP growth has slumped to its slowest pace in almost three decades, as trade tensions weigh on sentiment and activity. While retail sales appear to be holding up so far, we see signs that the tech war is starting to affect job security and expected wage growth,” said ING Economics.
Stateside, the Dow Jones industrial average looks set for a positive start with spread betting quotes suggesting the index will start at 27,364, up 32 points.
In the UK, insurers remain friendless after the industry's regulator reined in plans a little to limit the amount insurers would have to pay out after serious accidents.
“Essentially a 2017 decision to drastically reduce the assumed returns claimants can earn on a lump sum has been walked back a bit but the industry’s disappointment in today’s outcome is still palpable. Analysts had certainly pencilled in a more favourable settlement,” opined Russ Mould, the quotesmith at AJ Bell.
“This shows how difficult it can be to second guess a regulatory outcome. It also feels like the last thing general insurance businesses needed.
“They are already facing increased competition, rising claims and the need to hold more capital to meet future claims.
“At the very least recent developments may put the brakes on the generous dividends these firms have paid in the past, particularly when you consider an FCA probe could place further pressure on premiums as the difference between what new and existing customers are charged is challenged.
“Putting your trust in the income from the insurance sector increasingly looks like an accident waiting to happen,” Bell concluded.
Car insurers Admiral Group PLC (LON:ADM) and Direct Line Insurance Group PLC (LON:DLG) were both down by 0.6%.
11.00am: FTSE 100 continues to labour
London's leading shares remain lower on balance, with retailers among those dragging the index lower on reports footfall fell last month.
The index of heavyweight shares was down 12 points (0.2%) at 7,494, with retailers Burberry Group PLC (LON:BRBY) and Kingfisher PLC (LON:KGF) among those under the cosh.
Retail research business Springboard revealed retail footfall was down 2.9% from a year earlier, which was at least a marginal improvement on May's 3.0% fall.
High Street shops took the brunt of shoppers' abstinence, with shopper visits down 4.5% year-on-year while footfall in shopping centres was down 2.4%.
On the plus side, retail park visits were up 0.1%.
The chief executive of the British Retail Consortium suggested that high street outlets had been hit hardest by the relatively poor weather; presumably, retail park visitors are more prepared to brave the poor weather.
Burberry was down 1.7% despite retail sales in China, a major market for Burberry, rising 9.8%, which was the fastest rate of growth since March of last year; the retailer is scheduled to give a trading update tomorrow.
Do-it-yourself (DIY) kit seller Kingfisher, meanwhile, was down 1.4% at 218.3p following reports that Travis Perkins PLC (LON:TPK) has accelerated plans to sell off its DIY chain, Wickes.
Shares in Travis Perkins were up 0.3% at 1,264.5p.
9.50am: Bright start quickly fades
The Footsie’s slightly surprising buoyant start to the week did not last long, with the leading shares index now in negative territory.
The FTSE 100 was down 14 points (0.2%) at 7,492, despite some decent gains for the miners, which form a large proportion of the index.
Top of the form in the mining sector was Antofagasta PLC (LON:ANTO), up 4.4% at 900.84p, after a joint venture company it owns with Canada’s Barrick Gold was awarded US$5.84bn in damages after seven years of arbitration over the disputed Reko Diq project in Pakistan.
The gains were notched despite news that China’s economy grew by just 6.2% in the second quarter of 2019, which was its slowest rate of growth in 27 years.
“There's no doubt in anyone's minds that the trade war is a major contributing factor here, especially coming at a time when the economy was already in the midst of a slowdown as it transitions away from the heavy investment, export led model to a more sustainable domestically driven one,” said Craig Erlam at Oanda.
“While industrial production, fixed asset investment and, maybe more importantly, retail sales all exceeded expectations, all the focus has been on that lower growth number. Unemployment also rose slightly but this has been volatile in the past so won't be causing too much concern,2 he added.
At the dank and dingy end of the Footsie household, controversial housebuilder Persimmon PLC (LON:PSN) was down 1.5% at 1,959p after news broke that it is to be featured in a Channel 4 programme tonight, and not in a flattering light.
READ Britain’s New Build Scandal
Persimmon have been in the news for several years, on BBC Watchdog and other consumer programmes. They've been apologising and doing nothing after every exposé.
— Gavin Bets (@ESCtips_Gavster) July 15, 2019
Legacy software giant Micro Focus International PLC (LON:MCRO) was the top blue-chip faller, however, shedding 5% at 1,675.4p after its chairman, Kevin Loosemore, lobbed out 650,000 shares at around 1,777p a share.
8.50am: Surprisingly solid start for the Footsie
The FTSE 100 got off to a slightly stronger than expected start, rising 20 points to 7,525.79.
The blue-chip index took its cue from Asia’s main markets, which in turn heaved a rather large sigh of relief when China’s economic growth for the last quarter matched expectations.
Let that not detract from the fact that at 6.2%, the world’s second-largest economy expanded at its slowest rate in 27 years.
But once the bones of the ‘print’ had been picked through, analysts’ nerves were calmed as it narrative around the manufacturing sector was a relatively benign one.
Industrial production grew by 6.3%, up strongly on the 5% advance registered three months earlier.
“Relatively lacklustre growth in China has the market baying for more stimulus,” said Neil Wilson, markets guru at Markets.com.
Unsurprisingly, given their sensitivity to the economic ebbs and flows of the People’s Republic, the miners were in demand early on led by copper giant Antofagasta (LON:ANTO), which was up 4%.
Later this week we’ll get an insight into the health of the industry with a triumvirate of majors – Rio Tinto, BHP and Anglo American – reporting.
There was a bounce for delivery giant Just Eat (LON:JE.), which rose 2.2%. It has been under intense selling pressure recently with the ramp up of competition from the likes of Deliveroo and Uber Eats, which has put the stock in the crosshairs for the short sellers.
Sports Direct carnage good news for Newcastle United fans?
Monday’s mini-rally follows a 17% fall in the stock in the last three months.
Travis Perkins (LON:TPK) perked 2.5% after weekend reports suggested the builder’s merchant was ready to sell its Wickes DIY chain for around £500mln.
Meanwhile, Mike Ashley may be keener today to bank £350mln from the sale of Newcastle United than he was last week.
This follows the warning by Sports Direct (LON:SPD), the company he founded and in which he still holds a major investment, that a decline in profitability could be sharper than anticipated. The stock fell 10%.
6.33am: FTSE 100 set for subdued start
The FTSE 100 is expected to open its weekly account in subdued fashion with trade and Brexit concerns continuing to weigh on sentiment.
The spread betting firms are predicting the index of blue-chips will nudge five points higher to 7510.97 with Asia providing some weak positive momentum.
Chinese economic data buoyed the main indexes in the region, though the devil was in the detail.
While the world’s largest economy grew at its slowest pace in the 27 years during the second quarter, the performance was largely as expected.
And there was some relief around the comparative resilience of the manufacturing sector, which economists and analysts supposed was being hurt by US trade tariffs.
Here in the UK, it’s set to be another busy week for corporate news with updates from mining’s holy trinity – Rio Tinto (LON:RIO), Anglo American (LON:AAL) and BHP (LON:BHP).
Away from the diggers, followers of easyJet (LON:EZJ) are braced for bad news when it publishes third-quarter figures on Thursday, while reports from Burberry (LON:BRBY) and Royal Mail (LON:RMG) are unlikely to excite.
Around the markets: pound trading at US$1.2566 (down 0.05%); gold US$1,412.50 an ounce, 30c; Brent crude US$59.99 a barrel, down 22 cents
Significant announcements expected Monday, July 15:
Trading update: DP Eurasia PLC (LON:DPEU)
Finals: Northern Bear PLC (LON:NTBR), Polar Capital Technology Trust PLC (LON:PCT)
Economic data: US NY Empire State manufacturing survey
Proactive news headlines
Kavango Resources PLC (LON:KAV) has acquired a new prospecting licence adjacent to the existing Ditau licence in Botswana.
Adamas Finance Asia Ltd (LON:ADAM) has struck a deal with a Hong Kong-based family office to split its investment in a Japanese ski resort accommodation project.
Location Sciences Group PLC (LON:LSAI) has appointed a media trading veteran to advise on the growth strategy for Verify, its independent location verification platform. The data and analytics firm said it had appointed Andy Roberts, the former global head of trading at MindShare, a subsidiary of FTSE 100 media giant WPP PLC (LON:WPP).
Instem PLC (LON:INS) said all three areas of its business performed well in the first half of 2019 and the group is on track to meet full-year expectations.
Eland Oil & Gas PLC (LON:ELA) shares were higher on Monday after it received approval for a field development plan (FDP) for the Gbetiokun field in the Niger Delta.
Strategic Minerals PLC (LON:SML)(USOTC:SMCDY) generated US$203,000 of free cash in the three months to June 2019 from magnetite production from Cobre. Additionally, the company raised £820,000 on 25 June and received the money in early July.
Mosman Oil And Gas Ltd (LON:MSMN) has told investors that the Stanley-2 well, in Texas, is now on production.
SIMEC Atlantis Energy Ltd (LON:SAE) has updated on its conversion project at the Uskmouth power station in Newport, South Wales. Formerly a coal-fired plant the Uskmouth is being converted so that it can burn fuel pellets, derived from plastic waste, to generate a baseload capacity of 220 megawatts.
YellowCake PLC (LON:YCA) has welcomed the decision by US President Donald Trump not to impose any new trade restrictions on uranium imports into the US.
Anglo African Oil & Gas PLC (LON:AAOG) has been informed by international counsel that its claim against Société de Maintenance Pétrolière (SMP), the rig contractor for the TLP-103 and TLP-103C wells, has merit.
Anglo Asian Mining PLC (LON:AAZ) boosted production by 7% to 39,905 gold equivalent ounces in the six months to June 2019, when set against the comparable period a year earlier.
Block Energy PLC (LON:BLOE) has raised its stake in the West Rustavi field in Georgia to 100% from 71.5%.
Ceres Power Holdings PLC (LON:CWR) shares surged on Monday after it signed a collaboration agreement with South Korean conglomerate Doosan that will earn it £8mln over two years.
Oncimmune Holdings PLC’s (LON:ONC) chief executive Adam Hill said a deal to sell its cancer detection product to a Spanish private healthcare group “highlights the growing momentum behind our business”.
Motif Bio PLC (LON:MTFB) has requested a second meeting with the US drug regulator as part of its bid to win marketing approval for its antibiotic, iclaprim.
Shanta Gold (LON:SHG) says additional resources booked from drilling at New Luika will extend the life of the Tanzanian gold mine to at least 2025.
Bezant Resources PLC (LON:BZT) has completed a key component of the Environmental Impact Assessment baseline study required for the successful future completion of a pre-feasibility study at the Mankayan copper-gold project in the Philippines.
Kibo Energy PLC (LON:KIBO) has inked a collaboration deal with STEAG which envisages a co-operation to develop the AIM-firm’s energy portfolio.
Providence Resources PLC (LON:PVR) has confirmed a further extension of its farm-out backstop date, to allow for payment processing.
Business Headlines
Financial Times
- China’s economy grows at slowest rate in nearly 30 years
- Martin Gilbert set to assume Revolut chair - digital bank aims to strengthen governance and win over investors
- Balfour Beatty probes corruption claim in US
- Acting IMF chief backs monetary easing by central banks
Times
- AstraZeneca accused of betrayal over factory sale
- GlaxoSmithkline banks on new chairman to oversee company break-up
- Boeing crash jet may not fly this year
- Labour wouldn’t remove Carney successor at Bank of England
Daily Telegraph
- Sports Direct expected to post 20% fall in profits
- JCB heir steps on the gas in hydrogen bus boom after signing TfL contract
- Number of company profit warnings in the UK at a level last seen during the financial crisis
- Deutsche Bank’s sprawling art collection left untouched despite cost-cutting drive
Guardian
- High street suffers 'summer slump' as Brexit and wet weather bite
- City regulator fines balloon to £320mln in six months
- No-deal Brexit could mean near-zero interest rates – Bank policymaker