FTSE 100 holds above 7,500 at close
New Prime Minister to be confirmed by tomorrow
US stocks mixed by midday
4.55pm: Footsie regains footing at close
The UK's blue chip index held above the 7,500 mark at close Monday buoyed by higher oil prices, but the mood stayed faily cautious ahead of the confirmation of a new Prime Minister, expected by tomorrow.
The FTSE 100 finished at 7,514.93, up 6.23 points, a gain of 0.1%.
In New York, the Dow Jones Industrials Average hit 27,153 by midday, while the S&P gained 0.2% and the Nasdaq was up 0.6%.
Chris Beauchamp, chief market analyst at online trading firm IG commented: "Markets are struggling to hold early gains as investors start to fret about key upcoming central bank meetings. Aside from some gains for crude oil stocks as energy prices rise thanks to the situation in the Gulf, the main focus on an otherwise quiet day is what the ECB and the Fed will do.
“European markets are certainly in need of something to get the moving, as their struggle to move higher over the past two sessions looks to be running out of steam. A lack of movement, or an absence of a commitment to action, from the ECB, will likely see European equities endure a tough August, matching the seasonality patterns of the past twenty years. US stocks at least have earnings season to drive them forward, but even here the Fed meeting next week is the only game in town.
“Even a stellar earnings season is trumped by what the FOMC will do, so for the next two weeks equities may well go nowhere fast.”
3.45pm: Dow dips but not the Nasdaq
London’s FTSE 100 has given up its earlier gains as Wall Street’s main stock indices kicked off in unconvincing style ahead of a busy week.
After just over an hour of trading stateside, the Dow Jones was down 7 points to 27,147.54, while the S&P 500 was up 0.1% and the Nasdaq up 0.5%.
Markets were shuffling “zombie-style”, said Connor Campbell at Spreadex, who observed that the Dow was being held back from its all-time highs by the prospect of a Federal Reserve rate-cut next week.
“The increasing likelihood that the Fed will plump for a 25bps cut over a deeper 50bps slash appears to be preventing it from making any headway in returning to its record peak.”
Back home in London, the Footsie had dipped in the red, down four points to 7,504.41.
Whitbread and Centrica, mention earlier, were the biggest blue chip losers.
2pm: Wall Street prepares for earnings frenzy
US stock futures are pointing higher as Wall Street prepares to start work for a busy week.
The Dow Jones Industrial Average was expected to climb 63 points or 0.2% to 27,192 after Monday’s opening bell, according to futures contracts, with the S&P 500 expected to start 0.3% and the Nasdaq Composite 0.5% higher.
While a smorgasbord of around 130 S&P companies are due to report this week and a third of the 30 Dow’s components, Monday will provide just a small appetiser, with second quarter earnings from oil services giant Halliburton Co (NYSE:HAL) and appliances maker Whirlpool Corp (NYSE:WHR) the only notable names.
Haliburton delivered a solid beat on earnings, though revenues were a slight miss, leading to a 1% pre-market gain.
Whirlpool is not set to report after the closing bell, but analysts said it should tell us about the state of the US consumer.
With the data calendar on Monday is looking equally bare, there was more attention on other factors moving stocks.
With earnings due later this week and following a first quarter that was a bit of a car crash, analyst Neil Wilson said the market will be looking for production guidance and whether management still think they can hit their third quarter profitability target.
“The company does not expect to return to profitability until Q3, but even this could be a stretch. We should expect management to have greater visibility now and if they stick to the Q3 target it would be a positive for the stock.”
Meanwhile, in London blue chips were treading water at 7,529.28, up around 21 points on the day, as traders keep an eye across the pond.
12:30pm: Footsie shrugs off recession warning
By Monday lunchtime, the FTSE 100 was travelling sideways along its earlier high, with not a whole lot of positive news about.
In fact, some of it was quite gloomy, with the National Institute of Economic and Social Research warning that the UK's exit from the European Union may have already pushed the nation into a technical recession.
NIESR said it expects the UK to grow 1% this year and the next if a no-deal Brexit is avoided.
In the event of an orderly no-deal Brexit, the economy is forecast to stagnate, before starting to grow again in 2021.
"The outlook beyond October, when the United Kingdom is due to leave the European Union, is very murky indeed with the possibility of a severe downturn in the event of a disorderly no-deal Brexit," the forecasting think-tank said.
There was also bad news for Capital & Regional PLC (LON:CAL), which saw its shares singed badly as a huge blaze tore through one of its shopping centres in East London.
The company said The Mall in Walthamstow has been evacuated as firefighters battle a fire that started early on Monday.
Residents are advised to keep doors and windows closed due to the smoke from the #Walthamstow fire as crews work to bring the blaze under control. There are also local road closures in place https://t.co/IbEVilJqTu © @thatadamfrench pic.twitter.com/wjtYtMhK0y— London Fire Brigade (@LondonFire) July 22, 2019
“Our immediate priority is site, customer and staff safety,” the group said, while its shares were down 9% to 15.06p.
11.30am: Oilers lead the gains
London’s blue chip index is being led by gains for oil and travel stocks so far this morning.
Giants BP PLC (LON:BP.) and Royal Dutch Shell Plc (LON:RDSB) were among the the FTSE 100's top ten, with oil services players Hunting PLC (LON:HTG) and Premier Oil PLC (LON:PMO) among the leading mid caps.
Brent crude prices were up 2% to $63.79 per barrel amid simmering tensions in the Persian Gulf, after Iran seized a British-flagged tanker in response to the UK's decision to seize a tanker carrying Iranian oil a couple of weeks ago.
“Oil prices haven't risen too much yet but if the situation deteriorates further, we should possibly brace for higher prices,” said analyst Craig Erlam at Oanda.
UK PM May's Spokesman: It is highly escalatory for Iran to seize a ship going about legitimate business— LiveSquawk (@LiveSquawk) July 22, 2019
As for leisure stocks, shares in tour operator TUI AG (LON:TUI) are leading the way as they continue Friday's gains on hopes of compensation from Boeing over the grounding of its 737 Max fleets and research on Moday that shows positive signs in recent booking trends.
With the Footsie up 21 point to 7,530.08, other travel and leisure stocks on the leaderboard included BA owner International Consolidated Airlns Group (LON:IAG) and the Paddy Power and Betfair owner Flutter Entertainment PLC (LON:FLTR).
Meanwhile, the FTSE 250 index’s stroll into the green was being led by a 14% gain to 964p for clothes brand Ted Baker PLC (LON:TED) after it was reported that founder Ray Kelvin is open to the idea of a private equity buy-out of the firm.
Kelvin, who owns roughly 35% of the retailer but left earlier this year after a “forced hugging” scandal, has made “discreet” inquiries about the possibility of taking the company private, according to the Mail on Sunday.
Reports over the weekend indicated the challenger bank was looking to offload £500mln worth of mortgages to Cerberus Capital as it seeks to shore up its balance sheet.
10.30am: Pound stumbles to lift stocks
The FTSE 100 perked up as Monday morning wore on and as the pound wobbles on worries about the new Downing Street regime.
London’s blue chip index was up 37 points or 0.5% to 7,545.62 while sterling, having started flat, dropped 0.3% against the dollar to 1.2465 and 0.2% versus the euro to 1.1119.
One spark for the weakening in the pound was the resignation of Foreign Office minister Alan Duncan from the cabinet in protest against Boris Johnson’s expected victory in the Conservative leadership race, with others expected to follow this week.
The new Prime Minister will be confirmed later on Monday and will enter Number 10 on Wednesday.
With Johson expected to win, market analyst Joshua Mahoney at IG said investors were now “facing up to the fact that a no-deal Brexit cannot be ruled out despite parliament’s clear disdain of such an event.
“Johnson is likely to win, and with just three months until the Brexit deadline, he is unlikely to find any means to avoid either taking us out without a deal, or going against his word to extend the deadline.”
8.40am: Blue chips make subdued start
As predicted, it was a fairly flat start for the FTSE 100, which nudged just three points higher to 7,511.47 amid political uncertainty here in the UK ahead of the change of leadership.
Prime Minister-elect Boris Johnson, currently putting the finishing touches to his cabinet ahead of his formal anointment on Tuesday, faces destabilising defections and a rebel rump of former ministers ready to block a No Deal Brexit.
The pound, steady at just under US$1.25, looks set for a yo-yo week.
“A new regime will be installed this week at Number 10,” said Neil Wilson, analyst at Markets.com.
“Watch for a harder tone on Brexit and the very clear message that October 31 is a hard date.
“As previously argued, the reality of parliamentary arithmetic may see this soften in due course. Pound traders will be watching the new PM like hawks over the coming days.”
Centrica (LON:CNA) shares fell 1.5% amid reports it is about to cut its dividend again.
Whitbread (LON:WTB) was off 1.6% after it emerged the budget hotelier may be the target for short sellers, including Jane Street Global Trading, a specialist high-frequency trading firm based in Manhattan.
In total around 18% of the company’s shares are out on loan to funds betting against the former owner of Costa Coffee.
6.29am: FTSE 100 set for a flat start to the trading week
The FTSE 100 looks set for a flat start with traders keeping their powder dry ahead of a change of incumbent in 10 Downing Street this week.
Boris Johnson will face an immediate threat from within his own party when he is formally unveiled new Tory leader on Tuesday with six MPs ready to defect to LibDems.
Adding to the new PM's woes, senior ministers opposing a No Deal Brexit, including Philip Hammond and David Gauke, have announced they would quit the government when Johnson becomes Prime Minister.
Against this uncertain political backdrop, the index of blue-chips looks set to open flat at 7,508.70. The pound was steady at US$1.2504.
In Asia, the main markets started the week in reverse gear amid worries over trade and US interest rate policy and after a lacklustre end to the week on Wall Street, which provided something of a delayed hangover.
If there is some uncertainty over American monetary policy, here in Europe on Thursday we’ll get a little better handle on the European Central Bank’s strategy.
“Any decision not to go with a 20-basis point rate cut, which markets appear to be expecting to come soon, will inevitably shift the focus to the press conference and [ECB] President Draghi’s guidance, on the timing and extent of further easing measures,” said Michael Hewson of CMC Markets.
Around the markets: Bitcoin £8,457.28, down £18.84; gold US$1428.30 an ounce, up US$2.10; Brent crude US$63.42, up 95 cents
Monday’s significant news
Finals: Tungsten Corp. (LON:TUNG)
Economic data: US Chicago Fed national activity index
Proactive news headlines:
Jersey Oil and Gas PLC (LON:JOG) told investors that it has been awarded significant acreage through the latest North Sea licensing round. It has landed 100% of three blocks hosting the Buchan oil field and the J2 oil discovery.
Advanced Oncotherapy PLC (LON:AVO) said it has reached an important landmark following the completion of structural work at Harley Street, central London, site of its next-generation proton beam therapy system.
Learning Technologies Group PLC (LON:LTG) said full-year underlying earnings are likely to be “materially ahead” of market expectations after a strong first half for sales and profits.
Galantas Gold Corporation (LON:GAL) has hit more strong gold indications from work at the Omagh mine in Northern Ireland.
Belvoir Lettings PLC (LON:BLV) has changed its name to Belvoir Group to reflect its diversification away from being a single franchisor of residential lettings agents.
Pembridge Resources PLC (LON:PERE) has signed an off-take agreement with Japanese commodities giant Sumitomo for the delivery of 55,000 tonnes of copper concentrate from its newly acquired Minto mine in Canada.
Yellow Cake PLC (LON:YCA) has reported a net asset value of 218p per share as at 30 June 2019. The valuation is derived primarily from a holding of 9.2mln pounds of physical uranium, worth US$24.70 at prevailing spot prices, but acquired at an average price of US$21.8 per pound.
Seeing Machines Limited (LON:SEE) has completed the overhaul of its board with the appointment of Kate Hill as its new chair on a permanent basis.
Providence Resources PLC (LON:PVR) continues to await a payment into its bank account, from its Chinese partner. The Irish oil company, in a statement, told investors it has received further documentation showing the mechanics of the transfer of US$10mln to its account.
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