FTSE 100 closes down
Miners weigh on blue-chip index
B & M sparkles after quarterly update
FTSE 100 closed in the red on Wednesday as miners got hit after a sell-off in iron ore in China weighed on the sector.
Footsie finished over 55 points lower at 7,501.
But the mid-cap FTSE 250 went the other way, gaining over 35 points at 19,787.
"A sell-off in iron ore in China has hit mining stocks like Anglo American, BHP Billiton, and Rio Tinto hard, and that in turn has dented the UK equity index," said David Madden, market analyst at CMC Markets.
Rio Tinto (LON:RIO) shares dropped 4.6% at 4,606.5p, while Anglo American (LON:AAL) shed 3.35% at 2,187p. BHP dropped 4% to 1,960.8p.
On Wall Street at the time of writing, the Dow Jones Industrial Average is down almost 128 points at 27,221, while the S&P 500 is down around a point at the time of writing.
3.25pm: US markets defie expectations
US markets defied expectations and open mixed, which has given a bit of heart to the Footsie.
While the Dow Jones was down 82 points (0.3%) at 27,267, the broader-based S&P 500 was up 2 points (0.0%) at 3,007.
In the UK, with sterling rallying by more than half a cent against the US dollar, the FTSE 100 has trimmed its losses to 47 points (0.6%) and sits at 7,510.
Pound Sterling will Struggle to Go Much Lower vs. Euro: Nomura https://t.co/n539WbnGCJ
— Sydney Mitchell LLP (@SydneyMitchell_) July 24, 2019
The mid-cap FTSE 250, less prone to blowing in the opposite direction to sterling, is up 60 points (0.3%) at 19,812, with Sportsdirect International PLC (LON:SPD) leading the way with a 12% rise at 255p after it said its delayed results would be published on Friday. The accounts and audit are at an advanced stage and the results are expected to be within the guidance issued by the company late last year.
“This is a relief to investors no doubt but shares remain at YTD [year-to-date] lows so there is an implication that they’re still unsure about the strategy and cost of acquisitions. On that note, the guidance around House of Fraser suggests that it still is leaking cash and we will be waiting for what the next steps are for this brand,” said Neil Wilson at markets.com.
Elsewhere on the high street, B & M European Value Retail SA (LON:BME) proved there is still life in bricks and mortar retailing as it revealed it had seen revenues grow 21% year-on-year in the April to June quarter.
READ B&M sales soar following another record Easter
1.15pm: Glaxo provides a lift
The gauge of London’s big-cap shares has hit its low point for the day, with miners proving to be a lead weight around its neck.
The FTSE 100 was down 72 points (1.0%) at 7,485, with sentiment further soured by sterling’s strong showing on foreign exchange markets.
The pound is currently buying US$1.2503, up almost two-thirds of a cent.
Results from the heavily-weighted drugs giant GlaxoSmithKline PLC (LON:GSK) have provided a bit of support for the beleaguered Footsie.
GSK 2Q Earnings:
-Rev: GBP7.81B (est GBP7.59B)
-Adj EPS: 30.5P (est 25.1P)
-Shingrix Rev: GBP386M (est GBP341.3M)
-Sees 2019 Adj EPS To Decline:: -3 To -5% (prev saw -5% To -9%)
-Glaxo Sees To Maintain Div For 2019 At 80P/Share
-Expects To Complete JV With Pfizer Shortly
— LiveSquawk (@LiveSquawk) July 24, 2019
Glaxo’s shares rose 0.9% to 1,675.2p after the company raised full-year guidance after half-year sales of £7.8bn and adjusted earnings per share of 30.5p topped expectations.
“Sales of key drug Shingrix were better than expected at £386mln, although those of Advair, which is facing generic competition in the US, were slightly below forecast at £412mln. The CEO said she was expecting further positive data from clinical trials in the second half and confirmed that overall dividends would remain at 80p for the year,” reported Ian Forrest, an investment research analyst at The Share Centre.
“Advair is clearly facing an uphill battle in the US but the positive news on the pipeline of new drugs is reassuring for investors, as is the commitment to hold the dividend,” he added.
11.45am: London's losses lengthen
The Footsie's losses are starting to look sizeable as miners continue to weigh and traders brace themselves for a weak US session.
London's index of heavyweight shares was down 72 points (1.0%) at 7,484.
“A sell-off in iron ore prices in China has prompted a decline in major mining stocks like Rio Tinto, BHP Billiton, and Glencore, and seeing as the London equity benchmark has a relatively large portion of natural resources stocks in its make-up, the British market is underperforming its Continental counterparts,” explained David Madden at CMC Markets.
“Brazil’s Vale won approval to restart iron ore production, and that triggered the drop in iron ore prices,” he added.
CMC Market is expecting US indices to open lower, with the Dow Jones diving 64 points to 27,285 and the S&P 500 sliding 8 points to 2,997.
Hotels and restaurants operator Whitbread plc (LON:WTB) is in the doghouse for the third day in a row; the shares shed 2.4% at 4,432p as the company published the results of its recent tender off to buy back shares. On behalf of Whitbread, Morgan Stanley purchased 40.2mln shares at the strike price of 4,972p per share.
Pension funds group Standard Life Aberdeen PLC (LON:SLA) defied the trend, rising 0.6% to 309.1p, after reaching a final settlement with Lloyds Banking Group over the latter's attempts to terminate investment management arrangements with Standard Life Aberdeen.
10.20am: Miners weigh down the Footsie
The Footsie's early losses have lengthened despite enthusiasm for housebuilders' shares in the wake of respectable June mortgage approvals data.
London's index of leading shares was off 64 points (0.8%) at 7,493, largely thanks to the heavily weighted miners having an off day.
Antofagasta PLC (LON:ANTO) was one of the better performing blue-chip mining stocks, down 0.4% at 941.8p after its second-quarter production update.
The heavy hitters of the sector – Rio Tinto PLC (LON:RIO), BHP Group PLC (LON:BHP) and Anglo American PLC (LON:AAL) – were down by 3-4%.
Housebuilders were wanted after it was revealed that house purchase mortgage approvals by the main high street banks rose to 42,700 in June, from 42,400 in May, in line with the consensus.
“The recovery in mortgage lending over the last three months is another sign that households are unperturbed by the risk of a no-deal Brexit. The three-month average level of house purchase mortgage approvals rose in June to its highest level since March 2017,” observed Samuel Tombs, the chief UK economist at Pantheon Macroeconomics.
“Approvals look set to carry on rising, given that the new buyer enquiries balance of RICS’s [Royal Institution of Chartered Surveyors] Residential Market Survey surged in June to its highest level since February 2016,” he added.
Tombs expects the gradual upward trend in mortgage lending to be maintained in the second half of this year, despite the looming Brexit showdown.
Gross mortgage lending across the residential market in June was £21.9bn, down about 4% year-on-year.
“Considering the swell of political uncertainty over the past few months, it’s hardly a surprise to see a further slowdown in mortgage lending. Would-be buyers will be forgiven for pressing pause on any decision without more clarity over the UK’s future direction,” declared John Goodall, the chief executive officer of Landbay, a lending platform operator.
“However, with Boris now in the hot-seat, and promising Brexit by October, many may well consider making their property move between now and then to avoid any potential no-deal disruption. The truth is that we are in a buyers-market amid subdued house prices, decent wage growth and lenders with a genuine appetite to lend. Add to the mix low-interest-rate conditions alongside stable inflation and it’s not hard to see why things could be looking up in the near term,” Goodall suggested.
Taylor Wimpey PLC (LON:TW.), up 1.7% at 169.9p, was the best performer in the housebuilding sector, followed by Persimmon PLC (LON:PSN), up 0.7% at 2,040p.
8.45am: Soft start for the Footsie
The London stock market was out of step with its mainland European counterparts this morning, opening on the back foot.
With sterling holding steady and therefore not providing a tailwind, the FTSE 100 index found itself at around 7,542, down 14 points (0.2%) on last night's close.
Croda International PLC (LON:CRDA), down 4.2% at 4,621p, was the worst performing blue-chip after disappointing results.
The speciality chemicals company posted a 3.5% decline in profit before tax on a constant exchange rates basis.
The market gave warmer receptions to updates from ITV PLC (LON:ITV) and Informa PLC (LON:INF).
Terrestrial broadcaster ITV's results proved a ratings hit with the shares up 7% at 113.65p, as advertising revenues in the first half of 2019 declined by 5% year-on-year, which was better than the 6% decline ITV had been expecting.
READ ITV’s first-half ad revenues hold up better than expected as viewers tune in to Love Island
Publishing and events group Informa advanced 5.6% to 873.2p after boasting of underlying revenue growth of 3.4% in the first half of the year.
The delivery of Informa’s Accelerated Integration Plan, the one-year programme of combination and creation, contributed to our continued growth and performance during the first half of 2019. Read more from Group Chief Executive Stephen A. Carter at https://t.co/SGXfpKEtdG pic.twitter.com/CmmbUFgrUG
— Informa Plc (@InformaPLC) July 24, 2019
6.55am: UK investors to ignore Wall Street and Asian markets
The FTSE 100 look set to resist the pull of Wall Street and Asia’s main markets to open 10 points lower at 7,546.48.
While the rest of the world was buoyed by a thawing in trade relations and US rate cut hopes, in London traders are expectred to fret over a No Deal Brexit now Boris Johnson is Prime Minister, market watchers said.
“The worry is that the UK could rush out of the European Union without a deal if Johnson fails to negotiate a Brexit deal that could satisfy both parties, a challenge that his predecessor Theresa May couldn’t overcome in more than three years,” said Ipek Ozkardeskaya, senior analyst at London Capital Group.
“Johnson takes over an economy on the brink of recession and a divided government faced with an unsatisfactory European deal proposal. Britain’s Parliament will be closed from next week.
“When the ministers return from their holiday in September, the clock will be ticking loudly until the October 31 deadline. This means more downside pressure on the pound.”
Sterling was trading at US$1.2433.
Looking ahead, it is a fairly busy day for corporate news with updates from ITV (LON:ITV), GlaxoSmithKline (LON:GSK) and Antofagasta.
Main corporate news for Wednesday July 24
Trading updates: Antofagasta PLC (LON:ANTO), Britvic Plc (LON:BVIC), Marston’s plc (LON:MARS), Paypoint PLC (LON:PAY), Brewin Dolphin PLC (LON:BRW), Empresaria Group plc (LON:EMR)
Interims: GlaxoSmithKline PLC (LON:GSK), ITV plc (LON:ITV), Informa PLC (LON:INF), Croda International PLC (LON:CRDA), Tullow Oil plc (LON:TLW), Drax PLC (LON:DRX), Quartix Holdings plc (LON:QTX)
Economic data: BBA UK mortgage lending figures; US new home sales
Business Headlines
Financial Times
- Johnson to enter No 10 amid dire no-deal warnings - Brexit impasse looms for new PM as he assembles ‘modern’ cabinet amid resignations
- EU plans sweeping rules to curb illegal online content
- KPMG fined £5m over breach in BNY Mellon audit
- DoJ opens review into Big Tech’s market power - US investigation looks at whether leading online platforms are smothering competition
Times
- Reforms in funding planned to meet demand for nuclear power plants - leaked paper stresses need to hit climate targets
- Vodafone chairman defends dividend cut on way to exit
- Serious Fraud Office probes De La Rue over suspected corruption in South Sudan
- Trade wars hitting global growth, IMF says
Daily Telegraph
- Boris Johnson calls in Sky chief to rebuild links with business
- Bank of England chief economist warns Boris Johnson not to expect rate-setters to rescue economy
Guardian
- US justice department targets big tech firms in antitrust review
- BA loses legal action against pilot strikes
- UK factories facing biggest slowdown since financial crisis, says CBI