FTSE 100 ends up 75 points
Sterling continues slide amid rate cut worry
- Persimmon top Footsie riser on upgrade
5.15pm: Positive finish for Footsie
The FTSE 100 index closed convincingly higher on Friday after a fairly slow news day, supported by further weakness in the pound as talk of a possible UK interest rate cut added to the political worries on Brexit.
The UK blue-chip index ended 75.13 points higher at 7,426.21; over the week as a whole, it added around 1.11%. The mid-cap FTSE 250 index also closed higher, up 152.34 points at 19,970.95.
Connor Campbell, financial analyst at Spreadex, said it seemed that only one thing really mattered to the FTSE at the moment and that was "watching sterling squirm".
"The pound remained under pressure on Friday, fears of a general election keeping it at 3-week and 2-week lows against the dollar and euro respectively. In response the UK index jumped 50 points, pushing it past 7400 for the first time in almost 2-months," he commented.
On currency markets, against the dollar, the pound was down 0.1% to US$1.2307.
Meanwhile, over in the US, stocks were mixed as investors continue to mull the noises around the US-China trade talks, a mixed bag of economic data and a whistleblower complaint against President Trump, who is facing an impeachment inquiry.
Around London's close, the Dow Jones Industrial Average was up 13 at 26,904, while the S&P 500 shed 5.19 points at 2,972, and the Nasdaq Composite lost 35.17 points at 7,995.
3.15pm: Footsie rises
A threadbare day of news from blue-chips has not stopped London’s index of top shares from enjoying a strong session.
As it happens, Polymetal, down 3.1% at 1,141p, was one of the few blue-chip fallers as the Footsie rose 54 points to 7,405.
The extremely volatile stock, NMC Healthcare PLC (LON:NMC), led the charge with a 4% increase to 2,808p.
Brent crude was off 68 cents, or 1.1%, at US$61.06 a barrel following reports that Saudi Arabia has agreed to a partial ceasefire in Yemen in its extended conflict with Houthi militants.
2.45pm: US markets open higher
US markets opened higher, lending a bit of support to UK blue-chips that were beginning to flag after a strong morning session.
The FTSE 100 was up 60 points (0.8%) at 7,411, about 20 points below where it ended the morning session.
In the US, the Dow Jones was up 83 points (0.3%) at 26,973 while the broader-based S&P 500 was up 6 points (0.2%) at 2,984 after the release of a slow of economic data.
US personal income rose 0.4% in August while the personal consumption expenditures price index was unchanged.
Pantheon Macroeconomics said the data points to a slowdown in spending growth and that the market should expect “hefty” markdowns in forecasts for third-quarter gross domestic product.
August durable goods orders rose 0.2%, versus expexctations of a fall of 1.2%. Orders excluding transport rose 0.5%, which was ahead of the consensus forecast of a rise of 0.2%.
12.30pm: FTSE 100 led higher by Persimmon after Jefferies upgrade
Just a dozen FTSE 100 constituents are in the red as the index of leading shares continued to enjoy a bost from sterling’s decline.
The FTSE 100 was down 79 points (1.1%) at 7,430.
Three of the dirty dozen on the downturn are companies that issued profit warnings yesterday: cruise ships operator Carival PLC (LON:CCL); ciggies and e-cigarettes maker Imperial Brands PLC (LON:IMT) and educational publisher Pearson PLC (LON:PSON).
READ Investor confidence increased in September and surprisingly it was largely because of a stampede into UK equities
“Despite the wide range of implications politically and economically from Brexit, we see the primary risk to the sector as coming from the more radical policies proposed by the Labour leader Corbyn,” the broker said.
Among Corbyn’s “radical policies” is a pledge to build 100,000 affordable/local authority homes a year over a five-year period, Jefferies noted.
Despite the possibility of Labour coming to power and derailing the housebuilding gravy train, Jefferies upgraded Persimmon – best known for awarding its former chief executive a £110mln bonus last year – to ‘buy’ with a price target of 2,438p.
Persimmon shares were up 86p to 2,153p.
11.00am: FTSE 100 buoyed by Bank of England policy-maker's talk of a need for an interest rate cut
With the pound about as popular as a snogging session with the World Herpes Champion of 1972 sentiment towards blue-chips is favourable.
The FTSE 100 was up 68 points (0.9%) at 7,419 with packaging companies and miners leading the way.
On the foreign exchange markets, the pound was down by around a third of a cent at US$1.2292 as traders react to a statement from Bank of England policy-maker, Michael Saunders.
Saunders has suggested an interest rate cut may be needed even in the (increasingly unlikely) event of a Brexit deal being agreed, as uncertainty would still persist post-deal.
"In this case, it might well be appropriate to maintain a highly accommodative monetary policy stance for an extended period and perhaps to loosen policy at some stage, especially if global growth remains disappointing,” Saunders said.
Overnight, the GfK Consumer Confidence Index for September was published and improved to -12 from -14 in August.
“The index has traded in a tight range of -10 to -14 for all of calendar year 2019,” noted Shore Capital.
“Until there is further clarity on Brexit, we do not envisage any material change in consumer sentiment. As GfK highlights ‘UK consumers appear to be treading water during this wait-and-see run-up to October 31st.’ This month’s consumer confidence data highlights a small positive step forward but consumer confidence remains fragile as Brexit uncertainty and the potential economic implications weigh on overall sentiment. In our view, the population is becoming battle-hardened to a dysfunctional House of Commons,” the broker said.
The population has also become battle-hardened to stagnating house prices. The UK Cities House Price Index from Hometrack showed the year-on-year increase rising to 1.9% in August from 1.6% in July, with the average selling price in the 20 cities covered by the index increasing slightly to £257,900 from £256,900 in the previous month.
“The acceleration in house price inflation since 2013, reaching almost 20% in London in 2014, and the subsequent slowdown since 2016 are part of the unfolding house price cycle. We believe that the recent slowdown represents a return to a more sustainable pace of price growth rather than an impending re-correction in house prices,” said Hometrack.
Michael Stone, the founder of Stone Real Estate, said, “The UK’s major cities are the hotspots of the new homes market and with new build properties commanding a much higher premium than existing stock, it's no surprise that price trends in these urban hubs are more susceptible to wider market conditions.”
“That said, there remains a strong demand for these homes and while this has been partially stifled by political uncertainty, home buyer hunger has remained strong and prices have remained buoyant with the exception of one or two cities.
“We may well see this drop over the coming months as those investing in a brand new property take stock of what’s happening in Westminster before committing to a sale,” he added.
9.20am: Pound takes a pounding
Traders ignored the declines seen on Wall Street and in Asia to open 65 points higher at 7,416.31.
The falling pound, anticipating a No Deal Brexit, provided a significant boost to the index’s big exporters and, by extension, the benchmark itself.
Neil Wilson, an analyst at Markets.com, said sterling’s recent rally, prompted by forex dealers covering short positions, was over. And he reckons political risk will now provide the momentum for the currency.
“On Brexit, there’s a lot of noise of course and all the chatter is about MPs’ use of language and how could Boris possibly still take the UK out of the EU by October 31 without a deal,” Wilson said.
“The fact is he can and he intends to. There is some serious risk that the pound declines from here into the middle of October on the uncertainty and heightened risk of no deal.
“This would then be the make or break moment – extension agreed and we easily pop back to US$1.25, no deal and it’s down to US$1.15 or even US$1.10.”
On the market, the main movement was on the FTSE 250 with former punters’ favourite Sirius Minerals (LON:SXX) under pressure again. The shares were down 12.65%.
So far this year the mine developer has lost three-quarters of its value after hitting a funding roadblock, leaving the future of its giant Yorkshire potash mine in the balance.
Proactive news headlines
IQ-AI Ltd (LON:IQAI) said it has received the regulatory green light in America for its StoneChecker software, which is used to assess kidney stones.
Salt Lake Potash Limited (LON:SO4 ASX:SO4) has transitioned from exploration to development at its Lake Way project in Western Australia and chief executive Tony Swiericzuk said it is “difficult for me to contain my enthusiasm”.
PowerHouse Energy Group PLC (LON:PHE) is heading in the right direction after recently joining the ranks of AIM’s revenue-earning firms.
Consilium Group Limited (LON:COIN) has hailed the recovery and “rapid maturation” of the cryptocurrency and blockchain industry as the firm looked to expand its advisory services arm.
Solo Oil PLC (LON:SOLO) executive chairman Alastair Ferguson highlighted “further significant steps” taken by the company towards its strategic goals, including rationalising its asset portfolio and strengthening its management team.
ECR Minerals PLC (LON: ECR) has turned down a farm-in offer for its Windidda gold project in Western Australia.
Tavistock Investments PLC (LON:TAVI) said trading has remained in line with market expectations and that in future it will look to improve profitability by selectively purchasing client books from retiring advisors and investing in initiatives to increase the inflows of funds under management (FUM).
NQ Minerals Limited (LON:NQMI) expects operations at Hellyer to settle down after a tricky re-start to operations at the polymetallic mine in Tasmania as it transitions to operating status with growing cash flows.
Synairgen PLC (LON:SNG) said it is presenting data at an industry conference gleaned from a phase II study of its inhaled interferon-beta treatment for patients with chronic obstructive pulmonary disease (COPD).
hVIVO PLC (LON:HVO) will later on Friday deliver two presentations at the European Respiratory Society Congress, both presentations highlighting the utility of the hVIVO viral challenge model as well as helping inform trial design and endpoint selection.
6.45am: FTSE set to start modestly higher
London’s leading shares are expected to open modestly higher on balance, despite US markets closing lower yesterday on the back of impeachment developments.
Spread betting quotes indicate the FTSE 100, which rose 61 points to close at 7,351 yesterday, will open around 10 points higher at 7,361.
“US markets … were more preoccupied with the release of the whistle-blower manuscripts which alleged that White House officials tried to cover up the contents of the Presidential conversation with the Ukraine President, as well as other key conversations, that might have breached national security guidelines. There was also some concern that the US might not extend waivers that were granted to US companies that have dealings with China's Huawei,” said CMC’s Michael Hewson’s, reporting on yesterday’s negative trading session in the US.
The Dow Jones fell 80 points to 26,891 while the S&P 500 eased 7 points to 2,978.
Asian markets are off the pace this morning with Japan’s Nikkei 225 down 293 at 21,755 and Hong Kong’s Hang Seng 80 points softer at 25,962.
“Across the Pacific, Hong Kong is boiling,” noted Ipek Ozkardeskaya at London Capital Group.
“Tomorrow is the fifth anniversary of [the] 2014 umbrella protests in Hong Kong. It is also the 17th week of the anti-China protests that started as an opposition to the government’s extradition law and gained traction to cover more demands including sky-high housing prices and income equity,” the analyst noted.
In the UK, there are no significant anniversaries to celebrate unless you count 10 years since anyone could leave the house confident that the weather would not change completely before they reached their destination.
The results schedule is a little sparse, as it often is on a Friday, and it is doubtful if even the shareholders of Pennon PLC (LON:PNN) are that excited about the scheduled trading statement from the water utility company.
Since then, it has emerged from the doghouse; an upgrade to earnings guidance in June was backed up by a solid update in July that confirmed CVS’s actions to improve performance had proved effective.
Broker Peel Hunt expects underlying earnings (EBITDA) to rise 12% to £55mln and profit before tax by 11% to £41.4mln.
As for macro data, there will be an update on UK consumer confidence from GfK, which has relevance for several sectors, including retail and leisure.
In August, the headline reading for UK consumer confidence dropped by three points to -14, around a six-year low.
“It is possible that the political deadlock over Brexit had an influence here but it will be interesting to see if rising wage growth starts to give consumers a bit of a lift,” says Russ Mould at AJ Bell.
Significant announcements expected
Economic data: Nationwide house prices, speech from BoE’s Michael Saunders
Around the markets
- Pound: US$1.2331, up 0.08 cents
- 10-year gilt: yielding 0.521%, down 1.32 basis points
- Gold: US$1,513.90 an ounce, down US$1.30
- Brent crude: US$61.18 a barrel, down 56 cents
- Bitcoin: US$7,988, down US$116
Peloton’s shares plunged more than 11% on its debut on the market on Wall Street
The eurozone’s bailout fund is to desist from issuing bonds governed by English law
Auditor KPMG has transferred 800 staff and about 20 partners into its audit department from its advisory division in preparation for a possible forced break-up
Boris Johnson has been warned by senior allies that Britain will face civil unrest on the scale of the gilets jaunes protests in France or the riots in Los Angeles if Brexit is frustrated
Leading Democrats have accused the White House of instigating a cover-up to bury evidence that could incriminate President Trump
Cruise operator Carnival lowered its full-year profit forecast battered by the higher cost of fuel and tensions in the Gulf after this month’s drone attacks on Saudi Arabian oil facilities
Onthemarket, the property portal, has issued a surprise warning on revenue, blaming the Brexit-driven slowdown in the housing market
Alfa Financial, the maker of software for the leasing industry, has registered a sharp fall in profits blaming political uncertainties
The inkjet printer specialist Xaar lost more than a third of its value yesterday after revealing a management exodus and poor results
Deep divisions over the direction of monetary policy on the European Central Bank’s governing council are out in the open after the resignation of Sabine Lautenschläger, an executive member of the board representing Germany
Thomas Cook’s former bosses, its auditors and financial regulators are to face public questions from MPs about its collapse
The Daily Telegraph
Mitchells & Butlers’ comparable sales rose 3.3% in the eight weeks to 21 September, the firm said in a trading update, with drinks performing particularly well.
Pearson has warned on profits once more after a slide in textbook sales in the US that was twice as high as forecast
Woodford Patient Capital Trust was forced to cut the value of three more of its holdings on Thursday, in a triple-whammy humiliation for embattled fund manager Neil Woodford
Scandal-hit Ted Baker has poached Debenhams’ finance chief Rachel Osborne
Barclays chairman Nigel Higgins has shaken up the bank's board by hiring two well-known financiers - Dawn Fitzpatrick and Mohamed El-Erian - under pressure from investors
British Airways has blamed industrial action for falling profits and took a €137 million hit from the walkouts
Jaguar Land Rover will halt production at British factories for a week in November to mitigate potential disruption from a no-deal Brexit
Britain’s high streets, shopping centres and retail parks have been left with the highest number of empty outlets in five years due to rising costs and low consumer confidence
Boris Johnson’s pledge to raise the threshold for the top rate of income tax from £50,000 to £80,000 would cost £8 billion a year