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FTSE 100 closes marginally higher as traders await next round of catalysts

The UK's premier share index finished up 8.57 points at 7,396.65 on the day

Marks and Spencer Group PLC -
FTSE 100 closed ahead by a shade as markets caught breath before the next round of volatility
  • FTSE 100 index closes up at 7,396

  • Wall Street stocks lower

  • US productivity declines unexpectedly

5pm: Footsie closes eight points ahead

FTSE 100 closed marginally higher as traders look to the next catalyst to get things moving again on what was a fairly quiet day in the markets.

The UK's premier share index finished up 8.57 points at 7,396.65, with so-called defensive stocks the best gainers.

The mid-tier FTSE 250 finished down 78.40 at 20,216.59.

"Global stocks have remained in consolidation mode, with the optimism of Monday failing to persist as we push through the week," said Josh Mahony, analyst at IG Index.

"Coming off the back of a highly volatile period, we are finally seeing some calm creep into markets, as traders await a new catalyst to drive another bout of action."

Tomorrow, there may be some more action with sterling as the Bank of England's monetary policy committee holds its meeting on interest rates.

With both the upcoming general election and Brexit uncertainty still very much at the fore, it seems unlikely there will be any rate rise.

3.30pm: FTSE 100 treading water; Metro Bank flops as stockbroker Goodbody talks down hopes of takeover

Heading into the final hour of Wednesday’s session, the FTSE 100 was continuing its swing between positive and negative and was up around 8 points at 7,396 just before 3.30pm.

Tobacco giant Imperial Brands PLC (LON:IMB) had managed to retain its spot at the top of the blue-chip leaderboard with a 2.1% rise to 1,786.6p in late-afternoon, while the loss of a key contract with Vodafone Group plc (LON:VOD) left BT Group PLC (LON:BT.A) as the biggest loser with a 4.9% decline to 192.7p.

Also on the slide was troubled high street lender Metro Bank PLC (LON:MTRO), which tumbled 5.5% to 249.6p after stockbroker Goodbody seemed to pour cold water over any chances of the firm getting bought out by one of the big banks.

The broker said that they did not expect any takeover deal to complete before the outcome of an investigation by the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA) as a buyer “will not want to take the risk of exposing itself to material potential litigation claims”.

The analysts added that they doubted whether Metro was engaging with any of the large-cap banks and that the market had become “overexcited - particularly given we don’t know what the outcome of the regulatory investigation is yet”.

2.40pm: Wall Street heads lower as US productivity unexpectedly declines

US markets found themselves on the back foot shortly after the opening bell on Wednesday as an unexpected decline in US productivity seemed to have spooked traders.

The Dow Jones Industrial Average was 0.1% lower at 27,463 in early trading, while the S&P 500 fell 0.11% to 3,071 and the Nasdaq dropped 0.3% to 8,409.

Figures from the US Labor Department showed that productivity fell 0.3% between July and September, well below analyst expectations of 0.9% growth and the sharpest contraction since 2015.

The data also throws something of a spanner in the works for Donald Trump’s messaging that the US economy is performing well, particularly after his recent boast on Twitter regarding all-time highs in the US stock market.

In London, the lacklustre start in the US sent the FTSE 100 back into reverse, with the index down 8 points at 7,379 at around 2.40pm.

1.45pm: US markets expected to open a touch higher

Wall Street is expecting markets to open slightly higher as stocks continue to level out after reaching record peaks on Monday.

Leading the way is HP Inc. (NYSE:HPQ), whose shares climbed 7.7% to US$19.8 in pre-market trading after printer maker Xerox Holdings Corp (NYSE:XRX) said it was considering a cash-and-stock offer for the firm.

Fast food chain Wendy’s Co. (NASDAQ:WEN) also gained 4.56% in Wednesday premarket trades, after raising its full-year guidance and beating expectations in its third quarter results.

Optimism for easing tensions in US-China trade talks continues to push markets up after Chinese leader Xi Jinping’s speech praising free trade on Tuesday, but CMC’s chief market analyst Michael Hewson also raised some worries that perhaps investors have started to “price in a little too much optimism”.

Elsewhere, markets will also be listening up as federal reserve bank presidents in Chicago and New York deliver a raft of speeches later in the day.

Meanwhile, in London, the FTSE 100 had turned positive, albeit not by much, and was 8 points higher at 7,396 at around 1.45pm.

11.30am: BT drops as Virgin Media opts for Vodafone

As the morning session came to a close the FTSE 100 was still plodding along in negative territory and was down 3 points at 7,384 at around 11.30am.

The blue-chip index is reflecting similarly sluggish performances from other markets across Europe, with stronger than expected retail sales data for the eurozone in September, which showed a 0.1% rise month-on-month compared to expectations of flat growth, failing to provide much upward momentum.

On the company front, telecoms giant BT Group PLC (LON:BT.A) sank 3.8% to 194.9p in late-morning after Virgin Media opted to switch its mobile customers over to the network of rival Vodafone Group plc (LON:VOD).

Virgin’s 3mln customers currently use BT’s EE network for their mobile service, however, the current deal, due to end in 2021, will now start to wind down for the switch over.

The move will likely serve as a blow to BT’s turnaround efforts, with the group accelerating its roll-out of fibre broadband and 5G mobile internet in a bid to stay competitive and increase profits.

The loss of business may also increase fears that the firm may cut its dividend to stay on track with its cost saving plans.

At the other end of the FTSE 100 movers, Imperial Brands was still at the top of the table, rising 2.8% to 1,797.6p.

10.10am: FTSE 100 slips further as miners and property groups retreat

Into mid-morning the FTSE 100 had continued its slow decline despite a brief flirtation with some gains and was 16 points lower at 7,371 shortly after 10am.

Miners are serving as a key weight on the index amid uncertainty over US-China trade relations, with Anglo American plc (LON:AAL) sliding 1.4% to 2,056p while Glencore dropped 1.5% to 255.4p.

Blue-chip property groups also turned downwards in the wake of a profit warning from sector peer Intu Properties PLC (LON:INTU), with British Land Company PLC (LON:BLND) falling 2.3% to 590.2p and Land Securities Group PLC (LON:LAND) down 1.8% at 900.6p.

At the other end of the scale, tobacco firm Imperial Brands PLC (LON:IMB) was leading the blue-chip risers, up 2.1% at 1,785p, continuing a positive run in the wake of its final results on Tuesday.

The lacklustre performance in the FTSE 100 was slightly mirrored by a stagnant currency market, with the pound mostly flat against the dollar at US$1.288, as the UK’s election campaign got into full swing with the official dissolution of Parliament.

8.35am: Slow start for Footsie

As expected, the FTSE 100 drifted lower with little in the way of news on Sino-American trade relations to keep the mood buoyant.

The index of blue-chip stocks nudged 10 points lower to 7,377.82

According to Neil Wilson, senior analyst at Markets.com, the recent “relief rally” may already have priced in much of the good news on trade and none of the bad.

“A deal seems to hinge on the US removing the tariffs it’s placed on China - for all the optimism, this would be a stretch,” he explained.

“Whilst we noted yesterday the US appeared to have blinked, and does look prepared to reduce some tariffs and scrap some planned tariffs, demands from China to remove all tariffs in order to complete a ‘phase one’ deal would be too much,” Wilson added.

The day’s big corporate news came from Marks & Spencer (LON:MKS), with the retailer's latest figures on the face of it providing little solace to investors.

Poor clothing and homeware sales were only partially offset by the outperformance of the store chain’s food operation.

However, the six-month numbers bore the scars of the firm’s turnaround strategy and the market appeared willing to cut Marks some slack. The shares opened 5% higher.

“The sharp focus which the group is displaying in attempting to haul the M&S brand to the current day has initially been well received by the market, although there is much damage to repair,” said Richard Hunter, stocks guru at Interactive Investor.

Proactive news headlines:

MTI Wireless Edge Ltd (LON:MWE) revealed Wednesday that  Ginat Wave India Private Limited, its offset manufacturing company in India, has secured another large scale order, from a returning European customer, totalling €1.5mln. In a brief statement, the AIM-listed technology group, which  is focused on comprehensive communication and radio frequency solutions across multiple sectors, said the order is for cable harnesses to be supplied over 5 years.  

Thor Mining PLC (LON:THR) was on the ascent on Wednesday as it reported visible gold samples had been discovered at its Pilbara Goldfield tenements in Western Australia. The AIM-listed firm said visible gold had been found in 13 of 44 sediment trap sites at the project, a result it said was “very encouraging” ahead of laboratory assay work.

InnovaDerma PLC (LON:IDP) said it is trading in line with market expectations, buoyed by the stocking of its popular Skinny Tan line in 1,300 Boots stores. Revenues for the first four months of financial year were ahead 38%. InnovaDerma said Boots had increased shelving for its Roots hair care brand, which it described as “a major vote of confidence”.

Sound Energy PLC (LON:SOU) has signed a preliminary agreement to sell just over half of its stake in its Tendrara licences in East Morocco for US$113mln. The consideration is US$54mln cash and the rest a carry for future capital expenditure. Sound currently holds a 47.5% stake in the East Morocco licences but this will drop to 23.3% once the sale completes with the purchaser also having an option to acquire a further 9% within a year.

Ceres Power PLC (LON:CWR) has developed its first zero-emission combined heat and power (CHP) system, designed exclusively for use with hydrogen fuel. The fuel cell specialist said in a statement that the hydrogen CHP is simpler than its existing fuel-flexible system, as it delivers an equivalent performance with fewer components and up to a 40% cost reduction, and it can be used in homes and businesses.

Iofina PLC (LON:IOF) has unveiled an investment in Organic Vines, a hemp seed production and genetics firm. The AIM-listed group has invested US$900,000 into Organic Vines as part of a US$1.9mln fundraising effort to support the company’s first grow cycle at its 240,000 square foot greenhouse facility in Denver, Colorado, which is capable of producing over 50mln hemp seeds per cycle.

Pembridge Resources PLC (LON:PERE) has received the first revenues since copper, gold, and silver mining began again at the Minto open pit in October. In a statement, Pembridge said its Minto subsidiary has received a 90% provisional payment of US$3.4mln from Sumitomo Ltd for the concentrates produced in the month of October. Minto is an open pit and underground copper-gold-silver mine located in central Yukon, approximately 240 kilometres north of the capital Whitehorse along the Klondike Highway.

Aminex PLC (LON:AEX) aims to fast track its exploration programme in the Ruvuma Basin due to an improved business environment in Tanzania. A US$40mln work programme for 2020 has been submitted to the Tanzanian government and includes the drilling of the Chikumbi-1 well and the acquisition of extensive 3D and 2D seismic surveys over the Mtwara licence. Aminex is fully carried for the cost of the work through its farm-out with Omani group Zubair’s ARA subsidiary, where it expects to receive an advance payment of US$3mln shortly.

Frontier IP Group PLC (LON:FIPP) has said it is confident that its portfolio will continue to grow after profits in its latest full-year shot up 160%. The AIM-listed firm, which specialises in the commercialisation of intellectual property, reported a pre-tax profit for the year ended 30 June of £2.35mln, up from £902,000 in 2018, while total revenues jumped 81% to £4.27mln, reflecting an unrealised profit on investments of £3.85mln. In a separate announcement, the company also announced plans for a share placing to raise £3.5mln, although this could rise to £4mln depending on demand.

Arix Bioscience PLC (LON:ARIX) said an investee company has “in-licensed” an ATR inhibitor programme from one of the world’s leading cancer centres and a venture capital firm. Artios Pharma’s exclusive deal with The University of Texas MD Anderson Cancer Center and ShangPharma Innovation strengthens the company’s earlier-stage pipeline focused on the area of DNA damage response. DDR is a network of cellular pathways that sense, signal and repair DNA lesions.

Live Company Group PLC (LON:LVCG) has signed a joint venture (JV) deal to bring its BRICKLIVE shows to South Africa. The agreement with South African event organiser WORLDSPORT will see the media group stage and promote BRICKLIVE shows in the country, with the first to take place in Cape Town in the first half of next year.

genedrive PLC (LON:GDR), the near patient molecular diagnostics company, announced its intention to propose to shareholders, for approval at the company's forthcoming AGM, the appointment of RSM UK Audit LLP as its auditor for the year ending 30 June 2020. The group said the decision follows a competitive tender process which has been overseen by the Audit and Risk Committee. PwC LLP, the company's current auditor, which undertook and completed the audit for the year ended 30 June 2019. It pointed out that PwC has confirmed to the company that it is not aware of any circumstances connected with its termination as auditor that it considers should be brought to the attention of the board, creditors or shareholders. The company's AGM will be held at 12:00pm on 27 November 2019 at 46 Grafton Street, Manchester M13 9XX.

RM Secured Direct Lending PLC (LON:RMDL) said that, further to its announcement of 17 October 2019, the expected timetable of its proposed fundraise of up to £10 million through the issue of new ordinary shares of £0.01 each is being extended to facilitate further discussions with certain investors with a view to securing a potentially material investment in the placing. The group said the proposed placing is now expected to close at 1.30 pm (London time) on 12 November 2019, but may be closed earlier or later at the discretion of the company and broker N+1 Singer.

Inspired Energy plc (LON:INSE), a leading energy consultant to UK and Irish corporates, announces that Mark Dickinson CEO and Paul Connor CFO, are attending the Mello London investor conference on Wednesday 13 November 2019. Dickinson will be presenting to delegates at the event, which is being held at the Clayton Hotel Chiswick, Chiswick High Road, London, W4 5RY.

6.35am: FTSE set to drift lower 

The FTSE 100 is expected to open 24 points lower at 7,364.08, taking its cue from the bourses of Japan, mainland China and Hong Kong.

Wall Street was mixed, with the Dow Jones edging to a new all-time high. The broader-based S&P500 ended a fairly lacklustre session in reverse gear.

There was no real and positive update on the state of Sino-American trade relations, just some cryptic comments from the Chinese premier.

“Xi Jinping requested that countries use trade talks to promote better relations,” said CMC analyst David Madden, trying to make sense of Xi’s words.

“A reference was made to the tensions between nations, and Xi talked about easing the tensions through dialogue.

“Given that Beijing have been locked in a trade spat with Washington DC for over one year, it was clear the message was aimed at the US. Actions speak lounder than words. So, when the US dollar traded below the seven-mark against the yuan, traders viewed it as further evidence the Chinese government are keen to edge towards making a deal with the US,” Madden concluded.

Closer to home, there’s a market update from Marks & Spencer (LON:MKS), fresh from the ignominy of being booted out of the FTSE 100, along with a trading statement from builder Redrow plc (LON:RDW).

Around the market:

Pound worth US$1.2880, flat

Gold US$1,485.70 an ounce, up US$2.00

Brent crude US$62.74 a barrel, down 22 cents

Significant corporate news expected on Wednesday:

Interims: Marks and Spencer Group PLC (LON:MKS), Sophos Group PLC (LON:SOPH)

Finals: Connect Group PLC (LON:CNCT)

Trading statements: Apax Global Alpha Ltd (LON:APAX), Croda International Plc (LON:CRDA), Intu Properties PLC (LON:INTU), Redrow plc (LON:RDW), Tyman PLC (LON:TYMN)

AGMs: Hansard (LON:HSD), Hermes Pacific Investments PLC (LON:HPAC), Innovaderma (LON:IDP), Redrow plc (LON:RDW), Schroder Japan (LON:SJG), Strategic Equity Capital PLC (LON:SEC), Vast Resources PLC (LON:VAST)

Economic announcements: Halifax house prices, EU retail sales, US MBA mortgage applications       

City Headlines: 

Financial Times

  • Germany’s Scholz pushes eurozone banking union plan - finance minister says Berlin should support common deposit insurance scheme
  • Ikea and H&M step up venture capital investments
  • Bondholders warn Argentina not to make debt ‘uninvestable’

Times

  • Pessina may take Boots private for second time
  • Scandal-hit unit at RBS ‘pressured by Treasury’
  • Cobham’s private equity sale is left waiting for clearance
  • Sports Direct has said it will not rescue any more distressed retailers until politicians introduce better protection for shareholders facing losses from collapsed companies

Telegraph

  • BlackRock and Schroders emerge as frontrunners for third Woodford fund
  • Inmarsat's $3.4bn sale under threat as investors make last-minute push for a better offer
  • Dominic Chappell banned for a decade in wake of BHS collapse

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