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FTSE 100 closes lower as Trump on trade disappoints European markets

Footsie closed around 14 points in the red at 7,351 while FTSE 250 fared worse, dropping 137 points at 20,289

New York skyline
FTSE 100 closed in the red but on the other side of the pond shares were higher
  • FTSE 100 index closes down 14 points
  • Trump trade speech fails to reassure
  • Fed chaor Powell reassures investors on rates
  • Wall Street  heads higher

5.20pm FTSE closes lower but US stocks up

FTSE 100 index closed lower on Wednesday as European markets were disappointed by President Trump's comments on trade yesterday.

Footsie closed around 14 points in the red at 7,351 while FTSE 250 fared worse, dropping 137 points at 20,289, weighed on by oil major Tullow Oil (LON:TLW), which saw shares slip over 27% to 149.65p after it cut its full-year production guidance.

But Wall Street shares headed the other way after a soft open as traders were buoyed by comments from Federal Reserve chairman Jerome Powell, stating  the central bank was unlikely to raise interest rates in the near term. He is testifying  to the joint economic committee in Congress.

"European markets are marooned in negative territory, after President Trump’s omission of any tariff delay for European car imports, but in the US a recovery is underway and indices are clocking up some small gains after a weaker open," said Chris Beauchamp, chief market analyst at IG.

And he added: "Jerome Powell’s testimony is sending the right message for investors, since a December rate cut would probably get plenty of investors worrying that the data is taking a bigger turn for the worse," he added.

The Dow Jones Industrial Average added around 46 points to 27,738, while the S&P 500 gained around a point.

3.05pm: Wall Street opens in the red, Powell remarks scrutinised

Wall Street has started on the back foot on Wednesday, with investors poring over written comments from Federal Reserve Chair Jerome Powell ahead of his Congress testimony later.

The Dow Jones index opened in the red, but not by much, with the benchmark dipping 38 points or 0.1% to 27,653.39 in early trades.

Also down 0.1% was the broader S&P 500 index, with the Nasdaq Composite worst hit with a 0.2% decline.

Traders were mulling over comments from Powell that provided further indication that the Fed is not likely to cut interest rates again at next month’s policy meeting, saying the current stance of policy is “likely to remain appropriate” barring a material change in the outlook. 

Powell’s remarks echoed the language used at his post-FOMC press conference last month, said Andrew Hunter at Capital Economics

“Officials have no doubt been further comforted by the signs of stabilisation in the business surveys in recent weeks and the more encouraging news on the trade talks with China. 

“On balance, there is still a small chance of one final 25bp cut over the coming months if, as we expect, economic growth slows further – Powell also reiterated that risks to the outlook remain and that ‘policy is not on a preset course’. But it now looks increasingly likely that the Fed will move to the side-lines for an extended period.”

There was not much dollar reaction, but the pound is now 0.1% weaker at $1.2832, while the euro is modestly stronger.

Back in Blighty, the Footsie is still tip-toeing back towards the flat-line, now down 19 points at 7,346.

2pm: Wall Street stocks set to drop 

US stocks are expected to play catch up with the losses in other global equities when trading begins shortly, with fresh US inflation data proving mixed.

Futures markets are pointing to an opening 0.3% decline for the Dow Jones index to 27,569, with the broader S&P 500 and tech-laden Nasdaq Composite both down by a similar degree.

The headline US consumer prices index was up 1.8%, up from 1.7% which was better than the flat month expected.

Meanwhile core CPI, which excludes fuel and food prices, was up 2.3% year on year, which was unexpectedly softer than the 2.4% seen a month ago.

On a month-on-month basis, headline CPI was up a larger than expected 0.4% mainly due to higher gasoline prices. 

There was “little sign of the September tariffs pushing up prices of consumer goods” said Michael Pearce at Capital Economics

“Underlying price pressures are moderate, with core inflation edging back to 2.3%, consistent with the Fed’s preferred PCE measure running slightly below the 2% target.”

With the report suggesting core inflation is levelling off close to the Fed’s 2% target, Pearce concluded: “Barring a sharp slowdown in economic activity, that supports the Fed’s stance of leaving interest rates on hold for an extended period.”

The dollar was little moved against the pound at 1.2842, nor against the euro.

In London, the Footsie continues to try and creep back towards parity, now at 7,342, down 23 or 0.3% for the day.

One big gainer is Ocado PLC (LON:OCDO), recouping some of the big losses in recent days due to worrying reports for the company and investors that its relationship is "cooling" with US grocery partner Kroger.

Bernstein analysts said that the 19% sell-off over the past week is undeserved and that the group's relationship with Kroger remains strong.

12.45pm: Blue chips crawling back, mid caps wallowing

The FTSE 100 is continuing to work at its comeback from earlier losses, now down 27 points or 0.4% at 7,338.69.

With its financial sector stocks still wallowing, the heavy lifting is being done by the likes of Smiths Group PLC (LON:SMIN) as the engineer reported a strong quarter's growth of 11%.

Precious metals groups Fresnillo Plc (LON:FRES) and Polymetal International PLC (LON:POLY) were also glistering among the upper echelons of the leaderboard thanks to gold prices rallying around 1% to US$1466 thanks to the jittery markets providing support for haven trades.

“The rally lacks confidence,” cautioned Neil Wilson at Markets.com, however, putting his technical analysis hat on to read the runes - seeing potential moves back to long-term support around $1360-70, a “bullish flag retracement”, and a tall dark stranger who may cross your palm with bitcoin or something. 

The FTSE 250 index is still performing worse than its big sibling, down 164 points or 0.8% to 20,262.65.

Tullow Oil plc (LON:TLW) is the biggest drag as shares in the African oiler crashed 28% to 148.6p by early afternoon after warning that oil production would not meet full-year targets.

Average daily production for 2019 is now anticipated to be around 87,000 barrels of oil, down from the previous guidance of 89,000–93,000, which in combination with a dip in oil prices has also hit free cash flow generation and therefore putting pressure on the newly minted dividend. (READ MORE on Tullow Oil's update here.)

11.40am: Footsie reduces losses

Oil is one of the main reasons for the FTSE 100’s early decline, with the heavily weighted Royal Dutch Shell PLC (LON:RDSB) and BP PLC (LON:BP.) both sliding in morning trade.

Future pricing for a barrel of Brent crude is down more than 1% to $61.27 and this is likely to do with global trade tensions. 

“Oil prices are naturally sensitive to shifts in sentiment so it's no surprise to see them coming under a little pressure today,” said market analyst Craig Erlam at Oanda, adding that the crude price drop-off seems to be tied to the latest trade headlines.

Later API inventory data “will provide a temporary distraction” he said, with last week seeing a larger than expected increase.

“Another this week may add to the downward pressure on crude, although with Brent above $60 still, that's not the end of the world.”

Overall, London’s blue chip index has reduced losses slightly, though still remains firmly in the red at 7,326.39, down 39 points or 0.5%.

Looking at the other end of the index, the leaderboard is topped by Coca-Cola HBC AG (LON:CCH) even though the Coke bottler lowered its full-year revenue growth expectations due to poor weather.

SSE PLC (LON:SSE) is also on the rise as it said it's on course to complete the sale of its retail energy arm to OVO in “early 2020” as it reported improved earning from the rest of its business in the first half of 2019.

Shares in Spirax-Sarco Engineering PLC (LON:SPX) are steaming higher too as the engineer kept full-year expectations unchanged.

10am: FTSE extends losses after CPI disappointment

The FTSE 100 is extending losses in mid-morning trading after some mixed UK inflation data saw the pound recover from an earlier wobble.  

Consumer price inflation fell to 1.5% in October from 1.7% in September, the Office for National Statistics revealed, which is the lowest since November 2016 and below the consensus forecast for 1.6%. 

A weakening in inflation might fan the belief the Bank of England would be more inclined to cut interest rates in the new year if the economy continues to struggle.

However, core inflation, which excludes more volatile prices for fuel and food, was unchanged at 1.7%, in line with economists estimates.

The fall in the main consumer price index was mainly due to a sharp fall in energy prices in response to the reduction in the default tariff cap imposed by regulator Ofgem, pointed out economists, so not signalling weaker domestically-generated inflation.

“October’s low and stable rate of core inflation, meanwhile, masks a gradual rise in domestically-generated inflation (DGI) over the last year,” said Sam Tombs at Pantheon Macroeconomics, calculating that the BoE’s preferred measure of “underlying” services inflation dipped in October but remained well above its prior 12-month average. 

With CPI looking set to hover about 1.5% over the next six months, as a modest rise in core inflation is offset by further weakness in energy prices, Tombs said “we still doubt that the relatively subdued near-term outlook for inflation will steer the MPC to cut Bank Rate soon”.

Sterling, which had weakened against the dollar in the lead-up to the ONS report, recovered sharply and is roughly flat at $1.2850.

The Footsie meanwhile has softened further, now down 59 points or 0.8% at 7,306.66, with financial stocks leading the decline.

Life insurers, fund mangers and banks are among the big losers, with Prudential PLC (LON:PRU) down 4% and a 3%-plus fall for HSBC Holdings (LON:HSBA), with Hong Kong's violent protests clearly doing extra damage to this Asia focused pair.

But not far behind are Aviva PLC (LON:AV.), Legal & General Group PLC (LON:LGEN) and St James's Place Plc (LON:STJ).

8.40am: Further weakness for Footsie

The FTSE 100 index, as expected, opened in the red on Wednesday as London’s price-makers fretted over the latest salvo in America’s trade war and assessed the impact of continued turmoil in Hong Kong.

The index of UK blue-chips fell 33 points to 7,332.22 in early trade 

Rather than using the medium of Twitter, Donald Trump navigated a more traditional route to deliver his latest thoughts on international commerce, delivering a speech to the Economic Club of New York.

While he said the long-awaited phase-one deal with China could be done “soon”, the US president threatened to raise tariffs if an accord isn’t struck.

“This has not helped sentiment in Asia and is also a factor for European sentiment,” said Neil Wilson, analyst at Markets.com.

The Hang Seng lost almost 2% on Wednesday as civil unrest continued, while the Shanghai Composite also ended in negative territory.

Closer to home, shares in British Land (LON:BLND) fell 1.8% after it marked down the value of its property portfolio by £600mln as it recognised weakness in the retail market.

Profit-taking hit shares in ITV (LON:ITV), down 2% the day after a generally solid quarterly trading update.

On the up was blue-chip bottler and transportation firm Coca Cola HBC (LON:CCH), which rose more than 2% after it delivered an increase in revenues in spite of the generally poor weather.

Proactive news headlines:

EQTEC PLC (LON:EQT) has inked an agreement to develop a 1.18 megawatt (MW) biogas power plant in the commune of Gratens in France. Under the €5.5mln (£4.7mln) commercial agreement with French group Biomasse 31, EQTEC’s first in the country, it will provide the technology, equipment and services required to construct the plant.

Integumen PLC (LON:SKIN) provided 2020 revenue guidance of £4mln as it unveiled a deal to deliver artificial intelligence software to clients of Parity Group, the data and people specialist. The Drive4Growth partnership will provide Integumen access to Parity's National Health Service, central government and private institutional client base, the company said.  And it creates the opportunity to cross-sell its intelligent data management services driven by its Rinodrive technology, it added.

accesso Technology Group PLC (LON:ASCO) is continuing discussions with several parties over a potential sale of the business. In a brief update on Tuesday, the electronic queuing and e-ticketing specialist said it has received “refreshed indications of interest over the last several months” and the interested parties were still engaged in financial and operational due diligence.

Avacta Group PLC (LON:AVCT) has taken an “important step” towards further “substantial” milestone payments from the drug development arm of the Korean giant LG by expanding its partnership. The latest update reveals that LG Chem has now nominated two further prospective treatments that will use the UK group’s technology. Avacta chief executive Alastair Smith said the first LG drug programme had made “excellent progress”, and was upbeat on the expanded collaboration.

Xpediator PLC (LON:XPD) has appointed a new chief financial officer, Robert Ross, who will take up his post on 1 January. In a statement, the AIM-listed provider of freight management services said Ross is replacing Richard Myson, who has been at the company for 15 years and will become the group's chief commercial officer. Ross is currently finance director of Europa Worldwide Group, a transport and logistics company with £175mln annual revenues, and previously held several management roles at Big Four auditor PwC.

Arc Minerals PLC (LON:ARCM) has unveiled plans to sell its entire 99.43% interest in Casa Mining Limited to Canadian private equity group, Century Capital Management Ltd for a total consideration of up to US$9.8mln. In a statement, the company said the initial consideration will comprise a cash consideration of US$1.8mln and will have a significant positive impact on Arc's cash and balance sheet position.

Caledonia Mining PLC (LON:CMCL) has shrugged off power outages in Zimbabwe to lift production at the Blanket mine by 7% in its latest quarter. Production in the three months to September was 13,646 ounces of gold as output rose in the second six weeks as Caledonia used generators it has installed at the gold mine to keep operations running.

Eco Atlantic Oil & Gas Ltd (LON:ECO, CVE:EOG) chief executive Gil Holzman said the explorer is “very confident of the potential” of its Guyana joint venture as it updated investors on the latest findings of analysis from its two new offshore discoveries. The Jethro-1 and the Joe-1 wells, drilled in August and September, continue to be analysed and fluid samples are presently in the lab. Initial results, meanwhile, indicate that both discoveries comprise mobile heavy crudes which are said to be “not dissimilar” to the commercial heavy crudes in the North Sea, Gulf of Mexico, Brazil, Venezuela and Angola.

Horizonte Minerals PLC (LON:HZM) (TSX:HZM) has highlighted another quarter of good progress at its projects in Brazil. At its flagship Araguaia project, mine financier Orion is to provide US$25mln for a 2.25% royalty on the first 426,429 tonnes of contained nickel within the final product (ferronickel) produced and sold. Horizonte also published a first resource for the Serra do Tapa nickel deposit that sits 90km to the north-west of Araguaia. In the Measured and Indicated category, Serra do Tapa contains 70.3mln tonnes grading 1.22% nickel, which has boosted Horizonte’s total tonnage by 30%.

Collagen Solutions PLC (LON:COS) has decided to streamline its board of directors by reducing its size from eight to six members as it enters its next phase of growth. In an update on Wednesday, the manufacturer of biomaterials and regenerative medicines said that its chief business officer, Lou Ruggiero, and chief operating officer, Tom Hyland, will resign from the board of directors. This will leave the chief executive officer Jamal Rushdy and chief financial officer Hilary Spence as the only two executive directors on the board, and reduce the entire size from eight members to six.

Sound Energy PLC (LON:SOU) has told investors that Mohammed Seghri, its current managing director for Morocco, will be appointed as interim chief executive in the near future. In August, the company revealed that James Parsons would step down from the company amid a strategy to partially divest its Eastern Morocco portfolio, which envisages the continuing Morocco business being fully carried and non-operated. It has now been confirmed that Seghri will be interim chief executive and current non-executive director Marco Fumagalli will become acting chairman with immediate effect, to replace chairman Simon Davies.

Crossword Cybersecurity PLC’s (LON:CCS) chief executive, Tom Ilube, has been added to the #IB100, a list of the top 100 most influential black, Asian and minority ethnic (BAME) leaders in the tech sector. The list will be published online as part of a Financial Times report into diversity in tech aiming to encourage technology firms to implement inclusive working practices to fix progression challenges facing BAME individuals from moving to senior leadership positions.

Landore Resources Limited (LON:LND) has converted the exploration permits into mining leases at two huge licences next to its Junior Lake property in Ontario. The two licences are held by 90% subsidiary Lamaune and cover an area of 4,133ha adjacent to four leases at Junior Lake.

Echo Energy PLC (LON:ECHO), the Latin American-focused upstream oil and gas company, announced that the acquisition by the company of a 70% initially non-operated working interest in the Santa Cruz Sur package of five mature producing blocks, from Petrolera El Trebol SA, a subsidiary of Phoenix Global Resources PLC has now completed. Martin Hull, Echo’s chief executive, commented: "We believe we have secured a very attractive price for a package of assets which provide the Company with a balanced, revenue-generating portfolio with significant upside as well as exciting near-term drilling opportunities. I look forward to updating shareholders on our progress in due course, not least as we finalise preparations for drilling at Tapi AIke."

Collagen Solutions PLC (LON: COS) has decided to streamline its board of directors by reducing its size from eight to six members as it enters its next phase of growth. In an update on Wednesday, the manufacturer of biomaterials and regenerative medicines said that its chief business officer, Lou Ruggiero, and chief operating officer, Tom Hyland, will resign from the board of directors. This will leave the chief executive officer Jamal Rushdy and chief financial officer Hilary Spence as the only two executive directors on the board, and reduce the entire size from eight members to six.

Seeing Machines Limited (LON:SEE), the advanced computer vision technology company that designs AI-powered operator monitoring systems to improve transport safety has appointed two independent non-executive directors, John Murray and Gerhard Vorster, with effect from 1 December 2019. The group noted that Murray is currently chairman of PainChek Limited, listed on the Australian Stock Exchange (ASX); Vorster is a former Deloitte partner with a growing board portfolio and significant expertise in strategy and technology and is currently an alternate director of the Brisbane Airport Corporation and chairman of the Bio Capital Impact Fund.

Nu-Oil and Gas PLC (LON:NUOG) has announced that Graham Scotton has resigned from his position as a non-executive director of the company with immediate effect by mutual agreement.

Verona Pharma  PLC (LON:VRP) (NASDAQ:VRNA), a clinical-stage biopharmaceutical company focused on respiratory diseases, said its CEO Jan-Anders Karlsson will present a corporate overview and host one-on-one meetings with investors at the Jefferies 2019 London Healthcare Conference taking place November 20-21, 2019.

Oriole Resources PLC (LON:ORR), the AIM-quoted exploration company focused on West Africa, said it will be attending the 121 Mining Investment Conference on Wednesday 20 November to Thursday 21 November 2019 at etc.venues County Hall, Riverside Building, Belvedere Road, London, SE1 7PB. The group said Tim Livesey, its chief executive officer, will be giving a presentation at 4.10pm on the 21 November 2019.

Gfinity PLC (LON:GFIN), a world-leading esports solutions provider, said its Annual General Meeting will be held at 10.00am on 6 December 2019 at the Gfinity Arena, Vue Cinema Fulham Broadway Retail Centre, Fulham Road, London SW6 1BW.

6.50am: FTSE 100 set to fall 

The FTSE 100 is expected to fall on Wednesday morning, following declines in Asian markets with President Trump firing off new threats about trade.

London’s blue-chip index is seen dropping around 38 points, giving away all its gains from the day before when it finished at 7,365.  

Asian stocks were also mostly in the red due to mounting violence in the Hong Kong protests and the speech from the US President warning that he would hike tariffs on Chinese imports “very substantially” if the first phase of a deal fails.

Hong Kong’s Hang Seng was down more than 2% at 26,500, while the Shanghai Composite shed 0.5% and the Nikkei 225 lost 0.9%.

Wall Street enjoyed a mostly better session, with the Dow Jones unchanged by the end of play at just over 27,691, but the broader S&P 500 climbing 0.2% and notching up a new record on the day, while the Nasdaq Composite closed 0.3% higher. 

The Trump speech “contained little new to judge the imminence of a trade deal with China”, said economists at ING, who were “surprised that markets shrugged this off so lightly”.

Looking at the pound, there could be new impetus from UK inflation numbers due later this morning.

Consumer price inflation is expected to have eased from 1.7% to 1.6% in October. 

“A soft inflation read could revive the Bank of England (BoE) doves and increase the selling pressure on the pound following last week’s surprise dovish shift in the MPC,” said Ipek Ozkardeskaya at London Capital Group. 

“But, although a soft inflation could allow the BoE to loosen its monetary policy to cope with the global economic slowdown and the headwinds due to the Brexit, the probability of a rate action remains quite slim for the coming quarter.

She noted that activity on the gilts market suggested the chance of a rate cut is priced at a relatively low 32% by the end of the first quarter of 2020.

In company news, Wednesday will see results from British Land, SSE and Talktalk and trading updates including from JD Wetherspoon, Taylor Wimpey and Spirax-Sarco.

Significant announcements on Wednesday:

Interims: British Land PLC (LON:BLND), SSE PLC (LON:SSE), Talktalk Telecom Group PLC (LON:TALK), Renold PLC (LON:RNO), Speedy Hire PLC (LON:SDY), Biffa PLC (LON:BIFF), Wincanton PLC (LON:WIN), Wizz Air Holdings PLC (LON:WIZZ), Workspace Group (LON:WKP)

FinalsAvon Rubber PLC (LON:AVON), BBA Aviation PLC (LON:BBA),

Trading statements: Taylor Wimpey PLC (LON:TW.), Tullow Oil plc (LON:TLW), JD Wetherspoon PLC (LON:JDW), Smiths Group PLC (LON:SMIN), Spirax-Sarco Engineering PLC (LON:SPX), OneSavings Bank PLC (LON:OSB), Valeura Energy PLC (LON:VLU)

AGMsHays PLC (LON:HAS)

Economic announcements: UK and US inflation

City headlines:

Financial Times

  • Top health websites are sharing sensitive data with advertisers, with an investigation revealing symptoms and drug names shared with hundreds of third parties including Google and Facebook.
  • Chinese students flee Hong Kong after another night of violence, with Beijing warning against ‘mob behaviour’ as the city it buffeted by more transport chaos.
  • UK companies are at risk of falling short of gender targets, with a review finding the proportion of women in senior leadership roles in the FTSE 350 still ‘well adrift’ of the goal of 33%.

The Times

  • Royal Mail has lost its appeal against Ofcom’s finding that it was guilty of market abuse designed to quash Whistl, a letter-handling rival.
  • New Bond Street in central London is the third priciest street in the world in which to set up shop, according to new research.
  • A shake-up is on the cards at Domino’s Pizza Group after an activist investor who recently acquired a 6.5 per cent stake secured a seat on the troubled pizza takeaway chain’s board.
  • Tesla has chosen Berlin as the site for its new European manufacturing hub, which is expected to build electric cars and batteries for sale across the Continent.
  • Residents of flood-damaged homes in the UK will receive up to £10,000 towards measures to protect their properties from future deluges under plans from a government-backed scheme.

Guardian

  • The world’s existing climate policies will not be enough to end the upward march of record energy emissions rising beyond 2040 without a “grand coalition” of governments and investors, according to the global energy watchdog.
  • John McDonnell has accused McDonald’s of failing to pay enough tax in Britain and demanded a wage rise for its workers and trade union rights to organise at its restaurants.
  • Mars is to launch a vegan version of its best-selling Galaxy bar in the UK, the first move by a large mainstream confectionery brand to offer consumers a plant-based alternative to milk chocolate.

Telegraph

  • A CCTV company in China that is a 
major supplier to councils and the NHS has been advertising cameras that ­racially profile Uighur Muslims, amid a crackdown by the communist regime.
  • The High-Speed 2 rail link has descended into chaos after the deputy chairman of a Government-commissioned review issued a withering attack on its own draft findings.
  • Nervous investors are dumping shares in online grocer Ocado PLC (LON:OCDO) amid fears that its online rivals are catching up, with claims from industry observers that the company's relationship is cooling with Kroger, the largest supermarket chain in the US and a key client. 
  • KPMG faces fresh embarrassment after its former client Halfords was forced to take a £12m hit following an accounting change. 
  • Philip Hammond has been appointed to the board of an Irish packaging maker just a week after announcing he would not stand for re-election as an MP. 

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