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FTSE 100 closes a touch higher; sterling stays weak on election fears

By the close, the UK blue chip index was up 6.85 points, or 0.1% at 7,403.14

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On Wall Street around London’s close, the Dow Jones Industrials Average was up 33 points, or 0.1% as well
  • FTSE 100 ends 6.85 points firmer
  • US stocks tick higher
  • Trade deal hopes hold sway

4.50pm: Modest gains for Footsie

The FTSE 100 index ended Tuesday with similar modest gains to those experienced in morning trading on Wall Street as slight optimism over US/China trade negotiations held sway, while a weaker pound also helped in London.

By the close, the UK blue-chip index was 6.85 points, or 0.1% higher at 7,403.14, drifting back from a session peak of 7,421.30 less than a week after striking an intraday low of 7,200.

On Wall Street around London’s close, the Dow Jones Industrials Average was up 33 points, or 0.1% as well, at 28,098, while the broader S&P 500 index and tech-laden Nasdaq Composite both added 0.2%, with most investors more focused on the imminent US Thanksgiving holiday.

As Connor Campbell, financial analyst at Spreadex commented: “Without much to go on regarding a trade deal – investors seemed to ignore Kellyanne Conway’s claim that the countries are ‘getting really close’ to completing ‘phase one’ – the markets largely twiddled their thumbs.”

On sterling, he added: “After sharply rising on Monday on the back of polls pointing to an 80-seat majority for the Tories, the latest surveys showing a shrinking lead for Boris Johnson and co. caused the pound to go in reverse."

3.00pm: Indifference rules

US markets opened higher but the fact had little discernible impact on sentiment in London.

The FTSE 100 has been parked just above the 7,400 level for most of the afternoon and is currently up 10 points (0.1%) at 7,406.

In the US, the Dow Jones is up 35 points (0.1%) at 28,101 and the S&P 500 is up 1.5 points (0.1%) at 3,135.

On the macro side of things, the October advance goods deficit in the US to fall to a 17-month low of US$66.5bn, from US$70.5bn in September and well below the consensus forecast of US$71.3bn.

“The consensus always looked too gloomy, following the release of data on container movements at major ports pointing to a clear drop in imports,” according to Ian Shepherdson, the chief economist at Pantheon Macroeconomics.

“In the event, the 2.4% fall was bigger than we expected, and was concentrated in autos and other consumer goods. Auto imports may have been distorted by the GM strike, so a November rebound probably is a good bet. Imports of consumer goods have plunged by a total of 9.0% since August, perhaps in response to the new tariffs on many imported Chinese consumer goods. This too will reverse, at least in part, soon. Exports, meanwhile, dipped by 0.7%, with most of the decline in the consumer goods component,” he added.

1.30pm: A dog by any other name

Renaming a dog doesn’t then change the fact it is still a dog. Take from that whatever you wish as we look at the rather odd decision by Sports Direct (LON:SPD) to change its corporate moniker to Frasers Group.

The move will be voted on at the next annual meeting. Given that the founder and company principal, Mike Ashley owns 65% of shares, the proposal is likely to go through on the nod.

The news dribbled out just before the close Monday, and today it was greeted with a collective ‘meh’ as the stock drifted 2p to 338p.

Turning to the wider market, the index of blue-chips drifted in a sea of indifference, adding just six points to 7,402.10.

11.45am: Market does a passable imitation of a dead parrot ("Beautiful plumage, the Norwegian Blue")

An air of ennui continues to hang over the London stock market, as investors wait for more news on the US-Sino trade talks.

The FTSE 100 was up 12 points (0.2%) at 7,408.

“Stock markets in Europe are largely showing modest losses as the US-China trade story ticks along,” reported David Madden at CMC Markets.

“The updates from both sides yesterday seemed to show that progress has been made. Today, a phone call took place between China’s vice premier, Liu He, and Robert Lighthizer, US trade advisor, as well as Steven Mnuchin, US treasury secretary. It was reported the conversation entailed ‘resolving core issues’. It would appear the talks are at the finer details stage, which is a good sign, but nothing can be taken for granted,” he advised.

Back in the UK, insurance broker Hiscox PLC (LON:HSX) was doing its bit to keep the Footsie above 7,400, rising 2.4% to 1,300p on the back of a broker upgrade; HSBC has moved to ‘buy’ from ‘hold’.

In other broker action, FTSE 250 stock Tate & Lyle PLC (LON:TATE) was up 3.1% to 731p after Goldman Sachs warmed to the sweeteners maker, upgrading it to ‘buy’ from ‘neutral’.

10.30am: Housebuilders unfazed by drop in mortgage approvals

The FTSE 100 has scrambled into positive territory, helped by the weakness of sterling after an apparent erosion in support for the Conservative Party.

The top-shares index was up 2 points (0.0%) at 7,398.

“The pound is on a back foot today, with the election pollsters pointing towards a tightening gap between the Conservative and Labour parties just over two weeks before the general election,” commented Joshua Mahony at IG Group.

“Conservative gains had been a key driver of sterling upside, yet that appears to be flagging as we reach the business end of the election process. With the Conservatives having depleted much of the Brexit party vote, it seems as if their ascent could be stifled from here on. Conversely, the gains seen in a Welsh poll highlight the potential gains for Labour, with the possible impact of tactical voting pointing towards significant areas where Labour currently trail the Lib Dems or SNP,” he added.

House-builders did not seem overly fussed by the news that UK mortgage approvals fell to a seven-month low in October.

Industry association UK Finance said 41,210 mortgage applications were granted in October, compared to 42,216 in September. Economists had pencilled in a figure of 42,200 mortgage approvals for October.

On the plus side, the value of secured lending rose to £3.45bn from £2.46bn the month before, and was the largest month-on-month increase since March 2016.

“The good news is that people are still buying homes despite the political paralysis we’ve been subjected to in recent months and while we may have a long winter ahead, there are plenty of positives to take,” suggested Marc von Grundherr, the director of Benham and Reeves.

Pantheon Macroeconomics’ Samuel Tombs said we should expect a rebound in the first quarter of next year when, hopefully, the political situation will be a bit clearer.

“The return of mortgage approvals to their 12-month average in October likely partly reflects would-be buyers deferring purchases until the political outlook becomes clearer. Approvals should pick up again, if the Conservatives win a majority and pass the Withdrawal Agreement Bill by January 31, as now looks likely,” Tombs said.

 

“After all, the recent sharp decline in mortgage rates has made home-ownership much more attractive. The average quoted rate for a five-year, 75% LTV [loan-to-value] loan fell to 1.74% in October, from 1.80% in September and now is 30bp [three-tenths of a percentage point] below its level at the start of the year. Granted, employment growth has slowed and the persistence of Brexit uncertainty next year will continue to weigh on hiring decisions. Nonetheless, forward-looking indicators continue to point to wage growth remaining relatively brisk, and the passing of the WAB should help to lift consumers’ confidence, at least for a short while,” he added.

While Persimmon PLC (LON:PSN) and Barratt Developments PLC (LON:BDEV) shed 0.8% and 1.3% respectively, housebuilding peer Berkeley Group Holdings PLC (LON:BKG) was up 0.2%; Taylor Wilson PLC (LON:TW.) was unchanged.


 

9.20am: Blue-chips seeking direction

Despite sterling losing ground on foreign exchange markets, blue-chips stocks were mixed this morning.

The pound was down just over a fifth of a cent against the US dollar at US$1.2877, which would normally be enough to prompt a bit of interest in blue-chips but the FTSE 100 is actually down 6 points (0.1%) at 7,391, thanks largely to contract caterer Compass Group PLC (LON:CPG) serving up lumpy results.

The shares were down 6.6% at 1,934.5p after the catering giant said it was “taking prompt action to adjust our cost base” in Europe and certain markets elsewhere.

Richard Hunter, the head of markets at interactive investor, said the share price reaction to the numbers “is likely to be due to an element of profit-taking, as well as a tinge of disappointment at the headline level with the numbers themselves and a marginally cautious tone on prospects in Europe”.

“Even so, over the last year the shares have risen by a thumping 34%, which compares to a hike of 5% for the wider FTSE100 and, although the company is clearly well-regarded, it seems that the shares are for the moment up with events,” he added.

At the opposite end of the Footsie leader-board was building materials group CRH PLC (LON:CRH), which rose 2.0% to 2,967p after an upbeat trading update.

READ: CRH confident of further progress in 2020

Across the market as a whole, mining tiddler Rockfire Resources PLC (LON:ROCK) was the best performer, as it rocked 63% higher at 0.675p after it announced returned broad, consistent gold assays from a geophysical target on its Plateau gold project in Australia.

8.45am: Subdued start for Footsie

The FTSE 100 opened more with a whimper than a bang as it nudged 4 points lower to 7,392.58.

The spill-over exuberance from Asia’s main markets, which have been buoyed by trade hopes, failed to materialise. Instead the mood in London resembled the weather over the Square Mile – grey.

The big corporate news of the day came from De La Rue (LON:DLAR), the former mid-cap and banknote specialist that quite literally has a licence to print money.

Sounding the earnings alarm (again), it has now cancelled the dividend, leading to a 20% fall in the share price, which has now lost almost 70% of its value in the last year.

“Today’s update is worrying for investors because it suggests there’s more damage out there to be done to the shares,” said Neil Wilson, senior analyst at Markets.com.

“Shares took a long time to print but opened down 20%. Profits warnings tend to come in threes and De La Rue has held to the rule.”

All of this overshadowed the performance of Compass Group (LON:CPG), the Footsie-listed caterer.

A warning on the performance of its European operations knocked the gloss on what was a reasonably robust update and sent the share price 7% lower.

Finally, tails were certainly wagging at Pets at Home (LON:PETS), the retailer, which defied the sector gloom with better than expected profits. The shares spiked 7% higher.

Proactive news headlines:

Rockfire Resources PLC (LON:ROCK) has returned broad, consistent gold assays from a geophysical target on its Plateau gold project in Australia. The results are indicative of a large-scale gold deposit, similar to the Mt Wright gold mine, which is in turn part of the 10mln ounce-plus Ravenswood complex. Of particular note was gold mineralisation occurring almost continuously throughout a 215 metre deep hole, including 177 metres at 0.5 grams per tonne gold.

Thor Mining PLC (LON:THR) has received encouraging first results from hydrogeological drilling at the Kapunda ISR (in-situ recovery) copper project in Australia. Associate EnviroCopper drilled three holes and two screened wells at Kapunda to test the potential for an ISR operation – where ore is dissolved in the ground and the solution pumped to the surface to extract the metals.

Ncondezi Energy Limited (LON:NCCL) has received support “in principle” for a restructuring of an outstanding US$4.3mln loan plus interest. The restructuring involves a 12-month extension on existing terms, including 12% annual interest rate and the ability for lenders to swap debt for equity in part or in full at a conversion price of 10p per share

Motif Bio PLC (LON:MTFB) said it expects to make “significant savings” from delisting its depositary shares from America’s NASDAQ market. It will remain listed on AIM in the UK. Following the wind-down of its business, Motif Bio will become a cash shell

Crossword Cybersecurity PLC (LON:CCS) said its consulting division is breaking into new sectors and landing contracts with bigger customers. The division has recently signed numerous agreements including three with companies in the automotive, insurance and property sectors.

Allergy Therapeutics PLC (LON:AGY) said it is taking a “stepwise approach” to its upcoming phase III trial of its Grass MATA MPL vaccine for hay fever. Instead of embarking on one large study it will split the process in two – covering the 2020/2021 and 2021/2022 pollen seasons. This will allow Allergy to carry out an interim analysis of the data at the halfway stage.

Coinsilium Group Limited (LON:COIN) has unveiled plans to launch a blockchain software and smart contract development studio in Gibraltar. The blockchain investment and advisory firm said under a memorandum of understanding (MoU) signed with tech firm Devmons Management. Under the MOU  the two companies will rebrand Consilium’s Gibraltar subsidiary, TerraStream, as ‘TerraStream Blockchain Solutions’ (TBS), while Devmons’ co-founder, Matej Galvanek, will immediately join the new studio as a technology advisor.

Directa Plus PLC (LON:DCTA) has completed the €4.1mln purchase of a 51% stake in Setcar, the Romanian waste management and decontamination services business. In a brief statement, the graphene products specialist said the new operation will be renamed Directa Environmental Solutions.

SkinBioTherapeutics PLC (LON:SBTX) reported cash balances in line with expectations at the end of its financial year and said it has identified five “channels” for the development of its existing and new skin health technology. In the year to 30 June, the AIM-listed company completed its first human cosmetic study, appointed Stuart Ashman as its chief executive and began the discussions that resulted in a first commercial deal earlier this month.

Following on from the feasibility study for its BKM copper project in Indonesia, Asiamet Resources Ltd (LON:ARS) has designed an exploration programme focused on some of the walk-up targets nearby. The walk-up targets have the potential to add significant value by extending mine life beyond the initial nine years that have been modelled. In addition, these targets are expected to add heap-leachable copper resources to those already defined.

i3 Energy PLC (LON:i3E) confirmed that its Liberator Well 13/23c-11 reached target depth and encountered reservoir sands. In a statement, the company said the well encountered the Valhall shale as planned and cut around 220 feet of sand in the Captain reservoir. Quick analysis of the well’s initial findings indicate that, at this location, some 20 feet of the Captain sand with oil indications were found to be above the expected oil water contact point (OWC), at 5,270 feet.

AfriTin Mining Limited (LON:ATM) has raised £3.8mln through the issue of unsecured and convertible loan notes to tin trader AfriMet Resources. Money raised from the loan will also fund this ramp-up and also tests on the lithium discovery within the pegmatite ore body. Conversion of the notes would give AfriMet a 5.8% stake in AfriTin.

Salt Lake Potash Limited (LON:SO4) (ASX:SO4) said that a new corporate presentation is now available to view on the.company's website.

6.50am: FTSE 100 called higher

The FTSE 100 is expected to provide further gains on Tuesday as optimism grows about the US and China reaching a first staging post on the way to a trade truce. 

London’s blue-chip index was being called 15 points higher on spread betting platforms, climbing above the 7,400 mark that has acted as a lid on the Footsie stockpot for most of the past six months. 

Overnight, Wall Street produced some tasty gains, with the Nasdaq Composite leading the way with a 113-point or 1.3% gain to 8,632.49, another record closing high. 

The S&P index also notched up another record close, climbing 0.75% to 3,122.64, while the Dow Jones advanced 0.7% to just over 28,066.

Asian stocks are mixed but generally higher on Tuesday, with Nikkei 225 up 0.3% in Tokyo and the Shanghai Composite just on the right side of flat, but Hong Kong’s Hang Seng fell 0.1%.

After encouraging noises emerged from both sides over the weekend, further positive sounds for traders have come from the Chinese Ministry of Commerce, which released a statement saying that both sides had “reached a consensus” on resolving a number of issues in the talks. 

“While it is easy to be sceptical about these sorts of reports, given we’ve heard them so many times before, particular the ones about a rollback of tariffs, they do tend to create a momentum all of their own, even when they are denied, and no matter how cynical you are, it has tended to be a fool’s errand in standing in the way of any move higher,” said markets analyst Michael Hewson at CMC Markets. 

“As such optimism is rising that a phase one trade deal could be agreed before the 15th December when new US tariffs are expected to kick in, however it seems much more likely that these could well be deferred once more, with an agreement more likely to occur sometime in the New Year, if we get one at all.”

Looking less far forward, there are some company announcements due from the likes of FTSE 100 catering giant Compass and mid-caps including Pets at Home, Topps Tiles and Codemasters, as well as some data on both sides of the Atlantic. 

In the UK we have mortgage data, where mortgage approvals by the main high street banks are expected to remain little moved from the 42,300 in September.  

Significant announcements expected for Tuesday:

Finals: Compass Group PLC (LON:CPG), Greencore Group PLC (LON:GNC), Paragon Banking Group PLC (LON:PAG), Shaftesbury PLC (LON:SHB)), Topps Tiles PLC (LON:TPT), Ten Lifestyle Group PLC (LON:TENG), Treatt PLC (LON:TET), UDG Healthcare PLC (LON:UDG

Interims: Augmentum Fintech Plc (LON:AUGM), Caledonia Investments PLC (LON:CLDN), Codemasters Group Holdings PLC (LON:CDM), Cranswick plc (LON:CWK), De La Rue PLC (LON:DLAR), Draper Esprit PLC (LON:GROW), GB Group PLC (LON:GBG), IG Design Group PLC (LON:IGR), Imimobile PLC (LON:IMO), LXI REIT (LON:LXI), Pennon Group PLC (LON:PNN), Pets at Home Group PLC (LON:PETS), Schroder Real Estate Investment Trust (LON:SREI), Victoria PLC (LON:VCP)

Trading announcements: Intertek Group PLC (LON:ITRK)

Economic data: US Consumer confidence, US house price index, US new home sales

City headlines:

Financial Times

  • Bill Gross, the one-time ‘bond king’, predicts gains for stocks and bonds in 2020 will be harder to come by year as the stimulus loses ‘oomph’.
  • Shares in Chinese group Alibaba jump on Hong Kong trading debut after it raised more than $11bn in the world’s biggest share offering this year.

The Times

  • Naspers, the South African technology group attempting to gatecrash a recommended takeover of Just Eat is under mounting pressure to up the ante after its cash offer was dismissed as “wholly inadequate”.
  • The collapse of Neil Woodford’s investment empire has drained liquidity from Aim, the market for small companies, and has made investors wary of thinly traded shares, a leading small-cap stockbroker has warned.
  • TSB will target customers on tight budgets and push into unsecured lending as the bank confirmed plans to shut 82 branches.
  • National Grid has agreed to pay $36 million to end a dispute over gas supplies in New York after the state’s governor threatened to strip it of its licence to operate.

The Guardian

  • Just one in 20 Black Friday deals are genuine, according to damning research by Which? that concluded the annual shopping event was “all hype”.
  • Mike Ashley’s Sports Direct International, which has attracted criticism from politicians and investors over working conditions and its approach to business, has announced plans to rebrand itself as Frasers Group.

Telegraph 

  • One of BT’s challengers in the race to upgrade Britain to full-fibre broadband is attempting to tear up its exclusive partnership with Vodafone as part of a bid by its new owners to accelerate progress.
  • World trade is stuck in its longest slump since the financial crisis after another setback in September suggested the global economy is yet to turn the corner.
  • Qatar wanted to be the "special" investor behind Barclays' crisis-era fundraising when its prime minister became close with one of the company's bankers after meeting on a yacht in Sardinia, a court has heard. 
  • Eddie Stobart has attacked rival Wincanton for failing to submit a takeover bid, leaving investors with just one option to rescue the troubled trucking company.

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