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FTSE 100 closes ahead as markets boosted by hopes of trade deal

On Wall Street, shares were generally higher, with the S&P 500 index reaching a new high as it emerged the US economy grew by 2.1% in the second-quarter

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FTSE 100 and FTSE 250 closed ahead on Wednesday
  • FTSE 100 closes up 26 points
  • US stocks generally higher
  • Rolls-Royce slides after Morgan Stanley downgrade

5.10pm: Footsie closes higher

FTSE 100 index closed ahead on Wednesday, boosted by hopes of a final US, China trade deal.

The UK's top-flight share index added over 26 points to close at 7,429.

On Wall Street, shares were generally higher, with the S&P 500 index reaching a new high as it emerged the US economy grew by 2.1% in the second-quarter, after an initial reading of 1.9%.

The Nasdaq also rose but the Dow Jones was near flat.

"....traders are hopeful the US-China trade talks will bring about an agreement in the next few weeks. The discussions are in the ‘final throes’, according to President Trump, and from the Chinese side, it was reported they were ‘resolving relevant problems’," noted David Madden, market analyst at CMC Markets.

"The US are still scheduled to impose fresh tariffs on Chinese imports next month, but with the way things are going, we might have phase one of the trade deal signed by then, and traders are buying stocks with that expectation," he added.

Among top Footsie gainers, British American Tobacco (LON:BATS) fired up 3.15% to 1,362p as it issued an upbeat second-half pre-close statement.

The firm said a stronger performance from cigarettes was offsetting weaker growth from vaping in the US, meaning full-year sales and profits are on track to be in the upper end of its expectations.

3.55pm: Moribund markets

The Footsie continues to trade sideways, mirroring the performance of sterling on foreign exchange markets.

London’s index of leading shares was up 32 points (0.4%) at 7,435.

Insurer Prudential PLC (LON:PRU), up 3.4% at 1,388.5p, was the top blue-chip risers while power systems developer Rolls-Royce Holdings PLC (LON:RR.) occupied the basement, falling 2.6% to 722p after Morgan Stanley downgraded the stock to ‘equal weight’ from ‘overweight’.

3.15pm: US markets open mixed

It has been a mixed opening for US markets, with the Dow Jones in the red and the S&P 500 on the up.

The Dow was down 37 points (0.1%) while the broader-based S&P 500 was up 4 points (0.1%) at 3,144.

US consumer spending rose in October by 0.3%, marking the eighth month in a row it had risen. Economists had pencilled in a figure of +0.2%.

Meanwhile, The National Association of Realtors published its pending home sales index, which is a gauge of the number of purchase contracts signed. The index fell 1.7% in October.

While US markets have had a flurry of economic data releases to chew over, UK investors would be forgiven for looking forward to a warm cup of cocoa before resuming their afternoon nap.

The FTSE 100 has traded sideways after making solid headway in the first hour of trading. The index is now hovering around 7,441, up 38 points (0.5%) on the day.

 

2.15pm: US GDP revised upwards

The estimate of US gross domestic product (GDP) for the third quarter was revised to show annualised growth of 2.1%.

The previous estimate had been for annualised growth of of 1.9%.

“GDP for the third quarter was revised higher to 2.1%, a decent result under the circumstances, as the economy continues to outpace many of its peers. Durable goods orders were also ahead of market expectations while jobless claims rose on 213,000, well below forecasts,” said Craig Erlam at Oanda.

Durable goods orders rose 0.6% in October, confounding expectations of a 0.9% fall. Excluding transportation, orders were also up 0.6% versus expectations of a 0.1% increase.

US first-time jobless claims eased to 213,000 from 221,000 in the preceding week.

“This is a relief after back-to-back elevated readings, which seem to have been due in part to the California wildfires and Veterans Day seasonal adjustment problems,” suggested Ian Shepherdson, the chief economist at Pantheon Macroeconomics.

“The return to trend might not last, though. The peak in payroll growth came about nine months ago, and in the previous three cycles claims followed the turn in payrolls with lags from six-to-eight months. Weaker hiring drives the initial downshift in job growth; firings follow. We expect to see the trend in claims nudging higher over the next three months, but we don’t expect anything very alarming,” Shepherdson said.

Spread betting quotes relating to the opening values of US stock indices pulled back a little following the economic data releases.

The Dow is now expected to open at around 28,150, up 29 points, and the S&P at around 3,146, up 6 points.

In the UK, the FTSE 100 was up 36 points (0.5%) at 7,439.

1.00pm: Equities a bit fagged-out after early momentum fades

US markets are set to open firmer and that has given traders in London absolutely zero inclination to chase equity prices any higher.

The FTSE 100 remains anchored on or around 7,437, up 34 points (0.5%). Sterling has more than recovered lost ground against the dollar and is now up by one-fifth of a cent at US$1.2888, which has dampened enthusiasm for Footsie stocks.

Stateside, spread betting quotes indicate the Dow Jones will open around 38 points higher at 28,159 while the S&P 500 was seen opening its account some 8 points higher at around 3,148.

In London, Imperial Brands PLC (LON:IMB) and British American Tobacco PLC (LON:BATS) are keeping the home fires burning after a solid trading update from the latter.

Ironically, it is the former that is sporting the bigger rise; IMPs is up 2.64% at 1,713.4p while BATs is 2.61% firmer at 3,064p.

Both stocks seem to be benefiting from the assertion by BATs that stricter regulations on vaping in the USA are benefiting the bigger players.

“The argument in favour of this view is that youth-orientated upstart brand Juul, which had stolen a march on its larger rivals, is being stopped in its tracks amid a crackdown to tackle an apparent vaping-related health crisis among young Americans,” explained Russ Mould at AJ Bell.

“What’s less clear is how British American Tobacco can avoid running into the same problems – after all its peer Imperial Brands warned on profit in September, at least partly due to the push-back against vaping,” he wondered.

Despite sterling's rally, the FTSE 100 is still outperforming its baby brother, the FTSE 250, even though the mid-cap index is generally regarded as being less sensitive to sterling's fluctuations.

The FTSE 250 was up 57 points (0.3%) at 20,921, with some of the spring in its step being slowed by an 8.3% fall to 1,442p for media company, Future PLC (LON:FUTR), after a number of senior managers sold down their holdings.

Brewing and pubs group Marston's PLC (LON:MARS) was doing its bit to lift the mid-cap index with a 0.8% rise to 128.4p following full-year results.

“Marston’s results are in line with guidance but, as previously reported, the company’s strong performance in Q1 and Q2 faded against the tough comps provided by the hot weather and the World Cup in the group’s H2 last year,” reported Mark Brumby of Langton Capital.

“The group has nonetheless benefitted from the recovery in wet-sales across the country as a whole although (weather & football-impacted 2018) comps have still been hard to beat,” he added.

11.30am: Trade talk hopes keep equities simmering

London’s leading shares remain mostly firmer, helped by a bit of optimism over US-Sino trade talks.

The FTSE 100 remains disinclined, however, to venture above 7,450 and in fact, has ebbed to 7,436, up 33 points (0.4%).

Contract caterer Compass Group PLC (LON:CPG), down 40p at 1,875.5p, was defying the trend after yesterday’s disappointing full-year results.

Liberum Capital responded by downgrading the stock to ‘hold’ from ‘buy’ and lopping 240p off its previous 2,240p price target. UBS, on the other hand, reiterated its ‘buy’ recommendation and 2,255p price target.

A rating of ‘market perform’ from BMP Capital Markets and an 800p target price has not prevented precious metals miner Fresnillo Plc (LON:FRES) – down 2.2% at 563.8p – from being the second biggest faller among Footsie constituents.

The market’s top riser was Blackbird PLC (LON:BIRD), the company formerly known as Forbidden Technologies.

The shares flew 4.25p higher to 17p after the cloud-based video editing technology company secured a contract with Bloomberg Media.

9.50am: BATs provides a spark

The FTSE 100 is having a peek at 7,450 – regarded by the market’s tea-leaves readers and entrails examiners as some kind of “break-out” level.

London’s index of leading shares was up 37 points (0.5%) at 7,440, having ventured as high as 7,446 at one point this morning, largely thanks to the strength of miners.

“The FTSE 100 is at key overhead resistance at 7,450, a level that capped recent rallies in September and earlier this month,” said Jasper Lawler at LCG.

“Some will view a breakout as the beginning of a new bullish trend in UK shares. The equity benchmark up at 2-month highs is more about global growth than the December election,” he ventured.

A trading update from British American Tobacco PLC (LON:BATS) gave the shares a warm glow. They rose 57p to 3,043p after the fags maker said it is expecting revenue growth for the full year of between 3% and 5%.

“The twin concerns which have followed the stock are regulation in general and the company’s own debt pile, the latter of which is within the company’s control and where BATs is showing some signs of focus. The former of the concerns is out of its control, however, and there will inevitably be more regulatory pressure as time goes on,” suggested Richard Hunter, the head of markets at interactive investor.

8.40am: Tentative start for Footsie

The FTSE 100 appears to be taking baby steps rather than large strides higher as the market’s price setters appear intent on seeing out the final few days of the trading month in a tentative fashion, particularly given the impending US Thanksgiving break.

The UK blue-chip benchmark nudged 14 points higher to 7,417.22 

Pre-UK election nerves have been cited, and if one looks at the stellar performance of Wall Street of late it seems a fair assertion.

Bubbling in the background, as always, is the issue of trade and, specifically, whether Washington and Beijing can hammer out a phase-one accord before the year-end.

“Optimism around trade discussions has once again helped to underpin sentiment after reports that China’s negotiator Liu He and US trade negotiator Robert Lighthizer had reached a consensus on how to resolve a number of core issues, while keeping lines of communication open with a view to resolving other remaining issues,” CMC Markets analyst Michael Hewson said of Sino-American negotiations.

The miners once again led the Footsie pack with Mexico-focused silver digger Fresnillo (LON:FRES) up 2.4% as it recovered ground after a recent precious metals-inspired sell-off.

Roman Abramovich’s Evraz (LON:EVR) wasn’t far behind.

Sticking with the natural resources sector, Base Resources (LON:BSE) received an 8% kick after it published a maiden reserve estimate for its Madagascar heavy mineral project.

Proactive news headlines:

88 Energy Ltd (LON:88E) told investors it has finalised its farm-out deal with Premier Oil PLC (LON:PMO) and said that plans for the Charlie-1 appraisal well have now been approved by the new partners. “The plan of operations is one of the key major permits required for drilling,” the company said in a statement. “The final major permit is scheduled for submission in December, with approval expected in January ahead of the scheduled February spud date.”

Base Resources PLC (LON:BSE) (ASX:BSE) has compiled an ore reserve for the area that will form the “foundation” of its Toliara Project in Madagascar. Ranobe is estimated to be host to 586mln tonnes (Mt) of ore grading 6.5% heavy mineral, or 38Mt in situ. Included in the count were ilmenite, rutile, leucoxene and zircon. A total of 347Mt of ore was in the higher confidence 'proved' category

Blue Star Capital PLC (LON:BLU) has flagged progress by digital payments specialist SatoshiPay, a company in which the tech investor has a 27.9% holding. Back at the end of January SatoshiPay announced it would work with German digital media giant Axel Springer on a product driven by blockchain technology that would enable users to pay for content with the digital SatoshiPay Wallet. SatoshiPay has now launched its first service with Axel Springer; it is the Tatorte website, which provides a real-time map with police reports in Germany.

VR Education Holdings PLC (LON:VRE) has said it will launch its latest showcase experience, physics-based flight simulator Shuttle Commander on PlayStation on 3 December. Shuttle Commander will offer users the chance to take control of NASA's Discovery space shuttle in virtual reality (VR) and land it at several real-world sites such as Kennedy Space Centre, White Sands Air Force Base and Edwards Air Force Base.

Investors in Alba Mineral Resources PLC (LON:ALBA) can now look forward to the start of production testing for the new horizontal well at the Horse Hill project. In a statement today it was revealed that the horizontal well is now completed. The well has accessed exposure to 2,500 feet in the conventional Portland oil reservoir. It has now been suspended as a future oil production well, starting with an extended well testing programme.

Alliance Pharma PLC (LON:APH) is handing back the UK and EU licensing rights to Xonvea, a treatment for pregnant women with nausea. Some £2mln in milestone payments made to Duchesnay of Canada will be returned, starting with £250,000 before the end of the year. Inventory provisions and “associated restructuring costs” will amount to £1.9mln.

Union Jack Oil PLC (LON:UJO) has raised £5mln in a share placing as the company seeks to focus attention on its flagship West Newton project. In the equity fund raise, arranged by broker SP Angel, the company is selling 3.3bn new shares at a price of 0.15p each. The proceeds are earmarked for West Newton which Union Jack describes as a “highly accretive project”.

Motif Bio PLC (LON:MTFB) said that, further to the announcement yesterday of the company's intention to voluntarily delist its American Depository Shares (ADSs), it has given notice on November 26, 2019 to The Bank of New York Mellon to terminate its American Depositary Shares Program and Warrant Agent Agreement.  The Depositary will contact ADS holders in due course with additional information on this process, including those necessary and proper actions to be executed.

Verona Pharma PLC (LON:VRP) (NASDAQ:VRNA), a biopharmaceutical company focused on respiratory diseases, announced that, on November 26, 2019, it granted 500,000 options to purchase ordinary shares of £0.05 each to its CEO, Dr. Jan-Anders Karlsson, under and in accordance with its 2017 Incentive Award Plan. The group said the options have an exercise price of £0.445 per ordinary share and will vest over two different periods following the grant date.

Anglo Pacific Group PLC (LON:APF), a global natural resources royalty company listed on both the London Stock Exchange and the Toronto Stock Exchange, was a joint winner of the Best Alternative Finance Provider of the Year award at the Mines and Money gala dinner held on Tuesday evening.

Impax Asset Management Group PLC (LON:IPX) expects to announce its results for the year ended 30 September 2019 on Wednesday 4 December 2019.

Rockfire Resources PLC (LON:ROCK), the gold and base metal-focused resource company, announced that an updated version of its corporate presentation is now available on the company's website.

6.45am: FTSE 100 called higher 

The FTSE 100 is expected to start slightly higher on Wednesday after record-breaking finishes for US markets overnight.

Spread-better IG expects the FTSE 100 to open around 9 points higher after closing up nearly 7 points on Tuesday at 7,403.

The positive start in London follows more record highs in the US market overnight after optimism over US-China trade talks and positive remarks on the US economy from Fed chair Jerome Powell helped risk appetite among traders.

The Dow ended Tuesday’s session up 0.2% at 28,121 while the S&P 500 rose 0.22% to 3,140 and the Nasdaq climbed 0.18% to 8,648.

“It still remains unclear what the timing is likely to be on the agreement of a phase one [trade] deal, however with three weeks until December 15th, it’s not hard to imagine that it is highly unlikely that we’ll get anything tangible before that”, said Michael Hewson at CMC Markets.

“This is the date when the next round of tariffs is scheduled to kick in and would suggest that President Trump will want to keep that option open until the very last moment”, he added.

Looking ahead, another iteration of the US third-quarter GDP later today could provide catalysts for the market, although the figure is expected to remain unchanged at 1.9% growth for the period.

The record close on Wall Street helped push the Japanese Nikkei 225 0.28% higher on Wednesday, while Hong Kong’s Hang Seng was weaker, falling 0.09%.

On the currency markets, the pound is down 0.16% at US$1.2845 against the dollar as latest UK election polling shows the Conservative lead over Labour narrowing in the wake of their manifesto launches. A YouGov seat-by-seat prediction of the next Parliament released tonight could fuel these jitters going forward.

Significant announcements expected for Wednesday November 27:

Finals: AB Dynamics PLC (LON:ABDP), Brewin Dolphin (LON:BRW), Britvic PLC (LON:BVIC), Grainger PLC (LON:GRI), Marston’s PLC (LON:MARS), On The Beach Group PLC (LON:OTB),

Interims: Iomart Group PLC (LON:IOM), LondonMetric Property PLC (LON:LMP), Sosandar PLC (LON:SOS)

Trading update: Softcat PLC (LON:SCT), British American Tobacco PLC (LON:BATS)

Economic data: BRC shop price index, US GDP, US personal incomes, US personal expenditure, US jobless claims

Around the markets:

Sterling: US$1.2845, down 0.16%

Brent crude: US$63.04, down 0.27%

Gold: US$1,458.71, down 0.07%

Bitcoin: US$7,079, down 2.8%

City headlines:

Lloyds Banking Group is planning to slash the pay of its chief executive by more than £220,000 while spending £20 million on pay rises for the rest of its staff – Financial Times

The Society of Motor Manufacturers and Traders has warned that an entire year’s worth of UK car production will be lost if Britain fails to secure a trade deal after leaving the European Union – Telegraph

First Group has hired all of Virgin Trains’ existing management team to run the London to Glasgow West Coast service when First takes over from Virgin next month – Guardian

Manchester City’s owner has agreed to sell a $500 million stake to the California-based private equity firm Silver Lake – FT

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