- FTSE 100 closes in red
- US benchmarks gain again
- US retail sales rose 0.3% in December
5.15pm: FTSE 100 index closes lower
FTSE 100 index closed firmly in the red on Thursday as the pound remained strong and US stocks went higher.
Britain's blue-chip index finished just shy of 33 points lower at 7,609.
Midcap FTSE 250 went higher, however, gaining over eight points on the day. Against the US dollar, the pound added 0.35% to stand at US$1.3082, despite growing fears of an interest rate cut later this month.
"Optimism surrounding the signing of the US – China trade deal quickly faded and the FTSE was pretty much on the back foot from the start of trading," said Fiona Cincotta, analyst at GAIN Capital.
Following the profit warning in September, Pearson revealed that its US higher education business continues to hold it back, seeing revenue fall over last year by nearly 11%.The business accounts for nearly a quarter of the group's total revenue.
On Wall Street, the Dow Jones Industrial Average added 162 points and the S&P 500 index gained over 18 points.
4.15pm: FTSE overshadowed by go-go US indices
While US stocks have gained fresh impetus from solid US retail sales numbers, London’s blue-chips look set to end the day left on the shelf.
US retail sales rose 0.3% in December, in line with market expectations, lifting the year-on-year increase to 5.8% from November’s 3.3%.
Control retail sales, which exclude petrol stations, food services and drinking establishments, building materials and car sales, rose by 0.5%, slightly ahead of the consensus forecast, which was for a monthly gain of 0.4%.
“The strong increase in December’s control retail sales sets a high baseline for overall consumption (includes services in addition to retail sales) at year-end, building on the solid gains in overall consumption in October and November,” said Roiana Reid at Berenberg Capital Markets.
“Solid consumer fundamentals point to sustained consumption growth: elevated consumer confidence, low initial jobless claims, employment growth, gains in real disposable income, low-interest rates that reduce consumer debt service costs, and all-time highs in household net worth,” Reid added.
Edward Moya said the retail sales figures had settled some nerves after a batch of disappointing results from big names in the US retail sector.
“This morning’s barrage of US data also saw jobless claims fall more than expected and a strong improvement with the Philadelphia Fed business outlook survey. The survey was almost completely positive, only inventories declined. Markets are particularly liking this Philly Fed outlook as new orders surged and future business conditions index popped to the highest level since May,” Moya said.
Meanwhile, back in the UK, the FTSE 100 was slinking off to hide in a corner with a 39 point loss at 7,604.
3.45pm: NMC Health gets off its sickbed
US benchmarks may be hitting new highs but UK stocks remain down in the dumps.
The FTSE 100 was down 37 points (0.5%) at 7,606.
NMC HealthPLC (LON:NMC) seems always to either be at the top or the bottom of the Footsie leader-board; today it is at the top, up 4.2% at 1,408.49p, after Norges Bank increased its holding to 4.03% from 3.03% previously.
The stock of the hospitals operator has been under a cloud since hedge fund Muddy Waters kicked off a bear raid but there have been signs of late that institutional investors reckons the stock has been kicked around enough.
3.05pm: US stocks hits new records
The FTSE 100 index stayed lower in late afternoon trading on Thursday in spite of another boost for New York stocks in the wake of the phase one US/China trade deal signed overnight.
London’s benchmark was down 35 points at 7,607.45, just above the session low of 7,595,31 and well below the day’s peak of 7,653.58.
A recovery by the pound weighed on the UK blue-chip index after the currency was knocked by weak inflation data on Wednesday which fuelled Bank of England rate cut talk.
On Wall Street, investors continued to respond positively to the improving trade picture and some upbeat US data.
After around half an hour of trading, the Dow Jones Industrials Average was up 170 points, or 0.6% at 29,200, having breached the 29,000 level for the first time on Wednesday.
Meanwhile, the broader S&P 500 index added 0.5% and the tech-laden Nasdaq Composite gained 0.9%.
2.15pm: US data digested
The FTSE 100 index stayed weak in afternoon trading weighed by sterling strength even though US stocks were still expected to start firmer after in-line US data added to the rosy US/China trade deal picture.
December US retail sales rose 0.3%, in line with consensus, but sales ex-autos jumped 0.7%, beating the 0.5% consensus.
Ian Shepherdson, chief economist at Pantheon Macroeconomics commented: “The December numbers look good in isolation, but they are tempered by downward revisions to prior data.
“The net revision to the control measure was a hefty -0.5%, so control sales are now reported to have fallen in Q4, at a 0.3% annualized rate. That’s a dramatic downshift from the 6.0% Q3 increase and the 7.9% Q2 leap, but those gains were never sustainable and a correction was inevitable.”
He added: “Still, the downward revisions will depress estimates for Q4 real consumption and, hence, GDP growth.”
Other US data on Thursday saw the Philly Fed index jump to a reading of 17.0 from a downwardly-revised 2.4 in December, far above the consensus, 3.8.
Elsewhere, US weekly jobless claims fell to 204,000 from 214,000, below the consensus, 220,000, and the lowest since the final week of November.
12.15pm: Losses lengthen
The Footsie's losses lengthened in the lunchtime trading session as sterling made headway against the dollar on foreign exchange markets.
London's index of leading shares was down 32 points at 7,611. Sterling, meanwhile, was up by a quarter of a cent against the dollar at US$1.3064.
10.10am: RICS provides a boost to housebuilders
The FTSE 100 remains in the red despite some solid demand for mining and housebuilding stocks.
The FTSE 100 was down 16 points (0.2%) at 7,627.
Mining stocks continued to benefit from the feel-good factor following the US-China trade accord while housebuilders such as Persimmon PLC (LON:PSN), up 1.6%, and Barratt Developments PLC (LON:BDEV), 0.8% higher, defied the market trend after the release of the latest survey from the Royal Institution of Chartered Surveyors (RICS).
In December, the house price balance improved to -2 from -11 in November, hitting its highest level since June.
The RICS monthly study canvasses chartered surveyors, rebasing the surveyed population to 100, and then arrives at a balance by subtracting the number of respondents (per 100) who reported a decline in house prices from the number (per 100) who reported an increase.
The consensus forecast for November had been for a balance of -9.
“December’s RICS survey was conducted between December 20 and January 9 and so fully captures the impact of the general election result on the housing market. The survey is unambiguously positive, consistent with our view that the reduction in political uncertainty will be powerful enough to raise GDP growth back to its trend rate in the first half of this year without the need for more monetary stimulus,” said Samuel Tombs, the chief UK economist at Pantheon Macroeconomics.
“The new buyer enquiries balance leapt to +17—its highest level since January 2016—from -5 in November. While the supply of homes for sale will increase too—the new sale instructions balance rose to +31, from +13—the rise in demand looks set to feed through strongly to higher prices,” Tombs predicted.
8.40am: Weak start for Footsie
Pearson plunged 13% to 540.6p after it issued a lacklustre trading update and also revealed that its chief financial officer, Coram Williams is jumping ship to take on a comparable role at a company based on the European mainland.
But on the plus side, Associated British Foods PLC (LON:ABF) rose 3.1% to 2,633p to top the Footsie leader-board after the Primark stores chain's owner said it had got off to a decent start to its new financial year.
Overall sales for the FTSE 100-listed clothing retail to food producer conglomerate were up 4% in the first 16 weeks of its financial year to 4 January at constant currency rates, led by growth at its AB Sugar and AB Agriculture businesses.
Proactive news headlines:
ECR Minerals PLC (LON:ECR) has announced that its wholly-owned Australian subsidiary Mercator Gold Australia (MGA) has received a cash refund for research and development (R&D) expenditure of A$555,212 (approximately £295,515) under the Australian government’s R&D Tax Incentive scheme. In a statement, the precious metals exploration and development company said the qualifying activities pertain to research into turbidite-hosted gold deposits within MGA’s exploration licences in Victoria, Australia.
Digitalbox PLC (LON:DBOX) has hailed its first year as a digital media business as adjusted pre-tax profits for 2019 came in ahead of market expectations. The AIM-listed firm, which owns celebrity news site Entertainment Daily and satire brand The Daily Mash, said in a trading update that revenues and operating margins had also come in ahead of forecasts, with the growth attributed to its Insights programme which is designed to analyse user behaviour and inform content strategy
Cello Health PLC (LON:CLL) expects to report results for 2019 in line with consensus market expectations. The group enjoyed strong cash flow in the second half of last year, as is the norm, and conversion of operating profit into cash flow was strong; as a result, the group ended the year with a better net cash position than the market was expecting.
Clinigen Group PLC (LON:CLIN) has reiterated its expectation for growth to be “towards the upper end” of its organic gross profit guidance for the current year. The pharma and services group, which supplies drugs for clinical trials and distributes unlicensed and speciality pharmaceuticals, said it expects revenue growth of 16% for the first six months of its financial year to 31 December, with constant currency growth of 24%.
Genel Energy PLC (LON:GENL) chief executive Bill Higgs has celebrated 2019 as a “successful year” for the Iraq-focused oil and gas firm. In a trading update, ahead of full-year financial results due for release on 17 March, the group told investors that it delivered some 36,250 barrels of net oil production per day from the Kurdistan region of Northern Iraq. The company pointed out that it brought 19 wells into production during 2019.
Ariana Resources PLC (LON:AAU) produced a record 27,985 ounces of gold in 2019 surpassing its forecast for the year by almost 12%. The output from its Kiziltepe mine in Turkey in the fourth quarter was also close to a new record said Kerim Sener, the miner’s managing director. Ariana added it now expects to repay the development loan taken out to build Kiziltepe in full in April.
Iofina PLC (LON:IOF) said 2019 was a record year for crystalline iodine production by the company and it expects this year's output to grow even more. In a market update, Iofina said full-year crystalline iodine production totalled 602.7 tonnes in 2019, up from 588.8 tonnes in 2018, with 316 tonnes of the 2019 total being produced in the second half of the year. The company currently expects to produce between 315 and 345 tonnes of crystalline iodine in the first half of this year.
Woodbois Ltd (LON:WBI) on Thursday announced a “cash flow enhancement” as it revealed details of deals with past vendors and certain lenders. The aim is to accelerate the African timber company's growth as it moves toward a cashflow positive position during 2020, the forestry firm said in a statement.
Avation PLC (LON:AVAP) has announced that it has delivered the second in a series of five new ATR 72-600 turboprop aircraft to Braathens Regional Airways AB from the manufacturer's facility in Toulouse, France. The commercial passenger aircraft leasing company said that, as with the first delivery to Braathens, this second delivery was financed with a "Green Loan" provided by Deutsche Bank.
VR Education Holdings PLC (LON:VRE) is forecasting “continued strong growth” and accelerated adoption of virtual reality technology in 2020 as standalone devices and 5G become more widely available. In a trading update for the year ended 31 December, VRE’s chief executive David Whelan said standalone devices such as the Oculus Quest VR headset, made by Facebook, will result in VR adoption becoming “more mainstream”, and, as such, the firm will see “strong growth of sales” for its showcase experiences as well as accelerated adoption of its ENGAGE platform, which allows users to create their own simulated environments for teaching or demonstrations.
Tekcapital PLC (LON:TEK), the UK intellectual property (IP) investment group focused on creating marketplace value from investing in university technology, said it will exhibit at the Association of University Technology Managers (AUTM) annual meeting, the largest gathering of academic technology transfer professionals. AUTM is made up of over 3,100 technology transfer professionals committed to commercialising university research. Tekcapital's Invention Evaluator, and Vortechs Group business units look forward to attending the conference at the Manchester Grand Hyatt in San Diego, and to meeting with current and prospective clients.
APQ Global Limited (LON:APQ), an emerging markets growth company based in Guernsey, said it has issued a total of 26,578 ordinary shares to employees as part of the 2018 management share-based compensation scheme, including Bart Turtelboom, its chief executive officer, who has received 23,366 Ordinary Shares. The price used in calculating the number of shares awarded under the 2018 Scheme was the book value per share as at 31 December 2017 of 128.11 US cents. Following this issue, the firm noted, Turtelboom is interested in 22,191,927 ordinary shares representing 28.35% of the company's issued share capital.
6.50am: Benchmark tipped to get off to a firm start
The FTSE 100 is seen rising ahead of Thursday’s open, albeit only slightly, after global equities were boosted by the long-awaited inking of a trade deal between US and China.
CFD and spreadbetting firm IG Markets marked the blue-chip benchmark index around 8 points higher, making the price 7,643 to 7,646 with just over an hour to go until the open.
An initial trade deal was finally ratified, though it still only marks the first step in what remain tense relationships.
“The terms, which have brought a pause to standoff that has lasted nearly two years, contained a pledge by China to purchase US$200bn of US goods and services over the next two years, as well as tighter rules on intellectual property,” said Michael Hewson, analyst at CMC Markets.
“Amongst a number of downsides was the fact that the deal still means that tariffs still remain on US$360bn of Chinese goods, and are likely to remain there for at least another 12 months, at the very least.”
He added: “Given that it has taken nearly two years to pick off the low hanging fruit of a phase one deal, it does stand to reason that phase two is likely to take much longer. It also probably suits President Trump’s narrative to incorporate the prospect of a phase two deal into his re-election campaign."
Last night in New York, the Dow Jones closed 90 points, or 0.3% higher at 29,030, whilst the S&P 500 added 0.19% to finish at 3,289. The Nasdaq, meanwhile, was only slightly higher at the close rising just 0.08% to 9,258.
Asian equity benchmarks were mixed. Japan’s Nikkei rose by 16 points to 0.06% to 23,933, Hong Kong’s Hang Seng dipped slightly lower to 28,768 and the Shanghai Composite fell by 0.51% to 3,074.
Around the markets:
- The pound: US$1,3038, down 0.02%
- Gold price: US$1,553, up 0.07%
- Brent crude: US$64.45, down 0.06%
- Bitcoin: US$8,713, up 0.56%
Significant events expected on Thursday:
Trading announcements: 4imprint Group PLC (LON:FOUR), Associated British Foods PLC (LON:ABF), Bakkavor Group PLC (LON:BAKK), Dechra Pharmaceuticals PLC (LON:DPH), Hays PLC (LON:HAS), Halfords Group PLC (LON:HFD), Ibstock Plc (LON:IBST), John Wood Group PLC (LON:WG.), Marshalls PLC (LON:MSLH), N Brown Group plc (LON:BWNG), Pearson PLC (LON:PSON), Rio Tinto plc (LON:RIO), Whitbread plc (LON:WTB), Workspace Group plc (LON:WKP)
Interims: Theworks.co.uk PLC (LON:WRKS),
AGMs: Mineral & Financial Investments Ltd (LON:MAFL)
Economic data: UK RICS house prices, UK BoE credit conditions, US retail sales, US Philly Fed manufacturing index
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