- FTSE 100 closes 21 points higher
- US indexes register gains
- Energy stocks get boost as crude prices rise again
4.50pm: Footsie finds gains
The FTSE 100 index ended higher on Monday, as US indexes all managed to find gains as the New York morning progressed, with higher oil prices lifting heavyweight energy stocks in London.
At the close, the UK blue-chip index was 21.02 points, or 0.3% firmer at 7,558.92, below the session peak of 7,574.33 but above the day’s low of 7,532.34.
On Wall Street by London’s close, the Dow Jones Industrial Average was just 24 points, or 0.1% higher at 34,841, though the broader S&P index added 0.6% and the tech-laden Nasdaq Composite jumped 1.6% boosted by gains from Twitter as Elon Musk revealed a 9% holding in the social media firm.
Chris Beauchamp, chief market analyst at online trading platform IG commented: “Q2 has got off to a good start, continuing the rebound that began in the final month of Q1. The issues that dogged markets of throughout the end of 2021 and into 2022 remain with us, but once again stocks have demonstrated their remarkable ability to come storming back.
“Even fresh sanctions talk does not appear to be having much of an effect, as the market learns to look past the immediate hit to earnings. The strength of Friday’s payrolls report remains a motivating factor too, even if it has also emboldened Fed policy makers to think more seriously about a 50 basis point hike next time they meet.”
Beauchamp added: “Another beneficiary of Friday’s jobs report is oil, which has stabilised and has also started to move higher as the longer-term view reasserts itself. Economic growth forecasts have wobbled of late, but as optimism returns so does the drive to buy oil. After the recent drop, the commodity looks to be preparing for fresh gains.”
3.55pm: Sentiment holds firm
After opening on the front foot, the Footsie shuffled sideways throughout the day.
With half an hour of trading to go, the index was up 24 points (0.3%) at 7,562.
Sentiment in the afternoon was not noticeably affected by Bank of England deputy governor Sir John Cunliffe's warning that Russia’s invasion of Ukraine would add to the UK’s cost of living crisis, probably because most market participants had worked this out already.
Speaking at the European Economics & Financial Centre, Cunliffe said much will depend on the course of the conflict and the evolution of sanctions against Russia.
“In all probability, it will intensify and prolong the surge in inflation and tighten the squeeze on household incomes,” Cunliffe predicted.
“The consequent drop in demand through household consumption and business investment will, to an extent not yet clear, be greater than we thought in February and there are also likely to be additional impacts on the supply side of the economy,” he added.
Cunliffe was the only member of the Bank of England’s Monetary Policy Committee to oppose the interest rate hike at last month’s policy-setting meeting.
“At the last MPC meeting, shortly after the invasion, I voted against increasing rates. This was not because I take the first risk lightly. As the oldest member of the MPC (by some way) I remember very well indeed the extreme manifestation of such an inflation psychology, which characterised the 1970s. I remember also the cost of correcting it but I do not think we are yet seeing a psychology of persistently higher inflation emerge,” Cunliffe said, adding that he reckons the rise in pay has predominantly been driven by the tight labour market rather than wage slaves seeking cost of living rises.
2.35pm: US stocks open mixed
US stocks have got off to a mixed start, with the Dow taking a bath while the S&P 500 and the Nasdaq Composite have edged higher.
The Dow was off 146 points (0.4%) at 34,672 while the S&P 500 was three points firmer (0.1%) at 4,548; the Nasdaq was 113 points (0.8%) heavier at 14,375.
In London, the FTSE 100 is 20 points (0.3%) to the good at 7,558, led higher by Endeavour Mining PLC, which is up 7.7% at 2,064p after it said it will soon launch the construction of its Sabodala-Massawa expansion in Senegal.
READ Endeavour to launch expansion of Sabodala-Massawa as study confirms its potential to become top-tier gold mine
The next best performers among the blue-chips are housing-related stocks. Berkeley Group Holdings PLC, Barratt Developments PLC, Persimmon PLC, Taylor Wimpey PLC and fellow traveller Rightmove PLC are between 3.2% and 4.0% better.
1.15pm: Snoozy lunchtime session
The FTSE 100 is still slumbering in the lunchtime session.
The index is up 6 points (0.1%) at 7,544, having risen as high as 7,574 shortly after the opening.
Ted Baker PLC, once a FTSE 350 stalwart, is making some waves as it has effectively put itself up for sale.
“Takeover interest in British companies is at fever pitch, as valuations have come down following the challenging cocktail of the pandemic and Brexit. To that end, it isn’t wholly surprising that there’s a lot of interest in Ted Baker,” opined Sophie Lund-Yates, an equity analyst at Hargreaves Lansdown.
“Ted Baker’s share price has taken a real beating recently, as wider macro challenges have been compounded by its declining sales. The structural decline in retail, coupled with Ted’s exposure to occasionwear, which was one of the worst-hit areas during lockdowns, have made for very challenging conditions. The price that Ted Baker will accept from a buyer is clearly more ambitious than what the existing bids offer. Ted is keen to point out the potential growth for the brand, including around the benefits of a new leaner, more digital operation. There may well be a disconnect between Ted Baker’s valuation of itself and the amount a third party is willing to spend on a much improved, but nevertheless struggling, bricks and mortar retailer,” she added.
The fashion firm’s shares are up 15% after the company said it had received a third unsolicited bid approach, while Sycamore, one of the two companies that originally approached it has returned with a better offer.
As a result, the company has bowed to shareholder pressure and said it would consider offers, effectively starting an auction process for the company.
$TED Ted Baker bows to pressure and starts auction for the business https://t.co/0TdBIt3DXp #TED #Katie_Proactive
— Proactive (@proactive_UK) April 4, 2022
12.05pm: US stocks set for an indifferent start
US stocks are expected to open flat to higher on Monday as investors continue to digest Friday's US non-farm payroll numbers for March which painted a picture of a tight labor market in the world’s biggest economy as the Federal Reserve considers further interest rate hikes.
Separately, reports that Russia has committed war crimes in Ukraine are keeping investors nervous, adding to overall market uncertainty. It remains to be seen if more sanctions on Russia's exports will follow and, in turn, add to worries about inflation.
Futures for the Dow Jones Industrial Average rose 0.05%, while those for the S&P 500 were up 0.2% higher, and contracts for the tech-heavy Nasdaq-100 rose 0.4%
“Inflation and geopolitics remain at the top of the agenda for traders while they wait for this week's most important economic event, which is the FOMC minutes,” Naeem Aslam chief market analyst at AvaTrade said. “The US jobs report hasn't affected the short-term trajectory for the Fed to increase interest rates a number of times this year, and some of them are most likely to take place concurrently. If we had seen a significant miss in terms of the US jobs report, then there was the slight possibility that the Fed may have thought about revising its policy.”
While the headline payroll numbers rose by a smaller-than-expected figure, the jobless rate fell to 3.6% from 3.8% a month earlier, the Labor Department reported Friday. The data added to fears of spiralling inflationary pressures, especially as Russia's invasion of Ukraine continues to drive commodity shortages.
Looking ahead, the Federal Reserve’s minutes from its March meeting at which interest rates rose for the first time since 2018, will be in focus. The minutes are due on Wednesday.
“The Fed minutes will be the highlight of the week, as the central bank is expected to reveal additional details on its balance sheet reduction plans. A drop in the Fed's securities holdings, which total over $9 trillion, would be another step toward tightening policy,” said Aslam. “Futures markets predict that the Fed will expand its firepower at its next meeting in early May, raising interest rates by 50 basis points, or half a percentage point.”
Benchmark oil prices futures were lower, still feeling the effects of news last week that the US will release up to 1 million barrels of oil a day from its vast reserves. Brent crude futures were down 1.4% to $103.28 a barrel, while WTI crude futures were 1.7% lower at $98.58 a barrel.
“Oil prices are highly likely to remain volatile this week as the crude oil price violated an important support level of $100. The move took place because investors reacted to the massive strategic oil reserve release from the US. However, it is important to keep in mind that this short-term measure to target lower oil prices is likely to run out of course soon as this doesn't resolve the long-term problem,” noted Aslam.
In London, the FTSE 100 is up 15 points (0.2%) at 7,553, with the index's failure to build on a good start due in part to traders getting the barge pole out when it comes to banking and oil shares.
10.45am: British Airways joins easyJet in suspending flights
The low-cost airline easyJet PLC appears to have copped most of the flak for cancelling flights but now British Airways is getting it in the neck.
The airline, part of the International Consolidated Airlines Group SA, has cancelled several flights for the same reason easyJet gave: staff absentees caused by Covid.
The airline has tried to ameliorate the situation by calling in standby crew but reports indicate it still had to cancel 90flights to and from Heathrow this morning.
“Aviation has been one of the industries worst hit by the pandemic and airlines and airports are experiencing the same issues rebuilding their operations while managing the continuing impact of Covid. We are also building a completely new subsidiary at Gatwick while increasing the size of our schedule at Heathrow,” a spokesperson for British Airways said.
"So while the vast majority of our flights continue to operate as planned, as a precaution we've slightly reduced our schedule between now and the end of May as we ramp back up.
"We've apologised to customers who are affected by this and to limit the inconvenience have re-booked them onto earlier or later flights on the same day they were originally due to travel where possible. We're also offering them the opportunity to book onto an alternative flight or request a full refund,” the spokesperson said.
Shares in IAG were off 1.4% at 139.22p, making them the worst performers on the FTSE 100, which was up 15 points (0.2%) at 7,553.
“The pandemic might have eased in many countries but covid continues to wreak havoc in pockets of the world economy,” said Susannah Streeter at Hargreaves Lansdown.
“For British Airways’ owner IAG, covid absences will just compound the operational pain of the IT failures which won’t go away, and which have led to days of chaos at Heathrow and knock-on effects at other airports. Seeing luggage abandoned on carousels and the tales of travellers waiting for hours in queues, does little to restore confidence in the travelling public, with a fresh headache of delays just as hopes had risen that the drop in testing requirements would make journeys a lot easier,” she added.
10.05am: Early, meagre gains ebb away
There is precious little to get the pulses racing this morning in the London stock market.
The FTSE 100 is up 8 points (0.1%) at 7,546, slowly watching meagre gains ebb away.
“Despite all the gloom, the FTSE 100 found reasons to be cheerful first thing on Monday, though the identity of the biggest riser – defence firm BAE Systems – provided a sober reminder of the increasingly grim backdrop provided by the ongoing Ukrainian conflict,” said Russ Mould at AJ Bell.
“The geopolitical uncertainty and the global surge in inflation have not fully derailed global deal-making, with a merger between housing finance firm HDFC and India’s biggest lender HDFC Bank very significant from an emerging markets perspective.
“Lots of fund managers focused on the developing world own these stocks and they will likely be doing some quick-fire analysis on the merits of the transaction,” he added.
With little news flow from the City’s big guns the minnows have a chance to garner a bit of attention.
I3 Energy PLC, for instance, was up 14% at 23.5p after it increased its revenue forecast.
READ i3 Energy ups revenue forecast by 28% as Canadian production soars
Directa Plus PLC, meanwhile, is 11% firmer at 133,9p as it looks to clean up – literally – in the US with its Grafysorber technology.
The producer and supplier of graphene nanoplatelets based products for use in consumer and industrial markets has received authorisation from the United States Environment Protection Agency (EPA) for its Grafysorber technology to be used in oil contamination treatment.
9.20am: Banks and airlines are friendless
The Footsie has got off to a moderately bright start despite the weakness of banks.
London’s index of leading shares is up 17 points (0.2%) at 7,555, despite a lack of enthusiasm for banks. NatWest Group PLC is off 1.4%; Standard Chartered PLC is 0.9% lower and HSBC Holdings PLC is down 0.7%.
It is not looking like a great morning for the airline sector either, with easyJet PLC, down 2.0% at 544.2p, reporting more cancellations as a result of staff shortages caused by Covid.
British Airways owner International Consolidated Airlines Group SA is down 1.0% at 139.76p while Rolls-Royce Holdings PLC, which derives considerable revenue from maintenance contracts on its aeroplane engines, is off 0.7% at 98.71p as investors worry that the pandemic is surging again just as the holiday season gets underway. For much the same reason, hotels group InterContinental Hotels Group PLC is 1.1% weaker at 5,092p.
Corporate news from the big guns is thin on the ground. Aviva PLC shares are down 0.9% at 440.7p after it announced the appointment of Charlotte Jones as chief financial officer, although the two probably are not connected, Jones was previously chief financial officer at RSA Insurance.
8.45am: A holding pattern
The FTSE 100 was in a holding pattern after the first hour of Monday’s trade.
Hanging on in spite of encircling gloom, the index was down just 2.5 points at 7,535.
Among the company news highlights, EasyJet cancelled hundreds of flights over the weekend with more cuts scheduled today on renewed Covid disruption. Over 220 trips were axed as rising staff shortages hit the flight operator.
The UK government is set to nationalise Gazprom’s British arm amid a standoff between the gas giant and an American bank. The move is expected to cost the taxpayer billions.
Ryanair narrowed its full-year loss forecast and hiked its fuel hedging to over 80%. It now expects to make a loss of €350-400mln.
Caledonia Mining increased its quarterly dividend payment by 17% as it outlined plans to increase production alongside its footprint in Zimbabwe. The company is making a pay-out of 14 US cents a share for the first three months of the year, up from 12 cents.
Among the small caps, Induction Healthcare said it has won contracts totalling £3.6mln for its Zesty digital platform. The group will support the transformation of outpatient care delivered by the South-West London Integrated Care System, which represents four NHS trusts in the capital.
i3 Energy’s Canadian subsidiary had record reserves at the end of 2021, while the quarter just ended saw its highest production ever. Current output is also ahead of expectations, with the company upping its forecast for net income in 2022 to US$192mln.
7:00am: FTSE 100 set to shrug off the gloom to open in the green
The FTSE 100 looks set to ignore the encircling gloom to open the week in the green.
Overnight, the session was mixed in Asia with the threat of even harsher sanctions on Russia amid war crime claims weighing on sentiment.
The yield curve inversion, where the interest paid on short-dated treasuries is higher than that on long-dated US government debt, continued to herald an impending recession.
Rampant inflation, rising interest rates and slowing global economic growth appeared to play into this narrative.
On the brighter side, Friday’s American jobs numbers were stronger than expected.
However, even this was viewed negatively and was seen as adding wage-push pressure to the inflation problem, thus strengthening the case for higher US interest rates.
“It is abundantly clear [they] are currently too low and need to rise, and while last week’s sharp reserve release inspired fall in oil prices may go some way to easing some of the more worrying forecasts when it comes to energy price inflation, concerns about rising prices are unlikely to ease in the short term,” said Michael Hewson, an analyst at CMC Markets.
Looking ahead, it’s expected to be a slightly calmer week than the end-of-reporting-season madness we encountered the five trading days previous.
Slated are updates from gaming giant Entain, online greeting card specialist Moonpig and Russia focused iron ore specialist, Ferrexpo.
Around the markets
- Pound US$1.3122 (flat)
- Bitcoin US$46,225.70 (-0.42%)
- Gold US$1,924.60 (flat)
- Brent US$104.96 (+0.55%)
6.50am: Early Markets - Asia / Australia
Asia Pacific markets were higher on Monday with Hong Kong’s Hang Seng index leading gains among the major markets.
The Hang Seng index surged 1.92% while markets in mainland China are closed on Monday and Tuesday for holidays.
Japan's Nikkei 225 gained 0.09% and South Korea’s Kospi rose 0.57%.
Australia’s S&P/ASX200 lifted 0.39% as the country secured a trade deal with India that looks to offset losses caused by the fractured relationship with China.
The interim agreement with the sub-continent partner known as the Australia-India Economic Cooperation and Trade Agreement, will see India cut tariffs on Australian lamb, wool and rock lobsters as part of a new trade deal.