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FTSE 100 firm but off highs despite new intra-day records for US indices

Last updated: 12:15 09 May 2017 EDT, First published: 02:01 09 May 2017 EDT

Traders
  • FTSE 100 up 41 points, off highs

  • US indices hit new highs

  • Micro Focus hit by concerns over poor trading at soon to be acquired HPE

  • Centrica, SSE drop on Tory price cap fears

UK blue-chips consolidated gains at the end of the day as US indices hit new highs again.

The FTSE 100 index closed at 7,342, up 41 points.

Risers among Footsie constituents outnumbered fallers by about four-to-one.

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The biggest faller was legacy software outfit Micro Focus International (LON:MCRO), down 5.7% at 2,490p, as it revealed that trading at Hewlett-Packard Enterprise, which it is in the process of acquiring, has been weaker than expected.

Among the tiddlers, UK Oil & Gas Investments PLC (LON:UKOG) lost around one-sixth of its value as it confirmed it is talking to institutional investors about raising funds.

At least the board of UKOG knew the reason for the share price movement; the board of investment company Concha PLC (LON:CHA) professed to have no idea why the shares soared 80% today.

3.15pm: FTSE 100 off highs as New York makes unexciting start 

The FTSE 100 slipped from highs in late afternoon trading as Wall Street made steady but unexciting early progress, but strength in miners kept the mood bullish in London.

Around 3.15pm, the UK blue chip index was 46 points higher at 7,347, retreating from the session peak of 7,359 but still well above the day’s low of 7,300.

After three-quarters of an hour of trading in New York, the Dow Jones was 30 points higher at 21,042 as investors digested a big batch of mainly upbeat corporate earnings.

The broader S&P 500 index gained about 4 points, and the tech-laden Nasdaq composite firmed 29 points, both having reached intra-day peaks early on once again.

Meanwhile a  key measure of market volatility, the CBOE Volatility Index or Vix ticked higher after falling to a near 23-year low on Monday and threatening to hit its lowest level in history.

The VIX has been closely followed because it implies to some market participants that investors may be getting too complacent about the possibility of sharp dives in equities.

The move came after one big geopolitical overhang subsided over the weekend, with the French presidency won by Emmanuel Macron.

Craig Erlam, senior market analyst at Oanda said: “With the eurozone political distraction now seemingly being put to one side, it would appear that traders are once again focused on the upcoming central bank meetings with June being seen as a big month for both the Fed and the ECB.”

Miners continued to lead the FTSE 100 higher as the sector recovered from falls in the previous session, with BHP Billiton PLC (LON:BLT) up 2.5% at 1,153p and Antofagasta PLC (LON:ANTO) added 2.4% to 771.5p.

On the second line, fund manager Henderson Group PLC (LON:HGG) was a good gainer, adding 1.9% to 233.0p benefiting from an upgrade in rating by UBS to ‘buy’ from ‘neutral’

But insurer Hastings Group Holdings PLC (LON:HSTG) was a FTSE 250 faller, down 2% at 303.4p after a major shareholder sold 35mln shares, representing a 5.3% stake at 300.5p a share.

1.40pm: US stocks expected to buoy Footsie still further

The Footsie extended its gains to over 50 points in early afternoon trading bolstered by a rally in mining stocks and amid expectations that Wall Street will open modestly higher today. 

Around 1.30pm, the UK blue chip index was up over 55 points at 7,356, near its best level for the day so far, and well above the session low of 7,300.

Dennis de Jong, managing director at UFX.com, said: “Today’s strong gains on the FTSE 100 put it close to the all-time high it hit in March, on the back of a number of political developments that have been warmly welcomed by investors.

“It appears that the City is still riding the wave of Emmanuel Macron’s victory in Sunday’s French presidential election, and is more confident than ever that next month’s general election will return a strong Conservative majority.

“However, such confidence may not last long. Top of the agenda for Theresa May, Macron and Europe’s other leaders, once the dust settles, will be solving the Brexit conundrum. If negotiations sour, we may yet see the markets return to volatility.”

On foreign exchanges, the pound stayed weak against the US dollar, down 0.3% to US$1.2907 in the absence of any UK economic data and ahead of the Bank of England’s latest policy decision and quarterly inflation report on Thursday.

But against the euro, sterling bounced back after recent falls, up 0.2% to €1.1865 as the post-French presidential boost for the single currency faded.

Among today’s equity gainers, Sepura PLC (LON:SEPU) jumped nearly 30% higher to 13.25p after the UK government signalled it would approve the £74mln takeover of the walkie-talkie maker by Chinese firm Hytera.

But the market’s biggest faller today was oil and gas exploration and production company Mayan Energy Limited (LON:MYN) which dropped 16% to 1.05p after it said its LM 13 shallow-well programme on the Shoats Creek operation in the US has suffered delays due to recent weather.

However, Mayan added that it is continuing to advance after the site became accessible once again and has made "encouraging progress" with the programme.

12.30pm: Roaming boost from O2

Good news for those going on holiday in Europe this summer as, from 15 June,  Pay Monthly and Business customers on mobile network operator O2's will be able to use their UK plans in 47 European countries at no extra cost.

The date coincides with the incoming abolition of such fees by the European Union.

The move comes after the scrapping of roaming charges in similar destinations by EE, owned by BT Group PLC (LON:BT.),  Vodafone PLC (LON:VOD), and Three.

O2 customers will be able to take their UK plan into some non-EU countries as well, including Iceland, Switzerland and Monaco.

12:15pm: Never knowingly underpaid

Profits at employee-owned retailer John Lewis have been dented by £36mln after a payroll error may have breached minimum wage rules.

The group, which owns Waitrose supermarkets as well as the eponymous department stores chain, said it was working with HMRC to examine its practice of pay averaging, which aims to smooth out monthly pay over the year. 

The total cost of the back pay along with employer’s national insurance, pension contributions and other associated costs, could be as much as £36m, according to the annual report, published on today.

Charlie Mayfield, chairman of John Lewis, said arrangements had already been made to contact those affected and make payments.

10.30am Mining recovery props up Footsie

The FTSE 100 had pushed up to day’s highs by mid-morning helped by a recovery in heavyweight mining stocks following falls by the sector yesterday after disappointing trade data from China.

Around 10.30am, the UK blue chip index was up over 35 points at 7,336, its best level for the session so far, and well above opening lows of 7,300.

On currency markets, sterling drifted lower against the US dollar, down 0.2% to US$1.2619 in the absence of any UK economic data and ahead of the Bank of England’s latest policy decision and quarterly inflation report on Thursday.

Against the euro, the pound recovered some of its recent falls, adding 0.1% at €1.1853 as the post-French presidential boost for the single currency faded.

Chris Beauchamp, Chief Market Analyst at IG, said: “A steady recovery has been seen in markets this morning, after an indecisive day yesterday. In London the embattled mining sector is finally seeing some support, despite little sign of a real turnaround in the ongoing fall in commodity prices.”

Commodities trade and miner Glencore PLC (LON:GLEN) was the biggest sector gainer, up 2.5% to 291.6p, helped by a Macquarie rating upgrade which failed to impact yesterday.

But, the IG analyst added: “At the other end of the spectrum, Centrica leads the utility sector lower as the Conservatives bang on about their energy capping policies.

“Such a move is emblematic of the Conservative party’s more interventionist stance. It will start with energy companies, but some will be wondering whether other sectors will come under pressure as well. “

British Gas-owner Centrica was a top FTSE 100 faller, shedding 2.4$ to 197.6p, while electricity firm SSE PLC (LON:SSE) fell 1.5% to 1,427p. 

Away from the blue chips, The London market’s top gainer in early trading was engineering and environmental consultancy firm Waterman Group PLC (LON:WTM) which surged over 80% higher to 62p after it agreed to a £43mln takeover offer from Japanese firm CTI Engineering Co Ltd.

Waterman has agreed to a 140p per share takeover offer, an 83% premium to its 76.50p closing price on Monday.

09.20am: Energy firms dumped on May pledge

Energy companies were under intense pressure early on today, with British Gas-owner Centrica PLC (LON:CNA) dropping 3.5% to 195.3p and electricity provider SSE PLC (LON:SSE) down 1.7% at 1,424p after leader Theresa May pledged a price cap on energy bills if her Conservative party is returned to power in next month’s UK general election.

Neil Wilson,  senior market analyst at ETX Capital, said: “The move to cap prices would be a massive hit to the industry. It might cost Centrica something like £200mln and make it much tougher for the firm to reintroduce its progressive dividend policy.

“Like other providers it relies heavily on these standard variable rate tariffs – about three-quarters of customers are on these lucrative contracts.”

Despite the energy firm's falls, the FTSE 100 was up nearly 23 points at 7,323 in early morning trading. 

8.55am: Next and ITV lead Footsie gainers

The FTSE 100 got off to a positive start led by a revival in the fortunes in Next PLC (LON:NXT) as shares in the retailer (up 1.5%) continued to recover from last week’s earnings alert.

Not far behind was ITV PLC (LON:ITV), up 1.4%, as bid speculation resurfaced.

The two stood out after a rather subdued first hour for the index of blue-chip shares which was up 15 points at 7,315.84.

The big faller, off 11%, was Micro Focus International (LON:MCRO).

Its stock tumbled after it said software revenue at Hewlett-Packard Enterprise, the US company it is buying for £6.8bn, was down around 10% for the year.

The company is currently implementing an efficiency programme at HPE and early progress has been “encouraging”, according to chairman Kevin Loosemore.

"Whilst the short term decline in licence [revenue] is disappointing it is not unusual given the level of change being undertaken," he added.

Proactive news headlines…

Gene editing specialist Horizon Discovery PLC (LON:HZD) said its work in immuno-oncology has become a major growth driver as it restated its bullish sales target.

It has built what it describes as a ground-breaking platform to support the large and increasing number of customers in this new field of medicine, which uses the body’s own immune system to attack the disease.

There has been an important re-shuffle at the top of Seeing Machines PLC (LON:SEE), the leader in eye-tracking technology, with appointment of a new chief executive and the current incumbent moving to the role of executive chairman.

Mike McAuliffe, head of the automotive business Fovio, steps up to the role of CEO, with the company saying it needed a “different skill set to drive rapid global expansion”.

CentralNic Group PLC (LON:CNIC) has revealed that revenue more than doubled in the twelve months ended December 31.

The internet domains firm’s financial results showed revenues up 113% to £22.12mln for the year, up from £10.39mln the year before. Gross profit meanwhile rose by 58% to £7.66mln from £4.86mln, earnings (adjusted EBITDA) increased by 68% to £5.48mln from £2.95mln.

AFC Energy PLC (LON:AFC) has told investors it is expanding its position in the European market for fuel cells with the start of engineering work for a 1 megawatt proprietary fuel cell system at the Covestro Industrial Park Brunsbüttel.

Preliminary work has started at Brunsbüttel, at a site owned by Covestro Deutschland AG, where the AFC led project aims to deploy a fuel cell system that will be fed by hydrogen fed by Covestro's hydrogen grid.

Solo Oil PLC (LON:SOLO) has highlighted “very encouraging” recent progress with Helium One’s Rukwa and Balangida projects in Tanzania.

The company, which in March acquired a 10% stake in Helium One, noted that an airborne gravity gradiometry survey spanning 16,000 line kilometres had now been completed across the Rukwa and Balangida licences.

Health marketing group Cello Group PLC (LON:CLL) has made a good start to this year especially in the US where new acquisition Defined Health is doing well, it told shareholders at its annual meeting.

Tyratech PLC (LON:TYR) is to restructure into two divisions focused on animal and human health respectively to help it capitalise on the potential in both arms.

After carrying out a strategic review, Bruno Jactel, chief executive, said the company concluded that it did not have sufficient resources from operating cash flow alone to fund the next phase of its growth and unlock the full value of its assets.

Eurasia Mining PLC (LON:EUA) has re-started production at its West Kytlim alluvial platinum operation in the Urals in Russia. The main ore zones in Malaya Sosnovka are prepared for mining while snow melt is well advanced, resulting in the filling of the reservoir ponds to provide water for the wash plants.

 

6.45am...flat start

London’s blue chips are set to start flat after markets overseas struggled for direction overnight.

Spread bet firms see gains of around five points at best for FTSE 100 when trading gets underway after a similarly quiet end to Monday. FTSE 100 closed up 3 at 7,300.

France’s presidential election had little follow-through for markets with attention now swinging back towards the UK and the likely route Brexit will take.

US markets dawdled. The Dow Jones Industrial Average rose 5 to 21,012, with even more modest gains for the S&P 500 and Nasdaq.

Story of the day in the US was Apple. The iPhone maker's market capitalisation rose above US$800bn on the back of news that Warren Buffett, the Sage of Omaha, had substantially increased his stake in the first quarter.

US broker Drexel Hamilton also predicted Apple would head through the US$1trn barrier.

Asian markets were mixed. Decent gains in Hong Kong were not matched elsewhere with Tokyo and Shanghai both off slightly.

News headlines

  • The Institute for Fiscal Studies said overseas development assistance will rise by £1bn over the course of the next parliament as a result of Theresa May’s pledge to continue meeting the United Nations 0.7% target, the Guardian reports. 
  • However, in recent years less of ODA spending has been channelled through the Department for International Development with a growing emphasis on ensuring UK firms benefited.
  • Recruiters have warned Britain has a shortage of workers across scores of different jobs, particularly in the engineering sector, The Telegraph writes. Since unemployment has fallen to levels not seen in a decade, there are less people available to take new jobs, the Recruitment and Employment Confederation said.
  • The Transport for London faces legal action by the United Private Hire Drivers if Uber is unconditionally licenced, City Am reports. The UPHD is demanding the transport regulator impose a series of new conditions on the renewal of Uber’s licence to operate in the capital.  
  • The Co-operative Bank is set to admit defeat on its plans to sell the business, raising the chances that its American hedge fund owners will have to pump more capital into the bank, The Times said. The company is expected to provide an update in the next few days.

Commodities/currencies

  • Gold (oz): US$1,225 down US$/
  • Crude (barrel/WTI): US$46.30 down US$0.13
  • £/$: 1.2953 - no change 

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