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FTSE 100 finishes in the red; Tusk says still no progress in Brexit talks

If the 7,300 level were a fence, Footsie would have spent the whole day sitting on it
Cruise ship
Things (mostly) went swimmingly for Carnival in the third quarter
  • Nostra Terra's share price doubles on back of hedging deal with BP

  • Cruises operator Carnival posts strong third quarter results and confident outlook

  • FTSE 100 closes down 15.55 points

 

FTSE 100 pulled back in late afternoon deals, and even cruise giant Carnival plc (LON:CCL) couldn't tug it back.

The UK blue-chip benchmark closed down 15.55 points at 7,285, while FTSE 250 was also lower - down over 63 points at 19,503.

It came amid another blow to Brexit plans as European Council President Donald Tusk said after visiting Number Ten there had been "no sufficient progress" in the talks despite the PM's intervention last week.

In the currency markets, the pound gained 0.33% against the Euro, but lost 0.32% against the US dollar.

The biggest gainer on Footsie was Carnival after it posted results, which cheered, while the top laggard was drugs group Shire (LON:SHP), which shed 2.36% to 3,741.5p.

Also lower was advertising behemoth WPP plc (LON:WPP), which dropped 1.69% to 1,399p after a downgrade from Morgan Stanley.

The broker said it was likely to fall short of full year guidance and may face difficulties hitting its medium-term earnings growth targets.

3pm - Footise perks up

It’s allegedly better to travel than to arrive, but for the Footsie it was a day when travel stocks pointed it to the desired destination.

The top-shares index perked up late in the day, heading in to higher territory, having been tugged there by cruise lines operator Carnival PLC (LON:CCL).

READ Carnival reports above-forecast third quarter earnings, but expects fourth quarter hit from recent hurricanes

The shares rose 2.3% on better-than-expected third quarter performance, contributing to a 7 point gain for the FTSE 100 at 7,308.

In the morning session it had been airline easyJet propping up the Footsie, as investors bought into stock of the company, which has been named as one of two preferred bidders for insolvent rival Air Berlin.

EasyJet shares were up 1.8% at 1,201p.

In the small caps space, Nostra Oil & Gas Company PLC (LON:NTOG) doubled on the back of a hedging facility agreed with integrated oil major BP PLC (LON:BP.).

“This is a significant endorsement of both Nostra Terra's strategy and asset portfolio,” claimed NTOG chief executive, Matt Lofgran.

2.45pm: US stocks opened firmer

US stocks opened firmer and higher than expected.

The Dow was up 59 at 22,355 and the S&P 500 was 6 points higher at 2,503.

The strong start had zero effect on London’s fortunes, with the FTSE 100 ebbing to 7,299, down 3 points on the day.

Results from Carnival PLC (LON:CCL), released in the afternoon so as to catch the eye of investors on both sides of the market, prompted a 3.2% rise to 4,896p in the share price of the cruises operator.

Third quarter earnings per share (EPS) eased to US$1.83 compared to US$1.93 in the same quarter of last year.

On the company’s preferred measure of EPS, the number went up to US$2.29 from US$1.92 the year before. The difference between the two numbers excludes the changes in value of fuel derivatives and other so-called exceptional items.

Net revenue yields on a constant currency basis rose 5.1% year-on-year, comfortably better than the guidance given in June, which was for an increase of around 4%.

As for current trading, cumulative bookings for the first half of next year are well ahead of the prior year on both price and occupancy, which suggests cruisers have not been perturbed by hurricanes or the prospect of North Korea sparking off a nuclear winter.

“After the earthquakes in Mexico and a very challenging series of hurricanes, our thoughts are with all of those impacted and we are actively contributing to the relief and rebuilding efforts in the Caribbean and the southern U.S. through monetary and other support. Many people throughout these areas have been impacted and several ports are temporarily unavailable. Fortunately, our owned destinations including Amber Cove, Dominican Republic; Cozumel, Mexico; Mahogany Bay, Honduras; Half Moon Cay and Princess Cays, Bahamas, as well as more than 40 other ports, plus all those in Mexico, are fully operational and welcoming guests,” said the man with two jobs, Arnold Donald, who is both president and chief executive of Carnival.

1.45pm: Little change in the Footsie, though easyJet receives a lift from UBS commentary

The top-shares struggled into positive territory, albeit by less than a point.

Approaching the end of the lunchtime trading session, the FTSE 100 was up 0.38 points at 7,301.67.

The FTSE 350 remains mired in the red, but even here there has been a bit of a rally, to 19,513, down 53 points.

Card Factory’s losses have lengthened to 53.625p at 302p after the analysts’ meeting this morning.

Broker Peel Hunt reported that “increasing prices is not on the agenda at all” at the cards seller, as customer reaction has been very negative – and small wonder with a lump of cardboard retailing for several quid.

The broker reckons that this will put a crimp on future dividend payments.

“It’s disappointing but not crushing: special dividends will still feature, just not every year, and Card Factory is still very cash generative and a market leader that will get stronger with time,” the broker said, as it stuck with its ‘buy’ recommendation.

Back in the top tier, easyJet continues to top the Footsie leader board and it might not be just because it has been named as one of two preferred bidders for insolvent airline Air Berlin.

UBS reckons the low-cost airline is likely to be the main beneficiary of Ryanair’s current tribulations.

“Cross purchase analysis shows that easyJet's customer base overlaps more with Ryanair's than does BA's, which in our view is as expected. In addition, easyJet is also more of a sUBStitute for BA. (Note that Ryanair is viewed as more of a sUBStitute for easyJet than BA.) Accordingly, we think easyJet (rated Buy) will benefit from recent roster issues that Ryanair has faced given the high levels of sUBStitution,” the Swiss bank said.

“The UBS Evidence Lab data suggests that total airline spend is up slightly (~1%) over the last twelve months. BA seems to be capturing most of the increase as spend is up ~5% year-over-year, whereas easyJet and Ryanair are down ~6% and ~1% respectively (likely due to pricing). We expect that BA continues to benefit from fare mix between long haul and short haul as well as premium vs economy passenger seats,” it added.

EasyJet shares were up 2.3%.

12.30pm: FTSE 100 becalmed

The FTSE 100 continued to mark time in the lunchtime session.

The FTSE 100 was down 5 points, or 0.1%, at 7,297, but was making a better fist of things than the mid-cap FTSE 250, which was down 59 points (0.3%) at 19,507.

Results from FTSE 250 constituents - cards and giftware seller Card Factory and investment bank Close Brothers Group PLC (LON:CBG) – received negative reactions, contributing to the index’s decline.

Close said the competitive environment remains “challenging” for some of its business.

Liberum Securities kept the faith, sticking with its ‘hold’ recommendation and 1,535p target price, after full-year results were in line with its forecasts.

Numis Securities also recommends holding the shares and has a price target of 1,575p.

The shares currently trade at 1,429p, down 6%.

The shares of AA plc (LON:AA. were faring little better, as the market expressed disappointment in the roadside recovery outfit’s interims.

The company said its “IT transformation” had been delayed and that “a more measured approach” – presumably a synonym for “slower” – to implementation means additional capitalised labour costs will be incurred next year, leading to additional capital expenditure of around £35mln.

“We also recognise that in order to deliver an increasingly efficient operation and a distinctive membership proposition, additional IT investment will be required. We will provide further information in the first half of next year,” the company said.

Liberum cut its price target from 300p to 250p. The shares fell from 168.67p to 161.9p.

12.30: FTSE 100 little changed

It was back to square one for the Footsie in the run-up to the lunchtime session, ahead of what is expected to be a firmer start on Wall Street.

The index was back at the 7,300 level, pretty much where it closed last night.

Spread betting quotes pointed to the Dow Jones opening at around 22,327 across the pond, up 31 points.

The broader-based S&P 500 was seen opening up at around 2,499, up a couple of points from last night’s close.

Low-cost airline easyJet PLC (LON:EZJ) led the Footsie’s rally. The stock was up 2.5% as it closes in on acquiring some of the assets of insolvent German airline Air Berlin.

At the other end of the scale, marketing and advertising conglomerate WPP PLC (LON:WPP) fell 1.7% to 1,3999p after Morgan Stanley downgraded the stock to “equal weight” from “overweight” and slashed its target price to 1,600p from 1,930p.

READ Morgan Stanley sees “no early redemption” for advertising giant WPP

 

9.30am: FTSE 100 modestly lower

After 90 minutes' trading, London’s blue-chips index looked to be following a similar trajectory to yesterday:open lower and then trade sideways.

At 9.30am, the FTSE 100 index was down 18 at 7,283, just three points above its intra-day low.

Excitement was thin on the ground in terms of corporate news flow from Footsie companies, unless United Utilities floats your boat.

“United Utilities is in the middle of one of the biggest capital investment programmes in the industry. While this means debts are nudging upward, its regulated returns should ensure these remain easily serviceable. In any case, execution has been sound so far, with both operational performance and customer satisfaction improving,” observed George Salmon at Hargreaves Lansdown, who added that the biggest concern for UU investors will be the prospect of rising interest rates.

“Years of record low rates, plus prolonged economic uncertainty, have seen investors flock to shares in defensive investments like those in the utilities sector. This means that many, including United Utilities, are trading above their historic average valuations,” Salmon noted.

“The Bank of England has hinted a rate rise could be on the cards, and there’s no doubt that a sharp increase would upset the Applecart for United Utilities investors; however, with uncertainty around the Brexit negotiations still hanging over the UK, we feel caution is likely to remain very much the watchword for policymakers. In this context, there’s little reason to suspect increases will be anything other than steady, and spread over a long period,” he added.

There was a good deal more excitement in the mid-cap FTSE 250, where retailer Card Factory PLC (LON:CARD) was getting clobbered.

The shares were off 12% at 314.3p after the company reported a 14% dive in first half pre-tax income and griped about how the weakness of sterling is pushing up import costs.

“Despite the obvious headwinds, the share price plunge could be an over-reaction,” suggested Russ Mould, the investment director at AJ Bell.

“Chief executive Karen Hubbard, and the board, have shown confidence in the Wakefield company’s prospects – and above all its cash flow – by sanctioning a 3.6% increase in the interim dividend to 2.9p and offering the prospect of further special dividends,” Mould noted.

“If Card Factory pays a third straight annual special dividend of 15p since its 2014 flotation the yield would be above 10% after today’s crunching share price fall, and such a prospect is not impossible, assuming the full-year profit decline matches that of the first half,” Mould conjectured.

In other words, the message is: get well soon.

The FTSE 250 index was down 93 at 19,473.

The odd champagne cork might have been flying in Victoria Oil & Gas PLC’s (LON:VOG) offices after the latest update from Cameroon.

The group announced successful flow tests and first production gas from the Logbaba La-107 well, sending the shares 13% higher to 71.44p.

The well reached its target depth of 3,180 metres (m), the base of the Logbaba Formation, and encountered a total of 58m of net gas bearing sands in the Upper and Lower Logbaba Formations.

VOG’s chief executive officer Ahmet Dik said the flow tests exceeded the company’s expectations.

“We can now move to finalise long term gas supply contracts with high volume customers. Our next task is the safe and successful completion of the La-108 side track and to capture as much as the 100m of sands in that well as possible. These wells have been difficult and expensive to drill and the La-107 success is a credit to our operations and drilling teams," Dik said.

8.15am: The Footsie falls below 7,300

The Footsie has failed to keep its head above the 7,300 level, with investors mildly perturbed by the latest US-North Korea developments.

As per usual when geopolitical tensions rise, risk-averse investors head for precious metals, and that has resulted in gains for miners Fresnillo PLC (LON:FRES), up 0.8%, and Randgold Resources Ltd (LON:RRS), up 0.6%, but these gains were not enough to prevent the FTSE 100 from opening 12 points lower at 7,289.

Results from United Utilities Group PLC (LON:UU. are never exciting at the best of times and this morning’s trading statement was no exception.

Trading in the six months to the end of September has been in line with the group’s expectations.

The shares shed 0.2%, mirroring the market’s decline.

Publishing group Informa PLC (LON:INF) dipped 0.2% on the back of its announcement that it is to acquire Dove Medical Press.

Among the small caps, Victoria Oil & Gas PLC (LON:VOG) was the top riser, which climbed 16.6% to 74p after successful flow tests and first production gas from Logbaba well La-107.

Proactive news headlines:

Victoria Oil & Gas PLC (LON:VOG) shares advanced more than 12% in Tuesday’s early deals as it announced ‘first gas’ from its new well at the Logbaba field. The Cameroon-focussed integrated gas firm, in a stock market statement, said that Logbaba Well LA-107 has now been classified as a production well following a successful testing programme.

Eco (Atlantic) Oil & Gas Ltd (LON:ECO, CVE:EOG) has inked a deal with French major Total which acquires the option to take a 25% stake in the group’s Orinduik Block, offshore Guyana. The AIM-quoted explorer is already partnered with Tullow Oil PLC (LON:TLW) in the block, where a new 3D seismic programme was completed earlier this month.

Highlands Natural Resources PLC (LON:HNR) told investors it has kicked off a fracking programme, covering two wells - named Wildhorse and Powell - at the East Denver project in Colorado. The company highlighted that the start of the programme represents a further acceleration in its campaign at the East Denver project, ahead of the previously anticipated timeline.

Ferrum Crescent Limited (LON:FCR) has announced that its executive chairman, Justin Tooth has resigned with immediate effect, to pursue his other business interests, with the firm not intending to appoint a new full-time CEO in order to reduce costs. The AIM-listed lead-zinc exploration firm said, however, Grant Button, currently a non-executive director of the group and its company secretary, residing in Australia, will assume the role of non-executive chairman, also with immediate effect.

Westminster Group PLC (LON:WSG) has raised £750,000, before expenses, via an over-subscribed placing of 7.5mln new ordinary shares at 10p each, undertaken by broker Beaufort Securities Limited. The AIM-listed supplier of managed services and technology based security solutions said the cash raised will be used to “support the development of the company, with a particular focus on preparation for the anticipated Middle East project opportunity in its Managed Services division”.

Tethyan Resources PLC (LON:TETH) said today it has completed substantial geophysical surveys at the Suva Ruda and Gokcanica Projects located in Serbia, with interpretation of the data expected to be completed and announced in October.

Marketing and media analytics consultancy Ebiquity PLC (LON:EBQ) continues to achieve the milestones outlined in its five-year growth acceleration plan. Despite weaker performance in the US, results for the first half of 2017 were broadly in line with expectations.

Top level internet domains specialist Minds + Machines Group Limited (LON:MMX) is on course to deliver its maiden year of profitability as an operating business.

Christopher Wilks, chief financial officer at Signum Technology, has been appointed to the board of Kromek Group PLC (LON:KMK) as a non-executive director.

ImmuPharma PLC (LON:IMM) has started preparations for a new drug application of its lupus treatment Lupuzor with its Phase III trial now over half way through. The AIM-listed group said the decision to start to manufacture commercial batches of Lupuzor was taken in anticipation of the trial's successful outcome and in consultation with its regulatory advisors.

Haydale Graphene Industries PLC (LON:HAYD) has made its first sales in China through its partnership with shareholder Everpower. The sales are for a range of silicon carbide fibres (SiC)and 3D printing material and combined will generate about £160,000 in revenues.

Niche lender S & U PLC (LON:SUS) has reported another strong half year for its car finance arm Advantage and expects demand to remain strong despite Bank of England fears a credit bubble might be forming. Anthony Coombs, chairman, said: "In contrast to the reported hiatus in both the used car market and in economic growth generally, S&U continues to experience robust and good quality demand and our current trading is in line with our expectations.

Amedeo Resources PLC (LON:AMED) is digging in and waiting for an upturn in metals and the oil rig markets. “Despite the current difficulties in both the marine vessels market and the commodity markets, Amedeo is well resourced and remains focused on long term strategy of building a vertically integrated business in the resource and energy and related infrastructure sectors,” it said in its interim statement.

The boss of Instem PLC (LON:INS), a leading provider of IT solutions to life sciences firms, has said the company is “undoubtedly better positioned for profitable growth than ever before”.

Fast-expanding digital communications group Next Fifteen Communications PLC (LON:NFC) has hailed the performance of its recent acquisitions as it notched up another half of double-digit revenue growth.

Cancer-focused biotech ValiRx PLC (LON:VAL) has told investors it made “considerable progress” across both its clinical and pre-clinical drug portfolio in the first half of the year. Its lung cancer candidate, VAL401, finished the recruitment phase of its Phase II trial back in June and the study remains on track to be completed by the end of this year.

Sula Iron & Gold PLC (LON:SULA) has hit more high gold grades in drilling in Sierra Leone. The company will now conduct analysis on the results. Separately, directors will forgo salaries for the foreseeable future.

Galantas Gold Corporation (LON:GAL) will find out the results of the judicial review into its underground mining operations at Omagh in Northern Ireland in a judgement to be given on 29th September. The company already has consent to mine and has been continuing with work.

Eurasia Mining PLC (LON:EUA) has released interims showing the company's cash position to be £450,000 as at June 30. The feasibility study at the 1.9 mln ounce PGM Montechundra project is nearly complete, with work at the West Kytlim alluvial project also making progress.

Nigeria oil producer Eland Oil & Gas PLC (LON:ELA) reported net production of 5,275 barrels per day in the first half of its financial year. Production resumed at the OML 40 asset back in January, using a single well, after the company adopted a shipping export route rather than problematic pipeline operations.

6.50am: Flat start expected

Financial spread bet firms predict FTSE 100 will open flat at best after hefty falls overnight in Asia and in the US.

North Korea tensions and a sell-off overnight among US tech stocks hurt across overseas markets and financial spread bet firms expects this nervousness to spillover into London.

Footsie is tipped to open at 7,299, down slightly from yesterday’s close of 7,3012 a decline of nine points.

In the US, the Dow Jones shed 52 at 22,360 as North Korea described President Donald Trump’s recent comment as a ‘declaration of war’ and warned it would shoot down US planes even if they were flying outside of its airspace.

The S&P 500 and Nasdaq also both eased lower.

Gold was beneficiary of the ramping up of rhetoric, adding US$3 to US$1,315, while crude edged up to US$52.30 per barrel as producers cartel OPEC hailed the success of recent attempts to curb production and cut stocks.

Asian markets fell on the North Korea situation, with Hong Kong and Tokyo the worst hit. Shanghai was flat.

Commodites/Currencies

  • Gold: Up US$3 at US$1,315
  • Oil (WTI): Up 6c at US$52.28
  • £/$: 1.3476 – pound slightly lower

Business headlines

The Daily Telegraph

EasyJet and Lufthansa emerge as preferred bidders of Air Berlin assets: Low-cost airline easyJet appears to have beaten its rivals IN snapping up parts of the insolvent European carrier Air Berlin.

Aston Martin extends partnership with Red Bull Racing as it mulls F1 engine deal: Aston Martin has become a title sponsor of Formula 1 team Red Bull Racing as the car company increases its participation in the sport.

Unilever bets £2bn on booming Korean beauty trend: Unilever is splurging €2.3bn (£2bn) on a South Korean beauty business in the latest sign that the consumer goods giant is turning its focus towards its personal care division rather than its food business.

London’s financial industry moots post-Brexit court to ensure UK law doesn’t stray too far from EU rules: The City of London has “no appetite” for a bonfire of EU regulations after Brexit, representatives of UK-based financial firms said, as they unveiled plans for a dispute resolution body to limit how far British law can change after the UK leaves the bloc.

Google replaces Bing to become Apple’s default Siri search engine: Apple confirmed that its smart assistant Siri will now use Google rather than Bing for searches, in a sign of increasing integration between the two tech giants.

Trillions of pounds at risk without Brexit deal on derivatives, warns Bank of EnglandThe Bank of England has called for special arrangements to be made in order to protect the UK derivatives market when it leaves the European Union.

The Guardian

This summer was greenest ever for energy, says National GridThe UK has set a new landmark for clean energy after the National Grid announced that the electricity powering the UK’s homes and businesses this summer was the greenest ever.

Uber apologises after London ban and admits ‘we got things wrong’: Uber’s chief executive has apologised for the taxi app’s mistakes in London and promised to change as the company fights a decision by the city not to renew its licence.

UK chip maker Imagination bought for £550mln by China-backed tech firm: Shares in Imagination Technologies have jumped more than 40% after the UK chipmaker announced a takeover by a China-backed private equity firm that was blocked by Donald Trump from buying a US rival over national security concerns.

The Times

Harvey Nichols seeks new look with management reshuffle: The former Burberry executive who took over the running of Harvey Nichols nearly four years ago is stepping aside to take a new role at the company.

Turkey threat to shut tap on Kurdish crude lifts oil price: The oil price climbed above US$58 to its highest point in more than two years as the President of Turkey threatened to “close the tap” on Kurdish exports and analysts suggested that the full force of supply cuts was now being felt.

Ultra Electronics makes waves with £37mln Royal Navy contract: Ultra Electronics, the defence contractor, has won a £37mln from BAE Systems Maritime-Submarines for the final development and production of a hybrid electric propulsion system for the Royal Navy.

The Independent

Uber to deny it is part of the ‘gig economy’ in appeal: Uber is seeking to overturn a landmark ruling ordering it to give drivers basic employee rights by claiming it is not part of the ”gig economy” and the judges who found against it were “factually perverse”.

Daily Mail

Fast fashion firm Boohoo shares leap yet again after broker Panmure Gordon backs sales surge: No tears were shed by investors in Boohoo, with broker Panmure Gordon issuing an enthusiastic ‘buy’ note on the Manchester-based fashion website days before its first-half results.

Aldi profits fall by nearly a fifth as supermarket price war rages ... but it’s still opening one store a week: Aldi’s profits tumbled by nearly a fifth as the supermarket price war took its toll. Sales in the UK and Ireland rose 13.5% to £8.7bn in 2016, with the company enticing more than 1 mln customers into its stores during the year.

Deloitte becomes the latest victim of a cyber-attack with hackers accessing the secret emails of blue-chip clients and US government bodies: Accounting and professional services firm Deloitte has been hit by a cyber-attack, with hackers accessing confidential details and plans from some of the group’s clients, including multinational blue-chip companies and US government departments.

Major announcements expected

Tuesday September 26:

Trading update: Carnival Corp (Q3) (LON:CCL); Thomas Cook Group PLC (LON:TCG), United Utilities PLC (LON:UU.)

FinalsAnimalcare Group PLC (LON:ANCR), Close Brothers Group PLC (LON:CBG), Mysale Group PLC (LON:MYSL), Netcall PLC (LON:NET), Transense Technologies PLC (LON:TRT)

Interims: Altitude Group PLC (LON:ALT), AG Barr PLC (LON:BAG), Card Factory PLC (LON:CARD), Ebiquity PLC (LON:EBQ), e-Therapeutics PLC (LON:ETX), Faroe Petroleum PLC (LON:FPM), GYG PLC (LON:GYG), Horizon Discovery Group PLC (LON:HZD), Inspiration Healthcare Group PLC (LON:IHC), Instem Plc (LON:INS),  Mortgage Advice Bureau Holdings PLC (LON:MAB1), Minds + Machines Group Limited (LON:MMX), Moss Bros Group PLC (LON:MOSB),  Mi-Pay Group PLC (LON:MPAY), Personal Group Holdings PLC (LON:PGH),  Premier Technical Services Group PLC (LON:PTSG),  S&U PLC (LON:SUS), Taptica International PLC (LON:TAP), Time Out Group PLC (LON:TMO), Universe Group PLC (LON:UNG)

Economic data: US new home sales; University of Michigan economic sentiment report

 

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