logo-loader

FTSE 100 stages rebound as trade war fears ease

Last updated: 12:33 27 Mar 2018 EDT, First published: 01:44 27 Mar 2018 EDT

FTSE 100 sign
  • FTSE 100 closes up 111 points 

  • US stocks mixed

  • Hopes remain US/China trade war will be averted

  • Ferguson top riser

 

FTSE 100 joined global indices to shoot higher today after recent losses and closed up over 111 points.

Britain's blue-chip benchmark closed just at around the 7,000 level, up 1.62% on the day.

FTSE 250 was also higher - up over 202 points at 19,389.

In the currency markets, the pound shed 0.17% against the Euro, and lost 0.46% against the US dollar.

Fiona Cincotta, the senior market analyst at City Index, said: "After four straight sessions of losses the FTSE is making up for it and more."

She noted that Footsie found support from GSK (LON:GSK), up 4.88% to 1,351p on the back of the Novartis deal and from Ferguson (LON:FERG), up 6.7% to 5.470p and top riser, following a US$1 billion special dividend jackpot.

"In the forex markets the dollar was seen finding its feet again after a rough previous week last week and further losses on Monday.

"With no response yet from Russia over the expulsion of 60 Russian diplomats from the US and trade war fears easing, geopolitical downward pressure on the dollar is reducing. As a result, the dollar is gaining ground, even though consumer confidence data, surprised to the downside."

Retailer Next (LON:NEXT) was the biggest Footsie casualty, down  1.6% to 4,797p, after recent shares rises after proits fell for the third year in a row.

3.25pm: FTSE 100 founders a dying breed

Ladbrokes Coral Group PLC (LON:LCL) is set to become the 52nd founding member of the FTSE 100 index to disappear from the market, with the merged betting firm’s takeover by GVC Holdings PLC (LON:GVC) due to come into effect on Thursday.

Just 16 of the FTSE 100's founding members remain on the index under the same name, while a further 13 still trade on the benchmark index under a different name, according to research by AJ Bell.

Russ Mould, the investment director at AJ Bell said: "The remarkable rate of turnover among the UK's premier elite, with just 29 survivors after 34 years, shows how hard finding those sustained winners can be, especially as three founder members of the index went bust, two within a decade of its launch.”

He noted that two further members of the FTSE 100 founding group also look to be heading for the exit, with engineer GKN PLC (LON:GKN) and real estate firm Hammerson PLC (LON:HMSO) both facing questions over their independence following respective bids from Melrose PLC (LON:MRO) and French firm Klepierre.

Mould said: "Even if GKN staves off its predator the company is due to be broken up, as the defence plan outlined by chief executive Anne Stevens sanctions the merger of the Driveline operation with America's Dana, leaving shareholders with 47.25% of the new entity and the disposal of non-core assets ahead of a sizeable cash return."

Hamerson, meanwhile, will soon drop into the FTSE 250, alongside FTSE 100 founders Edinburgh Investment Trust PLC (LON:EDIN), Elementis PLC (LON:ELM) and Rank Group PLC (LON:RNK), should the company successfully fend off the attention of Klepierre and merge itself with Intu Properties PLC (LON:INTU).

2.50pm: US starts higher, but swiftly slips back

The FTSE 100 index remained not far from hefty session highs in late afternoon trading even though US stocks saw some early gains quickly reversed as investors chose to lock in profits following Monday’s 600 point-plus surge as fears over a US/China trade war subsided.

Around 2.45 pm, the FTSE 100 index was up 124 points at 7,013, drifting further below the day’s peak of 7,042.37.

In early deals on Wall Street, after notching ups its third-biggest points gain ever on Monday, the Dow Jones Industrials' opening advance was soon pared back, with the index shedding 9 points at 24,193, while other major indices were mixed.

Craig Erlam, senior market analyst at Oanda said: “Naturally, the prospect of a trade war between the world’s two largest economies has weighed heavily on risk appetite over the last couple of weeks with US equity markets posting significant losses on Thursday and Friday as things heated up.

“The message over the weekend though was far less confrontational and suggested the US would be open to scrapping the tariffs in exchange for certain other concessions such as reduced tariffs on important cars.”

He added: “Ultimately, Trump’s target was and remains to reduce the county’s sizeable trade deficit with a number of countries and while he may give the impression that a trade war is a worthwhile sacrifice, I’m not sure he’s as keen on it as he makes out.

“The question now is how big a concession other countries are willing to make to appease him, if any, and whether it will be sufficient enough for him to sell it to US voters as a worthwhile victory.

“Given the reaction we’ve seen in markets over the last couple of week’s I don’t think he’ll be keen to follow through on his threats and risk sending markets into a tailspin.”

1.00pm: US surge to continue

The Footsie remained strong in lunchtime trading, hovering near session highs back above the 7,000 level with US blue chips expected to extended Monday’s surge at the restart today as fears of a US/China trade war recede.

Around 1.00 pm, the FTSE 100 index was 131 points higher at 7,020, just holding off the day’s high of 7,030.24.

Joshua Mahony, market analyst at IG commented: “Yesterday’s 664 point rally in the Dow amounted to the third biggest single day point gain in history, with investors beginning to see light at the end of the tunnel after a period which threatened to see a global trade war break out.

“With Trump tweeting of multiple trade discussions going on behind the scenes, there is a feeling that the ultimate resolution will likely be a greater global access for US firms, highlighting why we are seeing an outperformance in US stocks.”

IG expected the Dow Jones to open around 120 points higher on Tuesday at 24,330.

AG Barr adds fizz

Among the gainers in London, shares in AG Barr PLC (LON:BAG) jumped 3.6% to 637p as its most famous brand, Irn-Bru post its ‘biggest ever year of sales’ in spite of worries over a reformulation of the fizzy drink to offset the impact of an impending sugar tax in the UK, helping it report solid gains in full-year profits, revenue and dividends.

The FTSE 250-listed soft drink maker reported full year pre-tax profits up 4.2% to £44.9mln as overall revenue increased by 8% to £277.7mln, and raised its final dividend.

But SuperDry PLC (LON:SDRY) saw its shares drop 7.9% to 1,520p as it announced that one of its founders, Julian Dunkerton is to leave the business and donate over £1mln worth of his company shares to charity.

The FTSE 250-fashion retailer said Dunkerton would step down as a director from 31 March 2018, adding he was resigning to devote more time to his other businesses and charitable interests.

Chill wind hits Stagecoach

Shares in transport operator Stagecoach Group PLC (LON:SGC) were also under pressure, falling 1.75% to 128.9p as the company revealed that recent adverse weather conditions caused by the ‘Beast from the East’ had affected its UK regional bus revenue, though its full-year expectations remain unchanged.

In a trading update, the FTSE 250-listed company said like-for-like-revenue growth for its regional UK Bus operations dropped by 2.5% year-on-year for the most recent four-week period, ‘illustrating the scale of the impact of these extreme weather conditions.”

Among the small caps, FreeAgent Holdings PLC (LON:FREE) shares rocketed 80.6% higher to 116.5p as Royal Bank of Scotland Group PLC (LON:RBS) agreed to acquire the cloud-based accounting software and mobile applications provider.

The FTSE 100-listed bank is to buy FreeAgent for 120p per share in cash, valuing the company at £53mln, with its RBS Bidco subsidiary undertaking the acquisition.

10.55am: IG leads spreadbetters lower

Spreadbetting firms took a tumble in mid-morning trading after the European Union financial markets watchdog, ESMA announced plans to ban ‘binary’ options sales to retail clients and restrict the sales of Contract for Differences (CFDs).

IG Group PLC (LON:IGG) shares topped the FTSE 250 index fallers list in response to the news, shedding 3.8% at 785p as the online financial trading company warned that its revenue in full-year 2019 will be lower than that expected in full-year 2018, primarily reflecting the impact of the regulatory changes in the UK and EU.

However, IG added in its response statement: “The Company is pleased that the uncertainty around the nature and extent of regulatory change in the UK and EU affecting the industry has been removed by this announcement.”

Elsewhere, peer CMC Markets Plc (LON:CMCX) fell 3.2% to 154.2p, but Plus 500 Limited (LON:PLUS) gained 3.45 at 1,078p as the ESMA news was as outlined back in December.

But the spreadbetters retreat failed to dent a strong rally by UK equities today, with the FTSE 250 index up over 220 points at 19,409, while the FTSE 100 surged 140 points higher to 7,029 after a leap by global markets on hopes that a US/China trade war will be averted.

10.30am: BoE FPC considered buffer increase

The Bank of England considered increasing the amount of money banks must set aside to counter their lending risks this month as the UK economy grows but held off on taking a decision until June.

Minutes from the last meeting of the BoE’s Financial Policy Committee – held on March 12 but published today – showed arguments for setting the so-called countercyclical capital buffer (CCyB) a little above its current 1% level.

The FPC - which oversees risks to the economy from the banking system – concluded that risks “had increased since the Committee first judged that a 1% UK CCyB rate was appropriate, in Q1 2016.”

A “measured increase” in the first quarter of 2018 could be accommodated by banks without a need to tighten credit conditions and would not have been a shock, the committee added.

But the FPC also listed the arguments for keeping the CCyB at 1 percent for now, including relatively modest growth in lending and said signs of intensifying risk appetite would need to persist to justify a hike in the CCyB.

On currency markets, after recent strong gains, sterling beat a retreat today, losing 0.6% versus the dollar at US$1.4144 and falling 0.4% against the euro to €1.1388.

But equities benefited as a result, with the FTSE 100 index extending its early surge to about 127 points at 7,016 around 10.30am.

08.45am: Footsie surges at open

The FTSE 100 index leapt higher in early deals, tracking overnight strength for US and Asian markets on hopes that a US/China trade war can be averted.

Around 8.45am, the UK blue chip index was up around 96 points at 6,985, rallying after late falls on Monday which saw the index close 33 points lower.

Jasper Lawlor, market commentator at London Capital Group commented: “Wall street rallied hard at the start of the new week, as trade war fears eased, following reports of progress in behind the scenes talks between China and the US.

“A healthy number of countries have now been granted exceptions from US steel and aluminium trade tariffs and now it is starting to look as if China could be joining them.”

He added: “With the US handing out so many exemptions markets are starting to question whether Trump ever had any intention of heading into a trade war with China. Or, whether this was simply tactic to increase leverage in trade discussions, with the world’s second largest economy, as Trump merely looks to fulfill a campaign promise.”

Among the gainers in London, GlaxoSmithKline plc (LON:GSK) took on 3% at 1,326.2p after the blue chip drugmaker agreed to buy Swiss firm Novartis's 36.5% stake in their consumer healthcare joint venture for US$13bn (£9.2bn).

The move comes less than a week after Glaxo walked away from a bid for US firm Pfizer’s consumer health business.

Meanwhile, FTSE 100-listed plumbing supplies firm Ferguson Plc gained 4.8% at 5,380p as it hiked its interim dividend by 10%, unveiled a special dividend and effect a share consolidation on top of ongoing share buybacks after selling its Nordic business.

The cash returns came as the firm - formerly known as Wolseley – reported a 15% jump in first-half profits as revenues rose by 10.3%.

Proactive news headlines:

A scientific review into hydraulic fracturing in Australia’s Northern Territory has concluded that the inherent risks of the controversial oil and gas extraction method can be mitigated or reduced to an acceptable level. In some cases the risks could be eliminated entirely, it said. The conclusion, which is intended to inform the region’s politicians, will be taken as good news by Falcon Oil & Gas Ltd (LON:FOG), its partner Origin Energy and their respective investors.

ITM Power plc (LON:ITM) has announced the opening of the first 'under the canopy' hydrogen refuelling station at Beaconsfield Services on the M40 in partnership with Royal Dutch Shell PLC (LON:RDSA).

OptiBiotix Health plc (LON:OPTI) has announced that it is gradually transitioning from a research and development company to a commercial business, and plans to open its online store by the end of April.

Genedrive PLC (LON:GDR) has signed a new distribution agreement for its Genedrive HCV ID Kit and Genedrive platform in India. The AIM-listed diagnostics manufacturer said the agreement made with ARKRAY Healthcare pvt Ltd (ARKRAY), a subsidiary of ARKRAY Inc. Japan, will focus on securing regulatory approvals for the HCV ID Kit in India.

DP Poland Plc (LON:DPP) has seen costs ease and a better performance from its mature stores in recent months. Lower cheese prices and staff being easier to recruit compared to the last quarter had reduced pressure on margins said Peter Shaw, chief executive.

Healthy demand for second-hand car finance enabled S&U PLC (LON:SUS) to post another record year. Anthony Coombs, chairman, said that unlike new cars, where sales have tailed off recently, demand for used cars rose by 6% in volume terms and by 12% by value in 2017.

Alliance Pharma plc (LON:APH) hiked its full year dividend by 10% as strong demand for its key brands boosted earnings. The pharmaceutical company delivered pre-tax profit of £28.4mln in the year through December 2017, up 28% on a reported basis. Underlying pre-tax profit rose 8% to £24mln.

Summit Therapeutics PLC (LON:SUMM) (NASDAQ: SMMT) is looking to raise £15mln via an accelerated book-build placing of up to 8, 333,333 new ordinary shares, at a price of 180p each, to advance its treatment for Duchenne Muscular Dystrophy (DMD). The AIM-listed group said the intended placing price represents a discount of 5.3% to its closing mid-market price on 26 March 2018 of 190p.

Frontier IP Group Plc (LON:FIPP) saw the value of its portfolio of its university spin-outs rise by almost 50% in its latest half-year. The AIM-listed intellectual property group’s investments were worth £8mln at end December, which included the additions of water pollution tester Molendotech and The Vaccine Group.

Be Heard Group PLC (LON:BHRD) has appointed the former chief executive (CEO) of GlobalData PLC (LON:DATA), Simon Pyper as its new chief financial officer (CFO). The AIM-listed digital marketing group said Pyper had led GlobalData in its AIM listing in 2010, with the company growing to a market cap of over £500mln. Be Heard has a current market cap of around £21.8mln.

e-therapeutics PLC (LON:ETX) saw its operating loss significantly reduced in the year ended 31 January 2018 having undertaken a  systematic review of its operations under new CEO Ray Barlow. The AIM-listed drug discovery company saw its full-year operating loss reduced to £6.8mln, down from a £16.3mln loss a year earlier.

Sunrise Resources Plc (LON:SRES) has sent 120 composite drill samples from its CS pozzolan-perlite project for laboratory testing. The pozzolan samples will be tested for strength, while the perlite samples will be tested for application-specific qualities. Sunrise is now moving towards bulk sampling and reports interest from several potential customers.

Strategic Minerals Plc (LON:SML) has identified a potential nickel sulphide target at the Hanns Camp project in Australia. The target will now be tested with aircore drilling, subject to permission from the relevant government department.

Touchstone Exploration Inc (LON:TXP, CVE:TXP) has reported on what it described as a “transformational” year for the Caribbean oil firm. In the year, the company produced an average of 1,375 barrels of crude oil per day which marked a 6% increase from the preceding year.

Lekoil Ltd (LON:LEK) told investors that it has decided to apply to Nigeria’s Federal High Court as it seeks to expedite the approval of its agreed acquisition of a stake in OPL 310, previously owned by Afren.

US Oil & Gas PLC (USOP) has issued 2.75mln new shares to private investors to raise gross proceeds of US$1.15mln. The placing shares are priced at 30p per share. The company said that the proceeds will be used for working capital and to fund planned drilling operations in Nevada.

Chariot Oil & Gas Limited (LON:CHAR) announced that it has received valid acceptances from qualifying shareholders in respect of 13,911,954 open offer shares, representing 41% of the maximum available, accordingly, the group has conditionally raised total gross proceeds of approximately US$2.5mln (£1.8mln). The company announced on 27 February 2018 that it had conditionally raised total gross proceeds of approximately US$15mln (£10.7mln) by the conditional placing of 82,582,747 new ordinary shares at an issue price of 13p each.

Eurasia Mining plc (LON:EUA)  has announced that it will be presenting at two events this coming week commencing 26th March 2018. The group said that, in association with fintech company Bankex, it will be co-presenting at the Standard and Poor's Global Platts NORTH AMERICAN DIGITAL COMMODITIES SUMMIT on March 26, 2018 in New York.  Subsequently, Eurasia Mining said it is attending the Mining Investment Asia conference in Singapore, 27-28 March 2018 in Singapore.

Metminco Limited (LON:MNC) (ASX:MNC) advises that its latest presentation has been released to the Australian Stock Exchange, with a full pdf version of the presentation available on the company's website.

6.45am: Big gains seen

The Footsie is seen jumping higher in early trade on Tuesday, recovering after yesterday’s late sell-off following strong overnight gains by US and Asia markets as Trump trade war worries ebb and flow.

Spread betting firm IG expects the FTSE 100 index to open around 84 points higher at 6,966, having shed 33 points to close at 6,888.69 on Monday.

Overnight on Wall Street, the Dow Jones bounced 669 points higher to close 24,202, its third-biggest points gain ever and recouping all and more of Friday's 450-point slide on hopes that a damaging trade war between the US and China might be averted.

Asian markets followed New York's lead and found strong gains today on hopes that behind scenes talks on tariffs between US and Chinese officials made that be successful, with the dollar a big casualty as a result.

On currency markets, the pound continued its push higher versus the greenback, but was flat against the euro ahead of the publication of minutes later today from the last Bank of England Financial Policy Committee.

Currency a factor for Ferguson

On the corporate front, plumbing and heating supplies group Ferguson Plc (LON:FERG) is expected to report solid first-half results today, notwithstanding the effects of volatile exchange rates.

Ferguson – which changed its name from Wolseley PLC last year to reflect its increased US bias – is likely to continue to be supported by ongoing strength in both the residential and non-residential repair, maintenance and improvement markets, based on reports from their key US peers.

However, with the FTSE 100-listed group’s poorly performing Nordic division being sold off, more attention will also go onto its UK business, which has also struggled lately due to a challenging environment.

Investors eye inflationary impact on United Utilities

A trading update from blue chip United Utilities PLC (LON:UU. will also be eyed, with the firm bracing for a tougher regulatory stance from Ofwat and it has been in discussions with the water watchdog over its future business plan.

At the first half results in November, UU said its “leading operational performance and customer satisfaction places us in a good position heading into the next regulatory review”.

Investors will also be looking to see how well the company has responded to inflationary pressures and the regulatory and political challenges which have led to its poor share price performance over the last 10 months.

Irn-Bru reformulation key for AG Barr

Commentary around ongoing sales for its reformulated soft drink Irn-Bru will be critical in AG Barr PLC’s (LON:BAG) full-year results on Tuesday.

The soft drinks industry is facing a shake-up with the introduction of a tax on soft drinks with higher sugar contents from April, and AG Barr has responded by reformulating its products to lower sugar recipes.

As a result, 99% of the firm’s portfolio will be exempt from the new levy; however, there have been concerns that the reformulated drinks could alienate the group’s legions of fans, though a February trading update suggested the new formulations had been well received.

Significant announcements expected on Tuesday March 27:

Trading update: United Utilities PLC (LON:UU.)

Interims: Ferguson Plc (LON:FERG), Earthport plc (LON:EPO), Orchard Funding Group PLC (LON:ORCH)

Finals: Ladbrokes Coral Group PLC (LON:LCL), AG Barr PLC (LON:BAG), Alliance Pharma plc (LON:APH), Billington Holdings PLC (LON:BILN), Biome Technologies PLC (LON:BIOM), T Clarke PLC (LON:CTO), DP Poland Plc (LON:DPP), Elecosoft PLC (LON:ELCO), e-Therapeutics PLC (LON:ETX), Gulf Marine Services PLC (LON:GMS), Moss Bros Group plc (LON:MOSB), Nostrum Oil & Gas PLC (LON:NOG), Scisys Plc (LON:SSY), STM Group Plc (LON:STM), S&U PLC (LON:SUS), Touchstone Exploration Ltd (LON:TXP)

Economic data: Bank of England Financial Policy Committee minutes; US consumer confidence index; US Case-Schiller house prices

Around the markets:

  • Sterling: US$1.4134, up 0.01%
  • Gold: US$1,348.70 an ounce, up 1.7%
  • Brent crude: US$65.86 a barrel, up 0.5%

City Headlines:

  • GlaxoSmithKline buys Novartis stake in consumer healthcare venture for US$13bn – Reuters
  • Nestle says it has harnessed science to reduce the sugar in chocolate – The Guardian
  • Aldi and Lidl dig deeper into Britain's grocery market - Reuters
  • Deutsche Bank seeks to replace CEO with Goldman executive – The Times
  • US jury orders AbbVie to pay US$3mln in AndroGel retrial - Reuters
  • Travelport shares jump 17% as hedge fund Elliott buys stake Reuters

Ramp Metals Launches Drilling Program in Pursuit of High-Grade Nickel in...

Ramp Metals CEO Jordan Black joined Steve Darling from Proactive to introduce the company to the public domain and share exciting developments in the mining industry. With a background as a geotechnical engineer and experience in venture capital, including a notable role in taking GoldSpot...

28 minutes ago