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FTSE 100 closes higher but Wall Street lags

The FTSE 250 index, though, fell around 30 points to 18,609 on the day
skyline
FTSE 100 closed up around 30 points
  • FTSE 100 closes higher

  • Blue-chips still red for November   

  • No guarantee of Santa Rally for December     

FTSE 100 held onto gains and closed up over 34 points on Thursday at 7,038.

The FTSE 250 index, however, seen as a better measure of domestic companies, fell around 30 points to 18,609.

It comes amid more Brexit turmoil and as Prime Minister Theresa May bids to keep her Brexit deal plan alive.

In the US though, stocks turned negative after going higher yesterday, with the Dow Jones Industrial Index down around 55 points at the time of writing and the S&P 500 off  nearly five points.

Ken Odeluga, at City Index, said: "The U.S. stock market pullback is partly linked to attention returning to possibly over-egged hopes on the weekend’s trade talks.

"In fact, although firm on Thursday, European stock markets also traded below highs struck following comments by Fed chair Jerome Powell.

"On the other hand, the extent of Wednesday’s bullish eruption was such that a hangover from the overreaction was highly probable either way."

4.10pm: Footsie up toward the close  

The UK’s blue-chips index marched toward a positive closing level in late Thursday afternoon trade, but with one more full trading session to go for the month it remained on course to fall in November. 

The FTSE 100 rose 36 points, or 0.5%, to 7,040p, with oil and gas, bank and mining shares among advancers.

But the benchmark was looking at a 1.2% decline for November. It’s also been a rough year for the FTSE 100 as it’s dropped roughly 8.5% since the end of December 2017.

If history is anything to go by, the FTSE 100 could next month could log a so-called Santa Rally, which the index has posted since 1998, said Richard Hunter, head of markets at Interactive Investor, in a blog post this week.

The average gain in a December Santa Rally over the past 20 years is 5.8%. The lowest gain was 2.5% in 2012 and the highest was in 2008 when the index jumped 12.2%, he said. 

However, there’s no guarantee of a rally this year, said Hunter.

“Any slowdown in the burgeoning US economy will be pounced upon, whilst the Federal Reserve's tightening policy (likely to be proven further by another interest rate hike in December) and the escalating trade spat with China could both have detrimental effects,” he said in addressing risks facing the market. 

Hunter added: “There may be the usual annual reasons which lead to some buying pressure, such as investors (private as well as institutional) repositioning and perhaps investing in their preferred themes for the upcoming calendar year. Equally, this may result in additional cash finding its way into the market which, all things being equal, should be price positive.”

 

3.00p: Footsie rises further 

The FTSE 100 revisited intraday highs Thursday afternoon, with oil shares gaining as crude prices bounced up, but US stocks gave up some ground following Wednesday’s rally.

The FTSE 100 advanced 58 points, or 0.8%, to 7,063, headed back toward an intraday high of 7,074.56 logged early Thursday. The FTSE 250 mid-cap index moved up 35 points to 18,677.

At the same time, the Dow Jones Industrial Average fell 68 points to 25,298. The Nasdaq Composite and the S&P 500 index each declined by 0.3%.

On the FTSE 100, oil producer Royal Dutch Shell PLC (LON:RDSB) bulked up by 1.7% to 2,422.50p, and rival BP PLC (LON:BP) advanced 0.6% to 526.80p. The heavily weighted shares rose as oil prices marched higher following a Reuters report that Russia is considering reducing its oil output.

Russia is still negotiating with Saudi Arabia, head of OPEC, over the timing and volume of any reduction, the report said, citing unnamed sources.

WTI oil traded above $51 a barrel after hitting below $50 a barrel for the first time in more than a year earlier Thursday. Brent crude prices surged more than 1% to above $59 a barrel after the Reuters report.

In other moves, British American Tobacco plc (LON:BATS) popped up 2.0% to 2,792p following a ratings upgrade by RBC Capital Markets to ‘sector perform’ from ‘underperform’, although the price target was cut to £27 a share from £34 a share.

Meanwhile, Jefferies reiterated their price target of 5,000p, saying it believes a US ban on methol cigarettes won’t materialize.

READ: Jefferies reiterates blockbuster £50 price target for BATS

 

1.35pm:  Wall Street may cool down 

Blue-chips in the UK travelled higher during lunchtime trade Thursday, while US stock futures suggested Wall Street will pull back after its Fed-inspired rally in the previous session.

The FTSE 100 tacked on 45 points, or 0.6%, to 7,049, and the FTSE 250 mid-cap gauge was higher by 21 points at 18,661.

Meanwhile, futures for the Dow Jones Industrial Average fell 46 points to 25,298. Nasdaq-100 futures stepped down 38 points and S&P 500 futures declined 8 points.

Dow industrials on Wednesday soared 617 points, one of the biggest one-day surges in eight months, after Fed boss Jerome Powell struck a cautious tone on further interest rate rises next year.

“Investors rejoice but does this change the broader outlook of the US and global equity markets? Yes, but only slightly. Clearly, with the Fed thinking about slowing down their hiking schedule and the ECB expressing similar thoughts of delaying tightening in the Eurozone, a lower-than-previously-expected interest rates environment is positive for equities,” said Konstantinos Anthis, head of research at ADSS.

“However, the prospect of a slowing domestic performance in the US and Europe and persisting trade concerns on a global level don't allow for much optimism so we still remain on the defensive regarding the US and European equity markets," he added. 

Back in the UK, Go-Ahead Group PLC (LON:GOG) shares leapt 5.9% to 1,642.00p after the FTSE 250 transport group logged revenue growth in the year-to-date period, and a recovery in its rail segment.

READ: Go-Ahead's recovery in rail after timetable chaos offsets lower expected bus performance

Meanwhile, Independent Oil and Gas Plc (LON:IOG) shares dropped 18% to 23.26p, with the company saying its financing plan for the core Southern North Sea project has been delayed.

READ: IOG says "unstable" markets are a challenge to funding plans

 

12.10pm: FTSE 100 holds to gains 

The FTSE 100 stayed in positive territory early Thursday afternoon, with bank shares broadly higher after lenders passed stress tests conducted by the Bank of England.

The blue-chip gauge rose 25 points, or 0.4%, to 7,029p, and the mid-cap FTSE 250 index moved up 38 points, or 0.2%, to 18,680.

The UK banking system is able to withstand a disorderly Brexit and hold up in the face of a range of risks, including a slide in property prices and a jump in unemployment, according to the central bank’s assessment released late Wednesday.

On Thursday, shares of Barclays PLC (LON:BARC) rose 0.3% to 167.30p, Royal Bank of Scotland PLC (LON:RBS) gained 0.4% to 221.00p, and Lloyds Banking Group PLC (LON:LLOY) claimed a 0.4% rise to 56.58p.

The stress tests results were “not a surprise to us given that all of the quoted banks that have been tested are now paying dividends and have been talking openly about returning surplus capital to shareholders by way of share buy-backs and special dividends (and in some cases are already doing so),” said Gary Greenwood, investment analyst at Shore Capital.

READ: Lloyds, RBS, Barclays and other UK banks pass tough 2018 stress test ahead of Brexit

Also, “the Bank of England chose to maintain the Countercyclical Capital Buffer for the industry at 1%, albeit we think this could be reduced in the event of any notable macro-economic weakness caused by Brexit,” Greenwood added.

READ: UK banks could raise dividends and buybacks, UBS suggests

HSBC Holdings PLC (LON:HSBA) shed 0.3% to 667.30p, and Standard Chartered PLC (LON:STAN) slipped 1 point to 611.40p. Shares of the Asia-focused banks were lower ahead of this weekend’s meeting between Chinese President Xi Jingping and US President Donald Trump at the Group of 20 summit in Argentina.

Investors will watch to see if the US and China can resolve their trade dispute.

In other action, Britvic PLC (LON:BVIC) shares leapt 5.6% to 826.00p after the soft drinks maker posted a 5% rise in annual revenue and profit.

READ: Britvic shares touch all-time high as annual profit rises despite “challenging environment”

Thomas Cook Group PLC (LON:TCG) shares fell 2.1% to 35.34p after the travel services company confirmed a 23.3% drop in full-year profit after warning the market about its “disappointing” performance.

READ: Thomas Cook confirms 'disappointing' full-year earnings and turnaround plan

10:25am: Footside rises further

UK large-cap stocks extended gains in mid-morning trade Thursday, with Unilever PLC and Ashtead Group PLC among advancers, as investors latched onto dovish comments made by the head of the Fed.

The FTSE 100 rose 42 points, or 0.6%, to 7,046p, aided by advances for industrial and consumer-related shares. 

European stocks were also broadly higher, with the Stoxx Europe 600 up by 0.5%, and in Asia, Japan’s Nikkei picked up 0.4%. The moves were made after Fed chair Jerome Powell in a speech Wednesday, suggested the central bank may slow the pace of rate hikes. That could mean less costly borrowing for business and households.

The pound has fallen back below US$1.28 after “having been pulled in different directions” on Wednesday by both the Fed and the Bank of England.

“Though the Bank of England’s dire, and controversial, warnings about the impact of a ‘no deal’ Brexit were meant to be yesterday’s headline story, Mark Carney and Co. ended up being usurped – in the eyes of cable at least – by a surprisingly dovish address from Jerome Powell,” said Connor Campbell, financial analyst at Spreadex.

“As for the European indices, [while] not normally a fan of their currencies strengthening, the downside to the pound and euro’s gains was countered by the hopes of fewer than forecast US rate hikes in 2019,” Campbell added.

In FTSE 100 moves, Unilever PLC (LON:ULVR) shares rose 0.7% to 4,287.50p after the consumer products heavyweight said CEO Paul Polman will retire next year, with the move taking place after an investor revolt over the company’s now-abandoned plan to move its headquarters out of the UK.

READ: Unilever CEO Polman to retire in wake of investor revolt over headquarters U-turn

Ashtead Group PLC (LON:AHT) shares picked up 3.8% to 1,775p as the equipment rentals company said CEO Geoff Drabble will step down next year and that it has named the head of its North American business as Drabble’s successor.

READ: Ashtead CEO Drabble to leave in 2019

8.35am: Early gains for Footsie

The FTSE 100 was trading 29 points higher at 7,033.08 in the first half hour, dragged higher by the sentiment change on Wall Street.

It’s been a roller coaster ride for US investors, which overnight saw the Dow Jones jump 617 points. However, there is some way to go before it is back to October’s record territory.

The reason Wednesday’s rebound was the less hawkish rhetoric of US Federal Reserve chair Jerome Powell.

“One of the reasons US stocks sold-off aggressively in October was because there was a fear the Fed would hike rates four times over the next 12 months, but dealers are now far less fearful of tighter monetary policy,” said David Madden of CMC Markets.

“The announcement, prompted dealers to snap up relatively cheap stocks, and sell the US dollar.”

Back in the UK, the day’s big faller was Intu (LON:INTU), owner of Gateshead’s Metro Centre, which collapsed almost 37% after the withdrawal of a bid approach from a consortium led by Peel Holdings.

“Their decision to walk away leaves Intu in a challenging position with its highly valued shopping centres facing cyclical and structural pressure, above average financial leverage, a departing CEO, and two recently failed bid processes which will have inevitably been disruptive to the business,” said City broker Liberum repeating its ‘sell’ recommendation.

Though there was no real read-across, the collapse of the Intu bid hit sentiment shoring up its rivals. Worst affected was Land Securities (LON:LAND), which fell 3.3%, followed by British Land (LON:BLND) and Segro (LON:SGRO).

A broker downgrade by the influential JP Morgan Cazenove left investors in the engineer Senior (LON:SNR) almost 8% worse off.

The mining stocks led the risers list with Evraz (LON:EVR) up 3.5%.

Proactive news headlines:

Haydale Graphene Industries PLC’s  (LON:HAYD) Taiwanese operation HTW has started to ship commercial quantities of its graphene ink for diabetes test strips. Trials have been underway for a year by the customer, but sizeable deliveries have now started as part of a 100kg order.

OptiBiotix Health PLC (LON:OPTI) has agreed a production, packaging and supply agreement for its CE Marked weight management product. Italy’s Nutrilinea will formulate and distribute SlimBiome Medical, which also has medical device status, in boxes of 30 single sachet doses for sale across its network and the UK firm’s growing list of partners.

Ariana Resources PLC (LON:AAU) has revealed what it describes as “excellent” exploration results from the Salinbas gold project in Turkey. At Salinbas, located within the ‘Hot Gold Corridor’, sampling activities have returned gold grades up to 5.02 grams per tonne.

Graphene specialist Directa Plus PLC (LON:DCTA) has signed a collaboration agreement with Ambienthesis, a Milan exchange-listed reclamation and hazardous waste disposal group. The agreement will see Directa’s G+ enhanced Grafysorber adsorbent tested as a cleaning agent for soil, groundwater and industrial waste.

genedrive PLC (LON:GDR) is to trial its hepatitis C (HCV) testing device in recovering heroin addicts as it looks to see if its diagnostic is cheaper and more effective than what is currently on the market.

KRM22 PLC (LON:KRM) has announced two new customer contracts for two recently acquired businesses, Irisium and ProOpticus, expanding its Global Risk Platform.

Shefa Yamim (ATM) Ltd (LON:SEFA) has increased the estimated mineralised tonnage at the Kishon Mid-Reach project following the results of a Note For The Record (NFTR) report.

Europa Oil & Gas Holdings PLC (LON:EOG) has maintained positive in its support for the Wressle oil project, in Lincolnshire, despite yet another disappointment in efforts to secure planning permission to develop the field. Late in Wednesday’s session, it was announced that Wressle project operator Egdon Resources had been frustrated again as the North Lincolnshire Council Planning Committee refused the new application for planning consent.  Europa owns a 30% stake in Wressle, while Union Jack Oil PLC (LON:UJO) holds a 27.5% project stake.

Bushveld Minerals Limited (LON:BMN) has revealed that discussions with potential electrolyte customers are ongoing with its 84%-owned energy sUBSidiary, Bushveld Energy Limited expecting to supply samples in the coming months.

Eco Atlantic Oil & Gas Ltd (LON:ECO) (CVE:EOG) chief executive Gil Holzman in Thursday’s quarterly financial results statement, described the explorer’s farm-out deal with Total as a “confirmation of the great value”. AIM-quoted Eco confirmed the completion of the transaction on Wednesday, with the explorer receiving US$12.5mln in cash in return for a 25% stake in the potential high-impact Orinduik offshore acreage.

Asiamet Resources Limited (LON:ARS) confirmed it raised US$3.3mln (£2.6mln) in a share placing on Wednesday to help fund a feasibility study at its Beruang Kanan Main (BKM) copper project in Indonesia. The exploration firm said it had issued around 60.7mln new shares in the oversUBScribed placing at a price of 4.25p each.

e-therapeutics PLC (LON:ETX), the network-driven drug discovery (NDD) company, said it will be presenting at the 6th Drug Discovery Innovation Programme in Frankfurt, Germany. The conference will be held on 29-30 November at the Leonardo Hotel Frankfurt City – South, and the firm will be presenting an overview of the company's NDD approach at 13:00 CET on 30 November.

BATM Advanced Communications Limited (LON:BVC) is hosting a Capital Markets Day in London today which will provide institutional investors and analysts with an opportunity to enhance their understanding of the group's business, including a detailed review of its divisions and units, through a series of presentations given by senior management. The group said presentations will be made available on the BATM website later today.

6.45am: FTSE 100 called higher

The FTSE 100 is expected to begin Thursday’s trading with a positive start, following Wall Street’s strong session.

Trading firm IG Markets sees the London index up more than 30 points ahead of the open, calling the price 7,036 to 7,040.

In New York, the inspiration to buy came from the Federal Reserve, which has seemingly become more dovish.

“Last night, Fed Chair Powell said that the Fed funds rate is 'just below' the neutral rate,” Danske Bank said in a note.

“Considering the comments from October where he said that the Fed funds rate was a 'long way' from the neutral rate, this was perceived quite dovishly by markets and risky assets performed strongly with tighter credit spreads, stronger equity markets, a weaker US dollar and lower yields as the market priced out the probability of a second rate hike in 2019.

“The market is now priced for a December hike and one hike next year.”

On Wall Street, the Dow Jones soared more than 600 points or 2.5% to finish Wednesday at 25,366.

The S&P 500, meanwhile, added 2.3% to end the session at 2,743 and the Nasdaq strengthened further, gaining 2.95% to close at 7,291.

In Asia, however, trading was mixed. Japan’s Nikkei was in positive territory, up 0.4% at 22,262 while Hong Kong’s Hang Seng moved 0.87% to 26,451 and the Shanghai Composite index shed more than 1% to 2,574.

Significant events expected on Thursday November 29:

Trading update: Go-Ahead Group PLC (LON:GOG)

Finals: Thomas Cook PLC (LON:TCG), Daily Mail & General Trust PLC (LON:DMGT), Britvic PLC (LON:BVIC), Character Group PLC (LON:CCT), Premier Asset Management Group PLC (LON:PAM), Urban & Civic PLC (LON:UANC), Tharisa PLC (LON:THS)

Interims: Greene King PLC (LON:GNK), BCA Marketplace PLC (LON:BCA), Paypoint PLC (LON:PAY), Motorpoint Group PLC (LON:MOTR), James Latham PLC (LON:LTHM), LXI REIT (LON:LXI), Schollium Group PLC (LON:SCHO), XPS Pensions Group PLC (LON:XPS), Great Eastern Energy Corp Ltd. (LON:GEEC)

AGMS: ASOS plc (LON:ASC), Ironridge Resources Limited (LON:IRR)

Ex-dividends to clip 1.56 points off FTSE 100 index: International Consolidated Airlines Group PLC (LON:IAG), Johnson Matthey PLC (LON:JMAT), Land Securities PLC (LON:LAND), Severn Trent PLC (LON:SVT)

Economic data: US weekly jobless claims; US personal income, spending; US pending home sales

Around the Markets: 

  • Pound worth US$1.2838, up 0.1%
  • Gold changing hands for US$1,225 an ounce, up 0.37%
  • Brent crude traded at US$58 a barrel, down 2.5%
  • Bitcoin priced at US$4,175, up 4.9%

City Headlines:

  • UK and Germany grow wary of Huawei as US turns up pressure – Financial Times
  • Microsoft's stock market value pulls ahead of Apple's – Reuters
  • Apple Watch could add two years to your life, research suggests – The Telegraph
  • Ikea profits plunge 40% as strategic overhaul costs bite – Financial Times
  • Facebook has 'a black people problem', says former employee – Sky News
  • Frankie & Benny's ban mobile phones to encourage families to talk to each other – M.E.N
  • UK plans for satellite navigation system in doubt after Brexit – Sky News

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