FTSE 100 closes firmly lower
Oil price slides
Dow Jones dives over 300 points
FTSE 100 closed in the red on Thursday as global stock markets amid trade turmoil.
Footsie closed down around 63 points at 7,207, while FTSE 250 shed over 246 points at 19,285.
In Europe, the German DAX tanked 206 points, while the French CAC 40 is down around 104.
"European equity markets are in turmoil as traders are running scared about the prospect of an escalation in the US-China trade dispute. The US is set to up the ante, by raising levies and introducing more tariffs on Chinese imports tomorrow, and that has prompted dealers to cut and run," noted David Madden, market analyst at CMC Markets.
On Wall Street, the Dow Jones Industrial Average is down 321 points at the time of writing.
In London, top laggard on Footsie was British Gas owner Centrica (LON:CNA), which fell over 10% to 94.20p. It came after news of EDF Energy’s further delay in the outage at the Hunterston B-8 nuclear reactor. Centrica holds a 20% stake in eight nuclear power stations owned and operated by EDF.
3.15pm: Dow slumps 300 points
London's leading shares were holding up reasonably well given that Wall Street opened lower than expected.
London's index of leading shares was down 49 points (0.7%) at 7,222, about 11 pips above its low point of the day.
Stateside, the Dow Jones was down 305 points (1.2%) at 25,661 and the S&P 500 was 33 points lower at 2,847.
The oil price took a tumble, with Brent Crude off 1% at US$69.66 a barrel. Royal Dutch Shell (LON:RDSB) shrugged this off, rising 0.1%, but BP PLC (LON:BP.) was 2.3% lower.
The Libyan government has reportedly suspended the operations of 40 international oil firms, including French giant Total, on the grounds that their licences have expired.
#Libya #Libyaoil BREAKING: UN-backed Libya government to cut commercial links with French + German business. Implications for oil sector - Total + Wintershall? Plus equipment supply/oil service companies. French+German banks hold substantial foreign reserves. https://t.co/k18DjIhGC3— Chris Stephen (@reportingLibya) May 9, 2019
2.25pm: Losses lengthen
The stand-off between China and the US continues to dominate proceedings in London and is expected to also do so on Wall Street when it opens.
As the opening bell on Wall Street has drawn closer, so the Footsie’s losses have lengthened. The index is now down 51 points (0.7%) at 7,220.
Spread betting quotes suggest the Dow Jones will open at around 25,766, which is almost exactly 200 points lower than last night’s close.
The broader-based S&P 500 is tipped to open at 2,853.6, down around 26 points.
Sterling has lost almost a quarter of a cent against the US dollar, which is usually supportive of the Footsie constituents, many of which are multi-national operators.
Among those feeling the benefit are fags makers British American Tobacco PLC (LON:BATS) and Imperial Brands PLC (LON:IMB) plus booze pedlar Diageo PLC (LON:DGE), which sport gains of between 2% and 0.6%.
“There’s really only one game in town today and it’s a binary one of ‘chicken’, with the global economy at stake. Either there will be a China-U.S. trade deal or there will not. Deep falls across most global stock market regions suggest that Thursday, the first day of talks scheduled with China’s Vice Premier Liu He, is more important than the second, set for Friday,” declared Ken Odeluga at City Index.
“If there’s no discernible outcome by Thursday’s US close, stock markets can be expected to extend this week’s downside considerably, well before the planned tariff hike at 12:01 U.S. Eastern Time,” he added.
1.30pm: Stocks trade sideways at lower level
The FTSE 100 was trading sideways in the lunchtime session after suffering losses in the morning.
The Footsie was down 27 points at 7,244.
12.15pm: US stocks expected to open lower
With US markets set to open sharply lower, there was not much incentive for UK investors to prod the Footsie higher.
At midday, the top-shares index was down 31 points (0.4%) at 7,240, about 20 points above its lowest level of the day.
“With the only trade war update being a dispatch from China’s Ministry of Commerce warning to watch its website ‘for retaliation detail’ in the event that the US does go ahead with the tariff hikes on Friday, the markets showed no signs of substantially reversing their early losses,” observed Connor Campbell at Spreadex.
The Chinese government threatened to retaliate if President Trump follows through on his plan to ratchet up tariffs on Friday, just as the two countries try to finalize a trade deal https://t.co/B5mPWpGjlj— CNN (@CNN) May 8, 2019
“The FTSE was the only index to make a proper go at easing its initial decline, and even then that only meant that the index was down 0.3% instead of the half a percent slide it saw at the open. This as a relatively quiet sterling dipped 0.1% against both the dollar and the euro, drifting under $1.299 and €1.1605 respectively,” he added.
“The Dow Jones, meanwhile, is facing a 120 point plunge after the bell, one that’d see it open under 25850 for the first time since the end of March. As the US session gets underway, more details may leak out about the day’s trade talks; that, or the markets will be gripped by uncertainty until 12.01am on Friday morning… “ Campbell concluded.
The first quarter trading statement from Wm Morrison Supermarkets PLC (LON:MRW) met with a lukewarm response.
The shares slipped 0.6% to 212.3p after the supermarket group barely managed to eke out any growth in the first quarter of its fiscal year, while it has also had to delay the expansion of its delivery service.
Regarding the latter, shares in Ocado Group PLC (LON:OCDO) advanced 1.3% to 1,370p after Morrisons agreed a temporary suspension on using its share of capacity at Ocado’s Erith (Kent) warehouse, after a fire destroyed the online grocer’s Andover facility.
11.00am: The Footsie is lower but it is hardly a rout
London's leading stocks were slowly clawing back earlier losses, against a background of limited macroeconomic data.
The index of London's leading shares was down 33 points (0.5%) at 7,238.
“Today has all the trappings of yet another pessimistic session, with a lack of major economic releases driving greater focus on the US-China trade breakdown,” commented Joshua Mahony at IG Group.
“Donald Trump’s claim that China ‘broke the deal’ alludes to a potential backtracking from prior agreements; however, with representatives from both sides meeting for a final time ahead of tomorrow’s potential tariffs increase, many will see Trump’s tone as yet another move in a high-stakes chess game which clearly has further to run,” Mahony added.
It used to be said in the Cold War era negotiations that the Soviet Union played chess while the US played poker, but dubious analogies aside, it would appear that President Trump continues to have a malign influence on sentiment.
Housebuilder Barratt Developments PLC (LON:BDEV) was among the blue-chips not shivering in Trump’s shadow.
The stock was up 2% as the company nudged full-year expectations up a bit.
“For now, Barratt is doing well for its self,” said Sophie Lund-Yates at Hargreaves Lansdown.
“There’s little it can do about the wider economy, but it’s strengthening foundations where it can. That includes being more discerning about land purchases, and rolling out more efficient build types. When all’s said and done, Barratt’s moving in the right direction, but it’s possible there are some more difficult conditions lurking not too far up the road,” she added.
9.50am: Trump breaks the market after claiming China "broke the deal"
It's been a week of unlikely comebacks on the football pitch but there's not much sign of it happening in the stock market.
The FTSE 100 was down 46 points (0.6%) at 7,225, thanks in part to the likes of Admiral, BP, Centrica and Hiscox trading ex-dividend today.
The trading update from packaging group Mondi PLC (LON:MNDI) proved about as popular as a leaky takeaway container, with the shares sliding 2.3%; sector peer DS Smith PLC (LON:SMDS), fell 3.6% in sympathy.
Mondi Q1 strong, EBITDA +16% YoY (+6% QoQ) driven by higher average selling prices (offsetting marginally lower like-for-like sales volumes), strong operational performance, acquisitions, CAPEX and less maintenance. Strong cash generation— Mike van Dulken (@Accendo_Mike) May 9, 2019
Mondi said like-for-like sales volumes in the first quarter of 2019 were marginally down on a year earlier.
The trading update from RSA Insurance PLC (LON:RSA) received a warmer reception; the shares were up 1.6% after it reported a rise in both net premiums and profits in its first quarter.
8.45am: London takes its cue from floundering Asian markets
The FTSE 100 took its cue from Asia’s main markets, which succumbed to a trade-induced sell-off following the US President’s robust comments on the current Sino-American impasse.
“Donald Trump laid the blame squarely on China – saying they ‘broke the deal’,” said Neil Wilson of Markets.com.
Tariffs on US$200bn-worth of Chinese goods will increase to 25% from 10% on Friday if a deal is not done. Beijing is apparently ready to retaliate.
Vice premier and chief Chinese trade negotiator Liu He is in the American capital for negotiations later.
“So is he really coming to do a deal?” asked Markets.com’s Wilson. “I think, probably, it’s case of gaining a reprieve in order to avert the rise in tariffs. It looks like we are yet a wee bit away from a comprehensive trade deal.”
Against this uncertain global backdrop the UK index of blue-chips fell 40 points at the open to trade at 7,230.62.
Also in the doldrums were the miners, which are linked to the fortunes of the People’s Republic, with Anglo American leading the sector’s mini sell-off with a 1.8% fall.
Ocodo (LON:OCDO) was atop the Footsie list of risers, though the movement, 1.2%, was rather tepid. Its advance was prompted by a deal struck with partner William Morrison (LON:MRW), which will free up warehouse space for the online grocer.
Supermarket chain Morrison’s, meanwhile, had news of its own in the form of a trading update, which was met by the market with a collective shrug as the stock marked time.
6.45am: Lower start predicted
The FTSE 100 is expected to start Thursday lower, following other major equities benchmarks after yesterday’s hopes of a Trump-China trade deal were seemingly dashed.
CFD and spreadbetting firm IG Markets sees the index some 24 points lower, making the price 7,237 to 7,240 with a little more than hour until the open.
“While it would be nice to believe the hope and hype, yesterday’s reports that Chinese officials had made large scale systematic edits to a 150-page trade treaty draft, prompting accusations of backtracking by US officials, would appear to suggest that the bar to any form of deal by the weekend is so high, you wouldn’t be able to vault over it,” said Michael Hewson, analyst at CMC Markets.
“This was more or less confirmed by President Trump when he addressed a rally in Florida, when he said that China ‘broke the deal’ and would have to pay.
“He went on to say that the US wouldn’t back down until China ‘stops cheating our workers and stealing our jobs’.”
Last night in New York the preceding rally went into retreat. The Dow Jones actually held positive territory – albeit only 2 points to the good – as it closed out at 25,967.
The S&P 500 meanwhile marked a 0.16% decline to end at 2,879, and, the Nasdaq finished0.26% lower at 7,943.
Asian stocks, meanwhile, showed a more pronounced pull back. Japan’s Nikkei dropped back 165 points or 0.76% to trade at 21,438.
Hong Kong’s Hang Seng shed more than 500 points or 1.79% to 28,484, while the Shanghai Composite was 0.95% lower at 2,866.
Around the markets
The pound: US$1.3018, up 0.09%
Gold: US$1,281 per ounce, down 0.16%
Brent crude: US$69.87 per barrel, down 0.01%
Bitcoin: US$6,041, up 3.89%
Significant announcements for Thursday May 9
Trading updates: Wm. Morrison Supermarkets PLC (Q1) (LON:MRW), Barratt Developments PLC (LON:BDEV), RSA Insurance Group PLC (LON:RSA), Superdry PLC (LON:SDRY), BAE Systems PLC (LON:BA.), IMI PLC (LON:IMI), Mondi Plc (LON:MNDI), Beazley PLC (LON:BEZ), Derwent London PLC (LON:DLN), National Express PLC (LON:NEX)
Economic data: RICS UK house price index; UK industrial, manufacturing production; US weekly jobless claims; US PPI
Proactive news headlines:
Korean gold explorer Bluebird Merchant Ventures Ltd (LON:BMV) is to start drilling at its Kochang mine in July after receiving confirmation of a grant from local mining group KORES.
Tungsten miner W Resources PLC (LON:WRES) has secured a €3mln loan facility with Caja Rural de Extremadura to tide it over until it gets the €5.3mln grant from the Junta de Extremadura Government, expected later this year.
Aggregated Micro Power Holdings PLC (LON:AMPH) has secured additional funding for its projects after its off balance sheet vehicle, Aggregated Micro Power Infrastructure 2 PLC (AMPIL), raised £15.1mln in the form of 8% loan notes.
Ashley House PLC (LON:ASH), the health and community care property partner, has signed contracts to start work on a further two community care schemes.
StatPro Group PLC (LON:SOG) is considering an appeal to the French Supreme Court after the Court of Appeal in Paris found in favour of shareholders in SiSoft as part on an ongoing legal dispute regarding an acquisition of a minority interest in the company.
PowerHouse Energy Group Plc (LON:PHE) has told investors that its venture with Waste2Tricity Limited (W2T) has reached an agreement for the sale of power generated from the processing of waste plastics.
Rambler Metals and Mining PLC (LON:RMM) has continued its run of record throughput at its Nugget Pond facility in Newfoundland.
Jubilee Metals Group PLC (LON:JLP) said the first quarter of 2019 was “an exceptional period” for the company, with quarterly operational earnings rising above £3mln.
Victoria Oil & Gas PLC (LON:VOG) highlighted a 127% rise in output for the first quarter of 2019, thanks to the restart of supply into a gas-fired power plant.
Baker Steel Resources Trust PLC (LON:BSRT) has a launched a tender offer to buy back around 8% of its share capital.
Crop protection specialist Eden Research PLC (LON:EDEN) said its commercial partner had made the first sales in Italy of Cedroz, which targets soil-dwelling pests called nematodes.
Chariot Oil & Gas Limited (LON:CHAR) has unveiled a new independent report that somewhat quickly underlines the significant opportunity presented by its recently acquired Anchois project, offshore Morocco.
Taptica (LON:TAP) has bought back 50,000 ordinary shares at a price of 132.96p each, worth £66,480.
Highlands Natural Resources PLC (LON:HNR) shares saw positive territory as it highlighted a quick move to revenue in its new cannabidiol (CBD) business in the United States.
Business news headlines
US-China trade war leaves global economy counting the cost - Financial Times
Rail passengers losing out on compensation due to demands - BBC News
Britain passes one week without coal power for first time since 1882 - The Guardian
Hackers make off with £31m in Bitcoin heist from Binance exchange - Sky News
Uber eyes conservative price for IPO - Financial Times
Eagle-eyed Australian spots a TYPO on the new A$50 note - Mail Online
KPMG 'severely reprimanded' for audit failings at Co-op Bank - The Guardian