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Market ReportFTSE 100

FTSE 100 trims losses

The FTSE 100 retreated as investors worry about Hurricane Irma, while mixed economic statistics raised fresh concerns over the UK economy.

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The FTSE 100 shed 19 points on Friday
  • FTSE 100 down 19 points at 7,378

  • ‘Mixed’ UK economic stats raise growth concerns

  • AstraZeneca rumoured to be in takeover hunt

  • Thomas Cook hit by pilot pay dispute

  • Greene King and Safestyle dented by lower consumer spending

Close - FTSE 100 pares losses 

Weighed down by mining stocks, the FTSE 100 ended the week on a dull note.

The top-shares index shed 19 points at 7,378, with the likes of BHP Billiton plc, Antofagasta PLC, Anglo American PLC and Rio Tinto PLC prominent among the losers.

“Market volatility and the trading range of indices has been low as investors unwind their positions ahead of the weekend,” noted David Madden, a market analyst at CMC Markets.

Among the small caps, Prospex Oil and Gas PLC (LON:PXOG) bucked the trend, moving higher after issuing shares.

The stock closed at 0.41p, up 17.1%, after the company raised £650,000 placing shares at 0.35p a pop.

Going the other way was Tethyan Resources PLC (LON:TETH), which lost a fifth of its value as it said it plans to delist from Aim now its shares are quoted on the TSX Venture Exchange.

3:30pm – FTSE 100 lower ahead of Friday’s close, after US  stocks make mixed start

The FTSE 100 was down 25 points, 0.34%, trading at 7,371, after US markets made a mixed start to Friday’s trading.

Wall Street’s Dow Jones was up slightly, 18.5 points or 0.09%, changing hands at 21,803 while the S&P 500 and Nasdaq were both still on the back-foot, down 0.05% and 0.26% respectively.

Currency factors are among the key factors for investors, with dollar weakness providing stimulus rather than legit positivity for the pound.

“Sterling popped its head above the $1.32 handle for the first time in a month as the growth picture from NIESR looked more upbeat. The pound even managed to notch solid gains against the euro despite the single currency hitting three-year peaks against the dollar,” said Neil Wilson, analyst at ETX Capital.

“Dollar weakness is the lead actor in this drama but traders are also a bit more positive on the pound since NIESR indicated growth picking up to 0.4% in the three months to August, while manufacturing growth has also improved.

“But finding reasons to keep buying the pound right now with Brexit talks on the rocks is a tough ask.”

Ole Hansen, Saxo Bank head of commodity strategy, meanwhile, highlighted the impact the dollar moves have had for certain commodity markets, saying: “The gains were spread out across several sectors including energy and grains.

“This follows a few weeks were gains primarily had been driven by metals, both precious and industrial. The latter traded lower for the first time in five weeks as the rally, which began almost three months ago, increasingly looked in need of a correction.

“Crude oil recovered on a pickup in demand from refineries along the Texan Gulf coast. The impact of Hurricane Harvey on the US energy market became apparent in the weekly status report which highlighted the collapse in refinery demand, imports, and exports as well as production.

“Cotton and Orange Juice rose strongly as hurricane Irma, the second potential catastrophic hurricane to hit the US within two weeks took aim at growing regions in Florida and beyond.”

1:30pm - Weaker dollar impacting UK stocks, but there are more reasons to be ‘risk off’

Mike van Dulken, head of research at Accendo Markets, highlighted that the weaker dollar has in turn push the pound to its August highs, hurting sentiment to UK stocks.

He added this to a list of other factors which says are coming together to force investors to don their ‘risk off hats’ – he highlights copper weakness pulling down big cap miners like Rio Tinto Plc (LON:RIO) and BHP Billiton plc (LON:BLT), he says profit taking has AstraZeneca Plc (LON:AZN) and GlaxoSmithKline plc (LON:GSK) trading lower.

He notes, however, that banks like Lloyds Banking Group Plc (LON:LLOY) and Royal Bank of Scotland Plc (LON:RBS) are supported because investors “like the idea” of tighter central bank policy, following this week’s updates from the European Central Bank.

1:00pm - FTSE 100 losses widen as Wall Street points lower

The FTSE 100 losses widened into afternoon dealing on Friday as Wall Street futures pointed to a negative open in New York.

London’s blue-chip benchmark was down more than 30 points or 0.45% to 7,363 just after 12:30pm.

In New York, the Dow Jones was seen about 75 points lower at 21,695 whereas the S&P 500 and Nasdaq are also expected to start in negative territory.

Investors are bracing for the next impacts of extreme weather systems coming out of the Atlantic.

Damages continue to be tallied in Houston following Hurricane Harvey, and now Florida is preparing for the impact of Hurricane Irma which has already devastated parts of the Caribbean.

Irma is being described as the most powerful Atlantic storm in a century, albeit in the early hours of Friday the system was downgraded to a category 4 hurricane whilst it was just less than 500 miles from Miami (winds were measured at around 155 miles per hour).

In terms of stock specific news, consumer credit records firm Equifax Inc (NYSE:EFX) was a notable Wall Street faller, seen down nearly 15% in pre-market after news of a major data breach which reportedly exposed information about as many as 143mln people.

In the UK, AstraZeneca Plc (LON:AZN) shares were down about 1%, trading at 4,726p, by Friday lunchtime as the City rumour mill claimed the drug maker was getting in the market for acquisitions.

The story, according to press reports, is that Astra is preparing a move for Nasdaq quoted Acadia Pharmaceuticals Inc (LON:NASDAQ), which was worth over US$4.4bn in the market ahead of Friday’s open.

Thomas Cook Group PLC (LON:TCG) shares flew lower, losing 2.6% to trade at 120.6p, after its pilots launched a 12-hour strike in a dispute over pay. The airline was had to reschedule some flights after members of the British Airline Pilots' Association trade union (Balpa) walked out at 3am today.

Earlier, pub group Greene King PLC (LON:GNK) was a high profile mover, with the share down 80 points or 12.2% at 578p, after reporting like-for-like sales fall 1.2% in the first 18 weeks of the year against a market that declined 0.7%, driven by a drop in food sales.

Double glazing sales group Safestyle UK PLC (LON:SFE) shares were down 29.85% to 165.23p on a new profit warning, amid an 18% fall in installations during June and July.

In the small cap market, there was welcome déjà vu for Empyrean Energy PLC (LON:EME) investors as the explorer again advanced in early deals, up 3.24p or 21% to 18.61p – marking a 150% rise for the past month.

The latest update reveals yet more gas shows from the Dempsey well, in California, though significantly, drilling has now reached the main target.

11:30am - FTSE 100 down as Hurricane Irma weighs on risk appetite

The FTSE 100 remained lower as Friday’s session progressed with investors becoming increasingly concerned over the potential impacts of the extreme weather in parts of the United States.

Damages continue to be tallied in Houston following Hurricane Harvey, and now Florida is preparing for the impact of Hurricane Irma which has already devastated parts of the Caribbean.

Irma is being described as the most powerful Atlantic storm in a century.

Standing at 7,377, London’s FTSE 100 was down 19 points or 0.26%.

“Stock markets in Europe are a bit subdued this morning as investors are bracing themselves for Hurricane Irma in the US,” said David Madden, analyst at CMC Markets.

“As concerns grow for how much disruption and destruction will be caused on the back of the hurricane, investors are losing their appetite for risk, and buying safe haven assets like gold.  An earthquake in Mexico is also adding to dealers woes.”

11:00am - Economist cautions after mixed UK stats

Howard Archer, chief economic advisor to the EY ITEM Club, reckoned Friday’s economic data indicated UK GDP growth may likely be limited to just 0.3% for the third quarter.

The pound has been weak, but, there is little evidence in trade data that British exports are getting any major boost from it.

Overall, in a note, Archer said: “A real mixed bag of data that overall points to a UK economy still struggling to break out of sluggish growth.”

He notes growth in July manufacturing as a positive, highlighting that it “fuels hope that healthy activity portrayed by the CBI and purchasing managers’ surveys is now feeding through in terms of improved production.”

But, he also acknowledged the disappointment in trade and construction output.

“There was still little sign of a marked pick-up in exports in July despite the weakened pound and healthy global growth. The overall trade deficit was unchanged at £2.9bn with a shortfall of £11.6bn in traded goods,” he said, and added that the construction sector continues to struggle markedly.

10:05am - FTSE 100 remains on back-foot in quieter Friday dealing

The FTSE 100 remained on the back-foot through Friday morning’s deals, down 20 points or 0.28% at 7,376 at around 10:00am.

Somewhat quieter macro narratives on Friday morning have left investors looking inwards at the British economy.

Economic stats, on UK manufacturing activity, showed an improvement of 0.5% for July and analysts anticipate further growth.

Meanwhile, however, in the stock market, share price slumps for pub group Greene King PLC (LON:GNK) and Safestyle UK PLC (LON:SFE) could be red flags for the British economy in the remainder of this year.

A decline in Greene King sales, with the worst impact in the food business, and Safestyle showing a near 20% drop in installations through the summer months on the face of it suggest a trend in slowing of consumer spending.

“Does this suggest a slowdown in home improvements as Brits pare back their spending? Credit growth has slowed, with the latest Bank of England figures showing total borrowing on cards, loans and car finance grew at less than 10% in July,” said Neil Wilson, analyst at ETX Capital.

“Most consumers tend to require some kind of finance to install new windows so this decline has clearly impacted Safestyle. It could also start to have a greater effect on others in the sector, eg Kingfisher, SIG and Howden Joinery.”

Wilson added: “The UK economy has slipped to the bottom of the EU ranks this year and with consumer spending and credit appearing to slow, the outlook isn’t a lot better.”

8:15am - FTSE 100 opens lower, Greene King shares slump 

The FTSE 100 started Friday's dealing on the back-foot, down 20 points or 0.28% changing hands at 7,376.

Pub group Greene King PLC (LON:GNK) was a high profile early mover, with the share down 12%, or 78p at 577p, after reporting like-for-like sales fall 1.2% in the first 18 weeks of the year against a market that declined 0.7%, driven by a drop in food sales. 

In other news, Trinity Mirror PLC (LON:TNI), the publisher of the Daily Mirror newspaper, announced that it is in talks to buy all of Richard Desmond's Northern & Shell publishing assets, which includes tabloid rivals the Daily Express and The Star. Its shares edged up 0.8% to 91.5p.

In the small cap market, there was welcome déjà vu for Empyrean Energy PLC (LON:EME) investors as the explorer again advanced in early deals.

The group's latest update reveals yet more gas shows from the Dempsey well, in California, though significantly, drilling has now reached the main target. Empyrean shares jumped 12.2% higher to 17.25p.

Proactive news headlines:

The Horse Hill oil project has been approved for an extended flow test by the Environment Agency. Stakeholders UK Oil & Gas Investments PLC (LON:UKOG) and Solo Oil PLC (LON:SOLO) confirmed that the approval will allow the programme to test the HH-1 well, as well as drill a side-track to HH-1 and the new HH-2 well. The Horse Hill partners, separately, await planning permission for the project – an application was submitted in October 2016 and it is anticipated that a decision will be made by the Surrey County Council planning committee on October 18 2017.

Seeing Machines Limited (LON:SEE) is moving its relationship with Progress Rail into the commercial phase after it extended its partnership agreement with the world’s largest builder of diesel-electric locomotives. Today’s agreement gives Progress the exclusive worldwide licence rights to offer Seeing’s technology as part of its train driver-monitoring package.

The recent uplift in base metals prices has prompted Anglesey Mining PLC (LON:AYM) to shift up a gear in developing its Parys Mountain project - aiming to complete a definitive feasibility study in the first half of next year. Assuming financing talks are well advanced by the middle of next year, construction at the North Wales site could start before the end of 2018 and initial output in the first half of 2020, the firm said.

Lead and zinc explorer Ferrum Crescent PLC (LON:FCR) has raised just shy of £200,00 to fund further exploration at its Toral and Lago projects in Spain. Shares were issued at 0.09p by new house broker Peterhouse

Bacanora Minerals Ltd (LON:BCN, CVE:BCN) said  Cadence Minerals PLC (LON:KDNC) has sold part of its stake in the group to an existing institutional investor and directors at Bacanora. Cadence sold 8.9mln shares in the group - or 6.75% of the capital, but still holds a 9.3% interest in Bacanora.

RM Secured Direct Lending PLC (LON:RMDL) has told investors it intends to raise further funds to take advantage of an “attractive pipeline of opportunities” it has identified.

Caledonia Mining Corporation PLC (LON:CMCL)  said it  ascertained on August 25, 2017 that VP Bank AG holds an interest in 938,773 common shares of the company - which represents approximately 8.9% of the issued share capital - as an intermediary on behalf of Sales Promotion Services S.A. Caledonia said it has no evidence to suggest that any significant proportion of this interest was accumulated recently.

Kibo Mining PLC (LON:KIBO) was awarded the Innovative Project Development Deal of the Year 2017 at the General Electric awards held in New York, on 7 September 2017.

Tethyan Resources PLC (LON:TETH) shares lost more than a third of their value, down 1.33p or 34.6% at 2.5p, after the metals explorer announced plans to exit AIM following a new listing on the Toronto Venture Exchange.

6:35am: FTSE 100 seen lower after mixed trading in US and Asia

FTSE 100 is seen starting lower on Friday, reversing the trend from yesterday, after a mixed session in the US and Asia.

Nothing concrete came from European Central Bank comments yesterday but stimulus measures and their future may be decided in October.

Spreadbetters are calling the UK's bluechip benchmark to start five points lower having ended Thursday around 42 points up at 7,396.

US stocks were mixed yesterday, but mainly lower, with the Dow Jones closing over 22 points lower at 21,784 and the S&P 500 shedding 0.44 to 2,465. The Nasdaq closed 4.55 up.

In Japan, the Nikkei 225 is down over 90 at 19,301, while the Shanghai Composite Index is up over 9 at the time of writing.

Back to the UK and the corporate front, closely watched is likely to be a trading update from brewer and pubs operator Greene King PLC (LON:GNK), which earlier this week saw its rating downgraded to ‘reduce’ by HSBC.

Scribes at the bank said they were worried that the UK pubs sector faces “twin risks from consumer weakness and rising input costs”.

Meanwhile, in data, reports on UK industrial and manufacturing production, construction output, and the latest balance of trade numbers, should give a snapshot of the health of the UK economy.

Significant announcements expected on Friday September 8:

AGMs: Greene King PLC (LON:GNK), Adams PLC (LON:ADA), Masawara PLC (LON:MASA), Ortac Resources Ltd. (LON:OTC), Simigon Ltd (LON:SIM)

Economics: UK industrial, manufacturing production; UK construction output; UK balance of trade

Around the markets:

  • Sterling: US$1.3140, up 0.31%
  • Gold: US$1,354.90 an ounce, up 0.73%
  • Brent crude: US$49.24 a barrel, up 0.31%

City Headlines:

  • Lenders have drawn £123bn from Bank’s stimulus packages - The Times
  • Profits fall by third at Capita after rule change - The Times
  • Goldman Sachs says it may triple or quadruple its Frankfurt presence - Independent
  • Amazon refutes claims it’s price gouging bottled water - Independent
  • Online gaming yields first results for Alzheimer’s research - FT
  • Eli Lilly cuts 3,500 jobs as focus turns to costs - FT
  • AudioBoom revenues boom 329% as advertisers step up podcast interest - FT
  • Bookseller Barnes & Noble’s shares tumble as it misses expectations - CITY AM
  • Pension fund group calls for corporate governance review at Sports Direct - CITY AM

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