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FTSE 100 closes higher on Friday amid boost to sentiment but falls over the week

US stock indices have opened sharply higher, following the global trend

Graph heading higher
  • FTSE 100 closes up on day; lower on week

  • US indices gain ground

  • US housing starts but permits rise to a seven-month high

5.30pm: FTSE 100 closes in positive territory

FTSE 100 closed Friday firmly in positive territory after a rocky week, which saw the blue-chip index fall overall.

The UK's premier share index finished 50.14 points higher at 7,117.15. Over the week as a whole, it lost 1.88%. 

The index suffered a technical glitch this morning, which prevented it opening on time.

Meanwhile, its midcap cousin FTSE 250 closed up 181.20 points at 18,821.85.

"The possibility of the European Central Bank loosening monetary policy next month has helped with the optimistic sentiment today," noted David Madden, market analyst at CMC Markets.

"Traders are getting used to the idea of the Chinese central bank fixing the yuan above the 7 mark against the US dollar, and the plunge in government bond yields lately has become the new normal, he added.

Concerns about the US-China trade dispute, Hong Kong, Italian politics and Brexit are certainly still in the background, noted Madden and may resurface next week

 

3pm: Footsie higher

US housing starts in July fell 4.0% to 1.19mln, which was below the consensus forecast of 1.26mln.

That’s about as exciting as it gets today in terms of relevant macroeconomic data.

On the plus side, housing permits granted rose 8.4% to 1.34mln, which was well above the consensus forecast of 1.27mln.

 

“The drop in headline starts was all in the volatile multi-family sector, where a second straight plunge offset a modest increase in single-family activity,” reported Ian Shepherdson at Pantheon Macroeconomic.

“The multi-family numbers tend to mean-revert eventually, so a hefty rebound is likely in August. Permits, by contrast, were flattered in July by the multi-family sector, where the 22% leap more than reversed the 16% drop in June. Again, though, these numbers are so noisy that the monthly data don’t mean much. The third straight increase in single-family permits, however, is good news. The trend is now clearly rising – following a sustained decline last year and the early part of this year - thanks to the upturn in new home sales,2 he added.

In London, rain stopped play in the cricket at Lord’s and it feels like much the same in the stock market too, where traders are no doubt contemplating slipping away early for the weekend, such is the sense of ennui.

The FTSE 100 was up 23 points (0.3%) at 7,090.


 

2.45pm: US markets open higher

US markets have opened higher but remain on track to post a decline of around 2% on the week.

The Dow Jones industrial average was up 175 points (0.7%) at 25,755 while the broader-based S&P 500 was 22 points (0.8%) better at 2,870.

On the home front, the FTSE 100 was clinging on to a gain of 28 points (0.4%) after gently subsiding in the second half of the lunchtime trading session.
 

1.00pm: Early gains pared

After getting off to a late start because of technical problems at the LSE, the Footsie peaked early and has been gently subsiding since.

The index of leading shares was still a healthy 41 points (0.6%) in credit at 7,108, however, on a day when trading catalysts have been in short supply.

“While I'd like to think there'll be no more drama in the final hours of trading, I'm just not that optimistic. The calendar may be a little thin but the yield curve inversion has spooked a lot of people this week and that may become very apparent again heading into the close,” said Craig Erlam at Oanda.

“At a time of heightened sensitivity in the trade war, we also can't rely on there not being another escalation. It's a good thing everyone has alerts on President Trump's Twitter account or no one would ever get anything done,” he quipped.

A couple of energy minnows have taken the opportunity to grab the limelight on a quiet Friday.

Upland Resources PLC (LON:UPL) climbed 12% to 1.85p after it completed its corporate migration to Jersey, while Oilex Ltd soared 23% to 0.19p after it launched a counterclaim for US$23.3mln (plus interest) in its dispute with the Autoridade Nacional Do Petroleo E Minerais.

10.00am: FTSE 100 up 57 points following a delayed start

The technical issues at the London Stock Exchange have been resolved and, as expected, the Footsie has opened on the front foot.

London’s index of heavyweight shares was up 57 points (0.8%) at 7,124.

Just nine Footsie constituents were in the red as bottom-feeders emerged from cover to pick up cheap shares.

ITV PLC (LON:ITV) was the top blue-chip riser, advancing 2.6% to 106.325p after it signed an initial deal to broadcast football matches from Spain’s La Liga.

Burford Capital Limited’s (LON:BUR) announcement yesterday afternoon that it would seek a US listing (or failing that, move the main market of London from AIM) and overhaul the board provided the shares with a late lift yesterday but they are back on the slide this morning, down 4.4% at 842.1p.

“To describe the last week-and-a-bit as turbulent for litigation finance provider Burford Capital would hardly do it justice,” commented Russ Mould, the quote-machine at AJ Bell.

“US research outfit Muddy Waters, not to be confused with the legendary blues singer, disclosed a short position in the stock after publishing negative research on the company; in what was characterised in some quarters as a bear raid.

“Burford helps fund law suits and it is standard industry practice to keep the identity of most ‘invested’ cases under wraps. This limited transparency arguably made the company vulnerable to Muddy Waters line of attack,” Mould suggested.

“A move towards a US listing might also help address criticisms that the company is taking advantage of AIM’s more relaxed regulatory set-up,” he suggested.

 

Another company that is no stranger to receiving flak is fashion flogger Ted Baker PLC (LON:TED); its shares were up 0.2% at 905.59p after entered into a new product licence agreement with Next PLC (LON:NXT) to accelerate the expansion of Ted Baker's childrenswear collections.

9.00am: Technical issues hit the LSE; Footsie opens higher - probably

Technical issues have prevented the FTSE 100 value from being updated this morning but so far as we know, a rally is on the cards.

The major European indices have opened higher by around 0.7% - 1% and spread betting quotes indicate that, given the chance, the Footsie would join them, with a rise of around 40 points (0.7%) at 7,117.

A spokeswoman for the London Stock Exchange said that trading in some smaller stocks outside the FTSE 350, such as on AIM, is taking place this morning.

It’s probably just as well, then, that little in the way of corporate news flow was planned today from the big names.

The AIM All-Share index was up 2.1 points (0.2%) at 860.95.

Shares in litigation finance firm Burford Capital Limited (LON:BUR) were down 2% at 863p after the company promised to overhaul its board in the wake of criticism from US hedge fund, Muddy Waters.

6.30am: London's leading shares expected to bounce back

The dead cat looks set to do its Tigger impression today, with the Footsie projected to bounce back after yesterday’s fall.

Spread betting quotes point to the FTSE 100 index opening at around 7,108, up 41 points from last night’s close – roughly half the number of points it surrendered yesterday.

US markets had a solid day yesterday, with the Dow Jones rising 100 points to 25,579 and the S&P 500 climbing 7 points to 2,848, although the tech-heavy NASDAQ Composite lost ground.

In Asia this morning, the Nikkei 225 in Japan was off 14 points at 20,391 but the Hang Seng index in Hong Kong was 162 points to the good at 25,657.

Today looks like a good day for navel-gazing as there is little in the way of vital news scheduled unless US housing starts and the University of Michigan’s sentiment index floats your boat.

Economists expect US homebuilding to have risen by 0.2% in July, rebounding from last month’s 0.9% drop.

The University of Michigan sentiment index is forecast to dip to 97.2 in August from 98.4 in July amid worries about the US-China trade dispute, global growth and the bond market.

Something is bound to happen on the corporate front – perhaps Mike Ashley will make a bid for Marks and Spencer [that's how rumours get started - Ed.]  – but at the moment we have no idea what it is that is in store.

Announcements due

Economic data: US housing starts, University of Michigan consumer sentiment

Around the markets

  • Sterling: US$1.2099, up 0.15 cents
  • 10-year gilt: yielding 0.409%, down 3.95 basis points
  • Gold: US$1,531.90 an ounce, down US$10.70
  • Brent crude: US$58.88 a barrel, up 65 cents
  • Bitcoin: US$10,000, down US$374

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