• FTSE 100 closes 52 points lower

  • July UK GDP rise boosts sterling 

  • Boris Johnson says no-deal Brexit would be a failure

5.05pm: Weak Footsie weighed by sterling

FTSE 100 closed in the red on the first day of the new trading week, hit by another rise in the pound.

The UK’s premier share index finished 52.21 points lower at 7,230.13, impacted by its international focus, although the more domestic FTSE 250 index also ended the day in the red, down 38.02 post at 19,667.50.

“This has been a common situation in the past week, where the jump in sterling has dented the international equity index,” noted David Madden, market analyst at London based CMC Markets.

“The FTSE 100 is also underperforming on account of the fall in mining stocks like Anglo American and Rio Tinto. The decline in Chinese imports over the weekend has hurt the mining sector as the country is a big buyer of minerals,” he added.

On currency markets, sterling added 0.65% against the US dollar at $1.2365 as new figures showed a strengthening of the UK economy in July.

Gross domestic product (GDP), or the value of all goods and services, was up 0.3% compared with June, which smashed the 0.1% figure that had been forecast.

Also boosting sentiment were comments by the prime minister, Boris Johnson, who was speaking in Dublin and repeated that he did want a Brexit deal with the EU.

3.40pm: Trump dig at CNN

US President Donald Trump has used news about an activist investor taking a stake in AT&T Inc (NYSE:T) to have another dig at CNN.

New York hedge fund Elliott Management has taken a US$3.2bn stake in the telecommunications giant, which owns CNN. 

Elliott is calling for a strategic overhaul of AT&T, saying it has been a “disappointing investment for shareholders”.

Shares in AT&T rose 4% to 37.7p.

Trump said CNN reports fake news and hopes Elliott’s influence will mean it changes its tack. The president has long had a strained relationship with CNN, accusing the broadcaster of biased and negative coverage of him. 

Earlier this year he called for a boycott of AT&TO to force “big changes” at CNN. 

2.40pm: Wall Street starts higher

Wall Street has started the week in positive territory with US stocks opening slightly higher.

The Dow Jones Industrial Average added 10 points to 26,807, the S&P 500 rose 5 points to 2,984 and the Nasdaq gained 19 points to 8,122.

Stocks are being supported by expectations of an interest rate cut by the Federal Reserve at next week’s policy meeting.  The Fed is expected to lower rates by a quarter-of-a-percentage point after Friday’s weaker-than-expected US non-farm payrolls and after chair Jerome Powell said the central bank remains committed to supporting economic growth.

On home soil, the FTSE 100 is now down 65 points to 7,217, largely due to a stronger pound on the back of forecast-beating UK GDP data. 

2.00pm: Sports Direct circles Links of London 

Sports Direct International Plc’s (LON:SPD) Mike Ashley is reportedly set to continue his acquisition spree with an offer to buy Links of London.  

According to Sky News, the sportswear company is one of two final bidders trying to purchase the struggling jewellery chain from its Greek owner, Folli Follie.

The news comes just days before Sports Direct’s annual meeting where institutional investors are expected to vote against Ashley’s leadership of the company.

Shares in Sports Direct are up 1.1% to 258p.

Hilco Capital, the owner of Homebase, is also said to bidding for Links of London, Sky News said, adding that it may have joined forces with Links’ current owner to acquire it through an insolvency process.

1.30pm: Lloyds has bigger issues than PPI, says analyst 

The decline in the share price of Lloyds Banking Group PLC (LON:LLOY) has eased after being hit earlier today by news of a further charge of up to £1.8bn for mis-sold payment protection insurance.

However, there may be a bigger problem facing the UK lender than PPI claims, according to one analyst.

Neil Wilson, chief market analyst at Markets.com, pointed out that one-third of all lending on new-build homes in the UK is funded by Lloyds. That means Lloyds will bear the brunt of a possible housing market crash on the back of Brexit.

Shares in Lloyds are down 0.2% to 49.9p.

1.00pm: US stock futures rise

US stock futures are pointing to a higher open as remarks from Federal Reserve chair Jerome Powell signalled a possible interest rate cut at its meeting later this month. 

Futures on the Dow Jones Industrial Average increased 47 points to 26,855, S&P 500 futures grew 6 points to 2,987 and Nasdaq futures gained 15 points to 7,873.

The Fed’s Powell said the central bank remained committed to supporting the US economy’s expansion, leaving the door open to a second interest rate cut. 

His remarks came after the US non-farm payrolls report for August missed expectations with 130,000 jobs added, compared to forecasts of 160,000. 

“Attention now should be turned to consumer spending which has been the brightest spot in the economy. If US consumers show any signs of closing their wallets amid the ongoing trade dispute, expect the Federal Reserve to move aggressively in easing monetary policy,” said Hussein Sayed, chief market strategist at FXTM.

He added: “However, tariffs on Chinese goods are still insignificant yet, as the bulk of tariffs that will directly impact consumers may come in October and December. “

Sayed said another piece of data that the Fed will be taking into their consideration for the Fed meeting next week is consumer prices.

“US core inflation is anticipated to accelerate to 2.3% year-on-year in August from 2.2% in the previous month,” he said. 

“Any upside surprise in prices may make the Fed’s job more complicated and give the dollar another upward push.”

12.00pm UK trade deficit narrows 

The UK trade deficit narrowed by £14.9bn to £2.6bn in the three months to July due to falling imports, according to the ONS.  

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said: “British firms appear to be depleting the inventories they accumulated before the original Brexit deadline in March, rather than placing new orders with overseas suppliers. A rebuild of stocks before the October deadline likely will drive up both imports and the trade deficit again soon. “

The trade data also showed that pipeline price pressures are intensifying again, he added. Import prices grew 3.4% on average in the three months to July 2019, compared with a 0.5% increase in average export prices, hit by a weaker pound.

“The further 1.5% drop in trade-weighted sterling in August likely will have a similar effect on import prices, boosting CPI inflation in about nine months’ time,” Tombs said.

The pound is now up 0.72% against the dollar at US$1.2372 and up 0.79% versus the euro at €1.1229.

11.00am: Sterling rises after UK GDP beat

Sterling has rebounded following better-than-expected UK GDP data and after Boris Johnson said a no-deal Brexit would be a failure.

The pound is up 0.4% versus the dollar at US$1.2336 and 0.3% against the euro at €1.1182. 

UK GDP was flat in the three months to July after a contraction of 0.2% in the quarter to June, beating forecasts for a 0.1% drop, after growth in industrial and manufacturing production.

IG senior market analyst Joshua Mahoney said the data has “slightly allayed fears that we could be in a recession, yet the economic picture remains tepid at best given Brexit uncertainty”.

He added: “Today will continue to be dominated by the outlook for Brexit, with the conservatives hoping to pass a vote to ensure an October election.

“Their bid to hold an October election looks destined to fail, yet the tone from the EU does show that patience is wearing thin on mainland Europe too.

“Boris Johnson’s comments from Ireland have been very telling, with the PM stating that a no-deal Brexit would be a failure of statesmanship.

“Many have grown used to the idea that Johnson is pushing towards a no-deal scenario, and thus his clear statement against such a situation has helped boost the pound.”

Speaking in Dublin, Johnson said a no-deal Brexit would be a failure that both the British and Irish governments would be responsible for. He added that he believed a deal was still possible by the EU summit in October.

The Irish government maintains that the backstop – a measure to avoid an Irish hard border – is needed in any withdrawal agreement but Johnson said he will not sign up to a deal unless it is removed because it is “anti-democratic”.

The rise in the value of the pound has pushed the FTSE 100 down 18 points to 7,264.

10.20am: Intu Properties shares jump on buyout rumours

Intu Properties PLC (LON:INTU) shares have jumped 11.8% to 40.8p after the Sunday Times reported that private equity firm Orion Capital Managers was considering a buyout of the British shopping centre operator. 

Orion Capital is understood to be in the early stages of finding partners for a buyout of Intu, the paper said. 

Intu shares have fallen from 110p since the start of the year as it struggles with store closures and retail failures. 

Orion has been building a stake over the course of this year and last disclosed a 9.2% holding.

“Given the recent share price weakness (down 68% year to date) they are currently sitting on a loss,” Peel Hunt said.

The broker added: “Any buyer would need a strategy and the resources to deal with Intu’s £4.9bn of net debt and in particular the significant maturities in 2021-23 which total over £2.5bn.

“Trading at an 85% discount to net asset value and with no dividends being paid at present we believe the shares remain highly speculative.”

Last year a consortium comprising Intu’s largest shareholder John Whittaker’s Peel Group, the Saudi Arabian fund Olayan Group and the Canadian giant Brookfield tried to take the company private but Brookfield’s lenders reportedly got nervous.

The rumoured buyout by Orion has had a positive read-across for Hammerson, whose shares are up 1.2% to 247p. Peel Hunt said it continues to see the potential for further asset disposals at Hammerson to help a re-rating in the shares.

9.40am: UK GDP flat in July

The UK economy did not grow in July, the Office for National Statistics has revealed.

Gross domestic product was flat in the three months to July after a contraction of 0.2% in the quarter to June. Economists were expecting a 0.1% drop in July.

The ONS also revealed industrial production edged up 0.1% month-on-month in July but fell 0.9% year-on-year.

Manufacturing output grew 0.3% on the month but dropped 0.6% compared to a year ago. Construction output rose 0.5% month-on-month and 0.3% year-on-year.

Britain’s services sector increased 0.3% month-on-month in July.

9.10am: IAG share fly lower as British Airways pilots strike 

British Airways owner International Consolidated Airlines Group PLC (LON:IAG) is now one of the biggest fallers on the FTSE 100 as pilots begin a two-day strike in an ongoing dispute over pay and conditions.

British Airways has told tens of thousands of passengers to not turn up at airports after cancelling 1,700 flights due to the strikes. 

Unions have criticised the airline’s cost-cutting drive and want to see pilots receive more of the group’s massive profits. The unions and the airline have said they are willing to hold further talks, but no date has been set.

The strikes could cost the airline up to £40mln a day. Pilots are scheduled to stage another strike on 27 September.

Shares in IAG were down 2.7% to 418.3p at the time of writing.

8.40am: FTSE 100 gains as no-deal Brexit concerns fade 

The FTSE 100 edged higher at the open, up 24 points to 7,305, as concerns about a no-deal Brexit eased and the US Federal Reserve left the door open to further interest rate cuts.

Last week MPs voted in favour of a bill requiring the prime minister to seek an extension to the 31 October Brexit deadline if a deal is not reached before 19 October.

The government is to ask MPs to back a snap election for a second time ahead of Parliament being suspended for five weeks. However, the government is expected to be defeated again.

Even as the prospect of a no-deal Brexit faded, the pound was down 0.34% versus the dollar at US$1.2241 in morning trading.

Across the Atlantic, Federal Reserve chairman Jerome Powell has pushed back against views the US economy was headed for a recession, while vowing to do whatever is needed to support economic expansion.

Meanwhile, Asia stocks gained after the People’s Bank of China to unleash some US$126bn of lending power by reducing the amount banks have to keep in reserve.

On the company front, Lloyds Banking Group PLC (LON:LLOY) shares dropped 1.8% to 49p after the bank warned that it expected to take a further charge of between £1.2bn and £1.8bn for mis-sold payment protection insurance after higher-than-expected claims.

Associated British Foods plc (LON:ABF) shares fell 2.2% to 2,302p after warning that it expected profit margins to drop at its Primark fashion chain in its next financial year.

BP PLC (LON:BP. and Royal Dutch Shell PLC (LON:RDSB) shares rose 1.1% to 506p and 1.6% to 2,291p respectively as crude oil prices increased after Saudi Arabia’s decision to remove and replace its energy minister. Oil was also boosted by the new stimulus measures in China and expectations of lower interest rates in the US.

Proactive news headlines:

Hurricane Energy PLC (LON:HUR) has confirmed that it has struck oil at its Lincoln Crestal well off the west coast of the Shetland Islands.

Touchstone Exploration Inc (LON:TXP, TSX:TXP) appears to have exceeded expectations with the results from a gas well in Trinidad and Tobago. Coho-1, on the Ortoire onshore exploration block, encountered 105 feet of net pay over four unique sand packages.

Telit Communications PLCN (LON:TCM) swung to a profit in its latest half-year thanks to a boost from the sale of its automotive business.

Iconic Labs PLC (LON:ICON) has acquired website Gay Star News Ltd (GSN), one of the world’s leading sources of news for the LGBTI+ community.

SIMEC Atlantis Energy Limited (LON:SAE) has announced its ambition to create the world’s first ocean-powered data centre in the north of Scotland.

Ariana Resources PLC (LON:AAU) sees potential to expand the Tavsan project in Turkey after new mineral discoveries outside of the initial mine plan.

United Oil & Gas PLC (LON:UOG) enjoyed a second successful North Sea licensing, one in which it was awarded four blocks.

Mosman Oil and Gas Limited (LON:MSMN) shares climbed on Monday after the firm said the Stanley-3 well in Texas had been completed.

Bluejay Mining PLC (LON:JAY) shares fluttered higher on Monday after the group confirmed the shipping of an ilmenite bulk sample from its Dundas project in Greenland.

Mkango Resources Ltd (LON:MKA, TSX-V:MKA) has appointed experienced Africa hand Senet as the lead engineer and project manager for its Songwe rare earths project in Malawi.

Norman Broadbent Group PLC (LON:NBB) has agreed a £2mln working capital facility with Bibby Financial Services as it looks to grow the business.

Quadrise Fuels International PLC (LON:QFI) has announced an £1.8mln, fully underwritten open offer for existing shareholders and a further subscription of arounds £0.7mln.

Midatech Pharma PLC (LON:MTPH) has appointed former Shire Pharmaceuticals finance director Stephen Stamp as its new chief financial officer with immediate effect.

W Resources PLC (LON:WRES) has begun the formal application process to receive a €5.3mln grant from the regional government in Extremadura, Spain. 

AFC Energy PLC (LON:AFC) has appointed former Rolls-Royce Holding PLC director Dr Gerry Agnew to its board. Agnew, who spent 19 years at Rolls-Royce in various roles, will join AFC Energy as a non-executive director.

Stobart Group Ltd (LON:STOB) said the management incentive plan for its Energy arm has now vested after the division more than doubled in size over the past three years.

Oncimmune Holdings PLC (LON:ONC) shares were higher on Monday after positive trial data for its EarlyCDT Lung test was presented at the World Conference for Lung Cancer in Barcelona.

One of Red Rock Resources PLC‘s (LON:RRR) investments is worth more than the AIM-listed company’s entire market value, it noted on Monday. Red Rock owns an 0.86% stake in Aussie-listed Jupiter Mines, which in turn has a 49.9% holding in Tshipi é Ntle Manganese Mining, operator of the South African mine that is planning to soon pay out a A$59mln.

Highlands Natural Resources PLC (LON:HNR) has changed its name to Zoetic International plc with immediate effect.

6.30am: FTSE 100 set to make positive start 

The FTSE 100 looks set to open in positive territory, taking its cue from Asia’s main markets, which started the week on the front foot.

Providing momentum was Friday’s move by the People’s Bank of China to unleash some US$126bn of lending power by reducing the amount banks have to keep in reserve.

In the US, meanwhile, Federal Reserve chair Jerome Powell pledged to do whatever was needed to keep the world’s largest economy growing.

Closer to home, Brexit, which is fast disintegrating into an ‘omnishambles’, will continue to dominate the domestic agenda.

The pound, changing hands for US$1.227, continued to trade well off its lows of early last week with the prospect of a No Deal Brexit fading.

But PM Boris Johnson looks to test soon-to-be-enacted legislation that would force him to seek a further extension to the deadline for Britain’s exit from the EU.

“Volatility [for the pound] is likely to remain as the political situation unfolds,” said David Madden of CMC Markets.

Scheduled corporate news flow is set to pick up in pace this week with updates from Primark owner Associated British Foods (LON:ABF) and retailer Morrisons (LON:MRW) leading the charge.

Significant events expected on Monday:

Finals: Abcam Plc (LON:ABC), Duke Royalty Ltd (LON:DUKE),

Interims: Diaceutics PLC (LON:DXRX), Medica Group PLC (LON:MGP)

Trading announcements: Associated British Foods plc (LON:ABF)

Economic data: UK gross domestic product, UK industrial production, UK index of services

Around the markets: Gold US$1,517.90 an ounce, up US$2.40; Brent crude US$62.15 a barrel, up 61 cents; Bitcoin US$10306.31, down US$5.99

City Headlines: 

Financial Times

  • Varadkar plays down prospects of Brexit breakthrough – Irish prime minister to meet Boris Johnson for first time for talks on border
  • Orcel demanded Santander ‘empower’ him as chief – private messages shine light on run-up to Spanish lender’s decision not to hire former UBS banker
  • KPMG partners quit in wake of WhatsApp row

Times

  • Brexit deal will deliver bigger boost for economy, says KPMG
  • Carmakers are no-show after Frankfurt targeted by protesters
  • A third of major car brands are staying away from the auto industry’s biennial jamboree
  • Nissan boss set to resign after bonus overpayments

Daily Telegraph

  • Science and technology boom to create millions of new jobs in decades after Brexit
  • Citigroup European chief David Livingstone: ‘Brexit was inevitable from the moment the UK decided not to join the euro’
  • Is struggling Morrisons the next takeover target?

Guardian

  • Cheaper rivals and online retailers have usurped M&S’s faded glory
  • Aim investors on target to pocket more than £1bn in dividends