Businessman checking stock market online
  • FTSE 100 ends off 1.44 points
  • US markets rally as trade comment offsets “Trumpeachment” worry
  • Sterling weak as UK parliamentary debate on Brexit resumes

5.10pm: Footsie recovers

The FTSE 100 index ended almost flat on Wednesday after recouping most of its early falls in late afternoon trading as US stocks put in a strong rally from an opening decline as the China trade deal pendulum swung back towards the positive.

At the close, the UK blue chip index was only 1.44 points lower at 7.282.99, just off the late peak of 7,292.00 and well above the session low of 7,212.96.

However, the mid-cap FTSE 250 index remained sharply lower, ending down 144.15 points, or 0.7% at 19,774.92 as more domestically minded stocks were knocked by a fall in sterling amid the UK political uncertainties caused by Brexit and the parliament prorogation battle.

On currency markets, the pound lost most of its recent gains as Brexit debating resumed again in the House of Commons today, dropping over 1% versus the dollar to US$1.2362.

Connor Campbell, financial analyst at Spreadex commented: “Whatever pleasure the currency took in the Supreme Court deciding Boris Johnson’s prorogation of Parliament was unlawful has been replaced with concern over what happens next, especially since there is increased talks of the government trying to force the country towards a general election. And with a busy Commons schedule this afternoon, the drama likely isn’t over for the pound just yet.”

On Wall Street, around London’s close the Dow Jones Industrial Average was up around 150 points, or 0.6%,at 26,957, with the broader S&P 500 index adding 0.3% at 2,975, while the tech-laden Nasdaq Composite gained 0.4%, retaking a psychologically important level above 8,000.

US stocks had dipped early on when the White House released the summary of a phone call between President Donald Trump and the Ukrainian president. House of Representatives’ Speaker Nancy Pelosi announcement late Tuesday the launch of an impeachment inquiry into whether Trump interacted improperly with his Ukrainian counterpart on election issues.

However, the impeachment worry was countered by the return of some optimism over US/China trade talks, after comments made by Trump at the United Nations General Assembly meeting in New York today.

The US President was reported as saying: “We’ve picked up trillions of dollars and they’ve lost trillions of dollars and they want to make a deal very badly. It could happen. It could happen sooner than you think,” he said, referring to China-U.S. trade negotiations.”

3.20pm: Mixed US start

US markets have opened mixed, as investors react phlegmatically to last night’s announcement of a presidential impeachment enquiry.

The Dow Jones was up 48 points (0.2%) at 26,854 but the S&P 500 was down 3 points (0.1%) at 2,964.

In the UK, the FTSE 100 was down 35 points (0.5%) at 7,256, as traders wait to see what the resumption of proceedings in parliament brings.

There has been talk of MPs trying to force the prime minister, Boris Johnson, to request another extension to the Brexit deadline while others are speculating whether Johnson will throw his chief of staff, Dominic Cummings, “under the bus” in order to save his own political skin.

Approaching the last hour of trading, energy firm Petrel Resources PLC (LON:PET), up 26% at 9p, was the best performing stock after a placing of 29.99% of the enlarged issued share capital among a new investor group of leading Middle Eastern oil & gas investors.

Michel Fayad and Roger Tamraz each now hold 10% of the issued share capital of Petrel; both will be invited to join the board as non-executive directors.

Alexander Mining PLC (LON:AXM), down 33% at 0.025p, was the biggest faller as management called time on its mineral processing activities and prepared for life as a cash shell and, it hopes, a reverse takeover of some sort.

1.45pm: Leading shares pare losses as sterling plunges

London’s leading shares have pared some losses as sterling continues to slump on foreign exchange markets.

The pound is down by more than a cent against the greenback at US$1.2378 as traders wait for the fall-out in parliament this afternoon as the prime minister returns from his stand-up gig in New York.

The FTSE 100 was down 38 points (0.5%) at 7,253.

“Britain’s House of Commons has resumed in an atmosphere of rancour following the UK Supreme Court’s ruling that Prime Minister Boris Johnson’s decision to suspend Parliament ‘was unlawful’. It’s emerged that BoJo will attend the Commons to face the music after all, though he was not there at the time of writing and Downing Street has only stated that he’ll address Parliament in the afternoon, following a hasty return from a UN meeting in New York,” said Ken Odeluga at City Index.

“In the meantime, it’s been left to Attorney General Geoffrey Cox to serve as lightning rod for MPs’ anger. Cox himself has faced demands for his resignation, as Johnson will later,” predicted Odeluga.

“Cox brushed those off whilst noting that the government will ‘respect the judgement of the court’, signalling that speculated ‘unconventional’ manoeuvres by the government that could end with another Commons suspension soon, are off the cards but the Attorney General didn’t rule out another suspension entirely,” Odeluga noted.

Earlier today, UK Finance revealed mortgage approvals for house purchases declined to 42,576 in August from a 29-month high of 43,303 in July.

“Even so, mortgage approvals at 42,576 in August were still modestly above the average level of 41,759 seen so far this year. They were also above the 38,000-40,000 level that largely held from late-2017 through to early-2019,” commented Howard Archer, the chief economic advisor to the EY ITEM Club.

“It is possible that mortgage activity may have been recently lifted by some people looking to complete their house purchases before Brexit occurs on 31 October given the major uncertainties as to what will actually happen then.

“Markedly improved earnings growth in tandem with recent record-high employment may also be providing some help to housing market activity.

“However, the fact that mortgage approvals eased back in August suggests that the upside for housing market activity currently remains limited amid major uncertainties,” Archer concluded.
 

11.40am: Blue-chips stabilise after stumbling early doors

The FTSE has been drifting sideways in the second half of the morning after falling out of bed with a bump this morning.

London’s leading shares index was down 65 points (0.9%) at 7,226, with just nine of its constituents limping into positive territory.

“PM flies back to chaos” was the headline in The Times, referring to Boris Johnson’s return from New York to face the music over the Supreme Court’s ruling on the suspension of parliament.

“Today sees the UK parliament return following the Supreme Court decision to rule the recent prorogation void. For markets this could bring heightened volatility as markets look to see whether Boris Johnson will seek to bypass the law that he must request an extension to article 50 if an agreement was not reached by the end of the October Eurogroup meeting,” reported Josh Mahony at IG.

“However, for the most part, we are stuck in a bottleneck, where opponents are unwilling to call a vote of no confidence or election given fears that they may not have numbers to win either. Thus the key here is whether Johnson will agree to extend, with the pound likely to remain highly susceptible to any change in tone over an October extension,” he added.

“It is worthwhile noting that while markets are fearful of a no-deal Brexit, we are also seeing significant economic weakening given the ongoing uncertainty, and thus this likely extension does mean further slowing for the months ahead,” Mahony said.

On the foreign exchange markets, the pound was making its way, slalom-style, lower against the US dollar, shedding two-thirds of a cent at US$1.2428.

The CBI Distributive Trades Survey for September was not as terrible as feared, providing some relief for beleaguered retailers.

The reported sales balance rose to -16 in September, from -49 in August, which was a better outcome than the reading of -25 expected by economists.

“On past form, the balance points to year-over-year growth in the official measure of retail sales volumes slowing to about 0.5% in September, from 2.2% in August,” commented Samuel Tombs at Pantheon Macroeconomics.

“Unusually warm weather in the first half of September might have depressed demand for new autumn ranges introduced by clothing retailers. The CBI’s survey, however, repeatedly has pointed to a retail apocalypse this year that has not occurred,” he added, sounding remarkably cheerful for someone named Tombs.

“The survey’s small sample size likely is partly responsible for its misleading message; the CBI no longer discloses how many retailers take part, but numbers were declining earlier this year. Most of the retailers who respond are traditional high-street retailers who are losing market share to online-only entrants. Retailers also simply report the direction of changes in sales, not their magnitude. As a result, we continue to expect retail sales to grow at a steady 3% year-over-year rate over the coming months, given that consumers’ confidence is in line with its long-run average, and real wages are rising briskly,” Tombs said.

10.10am: Transatlantic tensions at the top

The number of FTSE 100 stocks in positive territory barely makes it into double figures as political turmoil takes centre stage.

London’s index of heavyweight shares was down 64 points (0.9%) at 7,227.

“European markets have opened a little softer on Wednesday, as the President of the US faces impeachment proceedings and the Prime Minister of the UK calls to resign,” observed Craig Erlam at Oanda.

“While Boris’s defeat in the Supreme Court on Tuesday – which led to calls for his resignation – was largely welcomed by markets as it makes delivering no-deal on 31 October that much more challenging, the impeachment announcement against Donald Trump was not so well received.

“Everyone is naturally now speculating on how Trump responds to the impeachment proceedings but it still seems highly unlikely that the Senate backs it even if the House does but perhaps that’s not the Democrats ultimate aim, with the proximity to next year’s election not likely a fortunate coincidence,” he added.

Well-received trading updates have enabled supermarket group J Sainsbury PLC (LON:SBRY) and utility company United Utilities PLC (LON:UU.) to defy the trend.

The former was up 3% at 219.4p and the latter 0.4% better at 793.6p.

The update from holding company Halma PLC (LON:HLMA) was not so warmly received, with the safety controls specialist’s shares sliding 3.4% to 1,905.5p.

Halma said that it had traded in line with expectations while the Environmental & Analysis sector performed well, the Medical and Infrastructure Safety sectors saw more modest rates of growth.

8.30am: Political drama on both sides of the pond

Political drama on both sides of the Atlantic made for a negative start in London as the FTSE 100 fell 36 points to 7,255.64.

“Markets have taken a bit of tumble on fears president Trump could be impeached, while the drama in Westminster is just as intoxicating as the Brexit drama rumbles on,” said Neil Wilson of Martkets.com.

House Democrats think they’ve got Trump on charges he enlisted a foreign power to support his re-election.

“Markets won’t like the uncertainty it brings,” Wilson went on.

“In previous instances (Nixon, Clinton) there has been rockiness for equities and the dollar.”

Closer to home, the Supreme Court ruling over the wrongful prorogation of parliament leaves Boris Johnson with a tenuous hold on power and his administration under huge pressure.

“Calls for his resignation grow. But nothing has really changed. The only narrative that counts is that there’s elite out there frustrating Brexit at every turn. The court ruling only supports this story,” said Wilson.

“Sterling is the bellwether trade. For the time being the market is not terribly sure whether no deal risks have diminished or not.”

On the market, Sainsbury’s (LON:SBRY) store closure plan was greeted positively by the market. The cost cutting plan pushed the stock to the top of the Footsie leader board with a 1.4% gain. (READ MORE on the Sainsbury’s story here.)

Proactive news headlines

Stobart Group Ltd (LON:STOB), the aviation, energy and civil engineering group, said it continues to make strong progress in its two core divisions of aviation and energy.

Rare disease specialist Open Orphan PLC (LON:OPRH) expects to announce the first early adopters of its genomic health data platform later this year.

Allergy Therapeutics PLC (LON:AGY) surpassed City forecasts with the company quietly confident about the coming year.

EQTEC PLC (LON:EQT) almost tripled sales in its first half as the waste-to-energy firm looked to cut costs and establish new ways of funding its developments.

Amryt Pharma PLC (LON:AMYT) said it has now formally completed the acquisition of Aegerion Pharmaceuticals Inc. and, backed by shareholders, has raised US$60mln in new funds.

Metal Tiger Plc (LON:MTR) climbed on Wednesday after the group’s net asset value increased to a premium above its current share price.

Columbus Energy Resources PLC (LON:CERP) updated on its exploration programme on Trinidad’s South West Peninsula where it is preparing to drill the Saffron well.

Shares in Polarean Imaging PLC (LON:POLX) jumped higher as stakeholder Amphion Innovations PLC (LON:AMP) extended the term of a loan where Polarean shares have been used as collateral.

A strong order book and significant new business wins helped drive the first-half performance of contract research specialist Ergomed PLC (LON:ERGO).

Acquisitive telecoms and information technology services provider AdEPT Technology Group PLC (LON:ADT) is making progress on its ‘One AdEPT’ project.

Chariot Oil & Gas Limited (LON:CHAR) chief executive Larry Bottomley, in the explorer’s half-yearly results statement, highlighted that it now has a balanced portfolio with “a commercially attractive production opportunity” alongside its “giant potential prospects”.

Immotion Group PLC (LON:IMMO) has signed deals with three aquariums to install its virtual reality (VR) headsets.

Savannah Resources PLC (LON:SAV) is looking at substantial quantities of quartz and feldspar at its Mina do Barroso project in Portugal. Though lithium is the main target, these by-products have the potential to provide a significant additional income stream, Savannah said.

Enteq Upstream PLC (LON:NTQ) chief executive Martin Perry has highlighted the company’s advances in China and its recent deal with Shell as examples of ongoing progress ahead of today’s AGM.

Active Energy Group PLC (LON:AEG) says samples of its CoalSwitch fuel alternative and biomass black pellets are now being sent to potential customers in Europe as well as the US.

Iconic Labs PLC (LON:ICON) non-executive directors Xavier Latil and Rodolphe Cadio are stepping down from the board as the restructuring of the company is now substantially complete.

6.45am: FTSE 100 to move lower 

The FTSE 100 is expected to move lower on Wednesday morning as geopolitical risk sent jitters through the markets.

Spread-better IG expects the FTSE 100 to open around 21 points lower, having shed 34 points yesterday to close at 7,291.

In the US overnight, news that the US House of Representatives would begin an official impeachment inquiry into Donald Trump alongside the President’s criticism of China in a speech at the UN sent the main indices into the red.

The Dow closed down 0.53% at 26,807 on Tuesday, while the S&P 500 fell 0.84% to 2,966 and the Nasdaq dropped 1.46% to 7,993.

It was a similar picture this morning on the Asian markets as the Nikkei 225 fell 0.37% while Hong Kong’s Hang Seng slipped 1.04%.

Political developments in the UK are also likely to hold firm at the front of trader’s minds as the fallout continues from the Supreme Court’s ruling that Boris Johnson’s prorogation (suspension) of Parliament for five weeks until mid-October was unlawful.

With the political deadlock likely to continue, London Capital Group analyst Ipek Ozkardeskaya said a general election was “the most plausible outcome”, however the timing of the poll is still up for debate as opposition parties are unlikely to support an election until the Brexit exit date has been extended beyond 31 October.

While the return of Parliament today has many thinking the chance of a no-deal exit in October is now less likely, the pound’s reaction has been relatively muted, with sterling currently 0.2% lower to US$1.2463 against the dollar and mostly flat against the euro at €1.1333.

Significant announcements for Wednesday, September 25:

Finals: Allergy Therapeutics PLC (LON:AGY), Netcall PLC (LON:NET), PRS Reit PLC (LON:PRSR)

Interims: Boohoo PLC (LON:BOO), Ergomed PLC (LON:ERGO), Mi-Pay Group PLC (LON:MPAY), Mission Marketing PLC (LON:TMMG), Wandisco PPLC (LON:WAND), Xlmedia PLC (LON:XLM)

Trading statement: Babcock International PLC (LON:BAB)

AGMs: Tavistock Investments PLC (LON:TAVI), AdEPT Technology Group PLC (LON:ADT)

Economic data: BoJ policy decision, NZ policy decision, CBI distributive trends, US new home sales

Around the markets:

Sterling: US$1.2463, down 0.2%

Brent crude: US$61.59 a barrel, down 0.85%

Gold: US$1,528.3 an ounce, down 0.25%

Bitcoin: US$8,519.8, down 12.5%

City headlines:

Boris Johnson, who flies into London today, said the Supreme Court’s ruling that his suspension of parliament had been illegal was part of an attempt to frustrate Brexit – Times

Thomas Cook would have run out of cash within days, according to a court witness statement by its chief executive that paints a desperate picture of the fragile state of the company’s finances in the run-up to its collapse – Financial Times

The UK Government borrowed almost £18 billion more than previously recognised last year according to new calculations, narrowing the Chancellor’s room for manoeuvre – Telegraph

The head of the Hong Kong stock exchange has said he would reject his own offer if he was in charge of the London Stock Exchange – Daily Mail

Volkswagen chief executive Herbert Diess and chairman Hans Dieter Poetsch have been charged with market manipulation by German prosecutors – Telegraph