• FTSE 100 closes 67 pts up
  • Petro Matad tops the risers after sparkling news from Mongolia
  • UK PM to seek December 12 general election

5.30pm FTSE closes to the good

FTSE 100 index closed higher on Thursday, aided by a positive trading update from software group Aveva (LON:AVV) and a strong third quarter by drugs giant AstraZeneca PLC (LON:AZN).

The blue-chip benchmark finished ahead by 67.51 points at 7,328.25, with Aveva shares up 4.95% and Astra’s 5.55%.

Mids-cap cousin FTSE 250 though headed the other way, losing 28.79 points at 20,152.15 as traders still fretted over the Brexit uncertainty. The pound was also down, off 0.67% against the US dollar.

On Wall Street, the Dow Jones Industrial Average lagged around 103 points at 26,730, but the S&P 500 index and Nasdaq were both ahead.

Data today showed US durable goods fell by 1.1% last month, which undershot the 0.8% contraction, which had been forecast, and added to worries about the outlook for the US economy.

Meanwhile, there were some signs of hope in the ongoing US, China trade  situation.

“China announced they are willing to purchase $20 billion worth of US agricultural goods in year one if Washington DC agrees to a partial trade deal. When it corms to trade between the two sides, the sum of money isn’t huge, but it’s a good starting point, which could lead to further talks,” said David Madden, analyst at CMC Markets.

3.30pm: Footsie’s advance slowing

Entering the last hour of trading, the Footsie’s advance was showing signs of running out of steam.

The index of heavyweight shares was up 58 points (0.8%) at 7,318, about 20 points below its high point for the day.

No one was expecting a leg-up from today’s European Central Bank monthly meeting and they were not disappointed.

“For financial markets, today’s ECB meeting was as uneventful as expected. There were no changes to the monetary policy stance and no changes to the macro-economic assessment,” reported Carsten Brzeski, the chief economist at ING Germany.

“If anything, it seemed as if the hawks did not want to spoil Mario Draghi’s last meeting as ECB president, illustrated by the fact that today’s decisions were taken unanimously. According to Draghi, economic developments since the September meeting have given additional justification for the Governing Council’s determination to act,” Brzeski continued.

“Looking ahead, the main tasks for Christine Lagarde [Draghi’s successor] will be to repair the rift between the hawks and the doves at the Governing Council, to start the strategic review which could eventually lead to some recalibration of the price stability definition, and assess whether the pro-active monetary policy of the last few months is still effective at the lower bound of (negative) interest rates,” Brzeski said.

Christine Lagarde will have her work cut out, according to Rupert Thompson, the head of research at Kingswood, the fund manager,

“The ECB is forecasting moderate but positive growth in the second half of 2019 which is consistent with yesterday’s PMI data which showed confidence stabilising but at low levels. Christine Lagarde, the incoming ECB President, will have her work cut out. She will need both to try and quell dissent within the ECB over the September easing move and encourage governments to loosen fiscal policy – rather than rely on monetary policy, which is increasingly ineffectual, to do all the work stimulating growth,” Thompson said.

On the corporate front, Petro Matad Limited (LON:MATD), up 71% at 4.65p, was in the box seat to be the day’s biggest riser after revealing the results of well testing operations at its Heron-1 oil discovery in the north of Block XX, eastern Mongolia, adjacent to the producing Block XIX, operated by PetroChina.

One of two zones in the Heron-1 discovery well flowed crude at a peak rate of 821 barrels per day in testing, the company revealed.

2.45pm: FTSE 100 consolidates gains; US benchmarks open higher

London’s leading stocks traded sideways over the lunchtime session; US benchmarks have opened higher.

The FTSE 100 was up 68 points (0.9%) at 7,329. Stateside, the Dow Jones was 18 points (0.1%) better at 26,845 while the S&P 500 was 9 points (0.3%) higher at 3,005.

Today’s meeting of the European Central Bank’s policy-makers – the last with Matio Draghi at the helm – proved to be a damp squib.

The bank, as expected, left its policies unchanged.

“Although the Draghi-era is set to end, the era of low rates and the ECB acting as the Eurozone’s financial backstop continues. During his presidency the ECB has transformed itself in a major way. Previously unconventional policy measures have become part of the ECB’s standard toolkit. This is Draghi’s legacy,” declared Florian Hense at Berenberg.

12.15pm: Housebuilders shrug off mildly disappointing mortgage approvals data

With sterling still labouring against the US dollar, the Footsie found fresh impetus towards the end of the morning trading session.

The index of large-cap shares was up 71 points (1.0%) at 7,331, just a couple of points off its high point for the day.

Housebuilders Barratt Developments PLC (LON:BDEV), Persimmon PLC (LON:PSN) and Taylor Wimpey PLC (LON:TW.) all outperformed the Footsie, rising 1.2%, 1.3% and 1.6% respectively, despite a decline in mortgage approvals in September.

UK Finance reported that the number of mortgage approvals for house purchases last month fell to 42,300 from 42,500 in August; the figure was slightly below the consensus forecast of 42,400 but above the monthly average of 41,790 seen so far this year.

“Admittedly, annual growth stood at a hefty 9.2% y/y [year-on-year] – in line with the average of the last six months,” noted Capital Economics.

“So far, the strength of the rise in the UK Finance data has not been matched by the industry-wide figures from the Bank of England. Indeed, Bank of England figures show mortgage approvals down by 0.9% y/y in August. As a result, the relative strength of the UK Finance data probably reflects lenders taking market share from each other, rather than an increase in the overall provision of credit,” the forecasting unit speculated.

“In any case, the outlook for lending is subdued. Even if a Brexit deal is agreed soon, demand will be constrained by high house prices and economic uncertainty. We expect lending to be flat in 2019, and to rise by 2% to 3% per-year in 2020 and 2021 – but only if the Brexit clouds clear within the next few months. In the event of further delays, a recovery in lending is likely to be delayed too,” Capital Economics said.

Howard Archer, the chief economic advisor to the EY ITEM Club, said the fact that mortgage approvals fell back for a second month running in September suggests that housing market activity remains constrained amid major uncertainties.

“It is also notable that the labour market is now showing increasing signs of faltering,” he added.

“With the economy largely struggling and the outlook highly uncertain, we suspect that house prices will remain soft in the near term at least. Consequently, we expect house prices to only rise around 1.0% over 2019,” Archer revealed.

In corporate news, long-suffering shareholders in Woodford Patient Capital Trust PLC (LON:WPCT) received a much-needed pick-me-up when it was revealed Schroders has won the gig to manage the trust’s portfolio, taking over from fallen stock-picker, Neil Woodford.

“Beleaguered Woodford Patient Capital Trust shareholders finally have something to be happy about with news that Schroder’s have been appointed the new portfolio manager and that the trust is going to be run with the same existing investment mandate. The majority of Patient Capital Trust investors are likely to have been actively interested in the early-stage companies and it would have been very painful for investors if the trust had been wound up or its objective changed,” suggested Moira O’Neill, head of personal finance at interactive investor.

“The other fear had been that a new manager would dramatically increase the fees, but Schroder’s have been fair on this. The proposed performance fee has high hurdles and while performance fees are generally not well liked by investors, given the current situation it is reasonable.

“The board of the trust look to have finally got their act together and with new members and enhanced scrutiny, this is hopefully the start of a way back for shareholders,” she added.

Shares in the trust were up 28% at 38.9p.

11.10am: FTSE 100 holding station above 7,300 despite RBS PPI hit

Having established base camp above 7,300 in the first half of trading, the Footsie has largely been shifting sideways.

London’s index of leading shares was up 53 points (0.7%) at 7,314, despite Royal Bank of Scotland Group PLC (LON:RBS) hitting the skids after taking another hit relating to payment protection insurance (PPI).

“PPI has checked out with a bang, driving RBS back into the red in the third quarter – the industry will be relieved to see the back of the whole sorry saga; however, it’s not the main culprit in today’s profit miss,” notes Nicholas Hyett, an equity analyst at Hargreaves Lansdown.

“RBS’s investment bank, NatWest Markets, delivered a very disappointing result – with core income almost halving in a tougher rates environment,” he noted.

RBS shares were off 2.2% at 228.5p. They were spared the wooden spoon, however, by propulsion systems developer Rolls-Royce Holdings PLC (LON:RR.), which was down 4.2% at 696.4p after US activist investor Harris Associates was revealed yesterday as a 5% stakeholder.

“The activist investor achieved notoriety after it managed to push the Saatchi brothers out of the Saatchi & Saatchi advertising agency, it remains to be seen what kind of involvement it will have with the British engine maker,” said Fiona Cincotta at City Index.

10.00am: Market lifted by soft pound and resurgent AstraZeneca

A busy schedule of big company results and a softer pound has helped propel the FTSE 100 higher.

The FTSE 100 was 52 points (0.7%) higher at 7,313 with the top three places on the Footsie leader-board occupied by companies that had trading updates today.

Drugs giant AstraZeneca PLC (LON:AZN) was top of the tree, up 3.1% at 7,133p after what broker Liberum Capital called a strong third-quarter sales performance.

“At the product level key cancer growth drivers (Tagrisso, Imfinzi, Lynparza) beat expectations. Astra has raised FY product sales growth guidance from ‘low double-digit’ to ‘low to mid-teens’, the broker noted, as it stuck with its ‘gold’ recommendation and 6,400p price target.

Information provider RELX PLC (LON:REL) was also 3.1% higher, at 1,824p, after it said it expects full-year results to be in line with last year, with the weak print book market has offset improving electronic revenues.

Aveva Group PLC (LON:AVV) shares were up 2.2% at 4,006p after the company said the Asia Pacific region and engineering division were the stand-out areas in the first half of the software firm’s current fiscal year as growth accelerated.

8.45am:  RBS takes PPI knock 

The FTSE 100 defied early predictions that pointed to a back-foot start to open firmly in positive territory with an early 47-point gain to 7,307.32.

Ignoring the political turmoil in Westminster and reported splits in the cabinet, traders preferred to take their cue from Wall Street and Asia’s main markets, where the mood was more upbeat.

Later eyes will be on Mario Draghi’s final bow at the European Central Bank at which he will discuss the fragile state of the Eurozone economy.

Here in the UK, the big corporate news came from Royal Bank of Scotland (LON:RBS), which slumped to a third-quarter loss after it was hit with £900mln of PPI charges. The shares fell 1.8%.

“Not all of the positive momentum from the half-year numbers has evaporated though, and it remains to be seen whether this quarter is more of an anomaly than a trend,” said Richard Hunter at Interactive Investor.

On the up with a 2% rise was a revitalised AstraZeneca (LON:AZN), which weighed in with its fifth straight quarter of growth.

6.45am; Back foot start predicted 

London’s FTSE 100 is set to start Thursday on the back-foot with sentiments in Brexit limbo whilst broader European and US growth (or lack thereof) providing a further distraction for traders.

CFD and spreadbetting firm IG Markets sees the blue-chip benchmark down around 8 points, making a price of 7,251 to 7,254 with just over an hour to go until London’s open.

Eyes are on Europe today, with politics focussed on decision-makers in Brussels and economists waiting for the European Central Bank.

“With the Brexit process now on pause until the EU decide what length of extension to offer the UK attention now turns to today’s ECB rate meeting, and President Mario Draghi’s last as President,” said Michael Hewson, an analyst at CMC Markets.

“The resilience of European markets has been all the more surprising given that a lot of recent economic data has been anything but resilient.

“The sclerotic nature of the growth story in Europe is starting to fuel concerns that the weakness in the manufacturing sector could start to seep into the services side of the economy.”

He added: “It is becoming quite clear that there are growing tensions within the governing council over the direction of monetary policy, and with the departure of ECB President Mario Draghi, also at the end of this month, these tensions are only likely to increase when Christine Lagarde takes over on the 1st November.

“These disagreements are expected to intensify if today’s latest flash PMI numbers for October from Germany and France show no signs of improving.”

In the United States, Wall Street equities were modestly higher upon Wednesday night’s close though disappointing financials from blue chips like Caterpillar and Boeing tempered enthusiasm.

The Dow Jones finished the day up 45 points or 0.17% at 26,833, while the S&P 500 marked a 0.28% gain closing at 3,004 and the Nasdaq edged up 0.19% to 8,119.

Asian stocks were a bit more powerful today. Japan’s Nikkei rose by 0.59% to trade at 22,755 whilst Hong Kong’s Hang Seng added 0.46% to 26,689 and the Shanghai Composite, meanwhile, moved 0.36% lower to 2,931.

Around the markets

Pound: US$1.2916, up 0.03%

Gold price: US$1,493, up 0.23%

Brent crude: US$60.89, up 1.95%

Bitcoin: US$7,426, down 6.56%

Significant events on Thursday 24 October:

Finals: RDI Reit PLC (LON:RDI)

Interims: Braemar Shipping Services PLC (LON:BMS)

Trading statement: AstraZeneca PLC (LON:AZN), KAZ Minerals PLC (LON:KAZ), Royal Bank of Scotland Group PLC (LON:RBS), RPS Group PLC (LON:RPS)

AGMs: Aberforth Split Level Income Trust PLC (LON:ASIT), Alumasc Group (LON:ALU), Myanmar Investments International Ltd (LON:MIL), Renishaw plc (LON:RSW), South32 Ltd (LON:S32)

FTSE 100 ex-dividends: Ferguson PLC (LON:FERG), Rolls-Royce Holdings PLC (LON:RR.), ITV PLC (LON:ITV)

Economic announcements: ECB policy decision, EU PMI data, US jobless claims, US capital goods orders, US PMI data


Tensions highlight the importance of global trade – BBC News

Retailers cut 85,000 jobs in past year – The Guardian

Tesla wows analysts with quarterly net profit – Financial Times

Honda to stop producing gasoline-only vehicles in Europe by 2022 – Sky News

Ofgem ‘unable to approve’ subsea cables from Shetland and the Western Isles – BBC News

Zuckerberg’s testimony left lawmakers as concerned about libra as they were before – CNBC

SoftBank shares continue to fall after WeWork bailout – CNN