FTSE 100 closes lower
Wall Street stocks sharply down
Sterling up against dollar
4pm: FTSE 100 finshes lower
FTSE 100 index joined global indices to track lower on Friday as traders were spooked by the state of play of US-China trade and disappointing Chinese economic data.
Footsie closed down 82.40 points at 7,248.38. Its mid-cap cousin in London, FTSE 250 slumped 93.60 at 20,021.50.
On Wall Street, the Dow Jones Industrial Average plunged around 218 points; the S&P 500 lost nearly 21 and the Nasdad dropped 34 points.
Sterling gained 0.36% against the US dollar, which as usual, didn’t help the blue-chip index.
The pound firmed on news that opinion polls have put the Tories in the lead in the run-up to the general election on December 12. Markets believe the Conservative party to be more business friendly, as opposed to Labour – the main opposition party.
Summing up the latest on the US, China trade situation, David Madden, analyst at CMC Markets, said: “Beijing have expressed concerns about agreeing terms of a trade deal with Mr Trump as some people in the Chinese government deem him to be unpredictable.
“This could easily turn out to be a ploy by Beijing to try and gain leverage over the US, but for now dealers are content to trim their equity positions.”
Chinese manufacturing data overnight showed industry is still in contraction in China, which hit FTSE’s resource giants.
3.55pm: FTSE 100 fails to pull out of its slump as trade reports spook markets
In the last hour of trading, the FTSE 100 had failed to pull out of its mid-morning slump and was 74 points lower at 7,257 shortly before 4pm.
The blue-chip index has been weighed down by miserable showing from some of its major players, with its biggest company, Royal Dutch Shell PLC (LON:RDSB), topping the losers list after its stock slumped 4.3% to 2,223.5p after a disappointing set of third quarter results.
The macro picture wasn’t much better, with doubts that the US and China could agree a trade deal providing some Halloween frights for the markets.
“After a calm start, China jumped out of a bush screaming boo at the markets on Thursday morning, with Bloomberg reporting that Beijing had cast doubt on a long-term trade deal with the US despite the imminent completion of ‘phase one’ of the agreement”, said Spreadex’s Connor Campbell
“The markets did bounce back from those losses somewhat, lifted by Trump claiming he and Xi Jinping will be signing ‘phase one’ soon, only for the rot to set in once again as the President started shouting on Twitter about the Fed getting everything wrong”, he added.
Meanwhile, sterling was still on the front foot, up 0.26% at US$1.2934.
2.35pm: FTSE 100 slides further as sterling closes in on US$1.30
While equities are having a tough time this afternoon, there loss is sterling’s gain, with the pound having risen 0.38% to US$1.295 against the dollar in mid-afternoon, tantalisingly close to the US$1.30 level that some are expecting it to reach as chances of a no-deal Brexit fade into the background of the UK’s election campaign.
However, while politics may be driving sentiment on the currency markets in the short-term, Cityindex’s Fiona Cincotta says the UK’s underlying economic data is “less than inspiring with consumer sentiment slipping to the lowest level since 2013”.
Shortly before 2.40pm, the FTSE 100 was 81 points lower at 7,250.
1.45pm: Wall Street sees mixed start
US markets started Thursday’s session on a mixed footing, snapping a recent record run for the S&P 500 this week, as doubts begin to emerge around the chances of a long-term trade deal between the US and China.
Shortly after the opening bell, the Dow Jones Industrial Average was 0.17% lower at 27,141 while the S&P 500 slipped 0.07%. The one riser was the Nasdaq, which was up 0.18% at 8,318.
A Bloomberg report said on Thursday that Chinese officials are doubtful that a comprehensive deal can be reached, citing concerns around Donald Trump’s erratic and impulsive nature we could see him back out of any agreed deal at short notice.
There was also some glum reading in the form of US jobless claims data for the week ended 26 October, which rose by 5,000 to 218,000, which was mostly attributed to wildfires currently sweeping across California.
However, despite the slight increase, the pace of layoffs and unemployment in the US are still hovering around a 50-year low, signalling to many that the economy remains in good shape.
Meanwhile, consumer spending in the US for September increased for the seventh month in a row by 0.2%, with the third quarter seeing a 2.9% rise in spending.
Falling interest rates have lowered the price of many big ticket items such as cars and trucks, while inflation barometers had remained unchanged month-on-month, posing little threat to consumers.
Meanwhile, in London, the FTSE 100 was still languishing in the red and was down 68 points at 7,262 shortly before 1.45pm.
12.15pm: UK consumer confidence falls in October
Consumer confidence in the UK slipped in October as Brexit uncertainty continued to make consumers cautious ahead of the Christmas season.
The GfK consumer confidence index decreased two points to -14 during the month, with GfK client strategy director Joe Staton saying the decline was “worrying as strong consumer spending has been the main driver of economic growth since the Referendum in 2016 against a backdrop of low inflation, low interest rates, low wage growth and high employment”.
“Does reduced confidence in personal finances for the year ahead pose a risk to the wider economy? Nobody wants to see consumer spending reduce and let’s hope it doesn’t happen. But Brexit’s continuing uncertainty and the spectre of a general election is not helpful. People can only feel confident if they believe the external environment is stable, yet consumers are witnessing too many Brexit shifts and surprises, too many Brexit timelines and counter proposals to justify any longer-term confidence. The big black Brexit cloud is refusing to shift”, he added.
Meanwhile, analysts at Shore Capital said the figures showed “a step backwards, again” but overall consumers seemed “relatively calm, despite the ongoing and uncertainty emanating from Westminster”.
“Consumers will hope that the general election in mid-December with a majority in the House of Commons, so consumers can finally move on”, the broker said.
In lunchtime trading, the FTSE 100 was 65 points lower at 7,265 at around 12.15pm..
11.40am: FTSE 100 in the doldrums into late-morning; eurozone economy grows more than expected
As lunchtime approached, the FTSE 100 was still struggling to pull itself out of an earnings-inspired slump and was 72 points lower at 7,259 shortly after 11.30am.
The index has been pulled down by the ex-dividend status of Unilever PLC (LON:ULVR) while poor earnings reports from constituents such as Lloyds Banking Group PLC (LON:LLOY) and Royal Dutch Shell PLC (LON:RDSB) sent their shares downwards, pulling the FTSE 100 with them.
Equities are also struggling to overcome a strong performance form the pound, which in late-morning was 0.3% higher at US$1.2942 against the dollar.
Meanwhile, there was some more positive news from across the English Channel as the economy of the eurozone grew 0.2% in the third quarter of this year, the same pace as the prior three-month period but above expectations of 0.1% growth.
Eurozone grew modest 0.2% Q3, same as Q2. 2019 growth forecast 1.1% v 1.8% 2018. So far dodging recession, partly thanks to French growth. But inflation fell to 0.7%, keeping alive deflationary fears.
— Andrew Neil (@afneil) October 31, 2019
The modest improvement may bode well for the UK’s economy ahead of its own GDP data for the period which is due to be released next month.
However, analysts at ING said that the months ahead may be tricky for the bloc, saying that while “recent news about global economic risks like the trade war and Brexit have been promising, downside risks remain for the moment”.
“If indeed those risks disappear, the question is how quickly this will impact export orders and confidence. That will be key to the growth outlook for 2020 and will determine whether the eurozone can escape unscathed or if the r-word remains in play.”
10.15am: Hong Kong enters first recession in a decade
Hong Kong has tumbled into recession for the first time in a decade as ongoing pro-democracy protests and the US-China trade war continue to pressure the Asian financial hub.
Data released by the Hong Kong government showed that in the three months to September the region’s economy shrank by 3.2%, while gross domestic product (GDP) had also fallen by 0.4% between April and June when the demonstrations began.
The protest movement, which began in opposition to a now withdrawn extradition bill but has since expanded to include demands for universal suffrage and investigations into police brutality, have involved sometimes violent clashes between demonstrators and police, the vandalising of pro-mainland Chinese businesses and the closure of many outlets including banks and retailers during demonstrations.
The gloomy state of the region’s economy is causing issues for large companies with operations in the city, with Asia-focused bank Standard Chartered PLC (LON:STAN) down 2.6% at 694.4p in mid-morning.
While the bank reported a 16% increase in underlying profits for its third quarter on Wednesday, it has also warned of “growing headwinds from the combination of continuing geopolitical tensions and expectations of declining near-term global growth and interest rates”.
Meanwhile, the FTSE 100 had kept on falling after its lower start and shortly after 10am had tumbled 78 points to 7,253.
The index has been weighed down by dismal results from some of its major constituents, particularly oil major Royal Dutch Shell PLC (LON:RDSB) which was top of the fallers list as its shares sank 3.9% to 2,232.5p following a 15% drop in third-quarter profits as a result of lower oil prices.
Weaker-than-expected economic data from China is weighing heavily on the miners as the country is one of the world’s largest importers of raw materials such as iron, coal and copper.
Equities also aren’t being helped by renewed strength in the pound as the UK’s election campaign gets underway, with sterling up 0.23% at US$1.2931 against the dollar in mid-morning trading.
8.40am: Footsie falters
Its weighting is such, that the 3.5% fall in the stock after disappointing third-quarter results was more than enough to keep the blue-chip index in the red.
The index of UK blue-chip shares fell 4 points early on to 7,327.13
If the Footsie’s move was more technical than sentiment-driven, then the underlying volumes traded early on (which were fairly lacklustre) revealed to the market’s mood.
There is unlikely to be any wild price fluctuations until a clear election victor starts to emerge as Boris Johnson and Jeremy Corbyn both hit the campaign trail, analysts said.
And with the prospect of an imminent ‘no-deal’ Brexit off the table, sterling was tracking back to the US$1.30 level.
This strengthening of the pound will no doubt erode interest in (as well as the translated revenues and earnings of) the major multi-nationals.
One of those is British Airways owner IAG (LON:IAG), whose quarterly numbers failed to pass muster. The shares were off 1.9% early on.
Lloyds (LON:LLOY) was also in the dog house after the banking group sustained another hit from those claiming compensation for being wrongly sold payment protection. The stock was off 2%.
Proactive news headlines:
Simec Atlantis Energy PLC (LON:SAE) has been chosen to supply tidal generation equipment and offshore construction services for a demonstration project in Japan. The Y1,800 (£13mln) project is in the straits of Naru Island and is being run by Kyuden Mirai Energy. Separately, Atlantis also announced it has completed the acquisition of the maintenance side of Scottish hydro business Green Highland Renewables for a nominal sum. And at Uskmouth, a waste-to-power project in Wales, Atlantis has also awarded the combustion system design and development contract to Japanese firm Mitsubishi Hitachi.
InnovaDerma PLC (LON:IDP) is set to launch a new category and brand in 800 Superdrug stores that could eventually generate sales of up to £80mln a year. The exact details are being kept under wraps until closer to launch date. However, the maker of the popular Skinny Tan range said it and the retailer’s efforts will be focused on the “topical side of the business”.
Oncimmune Holdings PLC (LON:ONC) said it had the potential to generate “material revenues in 2020 and beyond” after what’s been a pivotal year for the diagnostics specialist. In its annual results statement the developer of the EarlyCDT product used to detect cancer said it had “minimum sales commitments” of £42mln.
KRM22 PLC (LON:KRM) has signed up three new customers for its risk management software, boosting its annual recurring revenues to £4.3mln. The first new customer is a quantitative investment firm which will use the company’s market surveillance application, Irisium, to monitor market activity to increase transparency, integrity and confidence in their offering. KRM will also provide production services to assist the customer with daily alerts monitoring.
Block Energy PLC (LON:BLOE) has completed drilling its sidetrack well at West Rustavi in Georgia. WR-38Z went to a depth of 2,634m with a horizontal section of 646m into field’s primary oil-bearing Middle Eocene formation.
Genel Energy PLC (LON:GENL) has been notified that production on the Tawke licence will average around 120,000 barrels per day at the end of 2019 and to stay at that level into 2020. DNO is the operator of Tawke (in the Kurdistan Region of Iraq) while Genel has a 25% stake.
Crossword Cybersecurity PLC’s (LON:CCS) Rizikon security product is to be offered to customers of its larger rival, NCC Group PLC (LON:NCC), following a collaboration between the two firms. The Rizikon portal will be offered to NCC customers as part of its third-party cybersecurity audit service, making it easier for them to assess the risk of their suppliers and identify any vulnerabilities in the supply chain.
Thor Mining PLC (LON:THR) (ASX:THR) said it has recently begun talks with potential investors about a second of its projects and it also expects an initial resource estimate from the Bonya prospect in Australia before the end of the year. In its latest quarterly review, Thor’s executive chairman Mick Billing said management have started “cutting non-essential project and corporate expenditure in order to conserve cash resources” while it continued to carry out talks with investors about its core Molyhil project and now also with US investors about the Pilot Mountain project in Nevada.
Pembridge Resources PLC (LON:PERE) announced late on Tuesday that it has entered a convertible loan agreement with its chief executive and chairman Gati Al-Jebouri. The miner said it will immediately receive £1mln to be used for “general working capital purposes”, with the option to receive an extra £700,000 over the lender’s discretion, both at an annual interest rate of 8%.
European Metals Holdings Ltd (LON:EMH, ASX:EMH) said it believed the Czech state-owned power utility is close to completing due diligence before making its agreed investment in the company. EMH, which first announced agreement in July that could see CEZ Group become its largest shareholder and co-development partner for the Cinovec lithium tin project, also said it had A$1.03mln cash in the bank at the end of September.
AFC Energy (LON:AFC), the industrial fuel cell power company, confirmed it will be hosting a Shareholder Day on Friday the 6th of December 2019 commencing at 10:30am at Dunsfold Park, Surrey to showcase the operation of the Company’s new zero emission, hydrogen fuelled Electric Vehicle (EV) Charger unit. It said the Shareholder Day will be limited to 50 people and will incorporate a demonstration of the EV Charger at Dunsfold Park, home of the Top Gear track, followed by a 20-minute presentation updating shareholders on the company’s progress over recent months.
ITM Power (LON:ITM), the energy storage and clean fuel company, announced that Sir Roger Bone, an existing non-executive director of the company, will be appointed as its new chairman, replacing Professor Roger Putnam who has decided to retire from the role and will not stand for re-election at today’s AGM.
Anglo Pacific Group PLC (LON:APF) (TSX:APY) has announced the appointment of Jim Rutherford and Graeme Dacomb to its board as independent non-executive directors, with effect from November 1, and the retirement of David Archer, its senior independent non-executive director on the same day. The group noted that Dacomb was a partner at Ernst and Young for 26 years where, for his last twelve years, he was a lead partner in the extractive industry, responsible for coordinating the provision of a full suite of services to multinational mining and oil and gas clients. It added that Rutherford has over 25 years’ experience in investment banking and investment management and was a senior vice president of Capital International Investors for 16 years where he was responsible for investments in the mining and metals industry.
Nektan PLC (LON:NKTN), the fast-growing, award-winning international gaming technology platform and services provider, has announced the appointment of Novum Securities as its joint broker with immediate effect.
Eurasia Mining PLC (LON:EUA), the established producer of palladium, platinum, iridium, rhodium and gold, said it has received another notification from holders to exercise warrants over 18,766,668 shares for a consideration, in aggregate, of a cash value of £112,600. Christian Schaffalitzky, Eurasia Mining’s chairman commented: “We appreciate the continued interest and support from our shareholder base and the additional funds raised through the exercise of these warrants, which with further cashflow to be received in December from our mining operations, builds on our cash reserves, and strengthens our position in ongoing negotiations regarding our assets”.
6.45am: FTSE 100 set to open a ‘touch lower’
The FTSE 100 is expected to open a touch lower on Thursday morning as equities come under pressure from upward moves in the currency markets.
Spread-better IG expects the FTSE 100 to open down around 2 points after ending Wednesday’s session 24 points higher at 7,331.
Equities in London are struggling as the coming election and the diminishing prospect of a no-deal Brexit has put the pound on a positive trend and close to breaking the US$1.30 level. In early trading on Thursday, sterling was 0.15% higher at US$1.2921 against the dollar, with some additional lift provided by yet another interest rate cut from the Federal Reserve on Wednesday, although the central bank also signalled that this would be the last one for a while.
The Fed’s move helped drive US markets higher overnight, with the Dow closing up 0.43% while the S&P 500 climbed 0.33% and the Nasdaq rose 0.33%.
The Asian markets were similarly positive on Thursday, with the Japanese Nikkei 225 up 0.37% while Hong Kong’s Hang Seng jumped 0.9%.
One small snag was the Chinese economy, with manufacturing data for October showing that factory and nonmanufacturing activity grew at a weaker than expected pace during the month.
The Eurozone economy may also provide some gloomy reading, with GDP figures due later expected to show that GDP growth decelerated in the third quarter of the year.
And while there is some lingering optimism around a trade deal between the US and China, investors may have to wait a little longer following the cancellation of next month’s APEC summit in Chile, where Donald Trump and China’s president XI Jinping were scheduled to meet and possibly conclude an agreement.
Meanwhile, on the corporate front, Royal Dutch Shell PLC (LON:RDSB) investors will be seeing whether declining oil prices have caused misery for the oil major similar to that of its competitor BP PLC (LON:BP.), which on Tuesday saw its third-quarter profits slump 39%.
Goldman Sachs, however, is optimistic, saying that the firm offers “one of the strongest cash returns to shareholders” with a c.6% dividend yield paid in cash.
Analysts at the US investment bank added that Shell’s investment in the middle east and north Africa, with new concessions off the coast of Egypt due to begin exploration in 2020, has potential to grow the company, but may also have exposed it to short term security risks.
Significant events on Thursday 31 October:
Trading statement: BT Group PLC (LON:BT.A), Elementis plc (LON:ELM), Hilton Food Group PLC (LON:HFG), International Consolidated Airlines Group PLC (LON:IAG), International Personal Finance PLC (LON:IPF), Lloyds Banking Group PLC (LON:LLOY), Royal Dutch Shell PLC (LON:RDSA), Smith & Nephew PLC (LON:SN.)
Economic announcements: GfK consumer confidence, EU GDP, EU inflation, US jobless claims
Around the markets:
Sterling: US$1.2921, up 0.15%
Brent crude: US$60.42 a barrel, up 0.3%
Gold: US$1,497.4 an ounce, up 0.7%
Bitcoin: US$9,126.2, down 1%
Another fund, £253 million Income Focus Fund, once run by disgraced manager Neil Woodford could be shut down – putting its investors at risk of huge losses – Telegraph
EU antitrust chief Margrethe Vestager is considering higher standards of proof for large internet companies in competition cases as part of changes to EU rules – Financial Times
The number of cars built in Britain fell again in September amid a slowdown in global demand and political uncertainty – Times
Boris Johnson has signalled he could ban fracking following years of protests over the controversial gas extraction technique – Telegraph
Partner pay at Grant Thornton has slumped and it has delayed publishing its accounts, as the UK’s sixth-largest accounting firm attempts to recover from a difficult year – FT
The government must urgently examine alternatives to business rates instead of “sticking plasters” on a system in need of reform, a group of MPs has warned – Times