logo-loader

FTSE 100 closes higher, supported by gains in oil giants as crude prices rise

Last updated: 02:30 07 Aug 2018 AEST, First published: 15:36 06 Aug 2018 AEST

FTSE 100 sign
  • FTSE 100 ends up 4.68 points

  • Dow Jones higher around midday

  • BP, Shell gain on crude strength

  • HSBC weak after mixed results

 

5.30pm: Footsie finishes marginally ahead

The FTSE 100 index ticked higher on Monday as energy stocks tracked rising oil prices, while HSBC PLC (LON:HSBA) fell after its earnings update failed to impress.

At the close, the UK blue chip index was 4.68 points higher at 7,663.78, just below the session peak of 7,681.86, having recovered from a low of 7,636.60.

Chris Beauchamp, chief market analyst at IG, commented: “A late recovery has seen the FTSE 100 tiptoe into positive territory today, while oil prices are spiking on Iran tensions. It has been a classic August session today, as silly season gets into its stride.”

On Wall Street, around midday, the Dow Jones Industrials was up around 64 points at 25,526, with both the broader S&P 500 index and tech-laden Nasdaq composite also higher.

He added: “A general sense of ennui with earnings season has set it in over in the US as most of the really block-bluster names are done and dusted, but we have seen Facebook shares do well in early trading, as the dip buyers continue to push back into the frame.

“On the flip side, oil prices have been given a lift as the US turns up the heat on Iran. It’s hard to know what the end-game is here, whether Trump is going for full-on regime change or just a push to get the Iranians to negotiate.

“But with protests in Tehran hotting up the Iranian government may find itself having to respond in kind, which would provide yet another boost to Brent and WTI.”

In London, the Footsie was helped by strength in heavyweight oil companies, with BP PLC (LON:BP.) and Royal Dutch Shell PLC (LON:RDSA) up 1.% and 0.6% respectively as crude prices rose, helped too by Saudi crude production registering a surprising dip in July.

But miners were weak spot as copper prices fell for a third session in four, and HSBC fell 1% following mixed results.

Europe’s biggest bank posted only a small rise in first-half pre-tax profit, as rising expenses from investments in a new growth strategy and a US$765mln settlement for alleged mis-selling of US mortgage-backed securities ate into higher revenues.

3.30pm: FTSE 100 set to finish lower, trade trouble and ‘no deal’ Brexit loom

Still by no means a heavy day, but, the FTSE 100 lowered further towards Monday’s close.

Standing at 7,647 the index was down 11 points or 0.15%.

In New York, there was mixed trading. The Dow Jones gave up over 70 points, down 0.29%, changing hands at 25,389.

The S&P 500 and Nasdaq, meanwhile, both moved positively - if only slightly – at 2,842 and 7,822 respectively.

“Though the Western markets were almost uniformly in the red, the day’s real loser was the pound,” said Connor Campbell, analyst at Spreadex.

“Plunging half a percent against the dollar – cable is at a fresh 11 month low – and 0.3% against the euro, sterling was spooked by the apparent increase in likelihood of a ‘no-deal’ Brexit, with international trade secretary Liam Fox echoing Mark Carney’s claims last week that the chances of the UK leaving the EU without an agreement in place is becoming more and more of a reality.”

“While the pound’s plight did limit the FTSE’s own decline, it wasn’t completely immune to the malaise seen by its peers.”

1:30pm: FTSE 100 continues to meander, but trade trouble and ‘no deal’ Brexit loom

To call it a volatile day would certainly be hyperbole, nonetheless the FTSE 100 turned back into negative ground through the early afternoon’s deals.

Standing at 7,655 the London index was down about 4 points or 0.057%.

Over in New York, all three major benchmarks were indicated higher in pre-market – albeit not by much.

1:00pm: UK investors look to US tech investments

It probably doesn’t take too much of a deep dive analysis to figure out the trends and drivers behind statistics showing that UK investors are preferring options abroad.

Many ‘top picks’ were last month made in the United States and specifically in the technology sector, that’s according to online investment platform  Interactive Investor.

“July proved to be another volatile month for markets, as the global trade war intensified, and earnings season delivered some surprising results, causing huge swings on both the upside and downside for individual stocks and sectors,” said Rebecca O’Keeffe, ii’s head of investment.

“However, in terms of geography, the US market was, yet again, the place to invest during July.

“The S&P delivered a 3.7% return and, despite some shock results, the Nasdaq put in a positive performance, rising 2.2%.”

12:20pm: FTSE 100 turns into positive territory, but trade trouble and ‘no deal’ Brexit loom

The FTSE 100 had turned into positive territory by lunchtime, with the London index up 5 points or 0.06% at 7,665.

Whilst it’s a seasonally quiet day, it’s not the most enthusiastic time for investors. There’s time for the market to be consumed by the bigger picture problems.

“Trade concerns continue to buffet market sentiment, with the US and China taking turns to threaten further tariffs,” said Mike van Dulken, analyst at Accendo.

“Fresh GBP weakness is a help, a product of both a possible no-deal Brexit and USD strength, itself derived from an safe haven seeking (world reserve currency), the Fed hiking and China's renminbi weakening.”

Connor Campbell, analyst at Spreadex, meanwhile, looked more closely at the apparent higher risk of a ‘no deal’ Brexit.

“There was a fairly obvious reason why the FTSE managed to flip from a 10 point drop to a similarly-sized rise: the pound’s latest plunge.

“Echoing Mark Carney’s comments from last Friday, Liam Fox’s claim that a no-deal Brexit was now the likelier outcome spooked sterling, the currency not comforted by ‘sources’ stating Theresa May is confident an agreement will be reached.”

The analyst added that the Wall Street diary and futures trading suggested a quit day could be expected, in Campbell’s words the US market “doesn’t appear particularly interested in getting involved”.

10:45am: FTSE 100 edges lower at international trade distracts, again

The FTSE 100 edged lower as the morning’s deals advanced, investor sentiments continue to be focused on international trade.

Standing at 7,639 the London index was down 19 points or 0.25%.

An odd stock story aside - such as HSBC or IWG for example - it has been a fairly uneventful morning in the market, which leaves investor attention free to drift to macro matters, specifically, the currently contentious international trade environment.

“A quiet start to trade today has seen markets calm down after a week of hugely significant central bank, economic, and corporate earnings,” said Joshua Mahony, analyst at IG Markets.

“On a day which is largely devoid of top tier economic releases, the focus once again turns to global trade, with the Chinese announcement of another $60 billion of US imports to be targeted with fresh tariffs.

“While this trade war appears be showing no signs of letting up, we have now seen the lion’s share of all trade between the two countries targeted with tariffs. Soon enough, something must give, and with the Chinese exports to the US far outweighing imports, any such breakthrough is likely to come from the Chinese side.” 

10:15am: UK new car sales improved in July

Economists will be encouraged, if only a very little bit, about the apparent positivity among car buyers during the month of July.

After falling in June, last month’s measure of new car sales increased by 1.2%.

“While there had been a drop of 3.5% year-on-year in June, this was the third increase in the past four months as there had been gains in both May (up 3.4%) and April (up 10.4%).  Prior to April, car sales had fallen year-on-year for 12 months running,” said Howard Archer, economist at EY.

“Nevertheless, new car sales were down 5.5% year-on-year over the first seven months of 2018 at 1,563,808 units.”

9:45am: All about trade as FTSE 100 outperforms European stocks

As Trump, trade and tariffs all remain among the key talking points in across Europe’s equity markets, investors may be fairly content with the FTSE 100's otherwise indifferent start to Monday’s dealing.

Changing hands at 7,659, the London index was ever so slightly in positive territory, up 0.01%.

In Europe, the Dax was off 0.42% amid rising trade anxiety for German investors.

“After attempting a rebound last Friday, the European markets started the week in the red, a trade war-led drop in German factory orders spooking investors,” said Connor Campbell, analyst at Spreadex.

“Plunging 4% in June – the sharpest decline for nearly 18 months – the German factory orders set the tone for the day, with the DAX falling more than half a percent following the release.”

Whether or not Donald Trump is winning his ‘trade war’ in Europe, the generally more pertinent issue for UK investors is the state of Britain’s trading position with the continent as the months countdown to Brexit.

That is among the main factors for the pound, which in turn is among the main reasons moving the FTSE 100 and its largely dollar-earning multinational constituents.

Today, the pound was down 0.32% at US$1.2960.

Over the weekend, UK trade secretary Liam Fox claimed there was now a greater chance of a ‘no deal’ Brexit because of the ‘intransigence’ of the European Commission.

8.45am: Sideways start

The FTSE 100 traded sideways in early trade, ignoring the positive start to the week in Asia and a strong finish Friday on Wall Street as it edged down 4 points to 7,655.16.

The morning’s biggest casualty, off 2.3%, was the delivery group Just East (LON:JE.).

Haunting the stock were competition fears – specifically a report from one national newspaper that rival Deliveroo is expanding its network of delivery-only staging posts for restaurant partners.

HSBC Holdings (LON:HSBA) was the last of the banks to report. A modest earnings beat wasn’t enough to excite traders as the stock was marked down 1% early on.

Of more interest possibly was the spat between investors in the bank over its capital structure.

Moving down a division to the FTSE 250, shares in the inter-dealer broker TP Icap (LON:TCAP) were up 4% after an upgrade from Peel Hunt, which moved to ‘buy’ from ‘reduce’ on the stock.

Proactive news headlines:

Solo Oil PLC (LON:SOLO) has raised £2.41mln of new capital and could raise up to £1.2mln more, as the group looks to strengthen its hand at the negotiating table. The company is a stakeholder in successful projects in Tanzania and onshore UK, and, as it works to ‘realise shareholder value’ from these key assets, it believes new cash calls are likely.

Metal Tiger PLC (LON:MTR) has received a boost from the latest assay results from the company’s joint venture project with MOD Resources Ltd (ASX:MOD) in Botswana, which sent MOD's shares Australia surging 13.6% In Australia. Metal Tiger also announced plans to raise at least £4.6mln through the issue of shares at 2.8p.

IP group Tekcapital PLC (LON:TEK) has been invited to give a master class at the Marketing and Technology Transfer Hub for the Americas in Santiago, Chile on 6 September. The event is a high-level training programme aimed at entrepreneurs and technology transfer professionals in the Latin American region.

Symphony Environmental Technologies PLC (LON:SYM) has reported solid revenue growth in the first half of the year as its d2p anti-microbial plastic products began to contribute to its balance sheet.

Arix Bioscience PLC (LON:ARIX) has made its first investment in an already-public-listed company. The life science investment group is to take an 11% interest in ASX-quoted Pharmaxis (ASX:PXS), which is developing treatments for inflammation and fibrosis.

Frontier IP Group PLC (LON:FIPP) said its portfolio company, Fieldwork Robotics, has entered into a collaboration agreement with UK soft-fruit grower Hall Hunter Partnership to test a raspberry harvesting robot.

Flying Brands Ltd (LON:FBDU) has appointed a senior executive who has a track record of business development to its oversee its main operating subsidiaries. David Smith, a 30-year veteran of the life sciences industry, has been named chief operating officer and chief executive of StoneChecker Software and Imaging Biometrics.

Range Resources Ltd (LON:RRL) has told investors that its well services subsidiary has landed a new contract. Range Resources Drilling Services Limited (RRDSL) is now to provide turnkey services to Touchstone Exploration Inc (LON:TXP, TSE:TXP) for one initial well, which will be drilled using RRDSL’s rig 17 which has now been mobilized.

Vast Resources PLC (LON:VAST) believes it is nearing an important administrative milestone in Romania. In a stock market statement, Vast told investors that the company’s 80% owned AFCR subsidiary, alongside its state-backed partner, has now submitted a joint formal application to Romania’s National Agency for Mineral Resources for an association licence.

Kibo Energy PLC (LON:KIBO) said it had completed the second phase of the school building and upgrade programme at the villages of Mheza and Namkukwe, near the Mbeya Coal to Power Project in the Songwe region of south-western Tanzania.

Itaconix PLC (LON:ITX), which is rebasing to the US, said chief financial officer Robin Cridland will leave the company at the end of August.

OptiBiotix Health PLC (LON:OPTI), a life sciences business developing compounds to tackle obesity, high cholesterol, diabetes and skin care, announced that, subject to the completion of normal regulatory due diligence, Sean Christie will be appointed as a non-executive director of the company. The firm said Christie has a wealth of international experience in the food, ingredient and chemical sectors as finance director of Northern Foods PLC and Croda PLC (LON:CRDA).

Be Heard Group PLC (LON:BHRD), the digital marketing services group, announced that Rakhi Goss-Custard, a non-executive director, will be stepping down from the board on Monday, August 20th.

Thor Mining PLC (LON:THR) (ASX:THR)  announced the appointment of Northland Capital Partners Limited as joint broker to the company alongside SI Capital Ltd.

6.45am: Bright start predicted

The FTSE 100 index is expected to extend last Friday’s rally in early trade on Monday, tracking gains by Asian markets following a pre-weekend advance on Wall Street, helped by above-forecast profits from banking giant HSBC PLC (LON:HSBA).

Spread betting firm IG expects the bluechip index to open up by around 24 points at 7,683 having gained around 83 points last Friday which was a recovery after sharp falls in the previous session when the Bank of England hiked UK interest rates.

Pre-weekend on Wall Street, the Dow Jones Industrials closed up over 136 points at 25,462 as upbeat corporate earnings offset a weak US payrolls report and worries over President Trump's trade war escalations.

Today in Asia, markets were also positive, supported by moves by the People's Bank Of China to raise reserve requirements to protect its currency, although the ongoing US-China trade war capped gains - Hong Kong's Hang Seng index gained 1.3%, while Tokyo's Nikkei 225 edged up 0.4%.

On currency markets, the pound remained weaker against both the dollar and the euro as last week's BoE rate move was seen as unlikely to be followed up again soon and worries over the lack of a Brexit deal dominated.

HSBC beats estimates

On the corporate front, Monday sees the curtain come down on the UK bank’s latest reporting season, with HSBC PLC (LON:HSBA) unveiling its interim results this morning.

The London and Hong Kong-listed lender saw its pre-tax profit rise by 4.6% to US$10.7mln (£8.23mln) for the six months to June 30, up from US$10.2mln a year earlier, showing a continuing return to growth after years of restructuring.

HSBC's second quarter pre-tax of US$5.96mln also beat the consensus forecast for US$5.79mln, with the bank's new CEO John Flint saying the group continued to benefit from a positive interest rate environment.

Despite the banks bowing out, there will still be a financial flavour to the rest of this week’s corporate diary, however, with insurers Prudential PLC (LON:PRU), Legal & General Group PLC (LON:LGEN), and merged fund manager Standard Life Aberdeen PLC (LON:SLA) joining HSBC on the results docket.

Significant announcements expected on Monday August 6:

Interims: HSBC Holdings PLC (LON:HSBA), Fidessa Group PLC (LON:FDSA), Ultra Electronic Holdings PLC (LON:ULE), SDL PLC (LON:SDL), Synthomer PLC (LON:SYNTS)

Finals: Omega Diagnostics Group PLC (LON:ODX)

AGM: Solo Oil (SOLO)

Traffic numbers: Wizz Air PLC (LON:WIZZ)

Around the markets:

  • Sterling: US$1.2990, down 0.1%
  • Gold: US$1,214.20 an ounce, unchanged
  • Brent crude: US$68.28 a barrel, up 0.4%

City Headlines:

  • HSBC first-half pre-tax profit rises 4.6%, second quarter beats estimates - Reuters
  • HSBC has become the latest big bank to push back against investors in a dispute over legacy capital instruments – Financial Times
  • Centrica, Britain's biggest energy provider, is taking its smart electricity drive to the electric car charging sector to fuel recovery - - Daily Telegraph
  • William Hill is in talks with a US casino giant about a tie-up that would give the British bookmaker a greater share of a potentially multibillion-dollar sports betting market – Sunday Times
  • Sports Direct billionaire Mike Ashley is unlikely to proceed with a rescue deal for House of Fraser because of its pension funds, leaving the struggling department store chain on the brink - Sunday Times
  • House of Fraser's hopes of rescue boosted as landlords call off legal action – The Guardian
  • Standard Life Aberdeen, which controls £655bn of assets, is trying to convince FTSE 100 and FTSE 250 companies to consider appointing a player outside of the Big Four, claiming they have been prioritising their profits ahead of making the best professional judgments – The Times
  • Deliveroo is expanding its network of 'super kitchens' across the UK as it takes the fight to its bigger rival Just Eat. – Daily Mail
  • BMW, the owner of Rolls-Royce cars and Mini, is said to be searching for land in southeast England to store key parts, as the carmaking industry braces for Brexit disruption in March – The Times
  • Virgin awarded almost £2bn of NHS contracts in the past five years – The Guardian
  • Blue Skies, a supplier of fresh cut mango, pineapple and tropical fruit juices to the likes of Sainsbury’s and Asda, saw its profits slump due to the weak pound despite revenue smashing through the £100mln mark last year – Daily Telegraph
  • Troubled payday lender Wonga is saved from insolvency by a £10mln bailout from its investors – Mail on Sunday
  • Sir Martin Sorrell is struggling to attract board members for his new venture, S4 Capital, amid his ongoing row with WPP – Mail on Sunday
  • City tycoon Michael Spencer has replaced ex-Numis boss Oliver Hemsley as chairman of investment firm FCFM after snapping up more than 90% of the group’s shares – Daily Telegraph
  • A leading UK investor Sarasin & Partners has asked the world’s biggest oil companies to reveal the full risk they face should demand of crude peak. – Financial Times
  • A record number of private equity and hedge funds have dissolved in China in recent months as new regulations limit their fundraising – Daily Telegraph

Australian Strategic Materials signs US$600 million LoI

Rowena Smith, CEO and managing director of Australian Strategic Materials Ltd (ASX:ASM, OTC:ASMMF), joins Jonathan Jackson in the Proactive studio to discuss the company’ s Dubbo Project, in Central West New South Wales. This project aims to extract and process critical minerals and rare earth...

9 hours, 3 minutes ago