FTSE 100 ends down 37 points
US stocks weak after 3M shocker
RELX defies the trend after reassuring AGM update
Gold trading at US$1,283.00 an ounce, up US$3.60 (click here)
Close: Footsie falls
The FTSE 100 index closed 37.62 points, or 0.5% lower at 7,434.13, albeit above the session low of 7,405.99 as US stocks continued to post big falls on Thursday.
The US blue chips were weighed by some disappointing earnings reports, notably from 3M Co., but came off earlier triple digit lows, although the tech-laden Nasdaq managed gains helped by upbeat after-earnings reports yesterday from the likes of Microsoft Corp.
Chris Beauchamp, Chief Market Analyst at IG commented: "Microsoft has topped $1 trillion in valuation, and durable goods orders rebounded strongly in March according to today’s figures, helping to counter the sudden jump in US jobless claims. But with the figure still close to a half-century low, this small turnaround should not yet concern investors. US markets are struggling, but outside of the Dow, weighed down by 3M’s numbers, the losses are relatively contained."
2.45pm: US stocks open sharply lower
The FTSE 100 has spent most of the afternoon heading south, not helped by a weak opening by US stocks.
The Footsie was down 43 points (0.6%) at 7,429.
In the US, the Dow Jones industrial average was down 28 points (0.8%) at 26,379 while the S&P 500 was off 6.9 points (0.2%) at 2,920.
US sentiment was not boosted by glamour stock Tesla missing the market's forecasts with its first quarter update.
“The immediate pressure may be off, now that Tesla has repaid US$1.1 billion in convertible bonds that matured in November and March, but Elon Musk and his colleagues face another $566 million repayment this coming November, even as the company continues to consume cash rather than generate it,” said Russ Mould, AJ Bell's investment director.
“The debate over whether the firm needs to raise fresh capital is therefore not going to go away. Given the loyal band of shareholders he has and the company’s massive market capitalisation it would make sense for Mr Musk to do so,” Mould suggested.
The latest batch of 50,000 shares was purchased at an average price of 4,038.53p; the shares currently trade at 4,049p, up 49p.
The shares were up 0.5% at 1,739.5p after the company left its full-year outlook unchanged.
1.30pm: Investors shrug off upbeat CBI Distributive Trades Survey
The FTSE 100's revival ran out of puff in the afternoon session despite some halfway decent macroeconomic news.
The top shares index was down 39 points (0.5%) at 7,433, with investors paying little heed to the CBI's survey on consumer spending or the National Institute for Social & Economic Research's (NIESR) prediction of an acceleration in growth for the UK economy.
“The CBI distributive trades survey points to healthy retail sales over the first half of April and end of March (the survey was carried out 28 March – 16 April),” reported Howard Archer, the chief economic advisor to the EY ITEM Club.
“Specifically, the balance of retailers reporting year-on-year growth in sales volumes rose markedly to a five-month high of +13% in April, having fallen sharply to a 17-month low of -18% in March from 0% in both February and January.
“Sales in April were reported to be above average for the time of year. They were clearly helped by the later Easter this year compared to 2018,” Dr Archer added.
“Retailers are upbeat about prospect for sales in May with a balance of +23% expecting sales volumes to be up year-on-year,” he noted.
Meanwhile, the NIESR has predicted Britain’s growth rate will bounce back above 1.5% next year, based on increased government spending and a “soft” Brexit.
Elsewhere, Anthony Rayner, a fund manager at asset management firm Miton, says markets are currently discounting better times.
“Looking across asset classes year to date, the real action has been in quite specific areas. US Treasuries and gold are just about where they started the year, holding their own in a period characterised by a preference for risk-on assets,” Rayner said.
“Cyclicals have outperformed defensive sectors materially in the US and Europe in April, a trend which has been in place for much of this year, particularly in the US.
“After such a strong rally in risk assets this year, markets are clearly pricing in better times, but whether they will be proved right is a different matter. We believe the better economic data has some momentum to it, though there are some conflicting data, so the evolving corporate earnings season and particularly the forward-looking commentary will provide some much needed bottom-up colour,” Rayner said.
The stock plummeted from 727p to 576.5p earlier this month when it warned on profits but today saw it give up a further 10.5p at 528p, despite its regeneration division being selected by selected by Enfield Council to build the first 725 homes at the £6 billion Meridian Water development in the Lea Valley.
Wonderful news for #Enfield as Galliford Try Partnerships @gtpartnerships announced as developers to bring 725 new #homes in the first phase of the @MeridianWater #regeneration project. https://t.co/sQbgcamEOB— Enfield Council (@EnfieldCouncil) April 25, 2019
11.30am: News flow works against the Footsie
The FTSE 100 was crawling back towards parity but was being done no favours by corporate news flow.
Sainsbury's remained down in the dumps following the collapse of its merger deal while Taylor Wimpey led the housebuilding sector lower in the wake of its downbeat trading update and this morning's hose price data from Hometrack.
Hometrack's UK Cities House Price Index for March indicated house prices were just 1.7% higher year-on-year, slowing from February's 1.8% annual gain.
The year-on-year gain was the lowest since May 2012.
Sales volumes in southern cities are 13% lower than in 2015, Hometrack reported.
“The weakest rate of house price growth in just over six years demonstrates the current difficulties faced by many residing and selling in our major cities,” said Marc von Grundherr, a director of Benham and Reeves.
“City living will always command a higher price premium and while these markets are more susceptible to the influences of Brexit doom and gloom at present, they will also be the first to see a sharp revival,” he predicted.
READ Barclays swings to quarterly profit but under-pressure investment bank hit by 'challenging markets'
“These are [sic] a messy set of results, the non-recurrence of massive conduct charges has boosted reported numbers, while one-off write backs in US loans are negatively impacting the underlying figures. Sweep all that aside though and eyes will focus on the poor results from the investment bank,” said Nicholas Hyett, an equity analyst at Hargreaves Lansdowne.
“A poor result from the investment bank isn’t a great surprise, international rivals have flagged pretty tough conditions across the market and Barclays is keen to point to a growing share of global banking fees, but despite a better than expected result in fixed income trading, today’s numbers will do little to take the pressure from activist Edward Bramson off the board. Still, the troubles in the investment bank shouldn’t distract investors from the rising pressures in the UK business – particularly margin pressure in mortgages,” Hyett added.
Shares in Barclays were down 2.3%.
9.45am: Modest rally in progress
The FTSE 100 was rallying moderately in mid-morning trading, although mining and housebuilding stocks continued to weight the index down.
The index of heavyweight shares was down 39 points (0.5%) at 7,432 – around 20 points above its low point for the day.
8.40am: Footsie drops at open
The FTSE 100 defied the early forecasts of a positive open to fall 49 points to 7,422.76.
The downward pull exerted by Wall Street and mixed sessions in Asia put paid to any thoughts of an immediate rebound from Wednesday’s bout of profit-taking.
“The Footsie has again slipped and seems intent on breaking 7,400 on the downside before it looks at 7,500 again,” said Market.com’s Neil Wilson with his technical analyst’s hat on.
There was no doubting the day’s big corporate story – the UK competition watchdog’s rejection of Asda and Sainsbury’s (LON:SBRY) planned nuptials.
While the regulatory rebuff was widely anticipated, the market reacted by wiping 5% from the value of Sainsbury, which, had the merger gone ahead, would have leapfrogged Tesco (LON:TSCO), to become the UK’s largest grocer.
“Confirmation that the competition watchdog has blocked Sainsbury’s planned merger with Walmart-owned Asda will surprise no-one after its forthright interim report in March made clear its deep reservations about the deal,” said Tom Stevenson, investment director at City investment firm Fidelity.
A share sale by a major holder of stock forced Legal & General (LON:LGEN) 5% lower, while Barclays (LON:BARC), the first of the banks to report quarterly figures, dropped 1.4%. Royal Bank of Scotland (LON:RBS) was off 1.5% ahead its update on Friday.
Proactive news headlines:
Sirius Minerals PLC (LON:SXX) has revealed its latest sales agreement for its new mine in Yorkshire with BayWa AG, a European agribusiness, signing a ten year deal. Through the deal, which is expected to ramp up over the term, BayWa will receive a minimum of 2.5mln tonnes of polyhalite fertiliser per year by year five.
Silence Therapeutics, PLC (LON:SLN) has appointed Iain Ross as a non-executive director and its chairman with immediate effect, with the experienced director returning to a role he held from 2005 to 2010.
Anglo Pacific Group PLC (LON:APF, TSX: APY), the mining royalty company, continues to see meaningful revenue growth in 2019, having notched up another record quarter.
Falcon Oil & Gas PLC (LON:FOG) boasted a strong financial position ahead of new well drilling programme, due to start in June. The company highlighted that it had US$6.9mln of cash and it was debt free. It added that the company has continued to focus on strict cost management, and, efficient operation of the portfolio. General and admin expenses decreased US$1.91mln.
NetScientific PLC (LON:NSCI) said it has accepted today the resignation of François Martelet as its CEO, who will depart on 30 April 2019 in accordance with the terms of his service agreement. The group noted that Martelet has resigned to assist the company in reducing its central costs and to pursue other career opportunities. It added that Ian Postlethwaite, currently Netscientific’s CFO and company secretary will henceforth combine these roles with that of CEO.
6.45am: FTSE 100 set to rally
The FTSE 100 index is expected to recover slightly on Thursday following falls in the previous session as mixed Asian markets countered weakness overnight in US stocks, while sterling was a touch easier.
Spread betting firm IG expects the blue-chip index to open around 9 points higher at 7,480 having shed 51 points on Wednesday.
Overnight on Wall Street, the Dow Jones industrial Average closed 59 points, or 0.2% lower at 26,597 after weak data from Germany and Korea revived global growth concerns ahead of US GDP first quarter numbers due on Friday.
In Asia today, Hong Kong’s Hang Seng index was 0.1% lower amid worries over the global growth outlook. But Japan’s Nikkei 225 index gained 0.5% boosted by a weaker yen, which lifted exporters, as the Bank of Japan said it would keep interest rates very low at least until early 2020.
Elsewhere on currency markets, the pound was cautious against the US dollar and the euro as traders await the next twists in the Brexit saga, with the latest CBI distributive trades survey the only domestic economic data of import due today.
Sterling also slipped as the NIESR economic think-tank predicted that the Bank of England will refrain from raising UK interest rates until August 2020.
Barclays kicks off banking results
The UK banking sector’s first-quarter results season kicks off on Thursday with trading news from Barclays (LON:BARC), with the lender needing to prove the turnaround plan for its investment bank is on track.
Activist investor Edward Bramson, whose vehicle owns a 5.5% stake in Barclays, wants to see its investment bank scaled back and the focus switched to other less risky parts of the business.
But Barclays has said it plans to improve the performance of the division rather than cut it back, prompting Bramson to request a seat on the group’s board to push his agenda.
In February, the lender hit back at Bramson by reporting a 15% increase in profit at the investment bank.
The time out, Jefferies International expects Barclays to report overall pre-tax profit of £1.5bn for the first quarter, compared to a £236mln loss a year earlier when the bank had to pay US$2bn to settle a lawsuit in the US over the sale of mortgage-backed securities.
It estimates broadly flat total income of £5.4bn with the investment bank falling to £2.4bn income from £2.8bn last.
D-Day for Sainsbury’s/Asda
In February, the UK Competition and Markets Authority suggested it was leaning towards rejecting the merger after provisional findings of its investigation raised “extensive competition concerns”.
Concerns included higher food and petrol prices in markets where both companies have supermarkets and petrol stations, as well as reduced quality and choice for customers.
To alleviate the CMA’s worries, the companies agreed to sell up to 150 supermarkets, several convenience stores and a “sufficient number” of petrol stations.
They also promised to slash prices by £1bn each year by the third year after completing the merger.
However, many analysts predict the CMA will still block the deal.
Significant events expected on Thursday April 25:
Trading updates: Barclays PLC (Q1) (LON:BARC), Taylor Wimpey PLC (LON:TW.), Meggitt PLC (LON:MGGT), RELX (LON:RELX), Anglo American PLC (LON:AAL), KAZ Minerals PLC (LON:KAZ), Acacia Mining PLC (LON:ACA), Synthomer PLC (LON:SYNT)
Interims: RDI REIT PLC (LON:RDI)
Ex-dividends to knock 7.66 points off FTSE 100 index: Antofagasta PLC (LON:ANTO), Fresnillo plc (LON:FRES), Glencore PLC (LON:GLEN), Informa PLC (LON:INF), Legal & General Group PLC (LON:LGEN), Spirax-Sarco Engineering PLC (LON:SPX)
Economic data: UK BBA mortgage lending figures; CBI distributive trades survey; US weekly jobless claims; US durable goods orders
Around the markets:
- Sterling: US$1.2902, down 0.1%
- Gold: US$1,193.71 an ounce, down 0.1%
- Brent crude: US$74.65 a barrel, up 0.1%
- Facebook's quarterly net income plunged 51% since the same period last year after admitting that it expects to pay up to $5bn to US regulators over its role in the Cambridge Analytica scandal - The Daily Telegraph
- Microsoft comfortably beat market expectations last night with a 19% jump in profit to $8.8bn as its commercial cloud business grew to $9.6bn - The Times
- Tesla registered one of its worst losses on record yesterday potentially dashing hopes that the company had turned a corner - The Times
- US justice department is pushing Goldman Sachs to include a guilty plea at the parent company level in a settlement over its role in the multibillion-dollar 1MDB corruption scandal – Financial Times
- Credit Suisse’ wealth arm attracted SFR 9.6bn(£7.3bn) of new money in the first quarter, despite its arch rival UBS warning that the start of this year was one of the "worst" periods in recent history. - The Daily Telegraph
- The boss of HSBC has declared that “the future is bright” for Saudi Arabia, only months after withdrawing from a conference in the kingdom over the killing of Jamal Khashoggi - The Times
- Cafe Rouge owner Casual Dining Group has appointed operations head James Spragg as its new boss - The Daily Telegraph
- Embattled carmaker Nissan issued a second profit warning in two months as it grapples with the weak sales in the US and fallout from the ousting of ex-boss Carlos Ghosn - Financial Times
- GlaxoSmithKline may face a shareholder rebellion after advisory group Glass Lewis told investors to reject the company's remuneration policy at its forthcoming annual meeting - The Daily Telegraph
- Interserve’s finance chief Mark Whiteling is standing down just weeks after the struggling government contractor’s contentious rescue deal - The Daily Telegraph