FTSE 100 closes higher - just
London listed miners struggle on trade worries
Trump vs China tariff war escalates
FTSE 100 closed in the black but only just, having spent most of the day in the red.
Traders are jittery to say the least about the intensifying trade dispute between the US and China.
The blue-chip benchmark closed up around three points at 7,034, with the big cap miners lagging.
The FTSE 250 was firmly in the red though, down 133 points at 19,264.
"China retaliated to the US decision to introduce a 25% tariff on $50 billion worth of Chinese imports by blacklisting over 100 US products worth the same amount including soybeans, chemicals and US cars," said Fiona Cincotta, analyst at City Index.
"Interestingly, both sides left the starting day open. China’s finance ministry which made the announcement did not mention when the tariffs will take effect. US companies can oppose the decision until 25 May."
Neil Wilson, at etxcapital added: "The market seems to be taking on a split personality; down heavily one day only to rally firmly the next as investors seem intent on overreacting to bad news and good news in equal measure."
Mining stocks were worst hit on fears about China’s metal imports. China is the biggest global buyer of metals and accounts for almost a half of the demand for most of the major metals.
2:45pm: FTSE 100 avoids panic as Wall Street stocks open sharply lower
Wall Street stocks have, as expected, made a dour start to Wednesday’s session with the Dow Jones giving up around 500 points or 2% in opening deals.
After the first moments, the benchmark was down 452 points or 1.88% changing hands at 23,580.
The S&P 500 shed 34 points or 1.3% to trade at 2,579 in the moments after the bell, whereas the Nasdaq was 95 points or 1.29% lower at 6,852.
President Trump, with his Twitter account, didn’t strike a reconciliatory or diplomatic tone. It is perhaps unsurprising that the market is pricing in further volatility through the trade spat with China.
We are not in a trade war with China, that war was lost many years ago by the foolish, or incompetent, people who represented the U.S. Now we have a Trade Deficit of $500 Billion a year, with Intellectual Property Theft of another $300 Billion. We cannot let this continue!— Donald J. Trump (@realDonaldTrump) April 4, 2018
When you’re already $500 Billion DOWN, you can’t lose!— Donald J. Trump (@realDonaldTrump) April 4, 2018
Back in London, the FTSE 100 stood at 7,008 - down 22 points or 0.32%.
Here, the so-called trade war is hitting mining and natural resource stocks hardest with industry giants BHP Billiton and Rio Tinto both giving up over 3% today.
2:30pm: Bitcoin and Ethereum traders aren’t insulated from the sell-off
Cryptocurrency traders were not excluded from the wave of negativity that’s swept through Wednesday, as bulls ran out of steam and the price rally in Bitcoin tapered off.
Bitcoin slumped US$335 or 4.53% to US$7,081 while Ethereum was weaker still, down US$28.77 or 6.91% to US$388.05. Elsewhere, the Ripple XRP token was off 5% at 51.19 cents.
The crypto markets have just marked their worst first quarter in their (comparatively short) history.
A continuing tightening of regulations and other third party censures, coming from the likes of Google and Facebook, has crimped some of the appetite for the major digital currencies which were soaring in value just a few months back.
Naeem Aslam, analyst at Think Markets UK, meanwhile, highlighted that the crypto market will gain credibility as a result of the stringency.
“These cleanups, even if they often yield immediate price corrections, are in fact essential to building the credibility of the crypto space,” the analyst said in a note.
“They may contribute to price volatility, but they are a key element in cleaning house for the blockchain community and removing the more ‘wild west’ elements from the space.”
Aslam added: “Further cleanups are coming from the closing of many of last year’s crop of crypto hedge funds thanks to poor profits. The reduction in numbers of the more cynical pump-and-dump funds will stabilize the cryptocurrency markets, as fewer funds will be able to sway coin prices in line with their own interests.
“This is a sign for long-term investors that the crypto markets in general is set to become increasingly stable – if not overnight.”
1.30pm: French to raise Luton output
In a pre-Brexit show of confidence, French autos group PSA has unveiled plans to raise output at its Vauxhall van plant in the UK.
PSA, which last year acquired Opel/Vauxhall from General Motors (NYSE:GM) will build Peugeot and Citroen models as well as the next Vauxhall Vivaro van in Luton, north of London.
The group said production at Luton will rise to 100,000 vehicles from 60,000 in 2017.
The UK government is contributing £9mln to the van investment as part of its push to support the automotive industry.
12.30pm: Cold blast for UK construction
Housebuilders managed to tick higher at lunchtime despite news of the biggest drop in UK construction activity last month since just after 2016’s Brexit vote.
The IHS Markit/CIPS UK March construction purchasing managers’ index (PMI) slumped to 47.0, down from 51.4 in February.
It was a bigger decline than had been predicted by economists in which on average pointed to a modest drop to 50.8. The 50-point line divides expansions in activity from contractions.
But the drop came after “the Beast from the East” brought snow, strong winds and the coldest temperatures in several years to much of Britain and elsewhere in Europe inevitably disrupting construction work.
A separate PMI report on Tuesday, however, showed UK manufacturers shrugged off the bad weather Construction makes up only about 6% of UK economic output.
On currency markets, sterling was lower after the weak data, off 0.1% against the US dollar at US$1.4045 and down 0.3% against the euro at €1.1430.
Meanwhile, the FTSE 100 index stayed over 50 points lower at 6,977 at 12.30pm with traders braced for a brutal start on Wall Street, with the Dow Jones seen slumping by around 500 poits on Trump/China trade war escalation.
11:55am: FTSE 100 below 7,000 on international trade spat
The FTSE 100 continued to soften as Wednesday progressed, with traders selling broadly. At midday, the benchmark of top shares had slipped below the 7,000 marker - down 55 points or 0.79% changing hands at 6,976.
Blue chip stocks were basically lower across the board. In the banking sector, Barclays Bank Plc (LON:BARC) lost 4p or 1.9% to 202.85p. Lloyds Banking Group Plc (LON:LLOY) shares were down 0.9p or 1.4% to 64.22p while Royal Bank of Scotland Plc (LON:RBS) was down 3.9p or 1.51% to 255.1p.
Natural resource stocks suffered too. Mining giant BHP Billiton plc (LON:BLT) slumped 43p or 3.1% trading at 1,364p while rival Rio Tinto Plc (LON:RIO) was off 119p or 3.28% to 3,511. Glencore Plc (LON:GLEN) shed 9.10p or 2.55% to 347.15p,.
There was no respite for retail either, notably the supermarkets were softer. Tesco Plc (LON:TSCO) was down 3.1p or 1.52% to 200.4p and Marks and Spencer Group Plc (LON:MKS) lowered 3.1p or 1.15% to 265.3p.
10:00am: FTSE 100 slide continues as Trump trade war with China escalates
The FTSE 100’s slide continue through Wednesday morning, with the benchmark down 29 points or 0.4%, as investors remain worried over international trade relations.
Brexit is less than a year away (according to the schedule anyway), and seemingly the world’s two ‘super powers ‘ are intent on battling over trade terms.
The so-called Trump trade war has inevitably escalated, with the Chinese response today coming in the form of a 106 item list of US products that will become subject to tariffs in the People’s Republic, specifically it is set to target agricultural business (including soybean and corn).
David Cheetham, analyst at online broker XTB, in a note highlighted that the tensions have now “ramped-up significantly” in recent days.
“There has been a lot of rhetoric surrounding trade wars for some time now, but the transformation of these threats into actions in recent days is alarming and is clearly roiling markets,” the analyst said.
“Not only are the markets directly impacted by the tariffs selling off, but there has also been notable weakness in stocks since the news broke with European markets falling to their lowest level of the week. The latest set of tariffs aren’t set to be implemented immediately but it is hard to picture either Trump or XI Jinping backing down for fear of looking weak.”
But, according to another analyst it may be Trump’s assault on Amazon, and the broader weakness among the other ‘FANG’ tech stocks, that’s been a bigger factor in the US market – more so than the so supposed tit-for-tat with China.
“While we are still encountering quite a subdued trading atmosphere, where major stock markets are in general struggling to find their direction, we are not facing the type of selling pressure that should worry people that there is some serious distress in the equity markets,” said Jameel Ahmad, FXTM head of currency strategy and market research.
He added: “It does remain difficult to pinpoint whether trade war concerns, or the recent selloff in stocks like Amazon, are driving the market volatility but there is some room to side with the latter.
“Another tweet from President Trump reinforcing his negative view on Amazon sent the US stock markets on another volatile ride overnight. It does not appear that trade tensions between the US and China are driving the price action this week.”
8:45am: FTSE 100 starts on back foot as Trump tit-for-tat on trade continues
In opening transactions London’s FTSE 100 remained on the back foot, losing 10 points or 0.14% to trade at 7,023.
Despite Tuesday’s equity rally on Wall Street, Donald Trump’s trade standoff with China continues to be something of a distraction for traders.
“There isn’t much to draw investors’ attentions away from the tariff tit-for-tat currently occupying the US and China,” said Connor Campbell, analyst at Spreadex.
He added: “The European markets continued to suffer from a mild case of tariff-trauma this Wednesday, dropping in the face of Trump’s latest anti-China announcement.
“With the US retaliating to China’s own retaliation by revealing 25% tariffs on around 1300 different industrial technology, transport and medical products, the markets weren’t allowed a post-Easter clean slate this Wednesday.
“Instead investors now have to fret about what China will do in response to Trump’s most recent bit of trade war manoeuvring, a concern that will likely outweigh any other economic news as the day goes on.”
Proactive news headlines:
Mytrah Energy Limited’s (LON:MEL) chairman Ravi Kailas is set to take the Indian wind power group private with a cash bid of 45p per share. Kailas’ vehicle Raksha Energy already owns 57.9% of the shares and the offer, pitched at a 64% premium to the price yesterday, is being recommended by Mytrah’s independent directors.
Caledonia Mining Corporation PLC (LON:CMCL) (TSX:CAL) has predicted a material boost to earnings this year due to changes in Zimbabwe’s export credit rules. The Reserve Bank of Zimbabwe raised the Export Credit Incentive (ECI) paid to all gold miners to 10% from 2.5% from February.
Delays in getting a contract with a new customer finalised by the year-end have hit revenues at implant and tissue supply group Collagen Solutions PLC (LON:COS). Sales for the year to 31 March will be £3.5mln (2017:£3.9mln), with the lower revenues also meaning losses will be greater than expected.
IXICO Plc (LON:IXI) said it has signed an extension to an existing agreement with a top 15 global pharmaceutical company to provide advanced imagining clinical trial services. The AIM-listed brain disease researcher said the value of the contract had increased from US$1.2mln to US$1.95mln, with its duration extended from 2019 to early 2020.
MaxCyte Inc (LON:MXCT) reported strong growth in its cash and total assets in 2017 as revenues increased by 14% and gross margins remained stable. The AIM-listed global cell-based medicines and life sciences company said its revenue for the year to 31 December 2017 was US$14.0mln, up from US$12.3mln a year earlier, with gross margins unchanged at 90%.
AfriTin Mining Ltd (LON:ATM) has completed a detailed design for its flagship asset Uis Tin Mine in Namibia, targeting the V1 and V2 pegmatite bodies, previously identified as the priority to supply feed to its new intermediary processing plant.
Bacanora Lithium PLC (LON:BCN) said the feasibility study for its 50%-owned Zinnwald lithium project in Germany continues on track for completion by June 2019.
Rose Petroleum PLC (LON:ROSE) has expanded its footprint in Utah’s Paradox basin, acquiring a 75% working interest in an additional 3,320 gross acres. The package is being acquired via joint venture partner Rockies Standard Oil Company (RSOC) and, including the new acquisition, Rose noted that the partnership now addresses some 79,577 acres in the Paradox Basin.
Europa Oil & Gas Holdings PLC (LON:EOG) chief executive Hugh Mackay told investors that the explorer is looking at adding a third ‘core’ area, on top of its acreage offshore Ireland and its interests onshore UK. “Outside our existing portfolio, we are actively looking to add a third core area of interest and are evaluating several opportunities at various stages of development,” Mackay said, in the company’s interim results statement.
NQ Minerals PLC (NEX:NQMI) (OTCQB: NQMLF), the Australia-based exploration and mining company, announced that, further to the receipt of a required Queensland Environmental Authority, it has been granted a Mining Lease for its wholly-owned Sunbeam Silver Mine
United Oil & Gas Plc (LON:UOG) told investors that a seismic acquisition programme has now begun at the Tullow Oil plc (LON:TLW) operated Walton-Morant licence, offshore Jamaica. The company, in a statement, highlighted that the Polarcus Adira vessel began data acquisition work on April 3, and the acquisition programme is expected to take around 8 weeks to complete.
Taptica International Ltd (LON:TAP), the global end-to-end mobile advertising platform for advertising agencies and brands, announced that its chief executive officer, Hagai Tal, yesterday purchased 47,500 ordinary shares in the company at a price of 300p each. Following the transaction, Tal is now interested in 9,501,259 ordinary shares representing 14.1% of the total voting rights of the company.
6:45am: FTSE 100's downward drift to continue despite strong US rally
Despite a strong showing last night from US stocks, the FTSE 100 was expected to open modestly lower on Wednesday.
Having closed 26 points lower at 7,030 on Tuesday, the blue-chip index was set to add another five points or so to yesterday's losses.
US stocks thundered higher, with tech stocks rebounding in convincing fashion.
The Dow Jones average rose 389 to 24,033 and the S&P 500 climbed 33 to 2,614.
Heading into the final moments of trading in Asia, markets were mixed, with Japan's Nikkei 225 up 88 at 21,378 and Hong Kong's Hang Seng down 76 at 30,104.
On the home front, there is a relatively quiet schedule in terms of expected company results.
Tiles and flooring retailer Topps Tiles Plc will report on its fiscal second-quarter, which includes the period when many parts of Britain experienced heavy snowfall.
As a result of the bad weather, the decent 3.4% year-on-year rise in like-for-like (LFL) sales growth in the first quarter is expected to turn into a LFL fall in the second quarter.
Anything better than a 1.4% year-on-year fall in LFL sales would suggest Topps is performing ahead of Peel Hunt's expectations, which are for 1% LFL sales growth in the full financial year.
The snow will also have affected the UK construction industry, so do not expect a sparkling purchasing managers’ index (PMI) survey result from the sector.
RBC Capital Markets says that with news order in the sector contracting, it expects the headline reading to ease to 51.0 from 51.4.
Significant announcements expected
Traffic numbers: Wizz Air PLC (LON:WIZZ)
Economic data: UK construction PMI survey; US ADP employment report; US factory orders; US ISM non-manufacturing index
Around the markets
- Sterling: US$1.4076, up 0.19 cents
- 10-year gilt: yielding 1.359%
- Gold: US$1,337.50 an ounce, up 10 cents
- Brent crude: US$67.91 a barrel, down 22 cents
- Bitcoin: £5,224.88, down £62.68
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