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FTSE 100 extends gains in the final sessions

Stocks consolidated gains at the death with bid stock Shire the best performing blue-chip

Consumer
More than half of the Footsie's constituents ended the day in the red
  • FTSE 100 index up 13 points at 7,412

  • US consumer confidence index rose in April

  • Citi survey says UK inflation expectations unchanged

Leading stocks added to modest gains in the final half-hour of trading, with the FTSE 100 ending the day at 7,425, up 27.

Bid stock Shire Plc (LON:SHP) led the advance after another revised proposal from suitor Takeda Pharmaceuticals. Shire's board said it is considering its position.

Shire shares closed at 3,930p, up 3.4%; 

3.40pm: US consumer confidence rises in April

The Conference Board’s US consumer confidence index rose to 128.7 in April, up from 127 in March.

The reading beat a forecast from analysts at Reuters, who had predicted the index to drop further to 126 following a fall in March.

Lynn Franco, director of economic indicators at Conference Board, said: "Consumers' assessment of current conditions improved somewhat, with consumers rating both business and labor market conditions quite favorably,"

He added that consumers’ short-term expectations for their incomes had also improved in the period.

3.10pm: UK inflation expectations steady in April says Citi

Inflation expectations among people in Britain for the year ahead remained unchanged in April at 2.4%, according to a survey published by Citi and YouGov (LON:YOU).

Expectations for annual inflation 5 to 10 years ahead rose to 3.1 percent in April, up from 3.0 percent, interrupting a recent series of small declines, Citi said.

In a note, the bank said: "With both short and long-term inflation expectations near their averages, we think neither urgent policy tightening nor a reversal of the nascent rate hike cycle are required,"

In other news, an appeal by computer giant Apple (NASDAQ:APPL) and Ireland against an EU ruling for the firm to pay €13bn in taxes is likely to be heard in the Autumn, according to Irish Finance Minister Paschal Donohoe.

The European Commission ruled in August 2016 that Apple had received unfair tax incentives. Both Apple and Dublin are appealing the original ruling, saying the tax treatment was in line with both Irish and EU law.

2.30pm: Cabinet Office minister downplays comparisons between Capita and Carillion

The cabinet office minister Oliver Dowden has downplayed comparisons between debt-laden outsourcing firm Capita (LON:CPI) and its now-defunct rival Carillion.

Dowden told parliament that Capita’s business model was very different from Carillion and measures taken by Capita may have prevented Carillion’s collapse in January.

He added that outsourcers should expect “a decent, not an excessive, rate of return ... while ensuring savings for the tax payer."

In mid-afternoon trading Capita shares were down 0.8% at 179.3p.

In other news, Brazil’s Raizen Combustiveis SA has agreed to buy downstream assets in Argentina from FTSE 100 oil major Royal Dutch Shell (LON:RDSA) for US$950mln.

During the sale process, Raizen´s bid topped rival offers by Argentine oil company YPF SA, Chile's Quinenco SA and China National Petroleum Corp's Petrochina Co.

Shell shares were up 0.79% at 2,539.5p in mid-afternoon trading.

2.00pm: US stocks set for an upbeat open as numerous Dow constituents report earnings

US indices are set to shake off yesterday's lethargy and open sharply higher, following the lead of Asian markets.

READ: Stocks expected to break loose as half a dozen Dow Jones constituents report

The Dow Jones average, which closed 14 points lower yesterday at 24,449, was expected to open 157 points to the good at 24,606, while the S&P 500, which yesterday closed barely changed, was tipped to open at 6,287, up 17 points.

1.30pm: Takeda makes new bid for Shire ahead of Wednesday deadline

Japanese pharmaceutical giant Takeda has made a new takeover bid for Shire (LON:SHP) ahead of the 5pm deadline on Wednesday.

Shire, a FTSE 100 pharma and biotech group, did not give details of the new bid, which is currently Takeda’s fifth offer.

The previous bid from Takeda offered 4,700p per share, comprised of 2,600p in Takeda stock and 2,100p in cash, valuing Shire at around £44.3bn.

On news of the offer, Shire's shares rose 5.2% to 4,000p in mid-afternoon trading.

1.10pm: April CBI survey shows manufacturing sector lost momentum in early 2018

The latest industrial trends survey from the CBI has indicated that manufacturing activity lost momentum during early 2018, but that it had stabilised in the intervening period.

Howard Archer, chief economic advisor at the EY ITEM Club, said: “The latest hard data shows that manufacturing output fell 0.2% month-on-month in February, which was the first decline since March 2011. This followed a flat performance in January. Prior to this, there had been 8 months of continuous expansion. Manufacturing output was still up 2.5% year-on-year in February.

“However, the underlying slowdown in manufacturing output following the heady expansion of the second half of 2017 is highlighted by the three-month/three-month growth rate slowing to 0.6% in February from 1.0% in January and 1.3% in both December and November.”

In a more positive development, the survey also indicated that manufacturers’ output expectations for the next three months improved to a three-month high in April.

12.30pm: FCA chief urges joint action with EU on Brexit risks

The chief executive of the Financial Conduct Authority (FCA) Andrew Bailey has urged EU counterparts to work jointly to address arising from Brexit, adding that unilateral action from the UK will only provide second-best measures.

"Now is the time for the UK and EU authorities to come together and work on the solutions to reduce the risks to financial stability that Brexit could pose," Bailey said at the City Week conference.

In other news, General Electric (NYSE:GE) has said it will test the world’s largest wind turbine in the UK at a facility in the northwest.

GE Renewable Energy, the U.S. firm’s renewable arm, and the UK government-funded Offshore Renewable Energy Catapult signed a five-year agreement to test the Haliade-X 12 megawatt turbine in Blyth, Northumberland.

12.00pm: Sterling drops to 5-week low against the dollar

The pound has fallen to its lowest level since mid-March against the dollar as expectations for a rate hike next month were dashed by comments from the Bank of England governor Mark Carney last week.

David Cheetham, chief market analyst at XTB.com, commented that a negative return at the end of April would break a run of 14 consecutive years in which the pound has gained against the dollar during that month.

He added however that US Treasury yields should not be overlooked amid the pressure on Sterling: “Whilst it is tempting to focus on this from a UK perspective the impact of recent developments in the US shouldn’t be overlooked with government bond yields across the Atlantic on 10-year notes near 4-year highs, and on the cup of 3%.”

11.40am: Arsenal signs partnership agreement with Chinese electric car firm

Football club Arsenal has signed an agreement with Chinese firm BYD Auto to make the electric car manufacturer the club’s official bus and car partner.

Arsenal’s chief operating officer, Vinai Venkatesham, said: “We are proud to become the first Premier League club to enter into a global electric vehicle partnership, and to do so with one of China’s largest and best known companies. Electric vehicles are destined to form a big part of our transport future so we’re delighted to welcome the world-leader in this field into our family of official partners.”

The deal comes before a major expected shake-up of the club as long-serving manager Arsene Wenger prepares to step down.

In other news, French investment firm Ardian has agreed to sell its 49% stake in Luton, the UK’s fifth largest airport, to AMP Capital for an undisclosed sum.

A source close to the matter told Reuters that the equity value of the stake amounted to around £350mln based on 2018 core earnings multiple to enterprise of less than 15 times.

11.00am: Treasury Select Committee chair demands answers on TSB meltdown

Nicky Morgan, chair of the Treasury Select Committee, has written to the chief executive of TSB Paul Pester, demanding answers regarding the meltdown following its planned upgrades.

Morgan is calling on TSB to explain any compensation plans for customers as well as the extent of the failure.

"The reports of unauthorised transactions, access to other customers’ accounts, and failures of in-branch services have all the hallmarks of an IT meltdown. This is yet another addition to the litany of failures of banking IT systems. Potentially millions of customers could be affected by uncertainty and disruption.” Morgan said.

10.40am: German IFO data suggests ECB may strike cautious tone

Germany’s latest IFO Institute data has shown a decline in business sentiment in April, to 102.1 points from 103.3 in March in its business climate index, with IFO president Clemens Fuest stating that “the upbeat mood in Germany’s executives’ suites is evaporating”.

Some are suggesting the figures will lead to a cautious approach by the European Central Bank (ECB), which will hold its weekly meeting on Thursday.

Chris Beauchamp, chief market analyst at IG, said: “This morning’s German IFO data has been another addition to the growing pile of evidence that suggests the ECB will strike a more cautious, but still guardedly optimistic, tone at this week’s meeting.”

He added: “Germany’s economy has been riding high, so today’s figure is not so much a reversal as a gentle letting heat out of the balloon. No doubt the ECB will be relieved, since they have now been given a fresh reason, and a solid one at that, to keep their policy unchanged for yet another meeting.”

10.00am: EU financial services boss says regulatory equivalence is “pragmatic solution”

The EU financial services commissioner, Valdis Dombrovskis, has said regulatory equivalence offered a way forward for the financial services sector following Brexit, despite not being perfect.

Dombrovskis added that equivalence “has its shortcomings but this is a possible way forward”.

Meanwhile, iconic insurance market Lloyd’s of London has begun a hiring spree at its new EU base in Brussels.

The group was one of the first companies to unveil Brexit plans, saying the new Brussels office will allow insurers to continue to operate across the union following the UKs planned departure next year.

9.30am: UK public sector net borrowing lower for last financial year

UK public sector net borrowing decreased by £3.5bn to £42.6bn in the latest financial year, according to figures released by the Office for National Statistics.

This was lower than forecasts from the Office for Budget Responsibility, which had predicted net borrowing for the period at £45.2bn.

The FTSE 100 retained its gains, up 24.5 points at 7,423.

8.40am: FTSE 100 starts on the front foot as Asia provides a boost

The FTSE 100 kicked off the day in positive territory, taking its cue from Asia rather than Wall Street as it advanced 25 points to 7,423.92.

Certainly, the geopolitical picture appears to be settling down after a turbulent two months.

“On the topic of sanctions and trade wars, concerns continue to ease after President Trump suggested a possible reprieve for Russian aluminium giant Rusal,” said Mike van Dulken of Accendo Markets.

Overnight, lower metals prices - industrial rather than precious – and the strong US dollar hit the miners. This carried over to London with Anglo-American (LON:AAL) among the top losers as its shares fell 1.5% following a production update

Leading the fallers was Paddy Power Betfair (LON:PBB) amid worries the bookie may be whacked by a downturn in revenues from fixed odds betting terminals. The shares were off 3%.

On the up – rising 1.5% - was BAE Systems (LON:BA), which benefited from an upgrade from the London arm of the German investment bank Berenberg, which has moved to ‘buy’.

Among the tiddlers, Redx Pharma was a top performer after pulling off a major managerial coup.

It has appointed Lisa Anson as its new chief executive. Anson currently heads up drugs giant AstraZeneca’s UK operation.

The shares rose 12% with the new hire seen as drawing a line under Redx’s recent struggles.

Proactive news headlines:

Drug discovery group Redx Pharma Plc (LON:REDX) has pulled off a major coup with the appointment of a senior executive from drugs giant AstraZeneca PLC (LON:AZN) as its new chief executive. She is 49-year-old Lisa Anson, who has been AZ’s UK president since 2012 and has worked for the company for more than two decades.

Growing medical devices group Tissue Regenix Group PLC (LON:TRX) said DermaPure products processed through the recently-acquired CellRight Technologies facility in San Antonio, Texas, are now on sale in the US. It follows the completion ahead of schedule of the manufacturing technical transfer.

SDX Energy Inc (LON:SDX, CVE:SDX) has announced another new discovery, in the Rabul 4 Well in Egypt’s West Gharib concession. The well was drilled down to 5,250 feet and encountered 43 feet of net heavy oil pay, across the Yusr and Bakr formations. The company said the average porosity measured 16%.

OptiBiotix Health plc (LON:OPTI) has entered into a non-exclusive agreement for Cambridge Commodities Ltd (CCL) to distribute its SlimBiome weight management technology in the UK.

Specialist tech investor Sure Ventures PLC (LON:SURE) has made its first direct investment in the UK. The venture capital fund is putting £500,000 into Immotion Group, a Manchester-based group that specialises in virtual reality cinema pods.

Coinsilium Group Limited (NEX:COIN) said it will provide advisory services to Singapore registered company MGXP PTE Ltd (PLACTAL) regarding the launch of its blockchain-based mobile game advertising app.

Falcon Media House Limited (LON:FAL) said it has received £325,000 from its issue of convertible loan notes in October 2017, however it was still awaiting outstanding funds from one of its major shareholders.

ITM Power plc said its large-scale power-to-gas energy storage deployment study with Northern Gas Networks (NGN) has found four suitable locations for a power-to-gas demonstration facility. The AIM-listed firm said that, of the four locations found, Low Thornley in Gateshead is recommended as the most suitable site.

Rainbow Rare Earths Ltd (LON:RBW) produced 279 tonnes of concentrate grading 62% total rare earth oxides from its Gakara mine in Burundi during the three months to 31 March. The averaged realised selling price per tonne of concentrate was US$2,357.

Goldplat plc (LON:GDP) sold 28,534 gold equivalent ounces in the nine months ended 31 March 2018, slightly up on the 27,714 ounces sold in the corresponding period a year earlier.  During the most recent quarter, the company produced 6,966 ounces of gold and gold equivalent.

Ironridge Resources Ltd (LON:IRR) has hit grades as high as 39.1 grams per tonne from rock chip sampling on its Dorothe license in Chad. Promising copper, lead and silver grades have also been returned. The company is now stepping up the pace of exploration and expects to deliver good newsflow in the coming months.

Jersey Oil and Gas PLC (LON:JOG) has told investors that its joint venture with Statoil has committed to pre-fund a multi-client 3D seismic survey which will include its acreage in the North Sea.

Range Resources Limited (LON:RRL) has increased production for a third consecutive quarter. The Trinidad-based oil group averaged 731 barrels per day (bopd) to March, a rise of 16% on the previous quarter.

Shefa Yamim (LON:SEFA), a precious stone exploration company in Northern Israel, has announced the appointment of Daniel Stewart & Company as joint broker to the company.

Victoria Oil and Gas PLC (LON:VOG) announced that Iain Patrick has resigned as an independent non-executive director of the company, with immediate effect.

Sareum Holdings Plc (LON:SAR), the specialist cancer drug discovery and development business, will present at BioTrinity 2018 in London today, at 12.20pm. Dr Tim Mitchell, CEO of Sareum, will introduce Sareum and provide an overview of its lead programmes including its most advanced programme SRA737, a novel Checkpoint kinase 1 (Chk1) inhibitor licensed to Sierra Oncology (NASDAQ: SRRA).

6.45am: FTSE 100 expected to continue its advance 

The Footsie is seen extending the previous session's gains in early trade on Tuesday, tracking a rally by Asian markets after Wall Street managed to claw back initial bigger falls overnight.

Spread betting firm IG expects the FTSE 100 index to open around 9 points higher at 7,408, having gained 30 points on Monday.

Overnight on Wall Street the Dow Jones closed just over 14 points lower at 24.448, above earlier lows, though worries over rising bond yields still countered optimism over the current corporate earnings season.

Of the around 18% of the US companies in the S&P 500 that have already reported, 78.2% have beaten consensus estimates so far.

However, the after-hours US earnings news was mixed, with Google parent Alphabet Inc (NASDAQ:GOOGL) seeing strong growth in ad sales not enough to offset a surge in costs that shrank its first-quarter operating margin, leaving its shares flat.

But Asian stocks still bounced from near two weeks low today, pausing after a bout of recent heavy selling helped by a recovery in the US dollar, with Japan's Nikkei 225 index up 0.7% as exporters benefitted from the weaker yen.

On currency markets, the pound was fairly flat versus both the dollar and the euro having beaten a retreat from recent highs in the past few sessions.

Blue chip trio update

On the corporate front in London, the main focus will be on trading updates from a trio of blue chips - miner Anglo American PLC (LON:AAL), bourses operator London Stock Exchange PLC (LON:LSE), and wealth manager St James’ Place PLC (LON:SJT).

After mixed production updates recently from peers Rio Tinto PLC (LON:RIO) and BHP Billiton plc (LON:BLT), investors will be keen to hear the state of play at Anglo American, particularly given that it has suspended operations at its Minas-Rio iron-ore project in Brazil after finding a minor leak in a pipeline.

The FTSE 100-listed miner said on April 3 that it suspended operations last Thursday after finding a leak on the pipeline that carries iron ore, in slurry form, from the mine to the export terminal.

Meanwhile, having finally concluded a four-month search for a new chief executive earlier this month, a first-quarter trading update from the LSE will probably contain few surprises.

David Schwimmer, who will join the group in August from Goldman Sachs, will take the reins from David Warren, the LSE’s chief financial officer and interim CEO, bringing to an end the soap opera/farce surrounding the early departure of LSE’s well-liked former boss Xavier Rolet.

In a preview, Deutsche Bank’s analysts forecast LSE’s income to be flat quarter-on-quarter but up 13% year-on-year a characterised by a return of volatility, currency headwinds, and a mixed index performance.

Deutsche Bank expects quarterly growth to be driven by LSE’s clearing business, LCH, which it sees reporting 4% quarter-on-quarter revenue growth.

Wealth trajectory

St James’ Place’s latest quarterly performance report should be more mixed, however, given the volatility bite.

Analysts at Numis Securities expect the blue chip firm to report total assets under management (AuM) of £89.5bn at the end of the first quarter, with a quarterly net outflow of £2.4bn.

But they noted that St James’ management continues to target gross flow growth of 15-20% per annum, which should translate into 10-15% pa net organic growth - assuming 95% retention.

Significant events expected on Tuesday April 24:

Trading update: Anglo American PLC (LON:AAL), London Stock Exchange PLC (LON:LSE), St James’s Place PLC (LON:STJ)

Interims: AB Dynamics plc (LON:ABDF), Proactis Holdings Plc (LON:PHD)

Finals:Circassia Pharmaceuticals PLC (LON:CIR), CityFibre Infrastructure Holdings PLC (LON:CITY), Inspiration Healthcare Group PLC (LON:IHC), Osirium Technologies PLC (LON:OSI), Proteome Sciences plc (LON:PRM), Sportech plc (LON:SPO), Sumo Group PLC (LON:SUMO)

Economic data: UK public sector finances; CBI industrial trends survey; US new home sales; US consumer confidence

Around the markets:

  • Sterling: US$1.3938, down 0.01%
  • Gold: US$1,322.50 an ounce, unchanged
  • Brent crude: US$68.92 a barrel, up 0.4%

City Headlines:

  • Rolls-Royce could move engine design approval to Germany – Reuters
  • Britain likely to intervene in Daily Mirror-Express deal - Reuters
  • Ad sales surge at Google parent Alphabet, but so do costs – Reuters
  • Congo dispute could force Glencore into huge debt write-of – The Times
  • Invesco Perpetual and £153mln trust part ways over fee dispute – Financial Times
  • Netflix reportedly considered buying US. cinema chain Landmark Theatres: - Daily Mail
  • Halliburton swings to Q1 profit despite Venezuela write-off – Financial Times
  • Kimberly-Clark lifts full year sales forecast: - Financial Times
  • Barrick Gold earnings helped by higher gold prices: - Financial Tiimes
  • Investment bank propels UBS to best quarterly result in 3 years – Financial Times
  • TSB owner’s callous boast about IT upgrade that left customers unable to access their accounts – Daily Mail
  • UK wine maker Chapel Down toasts rising profits as Americans get a taste for English fizz – Daily Mail
  • Hyundai Motor Group shares gain after Elliott calls for major change - Reuters

 

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