FTSE 100 at new record high
US-China trade war 'on hold'
Dow Jones breaks through 25,000
Sterling lower against Euro and US dollar
The weak pound and strong US start helped FTSE 100 to another fresh closing high on Monday.
The UK blue-chip benchmark closed at 7,859.17 - up around 80 points or 1.03%.
The previous highest close was last Thursday (May 17), at 7,787.
"Stock markets in Europe have had a good run today as investors are now less fearful of a global trade war," said David Madden, at CMC Markets.
"The US has decided to suspend its plans to impose tariffs on $150 billion worth of Chinese imports, and in exchange Beijing is planning on significantly increasing its purchases of US goods.
"The move has reassured investors, and helped the FTSE 100 hit a record high, while the CAC 40 has notched up a new 10-year high on account of the positive sentiment in equity markets."
FTSE 250 was also up - finishing over 147 points higher, at 21,137.
The Dow Jones Industrial Average is up 281 points at the time of writing and over the 25,000 level, while S&P 500 is up around ten at 2,730.
Against the Euro, the pound is down 0.46% at 1.1393 and, against the US dollar, it is also off 0.46% at 1.3408.
3.30pm: Footsie boosted by strong US open
After a mid-afternoon lull, the strong opening in New York helped to drag the FTSE 100 back towards its session, and therefore all-time, highs.
With less than hour to go in Monday trading, the index of blue chip shares was up 0.9%, or 66.5 points, to 7,845.3 – just shy of the 7,850 it briefly touched in the morning session.
News over the weekend that a trade war between the US and China was ‘on hold’ helped to boost the dollar, which in turn dragged the pound down, making London’s blue chips’ overseas earnings worth more when translated back into sterling.
Ppound recovers some losses
The pound had dropped to below US$1.340 this morning, but it recovered some of those losses to sit at US$1.343 shortly after 3pm – a 0.2% loss for the day.
Clothes retailers were basking in the Monday sun, possibly thanks to a boost from the royal wedding, with shoppers looking to get their hands on what they saw on the red carpet at Windsor.
AstraZeneca PLC (LON:AZN) was also in demand after it finally got approval from US regulators for its hyperkalaemia drug, which it reckons has the potential to bring in more than US$1bn a year. Shares rose 3.5% to £54.23.
Not many fallers
Miners were among the heaviest fallers, although, truth be told, it was slim picking on the list of losers.
3pm: US stocks higher across the board
As expected, US stocks opened higher on Wednesday in New York as the threat of US-China trade war, which had been hanging over the markets for a few weeks, receded.
The Dow Jones Industrial Average rose 168 points, or 0.7%, at the open to 24,883, with General Electric Company (NYSE:GE) the top riser, climbing 3.3% to US$15.47 after it confirmed plans to merge its rail business with rail equipment maker Wabtec.
As for the S&P 500, that kicked off the week 13 points, or 0.5%, higher at 2,725.9, while the Nasdaq Composite gained 0.7% to 7,406.3.
2.30pm: Government ‘not minded’ to refer Comcast’s Sky bid
Matt Hancock, who has ten working days to make a final decision on whether to refer the deal to Ofcom for an investigation, said he is “not minded” to intervene.
In a statement, he said: “Having reviewed the relevant evidence available, I can confirm that I have today written to the parties to inform them that I am minded not to issue an European Intervention Notice on the basis that the proposed merger does not raise concerns in relation to public interest considerations which would meet the threshold for intervention.”
The government is still reviewing a rival £19bn bid from Rupert Murdoch’s 21st Century Fox (NASDAQ:FOXA) for Sky after receiving the UK Competition and Markets Authority’s report into the deal earlier this month.
2pm: What’s in store tomorrow?
Although there’s still a couple of hours of trading left today, let’s take a quick look at what’s coming up on Tuesday.
The week’s batch of retail results kick off with updates from two mid-cap firms tomorrow; car parts to bicycles chain Halfords Group plc(LON:HFD) and speciality tiles company Topps Tiles Plc (LON:TPT).
Halfords’ full-year results will be the first set of numbers to be presented since new chief executive Graham Stapleton joined in January, and the company is guiding for a pre-tax profit of £71.4mln.
Topps Tiles will release its first-half results, though since the company has already told investors what to expect the focus will be on its outlook for the rest of the year.
In a trading update in April, the retailer said total revenues rose to £109.4mln in the 26 weeks to 22 May, up from £106.6mln for the same period a year earlier.
Take a look here to see what else is in the diary for Tuesday May 22.
1.20pm: FTSE 100 slips but still well up
The FTSE 100 fell back slightly from the all-time high it reached a few hours ago as traders here in London ventured out to lunch.
The index of blue-chip shares had reached as high as 7,850 at 10.45am, and even with a slight fall back, it is still up 42.2 points, or 0.5%, for the day to 7,821.0.
Geopolitics guiding markets
“There are a couple of key macro-motivators for the FTSE’s record-breaking gains,” explains Spreadex analyst Connor Campbell.
“Firstly, and most broadly, there is investors relief at the news that the brewing US/China trade war is ‘on hold’ – well, specifically, the previously announced tariffs have been put on the back burner – after the two countries agreed a framework to reduce America’s deficit with its global sparring partner.”
He adds: “Secondly, and more domestically, is the re-emergence of Brexit as a value-eroding weight for sterling.
“Tensions within Theresa May’s cabinet over the customs union, and rumours of a potential vote of no confidence in the Prime Minister and subsequent snap election, have helped extend the pound’s miserable spring showing.”
Royal wedding boosts retailers
Another one that could be getting a more genuine tailwind from the weekend’s celebrations is luxury fashion company Burberry PLC (LON:BRBY).
There tends to be a pick up in dress and suit shopping immediately following events like royal weddings, with fashion-conscious shoppers keen to get their hands on the latest outfits. Burberry’s stock is up 2.5% to £19.81.
1pm: US stocks called higher at the open
Perhaps unsurprisingly, US stocks are called to open higher when the bell rings in New York in just over an hour’s time, thanks to the easing of tensions between the US and China.
“The Dow Jones is set to rocket higher on the back of Treasury Secretary Steven Mnuchin’s calming comments over the weekend,” said Spreadex analyst Connor Campbell.
“The futures have the Dow shooting up by 240-ish points when the bell rings on Wall Street, an increase that will put the index back in the ballpark of 25000, a level it just about grazed this time last week.”
The Dow Jones Industrial Average is expected to open 236 points higher at 24,952.7, the S&P 500 is seen 15.2 points in the black at 2,727.9, while the tech-heavy is set to climb 45.6 points to 6,911.5 at the opening bell.
12.30pm: Third time lucky for Astra…
The drug, formerly known as ZS-9, had been rejected two times previously by regulators, casting doubt over Astra’s US$2.7bn acquisition of ZS Pharma back in 2015, which it primarily bought to gain access to the compound.
Today’s approval is key for the FTSE 100 drugmaker, which is still in the process of filling the void left by declining sales of its previous blockbusters Crestor and Seroquel drugs.
Astra reckons Lokelma, which lowers dangerously high potassium levels in the blood, can generate peak sales in excess of US$1bn a year.
12pm: BA owner to make an offer for Norwegian after all?
Following two unsuccessful approaches, IAG is understood to have proposed a deal that values its rival at 300 crowns per share, which represents a 32% premium to Friday’s closing price.
The news comes after IAG said on Friday that it was not expecting to announce a bid to buy Norwegian soon and ruled out a hostile offer.
In April, IAG disclosed that it had bought a 4.61% stake in Norwegian with a view to make a full offer for the airline.
IAG plans to offer €1.52 Bln (32% prem) for Norwegian - Expansion, citing unnamed sources.— Mike van Dulken (@Accendo_Mike) May 21, 2018
11.45am: M&S hires ex-Dixons Carphone UK&I boss to board
Katie Bickerstaffe, who stepped down from the electrical goods chain in April, will join M&S as a non-executive director.
The high street chain has also taken on Pip McCrostie, a former member of Ernst & Young’s global executive team, as a non-executive director.
McCrostie will also join the audit committee and Bickerstaffe will join the remuneration committee.
Read more on that story here.
11.30am: Zuckerberg to ‘go live’ during European Parliament testimony
Facebook boss Mark Zuckerberg is to ‘go live’ when he answers questions from the European Parliament on Tuesday.
The billionaire will be grilled by officials about the recent Cambridge Analytica, where it is alleged that the details of millions of Facebook users were misused, although Cambridge has always denied that it did anything wrong.
The public will be able to listen in to Zuckerberg’s responses, with the president of the European Parliament tweeting that the testimony will be broadcast live.
I have personally discussed with Facebook CEO Mr Zuckerberg the possibilty of webstreaming meeting with him. I am glad to announce that he has accepted this new request. Great news for EU citizens. I thank him for the respect shown towards EP. Meeting tomorrow from 18:15 to 19:30— Antonio Tajani (@EP_President) May 21, 2018
11.10am: Ryanair flies higher despite reduced profit guidance
Revenues also climbed 8% to €7.15bn from €6.65bn as the number of passengers carried rose 9% to 130mln from 120mln at a load factor of 95%.
The share price held firm despite slightly reduced guidance, with Ryanair now forecasting profits of between €1.25bn and €1.35bn for the year ahead. On average, analysts had been expecting €1.37mln.
“Despite all this pessimism, investors are taking the news in their stride,” says Accendo Markets analyst Artjom Hatsaturjants.
“Perhaps because none of this is actually news: oil prices continue to rise and staff talks are ongoing. And O’Leary has a tendency to beat FY guidance.
“At this early stage of the year, is he trying to engineer a reappraisal and an upgrade in the quarters to come?”
10.50am: Pound slips below US$1.34
More on the pound now, which is helping to push the FTSE 100 to fresh highs.
After a strong start to the year, sterling has unwound over the past few weeks in the wake of soft economic data and a resurgent dollar.
It is down 0.5% this morning to US$1.339 as dollar bulls sweep in following the US’s seeming trade war truce with China.
A weak pound generally boosts the FTSE 100 as it makes the overseas earnings of Britain’s blue chips worth more when translated back.
Markets.com analyst Neil Wilson reckons US$1.33 “comes into view pretty quickly” if sterling can’t claw itself back above US$1.34 soon.
10.30am: Records highs for FTSE 100
The FTSE 100 broke through the 7,800 barrier for the first time ever not long after the opening bell.
The temporary easing of trade hostilities between the US and China fuelled the dollar which, in turn, weighed the pound down, boosting the blue-chip exporters.
Shortly after 10am, the FTSE 100 was up 66.7 points, or 0.8%, 7,845.7.
'Sense of relief'
“The FTSE 100 notched up a fresh record high, rising clear of 7800 for the first time as the feel-good factor from the trade war truce bolstered risk sentiment and a weaker pound delivered the usual shot of adrenalin for the blue chips,” wrote Markets.com analyst Neil Wilson.
“It looks like progress on talks between China and the US means we are not about to descend into a punitive trade war.
“Whilst there is still long way to go and nothing is agreed until everything is agreed, there has undoubtedly been solid progress and the sense of relief in equity markets is palpable.”
Investors responded to reports over the weekend that the high street stalwart is closing another 100 underperforming stores amid falling sales and profits. The stock was up 2% to 297.3p.
Astra finally gets Lokelma approval
The drugs giant stumbled after weak first-quarter results on Friday but was back with a bang on Monday after it finally got FDA approval for its Lokelma hyperkalaemia drug at the third time of asking.
Big fallers have been hard to come by this morning. Two of of the most notable were Evraz Holdings PLC (LON:EVR), down 2.7% to 488.6p, and Micro Focus International PLC (LON:MCRO), down 1.7% to £13.39.
8.30am: Almost there...
The FTSE 100 kicked off in positive territory, rising 35 points to 7,813.83 - putting it within touching distance of a new intra-day high.
The temporary easing of trade hostilities between the US and China was behind the early move higher, with the weakness of the pound providing a boost to exporters.
Topping the risers' list was AstraZeneca (LON:AZN) after a new drug for a blood disorder linked to serious cardio-vascular and renal conditions was given the regulatory green light by the US Food & Drug Administration.
The shares rose 1.6% early on, helping the pharma giant claw back the stock price loss incurred on Friday in the wake of first-quarter results.
Going the other way was Ryainair (LON:RYA), which fell 1.5% in the wake of prelims, which on the face of it looked bang in line with consensus.
"Great results but a very cautious outlook could weigh on the stock this morning," said Neil Wilson, chief analysts at Markets.com.
"Ryanair has a habit of setting the bar rather low and then far exceeding it, so we must take this 'pessimistic side of cautious' outlook with a grain of salt."
Proactive news headlines:
Netscientific PLC (LON:NSCI) boss Francois Martelet has heaped praise on portfolio company Wanda after new data confirmed the benefits of its technology. Wanda has developed a system which continuously assesses patients in real time and can detect adverse events up to a week before they happen.
Kibo Mining PLC (LON:KIBO) has signed the second part of its engineering, procurement and construction agreement with Chinese power major Sepco III. Sepco III will construct the power line between Kibo's Mbeya coal-to-power-project in Tanzania and a local substation owned by Tanzania's electricity utility TANESCO.
Midatech Pharma Plc (LON:MTPH) (NASDAQ:MTP) has started dosing patients in its first in-human study of sustained release product Q-Octreotide (MTD201). The study is for carcinoid cancer and acromegaly, two rare, debilitating and often fatal hormone-based tumours.
MaxCyte Inc's (LON:MXCT) technology may have a role to play in the treatment of sickle cell disease (SCD). Pre-clinical data presented Friday (May 18) at an industry assessed the use of non-viral CRISPR-mediated gene-correction in the treatment of the blood disorder.
WideCells Group PLC (LON:WDC), the stem cell services and stem cell-related insurance specialist, said its 2017 financial statements are nearing completion. The additional time required to finalise the results mean its live bookbuild via the Teathers mobile app has been extended until the figures are released.
Tidal power and renewable energy group Atlantis Resources PLC (LON:ARL) is to raise £20mln as its acquisition of the Uskmouth power station nears completion. The coal-fired power station, in Wales, will be converted to run on pellets from waste and re-open in the final quarter of 2020 if all goes to schedule.
Highlands Natural Resources Plc (LON:HNR) told investors that it has reviewed its strategy in the wake of its recent progress at the East Denver project in Colorado. The company recently secured a funding deal for East Denver and, in doing so, set the project on a path to significant revenue growth, thanks to an initial six-well programme.
88 Energy Ltd (LON:88E, ASX:88E) can now start a proper countdown to testing for the Icewine-2 shale well in Alaska. It said, in a statement, that the previously suspended production test will resume on June 11.
Ferrum Crescent Ltd (LON:FCR) has said its investors approved its name change to Europa Metals Ltd at its recent annual general meeting. The AIM-listed firm said its shareholders voted 99% in favour of the name change.
6.35am: Strong start predicted
The FTSE 100 looks set to start the week in positive territory thanks to the easing of trade hostilities between the US and China, coupled with a weaker pound, which is likely to provide a boost to exporters.
The spread betting firms are predicting the index of blue-chip firms will open 51 points higher at 7,829.79. This would place it around 10 points shy of the intraday high hit in January.
"The US and China stepping back from the brink of a trade war has lifted sentiment, boosting equity indices, putting the Footsie on track for a fresh record high," said Jasper Lawler of London Capital Group.
"This is by no means the end of the matter, especially given the huge gap that remains between the two sides, as highlighted by the lack of any real detail in the announcement. However, this was the encouraging start to talks that traders were after."
Around the markets:
- Pound worth US$1.3433
- Gold off US$5 an ounce at US$1,286.30
- Brent crude worth US$79.09, down 24 cents a barrel
- Financial Times
- EDF, the French energy group, is in talks to sell a 49% stake in a portfolio of its UK wind farms in a deal that could raise up to £600mln.
- The British high street is bracing for another body blow this week as some of the country’s largest retailers prepare for more store closures. House of Fraser, Marks and Spencer and Next look for ways to cut costs.
- Royal Bank of Scotland is considering restarting dividends on a scale that would make it one of Britain’s most generous payers to shareholders and would be likely to accelerate the government’s sale of its holding.
- Asking prices for homes across Britain have reached an all-time high, but sales are continuing to fall as buying sentiment remains fragile, according to Rightmove.
- Sirius Minerals sees fertile site at steelworks: New life could be breathed into part of the vast site of the collapsed Redcar steelworks on Teesside, after a tentative deal struck with a company behind a £2.2 billion mining project in the nearby North York Moors.
- Cath Kidston boss a shoe-in as new head at Dr Martens.
- Sky will today unveil plans to create a 70,000 square foot site on its U.K. headquarters, its third tech centre in Europe.
- TSB Boss under fresh pressure after it emerges bank could face £16mln in fines for IT fiasco.