Market ReportFTSE 100

FTSE 100 closes higher on day and week as world leaders meet

The mid-cap FTSE 250 added over 147 points to close at 19,462 on Friday

Rising chart on a dollar background
A solid start by US blue-chips
  • FTSE 100 closes up

  • US personal income rises 0.5%

  • US indices positive

FTSE 100 closed higher on Friday on trader hopes that the US-China trade relationship will improve amid the G20 summit.

Britain's blue-chip index closed around 23 points higher at 7,425. On the week as a whole it was up around 0.24%.

Meanwhile, the mid-cap FTSE 250 added over 147 points to close at 19,462.

In the US, stocks were also higher, amid stable trading and some positive economc data. The Dow Jones Industrial Average is up around 68 points, while the S&P 500 gained around ten.

"President Trump will meet China’s Xi Jinping tomorrow for crucial trade talks. China has called for a balanced trade deal, but Mr Trump is holding a tough line and he might press ahead with more tariffs if the talks don’t go well," said David  Madden, analyst at CMC Markets UK.

Top riser on Footsie was International Consolidated Airlines (LON:IAG), which gained nearly 5% to 476.90p.

3.15pm: US stocks open higher after in-line personal income data

US stocks opened higher but rather than giving encouragement to UK blue chips, the Footsie has ebbed from its higher levels.

The Dow Jones industrial average was 39 points (0.2%) firmer at 26,566 while the S&P 500, at 2,931, was up 6.4 points (0.2%).

The FTSE 100 was up 10 points (0.1%) at 7,412.

In the US, Personal Income rose 0.5% in May, beating the consensus, 0.3%. The core Personal Consumption and Expenditure (PCE) deflator rose 0.2%, in line with the consensus.

Ken Odeluga at City Index said the PCE readings would “be neutral for the Fed whilst it weighs a rate cut in July”.

Meanwhile, in the UK, economists were still sizing up the UK current account deficit, which was eye-watering at £30.0bn in the first quarter, up from £23.7bn in the preceding quarter, but not as bad as feared – the market had pencilled in a figure of £32.0bn.

As a share of GDP, the deficit increased to 5.6% in the first quarter, from 4.4% in the final quarter of 2018.

“Some highly disappointing news saw the current account deficit jump to £30.0 billion (5.6% of GDP) in the first quarter of 2019; this was the largest shortfall since late-2016 and up from £23.7 billion (4.4% of GDP) in the fourth quarter of 2018 and £17.3 billion (3.3% of GDP) in the second quarter,” reported Howard Archer, the chief economic advisor to the EY ITEM Club.

“A doubling of the trade deficit drove the first quarter’s sharp jump in the current account deficit; this countered a marked drop in the shortfall on the primary income account. This was primarily due to reduced profits made by investors in the UK on their foreign direct investment,” Archer said.

“The sharp rise in the current account deficit in the first quarter is worrying as an elevated shortfall is a potential source of vulnerability for the UK economy – particularly if there was any major loss of investor confidence in the UK for any reason, most obviously due to heightened concerns over the economy if there was a ‘no deal’ Brexit,” Archer concluded.

2.00pm: Shares trade sideways

The Footsie traded sideways over the lunchtime session, as traders wait on news from the G20 summit in Osaka.

London’s index of heavyweight shares was up 21 points (0.3%) at 7,423.

News from the blue-chips has been sparse but as ever, the small caps have provided plenty of announcements of interest.

Craneware PLC (LON:CRW), the US healthcare software provider, fell out of bed after a trading update, shedding almost a third of its value at 1,990p.

The company issued a profit warning, blaming the timing and quantity of sales closed in the second half of the financial year.

Information technology specialist Adept4 PLC (LON:AD4) was in the wars again, tumbling 20% to 0.4p, after revealing a sharp decline in underlying profits.

11.30am: US stocks expected to open higher

The FTSE 100 continues to make progress albeit at a glacial pace.

The index of leading shares was up 23 points (0.3%) at 7,425, ahead of what is expected to be a firm opening on Wall Street.

“Having traded at lows for the week during yesterday’s session, futures suggest that the Dow Jones Industrial Average will start Friday’s session on the front foot. Optimism over a meeting that’s due to take place between the US and Chinese leaders on the fringes of the G20 summit in Japan this weekend appears to be responsible for driving the gains, although reports suggest there may still be a considerable way to go when it comes to finding compromise. A step in the right direction would, however, have the potential to bolster commodity prices and with it take major indices higher, too,” said James Hughes, the chief market analyst at Axi Trader.

“Ahead of the open, the market is calling the DOW to open up 92 at 26,619 and the S&P up 7 at 2,932,” he added.

ING's James Knightley is not expecting any breakthroughs at the meeting between US president Donald Trump and his Chinese counterpart, Xi Jinping.

“China does not want to be seen as having been successfully bullied into accepting US demands,” Knightley said.

In Knightley’s view, the fall-out from a stand-off could go one of two ways. China could use monetary and fiscal stimulus to keep the domestic economy afloat but if the US does not back down, global market sentiment is likely to deteriorate.

Option two would be for Trump to intensify the trade war and for the US central bank to respond with aggressive interest rate cuts, as Trump has wanted all along, at which point Trump could promptly end the trade war, return tariffs to zero, leading to a rebound in market sentiment.

On the UK corporate front, Goldman Sachs has given a leg-up to a couple of retailers.

Supermarket J Sainsbury PLC (LON:SBRY) was 2.2% higher at 195.65p after Goldman Sachs upgraded the stock to ‘neutral’ from ‘sell’. Although the target price has been trimmed to 215p from 225p.

Fashion firm Burberry Group PLC (LON:BRBY) jumped 3.8% to 1,856p after it was also upgraded to ‘neutral’ from ‘sell’ by Goldman Sachs; again, the target price was pared – to 1,800p from 1,855p.

10.15am: UK GDP numbers in line with expectations

While waiting for news to emerge from the G20 summit in Osaka, traders have been mulling over the first quarter UK gross domestic product data.

Gross domestic product increased by 0.5% quarter-on-quarter, in line with consensus.

The as expected result did little to alter the course of the FTSE 100, which continued to poodle higher, up 16 points (0.2%), with supermarket plays J. Sainsbury PLC (LON:SBRY) and Ocado PLC (LON:OCDO) joining the housebuilders in the upper echelons of the Footsie; the former was up 2.1% at 195.45p and the latter was 1.8% firmer at 1,186p.

“The national accounts show that households weren’t fazed in Q1 by the possibility of a no-deal Brexit at the end of March. The 0.6% quarter-on-quarter increase in households’ real spending was the biggest since Q1 2017,” reported Samuel Tombs at Pantheon Macroeconomics.

“Admittedly, such strong growth is not sustainable; indeed, households had to reduce their saving rate to 4.1%, from 4.5% in Q4, to fund most of the increase. Timelier retail sales data suggest growth in households’ spending slowed sharply in Q2. Nonetheless, the outlook for solid growth in real wages, and the above-average level of consumers’ confidence in the outlook for their personal finances points to steady quarter-on-quarter growth in households’ spending of about 0.4% in the second half of this year,” Tombs said.

9.00am: Housebuilders drag the Footsie into positive territory

Get used to a whole lot of not much happening until news starts emerging from the G20 summit, which got underway today.

The FTSE 100 managed to eke out an 8 point (0.1%) rise to 7,410, with housebuilders getting some buying interest following reports that Boris Johnson is planning an overhaul of the stamp duty laws if he becomes prime minister.

Berkeley Group Holdings PLC (LON:BKG), up 3.5% at 3,707p, topped the Footsie leader board with the likes of Taylor Wimpey PLC (LON:TW.), Persimmon PLC (LON:PSN) and Barratt Developments PLC (LON:BDEV) not far behind, with rises of 2.3% to 3%.

Among the mid-caps, Woodford Patient Capital Trust PLC (LON:WPCT) emerged from the doghouse, posting a 2.3% rise to 58.8p, as it said it was prepared to put its house in order after discussions with shareholders.

The group said it had agreed on a schedule with Woodford Investment Management, its portfolio manager, to reduce the level of gearing to below 10% within six months and to be generally operating ungeared within 12 months.

Merlin Entertainments PLC (LON:MERL), the operator of Legoland Parks, Alton Towers and Madame Tussauds, jumped as it agreed to a £4.8bn takeover offer from a consortium backed by the founding family of the Lego Group.

Shares in the company, long tipped as a takeover candidate because of the market’s unwillingness to accept its hefty capital investments, were up 14% at 450.21p.

Proactive news headlines:

Union Jack Oil PLC (LON:UJO) has raised £2.25mln as it works to follow up the West Newton appraisal success with an extended well test. It is selling 1.32bn new shares priced at 0.17p each in a share placing arranged by broker SP Angel.

Diagnostics group Oncimmune PLC (LON:ONC) has signed an exclusive distribution agreement in the US for its early stage lung cancer test. The exclusive agreement with US group Biodesix is worth US$28mln over five years and will also see the two companies work together to develop further the EarlyCDT test in both the US and elsewhere.

Turkey-focused gold miner Ariana Resources PLC (LON:AAU) is looking at adding other commodities to its portfolio. The AIM company wants to diversify its business and explore commodities that are associated with emerging technologies.

ImmuPharma PLC’s (LON:IMM) flagship lupus drug has confirmed its “outstanding and robust safety profile” in a six-month extension study. The follow-up study was designed to evaluate Lupuzor’s safety and tolerability, and the drug passed with flying colours, with no serious adverse events reported.

Norman Broadbent Plc (LON:NBB) has cut its annual losses in half after its revenues for 2018 reached their highest level in over 10 years. In its results for the year ended 31 December 2018, the recruiter reported a pre-tax loss of £700,000, 54% lower than the prior year, while revenues increased by 44% to £9.4mln. Big Pic in June.

Advanced Oncotherapy PLC (LON:AVO) remains on track to treat the first cancer patient at its Harley Street facility by the end of 2020.

Gaming Realms PLC (LON:GMR) is targeting development of its Slingo brand as well as international distribution and US expansion for 2019. In an outlook statement accompanying its full year results, the company said it would develop and licence mobile-focused games under the Slingo brand while international distribution would increase income from its game portfolio.

Providence Resources PLC (LON:PVR), in its financial results statement, highlighted that it has continued to progress its Irish asset base despite “encountering increased regulatory and political headwinds”.

Simec Atlantis Energy Limited (LON:SAE) is to receive £5mln in cash as compensation for the collapse of its planned acquisition of Scottish hydro group GHR. The tidal power group will also receive a £2mln interest-free loan from vendor SIMEC, which is the group’s controlling shareholder.

Matthew Idiens is to step down from his position at Rose Petroleum PLC (LON:ROSE) once the company has completed its current transitional period. Rose, in a statement, said that it continues to evaluate roles and needs at the executive and board levels, as it appointed Rick Grant as non-executive director.

EQTEC PLC (LON:EQT) has raised £750,000 in a share placing and managed to agree to a “comprehensive restructuring” of its debts.

Pre-revenue gold mine developer ECR Minerals PLC (LON:ECR) said the last nine months or so have been marked by a series of exciting developments at its Australian projects.

Wishbone Gold PLC (LON:WSBN) increased precious metals trading revenues 30% last year and hailed the new valuation of exploration assets in Australia at higher than their carrying value.

Galantas Gold Corporation (LON:GAL, CVE:GAL) said all resolutions were passed at its annual general meeting, including the election of David Cather, the former Avocet Mining CEO, as a non-executive director.

G3 Exploration Ltd (LON:G3E) said it remains committed to concluding the demerger of Green Dragon Gas, which it had hoped to get done and dusted by the end of this month.

Sareum Holdings PLC (LON:SAR), the specialist small molecule drug development business, said that subsequent to the successful closing of its recent fundraising, the company has raised a further £100,000 at 0.4p per ordinary share from an institutional investor which participated in the placing. The group said that total gross proceeds of the fundraising have therefore increased to £781,484, with the net proceeds to be used to progress the company's TYK2/JAK1 drug development programmes as well as for working capital purposes.

Eden Research PLC (LON:EDEN), the AIM-listed biopesticide products developer announced that its chairman, Lykele van der Broek has purchased 358,500 ordinary shares in the company at an average price of 10.94p each. It said that, following the transaction, van der Broek is now interested in 358,500 ordinary shares representing 0.17% of the company's issued share capital.

PCG Entertainment Plc (LON:PCGE) (NEX:PCGE) said discussions are continuing regarding potential acquisitions as it announced that its shares will cease to be traded on AIM as the company has failed to appoint a replacement NOMAD. The firm added that its shares will continue to be traded on the NEX Exchange and trading will recommence on Monday July 1. It also announced the appointment of First Sentinel Corporate Finance Limited as its NEX Corporate Adviser with immediate effect.

Malvern International PLC (LON:MLVN) pointed out that it had expected to announce its results for the year ended 31 December 2018 yesterday but said it continues to endeavour to finalise these results as soon as possible and will make a further announcement in due course.

Anglo African Oil & Gas PLC (LON:AAOG), the independent oil and gas developer, announced that its executive chairman, David Sefton will be presenting at an investor evening hosted by Turner Pope Investments on Wednesday 3 July 2019, in London, EC2, which will commence at 4pm.

6.40am: All eyes on Osaka

The G20 summit starts in Osaka today, which might inject a bit of life into the market, but until then, “wait and see” are the watchwords.

The FTSE 100 is called to open more or less unchanged this morning after dipping 14 points yesterday to close at 7,402.

“Investors are holding their breath as the G20 meeting starts in Osaka today. The most expected event of the summit is Trump – Xi meeting, scheduled for 11.30am local time on Saturday,” reported Ipek Ozkardeskaya at London Capital Group.

“The ongoing tension between the US and China is certainly more than just a simple trade war. Therefore, it will probably take more than this week’s meeting to agree on all aspects at stake. The US Treasury Secretary Mnuchin has recently stated that the countries were ‘about 90% of the way’ to seal a deal, adding ‘there’s a path to complete this’. Although the chances of seeing a trade deal by the end of this weekend remain low, investors will be chasing any progress that could hint at an eventual resolution for the year-old trade dispute,” she added.

Asian markets this morning did not behave as if investors were hopeful of the US and Chinese leaders ending the meeting holding hands and singing “Kum ba yah”.

In Tokyo, the Nikkei 225 was down 99 points at 2,240 while in Hong Kong, the Hang Seng was 167 points lighter at 21,240.

Equities in the US were firmer on balance, although you would not know it from the Dow Jones 30-share index, which closed 10 points lower at 26,527. The broader-based S&P 500 climbed 11 points to 2,925.

In London today, there will be little to distract traders from the big meeting in Osaka, with only a couple of junior oilers – Providence Resources PLC (LON:PVR) and Rose Petroleum PLC (LON:ROSE) – due to report anything of any note.

Significant events expected on Friday:

Finals: Providence Resources PLC (PVR), Rose Petroleum PLC (LON:ROSE)

AGMs: Anglo African Oil & Gas PLC (LON:AAOG), HemoGenyx Pharmaceuticals PLC (LON:HEMO), Kore Potash PLC (LON:KP2), KRM22 PLC (LON:KRM), Tower Resources PLC (LON:TRP), W Resources PLC (LON:WRES)

Economic data: UK GfK consumer confidence; Nationwide house prices; UK quarterly GDP; US personal income/spending; US Chicago PMI; University of Michigan final consumer confidence survey

Around the markets

  • Sterling: US$1.2669, down 0.02 cents
  • 10-year gilt: yielding 0.825%, down 0.72 basis points
  • Gold: US$1,422.70 an ounce, up US$10.60
  • Brent crude: US$65.37 a barrel, down 30 cents
  • Bitcoin: US$10,897, up US$217

Business headlines

  • Financial Times

  • Russian leader Vladimir Putin has called time on liberalism is spent as an ideological force, following the growth of national populist movements in America and Europe.
  • Insurance giant Legal & General has inked a £4 billion deal with the University of Oxford, which wants to develop thousands of new homes in the city.
  • The new issues market may be moribund but private equity dealmaking is thriving and is at its highest level since the lead-up to the global financial crisis.
  • The Daily Telegraph

  • Ratings agency DBRS has warned that reckless 2008-style lending in the US$52 trillion shadow banking sector could hit investors with serious losses when the financial cycle turns.
  • The Culture Secretary has triggered a formal investigation of financial links between The Evening Standard and the Saudi Arabian regime.
  • Staffline investors baulked after it fell to a loss and revealed its accounts were delayed earlier this year because of an anonymous tip to its auditors.
  • Serco has raised its sales forecast for this year despite being rebuffed in its attempts to merge with rival Babcock.
  • The Times

  • Growth in online fashion sales has slowed to its lowest rate on record, new figures from Kantar showed.
  • Nato came under divisive new pressure yesterday after the US tried in vain to persuade its allies not to give in to “nuclear blackmail” by Tehran.
  • Apple’s design guru Sir Jonathan Ive left the tech giant to form his own studio after nearly 30 years with the business.
  • Bitcoin came under pressure yesterday, enduring a sharp fall into the red which underlined the volatility of the world’s biggest digital currency.
  • Superdry has delayed the publication of its annual results by six days, blaming upheaval associated with a recent boardroom coup.
  • The Guardian

  • US President Donald Trump flew to the G20 summit on Wednesday sounding warnings that China was “ripe” for new tariffs and suggesting that Vietnam could be next.
  • Boeing’s shares fell yesterday after US regulators said they had identified new flaws in the plane maker's grounded 737 Max models.
  • At least 36 illegal miners are believed to have died in a copper mine owned by Glencore in the Democratic Republic of the Congo (DRC) on Thursday.
  • Daily Mail

  • Ford to slash 12,000 jobs across Europe by the end of 2020 as it struggles to turn its business around.
  • Mark Herbert, the boss of Pendragon, one of Britain’s biggest car dealers, is leaving less than three months into the job.
  • Seven investors have applied to the high court to put four of the embattled financier Gavin Woodhouse’s companies into administration.

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