FTSE 100 Turns South As Retail Sales Numbers Raise Prospect Of A November Rate Hike

The Footsie ended the week on a high note, finishing the day at its highest level as US stocks rebounded.

The FTSE 100 closed at 7,491, up 42 points on the day and 96 points on the week.

The large number of dollar earners in the FTSE 100 celebrated sterling's travails on the forex markets, as cable declined 0.9% to US$1.3313.

“The formal shift from phase 1 to phase 2 of negotiations between the UK and EU only intensified the pound’s Brexit migraine this Friday,” commented Connor Campbell at Spreadex.

“What we just went through was meant to be the easy part. Now the UK heads into the New Year facing an ‘even tougher’ (Angela Merkel) and ‘significantly harder’ (Jean-Claude Juncker) set of Brexit talks, as the country tries to work out what its future trade relationship will look like with the EU while desperately seeking avoid a ‘no deal’ scenario by the 29 March 2019 divorce deadline.

“The pound came over quite faint at the thought of all this. Against the dollar it plunged 0.8%, taking cable back below $1.335 as it shed all of its post-dovish(ish) Fed hike growth; as for against the euro, sterling dropped 0.7%, grazing 2 week lows in the process,” he added.

Pay-TV broadcaster Sky PLC (LON:SKY) topped the Footsie leader-board, adding 2.8% at 1,018p after it formed an unlikely alliance with rival BT Group plc (LON:BT.A).

“Shares of both Sky and BT gained ground today after announcing a ground-breaking new deal to share channels. Sky shares have not made up the losses from yesterday as the Disney deal with 21st Century Fox overshadows the company’s future. Investors are reacting positively because the extra subscriptions resulting from the deal should be a near-term positive for both firms. Only in the next 12 months will it be clear which of BT or Sky sees the most contract cancellations as customers choose one or the other,” observed Jasper Lawler of LCG.

“Sky is reluctantly accepting BT onto its team so that together they can face off against powerful new streaming enemies Amazon and Netflix. Amazon outbid Sky to win exclusive ATP tennis rights in August. It’s only a matter of time before either Amazon or another steaming firm like Netflix win rights to prized assets like the Premier League. Although we think the deal makes sense for Sky to help keep its customers by making more content available, it will probably hasten ‘cord cutting’ (where customers dump their satellite TV subscriptions),” Lawler added.

3pm - FTSE 100 climbs as pound loses ground

FTSE 100 was steadily climbing in late afternoon trade, buoyed by the weaker pound.

It came as the US dollar rise prompted currency traders to take profits after the news out of Brussels was that Brexit negotiations would move into the second phase, and involve talk on trade.

Sterling lost 0.90%  against the euro and 0.72% against the US dollar, while FTSE 100 rose over 19 points at 7,467.

The mid-cap FTSE 250 - a more UK company focused gauge - lost 27 points at 19,978 suggesting the Brexit progress made in Brussels had not unsurprisingly completely eradicated future fears.

Across the pond, US shares were heading higher, as rally mode looked to back on track. The Dow Jones added over 128 points at 24,635, while S&P 500  added 12.4 at 2,664. 

The Nasdaq index,  which is technology stock weighted,  rose 21 points at 6,872.

In equities,  at the top of the FTSE 100 pile was silver mining giant Fresnillo (LON:FRES)  as the  gold price rose. Shares gained 4.2% to 1,341p.

Elsewhere, on the losing front, SDL Group (LON:SDL) plummeted over 24% to 347p as the translation software group issued a profit warning.

In an update on its performance for the year to December 31, the group said its  sales pipeline was is in line with expectations, but warned that some of its software deals may not be processed or fully awarded by the end of the year. 

LED lights maker Luceco (LON:LUCE) dropped over 46% to 124.93p as it also posted  a profit warning in its trading statement.

Luceco said it would now deliver gross margin of approximately 33%, leading to a £3.5mln reduction in after tax profit to £13.2mln against current market expectations of £16.7mln.

SQS Software Quality Systems (LON:SQS) maintained its position of top London riser, adding  over 54% to 812.5p.

It came as it agreed to be taken over by Weilchensee 884 - a new German company formed by Assystem Technologies SAS to make the offer.

SQS shareholders will receive 825p in cash for each of their shares - valuing the firm at around £281.3mln.

SQS shares closed yesterday at 527.50p, so  it represents an impressive 57% premium.

1pm: Brexit wagon rolls on...

Brexit has nudged a little further down the road of progress, it seems.

EU leaders from the other 27 member states have agreed at a Brussels summit that the next phase of Brexit talks can now begin.

Initially, this second phase of Brexit talks will be dominated by talk on the transition period, under which the UK will continue to abide by EU law for roughly two years.

Theresa May has reportedly been given three months to get agreement within her cabinet on the UK government’s vision of a future trade deal.

It could still be though that she has to wait until March next year to get the discussions onto the topic of trade, as first comes the transition period.

The pound  lost 0.67% against the Euro and 0.43% agaisnt the US dollar.

FTSE 100 was up over 14 at 7,462.


EU leaders agree to move on to the second phase of #Brexit talks. Congratulations PM @theresa_may

— Donald Tusk (@eucopresident) 15 December 2017

12.15pm: US stocks seen higher 

After a weaker finish on  the US tax bill worries, US futures are seen higher on Friday.

The Dow Jones closed out over 76 points down at 24,508, while today futures are 62 points ahead. S&P 500 futures are  up nearly five points after the index closed almost 11 points lower at 2,652.

Meanwhile, the tech heavy Nasdaq has futures up 13 after it closed almost 20 points lower last night.

Wall Street sentiment was dashed on Thursday as question  marks continued over the  fate of President Trump's  US$1.5 trillion tax overhaul bill.

Marco Rubio, a Republican senator,  said that he would vote down the bill unless it included a greater expansion of the child tax credit,

There are also continuing questions about how the bill will be paid for.

FTSE 100 was up around three points at 7,452.

11.45am: Quiet Friday but sterling worries over Brexit

Connor Campbell  analyst at Spreadex, said: "Time to think it the last thing sterling needs at the moment.

"Whenever UK investors have a spare second thoughts tend to turn to the loud tick of the Brexit bomb. And even with the progress seen in the last couple of weeks – and the prospect of the EU formally agreeing to move on to the next phase of negotiations this Friday – there’s still not a lot for the pound to actually be thankful for."

The pound is down 0.46% against the Euro and off 0.26% against the US dollar.

FTSE 100 meanwhile was managing to claw its way back, up 0.04% to 7,451.

10.45am: FTSE 100 still lower; pound down

After briefly nudging into positive territory, FTSE 100 was down nearly 11 points at 7,437 at mid-morning.

Sterling was also under pressure and was 0.38% lower against the Euro at 1.1366 and down 0.075 against the US dollar.

Financial stocks were taking a hit, with Barclays (LON:BARC) down 0.32% to 199.95p and Old Mutual (LON:OMI) down 0.15% at 199.50p. Standard Chartered (LON:STAN) lost 1.04% at 751.50p.

In small caps, Ortac Resources Ltd (LON:OTC)was a notable gainer, adding 3.4% to 2.58p, but was higher earlier, as it revealed a new phase of work  was planned for the Akyanga gold project.

The company’s 84.7% owned associate Casa Mining has decided on the new initiatives following a review of previous exploration activity.

It is now looking to expand the project to incorporate structures that run parallel to Akyanga.

READ - Ortac Resources says Casa to start new phase of work at Akyanga gold project

10.20am: Has PM accepted EU plans for trade talks?

EU leaders are now arriving in Brussels.

At least one news source said though that UK PM Theresa May has basically accepted EU plans to postpone Brexit trade talks until next March.

The Independent writes that speaking to leaders over dinner last night, the PM accepted that “priority” should be given to talks on the transition period rather than the trade framework.

9.35am: Recouping some losses 

FTSE 100 was recouping some lost ground but still in the red in early morning trade, with retailers lagging.

The UK index of leading shares was down around 4 points at 7,444, while on the midcap front, the FTSE 250 was off over 30 points at 19,957.

"It looks like being a fairly lacklustre end to the week with European markets slipping back slightly against a backdrop of a little uncertainty about the time line of a US tax reform package while over in Brussels UK Prime Minister Theresa May appears to have won the backing of EU leaders in transitioning into the next phase of Brexit talks," said Michael Hewson, senior market analyst at CMC Markets.

The top stock gainer in London was SQS Software Quality Systems (LON:SQS), which surged by almost 55% after it agreed to be taken over by Weilchensee 884 - a new German company formed by Assystem Technologies SAS to make the offer. The bid will see SQS shareholders get 825p in cash for each of their shares - valuing the firm at around £281.3mln.

Elsewhere, on the Footsie, Next (LON:NEXT) was down 2.2% to 4,295p as it was dented by news of Stockholm listed H & M's disappointing quarterly sales figures. Marks & Spencer (LON:MKS) was also lower, down 0.3% to 308.5p.


Segro boosted by Liberum upgrade to 'buy' https://t.co/2HF5yaMTMg

— Digital Look (@DigitalLookNews) 15 December 2017

Among top risers on Footsie was Segro (LON:SGRO), which added 1.23% to 575p.

For those who've never heard of it (of course we have here). The firm develops warehouses and industrial property across Europe.

It comes after broker Liberum upgraded shares top a 'buy', citing more growth in the industrial sector around London.

8.40am: Rather dour start

Mirroring the weather in the Square Mile, the market made a rather dour start, falling 10 points to 7,437.87 as it took its cue from Wall Street following a rare down day of trading in New York.

The market’s focus will be Theresa May’s meeting with EU leaders in Brussels with hope of a formal agreement stating enough Brexit progress has been made to warrant a move on to trade talks. Sterling was almost static early on at US$1.3431.

“Dependent on whether its announced in time, it’ll be interesting to see how much the pound moves on the expected formal confirmation from EU leaders that they’re ready to move on to the next stage of negotiations with the UK,” said Connor Campbell of Spreadex.

“And while the fact that it is almost a given at this point might dampen the sterling’s enthusiasm, considering it’s rocky December form the currency shouldn’t turn its nose up at any good news, however predictable. Regardless it does seem like the pound is waiting for something.”

On the equity market, shares of BT Group (LON:BT.A) were up 1% after it signed a content deal with Sky (LON:SKY).

The property firm Segro (LON:SGRO) topped the leader board after being upgraded to a ‘buy’ by the stock-pickers at mid-ranked Liberum.

A disappointing set of quarterly results from fashion group H&M, which saw a surprise drop in sales, prompted London-listed peers lower.

Marks & Spencer (LON:MKS) dropped 0.81% to 306.80p, while High Street darling  Next (LON:NEXT) lagged 1.37% to 4,285.36p.

Proactive news headlines:

Ortac Resources Ltd (LON:OTC) told investors that a new phase of work is now planned for the Akyanga gold project. The company’s 84.7% owned associate Casa Mining has decided on the new initiatives following a review of previous exploration activity, and it is now looking to expand the project to incorporate structures that run parallel to Akyanga.

Ceres Power Holdings PLC (LON:CWR) said its first half income is expected to increase by around 80% and also revealed that it has signed a new technology assessment agreement with a leading global original equipment manufacturer (OEM). The developer of low cost, next generation solid oxide fuel cell technology also said it is in final stages of agreement for further OEMs to work with its SteelCell® technology and is confident of signing further contracts by early 2018.

Lithium group Bacanora Minerals Limited (LON:BCN) has received its second piece of good news this week through an offtake deal and share subscription with a Chinese investment group.

Canadian Overseas Petroleum Limited (LON:COPL, CVE:XOP), via its 50% owned ShoreCan joint venture, has been awarded a new asset from the Mozambique authorities. ShoreCan is to take control of Block PT5-B, spanning some 4,356 Square kilometres on the Mozambique coastal plain.

Mporium Group PLC (LON:MPM) has signed an agreement which will see it provide its IMPACT technology product to one of the world’s “largest and most prestigious” performance marketing agencies.

Blockchain consultant Coinsilium Group Limited (NEX:COIN) has been appointed as an adviser to its Token Generation Event by  Hdac Technology, a multinational backed by Hyundai.

Keywords Studios PLC (LON:KWS) has continued its acquisition spree and boosted its audio services by buying Mexico-City based LOLA for US$1.03mln from its founders. LOLA, which had revenues of US$1.2mln in 2016, has a reputation for quality and Keywords already uses its services to complement those of its local voice recording studio - the Kite Team Mexico, the firm said.

Strategic Minerals Plc (LON:SML) will now buy the Leigh Creek copper mine in South Australia from Resilience Mining Australia outright following due diligence. As reported in October, Strategic revealed it was to pay a total of A$5mln, mainly by way of royalties in combination with cash, shares and taking on debt, but it has renegotiated terms and will pay an equal mixture of cash and equity totalling A$3mln  (around £1.710mln) to buy it outright.

Ergomed Plc (LON:ERGO), the pharma services and drug development firm, said finance chief Stephen Stamp has been appointed chief executive after Dr Dan Weng decided to step down with immediate effect. Meanwhile, Dr Jan Petracek becomes chief operating officer and a board director.

Active Energy Group PLC (LON:AEG) has received  a letter of support from the Governor's Office of Energy Development in Utah for its CoalSwitch alternative fuel.

Energy specialist Aggregated Micro Power Holdings plc (LON:AMPH) expects the second half to be strong after producing a solid performance in the first six months of its financial year. The company specialises in the sale of wood fuels and installs commercial-size biomass-fuelled boilers used by schools, care homes and business parks.

Hummingbird Resources PLC (LON:HUM) said it expects to pour its first gold from the Yanfolila mine in Mali with the processing of ore well underway. Supply from the pad stockpile is now going through the mill and carbon in leach process plant in order to extract the yellow metal. Commercial ramp up will begin in the first quarter of next year and the aim is to produce 130,000 ounces of gold.

Internet of Things enabler Telit Communications Plc (LON:TCM) is targeting double-digit revenue growth next year after the recent award of various US certifications.

Gfinity Plc (LON:GFIN) has once again been named as Microsoft Corporation’s (NASDAQ:MSFT) preferred event partner, this time for the upcoming Halo World Championship 2018 which kicks off next month.

SDX Energy Inc (LON:SDX CVE:SDX) has confirmed that the KSR-15 well, at the Sebou field onshore Morocco, has now been tested and put on production. The well yielded into the sales line a restricted average rate of 7.52mln cubic feet of gas per day during the testing phase.

APQ Global Limited (LON:APQ), the emerging markets growth company has  announces that, as at the close of business on 30 November 2017, its unaudited book value was 93.96p per ordinary share.

6.45am: In the red expected

FTSE 100 is called to start the final full trading Friday before Christmas in the red after a weak finish on Wall Street and with Asian stocks lagging.

Global market traders are looking at the tax reform bill in the US and jittery about its successful passage into law.

It comes as Florida senator Marco Rubio said he would not vote for the overhaul, seen as a key plank  among President Trump's aims,  unless changes were made to child tax credits.

Wall Street shares were off on Thursday, despite some positive economic data around, with the Dow Jones closing down 76 at 24, 508 and the  broader S&P 500 down almost 11 points at 2,652.

In London, FTSE 100 finished over 48 points lower at 7,448 and is today called by spreadbetters at IG index to start around 22 points below that level.

In Japan, the Nikkei 225 is down 44 points at 22,649, while the Shanghai Composite Index is off 18 at 3,274.

Yesterday was a good day for Central Bank watchers but as City Index pointed out, the Bank of England, and its inactivity to move rates, keeping them on hold, did not  give much for markets to work with.

"The BoE has possibly one of the most difficult balancing acts to address compared to the ECB and the Fed," it said.

"The BoE are also sticking to their outlook for modest tightening over the coming years, should the economy perform as the central bank expects.

"However, the reality is that the next rate hike from the BoE is not due until the end of next year, which doesn’t leave pound bulls much to get excited about.."

It looks to be another quiet day on the corporate front with not much scheduled releases on offer.

Daily Mirror publisher Trinity Mirror PLC (LON:TNI) is set to release a full-year trading update on Friday, which may spark some interest.

The market already knows roughly what to expect though after the company said in October that it was on track to hit expectations with its full-year numbers despite a slide in third quarter revenues.

Significant events expected Friday December 15:

Interim results: Thruvision Group plc (LON:THRU)

Trading updates: SThree PLC (LON:STHR), Trinity Mirror PLC (LON:TNI)

Economic data: US industrial production; US Empire State manufacturing survey

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Source : http://www.proactiveinvestors.co.uk/companies/market_reports/188854/ftse-100-turns-positive-as-wall-street-shares-seen-higher-188854.html

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