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

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FTSE 100 joined the global share rout on Thursday, and closed down over 56 points at 7,175.

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FTSE 250 also tanked over 135 points to 19,551, while in the US, the Dow Jones is down around 93 points at the time of writing.

It appeared investors were, like those looking out of windows in the UK at artic conditions, put off by the big freeze.

David Madden, at CMC Markets, put it thus: "The momentum in the market recovery has run out of steam, and now traders are undecided whether the market will turnover on itself again, or if this is a breather before another leg higher.

"The economic outlook hasn’t changed, but with the Italian election over the weekend we could see traders adopt a risk-off strategy."

In the currency markets, the pound was down 0.27% against the Euro, and shed 0.15% against the US dollar.

On Footsie, in the top five laggards was advertising giant WPP (LON:WPP), which shed 8.18% to 1,280p as companies shy away from traditional advertising and are using online targeting to reach their customers.

Mining titan Evraz (LON:EVR) was the big winner, adding 4.94% to 448.20p after it swung to a net profit in 2017, citing an upswing in global markets as well as its cost-cutting initiatives and product development.

Halving earlier losses..

Heading into the last hour of trading, the top-shares index was staging a rally, halving earlier losses, as Wall Street turned positive.

The FTSE 100 was still 29 points in the hole at 7,203 but it had managed to break back above the 7,200 level.

In the US, Bureau of Economic Analysis’s Personal Consumption Expenditures (PCE) Report for January has given economists plenty to chew on.

“The solid increase in the January PCE price index – [the] last PCE price index report before the March FOMC meeting – keeps the Fed on track to raise its policy rate at the March 20-21 FOMC meeting,” suggested Mickey levy at German bank Berenberg.

“The core PCE price index has accelerated to 2.1% annualized over the last three months following the soft patch in early 2017 (Chart 4). We expect 12-mth core PCE inflation to rise moderately in 2018, but stronger economic activity is expected to push it above 2% in 2019,” he added.

“Consumers took a breather in January following robust consumption increases in late 2017. Despite the jump in the personal saving rate to 3.2% from 2.5%, it remains near historical lows … This reflects a host of positive factors: sustained low unemployment and sustained gains in employment and personal incomes; high household net worth; and elevated confidence. We expect consumers to spend a larger chunk of this additional take-home pay in coming months,” Levy said.

Among the tiddlers, mobile payments solutions provider Mi-Pay Group PLC (LON:MPAY) lost a fifth of its value at 9.5p as it announced a trading update, a placing of shares at 12.5p and a change in management duties, with Seamus Keating vacating the chairman’s seat to become a non-executive director, allowing chief executive officer John Beale to become executive chairman.

2.45pm: Blue-chips near the intra-day low as US opens lower

It’s another triple-digit fall for the Dow Jones average as investors await today’s comments from Fed boss Jerome Powell with trepidation.

The Dow was down 129 at 24,900 and the S&P 500 was down 11 at 2,703, adding to yesterday’s heavy losses.

Commenting on Powell’s appearance before the US Senate Committee on Banking, Housing and Urban Affairs, Miles Eakers at Centtrip said: “Any further hawkish rhetoric could dull risk appetite further, and economists are starting to fear higher-than-expected inflationary pressure will force the Fed to tighten monetary policy faster.”

In the UK, the FTSE 100 was sticking close to the 7,160 level – down 74 at 7,158.

The FTSE 250 was faring slightly better – down 0.72% versus the FTSE 100’s 0.9% fall – at 19,546, down 141 points, helped by the sharp advance by engineer Laird after its agreed takeover by private equity group Advent, and by a return to favour by theme parks operator Merlin Entertainments PLC (MERL).

The Legoland and Alton Towers owner reported in-line results for 2017 and said underlying expectations for 2018 are positive.

The FTSE 250-listed attractions operator saw its underlying earnings (EBITDA) rise by 9.5% to £474mln for 2017, in-line with the company's previous guidance.

The shares rose 12.2% to 381.3p.

“Having been stripped of its FTSE 100 listing last year following a sustained retreat from June’s all-time highs, punctuated by an October profits warning, the commitment to open a further 644 new rooms across all theme parks, a 68% increase on 2017, is being well-received by investors,” commented Henry Croft at Accendo Markets.

“Building on existing demand from those able to easily travel to parks by opening the door to visitors from further afield, in addition to generously offering them the ability to splash more cash over a multi-day trip, is a high growth strategy that today’s buyers hope pays off in the long run,” Croft added.

1.30pm: No sign of a rally as investors wait on Jerome Powell

There is no sign yet of the Footsie rallying, especially with miners out of favour as mineral prices soften.

The FTSE 100 was down 56 at 7,176, about 10 points above its low point for the day.

Evraz plc (LON:EVR) was defying the trend in fine style after its 2017 results pleased the market.

The stock sat atop the Footsie leader-board, up 4.9%, after it reported a 70.2% increase in underlying earnings (Ebitda) to US$2.62bn from US$1.54bn in 2016.

“The strength of the underlying cash flow generation and continuing success with deleveraging have allowed us to announce a formal dividend policy,” said Alexander Frolov, the chief executive officer of Evraz.

The steel exporter said it intends to splash out a minimum of US$300mln a year in dividends, though this policy will be suspended should net debt exceed three times annual Ebitda.

The shares responded by advancing 4.9% to 448p.

Also on the up was bid target Sky PLC (LON:SKY). The pay-TV and internet service provider was 3p higher at 1,351p after announcing a new partnership with Netflix in Europe.

Sky will make available the extensive Netflix service to new and existing customers of Sky, combining Sky and Netflix content side- by-side for the first time.

On the day that it was announced mortgage approvals hit a six-month high in January, house-builder Bovis Homes PLC (LON:BVS) softened the blow of reduced profits in 2017 with the promise of special dividends.

READ Bovis Homes PLC on the comeback trail as it pledges to reward patient shareholders with special dividends

The shares were up 2% at 1,071p.

As for mortgage approvals, Howard Archer, the chief economic advisor to the EY ITEM club, said: “January’s sharp rebound in mortgage approvals suggests that there may have been a hit to activity in December as a knee-jerk reaction to the Bank of England raising interest rates in November. It is also possible that cutting stamp duty for first-time buyers in November’s Budget may have provided limited support to mortgage approvals in January.

“It is possible that the rebound overstates the current strength of the housing market just as December’s drop overstated the weakness of housing market activity. It should be noted that housing market activity can be particularly volatile around Christmas and New Year,” Dr Archer added.

Noon: Footsie's slide continues; US markets expected to open on the back foot

The Footsie, having fallen below 7,200, continues its gentle slide ahead of the second set-piece testimony this week by the new boss of the Fed.

The FTSE 100 was down 54 at 7,178, with fallers among Footsie constituents outnumbering risers by around three-to-one.

“US equity markets are expected to open in the red on Thursday, as traders await the second appearance of the week from new Federal Reserve Chair Jerome Powell and a selection of economic data,” noted Craig Erlam at Oanda.

“Powell’s testimony in front of the House Financial Services Committee on Tuesday was very bullish on the economy and led many to believe that a fourth rate hike is on the table this year. While this isn’t a million miles from what markets are pricing in, it did trigger another negative response from markets with US indices falling around two and a half percent since and positioned for further losses today,” Erlam added.

WPP and Rentokil continue to lead London lower after disappointing trading updates while Carpetright PLC (LON:CPR) was dragging down the FTSE 250 index after another profit warning; the FTSE 250 was down 135 points at 19,553.

Carpetright, Britain's biggest floor coverings retailer, now expects to report a small underlying pre-tax loss for the full-year.

Trading conditions have remained difficult, characterised by continued weak consumer confidence, and the company let drop that it is “proactively engaged in constructive discussions with its bank lenders in order to ensure it continues to comply with the terms of its prevailing bank facilities”.

The shares lost a quarter of their value.

There was some good news from the retail sector, however, with fashion brand Burberry Group PLC (LON:BRBY) shooting up 6% on the appointment of a new creative officer.

Riccardo Tisci will direct all Burberry collections and will present his first Burberry collection in September.

Tisci was formerly the creative director at Givenchy.

.@Burberry has announced Riccardo Tisci as its new chief creative officer: https://t.co/iNFsp1kKUh pic.twitter.com/RxiWuJ7Ufe

— British Vogue (@BritishVogue) March 1, 2018

10.30am: Disappointing trading updates weigh down the Footsie

Losses have lengthened in London, with Footsie’s plight not helped by disappointing updates from WPP and Rentokil Initial.

The FTSE 100 fell below the 7,200 level and was down 38 at 7,193.

Marketing and advertising giant WPP PLC (LON:WPP) was down 13.6% at 1,204.5p after what was termed “uninspiring results” by Helal Miah at The Share Centre.

“Not much great news was expected from WPP’s full year results and that is exactly what we got. Like-for-like billings were down by 5.4% to £55.6bn, reported revenues did, however, rise by 6.1% to £15.3bn. Notably, a lot of this would have been down to favourable currency movements with the second half of the year showing downward momentum compared to the first half,” Miah noted.

Rentokil Initial PLC (LON:RTO) was another cellar-dweller after the pest controller cautioned about the adverse impact of currencies on this year’s profit numbers.

City analysts trimmed forecasts by around 4%.

The shares were down 7.6% at 267.5p.

8.20am: London opens modestly lower

London has opened lower but it is not the bloodbath seen in the US yesterday.

The top-shares index was off 20 at 7,212 with marketing and advertising group WPP group PLC (LON:WPP) leading the retreat after its full-year results disappointed.

WPP’s stock fell 8.5% to 1,275p, bringing an abrupt halt to the share’s recent recovery, as investors focused on a subdued outlook statement.

“Despite the difficulties WPP faced over the year, revenues and profits were ahead of expectations, with key metrics such as return on equity and earnings per share appreciating strongly. The progressive dividend policy and potential share buybacks are supportive, with the current dividend yield of 4.3% being ample and likely to improve further. Meanwhile, the Winter Olympics, football World Cup and mid-term US elections should provide an environment in which the company typically prospers, whilst its acquisitive nature should underpin its growth prospects,” commented Richard Hunter, head of markets at interactive investor.

“However, for the moment there are a number of headwinds which investors are refusing to ignore. Guidance for the current year is guarded at best, despite the boost that sporting events should bring, with a flat outcome being a possibility and not helped by a slow start to 2018,” he added.

ITV PLC (LON:ITV) remained in the dog-house after yesterday’s prelims, sliding 3% to 155.25p after HSBC downgraded the stock from ‘buy’ to ‘hold’ and cut the price target from 210p to 180p.

Liberum Capital, meanwhile, remains a buyer of the terrestrial broadcaster but has cut its price target from 330p to 265p.

Proactive news headlines:

Asiamet Resources Ltd (LON:ARS) shares advanced 6.5% as it kicked off a new drill programme at the Beutong copper-gold project, in Indonesia. The explorer has a 40% stake in the project, though it is in the process of increasing that to 80%, and the new programme aims to test the deposit at depth as well as investigate potential extensions to the deposit.

Tekcapital PLC (LON:TEK) told investors that the Lucyd blockchain venture has received US$6.1mln in contributions through its “token generation event” or TGE. Lucyd, established by Tekcapital last year, was setup to develop ergonomic, augmented reality (AR) smartglasses and a blockchain-based app store tied to the device.

Plastics products group Plastics Capital PLC (LON:PLA) had mixed news for shareholders, reporting continued strong sales growth, albeit lower than expected in its Industrial Division. Sales growth in the Films Division has been exceptional, the company said, while growth in the Industrial Division has improved in the second half of the financial year (which runs to the end of March), but not as much as expected when the group reported its interims in December.

Haydale Graphene Industries PLC (LON:HAYD) expects revenues over the next 12 months to rise following a period of investment and expansion. Ray Gibbs, chief executive, said: “The next six to twelve months should be an exciting time for the group, which we believe now has the customer engagement, geographic reach, engineering solutions capability and product know how to create material change in the group's future revenues."

Shares in Ceres Power Holdings PLC (LON:CWR) provided some cheer in a chilly market on Thursday with news of more progress with its SteelCell technology. The company unveiled a new 5kW (kilowatt) stack platform and the latest advancements of its SteelCell V5 at the Fuel Cell Expo in Japan.

Alliance Pharma PLC (LON:APH) has unveiled the succession of its deputy CEO to CEO, the current CEO's transition to a non-executive role, and the appointment of a new chairman. In a statement, the AIM-listed specialty pharmaceutical group said Peter Butterfield, currently deputy CEO, will take over from John Dawson as CEO on 1 May 2018.

Ticketing and queue-busting software outfit accesso Technology Group PLC (LON:ACSO) has bagged its first healthcare partnership, with the Henry Ford Health System (HFHS). The long-term agreement will enable HFHS, a six-hospital system, to use TE2, accesso’s digital experience and personalisation platform, to digitise and personalise patients’ interaction with the healthcare provider.

Belvoir Lettings PLC (LON:BLV) has acquired an additional 624 managed properties that its estimates will increase its network income by almost £1mln per annum. The AIM-listed property franchise group said the acquired properties, located within Welwyn Garden City and St Albans, will increase group management service Fees (MSF), Belvoir’s main revenue stream, by £400,000 in the first six years of ownership.

Devon-based tungsten and tin miner Wolf Minerals Limited (LON:WLFE) has topped up its bridge loan facility with major shareholder Resource Capital and restructured its other Senior debts. Wolf has been reliant on funding from Resource Capital to keep going while it sorted out teething problems at the new Drakelands mine near Plymouth, but this improvement programme is now nearly done, said Richard Lucas, interim managing director.

Challenger Acquisitions Limited (LON:CHAL) revealed it has so far secured 11 actors for the upcoming Star Sanctum convention to be held in May 2018. The leisure and entertainment focused company said in an update that a variety of television and film actors have been engaged for the convention, including Benedict Cumberbatch and Chiwetel Ejiofor.

BlueRock Diamonds PLC (LON:BRD) expects to ramp up production at its Kareevlei diamond mine in South Africa this year as it operates from its upgraded plant. The AIM-listed diamond mining company estimates it can achieve an average grade of between 3.5 carats per hundred tonnes (cpht) and 4.5 cpht, indicating total production of between 9,500 and 12,500 carats. Last year the mine, located in the Kimberley region, produced 3,728 carats.

Jubilee Metals Group PLC (LON:JLP) and its joint venture partner for the Kabwe project, BMR Group (LON:BMR), have agreed to extend the fulfilment on all conditions under their agreement from the end of February to the end of March. The decision to extend the long stop date comes after BMR lost its mining right for the Kabwe project in Zambia.

Eco Atlantic Oil & Gas Ltd (LON:ECO, CVE:EOG) is growing confident that its 40%-owned Orinduik exploration project has “world class potential” as Exxon Mobil continues to enjoy prolific success on the neighbouring block. Exxon on Wednesday gave details of its latest discovery offshore Guyana, after news of the oil find emerged.

Chaarat Gold Holdings Ltd (LON:CGH), in a statement after Wednesday’s close, updated investors as it continues to work towards the close of a US$20mln funding launched in December. On December 18, the mine developer announced that it planned to bring in the funds - in a mixture of equity and loan notes – and it has so far received US$11.36mln (US$6.4mln from equity and US$4.95mln of notes).

HemoGenyx Pharmaceuticals PLC (LON:HEMO) saw its shares jump higher after Align Research initiated coverage on the biotech company with a "conviction buy" stance and target price of 1,81p.

Metal Tiger PLC (LON:MTR), the AIM-listed investor in strategic natural resource opportunities, announced that Geoff McIntyre is stepping down from his role of non-executive director. The company also announced the appointment of Neville Keith Bergin as non-executive director effective immediately.

Bushveld Minerals Limited (LON:BMN), the AIM-listed integrated vanadium producer with additional investments in coal, power and tin, has announced the appointment of a new joint broker, Alternative Resource Capital, a trading name of Shard Capital Partners LLP.

Collagen Solutions PLC (LON:COS), the developer and manufacturer of medical grade collagen and tissue components for use in regenerative medicine, confirmed it will be attending two forthcoming conferences in New Orleans, Louisiana, USA, between 6-9 March 2018. The group said its CEO, Jamal Rushdy, will present at the Canaccord Genuity Musculoskeletal Conference on 6 March, and the company will exhibit at the American Academy of Orthopaedic Surgeons (AAOS) Annual Conference from 7-9 March.

Kibo Mining PLC (LON:KIBO), the multi-asset Africa-focused energy and resource company, announced that its new corporate presentation is now available to view on the 

group’s website

Pre-open

The FTSE 100 is expected to start Thursday materially lower, following another sharp sell-off in the global equity markets.

Wall Street has yet to arrest the slide since the Federal Reserve’s new man, Jerome Powell, spooked markets with suggestions that there could be a more aggressive attitude to raising interest rates.

The Dow Jones plummeted to close 380 points or 1.5% lower on Wednesday, to 25,029, meanwhile, the S&P 500 shed 1.11% to close at 2,713 and the Nasdaq Composite was down 0.78% to 7,273.

Attention will likely remain locked on the United States and the US Dollar on Thursday.

“Thursday promises to be a big day for the dollar thanks to a full US economic calendar, with highlights such as PCE, initial jobless claims and ISM Manufacturing figures all expected to impact on the market,” said Jasper Lawler, analyst at London Capital Group.

“Given the markets hyper-sensitivity to interest rate expectations, particularly in light of Powell’s optimism over the strength of the US economy, even the slightest surprise to the upside on a reading, could put fresh legs on the dollar rally.

“Given that in the previous session the dollar charged higher on a downward revision of Q4 GDP, a decline in personal consumption and a huge miss in pending homes sales, strong readings today could potentially see a strong reaction.”

In Asia, Japan’s Nikkei was off 343 points or 1.56% changing hands at 21,724. Hong Kong’s Hang Seng, meanwhile, was trading in positive territory albeit only slightly (0.09%) at 30,873 and the Shanghai Composite treaded 0.3% higher to 3,269.

Australia’s ASX 200 dropped 42 points or 0.7% to 5,973.

In London, where the work day is again impacted by the ‘beast from the east’ blizzards, the FTSE 100 is seen in negative territory.

CFD and spreadbetting group IG Markets sees index of London’s top 100 shares losing close to 50 points, at 7,189 to 7,193, with just over an hour until the start of trading.

In terms of corporate news, the diary looks fairly busy again with troubled outsourcer Capita likely to one of the morning ‘s key trading focusses.

Around the markets

Sterling: US$1.3765, up 0.04%

Gold: US$1,313 per ounce, down 0.12%

Brent crude: US$64.75 per barrel, up 0.015%

Bitcoin:US$10,416, up 1.03%

Headlines

Toys R Us and Maplin collapses put 5,300 jobs at risk - The Times

Music streaming service Spotify files to go public, lost $1.5 billion last year - CNBC

Dyson posts $1.1 billion profit driven by Asian demand for its tech – Reuters

Prezzo restaurant chain to close a third of its UK branches - The Guardian

Toyota to build new Auris in Britain - The Times

KFC reports gravy shortage, following chicken crisis – CNBC

Sturgeon says Brexit makes new Scottish investment bank vital – Herald Scotland

Bill Ackman Surrenders in His Five-Year War Against Herbalife - Wall Street Journal

FedEx and UPS go back and forth over the NRA – CNN Money

SEC Launches Cryptocurrency Probe - Wall Street Journal

‘Pharma bro' Shkreli seeks 12 to 18 month sentence, below guidelines – Reuters


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