FTSE 100 remains becalmed

  • FTSE 100 index rises 3 points
  • Barratt downgraded by Citi
  • Joules hammered after a profit warning

11.20am: Stock market makes the world staring championship seem action packed

Volatility remains low, with traders sitting on their hands ahead of the US non-farm payrolls release this afternoon.

The FTSE 100 was just about keeping its head above 7,600 at 7,601, up 3 points.

Housebuilders are wanted this morning but Barratt Developments PLC (LON:BDEV) less so after Citi downgraded the stock to ‘neutral’ from ‘buy’. Barratt shares were up 0.2%.

Outside of the FTSE 350, Joules, which describes itself as “the premium British lifestyle brand”, lost almost a quarter of its value after a poor Christmas trading season.

“Joules’s run of luck has come to an end. Posh wellies may be a niche market after all,” was the acerbic verdict of markets.com’s Neil Wilson.

“A weak online sales performance was to blame, which management explains was ‘due to an internally generated stock availability issue through the important end of season sale event, the cause of which has now been addressed’. In other words, they mess up on stock just like Marks & Spencer did. Too many posh wellies? Too many polo shirts? Who can say, but shares seen at least -10%,” he noted.

10.15am: Footsie crawls back above 7,600

Tumble-weed continued to blow across dealing rooms in the City as traders wait for this afternoon’s US jobs data.

At 7,602, up 4 points (0.0%), the FTSE 100 has at least managed to move back above 7,600 despite being weighed down by weak banking stocks, particularly Lloyds Banking Group PLC (LON:LLOY) and Royal Bank of Scotland Group PLC (LON:RBS), the two operators expected to be hardest hits by new regulations on easy-access savings accounts. Both stocks were down 2.0%.

Packaging giant Mondi PLC (LON:MNDI) fell 2.4% to 1,671p after it parted company with its chief executive officer, Peter Oswald.

Irish airline Ryanair Holdings plc (LON:RYA) gave a lift to a sector already breathing a sigh of relief at the softer oil price, as it raised

full-year profit after tax guidance.

The shares were up 7.8% at EUR16.41.

“Investors’ attention will always be grabbed by a big number and Ryanair has duly delivered, raising the upper end of its full year profit guidance above the EUR1 billion mark,” commented AJ Bell‘s Russ Mould.

“Despite the uncertainty created by Brexit and mounting concerns about the environmental impact of flying, it seems plenty of people fancied jetting away over Christmas and the New Year,” he noted.

9.20am: Back to a holding pattern as traders wait for US jobs data

After opening higher as expected, the FTSE 100 has returned to base camp as traders wait for this afternoon’s market-moving US jobs data.

The FTSE 100 was down 3 points (0.0%) at 7,595, despite strong upward movements for airline stocks as investors reacted to a slight weakening of the oil price as Middle East tensions simmer down.

“Oil prices were already in an uptrend prior to the recent events, supported by OPEC+ cuts in early December and an overall positive macro-environment with a strong performance by equities. After reports of the killing of Iranian Major General Qasem Soleimani first emerged last week, Brent Crude Oil rallied past $70/bbl before retreating just below those levels as a response from Iran was expected. $70+ levels were then tested again after reports of Iranian missile strikes in Iraq,” observed Mayank Joshi at Chatham Financial, a financial advisor.

“Both these rallies were fairly short-lived, and prices have now started retreating after a more measured response from Trump in his address yesterday. Interestingly at the time of writing, Brent is trading just over $65/bbl and is lower than where we were before the Soleimani incident,” he added.

Low-cost operator easyJet PLC (LON:EZJ), up 4.0%, just beat out British Airways owner International Consolidated Airlines (LON:IAG), up 3.9%, for the top spot on the Footsie greasy pole.

Package tour operator TUI AG (LON:TUI) was the fourth-best performer, with a 2.5% increase.

Given that a commercial airliner has recently been downed – apparently by a rogue Iranian missile – the airline sector is showing remarkable resilience.

The stream of Christmas trading updates from retailers continues, with JD Sports Fashion PLC (LON:JD.) finding the market hard to please this morning.

The shares were down 2.4% at 808p after it declined to provide hard numbers in its trading update.

“There has been no trading update from JD Sports since its interims on Sept 10th, but after impressive growth of over 10% in core UK sales in the first half, the message at the time was that “we are pleased by the continued positive trends to date in the second half in Sports Fashion”. Now,

“Today’s update talk[s] about ‘positive’ growth, but there are no figures and all JD Sports really say is that Overseas has done well enough for the group to be on track to hit full-year PBT [profit before tax] ‘in the upper quartile’ of the GBP403mln-433mln range. This is reassuring, but for a FTSE 100 company we would have expected a better level of information,” griped Nick Bubb, the independent retail analyst.

8.30am: Friday firmness

The FTSE 100 index pushed higher in early trade on Friday as, with traders decompressing from heightened geopolitical worries sparked by America’s assassination of Iran’s military leader earlier this week, the market looked to be headed for a mellower run into the weekend.

The index of UK blue-chips opened 24 points higher at 7,622.83

In the US, Apple shares hit a new high after updating on its performance, while Wall Street enjoyed another record session Thursday with the Dow Jones Industrial Average closing in on nose-bleed territory at 29,000.

Whether it gets there or not on Friday will depend on the latest US jobs figures, known as non-farm payrolls.

“Remember last month a blowout jobs number sent equities higher along with the US dollar and Treasury yields, as it suggested the US economy was doing better than many corners of the market feared,” said Neil Wilson at Markets.com.

With Brent Crude Oil well below its week high of US$70, the airlines, whose major ‘swing’ costs relate fuelling their jets, were back in demand. easyJet (LON:EZJ) climbed 7% in early deals, while British Airways owner IAG (LON:IAG) wasn’t far behind with a 5% spurt.

Antibodies specialist Abcam (LON:ABC), which valued at GBP2bn is one of AIM’s largest companies, slid 6% after it tempered its growth expectations for the year.

Proactive news headlines:

Frontier IP Group PLC‘s (LON:FIPP) portfolio company, Exscientia has signed a collaboration deal worth up to GBP203mln (EUR240mln) with German pharmaceutical giant Bayer focused on oncology and cardiovascular disease. Under the terms of the deal, Exscientia will initially work on three projects focused on accelerating the discovery of small molecule drugs using its Centaur Chemist platform, which uses artificial intelligence to identify new drugs.

Pembridge Resources Plc (LON:PERE) told investors it has received its third payment under its offtake agreement with Sumitomo. The latest payment, US$5.4mln, follows the first and second Sumitomo payments which came in November and December respectively.

MTI Wireless Edge Limited (LON:MWE) has secured an additional order to an existing contract, worth around US$0.6mln. The contract is for the manufacture of military aerials and follows on from a US$1mln order received in March 2019, worth US$1mln, that was to be delivered over 40 months; the additional order announced today is to be delivered within the next 12 months.

Tharisa PLC (LON:THS) chief executive Phoevos Pouroulis described a “solid operational performance” as the company reported on the three months ended 31 December 2019. The Cypriot firm with mining assets in South Africa, in a statement, told investors that it mined 1,143 tonnes of ore and milled 1,247 tonnes during the quarter.

Mkango Resources Ltd (LON:MKA) (CVE:MKA) confirmed it has bought a stake in a company that has developed a technology to recycle rare earth magnets. Its subsidiary Maginito has taken a 25% stake in HyProMag for GBP300,000 and has an option to take this up to 49% for a further GBP1mln. Maginito has developed a patented method for extracting and demagnetising neodymium iron boron alloy powders from magnets embedded in scrap and redundant equipment.

European Metals Holdings Limited (LON:EMH) (ASX:EMH) has raised GBP350,000 via a share placing at 15.25p a share. In total, 2.3mln shares were placed with new and existing UK investors. The company said the funds would be used to further the development of the Cinovec project, the lithium asset in the Czech Republic.

6.30am: Footsie called higher

Ahead of the release of the December US jobs report this afternoon, the FTSE 100 index looks set to continue yesterday’s positive mood.

Spread betting quotes indicate that the blue-chip index, which yesterday added 23 points to close at 7,598, will open 29 points higher at 7,627.

“In today’s December US employment report, we can expect to see a softening to 162k [from November’s 266k]; however, given the strength seen in the employment component of this week’s ISM non-manufacturing report, there is a chance that this estimate may well be on the low side. We should also look for any possible downward revisions to the November number, which was surprisingly stronger than expected,” advised CMC’s Michael Hewson.

Sterling took a bit of a biffing yesterday after Bank of England governor Mark Carney suggested that the central bank might have to rummage around in the largely empty cupboard of stimuli if the hoped-for post-Brexit bounce does not occur. Today, the pound is recouping some of those losses, which is likely to put a lid on Footsie’s gains.

Over in the US, President Trump is once again claiming the credit for US indices being at or near all-time highs.

The Dow surged 212 points yesterday to 28,957 while the S&P 500 jumped 22 points to 3,275.

In Asian markets this morning, the mood was also mostly upbeat with Tokyo’s Nikkei 225 up 95 points to the good at 23,835 and Hong Kong’s Hang Seng 36 points firmer at 28,597.

Turning to the UK corporate news calendar, it would largely be a dead period were it not for the post-Christmas trading updates from retailers.

JD Sports Fashion PLC (LON:JD.), the ‘athleisure’ (ugh!) retailer is seen by analysts as one of the winners in the changing UK clothing retail market, with its September interims beating market expectations with a 10% increase in like-for-like sales in the UK and a 7% rise in pre-tax profits.

The bar is set high for Christmas, although some say profit margins could have been squeezed by pre-Boxing Day sales.

Elsewhere on the high street, B&M European Value Retail SA (LON:BME) will also issue a third-quarter update on Friday.

Analysts at Peel Hunt think it will reflect a decent quarter for B&M, albeit up against easy comparatives, with like-for-like sales growth to remain around the 3% mark seen for the second half.

Significant announcements expected on Friday:

Trading announcements: JD Sports Fashion PLC (LON:JD.), B&M European Value Retail (LON:BME)

Economic data: US non-farm payrolls

Around the markets:

  • Gold: US$1.549 an ounce, down US$5.30
  • Brent crude: US$65.31 a barrel, down 6 cents
  • Sterling: US$1.3088, up 0.22 cents
  • 10-year gilt: yielding 0.823%, up 0.04 basis points
  • Bitcoin: US$7,734, down US$55

City headlines:

  • Financial Times

  • Western intelligence officials believe a passenger aircraft that crashed in Iran killing 176 people was mistakenly downed by an Iranian anti-aircraft missile.
  • After 15 years as the boss of British Airways owner IAG, Willie Walsh is stepping downward

  • The Times

  • John Lewis boss Paula Nicklods made a shock exit after the department store reported disappointing festive trading and cautioned that profits at the department store would be substantially lower this year.
  • Mitchells & Butlers posted like-for-like sales growth of 5.6% over the three-week festive period on strong demand for pub meals and drinks on key days including Christmas Day and New Year’s Eve drove.
  • Card Factory has sounded a profit alert and warned that it does not expect to pay a special dividend next year after enduring tough Christmas trading.
  • Recruitment firm Robert Walters suffered a slump in profit due to an end-of-year bout of Brexit uncertainty and disruptions caused by last month’s general election.
  • SIG, a provider of roofing materials and building insulation, issued its second profit warning in three months, this time slashing estimates on its earnings for 2019 by more than a third.
  • Occidental Petroleum, the top oil producer in the Permian Basin, is cutting jobs amid a slump at America’s most promising oilfield.

  • The Daily Telegraph

  • Almost 3,500 investors are preparing legal action in a battle to recover losses inflicted by the collapse of Neil Woodford’s investment empire.
  • Travelex has been criticised for leaving customers in the dark over a hacking attack after the currency transfer business refused to say if it had paid a US$6 million ransom.

  • Daily Mail

  • Airbus is plotting to expand in the UK after MPs backed Boris Johnson’s EU withdrawal deal that swept away some of the uncertainty over Brexit.
  • Home furnishings retailer Dunelm has posted a 6% growth in revenue for the first six months of the financial year.

  • The Guardian

  • Marks & Spencer shares fell sharply after its Christmas sales were dented by rivals’ discounts as well as its own buying mistakes.
  • Liberty Steel and the rolling stock manufacturer Hitachi announced job cuts affecting up to 505 staff across the UK.
  • Dixons Carphone has been hit with the maximum possible fine after the tills in its shops were compromised by a cyber-attack that affected at least 14 million people.
  • More than 11,400 investors are likely to lose more than GBP230 million in savings due to the collapse of London Capital & Finance after it was announced that only 159 affected mini-bond customers would receive compensation.

Leave a Reply

Your email address will not be published. Required fields are marked *