FTSE 100 closes a shade ahead as US inflation data dampens sentiment
- FTSE 100 closes ahead- just
- Wall Street mixed
- Babcock boosted despite hefty write-off
5.10pm: FTSE closes 0.02% higher
FTSE 100 closed with its head just above water on Tuesday as a rise in US inflation put a dampener on sentiment.
The Footsie closed up by 1.37 points, or 0.02%, at 6,890, off the intraday high of 6,895, but well ahead of the low at 6,859.
The US data showed CPI rose 2.6% year-on-year (y/y) or 0.6% month-in-month. Core inflation rose to 1.6% y/y from 1.3%, with the month-on-month reading printing 0.3%.
“A rise in US inflation served to highlight the fears that could gradually factor into market thinking in the months ahead, with markets on both sides of the Atlantic failing to gain traction today,” said Joshua Mahony, senior market analyst at IG.
“The Nasdaq provided one area of outperformance, with another day of consolidation in the US 10-year Treasury yield helping to bolster confidence in tech stocks,” he added.
On Wall Street, the Nasdaq gained almost 77 points at 13,926, while the Dow Jones Industrial Average shed over 141 points. The S&P 500 added around five points.
3.57pm: Water companies and banks lower
The UK market is drifting aimlessly towards the close, with the FTSE 100 currently off 7.06 points or 0.1% at 6882.06.
Water companies are among the losers, with United Utilities PLC (LON:UU.) 22p or 2.27% lower at 947.6p and Severn Trent PLC (LON:SVT) down 37p or 1.52% at 2395p. Banks are also on the slide, perhaps on the theory that Andy Haldane’s departure from the Bank of England signals lower interest rates for longer. Whatever the case, HSBC Holdings PLC (LON:HSBA) has fallen 6.3p or 1.46% to 426.25p and Lloyds Banking Group PLC (LON:LLOY) is down 0.58p or 1.3% at 43.82p.
Providing some support for the market are two companies with positive updates. Just Eat Takeaway.com NV (LON:JET) has climbed 198p or 2.69% to 7552p while JD Sports Fashion PLC (LON:JD.) is up 2.34% or 21.4p at 935p.
3.09pm: Bank of England economist leaves for RSA (not the insurer)
In a surprise move the Bank of England‘s chief economist Andy Haldane is leaving after its June interest rate setting meeting to become the new chief executive of the Royal Society for Arts, Manufactures and Commerce.
Haldane – at the Bank for more than 30 years – is seen as a hawkish member of its monetary policy committee and the pound has edged marginally lower against the dollar to $1.375 on the news.
Jame Smith at ING Bank said: “Markets have initially viewed it as the only major hawk leaving the committee, perhaps the only hawk at the moment … His comments about the recovery being particularly fast were not shared by all his colleagues.”
Meanwhile the FTSE 100 seems deeply unmoved by this or indeed any other news, down just 2.52 points at 6886.6.
2.43pm: Wall Street opens on a mixed note
The main indices on Wall Street got off to a mixed start on Tuesday morning as the news concerning blood clots and the Johnson & Johnson COVID-19 vaccine rippled across markets.
Shortly after the opening bell, the Dow Jones Industrial Average was down 0.29% at 33,648 while the S&P 500 was mostly flat at 4,127 and the Nasdaq rose 0.51% to 13,920.
Markets may also be a little skittish due to faster than expected US inflation for March as stimulus measures and an easing of lockdown measures juiced the American economy.
Back in London, the FTSE 100 has slipped lower into late afternoon and was down 13 points at 6,875 shortly before 2.45pm.
1.58pm: US prices edge higher than expected
Those watching the US inflation figures will see further signs of pricing pressures with the March figures coming in slightly higher than expected.
The consumer price index rose 0.6% month on month compared to forecasts of a 0.5% increase. This was the largest rise since a 0.6-percent increase in August 2012.
US CPI (M/M) Mar 0.6% (est 0.5%; prev 0.4%)
– US CPI (Y/Y) Mar 2.6% (est 2.5%; prev 1.7%)
– US Core CPI (M/M) Mar 0.3% (est 0.2%; prev 0.1%)
– US Core CPI (Y/Y) Mar 1.6% (est 1.5%; prev 1.3%)
— LiveSquawk (@LiveSquawk) April 13, 2021
— LiveSquawk (@LiveSquawk) April 13, 2021
Wall Street was rattled by the latest vaccine news but has recovered slightly after the figures despite the slightly higher numbers. The Dow Jones Industrial Average is forecast to open 0.2% or 68 points lower while the S&P 500 is expected to be flat and the Nasdaq Composite expected to show a 0.49% rise.
In the UK the FTSE 100 is down just 0.07% or 5.05 points at 6884.07.
12.38pm: Vaccine concerns hit US markets
After relative calm, Wall Street futures are pointing to an opening fall after reports of blood clotting associated with the Johnson & Johnson vaccine.
The US Food & Drug Administration has called for a pause in the use of the J&J vaccine.
As of 4/12, 6.8m+ doses of the J&J vaccine have been administered in the U.S. CDC & FDA are reviewing data involving 6 reported U.S. cases of a rare & severe type of blood clot in individuals after receiving the vaccine. Right now, these adverse events appear to be extremely rare
— U.S. FDA (@US_FDA) April 13, 2021
So the Dow Jones Industrial Average is expected to open 111 points or 0.33% lower while the S&P 500 is set for a 0.27% or 10 point fall and the Nasdaq Composite is likely to dip 0.06%.
In the UK the FTSE 100 has drifted lower again, down 12.71 points or 0.18% at 6876.41.
Before the vaccine news, analysts had been anticipating the latest US inflation figures, due at 1.30pm BST, and the US markets were expected to open higher.
Sophie Griffiths, market analyst at Oanda, said: “US futures are pointing to a muted but mildly positive open as investors focus on the CPI release due. Inflation expectations have become a key driver for the markets over recent months as optimism surrounding a strong US economic recovery grows. While the Fed has stuck unwaveringly to its dovish hymn sheet, insisting any rise in inflation is expected to be short term, markets are still focusing firmly on when any monetary policy tightening could begin…
“Expectations are for an increase of 0.5% month-on-month and 2.5% on an annual basis, up from 1.7% in February. A strong-than-forecast number could lift [US Treasury] yields, boosting the US dollar.”
Chris Beauchamp at IG said: “[Federal Reserve chair Jerome] Powell and co have done a good job of keeping expectations in check recently regarding inflation and rate rises, but a stronger CPI figure might well render these efforts worthless. The market appears determined to hunt down any sign that inflation is taking hold in a more permanent fashion, and after the PPI surprise last week investors are not going to let themselves be taken by surprise.”
11.46am: Cryptocurrency in demand but markets lacklustre
Stock markets may lack direction but Bitcoin is breaking new ground.
The cryptocurrency has jumped 5% to hit $63,000 for the first time, as it continues to gain backing from payment services such as Paypal and big banks. There is also interest in the sector ahead of the stock market listing of cryptocurrency exchange Coinbase on Wednesday at a reported value of some US$100bn.
Back in the perhaps more prosaic world of engineering, the mining equipment and pumps specialist Weir Group (LON:WEIR) is up 36.5p or 2.03% to 1881p after Credit Suisse raised its recommendation from neutral to outperform, reversing the move it made in January. The bank’s analysts keep their price target at 2150p.
The company is one of the biggest risers in the FTSE 100, but the leading index remains in the doldrums, down 2.51 points or 0.03% at 6886.61. The mid-cap FTSE 250 is doing better, but not much, up just 0.13% or 27.9 points at 22,181.45.
10.25am: Markets moving lower
Leading shares are still drifting rather aimlessly despite the hefty chunk of economic data already.
That may change when US inflation figures emerge later, given the market’s recent obsession with trying to spot signs of emerging price pressures. And if not that, then perhaps the US reporting season which begins on Wednesday with big banks including JP Morgan and Goldman Sachs.
At the moment though dealers are sitting on their hands, with the FTSE 100 down 7.31 points or 0.11% at 6881.81 while the FTSE 250 has edged up o.22% or 47.95 points to 22,201.5.
Among the risers in the mid-cap index is recruitment group Hays PLC (LON:HAS), up 3.69% or 5.9p at 165.6p. The company said third quarter net fees fell 10%, but this was better than the 12% decline expected and a vast improvement on the 19% fall in the second three months of the year.
It now expects full year earnings of £85m compared to analysts’ forecasts of around £61m. In a buy note UBS raised its share price target from 180p to 195p.
9.28am: JD Sports among the risers after update
The market may have got off to a fairly lacklustre start but retailers have received a lift from the grand reopening on Monday, which seems to have been fairly successful.
JD Sports Fashion PLC (LON:JD. has seen its shares pick up pace after further consideration of its positive results, achieved despite the pandemic shutting its UK shops for much of the trading period and helped by a strong performance in the US. It is currently 20.2p or 2.21% better at 933.8p.
The retail rise is helping both posh and not so posh businesses. Burberry PLC (LON:BRBY) is 33p or 1.61% better at 2085p while B&M European Value Retail SA (LON:BME) has climbed 11.8p or 2.2% to 547p.
None of this has helped lift the FTSE 100 off its worst level, and it is down just 0.59 points at 6888.53.
8.44am: Quiet start after below-par GDP figures
Traders sat on their hands following the release of data that revealed the UK economy grew during the lockdown month of February.
But the 0.4% increase in gross domestic product was anaemic at best and slightly undershot the 0.5%-0.6% predicted ahead of the release of official figures earlier.
AJ Bell’s Danni Hewson said: “Today’s GDP figures are the equivalent of pubs reopening in the middle of a snowstorm, welcome but chilly.”
She added that there was also “small comfort” to be found in February’s trade figures.
“Exports to the EU which dropped so dramatically off a cliff in January have bungeed back up, though they are still £2bn down on pre-Brexit levels,” Hewson went on.
On the market, the big corporate news came from JD Sports (LON:JD.), the British retailer trying to conquer the US.
While the commentators were impressed with the latest results from the trainers and trackies group, the market was less enamoured.
The shares stood pat early on – perhaps pausing for breath after a near 50% ascent in the last 12 months.
The market’s assessment of the dog’s dinner that was the ‘business update’ from defence contractor Babcock (LON:BAB) looked curious, to say the least.
The company took a £1.7bn hit to profits because of write-downs, yet the shares jumped 34%.
The first thing to note is the battlefield had already been salted with an FT story last week providing a warning of this mess.
The second element to this is the scale of the carnage, which possibly wasn’t as bad as foretold. Indeed, many of the items making up the £1.7bn figure were of the non-cash variety (in other words, accountancy prestidigitation).
Finally, the ongoing cash savings and disposals programme (£400mln) suggest the firm is taking self-help measures rather than relying on the market to bail it out. In other words, no rights issue.
No wonder traders were heaving a sigh of relief.
Next Fifteen Communications PLC (LON:NFC) said it is currently trading ahead of management expectations after a strong start to the new financial year.
Open Orphan PLC (LON:ORPH) said it is at an “advanced stage of planning” to spin out certain non-core assets and is also making preparation for capital reduction that would pave the way for the demerger.
IronRidge Resources Ltd (LON:IRR) found its highest grade lithium so far from an ongoing drilling programme at new targets adjacent to the Ewoyaa lithium project in Ghana, West Africa. Multiple high-grade lithium intersections were found alongside the highest grade of 4% lithium oxide over 1 metre.
Mode Global Holdings PLC (LON:MODE) has reported “strong growth” in its Bitcoin trading volumes during the first quarter amid a sharp increase in new customers. The financial technology group said that Bitcoin trading volumes in the period had increased by 316% compared to the fourth quarter of 2020, while the number of new customers jumped 200% over the same period as the price of Bitcoin reached record highs.
Jersey Oil & Gas (LON:JOG) has appointed industry veteran Les Thomas as an independent director.
Vast Resources PLC (LON:VAST) has appointed Edward Hollings as processing manager at its Baita Plai polymetallic mine in Romania. Hollings has worked in base and precious metal projects for 15 years, specialising in metallurgy and processing. In his role as processing manager at the Baita Plai flotation plant, he will become a key part of the new full-time expert management team on site at Baita Plai as the new upgraded mine plan is implemented and successfully delivered over the course of 2021.
Corero Network Security PLC (LON:CNS) saw order intake hit record levels in the second half of 2020. Revenues rose 74% to US$16.9mln in 2020 from US$9.7mln in 2019, with revenues in the second half of the year up 93% at US$10.7mln from US$5.5mln in the same period of 2019.
Tharisa PLC (LON:THS) produced 35,000 ounces of platinum group elements during the second quarter to 31 March 2021, an increase of 11.5% year-on-year. Chrome concentrate production was up 15.5% to 358,400 tonnes year-on-year, and specialty chrome production was up 11.8% to 85,600 tonnes.
VietNam Holding Limited (LON:VNH) saw its net asset value (NAV) rise 1.1% in March, extending the gain in the first-quarter of 2021 to 10.4%. Since the start of the financial year in July 2020, the NAV per share has risen 53.1%.
SourceBio International PLC (LON:SBI) shares advanced after it reported strong revenue and profit growth in 2020 driven by its (Coronavirus) COVID-19 antigen testing services and its Infectious Disease Testing business unit, set up last May.
Coro Energy PLC (LON:CORO) updated investors following its recent acquisition of Global Energy Partnership Limited and its portfolio of operated renewables projects. According to the statement, work is underway to progress its new flagship wind and solar projects in the Philippines which will each have some 100 megawatts of capacity.
Sigmaroc PLC (LON:SRC) said underlying revenue and profits surged in 2020.
6.50 am: London set for a quiet start
Traders look set to sit on their hands ahead of the release of UK gross domestic product (GDP) data.
The FTSE 100 index is set to open a couple of points lower at 6,887.
“The first surprise of the day is from the China Balance of Trade for March. in US Dollar terms, the surplus collapsed to $13.8 bio versus an expected surplus of $52.0 bio. Exports increased in March YoY by 30.60% versus 35.50% exp. The real surprise is March Imports YoY, surging 38.10% higher versus 23.30% exp. Imports rose across the board, led by steel and industrial metals, natural gas and crude oil, and notably, mechanical and electrical products and meat, both of which increased by over 25.0%,” said Jeffrey Halley at OANDA.
“The headline number will probably send shivers through investors initially but … even if the China export machine is slowing, and the last year was exceptional for several obvious reasons, if domestic consumption is driving imports, that recovery should earn China a pass mark,” he added.
US markets lacked lustre yesterday, with the S&P 500 off by a point at 4,128 and the Dow Jones 55 points weaker at 33,745.
In Asia this morning, things are a bit more vibrant with Japan’s Nikkei 225 up 235 points at 29,774 and Hong Kong’s Hang Seng 137 points higher at 28,591.
Looking at today’s agenda in the UK, GDP for February is expected to rise 0.5% from February’s level after falling 2.9% in January. The three-month reading is expected to be down 1.9% after falling 1.7% in the three months to January.
Trade figures are also due out, with economists expecting a visible trade deficit of £10.5bn after January’s deficit of £9.83bn.
Industrial production data completes the win-treble for the Office for National Statistics, with the consensus forecast being a 0.5% increase in February after January’s 1.5% decline.
As for company results, two companies that have been affected by the lockdowns – one more than the other, in all probability – will take centre stage.
Full-year results from JD Sports Fashion PLC (LON:JD.) are unlikely to throw up any major surprises after the company said in January that it expects its full-year pre-tax profit to be at least £400mln, a major improvement on market expectations of £295mln.
Half-year results from Revolution Bars Group PLC (LON:RBG) are unlikely to make for pleasant reading on Tuesday as the chain counts the costs of more closures brought on by the UK’s lockdown measures.
Instead, investors will be looking to the firm’s outlook as bars look set to reopen following the gradual relaxation of restrictions on April 12 and in mid-May.
Around the markets
- Sterling: US$1.3730
- 10-year gilt: 0.791%, up 1.28 cents
- Gold: US$1,730.30 an ounce, down US$2.40
- Brent crude: US$65.52 a barrel, up 24 cents
- Bitcoin: US$60,535, up US$524
6.50am: Early Markets – Asia / Australia
Stocks in the Asia-Pacific region were mixed on Tuesday after the Chinese central bank announced that Alibaba’s financial technology affiliate Ant Group is to restructure as a financial holding company.
The Hang Seng index in Hong Kong gained 0.13% while the Shanghai Composite in China dipped 0.62%.
In Japan, the Nikkei 225 rose 0.75% and South Korea’s Kospi gained 0.84%.
Shares in Australia were muted, with the S&P/ASX 200 trading 0.07% lower.
Proactive Australia news:
Walkabout Resources Ltd (ASX:WKT) (FRA:N6D) has secured a U$20 million debt funding facility with CRDB Bank PLC, achieving a major milestone in its progress towards construction of the Lindi Jumbo Graphite Mine in Tanzania.
Technology Metals Australia Ltd (ASX:TMT) (FRA:TN6) is trading higher after industry experts confirmed the scope to generate additional revenue by way of a high-value titanium by-product from the Yarrabubba Iron-Vanadium Project in Western Australia.
Peninsula Energy Ltd’s (ASX:PEN) (OTCMKTS:PENMF) (FRA:P1M) MU1A low-pH field demonstration test modifications for the flagship Lance Project in Wyoming, USA, have delivered favourable results including an increase in uranium recovery solution and improved response time in modified test patterns.
Castillo Copper Ltd (ASX:CCZ) (LON:CCZ) (FRA:7OR) is gearing up to resume drilling at Mt Oxide Project in the Mt Isa Copper Belt of northwest Queensland off the back of a review of historical data that enhances the exploration potential of Arya prospect.
Alto Metals Ltd (ASX:AME) has received highly encouraging first assay results from an ongoing extensive drilling program at its 100%-owned, 900 square kilometres Sandstone Gold Project in Western Australia.
Great Boulder Resources Ltd (ASX:GBR) has reverse circulation (RC) drilling underway at the Side Well Gold Project near Meekatharra in Western Australia’s Mid-West, designed to follow up shallow, high-grade gold mineralisation.
PolarX Ltd (ASX:PXX) (OTCMKTS:PXXXF) (FRA:PX0) has mobilised its field team to the Humboldt Range Gold-Silver Project in Nevada with fieldwork, including extensive geological mapping and rock-chip sampling, expected to begin this week aimed at establishing drilling targets.