Yahoo Finance FTSE 100 makes late rally as risk aversion continues to pull down European equities
Pharma giant Shire sank towards the bottom of the FTSE 100 scoreboard yesterday following the shock departure of its chief financial officer.
Shire said that the well-regarded Jeff Poulton, who shepherded the company through its acquisition of rare disease specialist Dyax and $32bn (£25bn) mega-merger with American pharma firm Baxalta, will remain in the role during the third quarter reporting period.
Investors disagreed with the CFO’s comments that it was the “perfect time” to step down, sending Shire shares sliding 151.5p, or 4pc, to £36.13.
The surprise announcement of Mr Poulton’s move to Indigo Ag comes as Shire finalises the integration of Baxalta and pays down debt residing from the huge takeover agreed to last year.
The Boston-based start-up he is heading to specialises in improving agricultural productivity. Shire was beginning to bear the fruits from its Baxalta purchase with the company beating expectations in its second quarter results earlier this month to swing to a $240m profit.
Elsewhere, banking and healthcare stocks with large international exposures continued to be the biggest casualties from the risk-off mood lingering on markets.
Taxpayer-controlled RBS dipped 2.3p to 255.2p while Barclays retreated a further 2.4p to 193.3p. Concerns emanating from weekend reports that hedge funds have built up large short positions in Provident Financial on the assumption that the doorstep lender’s woes will worsen pulled it down 107p to £17.45, a 5.8pc plummet.
Mining stocks once again mitigated the FTSE 100’s fall as metal prices continued to underpin gains with dual-listed BHP Billiton rising 15p to £13.66 ahead of its full-year results due when Australia opens for trading overnight. Overcoming the risk aversion dragging down European equities, the FTSE 100 cut losses late in the afternoon to end down just 5.1 points to 7,318.88.
Persimmon gained 35p to £25.56 ahead of its interim results today with expectations high that the housebuilder has brushed off election uncertainty and will continue the sector’s strong string of results.
On the junior market, games developer Frontier Developments soared after it secured a deal to create a spin-off game from the blockbuster Jurassic Park series.
Shares popped 113p at 844p after Frontier unveiled the game, its third franchise and first ever to be released simultaneously on PC, Xbox One and Playstation 4. The AIM-listed developer has seen its share price skyrocket 180pc this year, transforming it into a company with a valuation of nearly £300m.
Markets wrap: Risk aversion continues to pull down equities
Risk aversion has continued to plague European equities as investors cautiously await the Jackson Hole conference later this week and assess the situation in Washington.
A late afternoon rally has helped the FTSE 100 close only a touch lower as European indices continue to record heavier falls. The Dow Jones and S&P 500 are on course to finish slightly higher as the first signs emerge that the gloomy mood on the stock markets may be beginning to lift.
Miners helped support the blue-chip index most today as metal prices continued to rise while pharma firm Shire finished one of the sharpest fallers after its chief financial officer announced his departure.
With little on the economics calendar today, the dollar's weakness over events in Washington has helped to lift the pound back over $1.29 against the greenback.
Here's IG market analyst Chris Beauchamp's take on the difficulties facing equities this month:
"August’s reputation as the most difficult month for stock markets remains unbroken so far, with an apparent combination of light volumes, disenchantment with a lack of change in Washington and some broader concerns about valuations finally coming together to give the downside some traction.
"Admittedly, it has still to put much of dent in the rally, and none of the reasons were really enough earlier in the year to cause a selloff, but it seems the thin trading of August has been enough to create a perfect storm."
Payroll giant ADP rejects Bill Ackman's bid for board roles as tensions rise
American payroll giant ADP has rejected an attempt by Bill Ackman's Pershing Square to add candidates to its board, saying the nominees - including Mr Ackman himself - would not be an improvement.
Tensions have been rising between the billionaire investor and the US company in recent weeks, with Mr Ackman's investment fund last week issuing a 168-page report calling for major change at the "lethargic and inefficient sleeping giant" in which it recently disclosed an 8pc stake.
Pershing Square, which listed on the London Stock Exchange in May, said earlier this month that it wanted to add three candidates to ADP's board including Mr Ackman, part of its push for a shake-up of the firm.
Read Lucy Burton's full report here
Savings crisis might be over as Britons put away more money than we thought
British families are putting aside more money than was previously thought, indicating that the savings crisis may not be as acute as feared.
The average household saved 8.4pc of their income in 2015, new estimates from the Office for National Statistics (ONS) indicate, substantially higher than the 6.5pc previously estimated.
It means that in an average year from 1997 to 2015 households saved £11.5bn more than previously thought, and so should have a bigger buffer to use if they get into trouble financially, lose a job, or if prices rise rapidly.
Read Tim Wallace's full report here
FTSE 100 deteriorates with pharma firm Shire plummeting on the departure of its CFO
The FTSE 100's midday rally has rapidly deteriorated since US markets opened. After flirting with positive territory shortly after the opening bell in New York, the major US indices have once again retreated and are on course for a third consecutive session in the red.
Pharma firm Shire is one of the biggest casualties this afternoon after the FTSE 100 company announced that its chief financial officer Jeff Poulton will be leaving for Boston-based start-up Indigo Ag. Shares were flatlining prior to the announcement before plunging 3.6pc
Elsewhere on the markets, investors are waiting to see how things play out before committing to any positivity, according to Spreadex analyst Connor Campbell.
He added:
"There wasn’t exactly anything new to prompt this negative display from the US markets – but nor does there need to be. America is engulfed two major storylines at the moment: one, the US/North Korea tensions, seemingly set to ramp up again as the former pushed ahead with military exercises in South Korea; and two, the ongoing chaos of Trump’s domestic agenda, with Steve Bannon the latest high profile casualty of the orange one’s loyalty-free tenure.
"Both of these situations are serious enough that their ongoing existence – one threatening global stability, the other indefinitely delaying Trump’s tax and infrastructure plans – is enough to cast a cloud over the markets."
Hedge fund Silchester takes stake in William Hill
One of London’s most successful hedge funds, which is a major backer of supermarket Morrisons and publisher Pearson, has taken a stake in the under-pressure bookmaker William Hill.
Mayfair-based Silchester International Investors, founded by Stephen Butt, owns 5pc of the stock, which has almost halved in price compared to its four-year high of 465p.
The bookie has been under pressure from falling profits, the spurning of two potential mergers and the abrupt exit of chief executive James Henderson last year after just two years in the role.
Profits have fallen by more than a third from £277m in 2012 to £181m in 2016 and the former chief financial officer Philip Bowcock is now atop the firm.
Read Bradley Gerrard's full report here
Risk aversion shows signs of fading as US indices open flat
US stocks have started the week tentatively but there are signs that the risk aversion plaguing the markets is beginning to fade. The S&P 500 has nudged down early on while the Dow Jones and tech-heavy Nasdaq are bobbing in flat territory
The focus on the White House, which instilled much of the risk-off mood, will remain, however, according to Henry Croft, research analyst at Accendo Markets:
"Despite rising tensions in the Korean peninsula ahead of a joint US-South Korean military exercise, safe-havens are little changed, whilst with a dearth of macro data, focus will likely shift to the White House as the Trump administration begins its first week without Steve Bannon, widely seen as the driver of nationalism from within the Oval Office.
"The President is set to give a speech on the future of US policy on Afghanistan, but can he avoid another raucous confrontation with members of the press after Bannon’s departure?"
Global Ports takes a hit as unrest in Turkey sinks cruise revenues
Political unrest in one of its biggest markets has meant that maiden results from cruise and cargo port operator Global Ports Holding proved a washout.
Shares in the company - which floated in London three months ago - tumbled almost 8pc after revenues from cruise ship passengers fell and its cargo operations managed only modest growth.
GPH operates more than a dozen ports and is focused on increasing revenues from cruise ship passengers transiting through its facilities.
However, chief executive Emre Sayin said that upheaval in Turkey - which over the past year and half has seen a series of terror attacks and a failed coup - had deterred passengers from visiting the country, hitting revenue at the company’s ports there, which are the most profitable in its portfolio.
Read Alan Tovey's full report here
Banking and healthcare sectors suffering most from risk-off mood
The tug of war on the FTSE 100 is resulting in a flat finish at the moment with the lingering risk-off mood pulling the banking and healthcare sectors down most.
Elsewhere, investors appear to be betting on a strong performance from housebuilder Persimmon in its interim results due tomorrow. Its shares have advanced 1.7pc today with expectations high following an exceptional trading update last month which indicated that demand in the market remained strong in the first half of the year despite election uncertainty.
Of the other big movers on the blue-chip index, publisher Pearson has been lifted 1.9pc on an analyst note while a report in yesterday's Sunday Times that hedge funds have built up large short positions in Provident Financial in anticipation of further problems at the doorstep lender has sent its shares sliding 2.7pc today.
Meanwhile on the FTSE 250, Tullow Oil has popped 4pc as the price of Brent crude holds at around $52.65 and Total's takeover of Mersck's oil portfolio hints at 'Big Oil' getting back in the mood for acquisition activity once again.
European stock markets steady ahead of US open
Equity markets in Europe have consolidated their positions over lunchtime after paring some early losses. The US is waking up, however, and so will be the main driver of the gloomy mood hanging over the markets, Donald Trump.
Risk aversion has dogged markets since Mr Trump escalated tensions on the Korean peninsular a few weeks ago with the FTSE 100 falling nearly 3pc in that period.
While the attack in Spain heightened the risk-off mood which sunk shares last week, concerns that Mr Trump's economic agenda will be impossible to implement given the chaos in the White House has also pulled down shares with many stocks' recent rise underpinned by the president's pro-business plans.
Spreadex analyst Connor Campbell said this on the impact Trump's presidency has had on recent movements:
"The departure of Steve Bannon last Friday gave a slight lift to the markets; however, the constant turmoil of the Trump presidency, epitomised by its laughable turnover of key personal, seriously endangers the tax and infrastructure plans that had been such nectar to the markets earlier in the year. In other words, any more developments may impact the Dow and dollar."
Chinese car maker Great Wall looks to snap up Fiat Chrysler
The future of Fiat Chrysler Automobiles has been thrown into confusion after Chinese car maker Great Wall Motors said it planned to buy parts of the Italian-American automotive business - a claim that was quickly refuted by FCA.
Shares in FCA surged on Monday after Great Wall said it "intended" to make a move for car maker, stepping into the spotlight after a week of rumours swirling around the identity of a potential bidder.
Industry analysts believe Great Wall - which is focused on SUVs - could be eyeing FCA's Jeep brand, as it looks to bolster its own range of rugged vehicles.
However, FCA attempted to quash speculation, saying in a statement that it "had not been approached by Great Wall relating to Jeep or any matter relating to its business", and adding it was "fully committed" to its long-term business plan.
Read Alan Tovey's full report here
Ofgem threatens energy distribution companies with fines over poor customer service
The energy regulator has threatened electricity distribution companies with revenue cuts of around £14m if they do not improve customer service.
Ofgem said all of Britain’s electricity distribution network operators (DNOs) may have fallen short of minimum expectations when dealing with customers who request new electricity connections.
“Many of the failings involve poor communication,” Ofgem said. “For example, some customers struggled to get progress updates on their connection requests or found that information they were provided by a DNO was not detailed enough.
Read Sam Dean's full report here
Lunchtime update: Gloomy mood on stock markets beginning to lift
The gloomy mood on stock markets is beginning to lift with the FTSE 100 flirting with positive territory this lunchtime.
Miners are once again helping the UK's blue-chip index outperform its counterparts in Europe with stronger metal prices underpinning gains this morning.
European equities have tentatively recovered as the morning has progressed with analysts highlighting a flare-up in the geopolitical tensions between the US and North Korea as a potential roadblock for stocks later on.
Risk aversion has dogged the stock markets since the escalation in rhetoric a few weeks ago and, with the US and South Korea due to begin joint military exercises in the region, investors may flee to safe haven assets once again.
A sparse economics calendar can't inspire the currency markets this morning. The pound has nudged up 0.25pc towards $1.29 against the dollar ahead of Brexit papers due to be published on goods and information sharing.
Here's the current state of play in Europe:
FTSE 100: +0.01pc
DAX: -0.25pc
CAC 40: -0.29pc
IBEX: +0.18pc
Losses subsiding on European stock markets
Losses are beginning to subside on European stock markets with the FTSE 100 lying in flat territory and its smaller sister index, the FTSE 250, nudging up into positive territory.
Last week's loser on the mid-cap index, Hikma Pharmaceuticals, has reversed some of the losses it sustained after broker Jefferies upgraded it to "hold" while TBC Bank Group has jumped 2pc after reporting a 37pc rise in underlying net profit in the second quarter of the year.
Meanwhile on the continent, equities have pared some of their morning losses but the CAC 40 and the DAX remain around 0.2pc down for the session.
Stock markets have taken their cue from last week's sell-off, according to IG market analyst Joshua Mahony;
"The FTSE has started the week as it left off, with optimism over Steve Bannon’s removal as White House Chief Strategist proving short-lived.
"A proponent of the protectionist ‘America first’ policies heralded by Donald Trump, Bannon’s confrontational stance led to growing fears over the likelihood of an extension to the US debt ceiling without funding for the Mexican wall.
"Even if we see a more traditional economic thinker such as Gary Cohn take Bannon’s place, there is a feeling that Trump has lost too much support over recent weeks to truly pass any meaningful legislation."
Number of UK homemovers falls by 2pc - dampening market for first-time buyers
The number of homeowners moving house fell by 2pc in the first six months of the year, compared with the same period in 2016, according to new data.
There were 171,300 homemovers in the first six months of 2017 – 3,175 less than in the first half of last year. As a result, homemovers account for around half (51pc) of the housing market compared to 64pc a decade ago.
The drop in people moving means a shortage of suitable homes coming on the market for first-time buyers, who are already facing a chronic undersupply of housing.
Read Sophie Christie's full report here
Total deal shows the need for 'Big Oil' to consolidate in the low oil price environment
A big deal that definitely will be happening meanwhile is Total's $7.45bn acquisition of Danish firm Maersk's oil and gas business.
The French oil giant said in the announcement for the deal this morning that it will add around 1 billion barrels to Total's reserves and that Maersk's assets will make "an excellent fit" in its portfolio.
The deal shows how 'Big Oil' needs to look to consolidation in the low oil price environment, according to Rebecca O'Keefe, head of investment at Interactive Investor.
She added:
"The collapse in oil prices from over $100 per barrel in May 2014 to under $30 in January 2016 forced oil companies to cut their spending to the bone and these decisions dramatically reduced future production.
"However, with a moderate recovery in oil prices and a significant improvement in cash flows, oil majors are on the prowl, looking to buy assets to improve production levels and deliver excess returns and profits."
Fiat Chrysler shares pop on confirmation of takeover interest
Quite a confusing story breaking out of Italy this morning. Shares in Fiat Chrysler, the seventh-largest car maker in the world, jumped 3.6pc over in Italy this morning on news that China's Great Wall Motor Company is considering a bid for the firm behind brands such as Alfa Romeo and Jeep. Their shares then retreated slightly after Fiat Chrysler said that it had not been approached by the Chinese company.
Automotive News reported last week that a "well-known Chinese automaker" had made an offer earlier this month and today Great Wall has confirmed that it is interested in acquiring the car maker.
"With respect to this case, we currently have an intention to acquire. We are interested in (FCA)," an official in the Chinese company's press relations department told Reuters.
It is unknown whether Great Wall is looking to buy the entire company or just the Jeep brand.
A deal would appear to be a good fit for both companies with Great Wall looking to enter the US market and FCA seeking a bidder to combat rising costs.
Possible escalation of tensions on the Korean peninsular could pull markets down
European equities this morning are being pulled down by North Korea tensions resurfacing, according to CMC Markets analyst David Madden.
He commented on today's play:
"Stock markets in Europe are lower today as tensions between the US and North Korea are still simmering away in the background.
"The two nations are locked in a stalemate, and this week we will see the US and South Korea engage in their 10-day military exercises. The annual exercise always angers the North Korean regime, this time the stakes are higher given the current environment"
The FTSE 100 is one of the better performing indices in Europe and heading towards flat territory after paring some early losses. Provident Financial's 2.8pc fall and Micro Focus' 1.8pc gain are the two biggest movers on the blue-chip index this morning but have done so on meagre trading volumes.
British Airways owner IAG has rebounded from Friday's losses related to the terrorist attack in Barcelona with the company heavily exposed to events in Catalonia through its airlines Iberia and Level. The news breaking out of France in the last few moments that a car has crashed into a bus shelter in Marseille could further dampen the mood on the markets but the circumstances behind the crash are not currently clear.
A quick sitrep on the currency markets. The pound has edged up slightly against the dollar but the lack of news and economics data is keeping it close to the one-month low it hit last week.
Average UK house price falls by 0.9pc in August
Asking prices for homes in the UK fell by 0.9pc in August in their biggest month-on-month drop of the year, according to the latest Rightmove figures.
On an annual basis, the gain in house prices picked up pace in August, accelerating slightly to 3.1pc.
The figures showed that the national housing market, which has softened in the past year due to tax changes, Brexit, political uncertainty and a consumer spending squeeze, is holding up better than the market in London.
Demand for homes in the capital continues to ease and the slowdown shows few signs of letting up.
Asking prices in London rose 1.6pc in August over the past year, Rightmove said. While that is an increase from the July pace, it is well below a peak of 20pc in 2014 and is only the second time this year the annual rate of increase has topped 1pc.
Jackson Hole central bank conference the focus for investors this week
The scarcity of top notch economics data this week means that traders will be restlessly awaiting the annual Jackson Hole central bank conference in the US over the weekend. However, they will likely be disappointed by tight-lipped speeches expected from US Federal Reserve chair Janet Yellen and European Central Bank president Mario Draghi.
Mr Draghi's appearance in particular was earmarked as a possible turning point by ECB watchers, who had expected the former investment banker to discuss the winding down of the central bank's €60 billion-a-month quantitative easing programme at the conference.
However, reports last week signalled that Mr Draghi will remain silent on the subject as a subsequent surge in the euro would weigh on inflation. Inflation getting closer to the central bank's 2pc target is one of the prerequisites to removing the asset purchasing programme and therefore a hawkish appearance by Mr Draghi would be shooting himself in the foot.
Nonetheless, it's very possible that the forex markets will ignore any dovish rhetoric. Mr Draghi's press conference following the latest ECB policy decision was littered with caution over tapering monetary policy but it couldn't stop overexcited traders from sending the euro to an almost two-year high against the dollar.
Here's Julius Baer economist David Meier's take on Mr Draghi's appearance:
"Central banks will not try to fully backpedal from possible monetary policy normalisation, but downplay as much as possible the effects of monetary policy normalisation, in order to keep financial markets calm.
"ECB President Draghi will likely stress the flexibility it has in planning its policy reversal, as in inflation has not yet risen enough to convince ECB policy makers that a tighter monetary policy is necessary."
FTSE 100 on course for fresh three-month low
The FTSE 100 is currently on course to close at a four-month low as the risk-off mood prevails on European stock markets this morning.
The miners are keeping the FTSE 100 from sliding as far as its counterparts on the continent with rising metal prices underpinning their gains.
The resignation of Donald Trump's chief strategist Steve Bannon appeared to have lifted the mood dogging equity markets on Friday but the rebound was brief and the major US stock indices finished the session in the red.
Spreadex analyst Connor Campbell believes a flare-up of tensions on the Korean peninsular could return to dominate the focus of investors once again:
"While there’s not a lot of economic news to work with this Monday, there is still the continuation of some key macro-issues for investors to process.
"For example, though the tensions between the US and North Korea have faded into the background due to the domestic crisis engulfing Donald Trump’s presidency, the start of military exercises between America and South Korea could spark a return to the kind of market-dragging nuclear rhetoric seen a few weeks ago."
Agenda: Gloomy mood continues to pull down stock markets
Welcome to our live markets coverage.
A quiet start to the week on the markets sees the pound stuck in flat territory against the dollar and the FTSE 100 nudge down into the red with RBS and property development firm British Land Company pulling down the index most early on.
The gloomy mood weighing on stock markets at the end of last week continues to drag European equities into negative territory.
A joint military exercise between the US and South Korea could bring geopolitical tensions in Asia back into focus while oil cartel OPEC is meeting to discuss how to boost compliance to its pledged production cuts.
Mkts in limbo. Geopol & Jackson Hole risk events this wk. Seasonality plays big role as investors tend to de-risk in light end-Aug liquidity pic.twitter.com/WDeNLLOAkZ
— Holger Zschaepitz (@Schuldensuehner) August 21, 2017
The economics calendar has a very light look to it today with news overnight that house prices fell by 0.9pc in August the focal point for investors this morning.
The highlight in the corporate diary, BHP Billiton's full-year results, won't be available until this evening when markets are opening in Australia, where the miner has another listing.
Interim results: TBC Bank Group, Pires Investments
Final results: BHP Billiton
Economics: CBI industrial order expectations (UK), Consumer confidence (EU)