Britain

FTSE 100 marking time as market waits for US-China trade talk developments

  • FTSE 100 index rises 12 points
  • Hiscox wanted after HSBC issues a 'buy' note
  • Goldman Sachs warms to Tate & Lyle

11.45am: Market does passable imitation of a dead parrot ("Beautiful plumage, the Norwegian Blue")

An air of ennui continues to hang over the London stock market, as investors wait for more news on the US-Sino trade talks.

The FTSE 100 was up 12 points (0.2%) at 7,408.

“Stock markets in Europe are largely showing modest losses as the US-China trade story ticks along,” reported David Madden at CMC Markets.

“The updates from both sides yesterday seemed to show that progress has been made. Today, a phone call took place between Chinas vice premier, Liu He, and Robert Lighthizer, US trade advisor, as well as Steven Mnuchin, US treasury secretary. It was reported the conversation entailed resolving core issues. It would appear the talks are at the finer details stage, which is a good sign, but nothing can be taken for granted,” he advised.

Back in the UK, insurance broker Hiscox PLC (LON:HSX) was doing its bit to keep the Footsie above 7,400, rising 2.4% to 1,300p on the back of a broker upgrade; HSBC has moved to buy from hold.

In other broker action, FTSE 250 stock Tate & Lyle PLC (LON:TATE) was up 3.1% to 731p after Goldman Sachs warmed to the sweeteners maker, upgrading it to buy from neutral.

10.30am: Housebuilders unfazed by drop in mortgage approvals

The FTSE 100 has scrambled into positive territory, helped by the weakness of sterling after an apparent erosion in support for the Conservative Party.

The top-shares index was up 2 points (0.0%) at 7,398.

“The pound is on a back foot today, with the election pollsters pointing towards a tightening gap between the Conservative and Labour parties just over two weeks before the general election,” commented Joshua Mahony at IG Group.

“Conservative gains had been a key driver of sterling upside, yet that appears to be flagging as we reach the business end of the election process. With the Conservatives having depleted much of the Brexit party vote, it seems as if their ascent could be stifled from here on. Conversely, the gains seen in a Welsh poll highlight the potential gains for Labour, with the possible impact of tactical voting pointing towards significant areas where Labour currently trail the Lib Dems or SNP,” he added.

House-builders did not seem overly fussed by the news that UK mortgage approvals fell to a seven-month low in October.

Industry association UK Finance said 41,210 mortgage applications were granted in October, compared to 42,216 in September. Economists had pencilled in a figure of 42,200 mortgage approvals for October.

On the plus side, the value of secured lending rose to £3.45bn from £2.46bn the month before, and was the largest month-on-month increase since March 2016.

“The good news is that people are still buying homes despite the political paralysis weve been subjected to in recent months and while we may have a long winter ahead, there are plenty of positives to take,” suggested Marc von Grundherr, the director of Benham and Reeves.

Pantheon Macroeconomics Samuel Tombs said we should expect a rebound in the first quarter of next year when, hopefully, the political situation will be a bit clearer.

“The return of mortgage approvals to their 12-month average in October likely partly reflects would-be buyers deferring purchases until the political outlook becomes clearer. Approvals should pick up again, if the Conservatives win a majority and pass the Withdrawal Agreement Bill by January 31, as now looks likely,” Tombs said.

Further evidence that #UK #housing market activity is currently being pressurized by an unappetizing cocktail of #economic, domestic #political & #Brexit uncertainties. UK #mortgage approvals fall to seven-month low in October – UK Finance https://t.co/mWnX7qf8Q6

— Howard Archer (@HowardArcherUK) November 26, 2019

“After all, the recent sharp decline in mortgage rates has made home-ownership much more attractive. The average quoted rate for a five-year, 75% LTV [loan-to-value] loan fell to 1.74% in October, from 1.80% in September and now is 30bp [three-tenths of a percentage point] below its level at the start of the year. Granted, employment growth has slowed and the persistence of Brexit uncertainty next year will continue to weigh on hiring decisions. Nonetheless, forward-looking indicators continue to point to wage growth remaining relatively brisk, and the passing of the WAB should help to lift consumers confidence, at least for a short while,” he added.

While Persimmon PLC (LON:PSN) and Barratt Developments PLC (LON:BDEV) shed 0.8% and 1.3% respectively, housebuilding peer Berkeley Group Holdings PLC (LON:BKG) was up 0.2%; Taylor Wilson PLC (LON:TW.) was unchanged.

9.20am: Blue-chips seeking direction

Despite sterling losing ground on foreign exchange markets, blue-chips stocks were mixed this morning.

The pound was down just over a fifth of a cent against the US dollar at US$1.2877, which would normally be enough to prompt a bit of interest in blue-chips but the FTSE 100 is actually down 6 points (0.1%) at 7,391, thanks largely to contract caterer Compass Group PLC (LON:CPG) serving up lumpy results.

The shares were down 6.6% at 1,934.5p after the catering giant said it was “taking prompt action to adjust our cost base” in Europe and certain markets elsewhere.

Richard Hunter, the head of markets at interactive investor, said the share price reaction to the numbers “is likely to be due to an element of profit-taking, as well as a tinge of disappointment at the headline level with the numbers themselves and a marginally cautious tone on prospects in Europe”.

“Even so, over the last year the shares have risen by a thumping 34%, which compares to a hike of 5% for the wider FTSE100 and, although the company is clearly well-regarded, it seems that the shares are for the moment up with events,” he added.

At the opposite end of the Footsie leader-board was building materials group CRH PLC (LON:CRH), which rose 2.0% to 2,967p after an upbeat trading update.

READ: CRH confident of further progress in 2020

Across the market as a whole, mining tiddler Rockfire Resources PLC (LON:ROCK) was the best performer, as it rocked 63% higher at 0.675p after it announced returned broad, consistent gold assays from a geophysical target on its Plateau gold project in Australia.

#ROCK #Rockfire

Tipped this multiple times last week at 0.39 when no one was interested!!

They are now

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— The Angel of AIM (@TheAngelofAIM1) November 26, 2019

8.45am: Subdued start for Footsie

The FTSE 100 opened more with a whimper than a bang as it nudged 4 points lower to 7,392.58.

The spill-over exuberance from Asias main markets, which have been buoyed by trade hopes, failed to materialise. Instead the mood in London resembled the weather over the Square Mile – grey.

The big corporate news of the day came from De La Rue (LON:DLAR), the former mid-cap and banknote specialist that quite literally has a licence to print money.

Sounding the earnings alarm (again), it has now cancelled the dividend, leading to a 20% fall in the share price, which has now lost almost 70% of its value in the last year.

“Todays update is worrying for investors because it suggests theres more damage out there to be done to the shares,” said Neil Wilson, senior analyst at Markets.com.

“Shares took a long time to print but opened down 20%. Profits warnings tend to come in threes and De La Rue has held to the rule.”

All of this overshadowed the performance of Compass Group (LON:CPG), the Footsie-listed caterer.

A warning on the performance of its European operations knocked the gloss on what was a reasonably robust update and sent the share price 7% lower.

Finally, tails were certainly wagging at Pets at Home (LON:PETS), the retailer, which defied the sector gloom with better than expected profits. The shares spiked 7% higher.

Proactive news headlines:

Rockfire Resources PLC (LON:ROCK) has returned broad, consistent gold assays from a geophysical target on its Plateau gold project in Australia. The results are indicative of a large-scale gold deposit, similar to the Mt Wright gold mine, which is in turn part of the 10mln ounce-plus Ravenswood complex. Of particular note was gold mineralisation occurring almost continuously throughout a 215 metre deep hole, including 177 metres at 0.5 grams per tonne gold.

Thor Mining PLC (LON:THR) has received encouraging first results from hydrogeological drilling at the Kapunda ISR (in-situ recovery) copper project in Australia. Associate EnviroCopper drilled three holes and two screened wells at Kapunda to test the potential for an ISR operation – where ore is dissolved in the ground and the solution pumped to the surface to extract the metals.

Ncondezi Energy Limited (LON:NCCL) has received support “in principle” for a restructuring of an outstanding US$4.3mln loan plus interest. The restructuring involves a 12-month extension on existing terms, including 12% annual interest rate and the ability for lenders to swap debt for equity in part or in full at a conversion price of 10p per share

Motif Bio PLC (LON:MTFB) said it expects to make “significant savings” from delisting its depositary shares from Americas NASDAQ market. It will remain listed on AIM in the UK. Following the wind-down of its business, Motif Bio will become a cash shell

Crossword Cybersecurity PLC (LON:CCS) said its consulting division is breaking into new sectors and landing contracts with bigger customers. The division has recently signed numerous agreements including three with companies in the automotive, insurance and property sectors.

Allergy Therapeutics PLC (LON:AGY) said it is taking a “stepwise approach” to its upcoming phase III trial of its Grass MATA MPL vaccine for hay fever. Instead of embarking on one large study it will split the process in two – covering the 2020/2021 and 2021/2022 pollen seasons. This will allow Allergy to carry out an interim analysis of the data at the halfway stage.

Coinsilium Group Limited (LON:COIN) has unveiled plans to launch a blockchain software and smart contract development studio in Gibraltar. The blockchain investment and advisory firm said under a memorandum of understanding (MoU) signed with tech firm Devmons Management. Under the MOU the two companies will rebrand Consiliums Gibraltar subsidiary, TerraStream, as TerraStream Blockchain Solutions (TBS), while Devmons co-founder, Matej Galvanek, will immediately join the new studio as a technology advisor.

Directa Plus PLC (LON:DCTA) has completed the €4.1mln purchase of a 51% stake in Setcar, the Romanian waste management and decontamination services business. In a brief statement, the graphene products specialist said the new operation will be renamed Directa Environmental Solutions.

SkinBioTherapeutics PLC (LON:SBTX) reported cash balances in line with expectations at the end of its financial year and said it has identified five “channels” for the development of its existing and new skin health technology. In the year to 30 June, the AIM-listed company completed its first human cosmetic study, appointed Stuart Ashman as its chief executive and began the discussions that resulted in a first commercial deal earlier this month.

Following on from the feasibility study for its BKM copper project in Indonesia, Asiamet Resources Ltd (LON:ARS) has designed an exploration programme focused on some of the walk-up targets nearby. The walk-up targets have the potential to add significant value by extending mine life beyond the initial nine years that have been modelled. In addition, these targets are expected to add heap-leachable copper resources to those already defined.

i3 Energy PLC (LON:i3E) confirmed that its Liberator Well 13/23c-11 reached target depth and encountered reservoir sands. In a statement, the company said the well encountered the Valhall shale as planned and cut around 220 feet of sand in the Captain reservoir. Quick analysis of the wells initial findings indicate that, at this location, some 20 feet of the Captain sand with oil indications were found to be above the expected oil water contact point (OWC), at 5,270 feet.

AfriTin Mining Limited (LON:ATM) has raised £3.8mln through the issue of unsecured and convertible loan notes to tin trader AfriMet Resources. Money raised from the loan will also fund this ramp-up and also tests on the lithium discovery within the pegmatite ore body. Conversion of the notes would give AfriMet a 5.8% stake in AfriTin.

Salt Lake Potash Limited (LON:SO4) (ASX:SO4) said that a new corporate presentation is now available to view on the.company's website.

6.50am: FTSE 100 called higher

The FTSE 100 is expected to provide further gains on Tuesday as optimism grows about the US and China reaching a first staging post on the way to a trade truce.

Londons blue-chip index was being called 15 points higher on spread betting platforms, climbing above the 7,400 mark that has acted as a lid on the Footsie stockpot for most of the past six months.

Overnight, Wall Street produced some tasty gains, with the Nasdaq Composite leading the way with a 113-point or 1.3% gain to 8,632.49, another record closing high.

The S&P index also notched up another record close, climbing 0.75% to 3,122.64, while the Dow Jones advanced 0.7% to just over 28,066.

Asian stocks are mixed but generally higher on Tuesday, with Nikkei 225 up 0.3% in Tokyo and the Shanghai Composite just on the right side of flat, but Hong Kongs Hang Seng fell 0.1%.

After encouraging noises emerged from both sides over the weekend, further positive sounds for traders have come from the Chinese Ministry of Commerce, which released a statement saying that both sides had “reached a consensus” on resolving a number of issues in the talks.

“While it is easy to be sceptical about these sorts of reports, given weve heard them so many times before, particular the ones about a rollback of tariffs, they do tend to create a momentum all of their own, even when they are denied, and no matter how cynical you are, it has tended to be a fools errand in standing in the way of any move higher,” said markets analyst Michael Hewson at CMC Markets.

“As such optimism is rising that a phase one trade deal could be agreed before the 15th December when new US tariffs are expected to kick iRead More – Source