FTSE 100 ends up nearly 57 at 7,487
Airlines flying low, Ashtead top riser
BP and Shell boosted by higher oil prices
Draghi: No changes to ECB stimulus programme yet
FTSE 100 closed higher on Thursday as retail stocks buoyed the bluechip index and the oil price firmed.
Footsie closed at 7,487, up almost 57 points, while FTSE 250 ended th day at 19,763 – up 70 points.
Brent crude is up 0.68% at US$48.70 at the time of writing and the British pound is down 1.45% against the US dollar – again providing a boost to the London market.
Germany’s DAX and the CAC 40 fell 4.8 and around 16 points respectively, as ECB president Mario Draghi said his bond buying scheme will not be changed for now, but could be discussed in September.
Investors took this as an indication of a tapering of the stimulus packages, sending shares lower.
On FTSE100, among the risers was retailer Next (LON:NEXT), which gained 2.8% to 3,783p, following the better-than-expected UK retail sales data.
easyJet PLC () was the biggest laggard on the FTSE 100 with shares flying almost 6% lower at 1,334p.
Investors are concerned that the price war in the airline industry will hurt yields for a little while longer.
It was a weight too for PLC (), which shed 3.88% to 595p.
3.30pm -FTSE 100 holds onto gains
As the markets here in London head towards the close, the FTSE 100 was holding on to the gains it made earlier in the day.
The blue chip index is currently up 52 points, or 0.7%, to 7,483. That’s around where it’s been for most of the afternoon, although it did briefly touch 7,500 at around 1.40pm.
A number of big names have been dragging the Footsie higher today, with retailers and the big oilers in particular making solid gains.
Retailers boosted by sales data
The likes of PLC () (up 0.8% to 175p) and () (also up 0.8% to 250p) headed higher on the back of better-than-expected retail sales data, although it was () which benefitted the most – up 2.4% to £37.68.
After a rough week, oil prices have started to rebounded over the past 24 hours or so, with the price of a barrel of Brent crude flirting with the US$50 for the first time in a while.
PLC () was the big beneficiary of this rise with shares gaining a little more than 2% to £21.17, although BP PLC () was faring well too – up 1.2% to 452p.
Tool rental firm PLC () was the top riser among the blue chips though, up 3.6% to £17.09 following yesterday’s £187mln of Canada-based Contractors Rental Supply.
Airlines, miners struggle
easyJet PLC () has been nursing some sizable losses since the opening bell and is the top rise on the Footsie, down 5.8% to £13.35.
Although the budget carrier upped its full-year guidance, investors were more concerned that the price war in the industry will hurt yields for a little while longer yet.
That dovish sentiment from the easyJet board seemed to weigh on other airlines too. British Airways owner was down PLC () shed 3.6% to 597p, while PLC () dipped by 3.3% to €18.19.
The mining heavyweights were also lower this afternoon as a host of metals, including gold and platinum, saw their values drop.
That hit PLC () and PLC (), with the two dropping 2.5% and 1.6% respectively.
US markets more subdued than expected
Over in the States, the market’s got off to a more subdued start than traders had expected.
The tech-heavy Nasdaq inched 2 points lower to 6,383, the Dow Jones saw a modest 20 points knocked from its value to 21,621, while the S&P 500 was flat at 2437.7.
2.05pm…Draghi: No ‘tapering’ discussions until autumn at earliest
As had been widely expected, ther Eurozone interest rates remain unchanged.
There was also no surprise from ECB President Mario Draghi at his press conference just now either as he essentially repeated what he’s said before: ‘The European economy is doing well, but not well enough to consider easing the current economic stimulus measures.’
Draghi said the ECB policy makers were “unanimous” in their decision to leave things as they are until at least September, when the committee reconvenes after its summer break.
“The incoming information confirms the continued strengthening of the economic expansion in the euro area,” he said in the press conference.
But the ECB chief added that wage growth remains subdued and underlying inflation is only expected to rise gradually.
‘ECB played it safe’
“After financial markets overreacted to Mario Draghi’s Sintra speech, the ECB played it safe today,” said ’s Holger Schmiedling.
“In its monetary policy statement, the ECB maintained an easing bias for its asset purchase programme, emphasising once again that it “stands ready to increase the programme in terms of size and/or duration” if the economic outlook were to become less favourable or if financial conditions were to worsen significantly.
“The Eurozone economy seems to be largely on track. Recent data are in line with ECB staff projections and our own forecasts for resilient growth and no more than a very gradual pickup in core inflation. If upcoming data confirm the picture, as they probably will, the ECB will likely continue to tiptoe towards the exit from its aggressive monetary policy stance.”
Schmiedling expects the ECB to reduce asset purchases from the current monthly rate of €60bn to €45bn as of January, followed by another €15bn scale back in April, and then again in June before stopping next September.
1.10pm…FTSE higher, US stocks to follow suit
The FTSE 100 got off to a strong start this morning and it’s only built on those initial gains as the day has progressed.
The index of blue chip shares is currently up by 52 points, or 0.7%, to 7,483.
As has been the case for almost all of the day so far, toll rental firm PLC () is the leading light among the blue chips, up 3.8% to £17.13 following yesterday’s £187mln of Contractors Rental Supply.
Retailers boosted by sales data
Most of the major retailers, including PLC () and (), were headed higher following the better-than-expected UK retail sales data.
It was B&Q owner PLC () and clothes retailer () that were the pick of the bunch, adding 1.4% and 1.8% respectively.
() was also among the top risers after shareholders gave their backing to the cigarette makers US$47bn takeover of Reynolds.
That deal will create the world’s largest tobacco company and it is expected to go through next Thursday.
easyJet PLC () was still nursing some sizable losses, 5.5% to be precise, with investors concerned that the price war in the industry will hurt yields for a little while longer.
Those competition concerns seemed to weigh on PLC (), with the British Airways-owner shedding 2.5% to sit at 598.5p.
Oil price up, gold price down
Mining giant Limited () was also in the red after the price of gold dipped 0.4% to US$1,237. The share price has recovered some of its earlier losses, but it’s still down 0.7% to £69.15.
Elsewhere in the resources sector, the big-name oilers are putting in a good shift in thanks to oil prices which have rebounded slightly over the past 24 hours or so.
A barrel of Brent crude is edging ever closer to the US$50 mark again, while West Texas Intermediate crude oil is hovering around the US$47.50 level.
The rise in prices was welcome news for the likes of BP PLC () and fellow supermajor which are up 1.2% to 451.4p and 1.4% to £21.04, respectively.
US stocks set for bright start
The US markets closed on a high yesterday evening, and they’re set to continue in the same vein when they open later today.
Spread bet firms are expecting Nasdaq to open 11 points higher at 5,926, with the S&P 500 also seen as opening 2.2 points in the black at 2,475.7.
It’s a slightly more subdued start on the Dow Jones in New York, which is tipped to open a modest 8 points higher at 21,643.
12pm … Sky/Fox takeover decision to be delayed
Media mogul Rupert Murdoch will have to wait another few weeks until he finds out if his takeover bid for Sky PLC () will undergo an in-depth competition probe.
Culture secretary Karen Bradley has asked for more time to decide whether or not to refer the £11.7bn bid from the Murdoch-controlled 21st Century Fox (NASDAQ:FOXA) to the Competition and Markets Authority.
The minister did say that she was still “minded to” do so on the grounds of media plurality, adding that she expects her final decision is likely to come in the “coming weeks”.
Karen Bradley says nothing in submissions from Sky and Fox has changed her position on being minded to refer the merger on plurality grounds
— Mikey Smith (@mikeysmith) July 20, 2017
11.45am…BAT rises as shareholders back Reynolds takeover
() was on the rise today after shareholders backed the cigarette maker’s buyout of American brand Reynolds yesterday evening.
Reynolds shareholders have also given their approval of the US$47bn deal, which will create the world’s biggest tobacco company when it completes next week.
The takeover is expected to speed up the enlarged group’s development of e-cigarettes and vapes which have soared in popularity over the past couple of years.
“We look forward to realising the benefits of operating these two great companies as one stronger, global tobacco and next generation products business,” said BAT chief executive Nicandro Durante.
BAT’s London-listed shares are up 2.4% in late morning trade to £53.93.
eases lower on card surcharge fears
PLC () took a (temporary) hammering yesterday, possibly on fears that the credit card surcharge to be brought in at the end of 2018 would hurt the takeaway ordering and delivery platform.
At one point on Wednesday morning, the stock was down almost 9% although it managed to recover most of the losses pretty quickly to finish the day almost flat.
It is down another 2% or so today though to 689.5p, despite several analysts claiming that the ban – known as PSD2 – will only impact restaurants that charge the fees rather than itself.
British Gas to pay out £1.1mln to customers over missed appointments
British Gas, owned by (), has paid a total of £1.1mln in compensation to 12,000 customers for missed or delayed appointments caused by a third-party supplier, the UK’s energy regulator has confirmed.
In a statement, Ofgem said that the gas supplier compensated affected customers in full and paid an extra £30 to each.
The regulator added that it is not taking formal enforcement action against the company and that British Gas has agreed to the redress package.
Read more here.
Missed appointments waste customer time and money – good that @ofgem secured compensation for businesses & consumers let down by British Gas https://t.co/xSROcvecGK
— Victoria MacGregor (@VicMacG123) July 20, 2017
11.05am…FTSE 100 riding high
The FTSE 100 has been in the black since the word ‘go’ this morning, and it has continued to edge higher as the day progressed.
It is currently up by 41 points, or 0.55%, to 7,472.
Leading the blue chips higher is PLC (), with investors still enthusiastic after yesterday’s £187mln acquisition of Canada-based group Contractors Rental Supply.
Shares in the tool rental firm are currently up by 3% to £17.10.
B&Q owner PLC () is also making moves higher, up 1.1% to 305p, as is clothes retailer (), which is up 1.8% to £37.48 after it got a boost from the better-than-expected UK retail sales data earlier this morning.
It wasn’t a great morning for the airlines however. Despite upping its full-year forecasts, easyJet PLC () is the biggest loser (down 4.3% to £13.52) after management repeated that it expects yields to remain under pressure over the coming months.
The industry is in the middle of a pricing war which is hitting the margins of most of the big carriers, and those comments from easyJet seemed to be weighing on BA owner PLC (), which is down 1.2% to 604p.
10.35am … Lively morning over on the FTSE 250
It’s been an eventful day over on London’s second tier – the FTSE 250.
International PLC () shares have surged this morning after its colourful billionaire owner Mike Ashley repeated his belief that the retailer is on course to become the “Selfridges of sport”.
Ashley made the comment as the company reported a 58.7% dip in underlying pre-tax profits for the year to 30 April after a challenging year, while underlying earnings (EBITDA) dropped by 8.5%.
However, investors were encouraged by forecasts for a return to EBITDA growth this year, while the various issues that plagued it in 2016 – currency headwinds, negative publicity and employee working conditions, to name a few – are now (hopefully) in the rear-view mirror.
“There has been significant improvement at the management level and positive steps have been made in improving stakeholder engagement across all levels of the group,” said Liberum analyst Wayne Brown.
“The strategic partnership with ASICS, the stake in Game and the appointment of a CFO are just three of a larger number of positive steps undertaken.
“The prelims have been impacted by a number of well-flagged factors but we take encouragement that the right decisions have been made to ready the business to grow from a more sustainable level.”
Not everyone is a fan of the management team though …
Mike Ashley realising that being a scruffy drunkard who gambles away his profits doesn’t come across as very business-like #SportsDirect https://t.co/wX40yjNKJw
— Robert Boid (@bobberlet) July 20, 2017
Going the other way was price comparison website Group PLC () which was a heck of a lot of cheaper after it published its half-year results.
The share price is currently down by 7% to 333p although it had been as low as 308p earlier on, after it warned that full-year adjusted operating profits would be at the lower end of expectations as a result of current trends in its energy-supplier-switching business.
City broker Liberum stuck to its ‘hold’ recommendation following the update.
“We think this is a company that is very well run and we like the management team but we do have issues over the barriers to entry in the price comparison industry and the relative opacity of numbers,” it said.
10.15am…All eyes now turn to the ECB
Now that we’ve had the UK retail sales data, the next item on the agenda is the European Central Bank policy meeting, with ECB President Mario Draghi due to take the stage at around 1.30pm.
With recent data pointing towards a strengthening European economy, some hawks within the ECB’s governing council will be looking to taper (you’ve probably heard that word a lot this week) the current stimulus programme.
That programme is currently buying up around €60bn worth of bonds with newly minted money every month.
Last month, a confident Draghi seemed to hint that the ECB was close to winding down the programme which sent bond prices into a frenzy.
Most economists are expecting the committee to hold tight while it goes on its summer break, with any decision on tapering likely to come when it reconvenes in September.
“Traders are not anticipating any change to the policy but the press conference at 1.30pm might provide clues as to future alterations,” said CMC Markets analyst David Madden.
“The ECB chief, Mario Draghi, has praised the progress of the Eurozone but has stopped short of calling for a reduction in the size of the bond buying scheme. Keeping the euro lower is in his interest, so I suspect Mr Draghi will not be overly rosy in his outlook.”
When will the ECB pull its trillions from the markets? Here’s a guide https://t.co/8gubIKlZ7W pic.twitter.com/zQyxbElfQC
— Bloomberg (@business) July 20, 2017
9.50am…Sunny weather boosts UK sales
The recent warm weather has helped UK retail sales, which were stronger-than-expected last month according to the Office for National Statistics.
Retail sales volumes were up 0.6% month-on-month in June, boosted by us splashing out on our new summer wardrobes. Analysts had only expected growth of 0.4%.
Markit’s chief business economist Chris Williamson doesn’t expect the growth to continue going forward though.
“UK retail sales surprised to the upside in June, but with spending likely to have been buoyed by sunny weather, the upturn does little to change the underlying picture of an economy that seems to be losing momentum as we move into the second half of the year.”
Commenting on today’s official retail figures, @StatsKate, ONS Statistician said: https://t.co/W2QofXdDuS pic.twitter.com/7UZuszoEgs
— ONS (@ONS) July 20, 2017
9.15am…’Price war hurting easyJet’
easyJet is the top faller among the blue chips this morning, down 4.5% to £13.55 after a third quarter update, which was otherwise strong, hinted at ongoing margin pressures.
Here’s what Nicholas Hyett, equity analyst at , had to say about the news:
“An ever larger number of passengers are flying easyJet, two million more this quarter than a year previously. The problem is that easyJet is struggling to get its new passengers to pay the same as the old ones did,” explains Hyett.
“The group has blamed the lower prices on increased competition in key summer holiday markets, such as Spain and Portugal, and unfortunately that’s a trend that looks set to continue.
“For now, profitability is being supported by the steady slide in fuel prices. There’s no guarantee fuel will stay cheap though, and at the moment the group is struggling to land more sustainable cost savings elsewhere in the business, despite its increased scale.”
9am … Unilever nudges higher, on track to hit 2020 margin targets
() shares are ticking higher in early deals after the consumer goods giant overcame a slump in its margarine business to deliver a 3% increase in first half underlying sales.
The consumer goods giant posted a 5.5% rise in turnover to €27.7bn, including a positive currency impact of 1.7% from a weaker pound against the euro.
Margins also edged up by 180 basis points to 17.8% boosted by higher margins in ice cream brands Ben & Jerry’s and Magnum.
Speaking of margins, fund manager Steve Clayton thinks Unilever is making good progress towards achieving its goal of increasing underlying margins to 20% by 2020.
“Overall, these numbers look to be ahead of where analysts thought the group would be due to strong margin expansion,” said Clayton.
“After coming under intense pressure following the Kraft Heinz bid approach, Unilever’s redoubled efforts to raise margins are paying off.
“Cost savings of over a billion euros were achieved in the half year, with another €5bn planned in the medium term. Unilever look well set to hit their target of a 20% margin by 2020.”
8.45am … Footsie opens higher
It took a while for the FTSE 100 to get going on Wednesday but the blue chip index finished with a flourish and it continued that form into this morning.
The UK’s blue chip index has taken the cue from the US markets which closed higher last night, while Asian market are also in the black as they near the end of the trading day.
The Footsie is currently up 30 points, or 0.4%, to 7,461.
Ashtead top riser after Wednesday’s acquisition
Blue chip tool rental firm PLC () was the top riser in early deals, with the markets still reacting positively to yesterday’s £187mln acquisition of Canadian group Contractors Rental Supply.
CRS – which rents and sells bulldozers and trucks across Ontario – will beef up Ashtead’s North American business, Sunbelt, which is responsible for the vast majority of total group revenues.
Shares in Ashtead registered a small gain yesterday and has backed that up today with a 2.6% rise to take it to £17.03.
easyJet nosedives on yield pressures
easyJet PLC () was flying lowest on the FTSE 100 this morning despite upgrading its full-year profit guidance earlier today.
The budget carrier said the late timing of Easter and higher load factors helped to boost third quarter revenues by 16% to £1.39bn.
There was also a (good) surprise with revenue per seat, which rose by 2.2% despite analysts’ predictions of a low single digit decline.
Overall cost per seat fell during the period as well, which led easyJet to up its full-year pre-tax profit guidance to between £380mln and £420mln – ahead of the current consensus of £375mln.
But (there always seem to be a but), chief executive Carolyn McCall said she expects yields to come under pressure in the coming months as cheaper fuel prices exacerbate the price war currently raging in the industry.
That is what the markets have picked up on, with shares in the orange and white-liveried airliner down 4.5% to £13.50.
6.50am … FTSE 100 seen opening on the front foot
London’s FTSE 100 is expected to start this mid-July Thursday on the front foot, albeit modestly.
Such is the summer seasonality, the focus falls on the European Central Bank which meets to discuss rates later today.
But, that’s not to say that there are expectations that the central bank will actually change anything.
“Today’s ECB rate meeting has been touted as an important milestone in the context of how the central bank and ECB President Draghi in particular will manage the communication process of the enormous task of preparing the ground for the slow process of withdrawing from its large scale stimulus package,” said Michael Hewson, analyst at CMC Markets.
He added: “While no change in policy is expected today it is against this backdrop that ECB President Mario Draghi will be looking to manage expectations about the timetable for future monetary policy, with markets expecting some form of clarity as soon as the September meeting, by way of the Jackson Hole Central Bank annual symposium in August where we might get further clues.”
London’s anticipated drift higher is helped along by relatively positive equity trading on Wall Street and overnight in Asia.
The Dow Jones gained 66 points or 0.31% to close Wednesday at 21,640, while the S&P 500 closed the session up 0.54%, and the Nasdaq rose 0.64% to 6,385.
In Asia, Japan’s Nikkei climbed 0.65% to trade at 20,152. Hong Kong’s Hang Seng added 0.44% to 26,784 and the Shanghai Composite moved up 0.45% to 3,245.
Australia’s ASX 200, meanwhile, gained 0.53% to change hands at 5,762.
Here in London, CFD and spreadbetting firm IG Markets sees the FTSE 100 starting Thursday’s trading higher – calling the blue chip benchmark around 22 points higher, at 7,439 to 7,443.
State pensions need a radical rethink, not just an age raise – City A.M
BOJ pushes back inflation target for sixth time, keeps policy steady – Reuters
May pressed to give Brexit clarity at business summit – Sky News
Passengers stranded at Gatwick Airport as parking company goes bust – The Independent
Interims: PLC (), Group PLC (), (), Severstal (LON:SVST), ()
Finals: International PLC ()
Trading statements: PLC (LON:AAG), easyJet PLC (), Premier Foods PLC (), ()
Heavyweights going ex-dividend: Vedanta and SSE