FTSE 100 drops 71 points to 7,316
Spanish terror attacks hit travel and leisure stocks
US stocks decline
Worries about Donald Trump’s presidency weighs on market
3.55pm: Trump and terror woes continue to weigh
The FTSE is set to end the day in negative territory as declines continued towards the closing bell. London’s top tier index is down 71 points to 7,316.
In the absence of fresh catalysts, the slump continues to be driven by worries about Trump’s presidency and the Barcelona terror attacks.
Trump woes also have weighed down US stocks and the dollar in early trading across the Atlantic.
“The President isn’t just alienating the already hostile Democrats, but swathes of his own party, with more and more Republicans disturbed by his reaction to the white nationalist protests in Charlottesville last weekend,” said ’s Connor Campbell.
“In terms of market-specifics, the fallout from Trump’s Charlottesville comments has included the dissolving of the Strategic and Policy Forum and the White House Manufacturing Jobs initiative, the disbandment of the advisory council on infrastructure and may yet lead to the resignation of National Economic Council Director Gary Cohn, something the White House was forced to deny on Thursday evening.
“All of this further imperils the so far elusive infrastructure and tax reforms that helped send the US indices to all-time highs, causing investors to question their current valuations.”
Evening Market Comment: Trump chaos pushes Dow Jones below 21700 for first time since July… https://t.co/nf46sIRowp
— Connor Campbell (@ConnorSpreadex) 18 August 2017
In company news, airlines IAG and EasyJet shares flew lower on fears Spain’s terror attacks will impact tourism.
The United States condemns the terror attack in Barcelona, Spain, and will do whatever is necessary to help. Be tough & strong, we love you!
— Donald J. Trump (@realDonaldTrump) 17 August 2017
, Shire and Mediclinic International slumped after generic drugs-focused German rival Stada said private equity firms Bain Capital and Cinven completed their €4.1bn takeover of the group.
Gambling companies, including Paddy Power Betfair and Ladbrokes Coral Group, were sitting lower following news that China is putting further restrictions on domestic firms making “irrational” acquisitions of foreign assets in areas including property, hotels, sports and gambling.
On the upside, was one of the few risers after the price of rose as yellow metal attracted investors seeking safe havens.
Mondi gained after analysts at Citi raised its rating on the stock to ‘buy’ from ‘neutral’ and raised its target price to 2,580p from 2,120p.
RSA Insurance was also lifted by a broker upgrade. RBC Capital Markets moved its rating to ‘outperform’ from ‘sector perform’ and increased the target price to 750p from 625p.
In currenices, the pound is weaker against the pound and the euro after a brief rebound earlier. It is down 0.06% versus the dollar at US$1.2860 and down 0.27% against the euro at €1.0947.
3.10pm: A fall in house prices could cause a recession, analysts warn
The market is failing to acknowledge the “real risk” of falling house prices by focusing too much on the modest decline in real wages and fluctuations in consumer credit and saving, according to analysts at .
“One third of household net wealth and three quarters of liabilities are directly linked to the housing market,” the analysts said.
For every 4% change in house prices there is a 1% change in real consumption, they added.
“As consumption makes up nearly 70% of GDP, it is hard to imagine a scenario where a nationwide correction in house prices did not cause a recession.”
House price growth has slowed since the Brexit vote but, for now, the market is mostly stable. Still a potential drop in house prices is a “real risk to watch”, Berenberg said.
2.40pm: US stocks under pressure
US markets have opened in the red amid worries about stability of Donald Trump’s presidency.
The Dow Jones Industrial Average dropped 22 points to 21,732, the S&P 500 fell 0.6 points to 2,439 and the Nasdaq dipped 1.12 to 6,219.55.
While speculation that Trump’s key economic advisor Gary Cohn had resigned has been put to bed, it has raised concerns that division within the government means the President may be unable to deliver on the policies he has promised.
It served as another blow to Trump after coming under fire for saying both sides were to blame during violence at an anti-racism protest in Charlottesville that killed one, and claiming that among the white supremacists involved there were “very fine people”.
“The negativity is flowing through to the markets as well as such a move would cast doubt over whether Trump will deliver on his tax reform and spending promises in the foreseeable future, two things that have been at least partly responsible for the post-election rally in the markets,” said Oanda’s Craig Erlam.
On this side of the pond, the FTSE is now down 82 points to 7,304.
1.50pm: Pharmaceutical stocks slide
Shares in pharmaceuticals have fallen today after generic drugs-focused German rival Stada said private equity firms Bain Capital and Cinven completed their €4.1bn takeover of the group.
The private equity firms earlier this week said they had only managed to persuade 34% of shareholders on the deal but a last-minute rally of support allowed them to go ahead with the acquisition.
Chairman, Engelbert Coster Tjeenk Willink, said: “Stada will now once again be able to fully concentrate on the operating business and to move forward with the successful growth strategy even more resolutely with the support of two strong partners.”
Shire is the worst performer, while , Mediclinic International and GlaxoSmithKline are also sitting lower.
1.20pm: Fed’s Fischer criticises Trump’s plans to curtail regulatory burdens
Federal Reserve vice-chairman, Stanley Fischer, has slammed Donald Trump’s efforts to loosen constraints on banks.
In an interview with the Financial Times, he said Trump’s attempts to reverse the post-financial crisis drive for tougher regulation on the banking industry was “dangerous and extremely short-sighted”
“One can understand the political dynamics of this thing, but one cannot understand why grown intelligent people reach the conclusion that [you should] get rid of all the things you have put in place in the last 10 years,” he said.
12.40pm: Markets await policy hints from central bank heads at Jackson Hole
Central bank leaders will head to Jackson Hole next week and the market will be closely watching for any hints from them on plans for policy shifts.
“The era of cheap money is coming to a timely end, with central banks now on a quest to raise rates at a pace that supports both growth and inflation,” said FXTM research analyst, Lukman Otunuga.
Otunuga said although reports have suggested European Central Bank President, Mario Draghi, will not deliver a new policy message at the conference, there is still a possibility that he will talk down the resurgent euro.
“With July’s ECB meeting minutes revealing concerns over the strengthening Euro, complicating the European Central Bank’s efforts to hit the 2% inflation target, Draghi may verbally intervene at Jackson Hole to weaken the currency,” he said.
“Other heavyweights such as Janet Yellen and Mark Carney, will also be on the scene with market players, closely scrutinizing any comments made regarding monetary policy. With concerns over stubbornly low inflation and political drama in Washington, weighing on the prospects of higher US interest rates, Yellen may avoid discussions on policy shifts altogether.
“The unsavory combination of Brexit uncertainty and soft economic fundamentals in the UK continues to weigh on the prospects of higher UK rates and this may be reflected in Mark Carney’s rhetoric at the pending Jackson Hole.”
12.00pm: FTSE continues its descend
The FTSE 100 is still in the red in midday trading, falling 75 points to 7,312, in the wake of the terror attacks in Spain and concerns about Donald Trump’s presidency.
“We’re seeing risk aversion in the markets again on Friday, with the possibility of a self-inflicted crisis within Donald Trump’s White House and another terror attack, this time in Barcelona, weighing on risk appetite,” said Oanda’s Craig Erlam.
“Trump has already this week been forced to dissolve his manufacturing council and the strategic and policy forum, while his infrastructure council never even got off the ground, after numerous CEO’s withdrew from the initiatives due to his response to the white supremacy rally in Charlottesville, Virginia, last weekend. “
Investors turned to safe havens, including , sending the price of the yellow metal up 0.67% to US1,301 per ounce.
Airlines fell, including International Consolidated Airlines and easyJet, after the terror attack in Barcelona.
Housebuilders and gambling companies were also under the cosh following news that China was clamping down further against “irrational” acquisitions of assets in industries ranging from real estate to hotels and entertainment.
11.30am: Pound strengthens against dollar
The pound has rebounded against the dollar, rising 0.16% to US$1.2888, amid fears about Donald Trump’s presidency given his lack of policy success due to division within the US government.
But Connor Campbell, financial analyst at , said it was important to point out that the pound has begun to flag against the dollar, falling from an early August 11-month high of US$1.326 to its current sub-US$1.29 levels.
Afternoon Market Comment: FTSE threatening to fall below 7300 as European losses continue… https://t.co/tx8URSSctD
— Connor Campbell (@Connor) 18 August 2017
11.00am: UK tourism grows in June, ONS reveals
Foreign visits to the UK rose 7% to 3.5 million in June compared to a year ago, driven by toursits from North America, the Office for National Statistics revealed.
Overall the number of foreign visitors to the UK increased 8% to 10.8 million in the second quarter.
The data did little to help tourism stocks, however, as news of the the terror attacks in Spain overshadowed the data.
10.30am: Housebuilders suffer as China further limits international investment
Housebuilders are on the back foot following news that China will restrict domestic companies from international investment in sectors such as real estate, hotels, the entertainment industry and sports clubs, according to a State Council guideline on overseas investment posted on the government website.
Holdings, , and are all in the red.
This provided a further drag on the FTSE 100 after already being hit by doubts about US President Donald Trump’s ability to deliver on policies and the aftermath of yesterday’s terrorist attack in Barcelona.
International Consolidated Airlines and easyJet are still leading the declines on worries that the recent terror attacks across the UK and Europe will deter travellers.
“In London, Paris and now Barcelona, the terrorist attacks over recent years have taken place in the three most visited cities in Europe, with inevitable implications for numbers over the coming year,” said IG market analyst, Joshua Mahony.
“With Turkish tourism numbers finally coming back, the focus on top European cities will arguably be a bigger hit to low cost European carriers if people decide to stay away.”
10.00am: Investors flock to safe havens
In the wake of the latest terror attack and worries about Donald Trump’s presidency, investors are seeking safe havens such as . prices rose 0.56% on the Comex to US$1,299.70 per ounce.
Demand for treasury bonds has also jumped. The 10-year UK Gilt fell 1.93% to 1.066% and German Bund yields dropped 6.10% to 0.40%.
Attacks in Barcelona last night, caused a flow of funds into safe haven assets such as and JPY
— Bharat Gohri (@bgohri) 18 August 2017
9.30am: Trump woes drag on markets
The Barcelona terror attack has hit European equity markets, particularly travel and leisure stocks, including British Airways owner International Consolidated Airlines and easyJet. But it’s not the only issue bothering markets.
“The Barcelona attack is just one catalyst for the selling, with issues in Washington also causing investors huge concern,” said Rebecca O’Keeffe, head of investment at Interactive Investor
“Markets had originally given President Trump the benefit of the doubt and hoped his abrasive style would cut through the political web and get things done. However, far from being a force for change, seven months into his presidency there has been no noticeable policy success and US politics is more divided than ever. Dissolving his infrastructure council before it even began highlights just how volatile the situation is and the question for investors is changing from what support Trump may deliver to markets to what risk he brings.”
08.30am: FTSE 100 opens lower as markets rattled by Barcelona terror attack
The FTSE 100 followed Wall Street and Asian markets lower with traders rattled by the terror attacks in Barcelona and a neighbouring resort.
The index of blue-chip shares was marked down 52 points to 7,336.27.
easyJet () was the biggest faller, down 3%, with () not far behind.
“As we’ve seen over the last couple of years in Europe, these kinds of atrocities affect tourism and will hit airline earnings,” said Neil Wilson of ETX Capital.
“Investors are concerned that demand will fall over the rest of the year, which was already looking like it would be a tough patch for the industry.
“Airlines are already dealing with a price war and several have warned about the second half.
“The attacks in Spain will do nothing to help and should hit earnings, although we won’t know to what extent until the quarterly updates come in.”
, always a haven for investors, in times of turmoil was up sharply overnight at a dollar shy of US$1,300 an ounce.
This had a knock-on impact on the companies that mine the precious metal, with Footsie constituent PLC () up 1.2%.
Proactive news headlines:
Tanzania-focused producer Shanta Ltd () continues to ramp up operations at its New Luika mine, as it reviews its business plan amid changing legislation in the African country As well as posting latest half year figures, the miner revealed it had terminated a previous arrangement to buy , which owns land next to New Luika, for US$5.6mln because of last month’s legal changes.
Asia-Pacific online gaming and media group () has raised £1mln from a syndicate of institutional investors. The AIM-quoted firm said it will use the money to fund its continuing operations, including general working capital requirements.
Vast Resources said that that Sub-Sahara ia Investments has exercised its right to provide equivalent finance on the same terms and conditions as a previous US$10mln deal agreed with a Romania-focused corporate finance and investment firm.
BOS Global PLC managing director hailed as a “remarkable achievement” the granting of two Australian patents protecting its workplace productivity software.
() has secured the addition of one of the UK’s leading high street lenders and expanded its existing loan facility by £15mln to fund territory growth, and said builds in progress are performing ahead of expectations.
() has completed drilling of its first two wells at the East Denver Niobrara oil and gas project in Colorado. The company said it has successfully drilled and set surface casing in both the Wildhorse and Powell wells to a total depth of 2,100 feet.
6.45am … US and Asia down after Trump antics and Barcelona
The Footsie is expected to drop back again in early trading on Friday following sharp falls overnight on Wall Street and in Asia, with the terror van attack in Barcelona also unnerving investors
Spread betting firm CMC Markets expects the FTSE 100 index to open around 40 points lower at 7,337, having shed 45 points yesterday.
Overnight on Wall Street, the Dow Jones Industrials plunged over 274 points to 21,750, while the tech-laden Nasdaq Composite shed 1.9% and the broader S&P 500 fell 1.5%, its biggest drop in three months, amid concerns that President Donald Trump’s economic agenda could be under pressure.
Michael Hewson, chief market analyst at CMC Markets UK said: “The mass resignations from the President’s business advisory councils followed by their dissolution, and the subsequent heavy criticism from fellow Republicans appears to show a US President more isolated than at any time in his short Presidency, giving the impression of US politics that appears to represent events that on a normal day could be said to have come from the Daily Mash, as opposed to the Economist.”
Asian markets tracked the New York declines, with Japan’s Nikkei 225 index down around 1% with confidence also shaken by the killing of at least 13 people on the Las Ramblas tourist street in Barcelona after a van moved down crowds of tourists.
The UK corporate diary is not just seeing a Summer lull on Friday, but almost a complete full stop, with the only item on the agenda an annual general meeting for PLC (), the behavioural marketing services group formerly known as Brainjuicer.
Similarly, after a busy week for UK data which saw the release of UK inflation, unemployment, average earnings, and retail sales data, nothing is scheduled for release on Friday.
Across the Atlantic, meanwhile, only the preliminary reading of the University of Michigan consumer confidence survey for August is due, with the final July reading having slightly beaten forecasts at 93.4, against estimates for 93.1, albeit a decline from readings of 95.1 in June and 97.2 in May.
Significant events expected on Friday August 18:
AGMs: PLC ()
Economic data: University of Michigan consumer confidence survey for August
Around the markets:
Sterling: US$1.2860, down 0.06%
: US$1,298.90 an ounce, up 0.50%
Brent crude: US$50.91 a barrel, down 0.24%
Woodford remains bullish on outlook for as losses widen – Daily Telegraph
Nasdaq Nordic market raises challenge to London’s AIM – Financial Times
China home price growth cools for second month in July – BBC News
German stock exchange sees insider trading probe widen following failed London takeover – Daily Mail
Singaporean fund and KKR join £6bn Unilever spreads auction – City AM
receives bid for Botswana mine – The Times
Gap shares back in fashion after rosier outlook, earnings beat – Financial Times
drops High Court tax appeal, with win ‘to yield $10bn in revenue’ – The Australian
Victoria’s Secret Owner company drops to six-year low as it fails with younger customers – The Independent
set to shed UK staff as it ramps up budget cuts – The Times
Hyundai to introduce new electric cars for 2022 – The Independent
Solarworld resurrected with the help of Qatari investment – Financial Times
Learndirect blames government cuts for damning Ofsted report – The Guardian
Toblerone not distinctive enough to be a trademark, claims, as it launches ‘copycat’ bar: – The Independent
Foreign-owned firms ‘hold key’ to Britain’s productivity woes – The Times
Cuadrilla begins drilling on first UK shale well for six year – Financial Times
South Korea’s thirst for craft beer helps food and drink exports top £10bn – The Guardian
blog reveals disparity in productivity between foreign and domestically-owned firms – City AM