FTSE rises 23 points to 7,430
Investors look ahead to Jackson Hole
Hurricane Harvey threatens to disrupt US oil production
shares surge on changes at the top
2.20pm: Dixons Carphone shares recover as chairman doubles stake
Dixons Carphone chairman, Ian Livingston, has bought £99,472 worth of shares after the company’s market value plunged yesterday following a profit warning.
Shares slumped 30% yesterday after the company said it expects its full year profit to drop due to challenges in its UK mobile business, the disposal of its Spanish arm and lower EU roaming charges.
Livingston, who was appointed chairman in February, doubled his existing stake by purchasing shares at 182p each after the sharp decline in the share price. Shares were trading at 235p before the profit warning.
In afternoon trading, share picked up 3.45% to 187.05p.
2.00pm: Supermarket shares slump as Amazon moves to cut prices at Whole Foods
London-listed supermarket shares are under the cosh after Amazon announced it would start cutting prices at Whole Foods as soon as next week.
Amazon said it was buying Whole Foods for £10.7bn in June as the online giant expands into groceries, adding worries about the fierce rivalry that already exists between supermarkets.
Upon closing its takeover on Monday, Amazon will start lowering prices of Whole Foods’ staple groceries in a move that is expected to broaden the upmarket grocer’s appeal to more customers.
.@WholeFoods acquisition to close Monday https://t.co/t5M6W0OwD1
— Amazon News (@amazonnews) 24 August 2017
Shares in , Sainsbury’s, Marks & Spencer and Morrison Supermarkets were in the red following the announcement.
1.40pm: US durable goods orders drop in July
US durable goods orders fell by more than expected last month, the US Census Bureau revealed.
Orders for long lasting items such as cars and washing machines dropped by 6.8% in July after a 6.4% rise in June, compared to analysts’ forecasts for a 6.0% decrease.
Dennis de Jong, managing director at UFX.com, said: “Investors will be concerned on the back of today’s results. Not only will support for the dollar dampen, the downbeat numbers will cast further shadows over the US growth outlook.”
He added: “Attention now turns to the Jackson Hole meeting later today. Janet Yellen isn’t expected to address monetary policy directly, but as investors contend with the threat of President Trump’s government shutdown, any hints the Fed Chair may provide will be scrutinised.”
1.05pm: British public’s inflation expectations rise
The UK public’s inflation expectations for the next year rose in August to 2.6% from 2.5% in July, according to a survey for Citi by YouGov.
That is in line with official data showing inflation rose at an annual rate 2.6% in July.
In the next five to 10 years, expectations for inflation reached 3.2%, the highest since 2013 but no higher than the average since the survey began in 2005.
“More ‘normal’ inflation expectations do not call for emergency monetary stimulus from the . But neither do they call for its urgent withdrawal,” Citi economists Christian Schultz and Ann O’Kelly said.
12.40pm: UK employment law changes see costs rise for businesses, BCC survey shows
Changes to UK employment law have led to rising costs for four out of five businesses, according to the British Chambers of Commerce (BCC) annual workforce survey.
The survey showed 75% of respondents reported an increase in costs as a result of pensions auto-enrolment, 50% of businesses said costs rose due to the National Living Wage and 20% of companies saw expenses grow on the apprenticeship levy.
On the back of the minimum wage increases, 38% of respondents plan to raise prices of products and services while 25% intend to reduce pay growth.
The trade body called on the government to ensure businesses are not affected by new upfront costs or taxes during the remainder of this Parliament.
12.00pm: and mining shares lead FTSE 100 higher
The FTSE 100 rose 29 points to 7,436 ahead of key speeches at the Jackson Hole central bank gathering.
is the top riser as analysts welcomed its decision to replace the managing director of its struggling home credit business.
Mining shares were also higher, including BHP Billiton, Antofagasta and , boosted by an increase in base metal prices.
BP and were lifted by a rise in oil prices as Hurricane Harvey moved in over Texas, threatening to disrupt US oil production and soothing worries about a global supply glut.
In currencies, sterling gained 0.21% versus the dollar to US$1.2828 and increased 0.16% against the euro to €1.0865.
With little else in the way of major macro-economic events, all eyes are on Jackson Hole with market participants keen to hear any hints about monetary policy from Federal Reserve chair Janet Yellen and European Central Bank President Mario Draghi when they speak later.
In a potential lift for US markets, Donald Trump’s economic advisor Gary Cohn has put to rest rumours about his departure by telling the Financial Times he felt duty bound to stay on at the administration despite the President’s failure to condemn the neo-Nazis in Charlottesville.
Cohn also claimed that Trump will put tax reform back on the agenda next week with a speech in Missouri.
Connor Campbell, financial analyst at , said this is no doubt a relief for investors desperate for a sign that the President will deliver on his market-lifting promises. “Whether he can push through said reforms, however, is another matter entirely.”
Afternoon Market Comment: Markets perk up as Trump’s economic advisor puts tax reform back on the agenda… https://t.co/tx8URSSctD
— Connor Campbell (@Connor) 25 August 2017
11.30am: Draghi to keep lid on ECB policy plans at Jackson Hole
European Central Bank President Mario Draghi is likely to avoid providing any hints about monetary policy changes when he speaks at Jackson Hole later, said Oanda’s Craig Erlam.
“The central bank announced one reduction on asset purchases last December and it’s expected to announce another in the coming months,” he said.
“While investors are desperate to get more information on this, I think it’s highly unlikely given the ECBs unease at past market reactions.
“I think the central bank will prefer to address this after the meeting next month on home turf and won’t want to risk further tightening of financial conditions in the meantime, with the euro having already sharply appreciated this year.”
As for Federal Reserve chair Janet Yellen’s speech, investors will be keen to hear whether she will provide any indication on whether the central bank is planning another interest rate hike this year.
The Fed has been tightening its monetary policy but there is growing unease within the central bank about whether the current pace of rate increases is appropriate given that inflation is lagging well below the 2% target.
“Investors have long been unsure that there’ll be another rate hike this year and the message seems to finally be filtering through to the Fed,” Erlam said. “It will be interesting to see whether Yellen will address this today or instead focus on balance sheet reduction, which is expected to be announced in September and doesn’t interest investors in the same way.”
11.10am: Mining shares boosted by base metals
Mining shares are among the biggest risers on the FTSE 100 as base metal prices are on course for their seventh weekly increase and strongest weekly gains in 11 years.
Strong demand and incoming supply curbs in China have given base metals a boost.
BHP Billiton, Antofagasta, and shares are higher.
10.30am: Indecision rife across financial markets, says IG
Investors are cautious ahead of key speeches from European Central Bank President Mario Draghi and Federal Reserve chair Janet Yellen at Jackson Hole later, said IG’s Joshua Mahony.
“Indecision is rife across financial markets this morning, as the impending appearances from Mario Draghi and Janet Yellen mean that there remains little certainty over how this week is likely to close out,” he said.
“For the most part we are likely to hear Draghi reiterate his stance from earlier in the week, with ECB sources recently speculating that Draghi wouldn’t announce any new policy shifts at today’s speech.
“However, we could see Janet Yellen steal the headlines, with today marking her final Jackson Hole appearance before Donald Trump decides her future in February.”
Today’s Jackson Hole meet sees Yellen and Draghi in focus. Could be Yellen’s last
— Joshua Mahony (@JMahony_IG) 25 August 2017
Mahony added that oil prices are higher as Hurricane Harvey in the Gulf coast threatens to disrupt production in the region, which accounts for 45% of the nation’s refining capacity and 17% of US output. This has helped to soothe worries about the global supply glut.
Brent crude rose 0.68% to US$52.40 per barrel and West Texas Intermediate increased 0.71% to US$47.77 per barrel.
“With possibly the biggest storm in over a decade to hit American soil heading straight into the oil producing heartlands, there is the potential for huge disruption both at sea and inland,” Mahony said. “With three refineries already shutting down ahead of the storm, there is a significant chance that we will see a major disruption to the extraction and refining of crude oil and gasoline irrespective of any physical damage.”
10.15am: German business confidence falls
German business confidence fell slightly in August, reflecting less positive assessments of the current business situation.
The ifo Institute’s business climate index dropped to 116.0 points from 115.9 in July. But Clemens Fuest, resident of the ifo Institute, said sentiment among German businesses remains very strong.
“The decline was due to slightly less positive assessments of the current business situation,” Fuest said. “Companies’ short-term business outlook, by contrast, improved. Germany’s economy remains on track for growth.”
9.30am: German economic growth unrevised in latest second quarter estimate
Germany’s economy grew by 0.6% quarter-on-quarter in the second quarter, in line with initial estimates and market forecasts, Destatis revealed.
This marked a slowdown from the 0.7% seen in the first quarter.
On an annual basis, gross domestic product rose 2.1% in the second quarter, following 2% growth in the prior quarter.
German exports rose 0.7% during the period, easing from 1.6% growth in the first quarter and missing expectations for a 1.2% increase. Imports edged up 1.7%, less than the 2.0% expected and compared to 0.4% in the previous quarter.
Private consumption grew 0.8%, beating forecasts of 0.7% and following a 0.4% increase.
8.50am: Markets quiet ahead of Jackson Hole
The FTSE 100 added just six points to trade at 7,413.16 ahead of the main speeches at the Jackson Hole summit in the US for central bankers.
In the meantime, there is very much a listless feel to the market as traders wind down ahead of the extended weekend break.
Top of the Footsie risers (again) was the Tuesday’s big faller, the doorstep lender () following news Provvy had replaced the head of its struggling home credit unit.
The prospect of category-three storm Hurricane Harvey ripping through the Gulf of Mexico and into the central coast of Texas has put the oil industry there on red alert.
Platforms in the Gulf have already being evacuated and refineries in Texas are braced for a battering.
The net effect on the markets has been to push up the cost of a barrel of Brent crude to US$52.50.
The knock-on impact was a boost to oilers, with BP (LON:BP) at the vanguard.
The miners were also in demand early on, while the retail gloom generated by the Dixon Carphone’s (LON:DC.) profit warning Thursday spread to affect (), J Sainsbury () and Marks & Spencer ().
Proactive News headlines:
() expects to come on strong in the second of its current fiscal year, but admitted that a slower-than-expected start to a couple of big contracts picked up earlier this year will hamper near-term performance. Even with a “more pronounced second half weighting”, WYG said the expected first-half shortfall in performance meant it would be lowering its full-year guidance.
CentralNic Group PLC () headed higher on Friday morning after the internet domain names specialist announced the €26mln acquisition of Slovakian counterpart SK-NIC and confirmed it is on track to hit full-year expectations.
PLC (), the digital marketing services group, has changed the terms of the earn-out deal agreed as part of the acquisition of the user experience business MMT. The company said the new deal will benefit both sides of the transaction.
() is seeing significant commercial traction for its energy storage and clean fuel technology with a pipeline totalling £35.5mln, £17.8mln of which is under contract. The update was provided as ITM delivered results for the 12 months to April 30.
Digital media specialist PLC () said it bought for £8 and then cancelled the founder share in the business owned GSC SICAV. The share allowed its owner the right to appoint and remove directors from the business, providing a layer of protection that is now not required.
SDX Energy PLC (LON:SDX) revealed a first half boosted by the acquisition of the assets with net revenues transformed. The company, in results for the six months ended June 30, reported revenue of US$18mln compared with US$4.6mln in the same period of 2016.
(LON:ECO, CVE:EOG) chief executive Gil Holzman has told investors that the explorer has started to look for new opportunities. Holzman, in the explorer’s first quarter results, highlighted the company has been able to engage in seeking new potential assets and explore new transactions due to its strong balance sheet.
() investors waiting on the Australian shale decision will be assured that in the meantime the group remains financially stable. In a stock market statement, highlighting the filing of interim financial statements, Falcon told investors that its position was strong – with no debt and US$9.7mln cash at the end of June.
() shares zipped higher in early deals after the miner secured the final regulatory approvals needed for the construction of its Elikhulu tailings project in South Africa. The AIM-quoted firm has been granted the integrated water use licence for the project by the South African department of water and sanitation for a period of 20 years.
() said today it has received £250,000 – £237,500 net of fees – from the previously announced £1mln unsecured convertible note facility due 8 June 2019. The note facility was first announced on 13 June 2017 and in total £350,000 has now been received from it. The cash will be used for general working capital purposes and to potentially support an acquisition or development of a project to complement the company’s US$3mln equity interest in the New York Wheel Project.
() has proposed the implementation of an options programme, consisting of three tranches, designed to incentivise its board and management to target, over the next five years, a market capitalisation of £100mln and progressing onto a share price of 10p. The diversified mineral production and development company said the options programme is being implemented after its board received a number of enquiries, from shareholders and the general market, as to the future direction of the company and how the board and management would be incentivised.
6.45am … FTSE to edge higher
The FTSE 100 is expected to edge higher in early trading today, following mixed showings overnight on Wall Street and in Asia, with the session likely to be quiet ahead of the long bank holiday weekend in the UK.
Spread betting firm CMC Markets expects the FTSE 100 index to open around 4 points higher at 7,411, having gained about 24 points yesterday.
Overnight on Wall Street, the Dow Jones closed 28 points lower at 21,783, with other US indices also weaker on worries over the continuing battles between President Trump’s administration and Congress.
But Asian stocks advanced today, shrugging off the sluggish performance on Wall Street as attention shifted to the central bankers’ symposium that began on Thursday in Jackson Hole, Wyoming.
David Madden, market analyst at CMC Markets UK said: “After a long wait the Jackson Hole symposium finally kicked off yesterday, and traders will be paying close attention to the speeches from Janet Yellen and Mario Draghi, which are due to take place today.”
ECB and Fed bosses to speak
He added: “The ECB chief (Draghi) will probably use the speech to congratulate himself on the recovery of the eurozone thanks to the loose monetary policy, but he might use the relatively low inflation rate as an excuse not to talk about reigning in the stimulus package.”
Madden continued: “Janet Yellen, the chair of the Federal Reserve, is likely give us more of the usual, that the US economy is improving, and in particular unemployment is falling. Earnings could be firmer but they are edging higher. The US inflation level is below the Fed’s target, and if Ms Yellen brings that up, it will tip off traders that we are unlikely to see a rate hike in December.”
On the data front, overnight a survey showed UK consumer morale improved slightly in August but remained subdued overall as households became gloomier about their finances.
The monthly consumer confidence index from pollster YouGov and consultancy Cebr rose to 107.6 from 107.2 in July, aided by an increase in its measures of job security and house prices..
But consumers’ perception of household finances worsened for a fifth month in a row, the longest run since YouGov records started eight years ago.
Corporate diary very thin
On the final Friday trading session of August, the corporate news diary is unsurprisingly pretty empty, with just a handful of releases to provide any interest.
Small cap hydrogen fuel and storage specialist () recently revealed good growth in its order pipeline, which should bode well for progress when the firm posts full-year results on Friday.
READ: ITM Power’s pipeline fills up some more
At the start of this month, ITM revealed that another £4.87mln of orders had rolled in, meaning the company currently has £23.54mln worth of projects under contract and £16.67mln of contracts in the final stages of negotiation.
Back with half-year results in January, ITM Power said its orders totalled £15.68mln, which was a 100% increase year-on-year and the group said it remained confident of delivering full year results to end April in line with market expectations.
For its half year to October 31, the firm reported revenue of £0.4mln, down 39% compared to the same period of 2015, reflecting the early stages of build projects during which there is relatively little revenue recognition.
UK concerns for , but Europe could excite
Elsewhere, FTSE250-listed IT services group PLC () will deliver its first half results, having said back in April that it expected to beat expectations in 2017 after solid first quarter growth.
READ: Computacenter expects to beat 2017 expectations after solid first-quarter growth
However, Swiss bank recently downgraded its rating for to ‘neutral’ as its analysts think the firm could be set for a rough ride over the coming years as the UK economy continues to show signs of stalling.
Around 40% of the mid cap firm’s sales and more than half of all profits come from its UK business, making it an “important market” for the company.
But was a little more optimistic about the outlook for other parts of the business, with an “improving picture” across the Channel in continental Europe, while the Windows 10 cycle could also serve to boost sales.
Significant events expected on Friday August 25:
Interims: PLC (), Henry Boot PLC (LON:BOOT)
Economic data: US durable goods orders
Around the markets (around 8.45am):
Sterling: US$1.2828, up 0.2%
Gold: US$1,287 an ounce, up 0.1%
Brent crude: US$52.37 a barrel, up 0.6%
drug reduces risk of repeat heart attack by almost a third – Daily Telegraph
Chief Mike Ashley increases stake in Centres to 15% – Scottish Herald
closer to IPO after Warner Music deal – Financial Times
Amazon accelerates assault on UK supermarkets – Daily Telegraph
Phoenix hunts for deals as it sits on ‘more money than ever before’ – Daily Telegraph
Miner South32 looks to jump on electric vehicle bandwagon – Daily Telegraph
BHS creditors to be paid tens of millions by Arcadia – The Times
John Laing suffers profits fall after hit on waste projects – Financial Times
Jet2 announces pilot recruitment drive as it looks to fill 1700 jobs – The Independent
SoftBank takes £3.4bn bet on shared workplace start-up – Daily Telegraph
Two SocGen Managers accused of Libor manipulation – Financial Times
Bell Pottinger faces sanction over claims it stirred racial tension in South Africa – Daily Telegraph
Vegan millionaire eco-warrior Dale Vince surrenders in battle with rival Good Energy – Daily Mail
Pay revolt companies to be named and shamed – The Times
Housebuilding in the UK at the highest since financial crash – The Times