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FTSE erases early losses to rise 5 points
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Sterling up 0.1% to 1.2880
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City pondering politics as 12 December election agreed
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Wall Street seen starting flat after mixed data
Global markets dont seem to be reacting much to anything today, with participants sitting on their hands ahead of the Federal Reserve pronouncements later in the day.
Data has just emerged on US gross domestic product and jobs growth, with both better than expected.
US GDP grew 1.9% in the third quarter compared to last year, down from 2.0% growth in the second but well above the 1.6% expected.
Personal consumption continued to be the driver, up 2.9% versus the estimated 2.6%, though down from the previous 4.6%.
Core PCE was up 2.2% quarter on quarter, in line with forecasts and up from the prior 1.9%.
Market analyst Naeem Aslam at Think Markets said “it is time for investors to have a reality check” as the data showed the Fed does not need to cut rates.
“The ultra easing monetary policy is simply off the table. Basically, there is no need for the Fed to have a dovish rate cut and that is if the fed is going to have that,” he said.
The ADP job report, which comes as an amuse-bouche ahead of the big non-farm payrolls number on Friday, showed an increase of 125,000 private sector jobs in October, above the consensus estimate of 110,000.
Paul Ashworth, chief US watcher at Capital Economics, said the “disappointing” number “confirms that there has been a significant slowdown in jobs growth over the past few months, and does not include the 50,000 striking workers at GM.
“Assuming that downward trend in employment and activity growth continues, we expect the Fed to cut interest rates both today and in December, even if the Fed tries to downplay expectations of the latter in the FOMC statement due later today.”
Futures markets are pointing to flat start for Wall Street, with the Dow Jones seen rising just eight points to 27,051.
US Q3 GDP at 1.9% (Exp. 1.6%)
– Consumer spending continues to keep growth relatively robust pic.twitter.com/7qtGys14Fy— Justin McQueen (@JMcQueenFX) October 30, 2019
*sad trombone*
*GOLD PARES GAINS AFTER U.S. 3Q GDP EXPANDS MORE THAN FORECAST
— Joe Weisenthal (@TheStalwart) October 30, 2019
Back in Blighty, the FTSE 100 is in positive territory, up five whole points at 7,311.69.
GlaxoSmithKline PLC (LON:GSK) has provided an extra boost as strong third quarter and upgrade to full-year earnings guidance sends the shares to their highest levels in 17 years, up 2% to 1,772.15p.
READ: GlaxoSmithKline shares close to 17-year high as it upgrades full-year earnings forecasts[hhmc]
Reckitt Benckiser Group PLC (LON:RB.), where some of its brands overlap with Glaxo's consumer healthcare products, was the second higher riser in London, up 2% to 5,958.5p, while AstraZeneca PLC (LON:AZN) is in the top 10.
Standard Chartered remains top of the leaderboard however, after its own quarterly update earlier, with analysts at Shore Capital "pleasantly surprised" by the strength of the performance, saying in such a difficult operating environment this "is no mean feat".
"Despite a cautious outlook, we remain positive on Standard Chartereds shares reflecting consensus forecasts that still appear too conservative and a somewhat depressed valuation," ShoreCap said, recommending clients switch out of HSBC Holdings (LON:HSBA) in favour of its rival.
10.55am: FTSE flattens out as analysts look for election winners
While there has not been a big effect on blue-chip stocks from the confirmation of the festive general election, City analysts are delving into the possible economic outcomes and significance for certain sectors.
For the retail sector, analysts at Peel Hunt said their view is that the 12 December election date is “not a bad one”.
“Black Friday may be slightly affected by pre-match nerves, but a clear outcome may be enough to give the sector a fillip into Christmas and the key big ticket selling period.”
Elsewhere, broker Shore Capital advised clients to take profits from housebuilding shares, with the sector having recently undergone “wild gyrations” as optimism grew that a no-deal Brexit had been avoided, that Brexit will deliver a “substantial economic dividend” and that a November budget would see Stamp Duty slashed to “set the housing market alight”.
“Now, however, we have replaced what appeared to be confidence with fresh doubt and uncertainty and…we believe that uncertainty is a killer for the housing market.”
Over at Liberum, analysts noted that history as a guide would point to the housing market slowing in the run-up to the election, “but if the opinion polls and bookmakers are correct, the housebuilders shares could outperform if a Conservative victory is the outcome”.
Liberum expressing a belief that smaller housebuilders would benefit more from improved risk appetite and that their valuations are more attractive, picking out MJ Gleeson Plc (LON:GLE), which saw its shares rise 5% to 828p by mid-morning. Persimmon PLC (LON:PSN) was the broker's the preferred large cap builder, though its shares were down 1% to 2,300p.
But while opinion polls suggest the Conservative Party will win an outright majority, UBSs investment gurus said, “we would caution about making predictions with any certainty at this stage”.
“The 2017 election serves as a good reminder that much can change when the campaigns begin in earnest,” the economists and strategists of the banks chief investment office said.
They maintained their bullish medium- to long-term view on sterling versus the US dollar and expecting a range of $1.26–$1.32 for the pound “until the next phase of political uncertainty concludes”.
Also looking at currency effects, Joshua Mahoney at IG Group said a possible resurgence for Nigel Farage would knock the pound back down as he envisions a “fraught” campaign “that will rip up the traditional political heartlands” as Brexit concerns dominate.
“A no-deal Brexit may only represent the stance of the Brexit Party, yet traders will be well aware that the Conservatives could ultimately require their help to form a government should we see a hung parliament.
“Nigel Farage has bided his time, but his renewed efforts to undermine Johnsons deal could drag the pound lower as traders see the flow of Brexit votes move back towards the hardline Brexit Party.”
9.45am: Pound "not freaked out" by general election
The Footsie is continuing to grind along just below the waterline in morning trading at 7,291.5 while the pound is equally becalmed.
"The fact sterling hasnt freaked out suggests the currency is hoping for increased political clarity heading into 2020, a result that would give one party a workable majority and allow the Commons to avoid the repeated Brexit deadlock that has become the norm post-referendum," said Spreadex analyst Connor Campbell.
"Yet if the last few UK votes are anything to go by, that hope might be a bit naïve."
Similarly, Russ Mould at AJ Bell noted that pressing the button for a general election “has had no impact on the UK stock market, perhaps because it was widely expected to happen".
Financial and healthcare stocks are most in demand, while miners and retailer are out of favour.
The more UK-focused FTSE 250 index is down 44 points at 20,123, with engineers Hunting PLC (LON:HTG) and Wood Group PLC (LON:WG.) the sharper fallers along with retailers such as Marks & Spencer (LON:MKS) and Sports Direct International Plc (LON:SPD).
8.40am: Subdued start for stocks; StanChart up, Next down
The FTSE 100 nudged 13 points lower to 7,293.03 as the market factored in the significance of a December general election ("meh", it seems) and prepared for the US Federal Reserves monthly interest rate call ("much more interesting" in the market's view).
The central bank looks set to pull the pin on a 0.25% cut to the base rate, according to Fed fund futures, which have priced in a 97% chance of this happening.
Sentiment going forward will depend on the accompanying commentary from chair Jerome Powell.
“The Fed lowered rates in June as well as September, but that hasnt been enough for President Trump or the markets,” said David Madden, analyst at CMC Markets.
“The US unemployment rate is at a fifty-year low, plus average earnings are comfortably outstripping inflation, so workers are getting an increase in real wages, so it seems strange the US central bank are potentially going to cut rates again.
“In recent months, the Fed have talked about adjusting their policy in accordance with the data. Manufacturing as well as services have slowed down but three rate cuts in four months seems excessive.
“Regardless of the rate decision, the press conference will be closely watched.”
Returning to London, Standard Chartered (LON:STAN) was among the mornings big Footsie gainers, rising 2% after its quarterly numbers passed muster.
Next (LON:NEXT) was the biggest blue-chip loser as profit-takers used a solid trading update to book some of the hard-won gains of the last five months. The shares were down 1.9% (Read more on the Next update here.)
Proactive News Headlines:
Block Energy PLC (LON:BLOE) has signed a gas sales agreement with Bago, one of the largest private gas suppliers and purchasers in Georgia for output from the West Rustavi field. Bago will pay US$5.24 per thousand cubic feet and cover the costs of installing the infrastructure to connect the field to the Georgian grid network. Sales are expected to start in the first quarter of 2020.
Sareum Holdings PLCs (LON:SAR) latest drug candidate has the potential to fight a number of cancers, according to a poster presentation given on Tuesday in the US by the firms chief executive, Dr Tim Mitchell. He said there was a “good level of interest directed” at the companys discovery from delegates at the American Association for Cancer Researchs annual gathering. “The conference is an important international cancer congress showcasing innovative research from academic and pharmaceutical organisations from around the world,” the Sareum CEO added.
Argo Blockchain Plc (LON:ARB) has increased an order for Bitcoin mining machines to 10,000 from 5,000, which once installed will increase its mining capacity by 240%. The cryptocurrency miner has replaced an order for 5,000 Antminer S17s, which would have cost US$13.09mln, with an order for 10,000 Antminer T17s costing US$9.51mln.
Bango PLC (LON:BGO) has signed an agreement with South Korean digital advertisement firm NHN ACE to develop digital marketing solutions targeting Korean mobile games users. The two companies will work with app developers to attract new paying users and increase in-app purchase revenues, employing premium apps and content while reducing marketing costs.
Applied Graphene Materials PLC (LON:AGM) surged on Wednesday as a primer containing its graphene technology hit the shelves of bike and car accessory retailer Halfords Group PLC (LON:HFD). The Hycote anti-corrosion primer, which Applied Graphene developed in partnership with consumer chemicals group James Briggs Ltd (JBL), has also been put on sale on Amazon Incs (NASDAQ:AMZN) website as well as on Tetrosyl Express, the UKs largest supplier of car care, parts and accessories.
Kibo Energy PLC (LON:KIBO) has formed a partnership with Italian firm AB Group to build flexible power plants in the UK. The agreement is a critical step towards delivering a fully operational site at Bordesley by the end of the first quarter of 2020, said the energy group. Kibos UK operation is run through joint venture MAST Energy Developments (MED), where it has a 60% stake.
Eurasia Mining PLC (LON:EUA), the established producer of palladium, platinum, iridium, rhodium and gold, said late Tuesday it had received notification from holders to exercise warrants over 27,066,666 shares raising, in aggregate, a cash value of £162,400.
Sound Energy PLC (LON:SOU) has signed a memorandum of understanding to sell natural gas from its Tendrara licences to Moroccos state power company. A detailed gas sales agreement is still under negotiation, but Sound said this is a binding agreement and the ongoing talks will incorporate the MOU. The aim is to get a final agreement signed by the end of the year.
ANGLE PLC (LON:AGL) expects the US Food and Drug Administration (FDA) to approve its Parsortix biopsy platform in the third quarter of next year following positive results from analytical studies. The medical tech firm said headline data from these studies, as well as a successful FDA clinical pivotal clinical study, originally announced in May, had been submitted to the FDA with the aim of getting market clearance for Parsortix to be used in metastatic breast cancer patients.
Corero Network Security PLC (LON:CNS), the network security company, has announced new customer orders through the Juniper resale partnership as well as two separate 100Gbps orders, totalling over $1.0 million, for its leading SmartWall DDoS protection products. Ashley Stephenson, Coreros CEO commented: "We are delighted to announce over $1 million of new orders and more importantly, to confirm encouraging sales progress from our strategic partnership with Juniper.”
Greatland Gold PLC (LON:GGP) has identified four new drill targets at its Scallywag prospect in Western Australia following geophysical surveys at the site. The AIM-listed miner said the four targets, Kraken, Barbossa, Blackbeard and London, had been identified through an induced polarisation (IP) survey across the northern portion of the prospect and will be tested in the next field season.
Diversified Gas & Oil PLC (LON:DGOC) shares rose on Wednesday after it announced that it is contemplating a securitisation transaction to form a wholly-owned and fully consolidated special purpose vehicle to issue non-recourse, asset-backed securities in a private placement transaction. The Appalachian basin-focused firm said it expects to use the proceeds to reduce the debt on its existing revolving credit facility, and will collateralise the notes with a portion of its working interest from its upstream producing asset portfolio.
KR1 PLC (LON:KR1) has added three new investments to its blockchain technology portfolio costing around US$416,000.
Sativa Group PLC (LON:SATI) has inked a deal with a company that helps some of the worlds major consumer brands increase their market share here in the UK. SHS Sales & Marketing, which counts among its customers Mars and Colgate, will market Sativas Goodbody Botanicals CBD range. It will do so on an exclusive basis, advising on product mix along with providing promotional and communications support.
Columbus Energy Resources PLC (LON:CERP), the oil and gas producer and explorer with operations in Trinidad and Suriname, confirmed on Tuesday the spud of the Saffron prospect having received Ministry approval for the drilling of the prospect which is in the South West Peninsula, Trinidad. In a brief statement, the company said it expects to advance to drilling with the 8½ inch pilot hole in the next few days. The firm added that it expects the well will take approximately 30-45 days to complete and evaluate and said it will update the market when appropriate.
Eland Oil & Gas PLC (LON:ELA) has revised down its production estimates for this year due to technical and permitting issues in Nigeria. The Gbetiokun-4 well has been suspended because of problems casing the core with attempts to rectify the issue hampered as the equipment required is not currently available in the country. Eland's joint venture Elcrest has now moved onto drilling Gbetiokun-5, which is expected to be spudded within two weeks.
Custodian REIT (LON:CREI), the UK commercial real estate investment company, announced late Tuesday that to satisfy continued investor demand, it has issued 850,000 new ordinary shares under its ordinary share block listing facility at a price of 115.0p each, raising £977,500 before costs and expenses. Following the issue, the company said its issued share capital comprises 411,553,344 ordinary shares.
Vast Resources PLC (LON:VAST), the AIM-listed mining company, said late Tuesday it was notified that on 29 October 2019 Andrew Prelea, its chief executive director purchased 4,000,000 ordinary shares of 0.1 pence each in the company at a price of 0.2725p each. Following this purchase, it added, Preleas total beneficial ownership in the company is 43,179,476 ordinary shares, which represents approximately 0.42% of the issued share capital.
Personal Group PLC (LON:PGH), a leading provider of employee services in the UK, announced late Friday that its fourth dividend for 2019 of 5.825p per share will be paid on 13 December 2019 to members on the register on 8 November 2019. It added that this dividend, the final of four to be announced this year, represents a 1.3% increase over the equivalent period last year, reflecting the company's progressive dividend policy.
Red Rock Resources PLC (LON:RRR), the natural resource investment and development company, announced that Pello Capital Limited has been appointed as joint broker to the company with immediate effect. Andrew Bell, Red Rocks chairman commented: "We have appointed Pello Capital as broker to benefit from their regional UK retail investor reach and their knowledge of the retail investor market in spreading awareness of our developing story. Through them, and their research capabilities, we expect over time to achieve a diversification of our retail and non-retail shareholder base."
Chaarat Gold Holdings Ltd. (LON:CGH), the AIM-quoted gold mining company with assets in the Kyrgyz Republic and Armenia, said it has been informed that Labro Investments Limited, in which the company's chairman Martin Andersson is indirectly beneficially interested in the majority of shares, purchased 50,000 shares in the company on the market at an aggregate share price of approximately 38.2p each on 28 October 2019 and 166,240 shares on the market at an aggregate share price of approximately 38p each on 29 October 2019. Following this purchase, its added, Labro Investments Limited holds146,417,436 shares, representing 33.17% of the issued share capital of the company.
