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| | London open: Stocks drop amid political woes in Spain, Italy |  | | FTSE 100 | Euronext | Dax perf | CAC 40 |  |  |  |  | | Please click on the images to view our interactive charts | | | Stocks in London fell on Tuesday as traders returned to their desks after the bank holiday weekend, dragged lower by a selloff in European markets on the back of political uncertainty in Italy and Spain. At 0850 BST, the FTSE 100 was down 0.9% to 7,664.66, with sentiment wobbly ahead of likely fresh elections in Italy and as Spanish premier Mariano Rajoy faces a vote of confidence in his leadership at the end of week. In currency markets, sterling was flat against the euro at 1.1453 and down 0.2% versus the dollar at 1.3282. The euro, meanwhile, was trading at a six-and-a-half month low against the greenback, down 0.4% at 1.1576. Fresh elections are now expected in Italy after President Sergio Matarella intervened on Sunday to block the populist coalition partners from installing a euro-sceptic as their choice for finance minister - news that sent Italy’s two-year yield back toward euro crisis highs, adding 50 basis points on Monday to 0.981%. Analysts at Rabobank pointed out that both September and October have been suggested by Italian press as possible months for the fresh ballot. "Expectations that a potentially more market friendly administration is likely to have very little time in the seat, the mere prospect of a second poll this year on account of political deadlock and Presidential intervention raises questions as regards just how those vying for power are likely to fare and indeed, just how much populist juice they will be able to extract from the latest chapter in Italian politics. "Leaders from both the League and Five Star have already seized on Matarella’s move as un-democratic, part of the old Italy and representative of an elite class that they have vowed to sweep aside. While Matarella may have bought some time, his move could yet backfire, serving merely to embolden even greater support for both parties that may see market concerns of Italy’s drift from the euro area intensify." Meanwhile, in Spain, the opposition party called for a vote last week after a Spanish court handed down a ruling on a corruption case involving members of the ruling Partido Popular. "The confidence vote and the political turmoil that this could create in Spain adds fuel to the political fire burning in Italy at present, the prospect of which in combination with concerns as regards the stability of Spanish politics will continue to apply pressure to peripheral debt markets and likely support the ongoing bid for core govvies already in motion," Rabobank said. In UK corporate news, Dixons Carphone shares tumbled after the company said profits were down 24% in the past year and will drop more than 21% in the coming year as new chief executive Alex Baldock sees "plenty of hard work" ahead for the electricals retailer. Vedanta was in the red as it was ordered to permanently close its Tuticorin copper smelter in India, where anti-expansion protestors were killed by police earlier in May. GlaxoSmithKline slipped after it and Innoviva submitted a regulatory application to the Japanese Ministry of Health, Labour and Welfare for their single inhaler triple therapy for the treatment of patients with chronic obstructive pulmonary disease or COPD. Old Mutual was in the red after saying it will proceed with the listing of its asset management business Quilter PLC following shareholder approval for the managed separation. Standard Life fell as it said it plans to return £1.75bn to its shareholders following the sale of its UK and European insurance business to Phoenix Group. Rolls-Royce retreated as it unveiled a new range of engines for aviation business, purpose built for Bombardier’s latest jets, while RBS was weaker following reports that the government could sell off another stake in the bank this week. On the upside, Smiths Group rallied after it confirmed that it is in very early stage discussions about a potential combination of its medical division with Nasdaq-listed ICU Medial. Serviced office provider IWG was also on the front foot as Prime Opportunities Investment said it had made a cash offer for the company that was rejected. The US real estate investment group said it is considering making another offer for the group. In broker note action, IAG was upgraded to 'buy’ at AlphaValue, while Fresnillo was lifted to 'outperform’ at BMO. Ocado was cut to 'equal-weight’ at Morgan Stanley and Workspace was downgraded to 'hold’ at Deutsche Bank. |
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| | US close: Street falls as sentiment hit by North Korea news | | Wall Street moved finished in the red on Thursday amid growing geopolitical concerns, with worries about trade talks with China and Trump's decision to pull out of a historic summit with North Korean leader Kim Jong Un weighing on investors' minds. The Dow Jones Industrial Average ended the session down 0.3% at 24,811.76, the S&P 500 was off 0.2% at 2,726.76, and the Nasdaq 100 slipped 0.06% to 6,949.70. Trump told North Korean leader Kim Jong Un that a planned summit between the two "will not take place" in a letter that followed expressions of anger from officials of the rogue nation over US demands to denuclearise. In his letter, Trump said, "you talk about your nuclear capabilities, but ours are so massive and powerful that I pray to God they will never have to be used." Choe Son Hui, North Korea's vice minister of foreign affairs, said that if the 12 June talks were cancelled, the US would be faced with a "nuclear-to-nuclear showdown". Elsewhere, Trump reignited concerns about a trade war between the US and China by announcing plans for an investigation that could lead to import tariffs on cars. The US Department of Commerce said late on Wednesday that it had begun a probe into auto imports to determine whether they "threaten to impair the national security" of the US. "There is evidence suggesting that, for decades, imports from abroad have eroded our domestic auto industry," Commerce Secretary Wilbur Ross said in a statement, as he promised a "thorough, fair and transparent investigation". China hit back by saying that the probe was an "abuse" of national security clauses. On the data front, the number of Americans filing for unemployment benefits rose last week to a seven-week high, according to data from the Labor Department. US initial jobless claims were up 11,000 to 234,000 from the previous week's level, which was revised up by 1,000. Economists had been expecting a reading of 220,000. Meanwhile, the four-week moving average was up 6,250 to 219,750 from the previous week's average, which was revised up by 250. In other news, sales of US existing homes slid in April after two straight months of increases, according to data from the National Association of Realtors. Sales fell by 2.5% to a seasonally-adjusted annual rate of 5.46m in April. Economists had been expecting a level of 5.57m. On the year, sales were 1.4% lower and have fallen year-over-year for two straight months. In corporate news, Victoria's Secret parent L Brands collected 3.44% despite downgrading its outlook late on Wednesday. Shares in Hormel Foods lost 1.12% after earnings slipped on less than expected revenue rise, while Medtronic ticked up 1.98% following a fourth-quarter earnings and revenues beat. Best Buy slumped 6.65% as online growth slowed for the electronics retailer, and McKesson dropped 1.87% after missing estimates. |
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| | Tuesday newspaper round-up: Brexit, RBS, drones, Codemasters | | The growing risk of a bad Brexit deal for the City of London is causing severe tensions between the Bank of England and the Treasury, according to reports. Amid mounting fears that Brussels will reject plans put forward by the chancellor, Philip Hammond, for maintaining close ties with the EU for financial services, the Financial Times reported that Bank officials are at loggerheads with the Treasury over the search for a “Plan B” arrangement. – Guardian Another tranche of the state’s share in Royal Bank of Scotland could be sold off as early as this week, with speculation mounting that the Treasury is to resume its privatisation imminently. About 10% of the bank could be sold to investors, which would raise about £3bn but still crystallise a substantial loss to taxpayers after the government was forced to bail out RBS during the financial crisis in 2008. While the Treasury’s long-term goal is to sell its 70.5% stake and return the bank to the private sector, the share price could yet defer a decision. - Guardian Drones monitoring roads for car crashes and directing emergency services, speeding up surveys in construction by doing them from the air, or even managing inaccessible mines could deliver a massive boost to Britain’s economy, it has been claimed. PwC has estimated that by 2030 drones could boost Britain’s GDP by £42bn, and create cost savings of £16bn as they make work more efficient. - Telegraph British chief executives were nearly twice as likely to leave their jobs last year as their international counterparts, underscoring the “unforgiving” challenge of running a London-listed company. The churn rate for FTSE 100 and FTSE 250 companies reached 16.5pc in 2017, nearly double the global average of 9.3pc, according to research by executive search business Heidrick & Struggles (H&S). - Telegraph The accounting watchdog has been accused of “outrageous ineptness” in its five-year investigation into the accounts of Autonomy, which could become its slowest inquiry yet. The Financial Reporting Council is still investigating the British technology company’s accounts, audited by Deloitte, in the years leading up to its $11 billion acquisition by Hewlett-Packard in 2011. That deal ultimately led to an accounting scandal. - The Times One of the most established names in the British video games industry will be valued at £280 million when it floats on the Alternative Investment Market this Friday. Codemasters, which develops the official Formula One games, will raise £185 million from the sale after pricing its shares at 200p. Only £15 million of the sale is for the Warwickshire-based business, while £159.9 million will go to Reliance Big Entertainment, its Indian owner, which is cutting its stake of more than 90 per cent to 30 per cent. Executive directors and senior management are also taking out £10 million at the float. - The Times | | | | To advertise in the Euro Markets Bulletin please contact advertise@advfn.com |
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