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| | London open: FTSE jumps for June as trade war fears shrugged off |  | | FTSE 100 | Euronext | Dax perf | CAC 40 |  |  |  |  | | Please click on the images to view our interactive charts | | | London share prices gained ground on Friday, the first day of June, shrugging off the renewed concerns about global trade wars that had sent Wall Street into the red. Mirroring a recovery in Asia, the FTSE 100 jumped 53.54 or 0.7% to 7,731.74, back towards recent all-time highs, as the pound lost territory on the dollar, falling below $1.33 again, and remained little moved against the euro at 1.1365. Italy's President Sergio Mattarella overnight gave his consent to a new populist government agreed between the League and Five Star, with academic Giuseppe Conte as Prime Minister and the finance ministry brief to be held by another professor, Giovanni Tria, who has warned of an implosion of the euro if it isn’t reformed. This now paves the way for the government to be sworn in later this afternoon which will be followed by a confidence vote in parliament next week. "Markets were reassured when Italy stepped away from the precipice of fresh elections and the populist coalition proposed a new cabinet. While Eurosceptics will still dominate potential future Italian government of Giuseppe Conte, markets were considering this a preferable outcome to the alternative of fresh elections that would have been seen as a potential vote of confidence in the European system," said market analyst Artjom Hatsaturjants at Accendo Markets. Some immediate respite for investors, maybe, but Neil Wilson at Markets.com noted that the 10-year BTP is still above 2.6%, pushing 2.7%, well north of the 1.7%-1.8% level before the mini-crisis blew up. "So, some calm but certainly the market is still pricing expansionary fiscal policies and/or a run-in with the EU on borrowing and the expectation of ballooning debt-to-GDP. Whatever it is there is still risk in there, but the redenomination/Eurozone breakup risks (the tail risk that wagged the dog this week) have decidedly retreated with the approval of the govt," Wilson said. Whilst political fears receded in Italy receded these are being balanced by trade war concerns, said Jasper Lawler at London Capital Group, but the market losses have not been as large as we would have expected just a few months ago. "The market is becoming more familiar with this administrations’ negotiating tactics and as a result, rather than seeing a move straight into risk off trading, we are seeing some investors take a wait and see approach." Traders will be focused on economic data on Friday though the political theme will continue to offer a background beat. The release of US non-farm payroll report is the main event, with nearly 190,000 new jobs expected ahead of the next Federal Reserve meeting in less than two weeks. In Europe it's a morning of manufacturing PMI surveys an interesting industrial insight as market stand at the brink of a potential global trade war. As for the UK report, due at 0930 BST, the market is expecting the PMI to fall to 53.5 for May from 53.9 a month earlier. There was a dearth of major UK company news on Thursday, with Rio Tinto confirming completion of the sale of its 75% share of the Winchester South coal development project in Queensland for an up-front $150m cash, while ZPG confirmed the sale of Hometrack Australia for A$130m in cash. FirstGroup shares were up after Wolfhart Hauser, who has become executive chairman after chief executive Tim O’Toole was sacked on the back of major losses a day earlier, was reported as saying he would accept a bid for all or part of the company if an offer created value for shareholders. Sainsbury's came under political pressure after being asked to explain the reasoning behind a pay deal which could leave 9,000 staff worse off, by Rachel Reeves, chairwoman of the business, energy and industrial strategy committee, who is already closely scrutinising Sainsbury’s proposed merger with Asda. Royal Dutch Shell announced production start at the Kaikias field in Gulf of Mexico, 12 months ahead of schedule. Ryanair said chief executive Michael O'Leary sold €33m worth of stock in the airline earlier in the week. The Competition & Markets Authority said it was launching a review into the £2bn funerals market to ensure that people are not getting a bad deal from pre-paid funeral plans. Around 1.3m people in the UK have a pre-paid plan. Meanwhile, electricity regulator Ofgem launched a probe into the way that Utility Warehouse manages its customers who are in debt, investigating whether the supplier has breached rules related to the way it manages these customers. |
| | Market Analysis 01/06/2018 | | TradeYour capital is at riskToday's highlights: Trump's tariffs weigh on markets Wall Street falls on Trump's tariffs: US President Trump's administration yesterday announced... Read More.. |
| | Market Status | Top 10 FTSE 100 Risers Top 10 FTSE 100 Fallers |
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| | US close: Stocks slip on metal tariffs announcement | | US stocks ended lower overnight, with industrial stocks hit after the White House launched trade tariffs on steel and aluminium imports from the European Union, Canada and Mexico. The Dow Jones fell 1.02% to 24,415.84, while the S&P 500 dropped 0.69% and the Nasdaq Composite lost 0.3%. As the last day of May, the Dow booked a 1.1% rise over the month, with the S&P 500 adding 2.2% and the Nasdaq putting on 5.3%, all eclipsed by the small-cap Russell 2000 index's gain of 6.1%. As global trade risks returned to the front burner, with President Trump announced an end to steel/aluminum tariff exceptions for Canada, Mexico, and the EU from midnight on Thursday, provoking retaliation from all three countries, Treasuries underperforming but not as badly as US equities. Levies of 25% will be made on steel imports and 10% on aluminium, as originally announced by the President back in March, but Canada and Mexico had been granted an exemption while US officials renegotiated the North American Free Trade Agreement. They were expected to be met with retaliatory measures against US products, including motorcycles, jeans and bourbon. European Commission president Jean-Claude Juncker said: "The EU believes these unilateral US tariffs are unjustified and at odds with World Trade Organisation rules. This is protectionism, pure and simple." Market analyst Neil Wilson at Markets.com said: "The EU has quickly responded in kind and it must be said that this hardly bodes well for the even bigger US-China trade spat. A full blown international trade war is now more likely, although there remains plenty of time and room for manoeuvre for the main protagonists to avert such a development. Now Mexico is also responding tit-for-tat." Earlier, there was some key economic data from the Commerce Department, which showed spending rose 0.6% in April, above the consensus of 0.4%, with March spending data revised up to 0.5%, representing a meaningful acceleration over January and February. With the deflator up 0.2%, as expected, real spending rose a hefty 0.4%, double the consensus of 0.2%. The core personal consumption expenditure deflator rose 0.2%, above the consensus of 0.1%. On the income side of the report, April personal income was shown to have risen 0.3% month-on-month, in line with consensus, as disposable income rose by 0.4% and compensation rose by 0.3%. Although the core PCE deflator is on track to hit the 2% target in July and then to nudge above it in August, Federal Reserve officials have made it clear that this alone will not prompt a policy response as the inflation target is 'symmetric'. "At this point, we don't see much to worry about, especially with hospital services prices calming down after a run of big increases. The Fed will continue to tighten on the basis of heading off future inflation risk, not because the near-term data are about to become alarming," analysts at Pantheon Economics said. Elsewhere, new applications for US unemployment benefits fell more than expected last week. Initial claims for state unemployment benefits fell by 13,000 to a seasonally adjusted 221,000, the Labor Department said on Thursday. Claims data for the prior week was unrevised. Lastly, the National Association of Realtors' pending home sales index decreased to 106.4, down 1.3% from March, which was also revised to 107.8 from 107.6, and falling significantly short of the 0.4% rise forecast by economists. Pending home contracts, a forward-looking indicator of the health of the housing market fell 2.1% year-on-year. In corporate news, Micron fell 5.32% after the semiconductor manufacturer was downgraded to 'equal weight' at Morgan Stanley and technology firm Siena lost 3.41% after revealing an earnings miss. Kirkland shot up 15% after the home decor retailer reported first-quarter that came in ahead of expectations and transportation company Brink gained strongly after it provided an upbeat outlook as part of its announcement that it bought cash-management business Dunbar Armored for $520m. |
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| | Friday newspaper round-up: Trade, Capita, Sainsbury, BoE | | Britain is calling on Brussels to step back from a trade war with the United States after President Trump imposed new tariffs on EU imports. Liam Fox, the trade secretary, said yesterday that Britain “does not rule out” countermeasures or a challenge in an international court. However, he urged calm on all sides to avoid a full trade war. - The Times Italy’s populist parties were finally given the green light to form a coalition government on Thursday evening, after they backed down over their initial selection of a deeply eurosceptic economy minister. After days of intensive negotiations and pressure from the markets, the anti-immigrant, hard-Right League party and the anti-establishment Five Star Movement agreed to a compromise. - Telegraph A grassroots group of Jeremy Corbyn supporters and trade unions is to launch a major UK speaking tour, billed as the leftwing campaign to remain in the EU. The Left Against Brexit tour will attempt to persuade Corbyn and his allies of the leftwing case for a pro-EU position and will argue that the party can reap electoral benefits from a shift. - Guardian Outsourcing specialists Capita and FDM Group are facing potential legal action from former employees who were faced with demands for thousands of pounds in fees when they tried to leave. Both companies insist graduates and other job hunters carry out three or four months of training, for which they are not paid, before they are put forward for work with top companies. - Guardian Pre-paid funeral plans could be hit with tougher regulation under government plans to deal with bad practice in the sector. The government is due to launch a consultation on regulating the funeral sector, where around 1.3 million people in the UK have a pre-paid plan. - Guardian J Sainsbury has come under more pressure after being asked to explain the reasoning behind a pay deal which could leave 9,000 staff worse off. Rachel Reeves, chairwoman of the business, energy and industrial strategy committee, who is already closely scrutinising Sainsbury’s proposed merger with Asda, has asked it to explain why workers “deserve to be paid less in future for doing the same amount of work”. - The Times The interim boss of troubled transport company FirstGroup has said he will accept a bid for all or part of the company after its chief executive Tim O’Toole was sacked and the firm swung to a major loss. Wolfhart Hauser, who has become executive chairman, said if an offer created value for shareholders, it was something he would consider. - Telegraph The chancellor, Philip Hammond, walked into a gender row yesterday after picking a man for the role of external economist on the Bank of England’s interest rate-setting committee in preference to four shortlisted women. Jonathan Haskel, an economist at Imperial College Business School, was named by the Treasury to succeed Ian McCafferty on the Bank’s monetary policy committee. - The Times Britain’s cheapest energy supplier risks being pulled from the market after the regulator found that a catalogue of customer service failings at the cash-strapped company has continued despite its warnings. Ofgem accused Iresa of failing to take adequate steps to address the mounting number of customer complaints made against the company since the three-month investigation began a little over two months ago. - Telegraph Sportech has signed a deal with a data company to provide fixed-odds sports betting in the emerging American market. As part of the agreement, the betting technology operator will offer prices from Sportradar to customers before the anticipated introduction of legal sports betting. - The Times A blood test for 10 different types of cancers could one day help doctors screen for the disease before patients show symptoms, according to research from Grail, a US company backed by Bill Gates and Jeff Bezos and carried out at the Cleveland Clinic’s Taussig Cancer Institute. The test, called a liquid biopsy, screens for cancer by detecting tiny bits of DNA released by cancer cells into blood. - Guardian/Times Oleg Deripaska’s En+ company faces suspension from the London Stock Exchange tonight unless it secures another last-minute reprieve from US sanctions authorities. The energy and aluminium company, which listed in London late last year, was hit by sanctions last month as a result of Mr Deripaska — who has been accused of acting for the Russian state — controlling about two thirds of its shares. - The Times Fast-rising online retailer The Hut Group plans to recruit 2,000 more staff in a major hiring spree. Profits at the private company, which is frequently on bankers' lists of float candidates, surged 51pc to £318m for the year to December 2017, as the booming beauty market bolstered sales of hair and skincare products. - Telegraph A complex family feud which stemmed from one of the largest corporate collapses of the credit crunch has been thrown out of courts in Cayman, which ruled that the two companies involved had instead systematically defrauded banks. In the judgment for the case, branded by liquidators as "the largest Ponzi scheme the world has ever seen", the court found the Al-Gosabi family, who owned Saudi conglomerate Ahmad Hamad Algosaibi & Brothers (AHAB), had been working with Maan Al Sanea, who married into the family, to commit fraud against over 100 banks over two decades. = Telegraph A think tank has been found guilty of abusing its charitable status by pursuing a hard Brexit agenda that violated its legal obligation to maintain “balance and neutrality”. The Charity Commission said the Legatum Institute had “crossed a clear line” in a report it published on the potential for free trade deals after Britain left the EU. - The Times The accountancy regulator has started disciplinary action against executives at Autonomy and two of the company’s auditors at Deloitte five years after an accounting scandal engulfed its sale to Hewlett-Packard. The move follows legal action in the United States where Sushovan Hussain, Autonomy’s former chief financial officer, was convicted of fraud in April. - The Times The head of the campaign group that celebrates real ale has quit after members rebelled over his plans for the body to promote lager and craft beer. Tim Page has resigned as chief executive of the Campaign for Real Ale (Camra) just weeks after losing a crucial vote on his proposals to modernise the organisation, which he had been working on for two years. - The Times | | | | To advertise in the Euro Markets Bulletin please contact advertise@advfn.com |
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