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| | London open: Sanguine markets send shares higher |  | | FTSE 100 | Euronext | Dax perf | CAC 40 |  |  |  |  | | Please click on the images to view our interactive charts | | | London stocks got off to a positive start to the week, in sync with resurgent European markets as political worries faded and global trade concerns were shrugged off. The FTSE 100 rose 46.95 points or 0.6% to 7,748.72 in the first half hour of trading on Monday. Sterling was consolidating its slight recovery from the end of last week, up almost 0.2% against the dollar to 1.3368 but down 0.2% on the euro at 1.1420. Trade talks between the US and China broke down over the weekend with a warning from Beijing that all agreements could be voided if the US moves ahead with plans to level import tariffs against $50bn worth of Chinese goods. A feisty G7 meeting over the weekend saw the US Treasury secretary having to fend-off his furious European and Canadian peers as they vented about last week’s trade tariff announcement from the White House, but neither issue seemed have much impact on Monday’s trading. Markets being "surprisingly sanguine", said Jasper Lawler at London Capital Group said. "The markets are reacting with the same indifference with which they responded to the tariffs being levied on the US’s closest allies last week, in a sign that traders are becoming increasingly accustomed to Trump’s heavy-handed negotiating tactics. There remains a certain level of optimism that this aggressive posture from Trump is a positioning that will quickly blow over, rather than result in the actual application of US tariffs and the application of threatened retaliatory measures from the targeted countries." In what is a fairly quiet week for major economic data, purchasing managers' index reports will be the main points of interest. The UK construction PMI is due at 0930 BST ahead of the key services report the following day. Construction activity is expected to have eased off, giving back some of the rebound in April that followed a weak March, with economists forecasting the PMI will drop to 52 from 52.5. In company news, DS Smith said it was buying Spanish packaging firm Europac for €1.67bn (£1.45bn). The acquisition, transaction expenses and the refinancing of Europac debt will be financed from a £1bn rights issue and a new committed debt facility of €740m (£645m), the company added. Rolls-Royce confirmed that it has completed the sale of its fuel injector business, L'Orange, for net proceeds of €673m after costs. CYBG, the owner of Clydesdale and Yorkshire Bank, has upped the price of its proposed takeover approach for rival Virgin Money, which has agreed to push back the bid deadline. CYBG would offer 1.2125 new shares for each Virgin Money share, potentially giving Virgin Money shareholders a 38% stake in the combined group, up from the 1.1297 original offer made last month that would have led to a 36.5% ownership. Shares in CYBG were up and Virgin Money was down slightly. Shares in BT Group were up slightly amid as investor support for chief executive Gavin Patterson was reported to be "crumbling", by the Financial Times, with several top-20 shareholders warning they are running out of patience. Wizz Air said its passenger numbers grew once again in May, as the airline's route network continued to expand, with capacity for the month rising 17.1% year-on-year to 3,086,626, and passengers up 18.1% to 2,836,380. The FTSE 250 low-cost carrier said its load factor grew by 0.8 percentage points for the month to 91.9%. SIG was leading the risers on the FTSE 250 after being upgraded to 'buy' at broker Liberum. |
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| | US close: May jobs report boosts stocks, offsets worries on trade front | | The latest US monthly employment report helped to offset trade fears from a day earlier, giving shares a boost at the end of the week. By the closing bell, the Dow Jones Industrial Average had gained 0.90% or 219.37 points to 24,635.21, while the S&P 500 was 1.08% or 29.35 points higher at 2,734.62 and the Nasdaq Composite had collected 1.51% to 7,554.33. From a sector standpoint, the strongest areas of the market were: Real Estate Holdings (3.79%), Coal (3.72%) and Toys (2.87%). In parallel, the US Treasury bond curve shifted higher, with yields on both two and 10-year notes adding four basis points to 2.47% and 2.90%, respectively. For the week as a whole, the S&P 500 added 0.5% or 13.29 points. On Thursday, the main US stockmarket gauges had suffered considerable losses following the White House's announcement that it had chosen to go ahead with tariffs on steel and aluminium imports from the EU, Canada and Mexico, rekindling fears of a global trade war as a result. Elsewhere, North Korean delegates have been mobilised and are en route to Washington today to deliver a letter to Donald Trump from the Hermit Kingdom's leader Kim Jong Un. Meanwhile, for the moment at least investors appeared to be breathing a sigh of relief at the prospect that Spain and Italy might be spared 'snap' elections, although they were expected to be closely watching the first moves by the government in each of those countries. On the domestic data front, most economists dubbed the latest non-farm payrolls report as "solid", highlighting the broad-based gains in employment by sectors. According to the Bureau of Labor Statistics, non-farm payrolls jumped by 223,000 last month (consensus: 190,000). To take note of, a good reading had been expected by analysts after the US President tweeted he was impatient for them to be published, which drew a fair amount of criticism. Wage growth was as expected, rising by 2.7% year-on-year, although Pantheon Macroeconomics's Ian Shepherdson said that statistical quirks had weighed on that figure. Neil Wilson of Markets.com, said, "Trump gave today's numbers a big billing but nonetheless the nonfarm payrolls print was a little stronger than expected, but not so powerful as to significantly shift expectations on where the Fed is going in the medium term. It just means the June rate hike is a nailed on certainty." Wilson added the reading may "help make Fed language on the labour market more hawkish", as policymakers can now "really start" to talk about being 'beyond' full employment. Meanwhile, the Institute for Supply Management revealed that its manufacturing index had risen to a reading of 58.7%, up 1.4% from April to a two-month high (consensus: 58.1%). The new-orders index picked up, rising 2.5 to 63.7%, and the production index gained 4.3 to 61.5%. The employment index also improved 2.1 points to 56.3%. In corporate news, Abercrombie&Fitch was down 8.72% despite reporting narrower losses for its first-quarter while Sears was down by 18.86% after it announced that it would close 72 stores in the near future. Twitter gained 5.62% after having its price target hiked amid World Cup opportunities and Facebook rose 0.45% after analysts indicated that GDPR was more likely to help the firm than hurt it. |
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| | Monday newspaper round-up: Brexit, China-US deal, auditors, trains | | Britain will have only weeks to negotiate deals with dozens of countries after the European Union refused to help to extend any existing trade agreements before the legally binding signing of a Brexit withdrawal treaty. European officials have told the government that they will not ask the EU’s trading partners to allow Britain to benefit from current trade deals with key countries such as Japan or South Korea until Theresa May signs the final legal text of a Brexit deal. - The Times China has threatened to dash any trade agreements struck with the US in recent weeks if President Donald Trump moves ahead with his threat to level tariff hikes against Chinese goods. The latest round of trade talks between the US and China ended over the weekend with a chilly warning from Beijing that all agreements could be voided if the US moves ahead with plans to level import tariffs against $50bn (£37bn) worth of Chinese goods. - Telegraph Britain should accept continued EU regulations in goods in return for retaining access to the EU single market, one of the thinktanks closest to Downing Street has proposed. After consultations across business and politics, a report from Open Europe concludes: “There is no strong business case for immediate significant divergence from the EU’s regulatory regime.” - Guardian The cost faced by smaller firms trying to loosen the Big Four’s grip on the audit market is the biggest bar to competition as they routinely end up empty-handed after tenders, it has been claimed. BDO, the fifth biggest player in the market, is calling for an overhaul of the way in which auditors compete for contracts at Britain’s biggest companies. The proposals are even winning support from within the Big Four of PWC, KPMG, Deloitte and EY. - The Times The CBI cheered the new Home Secretary’s pledge to take “a fresh look” at the immigration system, potentially meaning more skilled workers could be allowed to move to the UK. Sajid Javid pledged to review the visa system for skilled workers from outside the EU, and hinted students could be removed from the figures when counting annual migration figures. - Telegraph Clydesdale and Yorkshire Bank has made an eleventh hour top-up to its bid to buy Virgin Money by offering the takeover target’s shareholders a bigger stake in the combined group. The fresh approach emerged last night, ahead of today’s deadline for the deal to create a £4bn challenger bank. The move means the banks will get a 14-day extension while they finalise terms before a firm offer must be made. - Telegraph Railway passengers could choose to pay more to travel on “reliable and comfortable trains” under a radical shake-up of rail ticketing being planned by the industry. Combining peak and off-peak fares into a new “flat fare” structure so passengers are charged the same during busier and quieter periods, and reducing prices for e-tickets but charging more for paper tickets, are options outlined in a consultation being launched on Monday. - Guardian The casual dining sector may be suffering a bout of indigestion, but one of its most resilient operators is seeking new owners to share its taste for global ambitions. Wagamama, the Japanese noodle bar chain chaired by Allan Leighton, has appointed Goldman Sachs to review what one source described as “strategic growth options” for the business. - The Times The energy supply minnow hand-picked by the industry regulator to take on thousands of customers from a bust rival is struggling to meet a steep rise in complaints. Ofgem appointed Green Star Energy as the “supplier of last resort” in March following the collapse of Future Energy left around 10,000 households in limbo.- Telegraph A “latte levy” of 25p on disposable coffee cups, being proposed by MPs, would cost up to 11,000 jobs in the UK, according to a study commissioned by paper cup manufacturers. The charge - suggested earlier this year by the Environmental Audit Committee - is aimed at improving the environment by incentivising people to bring their own cups to coffee shops. - Telegraph The author of an independent review into alleged failings at Britain’s biggest financial arbiter has been accused of having a “conflict of interest” over links to the organisation he is investigating. Richard Lloyd, the consumer rights champion and former Which? director, is reviewing claims that the Financial Ombudsman Service, which settles disputes between City firms and their customers, hurt complainants by issuing flawed judgments in favour of banks. - The Times Drivers delivering goods for Amazon are to fight for better employment rights, including sick pay, holiday pay and the national minimum wage. The GMB union announced on Monday that it is taking legal action on behalf of members working for three delivery firms used by Amazon, arguing that the companies wrongly classed them as self-employed. - Guardian Gala Leisure, the UK’s biggest bingo chain, has recruited industry veteran John Kelly as non-executive chairman. Mr Kelly, who founded the Gala Coral Group, has been recruited into the post after serving as chairman of betting giant Ladbrokes Coral until it was bought by online rival GVC. - Telegraph The future of the embattled House of Fraser department store chain was hanging in the balance this weekend, as deadlock between its Chinese owner and lenders threatened to scupper its planned rescue package. The GMB and shopworkers’ union Usdaw are watching from the sidelines, anxious about the risks of financial collapse for the store’s 17,000 employees, who work in its 59 stores across the UK. - Guardian Astrazeneca is preparing to disclose payments to doctors in all countries in which it operates in a move that will pile pressure on its rivals to follow suit. The lack of transparency across the pharmaceuticals industry over payments to professionals who have influence over prescribing and purchasing drugs has raised concerns about conflicts of interest and potential bribery. - The Times | | | | To advertise in the Euro Markets Bulletin please contact advertise@advfn.com |
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