FTSE 100 Could Slip Up On Oil Services Drama

Mid-cap oil shares were amongst the worst performers on London’s stock market performers on Thursday, as a drama unfolded at oilfield services firm Petrofac. Petrofac stock tumbled as much as 34%, dragging the FTSE 100 Oilfield Services & Equipment index down about 10% after the company suspended its chief operating officer until further notice. That followed news that the Serious Fraud Office (SFO) questioned him as part of a probe into Monaco-based vehicle Unaoil. Both Petrofac COO Marwan Chedidhave and chief executive Ayman Asfari were questioned under caution by the Serious Fraud Office (SFO) about a fortnight ago in connection with the probe. Petrofac said in a statement on Thursday that it is cooperating with authorities.

The SFO last July launched a criminal investigation into Unaoil, its officers, employees and agents in connection with suspected bribery, corruption and money laundering as part of a wider probe into alleged corruption in the global oil industry. Petrofac had engaged Unaoil for the provision of local consultancy services in Kazakhstan between 2002 and 2009. Shares of the FTSE 100’s other well-known oil services groups, Wood Group and the company it is in the process of buying for £2.2bn, Amec Foster Wheeler, also fell, losing between 3%-5% by mid-morning on Thursday. Wood Group said earlier in the week that it was looking into its own past dealings with Unaoil. Its prospectus for the Amec takeover also stated that the SFO had requested info from Amec about the probe.

In the meantime, the SFO’s investigation is likely to keep a cloud over the oil services industry and extend share price declines, particularly of Wood Group, which had lost about 15% in the year to date up till Wednesday’s close. Investors in wider sectors of the FTSE 100 mid-cap index will also be vigilant. The oilfield sector as a whole constitutes a weight on that is close to that of large components likeInmarsat (LON:ISA), Investec, and G4S (CO:G4S). Whilst the FTSE 250 is largely matching the performance of the blue-chip FTSE 100 index so far this year—rising 22.5% vs. the flagship gauge’s advance of 23.9% at last check—it’s conceivable that extended slides by oil services shares could exert a drag on the mid-cap list from here, unless the SFO’s probe narrows in more tightly on Petrofac

FTSE Resilient Despite Chinese Downgrade

The main news today from the Asian session is that ratings agency Moody’s has downgraded China from A1 to Aa3 as well as changing the outlook from stable to negative. After opening lower the FTSE 100 has pared these losses and currently trades higher by around 10 points at the time of writing. The pound is also higher on balance as sterling recovers most of Tuesday’s declines and remains in wait-and-see mode ahead of its next sustained move.

The first downgrade to China from Moody’s in almost 30 years has caught the attention of traders this morning as the almost forgotten narrative of a slowdown in economic activity in the Far East could be set to return. The latter parts of 2015 and early 2016 were dominated by growing concerns surrounding the state of the world’s second largest economy as fears of a hard landing in China soured global risk sentiment. Since then however, this theme has been largely overlooked as political shocks in the UK and US – as well as the absence of a political shock in France – have been the main driving factors for markets.

Cause for concern rather than panic stations

Closer inspection of the report from Moody’s suggests this is a measured move based on an expectation that China’s financial strength will “erode somewhat” over the coming years. However the publication also reveals that the the “risks are balanced” and the GDP will remain “high compared to other sovereigns” so the news in itself shouldn’t be ringing too many alarm bells just yet. Having said that, a likely result of the downgrade is a pique in traders’ interests once more to events in China and there will now be a growing focus on whether other ratings agencies follow suit. It’s likely that there will also be increased scrutiny of upcoming Chinese data, with PMIs and industrial production figures scheduled to be released in the next month.

FTSE Decline To 7450, Stocks Subdued Following Manchester Attack

Bit of a flat day yesterday with only the 12700 Dax resistance level getting any sort of decent reaction. After the attack in Manchester the market all felt quite subdued and today we have the terror threat raised to critical from severe (not much of a surprise though).

Overnight the FTSE 100 futures price has weakened, dropping back below 7500 as Asia and Australian markets dropped, after Moody’s cut its rating on China. The 2 hour FTSE 100 chart has gone bearish now with resistance at 7501. I was expecting us to reach the 7535 level yesterday but the bulls didn’t seem to have much strength and stalled at 7520 instead.

Today we have the Federal Reserve due to release minutes from its most recent meeting, offering more clues on the pace of interest-rate increases in the US. We also have ECB Draghi speaking in Madrid at 13:45 today, so likely to see some Dax volatility then. We have a small 1.7 dividend later today as well, a level that probably wont bring the divi hunters out!

Today we have the Federal Reserve due to release minutes from its most recent meeting, offering more clues on the pace of interest-rate increases in the US. We also have ECB Draghi speaking in Madrid at 13:45 today, so likely to see some Dax volatility then. We have a small 1.7 dividend later today as well, a level that probably wont bring the divi hunters out!

 

FTSE 100 rebounds and sterling rises

London’s main share index has notched up its fourth straight week of gains. having recovered some of the ground lost in the past two days.

At the close on Friday, the FTSE 100 was up 34.29 points at 7,470.71.

The FTSE fell on Wednesday and Thursday as markets were hit by the uncertainty surrounding the Trump presidency.

The row over the firing of FBI director James Comey led to growing scepticism about Mr Trump’s ability to deliver tax and regulatory reform.

But the FTSE 100 saw a broad-based recovery on Friday, with software and IT firm Micro Focus International leading the way – up 2.7%.

The biggest faller on the index was Smiths Group, down 2.8% after announcing that chief financial officer Chris O’Shea was stepping down.

On the currency markets, the pound rebounded back above the $1.30 mark. On Thursday, it had reached an eight-month high of $1.3048 after the release of stronger-than-expected retail sales figures, but fell back in late trade.

However, on Friday it was trading at $1.3029. Against the euro, the pound was down slightly at 1.1643 euros.

FTSE 100 rises as sterling weakens

London’s stock market began the week higher as the pound fluctuated around the $1.30 mark.

The FTSE 100 ended 25.52 points, or 0.34%, higher at 7,496.23.

Shares in Marks and Spencer led the index higher, rising 2.75% ahead of the High Street giant’s results on Wednesday.

Product testing company Intertek also gained, jumping 2.1%, after analysts at Kepler Cheuvreux raised their rating on the company to “buy” from “hold”.

Worldpay Group was one of the biggest fallers on the index, down 2.4%, after Bryan Garnier cut its rating on the company to “sell” from “neutral”.

A change in broker ratings was also behind a 3.2% rise in Cairn Energy’s shares. The FTSE 250 company was boosted after Macquarie lifted its rating to “outperform” from “neutral”.

On the currency markets, the pound fell back below the $1.30 mark in early trade, but then recovered to stand at $1.3005, still down 0.2% for the day. Against the euro, sterling slid 0.5% to 1.1573 euros.

FTSE 100 bolstered by Severn Trent

London’s stock market edged higher, with shares in Severn Trent rising after the water company reported an increase in full-year profits.

Severn Trent shares rose 1.7% after it said underlying pre-tax profits rose 4.3% to £525m, helped by fewer leaks following an investment programme.

Severn was one of the biggest risers on the FTSE 100, with the index up 4.36 points at 7,500.70 in early trade.

EasyJet was the biggest riser in the FTSE 100 following a broker upgrade.

Shares in the airline climbed 1.9% after RBC Capital Markets raised its rating on the company to “sector perform”, arguing it was “increasingly probable EasyJet has reached its profit nadir”.

After a strong performance on Monday, Marks and Spencer fell back, dropping 1.7%. The High Street retail giant is due to report its full-year results on Wednesday.

On the currency markets, the pound slipped 0.1% against the dollar to $1.2987, and was down 0.2% against the euro to 1.1540 euros.

FTSE 100 rebounds and sterling rises

London’s main share index has notched up its fourth straight week of gains. having recovered some of the ground lost in the past two days.

At the close on Friday, the FTSE 100 was up 34.29 points at 7,470.71.

The FTSE fell on Wednesday and Thursday as markets were hit by the uncertainty surrounding the Trump presidency.

The row over the firing of FBI director James Comey led to growing scepticism about Mr Trump’s ability to deliver tax and regulatory reform.

But the FTSE 100 saw a broad-based recovery on Friday, with software and IT firm Micro Focus International leading the way – up 2.7%.

The biggest faller on the index was Smiths Group, down 2.8% after announcing that chief financial officer Chris O’Shea was stepping down.

On the currency markets, the pound rebounded back above the $1.30 mark. On Thursday, it had reached an eight-month high of $1.3048 after the release of stronger-than-expected retail sales figures, but fell back in late trade.

However, on Friday it was trading at $1.3029. Against the euro, the pound was down slightly at 1.1643 euros.

FTSE 100 sinks while pound jumps

London’s main share index closed nearly 1% down after the political controversy in the US surrounding President Trump continued to hit investor confidence.

The row over the firing of FBI director James Comey has led to growing scepticism about Mr Trump’s ability to deliver tax and regulatory reform.

The pound rose above $1.30 to its highest level since September, helping to pull the FTSE lower.

US shares fell heavily on Wednesday.

In London the FTSE 100 dropped 67.05 points to 7436.42.

Sterling was boosted by stronger-than-expected UK retail sales data, while also benefitting from the weakness of the dollar.

The pound was up 0.25% against the dollar at $1.3003, and was 0.59% higher against the euro at 1.1687 euros.

The sell-off in shares in London was echoed across Europe, with Germany’s Dax index down 0.33% and France’s Cac 40 dropping 0.53%.

“Stocks are sliding again today as traders are still spooked by the latest scandal surrounding Donald Trump,” said David Madden, market analyst at CMC Markets UK.

“The row between Mr Trump and the FBI is still on traders’ minds and while this is hanging over the market. I can’t see sentiment changing anytime soon.”

Despite the falls, there was good news for some UK shares.

Burberry rose 4.69%, despite the luxury fashion brand reporting a dip in full-year profits, and shares in Royal Mail climbed 1.04% after it reported a 25% increase in annual profits.

FTSE’s recent record-breaking run stalls

The FTSE 100’s recent record-breaking run has stalled, with shares losing ground on Wednesday.

At close of trade in London, the benchmark index was down 18.56 points, or 0.25%, at 7,503.47.

On Tuesday, the FTSE had climbed above the 7,500 level for the first time, closing at 7,522.03 points.

Against the US greenback, the pound was up 0.22% at $1.2945. However, it dipped against the euro, falling 0.33% to 1.1616 euros.

In general, a weaker pound lifts the FTSE 100 as many companies on the index have significant revenues from overseas.

A weak pound means these revenues are worth more when converted back into sterling.

Shares in Lloyds Banking Group were up nearly 2% after the government confirmed it had shed its last remaining stake in the bank, thus returning it to the private sector.

Other winners included Fresnillo, Tesco, Kingfisher and Randgold.

Shares in British Land were down 3.3% despite it posting a 7.4% rise in full-year profit.

Other fallers included Ashtead Group, CRH, Hikma Pharmaceuticals and Rolls-Royce Holdings.

Miners, Lloyds help FTSE hover near record high

Britain’s top share index held close to a record high on Wednesday, helped by gains among miners and banking stock Lloyds (LON:LLOY), though a fall in British Land’s stock weighed on housing-focused peers.

The blue chip FTSE 100 index was flat in percentage terms at 7,521.33 points by 0918 GMT, within a whisker of a record high hit in the previous session.

Traders, however, were more cautious on the FTSE’s recent run, which has seen its longest gaining streak since January.

“There’s nothing really driving this market higher in terms of positive sentiment,” John Moore, a trader at Berkeley Capital, said.

“We believe it’s a bit of a final short squeeze, getting the last of the bears out of the market before a bit of a move lower.”

While a broader risk-off mood prevailed among European indexes, Britain’s large caps were led by gains in Lloyds, which rose more than 2 percent after the British government sold off its remaining stake in the lender following its bailout in the 2007-2009 global financial crisis.

Investment platform provider Hargreaves Lansdown (LON:HRGV) was also a top gainer, up 2.3 percent and recovering some of its losses from the previous session.

Its shares tumbled 8.5 percent on Tuesday, with traders pointing to an announcement from ETF provider Vanguard about plans to sell directly to investors in Europe for the first time.

“The HL business model has proved itself to be incredibly resilient in the face of a couple of major headwinds in recent years,” Shore Capital analyst Paul McGinnis said in a note.

“We would be a lot more nervous around the implications of the Vanguard platform for the fledgling robo-advice sector.”

Mining stocks also supported the blue chips, with Rio Tinto (LON:RIO), Antofagasta (LON:ANTO) and Anglo American (LON:AAL) all gaining between 1.1 percent to 1.4 percent on the back of steady copper prices. [MET/L]

Precious metals miner Fresnillo (LON:FRES) was also in demand as the price of gold rose. (GOL)

Broker action lifted shares in Kingfisher (LON:KGF), which was up nearly 2 percent after HSBC raised its recommendation on the stock to “buy” from “hold”.

A Jefferies downgrade to “underperform” from “buy” weighed on pharma stock Hikma, which dropped 2.6 percent.

Jefferies equity analyst James Vane-Tempest cited the recent delay in U.S. approval for Hikma’s generic drug Advair.

Results also weighed on British Land, falling 3 percent and on track for its biggest one-day loss in four months after issuing a cautious outlook for the property market due to Brexit uncertainty.

Peers Land Securities Group and Intu Properties also fell.

Outside of the blue chips, well-received full-year results from Sophos helped the network security firm hit a fresh lifetime high, up 8.6 percent.

The stock has been in demand in the wake of a global ‘ransomware’ attack, boosting shares in cyber security firms.