FTSE 100 closes higher in absence of US markets – Proactive Investors UK

Britain’s blue-chip benchmark finished the afternoon session around 50 points higher, or 0.70%, at 7,188

  • FTSE 100 closes up 50 points
  • US markets closed for Labor Day holiday
  • M&S expects problems with food imports 

4.56pm: FTSE closes ahead

FTSE 100 closed in positive territory on Monday, while US markets were closed for Labor Day.

Britain’s blue-chip benchmark finished the afternoon session around 50 points higher, or 0.70%, at 7,188 – well up from the session low of 7,138.

Midcap FTSE 250 also ended higher, gaining around 53 points, or 0.22%, to 24,248.

“Having started the day with gains, indices across Europe have held on to their bullishness throughout the session, with Friday’s nervousness being swept aside,” noted Chris Beauchamp, chief market analyst at trading group IG.

“After all, a poorer outlook for US jobs would most likely prompt a significant delay for the Fed’s tapering programme, keeping support measures in place and providing a rationale for further equity inflows, in a revival of the ‘bad news is good news’ trade of yesteryear.”

On Friday, US benchmarks finished lower apart from the Nasdaq after disappointing job creation data for August tempered expectations about the speed of the country’s economic recovery.

Top riser on Footsie on Monday was broadcaster ITV, whose shares gained 2.54% to 117.05p.

3.30pm: Bitcoin nears US$52,000

The Footsie kept its rise going before close, surging 57 points to 7,195.

Bitcoin is nearing US$52,000 after finally touching the US$50,000 mark again over the weekend.

The cryptocurrency was flat at US$51,711 after a 21% jump over the past month, though it’s still well below the US$63,000 all-time highs seen earlier this year.

“There hasn’t been much in the way of any fresh news for cryptocurrencies,” commented Fawad Razaqzada, analyst at ThinkMarkets.

“They are continuing to find support because of momentum buying – people buying because prices are rising, hoping to sell back at even higher prices.”

2.30pm: Marks and Spencer anticipates food imports issues when Brexit rules change

The Footsie was firmly in the green in the early afternoon, up 41 points to 7,180.

() was flat at 182.01p even though it expects food-related trouble next month when Brexit rules are enforced.

The supermarket is concerned that there are not enough officials on both EU and UK sides when tougher checks will be carried out on imports. A quarter of the UK’s food comes from Europe.

Some EU authorities operate only Monday to Friday, which Marks and Spencer said “will cause significant disruption to that import schedule and exacerbate the HGV driver shortage” in a letter to suppliers seen by The Times.

“Our proposed solution that we set out today is for a digitally enabled Facilitated Movement Scheme that still meets all of the EU standards, but with a common sense, practical and modern approach to achieving them that everyone can work with, EU and GB businesses alike,” George Wright, commercial director at M&S Food, wrote.

“The goal of such a scheme would be to simplify the documentation burden, for both UK and EU businesses, whilst still demonstrating standards are being met. We hope a scheme like this will be adopted and we would value your support in engaging and advocating for this approach with your local governments.”

1.20pm: CBI warns labour shortage could last for two years

The Footsie was on the rise at lunchtime, adding 49 points to 7,187.

The labour shortage could last for up to two years and potentially delay the UK’s economic recovery, warned the Confederation of British Industry (CBI) as it urged the government to take action to alleviate short-term pressures.

Labour supply problems, exacerbated by Brexit, have been reported in many industries as the economy tries to recover from the COVID-19 pandemic.

A lack of lorry drivers has caused much-reported supply disruptions to supermarkets and fast-food chains in recent weeks, with the Road Haulage Association saying the HGV driver shortage stands at 100,000, while the construction industry, food producers, hotels and restaurants have all issued their own warnings about the dearth of skilled staff.

“Using existing levers at the UK’s control – like placing drivers, welders, butchers and bricklayers on the Shortage Occupation List – could make a real difference. The government promised an immigration system that would focus on the skills we need rather than unrestrained access to overseas labour. Yet here we have obvious and short-term skilled need but a system that can’t seem to respond,” said CBI’s director-general Tony Danker (you can read more on that story here).

12.20pm: UK financial regulator concerned about Kim Kardashian crypto involvement

The FTSE 100 stayed put at noon, surging 43 points to 7,181.

The Financial Conduct Authority has published a recent speech by chair Charles Randell where he expressed concern on an Instagram story posted by Kim Kardashian in June.

The reality TV star was paid to tell her 250mln followers to speculate on crypto tokens by ‘joining the Ethereum Max Community’, which he said may be “the financial promotion with the single biggest audience reach in history”.

Kardashian disclosed that it was an ad as per Instagram rules, but she didn’t have to mention that Ethereum Max is not affiliated with the coin Ethereum and it’s a speculative digital token created by unknown developers.

“I can’t say whether this particular token is a scam. But social media influencers are routinely paid by scammers to help them pump and dump new tokens on the back of pure speculation. Some influencers promote coins that turn out simply not to exist at all,” Randell said.

According to Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, the FCA is once again saying that investing in cryptos is seen as extremely high risk.

“It appears to be throwing its weight behind recommendations made by the influential Basel committee which brings together regulators from around the world.  If banks and other regulated financial institutions dabble in crypto, the committee is considering making them put aside enough capital to cover 100% of potential losses. Giving speculative tokens a high-risk price tag is likely to make cryptocurrency dealing and investment very expensive and could limit the number of new institutional entrants into the crypto world,” she said.

“It’s likely lower financial buffers would be needed for stable coins, which are seen as less volatile as they are pegged to currencies like the dollar. It is clear the FCA wants to push the financial industry towards these digital assets, seeing them as a useful way to improve the payments market away from the crypto Wild West.”

11.05am: Semiconductors shortage hits new car registrations

The Footsie edged higher in the late morning, rising 42 points to 7,180.

New car registrations dropped by 22% in August to just over 68,000 units as the global shortage of semiconductors continued to weigh on production, according to the Society of Motor Manufacturers and Traders.

August is traditionally one of the quietest months of the year for new car registrations ahead of the plate-change in September, but this year’s figures were the weakest since August 2013 and down 7.6% against the average recorded over the last decade.

“The outlook for 2022 is slightly brighter, though,” said Gabriella Dickens, senior economist at Pantheon Macroeconomics.

“Households’ excess savings have surged over the past 18 months or so, and now are equivalent to around 8% of GDP; some of that money eventually will be spent on a new vehicle. And some consumers may be waiting for cheaper electric models to be released by major manufacturers later in the year.  Accordingly, we think that private car sales will return to their 2019 level in the first half of 2022.”

9.55am: UK construction activity rises at softest pace since February

The Footsie held its gains in mid-morning, rising 36 points to 7,175.

UK construction companies signalled a further increase in output volumes during August, however the pace of growth was the slowest since February.

The construction PMI was down to 55.2 last month from 58.7 in July, though it still meant activity has expanded over the last seven months.

“Supply chain disruption continued to disrupt activity across the UK construction sector, as demand for materials and logistics capacity outstripped supply,” said Usamah Bhatti, an economist at IHS Markit, which compiles the survey.

“Businesses noted a stronger degree of optimism regarding the year-ahead outlook, as more than half of survey respondents predicted a rise in activity. This was underpinned by expectations that new contracts would be brought to tender across the construction sector as markets continued to recover from the economic disruption caused by the pandemic.”

8.50am: Scottish Mortgage Trust tops leaders after new Nasdaq record  

The FTSE 100 got off to a better than expected start to proceedings as London’s traders ignored the gloom and jitters precipitated by a worse-than-expected jobs reading from the US on Friday.

Still, it is expected to be a day of light traded volumes with America enjoying its Labor Day vacation a week on from the British Bank Holiday.

Looking ahead, the progress of economic recovery here at home will be charted by the release of the GDP number at the end of the week.

“In the meantime, the success of the vaccine rollout and the general withdrawal of government assistance is, for the moment, staving off a hard landing, even though the winter months could bring new challenges both in terms of the virus and pressure on unemployment,” said Richard Hunter, head of markets at Interactive Investor.

Turning to the early movers, Silicon Valley investor Scottish Mortgage Trust () topped the leader board early on after the tech-heavy Nasdaq closed Friday’s session in record territory once more.

Turning to the FTSE 250, shares in veterinary supplies group Dechra (), which is currently Footsie-bound, fell 7.5% after its prelims. It was hard to see what the precipitant was, though the departure of chairman Tim Rice may have unsettled the livestock.

Among the smaller caps, Powerhouse Energy () was up 18% after it emerged that German gases giant Linde could deploy some of the UK group’s unique plastics recycling technology.

6.50 am: Quiet day predicted 

It looks set to be a quiet day for UK equities with the US closed for Labor Day and little in the way of guidance provided by Asia’s main markets.

Only Japan’s Nikkei 225, up 1.7%, showed any signs of dynamism with the remainder of the region’s main bourses trading sideways.

Investors were still trying to understand the underlying reason for and impact of significantly worse than expected employment data on Friday.

The world’s largest economy added just 235,000 new jobs last month – around 500,000 fewer than expected with the rapid spread of the Covid delta variant blamed for the big miss.

“[The] disappointing US payrolls report was a wake-up call if one were needed that the slow road to economic recovery from the pandemic is unlikely to be an easy one, and is likely to take a few awkward twists and turns along the way,” said Michael Hewson, analyst at CMC Markets.

Looking ahead, the retailers appear set to dominate the corporate headlines this week with updates expected from Dunelm (LON:DMLM), Ted Baker ) and Morrisons (), the supermarket group set to be taken over by private equity.

Packaging group DS Smith () and housebuilder Vistry () are also scheduled to provide news.

Around the markets

Pound US$1.3844 (-0.19%)

Bitcoin US$51,786.33 (+4.01%)

Gold US$1,828.50 (-0.28%)

Brent crude US$71.77 (-1.17%)

6.50am: Early Markets – Asia / Australia

Stocks in the Asia-Pacific region were mixed on Monday following U.S. jobs data released Friday that fell short of expectations, with the economy adding just 235,000 positions.

The Shanghai Composite gained 1.11% and Hong Kong’s Hang Seng index rose 0.90%

In Japan, the Nikkei 225 surged 1.88% while South Korea’s Kospi fell 0.08%.

Australia’s S&P/ASX 200 lost 1% earlier in the day but has managed to reclaim some of the losses, trading 0.35% lower during the last hour of trading.

READ OUR ASX REPORT HERE

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