Market buzz: Bond yields dip, GDP cut hits pound, Stobart talk lifts Flybe

1644: The yield on the benchmark 10-year US Treasury note was down by four basis points to 2.91% after hitting a high of 2.96% during the previous session, while that on the two-year note is one basis point lower to 2.25%. No immediate trigger for the move is apparent.

The FTSE 100 lost 29 points or 0.4% to finish Thursday's session at 7,252.39.

1558: After reports possible talks between Stobart and Flybe sending shares of the latter aloft by 27%, Stobart points out that the pair "have a range of shared interests arising from Stobart Group's ownership of London Southend Airport and its aircraft leasing company and the growing franchise arrangements between the two groups' airlines".

As part of its review of "alternative structures" for its airline and leasing business amid the consolidation of the regional airline sector, Stobart has "considered" taking "a non-controlling interest in a vehicle to acquire 100% of Flybe likely to be in cash".

"It is not possible to say, at this stage, whether a transaction will take place, whether a firm proposal will be made or, if it is, the form a transaction to combine the airlines might take."

1515: Adulation for Glencore. Credit Suisse keeps as 'top pick' in sector. "Valuation: 4.9x 2018E EBITDA and 9% FCF yield, cheaper than UK rivals who have less base metals (electric) exposure and instead have iron ore as a large part of their on-going business model."

1514: Fed's Dudley reportedly keeps mum on monetary policy.

1314: IQE shares trying to clamber atop their exponential 200-day moving average at 216p. Recent bullish divergence on RSI seems to have proven correct. Let's see how trading volumes come in today.

1313: Anything interesting in the latest set of European Central Bank meeting minutes? Analysts at Capital Economics are telling clients: "January meeting suggest that the Bank will drop the easing bias from its policy statement as soon as the next meeting on 8th March, but gives few signals as to when asset purchases will end."

1230: The FTSE 100 is climbing away from its day's lows, but is still down 66.08 points or 0.91% at 7,215.49. Cable has been as low as around 1.386 but is up slightly off that level.

The London midday market report says stocks still in the red even as the pound lost ground after the disappointing economic growth figures, with investors still digesting hawkish Federal Reserve minutes and wading through the deluge of corporate releases. "Although this more or less priced in, the potential for a fourth hike was keeping investors on edge."

Stocks to note include software development company Playtech, which tanked 10% after its full-year results fell short, with growth rates slowing from 2016. Broker ShoreCap says EBITDA was in line with its downgraded estimate after the profit warning in November in a "tale of two halves" as gaming profits fell in the second half. "The focus today is on current trading, with B2B gaming revenues-ex Asia ahead by just 4% at the start of 2018. Our full year estimates are for mid-to-high-single digit growth rates with the group set to return to this pace in the second half as tough H1 comps in Asia are lapped."

Centrica also had a weak second half in its UK business, due to falling customer numbers and a possible government-imposed price cap. This led to a 17% fall in adjusted full year operating profits and to the British Gas owner announcing it was axing 4,000 jobs by 2020 and booking a £476m post-tax net exceptional charge.

1205: Schroders has put out an interesting note on the US 'big tech' companies as recent months have "felt like the tide is turning" against them, with Google has been fined for market abuse, bosses hauled in front of the US Senate and the UK Parliament, the repeal of net neutrality regulations in the US has swung the balance of power away from internet companies and back towards infrastructure providers and the imminent introduction by the EU of the General Data Protection Regulation laws will increase complexity and risk for companies dealing with consumer.

"On balance," analysts conclude, "we are comfortable that – for now at least – these companies are contributing more to society in the form of free products and innovation than they are detracting by monopolising our data and crimping competition. We will, however, continue to monitor developments and remain wary of tail risks that could threaten the long-term durability of their business models. We see the most likely risk as taking the form of regulation on the one hand and/or consumer backlash on the other."

1156: After the downward revision to UK GDP growth, Howard Archer, chief economist advisor at the EY Item Club, says this "may dilute expectations that the Bank of England will raise interest rates in May, but we suspect that the MPC remains more likely than not to act then".

He adds: "With the Bank of England keen to gradually normalise monetary policy and the economy likely to see essentially stable growth during 2018, we expect two interest rate hikes this year in May and November. This also assumes that earnings growth will trend up gradually."

1137: The imposition of the new Mifid II rules on the financial services sector is still seeing companies adjust almost two months after they were introduced.

Fidelity International has today gone back on its decision to get clients to take the cost of investment research and will now take the charge itself. The US-owned asset manager has buckled to pressure from clients, the FT reports, and said it will now fully absorb the cost of external research.

Paras Anand, CIO equities for Europe at Fidelity, said : "The overwhelming industry consensus has been to not embrace the RPA model which in turn means our clients, in most cases, would face disproportionate operational and reporting consequences were we to retain this approach. These client challenges and inefficiencies were not what we envisaged so we have decided to move to a Fidelity-funded research model."

1130: Speaking in Tokyo, recently-appointed Federal Reserve governor Randal Quarles points out, as some observers have over the past two days, that corporate investment in the States may finally be on the up. Significant as well, he says that headline PCE inflation a few tenths of a percentage point below the Fed's target of 2.0%, it was 1.7% in December, does not worry him. "Suffice to say, a deviation from our target of a few tenths of 1 percentage point, especially one I expect to fade, does not cause me great concern. [...] Against this economic backdrop [...] I view it as appropriate that monetary policy should continue to be gradually normalised."

1118: Down among the small caps there has been some intrigue at Cardiff-based semiconductor specialist IQE in recent weeks after attacks from US short-sellers.

This morning there's an announcement from CSC – IQE's joint venture with Cardiff University where accounting practises have led a battle of words between the company and several local analysts and the US short sellers. CSS says one of its partners is launching a new product which CSC has been a key part of developing. The partner will now use IQE as its key wafer supplier.

Comment from Jamie Constable at broker N+1Singer: "Unlikely to be material to IQE at this stage but proof of why IQE set up these JV's in the first place and they are starting to deliver business. We stay at 'buy'."

1105: The CBI says retail sales growth slowed for the third month in a row in the year to February, according to its quarterly Distributive Trades survey.

Orders placed on suppliers were broadly flat over the year, but are expected to pick up slightly next month.Within the retail sector, growth in sales volumes was recorded in the grocers, hardware & DIY, and non-store goods sub-sectors. Meanwhile sales fell in clothing, footwear & leather, department stores, and furniture & carpets.

0945: GDP growth rose just 0.4% in the fourth quarter compared to the third, the Office for National Statistics has revealed, revising down from its initial 0.5% estimate, which meant year-on-year growth was cut to 1.4% from 1.5%.

The 0.1 percentage point revision down from the preliminary estimate was partly due to a downward revision to the estimated output of the production and services industries, ONS said.

The pound was little moved, having already fallen 0.2% to $1.3887 earlier. Analyst Naeem Aslam at Think Markets gave his immediate reaction to the ONS data. "Higher inflation was the reason that we have not seen the UK’s economy expanding more than the previous estimates. The pound has shown no reaction to the figure."

He said investors will still keep business and consumer spending on their radar in order to continue to gauge the health of the economy but Brexit remains "the biggest elephant in the room" and continues to be the main influence on the economy and hence the pound.

"The longer the uncertainty remain around this issue, the worst the effect would be on the economy and it would create more obstacles for business and consumers."

0859: After the falls on Wall Street overnight bled into a red session for Asia, the FTSE has fallen 86.82 points or 1.19% to 7,194.75 after an hour of trading.

The cause was the overnight release of latest Federal Reserve meeting minutes, which reignited the market’s fear of rising interest rates.

The FOMC minutes indicated that “a majority of participants noted that a stronger outlook for economic growth raised the likelihood that further gradual policy firming would be appropriate”.

Jim Reid at Deutsche Bank, while bemoaning his latest skiing injury, noted that US yields jumped after the release of the minutes, when they had been flat and the S&P 500 up around 1% but by the close 10-year US Treasury yields had risen 6bps to 2.951% and the S&P 500 closed at its lowest level in a week.

"Notably, the relatively hawkish minutes was before the January wage growth and CPI / PPI prints, so it seems reasonable to assume that if the Fed was getting more confident in their growth and inflation outlook at their meeting, the subsequent data releases would have only added to their views," he said.

0845: Biggest faller in the 350 is Moneysupermarket, which posted an increase in full-year profit but tumbled as investors were left disappointed by its 2018 outlook.

British American Tobacco is the worst of the blue chips. This is the analysis from Mike Van Dulken at Accendo: Revenues (£20.3bn reported, £20bn adjusted, £19.3bn adjusted at constant currencies) missed consensus of £20.6bn, however, pre-tax income was either a beat at £8.1bn on an adjusted basis or bang in-line at £7.8bn when adjusted for constant currencies. "Importantly, both metrics suggest a currency boost which, of course, can’t exactly be relied upon for growth forever."

"The real problem, however, looks to be volume growth (the be-all-and-end-all in tobacco sales) of +3.2%, thanks only to the monster Reynolds acquisition. Excluding the purchase, volumes fell 2.6% organically basis, although Global Drive Brand (GDB) growth of 7.6% was a big rebound from -1.3% in H1, and total organic growth did at least outperform a market -3.6%. Nonetheless, falling volumes are a problem unless you can keep increasing prices. Comments about a challenging trading environment, even after a transformational deal, also ring loudly in investors ears."

0753: The FTSE 100 is being called 64 points lower by traders in the City of London, tracking weakness on Wall Street after the latest Federal Reserve minutes revealed that the US central bank wants to keep lifting short-term interest rates gradually this year.

0745: There's a raft of results out today. Barclays looks likely to impress as it declared its intention to more than double dividend payouts in 2018 to 6.5p per share after lower costs helped lift profits last year.

Higher commodity and copper prices provided a boost for Anglo American as the miner reported a 45% jump in full year earnings before interest, tax, depreciation and amortisation to $8.8bn.

RSA Insurance posted a jump in full-year profit on Thursday and bumped up its dividend as a strong performance in Scandinavia, Canada, the Middle East and Ireland helped to offset a poor showing in the UK.