Market buzz: Gains in Oil&gas, Autos offset by pound strength
1730:Close Stocks have finished the session just off their session lows, with the renewed weakness in Facebook shares on Wall Street having apparently unnerved what traders remained at their desks, coming as it did alongside another move higher in Sterling.
Oil&Gas and Autos&Parts led to the upside, mimicking the broader sector action on the pan-European Stoxx 600, with the latter benefiting from Brent at 52-week highs and the latter from more positive remarks on trade Stateside.
The FTSE 100 ended the session 0.48% or 33.25 points lower to 6,888.69.
1619: Facebook shares still on the back foot, down 5.99% to $149.84. FTC reportedly investigating privacy practices. As an aside, there is some 'market chatter' out and about referencing comments by Nobel Economics prize winner Robert Shiller over the weekend warning of "chaos" in case of a trade war.
1615: Stocks on the Continent have turned lower going into the close, with traders referencing strength in the single currency as the reason for the move. Euro/dollar now at 1.24405, up by 0.71%. Cable at 1.42316. US dollar spot index off 0.40% to 89.081.
"This initial buoyancy has been difficult to sustain with stocks pulling back from their highs on the back of a rising euro, as well as some concern that the recent declines could also be indicative of developing micro fissures in the economic arguments for higher stock prices, and a buoyant global growth story," comments CMC Markets UK's Michael Hewson.
As as an aside, Dax is now perched atop its 100-week moving average, 200-week comes in at 11,129.
1343: "Moderately dovish" ECB commentary of late suggests risk of a "short" delay to its exit from asset purchases, so as to limit risks to financial conditions, Deutsche Bank says. That is even without the risk of an escalating trade war, they add. On a separate note, at 370 the Stoxx 600 is about 5% below 'fair value', they estimate, although fair value is seen fading towards about 360 by mid-2018 - and possibly lower in the third quarter - "largely as a function of the normalisation (declines) in euro area PMIs".
1330: Chicago Fed's three-month moving index for its national activity gauge jumps from +0.02 in January to +0.88 for February.
1241: Ghana's central bank cuts interest rates by 200 basis points to 18% - a four-year low.
1224: The pound has been climbing on news that Labour Party will table an amendment to the government's EU withdrawal bill to ensure parliament has a final say on the Brexit deal in order to prevent a hard Brexit.
The news "is being taken well by the market,” says Jane Foley, chief currency strategist at Rabobank. “It means less chance of a hard Brexit.”
Market analyst Michael Hewson at CMC Markets noted earlier that GBPUSD pushed up to 1.4220 last week just shy of trend line resistance from the 2014 highs. "A move through 1.4220 retargets the 1.4350 highs. As long as this level holds we could drift back down to the 1.3980 area. A move below 1.3970 runs the risk of a return to the lows last week."
Mike van Dulken at Accendo Markets said that it was a case of USD weakness as well as GBP strength. This, he noted, was keeping equity bullishness in check, holding stock indices from breaking back above key levels. The FTSE 100 is up 33.27 points or 0.48% at 6,955.21.
1120: Analysts at BoA-Merrill are waxing lyrical on the pound, pointing out to client's the potential for further gains in April (trade tensions allowing).
"Within the G10 FX complex, there is no stronger seasonality than in GBP through April. GBP/USD has rallied every single year for the past 14 years. This remarkable outperformance covers major events such as the financial crisis, general elections and the Brexit referendum, and suggests to us a consistently strong underlying flow which has trumped these idiosyncratic factors.
"A combination of the end/start of the UK tax year and a heavy month of dividend payments by UK corporates are factors which we think are at play driving GBP strength during April."
1042: Three-month LME copper down at $6,577 per metric tonne versus a Friday close of $6,659. Iron ore futures are down 1.5% at $62.7/t in Singapore, broker SP Angel also noted, with Chinese steel futures prices also heading south and at lowest since last summer.
"On the back of a weak sentiment in the metals market, miners are trading lower this morning," the broker said.
Oil prices recorded one of the biggest weekly advance since July on the back of a weaker US$ and as President appointed John Bolton as national security adviser who is considered one of the most hard line foreign policy figures in the administration.
1030: Fresnillo is top of the FTSE 100 leaderboard this morning after an upgrade from Goldman Sachs, which upgraded its recommendation on the Mexican precious metals miner and added the stock to its 'conviction list' with a 1,550p price target. Analysts also raised Randgold Resources to 'buy' but cut the TP to 7,500p from 8,000p.
"Our commodities team for the first time in more than five years is positive on gold," Goldman said, though it might seen to run the face of the bank's economists' positive view on global growth. "However, our commodities team believes that the dislocation between the gold prices and US rates is here to say. Their bullish view on gold is driven by: 1) Higher inflation (gold is an inflation hedge); 2) Rising EM wealth which historically has been positive for gold; and 3) Increased risk of an equity correction."
Another top pick was Egypt-focused Centamin, which is seen as having the best asset in terms of quality and cost positioning, upside risk to 2017 production and potential for strong balance sheet and dividend growth.
1023: Worth mentioning perhaps, so as to understand last week's price action better, at the weekend the FT picked-up on comments out of Steve Bannon saying the US president would likely eventually move to end the post of White House chief of staff. NBC News reported along similar lines, citing three people familiar with the discussions, according to The Independent.
1021: AUD/JPY will act as the proverbial canary in the FX coal mine when it comes it to the markets' reaction to trade tensions, according to Marshall Gittler. As an aside, on Friday Rabobank said it would expect the Japanese yen to strengthen on the back of heightened frictions on trade, where as the Aussie should weaken.
0935: Gross UK mortgage lending in February is estimated to have been £19bn, up 4.9% over the same month last year but below the monthly average of £21.4bn for 2017.
Borrowers are still looking to lock in to attractive deals amid speculation of further interest rate rises later this year, said Eric Leenders, personal finance chief at UK Finance, the industry body for banks and building societies that produced the figures.
“We are also seeing a continuing rise in credit card spending, reflecting the growing number of transactions carried out using cards, while other forms of borrowing such as overdrafts continue to fall. Meanwhile real wages continue to be squeezed by inflation, impacting on consumer confidence and retail sales. This pressure on household incomes should ease in the coming months, as the effect of the fall in sterling begins to fade and the strong labour market leads to a better outlook for wage growth.”
0914: GKN may have received an offer for more cash in the Driveline deal from US-based Dana, but Melrose is starting to get the better of the argument, reckons Russ Mould, investment director at AJ Bell.
“The way in which GKN’s shares have started to trade at a slowly decreasing discount to the price implied by Melrose’s cash-and-stock offer suggests that the argument is starting to swing back in favour of the predator rather than the prey. This is despite strong opposition to the bid from politicians and champions of British industry, as well as concerns from customers of the aerospace operations,” he says .
Melrose has offered 81p-a-share in cash, plus 1.69 Melrose shares for every GKN share held. Melrose's share price opened at 219.6p on Monday, meaning the offer would be valued at 452.1p, while GKN 429.8p open implies a 4.9% discount.
"That compares to the 7.6% discount which existed at the close last Tuesday and the diminishing gap suggests Melrose is starting to get the better of the argument, despite GKN’s announcement today that America’s Dana has offered an extra £100m as part of the deal to combine their car parts businesses," Mould says.
0912: The combination of Dana and GKN's Driveline has significant strategic merits, but not enough for prevent broker Numis from supporting Melrose's hostile bid for the FTSE 100 group. "The issue we have is that the business is being sold too cheaply and too early," analysts say, recommending investors help directors avoid selling at the "wrong price today" and look for recovery and a "more structured timescale" by backing the Melrose proposal.
0910: Monday's London open market report finds stocks slightly higher as dealmaking again dominates the corporate headlines and investors attempt to erase last week's losses. The FTSE 100 was up 17.55 points or 0.25% at 6,939.49, in spite of stronger sterling. The pound is up 0.3% on the dollar to 1.4179 and 0.12% versus the euro to 1.1452.
0724: UK retail rising star JD Sports has agreed the "transformational" acquisition of Nasdaq-listed The Finish Line for $558m (£396m) in a deal that would add a 556-store estate across 44 US states of the largest sportswear market in the world.
0710: Last week, the FTSE 100 fell almost 3.3%, while Wall Street endured its worst weekly performance in over two years, retreating almost 6%.