5th Sep 2018 12:05
LONDON (Alliance News) - The FTSE 100 was facing a second down session on Wednesday, while the pound failed to benefit following a better-than-expected UK services Purchasing Managers' Index reading for August.The FTSE 100 was down 0.5%, or 34.71 points, at 7,423.15 Wednesday midday. The FTSE 250 was 0.2% lower, or 57.43 points, at 20,491.18 and the AIM All-Share down 0.1% to 1,106.39.The Cboe UK 100 was off 0.5% at 12,575.12 and the Cboe UK 250 down 0.2% at 18,573.74. The Cboe UK Small Companies was up 0.1% at 12,271.15, however.The CAC 40 in Paris was down 1.1% Wednesday midday, while the DAX 30 in Frankfurt was down 0.6%."The markets remained in a mood on Wednesday, the prospect of the US-China trade war levelling up later in the week - and the impact the pre-existing tariffs are already having on the Chinese economy (the country's services PMI just hit a 10 month low) - keeping the European indices in the red," said Spreadex analyst Connor Campbell.Having declined over the course of the morning prior to the release of the services PMI, the pound failed to recover this lost ground despite the latest services PMI reading surprising to the upside.The IHS Markit/Chartered Institute of Procurement & Supply services PMI rose to 54.3 from 53.5 in July, its second-highest level since February and above the expected score of 53.9.However, optimism towards the year-ahead business outlook hit five-month low in August. "In summary, though the sector remained in positive territory, the dark clouds of political indecision are still having an effect and preventing more business activity," Duncan Brock, group director at the CIPS said.Sterling was quoted at USD1.2811 Wednesday midday, soft compared to USD1.2823 at the London equities close on Tuesday."The improvement in August's Markit/CIPS report on services came as a bit of a relief after the recent run of poor data on the economy and suggested that the services sector is holding up better than the industrial sector," commented Ruth Gregory, senior UK economist at Capital Economics.Gregory continued: "Combining the services survey with its sister reports on manufacturing and construction suggests that overall economic growth held steady at 0.4% or so. As such, today's figures provide reassurance that the rebound in GDP growth in Q2 has been sustained in Q3 so far."From the eurozone, IHS Markit's composite output index rose to 54.5 in August from July's 54.3. The score was marginally above the flash estimate of 54.4. Both manufacturing production and service sector activity rose at similar and slightly faster rates. The services PMI came in at 54.4, in line with flash estimate, and up from 54.2 in July.Following this, Eurostat reported retail sales in the bloc dropped sequentially for the first time in three months. Retail sales fell 0.2% month-on-month in July, in contrast to a 0.3% rise in June and marginally worse than the forecast 0.1% decline. This marked the first fall since April, when sales were down 0.2%. On a yearly basis, eurozone retail sales growth eased to 1.1% from 1.5% in June. Economists had forecast a 1.3% rise.To come in the economic calendar, US MBA mortgage applications are due midday London time, followed by the US trade balance at 1330 BST and the Redbook index at 1355 BST. The Bank of Canada announces its latest interest rate decision at 1500 BST.Markets in the US are pointed towards a tumble at the open on Wednesday, with the Dow Jones and Nasdaq both called 0.5% lower and the S&P 500 seen down 0.4%.Among movers on the London Stock Exchange, housebuilder Berkeley Group was up 1.2% at midday after backing its guidance ahead of its annual general meeting.The FTSE 100 company said that, in the first four months of its financial year to August 31, market conditions in London and the South East, its main areas of operations, have remained consistent. "Pricing has remained robust as there is demand for good quality, well located homes that enhance communities and meet the local housing need," Berkeley said.However, the company said that the London housing market "remains constrained by high transaction costs, restrictive income, multiple limits on mortgage borrowing, and prevailing economic uncertainty" which has been heightened by Brexit.Shares in peer Barratt Developments, which posted a 9.2% rise in annual profit and 4.8% growth in revenue on Wednesday, were flat at midday.BHP Billiton was down 0.6% after the Australian miner said it will buy Guyana Goldfields's minority stake in London and Toronto-listed SolGold for GBP27.4 million.SolGold is the majority owner and operator of the Cascabel copper-gold project in Ecuador. SolGold was up 17% at midday.BHP will buy all of the 103.1 million SolGold shares, a 6.1% stake, held by Guyana Goldfields at a price of 25.592 pence per share, a 20% premium to SolGold's closing price in London on Tuesday of 21.35p.BHP Chief Executive Officer Andrew Mackenzie said the deal would see the FTSE 100 miner gain "exposure to a high-quality copper exploration project in Ecuador, which is a highly prospective location for BHP."In the FTSE 250, William Hill gained 5.8% on news of a partnership with Eldorado Resorts as the London-listed bookmaker looks to expand further in the US.The Nasdaq-listed group will receive USD50 million in William Hill shares as well as a 20% stake in William Hill's US business and a share of the profit "attributable to its licences".In return, William Hill will become Eldorado's exclusive partner to provide digital and land-based sports betting services, as well as online gaming.Eldorado has 21 casinos across 13 US states with a customer base of 23 million people, though the expected acquisition of Tropicana Entertainment is expected to bring the number of casinos up to 26.Wednesday's news from William Hill comes after a loosening of US sports betting regulation in May by the Supreme Court.London-listed peers such as GVC Holdings and Paddy Power Betfair have already moved to capitalise on the US market, with the former entering a joint venture with MGM Resorts International and the latter combining its Betfair US unit with US fantasy sports operator FanDuel."William Hill needs the US to be a success because its UK operations continue to face increased regulatory pressures," commented Russ Mould, investment director at AJ Bell.Elsewhere on the Main Market, Chemring was 4.9% higher after the defence firm said US unit Chemring Sensors & Electronic Systems has been selected by the US Department of Defense as a supplier of next generation chemical detectors.The contract is expected to "take the form of an indefinite delivery, indefinite quantity contract" and will be for engineering and manufacturing development of the programme, most commonly known as the Aerosol & Vapour Chemical Agent Detector.Gem Diamonds was up 3.2% after the company said profit grew significantly in the first half of 2018 helped by the sale of a 910 carat diamond found in Lesotho.The miner said pretax profit multiplied sharply to USD64.8 million in the six months to the end of June compared to USD2.3 million reported for the same period a year earlier, as revenue jumped to USD167.7 million from GBP92.9 million.In the first-half, Gem Diamonds said it recovered 61,596 carats, up 22% from 50,478 carats recovered a year ago. The company said it achieved an average price of USD2,742 per carat, up 54% compared to USD1,779 per carat the year before.Due later Wednesday, at 1500 BST, are August traffic statistics from British Airways parent International Consolidated Airlines.After the market close are the results of the latest quarterly index review, based on Tuesday's closing prices.For the first time since 2006, the composition of the FTSE 100 is seen unchanged in the upcoming index shuffle, though newly-listed companies such as Avast, Vivo Energy and Amigo Holdings are up for promotion to the FTSE 250.Related Shares:
WMH.LGem Diamonds DiBHP Billiton PLCSolGoldBarratt DevelopmentsChemring