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Market buzz: 'Human-mouse' sends stock flying, AA skids out of the 250
1702: London's top flight share index finished up 0.62% at 7,289.58 on Monday, while the pound edged lower by 0.12% against the dollar to 1.3951 and by 0.13% against the European single currency to 1.1346.
The pound had been up earlier on the back of comments from Bank of England deputy governor Dave Ramsden on interest rates and from Labour leader Jeremy Corbyn on Brexit.
1625: The AA is a big faller today as it looks ever more likely that the roadside assistance outfit will skid out of the FTSE 250 at the next index reshuffle, which will be decided based on market closing prices tomorrow.
The quarterly reshuffle is also predicted to see Royal Mail promoted from the 250 and rejoin the blue chip index, with property company Hammerson replacing it in the mid-cap list. A stock will generally be promoted into the FTSE100 at the quarterly review if it rises at least to 90th position by market capitalisation in the official main market list and a stock will be demoted if it falls to 111th or lower.
Inhaler maker Vectura Group, retailer N Brown, outsourcer Mitie, property developer Hansteen and funeral provider Dignity are in line to to drop out of the 250, with Games Workshop among those which could potentially be promoted in their place, as well as Pantheon International, Charter Court Financial Services and online travel agent On The Beach.
"Sometimes the FTSE reshuffle provides an insight beyond financial markets and into the real world inhabited by human beings, who it seems are increasingly seeking refuge in the fantasy world of Warhammer," said analyst Laith Khalaf at Hargreaves Lansdown. "As a result, Games Workshop has enjoyed some spell-binding performance with its share price more than doubling over the last year, propelling the company into a FTSE 250 promotion spot."
1530: Biggest riser in London today is Hemogenyx Pharmaceuticals, which has more than doubled after details accidentally emerged, apparently, of a patent application for its leukaemia treatment. The London-listed, Brooklyn-based company is poised to file a patent for a "new type of humanised mouse" that can be used to show how antibodies developed by the biotech company can treat leukaemia.
1502: Rising supplies of lithium from Chile will lead to a fall in lithium prices and so provide a boost to electric car makers, Morgan Stanley says, with the mineral's price predicted to plunge 45% by 2021. Producers in Chile are planning expansions that could add around 500,000 tonnes per year to global supply by 2025, analysts at the bank said, which should "swamp" forecast demand growth, with 2018 being the last year of a global lithium deficit.
Lithium demand has increased as it is used in batteries for alternatively fuelled vehicles, with some forecasters having predicted China's plan to ban new petrol-powered vehicles would push requirements even higher. Consultant Roskill last year estimated 785,000 tonnes of lithium carbonate equivalent will be needed per year by 2025.
1448: Will US stocks "quickly" re-test their recent lows? JP Morgan asked on 22 February. For its strategists, the recent "market dip" was technical in nature, driven by the hedging of index options and short volatility products, together with selling from systematic strategies in a market that saw over 90% of electronic liquidity dry up.
In a similar vein, they admitted that the rally was "very fast" but said that in their opinion the fundamentals were intact. Hedge funds had also de-risked aggressively with "the open interest on index put options rising by roughly $500bn shortly after the sell-off." As for those who believe markets need to re-test quickly, JP Morgan saw no significant evidence to back that up.
As for the fear of quickly rising yields and inflation, they said: "While we think that inflation and yield fears are overblown near term, this is more difficult to disprove." For the current week, which is month-end, they said buying from fixed weight allocators could be substantial. "These flows will be a headwind for any near-term bearish thesis." They also pointed out how speculators had amassed their largest 'short' position in the history of bond futures trading which, they said, opened up the risk of a short squeeze.
1410: RBC ups Centrica to 'outperform' from 'sector perform' and lifts target from 150p to 175p. "We are far from convinced that CNA will be able to deliver any bottom line growth over the next few years, and it remains beset by political and competitive pressures. However, post updating for full year results, we think the dividend will be maintained at 12.0p/sh," it says. BP also gets a one notch upgrade to 'outperform' from the same broker.
1409: In the context of the impact on airlines' the total network, the launch of director Eurostar service between London and Amsterdam in April will be "immaterial", UBS says, accounting as it does for just 2.5% of easyjet's total capacity and 3.5% in the case of KLM. Having said that, EZJ will be the most negatively affected, the analysts say.
1309: The pound is up against the dollar and the euro, boosted by comments from BoE deputy governor Dave Ramsden over the weekend and by Labour leader Jeremy Corbyn in his speech today.
Following the speech in Coventry, where Jez revealed he will back a permanent customs union after Brexit, bookies cut their odds on Corbyn becoming the next Prime Minister.
Ladbrokes said Tory Brexiteer Jacob Rees-Mogg was their market leader following heavy support from the 'Moggmentum' movement but moved the odds on the opposition leader to 5-1.
Elaborating on his support for a customs union with the European Union after Brexit, Corbyn said this would avoid the need for a hard border with Northern Ireland and allow free-flowing trade for business.
"Labour would seek a final deal that gives full access to European markets and maintains the benefits of the single market and the customs union... with no new impediments to trade and no reduction in rights, standards and protections," he said.
"We have long argued that a customs union is a viable option for the final deal. So Labour would seek to negotiate a new comprehensive UK-EU customs union to ensure that there are no tariffs with Europe and to help avoid any need for a hard border in Northern Ireland."
1225: The London midday report shows the FTSE 100 up 0.4% to 7,273.40 despite the weight of a rising pound on the index's legion of overseas-focused giants.
David Cheetham, chief market analyst at XTB, talks about Bank of England deputy governor Dave Ramsden's comments over the weekend: "Ramsden was one of only two members who voted against raising rates for the first time in a decade back in November, and this apparent hawkish shift in his views can be seen to suggest that there will be little opposition to further rate hikes going forward."
Outside the FTSE 350, Interserve is a notable faller. Its shares are down 10% after a report in the Sunday Telegraph that the outsourcer was struggling to put together a debt refinancing deal after the collapse of Carillion spooked its lenders.
1137: Provident Financial is down at its lowest levels since the mid 1990s on the back of a weekend newspaper report that suggested that the doorstep lender is sounding out investors for a "bumper" capital raise.
Shares in the Provvy earlier sank below 567p for the first time since 1996 and are down more than 9% at 597.4p. The Sunday Telegraph said management were looking for up to £500m to cover the cost of fines and to shore up its balance sheet. The article said that the announcement could be made alongside results that are due on Tuesday.
Broker Numis suggested the balance sheet does not need shoring up as Provident is trading profitably and it is not paying dividends, while it undergoes investigations by the Financial Conduct Authority over its Moneybarn car finance arm and the RPO product sold by its Vanquis Bank subsidiary.
"The resolution of ROP should see investors start to look at the value of the group as opposed to obsessing about ROP. We believe Provident is worth about £3bn on a look through basis and consequently if ROP were to cost £0.5bn (we don't think it will cost anything like that) shareholders should double their money," Numis said.
1122: Economist Howard Archer, chief economic adviser to the EY Item Club, believes 2018 will be "difficult" for housing market, forecasts 2% gain in prices.
Earlier UK Finance reported that mortgage approvals for house purchases picked up to a three-month high of 40,117 in January after slowing to a 56-month low of 36,085 in December. This suggests that there may have been a hit to activity in December as a reaction to the Bank of England raising interest rates in November.
1051: China's top steel-making hub, the city of Tangshan, is set to propose new curbs on output in a bid to reduce pollution once the current measures in place expire in March, Reuters reports citing a draft document. Although markets had been speculating since early February on an extension of those curbs past their official end date of 15 March, Chinese steel rebar futures climbed 6.9% to $686.1 per metric tonne.
1036: Three-month LME copper futures now at $7,152 per metric tonne versus Friday's close of $7,144. In parallel, Iron ore Fe spot (cfr Tianjin) is at $78.1 per metric tonne, up from $77.6. Futures in Singapore reportedly hit 10-month high on speculation of steel supply curbs in China.
Anglo American, Randgold Resources, Fresnillo and Antofagasta are among the top five risers on the FTSE 100.
0945: We've a note on rising yields from Jim Reid and his credit strategy team at Deutsche Bank, noting that it is "a delicate point" in the post-crisis workout period as yields are rising at one of the fastest rates over the past decade as the Fed are now firmly on a regular hiking cycle and the ECB slowly coming towards the end of its period of QE.
"However, we're starting to see the inevitable consequences of unwinding a long period of ultra-accomodative monetary policy with the equity vol shock in early February. A more complicated macro environment lies ahead," Reid said, ahead of a five-day analysis-jamboree that will looking at the theme from a different angle each day.
"We think rates and yields will continue to structurally move higher in the quarters and years ahead regardless of any short-term moves, and we hope policymakers won't be derailed by the inevitable macro issues that this will bring. An era of higher rates and yields won't be without risks and will bring higher vol and more regular risk selloffs, but we'd argue that central banks shouldn't fight it at the front end. If they do, they'll risk keeping policy too loose and asset prices will get even more expensive and dangerous bubbles will likely form."
0850: The FTSE 100 is easing off from its quick start, up 27 points to 7,271.85, while the pound is up 0.3% against the euro at 1.1391 and 0.5% firmer versus the dollar at 1.4040.
The London open market report shows Bunzl and AB Foods among the leading risers.
0825: As first snow begins to fall in London, traders are keeping warm by buying stocks. The FTSE 100 has started the week on the front foot, rising 41.47 points or 0.57% to 7,285.88 in early trading.
Down on the FTSE 250, Hiscox is down almost 8% on the back of its results, while Provident Financial is down 6% after reports in the Sunday newspapers that it has been sounding out investors about a "bumper cash call".
Market analyst Rebecca O'Keeffe at Interactive Investor said: "Equity markets in the UK and Europe are off to a good start, following on from a late surge in the US on Friday and a positive start to the week in Asia.
"Inflation and US monetary policy has been the catalyst for recent volatility and remains the centre of attention, with all eyes on Jerome Powell's economic testimony this week and the Federal Reserve's preferred inflation measure, the core personal consumption expenditures price index, due out on Thursday."
That's due on Tuesday, with plenty more in the busy week ahead, including a Brexit speech from Labour leader Jeremy Corbyn later on Monday, a major speech on a similar subject from PM Theresa May on Friday, plus Brexit negotiations going on Brussels today and tomorrow.
0805: Italian-American car maker Fiat Chrysler Automobiles will stop making diesel-fuelled passenger vehicles by 2022 after the collapse in demand and rising costs. The Financial Times reported that a four-year plan to be unveiled by FCA on 1 June will include plans to phase out diesel across its brands.
0756: Breaking news: the 'beast from the east' is showing its face, with snow tumbling down in the capital.