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European shares end lower
A dip in the oil price and continuing worries about the US-China trade dispute left the major European markets flagging on the final trading day of the week.
But they still managed to make weekly gains, with the exception of Italy - on concerns about the new eurosceptic coalition - and Spain. On Italian politics, Matteo Ramenghi, chief Investment officer at UBS Wealth Management Italy, said:
Following weeks of political stalemate, the news on Friday morning that Italy is one step closer to an anti-establishment alliance will certainly have alarmed investors. In particular, markets will be wary of the lack of fiscal discipline outlined in the parties’ policy plan.
The final scores showed:
- The FTSE finished down 9.18 points or 0.12% at 7778.79
- Germany’s Dax dipped 0.28% to 13,077.72
- France’s Cac closed 0.13% lower at 5614.51
- Italy’s FTSE MIB fell 1.48% to 23,449.65
- Spain’s Ibex ended down 1.02% at 10,112.4
On Wall Street the Dow Jones Industrial Average is currently up 17 points or 0.07%.
As for oil, Brent crude is down 0.37% at $79.01 a barrel.
On that note, it’s time to close for the day. Thanks for all your comments, and we’ll be back on Monday.
AstraZeneca suffers pay revolt at annual meeting
Pharmaceutical group AstraZeneca has suffered a pay revolt at its annual meeting.
Some 35% of shareholders who voted were against approving the remuneration report, as a protest against chief executive Pascal Soriot’s £9.4m pay package.
The news came after its first quarter results came in below expectations, partly due to increased generic competition for its anti-cholesterol drug Crestor.
FTSE 100 closes lower
Well the FTSE 100 didn’t make it to a new peak.
The UK’s leading index has closed the day down 0.12% at 7778.79, but it was a close call. It recovered from a low of 7753 during the day, although it ended down from the high point of 7791.
But it was the eighth week of gains, a good recovery from the lows of March.
Updated
As we head into the close of European trading, markets remain marginally lower.
The FTSE 100, which came within a whisker of a new record, is currently down 12 points but is off its worst levels. Fiona Cincotta, senior market analyst at City Index, said:
The FTSE edged away from its record closing high, in an uninspiring session ahead of the weekend. It is, however, still firmly on track for another winning week. This is its 8th consecutive winning week as low for longer interest rates, a weaker pound and stronger oil prices have kept the bulls firmly in control.
The pound was trading lower versus the dollar once again on Friday, as it heads towards fresh 5-month lows. Whilst a run of soft UK economic data, a dovish Bank of England and growing concerns over the future health of the UK labour market has been weighing on demand for the pound over the past month, the negative sentiment intensified this week by the return of Brexit fears and an ever-stronger US dollar. With the UK economic calendar quiet for the first part of next week, investors will need to wait until Wednesday’s inflation data for any hope of a meaningful change in direction for the battered pound.
Connor Campbell, financial analyst at Spreadex, said:
Though it came close, the FTSE couldn’t quite hit 7800, or surpass January’s all-time intraday high. To be fair to the index, it would have had to magic momentum out of nothing this Friday to do so. Brent Crude slunk back below $79.50 per barrel as the day went on, ruling that out as a boost; and while cable was down 0.3%, pushing sterling towards a fresh 4 month nadir, it wasn’t substantial enough a loss to reignite the UK index.
Of course, the market has not quite closed yet, and a 12 point decline could easily be overturned in the next few minutes.
Uncertainty over the US-China trade talks means stock markets are likely to remain nervious, says David Madden, market analyst at CMC Markets UK:
There continues to be uncertainty and confusion over how US trade talks with China are going. There was a report that China agreed to cut the trade deficit by $200 billion, but that was denied by the Chinese Foreign Ministry. Things are still up in the air in relation to how the trade negotiations will play out, and dealers are likely to remain cautious until we get clarification.
TGI Fridays staff strike over tipping
TGI Fridays faced protests outside restaurants in London and Milton Keynes as waiting staff joined in the UK’s first strike over tipping.
In February, the casual dining chain, which has 83 outlets, began redistributing 40% of service charge payments paid on credit and debit cards to back-of-house employees, including kitchen staff, in lieu of a wage increase.
Waiting staff are angry about the loss of card tips, about which the Unite union claims they were not properly consulted. Kitchen staff are said to be unhappy about being offered a share of tips, rather than a rise in basic pay.
Workers say the change is linked to increases in the legal minimum wage, which has forced the restaurant to put up waiters’ pay. Those increases, they say, have gradually eroded the differential with kitchen staff who have historically earned a bigger salary but not had a share of tips.
The full story is here:
Updated
Developments in the tax case involving Ireland and Apple. Reuters reports:
Apple has paid €1.5bn ($1.76bn) into an escrow account set up by the Irish government to hold €13bn in disputed taxes, Finance Minister Paschal Donohoe said on Friday.
The European Commission ordered Apple in August 2016 to pay the taxes it ruled it had received as illegal state aid, as part of its wider drive against what it says are sweetheart tax deals usually used by smaller states in the bloc to lure multinational companies and their jobs and investment.
Both Apple and Dublin are appealing the ruling, saying the iPhone maker’s tax treatment was in line with Irish and European Union law.
Last October the Commission said it was taking Dublin to the European Court of Justice over delays in recovering the money that was due to be recovered in January 2017, four months on from the initial ruling in August 2016.
The commission has been pressurising Ireland to recover the taxes as soon as possible to allow it to close the EU Court of Justice’s action for missing the deadline.
Wall Street mixed at start of trading
With continuing concerns about the trade talks between the US and China, along with oil prices coming off their peak and some profit taking in technology companies, Wall Street is off to an uncertain start.
The Dow Jones Industrial Average has added 38 points or 0.16% but the S&P 500 is down 0.15% and the Nasdaq Composite has lost 0.11%.
The FTSE 100 came within a whisker of a new all time high earlier in the day, touching 7791.41 (the record is 7792.56 set on 12 January).
But following that failed attempt to reach a new peak, the UK’s leading index is now down 0.36% at 7759. Mike van Dulken, head of research at Accendo Markets, said:
The FTSE100 is slightly offside today, but still positive for the week... Small losses are in spite of what is normally helpful sterling weakness (EU customs backstop agreed, Bank of England scared off from rate hike), exacerbated by additional dollar strength (US 10 year bond yields above 3%, Fed hiking) that is causing oil to pause and putting pressure on metals and miners.
Blame can also be pinned on disappointing results for heavyweight AstraZeneca and some profit taking in certain names following strong rallies, perhaps fuelled by geopolitical rumblings (North Korea, US, Italy) although not enough to cause panic.
Meanwhile Brent is at $79.66 a barrel, having breached the $80 level on Thursday on concerns of supply disruption following Donald Trump pulling out of the nuclear deal with Iran.
Italian markets fall after populist coalition pledges spending binge
Italy’s main stock market is down sharply while government borrowing costs have hit seven-month highs after the newly-formed coalition vowed to ramp up spending.
The deal between the League and the 5-Star Movement puts Italy on a potential collision course with the EU and risks a further increase in debt, and that is making investors nervous.
Italy’s FTSE MIB index is down 1.4% 23,460, while the yield on benchmark 10-year government bonds rose 10 basis points to 2.22%.
BP boss expects oil price to fall to $50-$65 a barrel
BP chief executive Bob Dudley expects a flood of US shale and an increased supply from OPEC to weigh on oil prices, which hit $80 a barrel on Thursday for the first time since 2014.
Dudley told Reuters that BP is factoring in a price of $50-$65 a barrel:
Clearly the withdrawal of the United States from the Iran nuclear deal has brought a lot of uncertainty to the market.
He suggested that a $50-$65 range would reflect a reasonable price, neither too high nor too low:
Two years ago, when the price was $27, it was great for global growth, the engines of consuming economies.
But it was terrible for producing countries and that led to producing countries not being able to purchase things as well. That was not a healthy price.
I think when you get above $80, that’s not a healthy price either.
Updated
Reinstated Mothercare boss takes a pay cut
He must really like the job.. Mothercare boss Mark Newton-Jones returns to work just over a month after being ousted, but with a £138,000 (22%) pay cut and a new job-share partner in David Wood.
At least his shares are worth a bit more now after a 27% rise in the past couple of days since the struggling baby goods chain announced a restructuring and a new financing deal.
Sainsbury’s is stuffing its shelves in preparation for a bumper Saturday featuring a royal wedding, the FA Cup final, and some sunshine.
Britain’s second biggest supermarket expects to sell (on Saturday):
- 95,000 bottles of prosecco and champagne
- 645,000 punnets of strawberries
- 6,000 Taste the Difference lemon cakes
And as Chelsea take on Manchester United in the FA Cup Final, Sainsbury’s is predicting a 50% increase in beer and cider sales, a 30% rise in chicken wings, and a 20% increase in crisps sales (compared with a typical week).
M&S rebrands as Markle & Sparkle (for one weekend only)
The bunting is up, the picnics are packed, and Marks & Spencer has come up with a new way to capitalise on celebrate the royal wedding.
For one weekend only, Marks & Spencer’s store in the centre of Windsor has been renamed Markle & Sparkle.
Here is a snap of the town crier joining in the festivities with Percy & Penny Pig a day before Prince Harry and Meghan Markle marry at Windsor Castle:
Carpetright up 9.8% after announcing £60m share issue
Carpetright shares have risen 9.8% to 36.5p a share after the troubled floorings firm announced plans to raise £60m by issuing new shares.
It comes at a tough time for the retailer, which is closing 92 stores and has warned full-year losses will be double those previously expected.
The shares will be priced at 28p a share, representing a 15.8% discount to Thursday’s closing price of 33.25p.
Analyst David Madden from CMC Markets, says the share issue could be a positive step for Carpetright:
The funds will be used to pay down unsecured loans and implement a revised business plan.
Carpetright has been struggling for years, but if the share issue is successful this could be its first step in the road to recovery.
Updated
Number of low paid workers falls in UK
Low-paid work has fallen to the lowest level since the early 1980s according to the Resolution Foundation.
In a report published overnight, the think tank said the share of employees who are officially classified as low paid – earning less than around £8.50 an hour – has fallen to 18%, the lowest since 1982.
Conor D’Arcy, senior policy analyst, said policymakers should not become complacent:
The national living wage was the bold policy we needed to kick start a low-pay revolution, and it has seen low pay fall to its lowest levels since the early 1980s. But now is not the time for complacency. A higher minimum wage cannot solve all our low-pay challenges.
Workers today too often find themselves stuck on the shop floor with no chance to move up the ladder. Many are employed by one of a handful of big-hiring but low-paying firms in an industry or local area with few other options available. Women remain far more likely to be trapped in low pay than men.
Read our full story here:
Pound dips amid customs union confusion
The pound is under pressure this morning as uncertainty persists about whether the UK will stay in the customs union after Brexit.
Prime minister Theresa May said on Thursday that Britain will leave, but there is also speculation that Britain might remain within the union for a period of time beyond the transitional arrangement.
Markets do not like uncertainty...
The pound is down 0.2% against the dollar at $1.3481. It is down 0.1% against the euro at €1.1443.
AstraZeneca boss faces pay revolt
AstraZeneca’s annual shareholder meeting this afternoon could be a tricky one for chief executive Pascal Soriot, who is facing an investor revolt over his £9.4m pay package.
Sarah Wilson, chief executive of the shareholder advisory group Minerva, told the BBC’s Today programme:
There are plenty of aspects of AstraZeneca’s pay that are definitely cause for concern for many shareholders.
There’s very poor disclosure about the targets and also we’re not seeing that the chief executive and the executives are actually building up any real share ownership.
It’s a very complex scheme and it is interesting because the City has been asking for simplification ... you end up with some extraordinary numbers at the end of it that don’t seem to stack up for people.
AstraZeneca leads FTSE lower
AstraZeneca is the biggest FTSE faller this morning after the drugs giant reported a weaker-than-expected first-quarter.
Shares are down 2.7% after the company blamed generic competition to its cholesterol fighting drug, Crestor, and high costs.
The biggest fallers:
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Charlotte Hogg said she the events of last year have changed her leadership style:
I think it also has made me a different kind of leader in the organisation I’m in today.
I hope it makes me a more positive one actually, because when something bad happens and you bounce back you see the possibilities in life and that’s a wonderful place to be.
The other thing is whenever I see someone going through a rough time, I try to reach out.
I hoped I did it before, but I’m pretty certain I’d do it every time now.
One wonders whether Hogg reached out to her former colleague, Ben Broadbent, a deputy governor of the Bank who was heavily criticised this week for saying the economy was in a “menopausal” phase, past its productive peak:
Former Bank deputy Charlotte Hogg apologises (again)
Charlotte Hogg has spoken about the lessons she learned after the “mistake” that ended her career at the Bank of England last year.
Hogg resigned as deputy governor just two weeks into the role after MPs concluded she was not up to the job because of her failure to disclose that her brother works for Barclays, which is regulated by the Bank and was a potential conflict of interest.
More than a year on, Hogg - who is now the chief executive of Visa Europe - has told the BBC it was a tough time.
I wouldn’t wish it on anybody, but there are many worse things that happen to us in life .
When something very difficult happens and you are enormously well supported by your colleagues who are wonderful and also by your friends, that enables you to bounce back.
I think I’ve said everything I needed to when I resigned but I apologise for the mistake I made and I apologised to my colleagues and you know, we all moved on.
I owned up to having made a mistake and I set the bar for what I thought the consequences of that should be.
“I owned up to having made a mistake.” Ex Bank of England deputy governor Charlotte Hogg talks for the first time about how her resignation changed her. Full interview here https://t.co/OMzepUcfqH @BBCNews
— Kamal Ahmed (@bbckamal) May 18, 2018
Updated
Can the FTSE push through the 7,800 mark for the first time today?
Connor Campbell, analyst at Spreadex, says that while the FTSE is in “pause” mode as oil dips back below $80, the day is young:
Having hit an all-time closing high on Thursday, the FTSE paused after the bell on Friday, so far content just to linger in the record peak arena.
With brent crude dipping back below $80 per barrel, helping nudge BP and Shell into the red, the FTSE had little reason to ascend to fresh heights.
There’s still a long way to do until the day is over, however, and given that all it needs is 15 or so points to hit 7,800, the chances of the index finally breaking through that landmark level are still pretty good.
European markets dip in early trading
Strong oil prices helped to push the FTSE 100 to a record high close on Thursday of 7,787.97.
Investors are more cautious this morning, following falls on Wall Street.
Here are the scores so far:
- FTSE 100: -0.1% at 7,777
- Germany’s DAX: -0.01% at 13,113
- France’s CAC: -0.3% at 5,608
- Italy’s FTSE MIB: -0.3% at 23,742
- Spain’s IBEX: -0.3% at 10,186
- Europe’s STOXX 600: -0.2% at 395
The agenda: Oil dips back below $80
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
Brent crude is trading at $79.52 this morning, after rising above $80 for the first time since 2014 on Thursday.
Concerns about falling oil exports from Iran, which have driven the price higher over recent days, gave way to renewed fears about a trade war between the US and China after comments from President Trump.
Trump appeared to suggest that prospects of an agreement between the two countries was limited, as China had be “very spoiled” on trade with the US, which had been “ripped off” for years by China and the US “just can’t do that anymore”.
However, Jasper Lawler at London Capital Group believes the recent rise in oil prices could regain momentum:
The rally in oil has been relentless over the past two weeks, surging over 10%, before striking $80 per barrel; a 260% rally from its nadir back in 2016.
With supply shortages from crisis hit Venezuela only likely to worsen, Iran sanctions just kicking in and US oil supplies drastically lower, this rally has potential to go higher.
We will be bringing you more on this and all the main financial news throughout the day.
Talking trade with the Vice Premier of the People’s Republic of China, Liu He. pic.twitter.com/9T7Iq6F3Xe
— Donald J. Trump (@realDonaldTrump) May 17, 2018
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