Market buzz: Reports say US-N.Korea summit called off
1609: Markets are in 'risk-off' mode following the announcement from the White House, with the 10-year US Treasury note yield down by four basis points at 2.96%.
The short-end of the interest rate curve has also caught a bid, with the yield on the benchmark two-year note declining by four basis points to 2.49%, reducing the yield spread with the 10-year to 45 basis points.
Even 10-year Italian government bonds are seeing some demand after the news, with the 10-year yield down by one basis point to 2.39%.
Turkey's lira on the other hand is again on the back foot, with the US dollar up by 4.63% to 4.7882 against it.
However, the US dollar spot index is in fact down by 0.26% at 93.756.
On the FSTE 350, the worst performing sectors now are:
Bottom performing sectors so far today
Oil & Gas Producers -1.66%
Life Insurance -1.49%
Fixed Line Telecommunications -1.44%
1451: Reports cite US President Donald Trump as saying 12 June summit in Singapore with North Korean leader has been called off.
1256: Kingfisher shares are on the up but while the B&Q owner should recover some of the seasonal weakness later in the year, analysts at RBC Capital Markets don't expect all of it to be recovered and expect consensus PBT downgrades today in the order of 2-3%
Kingfisher's Q1 update was softer than expected, with LFL sales below consensus expectations, with snow disruption in major markets estimated to accounted for three percentage points of the -4% LFL decline.
While there were brighter notes, as RBC, which has a 'sector perform' rating on the shares with a 315p price target, noted that business disruption appears broadly in line with plan and new ranges are "clearly having a positive impact" on the performance of Brico Depot in France, analysts think the UK home improvement market has become more challenging in recent months.
1229: While today Smurfit Kappa's all about its Dutch deal, overnight there was a story that three major shareholders are stepping up calls for management to end its refusal to engage with the US suitor Paper and enter into negotiations with the US group. The Financial Times reported the investors included Janus Henderson, Smurfit’s third-biggest shareholder with a 4.3% stake.
1211: The London midday market report shows stocks steady as the small gains eked out earlier evaporated after stronger-than-expected retail sales lifted the pound. The FTSE 100 was flat at 7,788.04 as sterling pushed up 0.5% against the dollar to 1.3409 and 0.2% versus the euro to 1.1432.
Ex-dividends, as generally seen on Thursdays, are a heavy weight on the blue chips indices, today taking 3.25 points off the FTSE 100 and 15.5 points off the 250 as Bellway, Bunzl, Carnival, Countryside Properties, Diploma, Euromoney, Brewin Dolphin, Marston's, Soco, Tritax Big Box, Whitbread and Morrisons went ex-d.
In broker note action, Bakkavor was cut to 'hold' at HSBC, while drinks maker Britvic was lifted to 'buy' at Societe Generale a day after well-received results.
Goldman Sachs cut Bunzl to 'neutral' from 'buy' following outperformance, but sad it still views the FTSE 100 conglomerate as a long-term earnings compounder. Goldman also cut AB Foods to 'neutral'.
1102: Looking at Tate & Lyle, new CEO Nick Hampton has reviewed the business and announced three initiatives he said would improve performance. Tate & Lyle will concentrate its efforts on beverages, dairy, and soups, sauces and dressings, develop new products and target $100m of productivity gains over the next four years, he said.
Analysts at Societe Generale said the group's guidance to 4-5% constant currency growth in FY19 adjusted EPS, "could trigger circa 10% upgrades to current consensus".
Investec expects consensus FY19 EPS forecasts to rise by around 3-5%, assuming pound-dollar rate as a low single-digit drag on earnings, based on current rates.
1036: Following reports that Theresa May was set to ask the European Union for an extension of the Brexit transition period until 2023, a government source has denied the story.
The Prime Minister was reported by The Times to be preparing to make the request in order to avoid the hard border in Ireland and give businesses enough time to adapt, even though the plan faces criticism from Tory Brexiteers who prefer the ‘max-fac’ divorce scheme.
A government source has now denied the report, telling Reuters that both Britain and the EU were “absolutely clear” on the transition period ending in December 2020.
1022: Commenting on the improved UK retail data, Howard Archer, chief economic advisor to the EY ITEM Club, says this is some "much-needed, better than expected news for the UK economy" after a stream of recent disappointing data and surveys.
However, while retail sales rose month-on-month, Archer agreed that it was premature to celebrate the return of the consumer, with the underlying three-month performance still weak. "Consumers still appear to be cautious; they have faced an extended squeeze on their purchasing power, while their confidence has been fragile as it is has been pressurised by economic and Brexit uncertainties. The main support to consumer spending has come from high employment which reached a new record high in the three months to March."
Furthermore he added that the recent rise in oil prices to a three-and-a-half year high could lead inflation to be higher than expected in the near term at least and hold back the improvement in consumer purchasing power. "At the very least, current higher fuel prices will mean that consumers will have less to spend on discretionary items."
1010: Shares in Electrocomponents are up more than 10% as it reported annual revenue growth of 12.8%, with all five of its regions reportedly seeing double-digit like-for-like growth, with margins up and profit before tax gaining 33%.
Water company United Utilities is trading lower after posted a drop in full-year pre-tax profit, although revenue edged higher.
Tate & Lyle is up on the back of a 13% increase in annual profit driven mainly by the rising price of commodities.
Intertek is on the up as trading update says it's on track to deliver on its 2018 targets, reporting group revenue up 4.4% at constant rates, but down 2.5% reported after currency effects.
Shares in Smurfit Kappa are up a little after it agreed to acquire Dutch paper and recycling business Reparenco for roughly €460m.
1009: The slow start to the year is only part of the reason why Ibstock shares trade 7% lower this morning, said analyst Mike van Dulken at Accendo Markets.
"Firstly, Ibstock says price rises are in-line with expectations. So housebuilders are already facing higher input costs for rather important materials to house construction. Secondly, Ibstock highlights Energy costs higher than expected, and likely to continue for the rest of the year. Assuming these costs have to be passed on, in order to protect margins, this means Housebuilders may be facing even more and continued price rises."
This was not good news for the sector, van Dulken said, with UK house price data softening amid consumer uncertainty linked to the "twin threat of BoE rate rises and muddled Brexit negotiating".
While the housing market fundamental demand may well remain strong, he questioned if the same can be said of the outlook for housebuilder profit margins, suggesting it was "only if house prices rise and/or costs stay manageable".
0942: UK retail sales volumes rose much more than expected in April, climbing 1.6% month-on-month and 1.4% on the year, the Office for National Statistics has revealed.
0846: Wages are on the up, according to a survey of pay deals from XpertHR, with large UK employers agreeing average pay rises of 2.5% in the peak month of April, in line with increases so far in 2018 and up from 2.0% growth in April last year.
0841: TalkTalk shares are flying, up more than 10% despite the telecoms group swinging into a full year loss. The company has agreed to sell its direct business-to-business operation for £175m to simplify its business, cut costs and strengthen its balance sheet.
CEO Tristia Harrison said: "When we reset TalkTalk a year ago, we said we would focus on delivering sustained customer growth whilst radically simplifying the business. One year into the strategy, we are making good progress on both. We have also made real progress in simplifying the business to focus on core, fixed connectivity. This will continue into FY19 with the sale of our direct B2B business. As expected, our decision to invest in growth has come with short-term implications for [earnings] but positions us well for FY19."
0753: What happened with the yen overnight? wonders analyst Marshall Gittler at ACLS Global. "The answer is, as usual it strengthened when Tokyo stocks fell. Tokyo stocks were down sharply on reports that Trump told the Commerce Department to consider whether US car and truck imports endangered national security.
"Japanese autos aren’t the big deal that they were back in the 1980s, but they still are substantial, amounting to some ¥18.6tn over the last 12 months, or 23.4% of total exports."
Gittler says the funny thing is, he thinks the move is aimed at Canada and Mexico, not Japan.
"While CAD is often thought of as a 'petrodollar', in fact it should be thought of as an 'autodollar' too, because auto exports amount to some 27% of total exports – nearly as much as energy (33%). Trump’s move is probably aimed at getting the NAFTA negotiations moving, as the auto sector is one of the big stumbling blocks.
0738: B&Q and Screwfix owner Kingfisher says it was hammered by bad weather in February and March, with like-for-like sales down 4% in the first quarter but management still confident about the underlying turnaround of the business.
0735: The London pre-open report sees stocks edging lower at the open on Thursday as investors eyed the release of retail sales data for April. The FTSE 100 has been called to open down seven points at 7,788.
0714: Among the newspaper business sections on Thursday morning, PM Theresa May will ask the European Union for a second Brexit transition period to run until 2023 to avoid a hard border in Ireland, says The Times, following the head of HMRC telling MPs that the 'max fac' post-Brexit customs model that is favoured by Boris Johnson, Liam Fox and Michael Gove could cost business as much as £20bn a year, as reported in the Guardian.
There's also news on President Trump's investigation into car and truck imports, a rift at the top of Barclays and a study claiming income tax will have to go up by 10p in the pound within 15 years to pay for long-term improvement in the NHS.
0705: Wall Street stocks ended higher overnight, reversing early losses after central bank officials signalled that the pace of policy tightening was not set to quicken. The Dow Jones finished up 0.21% to 24,886.81, alongside a 0.32% or 8.85 point advance for the S&P 500 to 2,733.29, while the Nasdaq Composite was 0.64% or 47.50 points up at 7,425.96.
Alongside stocks, the yield on the benchmark two-year US Treasury note was four basis points lower to 2.53%, while that on the 10-year note slipped back below the 3.0% mark, after a seven basis point retreat for the session.
According to the minutes of the 2 May meeting of the Federal Open Market Committee, rate-setters expected to raise rates again in June.
However, they also emphasised the "symmetric" nature of their inflation target, such that gains in prices modestly above it are not a worry - after years of consistently weak readings - so long as policy is consistent with the medium-term 2% target.
"Participants are watching the wage numbers closely but evidence of a broad acceleration remains scant. In short, then, the FOMC still thinks it has the luxury of time to see the full impact of the fiscal easing and the uncertainty over foreign trade, so a shift to a more aggressive stance - dropping "roughly balanced” risks, for example - is still some way off," explained Ian Shepherdson, chief economist at Pantheon Macroeconomics.