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FTSE 100 showing no signs of Brexit hangover as earnings data cheers – Proactive Investors UK

  • FTSE 100 up 68 points, or 1%

  • US and China resume trade talks

  • Sterling up nearly half a cent against the US dollar

  • WPP leads the advance after new CEO unveils strategic shift

11.15am: The Footsie eyes 6,800 as earnings and employment data provides some cheer

The release of UK earnings data has given the Footsie a real boost, with the top-shares index eyeing a return to the 6,800 level.

The FTSE 100 was up 68 points, or 1.0%, at 6,789, just four points off its intra-day high.

“In ordinary times, ministers would trumpet such record employment figures and rising wages as an achievement. Not today. The febrile atmosphere in Westminster means they will pass largely unnoticed,” suggested Pawel Adrjan, an economist at the job site, Indeed.

“In any case, while wages are inching up, the rising cost of living means real progress is glacial. The average Briton’s weekly pay-packet is now just £4.50 bigger than it was last Christmas – barely the cost of a mulled wine,” Adrjan commented, presumably before popping off to watch a re-run of Scrooged.

“Nevertheless this is the best jobs report we’ve seen in a while. More people are being tempted back into the workforce, and this will come as an early Christmas present for companies struggling to recruit.

“UK employers still have 848,000 vacancies, and the ratio of unemployed people per vacancy remains at a record low.

“As a result, many employers have had to increase wages in order to poach recruits from elsewhere or broaden their search to tap into underused talent pools.

“While January traditionally provides a boost in job-seeking activity, the tightness of the labour market means recruiters will have to fight harder – and look further – for every new hire,” he added.

Nick Kilbey, a sales trader at foreign exchange trading platform operator Foenix Partners, was in a slightly cheerier mood.

“The British economy defied Brexit chaos this morning as the latest Average Earnings print beat expectations at 3.3%, confirming the strongest pay rise in a decade.

“Regardless of the positive wage growth data, it’s difficult to see how investors will ‘bid’ the local currency in the short-term following yesterday’s humiliating defeat for Prime Minister Theresa May in the House of Commons,” he added.

Sterling was actually making ground against the greenback on the foreign exchange markets, rising almost half a cent to US$1.2607.

That’s usually bad for the Footsie but the 100-share index was well in the blue, led by WPP PLC (), the marketing and advertising giant, which was up 7.5% on the back of the publication of its strategy review.

READ WPP shares jump as new boss unveils fresh strategy to turn around business

Aberdeen PLC () was holding the Footsie’s wooden spoon after RBC downgraded the investment firm to ‘Sector Perform’ from ‘Outperform’ citing a “flagging” performance and a “less secure” dividend.

The shares were down 2.9%.

10.00am: The Footsie tops out after earnings data 

Confusion continues to reign on the Brexit front but there appears to be some cheerier news relating to Sino-US trade relations.

The FTSE 100 was up 24 at 6,744 as China and the US began the latest round of trade talks.

“On the agenda are Chinese imports of agricultural products and changes to the country’s economic policies, the relatively softer issues between the two countries. The really contentious ones such as patent rights in China, intellectual property theft and the South China Sea have been held back for a different occasion, allowing the market to build some hope for a resolution,” commented Fiona Cincotta at City Index.

Closer to home, the UK unemployment rate was unchanged at 4.1% in October.

Average earnings, including bonuses, were up 3.3% year-on-year in the three months to the end of October, up from a 3.2% gain in the three months to September.

“Finally British workers’ pay is starting to claw back some of the ground it’s given up during the ‘lost decade’ since the financial crisis. After yesterday’s weaker than expected GDP figures and more Brexit uncertainty after Theresa May’s last-minute decision to abort today’s Brexit vote, today’s wage growth figures provide UK workers with a little bit of pre-Christmas cheer. The latest data show wage growth ratcheting up to 3.3% both including and excluding bonuses. This means our pay packets continue to comfortably outstrip inflation,” said Tom Stevenson, the investment director for personal investing at Fidelity International.

“However, while we have now seen wage growth rise for four consecutive months, we are still not out of the woods. With the ongoing political and economic uncertainty, the recent steps forward could be reversed. Britain’s pay growth continues to lag our main competitors since the financial crisis,” he added.

8.45am: Positive start for Footsie


The FTSE 100 got off on the front foot with the depressed pound providing a boost to the dollar earners of the top flight with the index up 37 points at 6,758.23 in the first half hour.


There is probably no bigger blue-chip beneficiary of the current disparity between the US and UK currencies than PLC (), the plant hire group, which has a big presence in the US.


Its shares were flying 6.5% higher after it said interim profits had grown 19% and that full-year earnings would be ahead of market expectations.


“Given Ashtead’s continuing meteoric rise in earnings and profit, the fact that the share price has lost a third of its value in the last three months is something of a conundrum,” said Richard Hunter, market commentator at Interactive Investor.


“On the face of it, the company is riding the wave of an economic boom, particularly in its dominant US market, where tax cuts and a healthy construction market have propelled an increase in earnings, which is largely

responsible for the improved profit figure.”


Just behind Ashtead, and up 5% early on, was the marketing and advertising conglomerate WPP (), which outlined its growth plans under new boss Mark Read.


His blueprint will see the international group shed 3,500 jobs while spending in the order of £300mln on the re-boot.


Pensions and investment group Aberdeen led the Footsie fallers with its stock off 5% after RBC Capital Markets cut its recommendation to “sector perform”, while the price target was hacked back to 260p from 400p.


It was part of a sector-wide review, in which Aviva was named RBC’s top pick. It reckons the shares are worth 540p.


Sticking with the broker changes, checked out of , the fashion retailer, which it downgraded to ‘hold’ from ‘buy’.

Proactive news headlines:

() said it was working on the “smooth and fast” transfer of the automotive business to buyer TUS International as updated on trading and said it had found a further US$10mln of cost savings.

’s () subsidiary Imaging Biometrics has had its new IB Rad Tech software platform installed at the Barrow Neurological Institute in St. Joseph’s Hospital and Medical Center in Arizona.

Mobile payments company () has launched Bango Marketplace, a new product that increases user numbers and revenues for app developers and opens new revenue streams for mobile operators.

(), the data science company delivering insights in neuroscience, has announced the resignation of chief financial officer Susan Lowther, who is leaving to pursue other business interests.

() on Tuesday said its partner company, Polarean Imaging, had raised US$4mln through a share placing. The developer of medical, life science, and technology businesses said Polerean had issued 22.3mln new shares worth 14p each.

Chariot Oil & Gas Limited () has conducted a thorough analysis of drilling cost estimates for its key prospects and remains keen to take advantage of rig rates, which currently are at historically low levels.

(LON:ECHO) has mobilised equipment that will allow it to acquire 1,200 square kilometres of three-dimensional seismic data on the Tapi Aike exploration acreage in Neuquén province, Argentina.

() has elected to extend the deadline for the final confirmation of the Strategic Development Agreement with Chinese power company SEPCOIII, which was announced in July. The extension will run for a further 4 months to 30 March 2019.

The official licence certificate for the Mochetundra project in Russia has now been delivered to (). The licence was registered with the state registry of subsoil mining licences in Moscow on Monday 10 December.

Bacanora Lithium PLC () has moved to quell speculation over its future funding.  The statement followed a webinar held by Cadence Minerals, which is an investor in Bacanora. “The company would like to reiterate that Cadence Minerals is not an insider to Bacanora and neither it nor any other shareholder is in possession of any inside information regarding a potential equity raise or any other funding matters,” Bacanora said.

(), the energy company focused on the Republic of Georgia, has signed a service agreement for the provision of downhole perforation technology. Block said conventional perforation technologies have had mixed success in Georgia so it has opted for this advanced technology, which has a proven record of significantly enhancing recovery rates.

Stobart Group Limited () said that further to the announcement of 3 December, a dividend of 1.5p per share will be paid on 31 January 2019 to shareholders on the register as at 28 December 2018, not 11 January 2019 as previously announced.

() has announced the appointment of Dr Christian Schetter as Entrepreneur in Residence (EIR). The firm noted that Schetter has over 20 years’ industry experience across the life sciences sector, and joins Arix from German immuno-oncology company Rigontec GmbH, where he was CEO for four years before its acquisition by .

Landore Resources Limited () has announced the appointment of as its nominated adviser and broker with immediate effect.

(LON:AEG) has said it is the intention of its directors to transition the company’s Nomad role from Northland to SP Angel. It added that the process has already started and, at present, the company anticipates an orderly transition of the role.

() has confirmed that the redemption of its Convertible Loan Notes occurred at the close of business on 10 December 2018. The group said that, of the £10.01mln nominal of Convertible Loan Notes outstanding, it received elections from 91% of noteholders to convert £9.13mln into a total of 11,702,811 new ordinary shares, therefore, the company is redeeming the remaining £0.88mln nominal of Convertible Loan Notes at par.

The FTSE 100 looks set to claw back some lost ground with the index of blue-chips set to ignore the falls on Asia’s main markets overnight where trade fears continue to affect sentiment.

According to the spread betting firms, the benchmark will open 42 points to the good 6,743.54 with the knock-on impact from a weaker pound expected to lift the Footsie’s dollar earners.

Overnight the pound bumped along at near recent lows with a renegotiated Brexit deal expected to be rebuffed by Brussels.

At 6.50am, sterling was changing hands for US$1.2573, which was up a smidge, though still not far off the 52-week low of US$1.2507.

“Until traders have any sense of what will happen with Brexit, they will remain extremely nervous,” said Jasper Lawler of London Capital Group. 

“Whilst the possibility of a hard Brexit remains very real, this combined with the increasing political uncertainty is turning out be a lethal mix for the pound.”

The UK currency will remain in focus with unemployment and average earnings data expected later this morning.


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