Ftse live_ footsie holds firm, pound weak as rate cut boosted by pmis _ this is money

Rally: By mid session, the FTSE 100 index was 29.2 points, or 0.4 per cent higher at 6,729.1, just below the day’s peak of 6,730.3 having recovered from an early low of 6,663.72

New York investors will have another flood of US corporate earnings to digest, including numbers from GE and American Airlines, together with the first reading for Markit’s US manufacturing PMI next week’s which will be scrutinised closely ahead of next week’s Federal Reserve policy meeting.

European markets were mixed, however, with France’s CAC 40 index up 0.2 per cent and Germany’s Dax 30 index flat despite flash July PMIs for the eurozone proving slightly better than forecast,

On currency markets, the pound fell back around 1 per cent against both the dollar and the euro at lunchtime, to $1.3103 and €1.1887 respectively, impacted by the gloomy UK PMI reports.

The earlier than usual reading of Markit’s UK PMIs showed the dominant services sector reading fall to 47.4 in July, down from 52.3 in June, marking the steepest drop since records began in 1996 and the lowest reading since March 2009. Grade 9 electricity formulas Economists had expected a much smaller fall to 49.2.

The report of a sharp drop in business activity across a broad swathe of Britain’s economy may alarm the Bank of England, which is trying to decide how aggressively it needs to act to cushion the shock of the vote to leave the EU having passed on the opportunity to cut rates this month.

David Cheetham, Market Analyst ay xtb.com, said: ‘Rather unsurprisingly, the PMI releases are negative for the pound and will ratchet up the pressure on the Bank of England to provide some stimulus measure at their next meeting a week on Thursday.’

Among equities in London, Vodafone remained a top FTSE 100 gainer, adding 2.6 per cent, or 5.8p at 230.9p after the mobile telecoms giant reiterated its outlook for its current financial year as it said it ‘continued to make good progress’ during its first quarter.

Irish construction materials company CRH was the biggest blue chip riser, up 3.8 per cent or 84p at 2,279p after saying it now expects its first half earnings to be ahead of its previous guidance due to its trading performance in the latter half of the second quarter.

And British Gas-owner Centrica was also a strong FTSE 100 gainer, up 2.1 per cent, or 5.1p to 243.1p as broker JP Morgan upgraded its rating to overweight from neutral ahead of first half results next week.

But high street retailer Marks & Spencer was the top blue chip faller, dropping 2.7 per cent, or 8.7p to 319.8p after Barclays cut its rating to underweight from equal-weight.

And easyJet extended yesterday’s falls, dropping 2.8 per cent, or 30p to 1,037p, as Investec downgraded the stock to hold from buy and cut its price target to 1,100p from 2,050p to reflect the revised outlook following the airline’s third quarter update.

10.15: The Footsie ticked higher but sterling fell back as the morning session progressed after a survey showed evidence of the first real economic damage from last month’s UK vote to leave the European Union, boosting expectations that the Bank of England will cut interest rates next month.

By mid morning, the FTSE 100 index was up 4.1 points, or 0.1 per cent at 6,704.0, recovering from the early session low of 6,663.72, and on course for weekly gains of around 0.6 per cent.

The rally came after an early edition of Markit’s UK purchasing managers’ indices showed the services sector – one of the few drivers of British economic growth recently – has been hit especially hard by the Brexit vote, with orders plunging and confidence crumbling.

Markit’s services sector PMI reading fell to 47.4 in July from 52.3 in June, marking the steepest drop since records began in 1996 and the lowest reading since March 2009. Gas 1981 Economists had expected a much smaller fall to 49.2.

Gloomy: The report of a sharp drop in business activity across a broad swathe of the UK economy may alarm the Bank of England, which is trying to decide how aggressively it needs to act to cushion the Brexit shock

The report of a sharp drop in business activity across a broad swathe of Britain’s economy may alarm the Bank of England, which is trying to decide how aggressively it needs to act to cushion the shock of the vote to leave the EU having passed on the opportunity to cut rates this month.

The BoE’s own research, published on Wednesday, along with some other surveys, had pointed to a big rise in uncertainty but a relatively limited initial drop in activity.

Ipek Ozkardeskaya, Senior Market Analyst, said: ‘The outcome has been quite dramatic as data suggested a significantly worse-than-expected contraction in both manufacturing and services sectors following UK’s decision to exit the European Union.

‘Concerns regarding the economic future may have deteriorated drastically and could further dent the appetite in UK assets and the sterling.’

On currency markets, the pound fell back against both the dollar and the euro following the PMI data, down 0.4 per cent at $1.3178 and 0.3 per cent €1.1943 respectively.

Sterling was also cautious after Philip Hammond said the new Tory government’s tax and spending policy could be ‘reset’ if the economy takes a downturn following the EU referendum result.

The new Chancellor revealed he is ready to use the Autumn Statement mini-Budget to set the economy on a different course if analysis shows the Brexit vote has had an impact.

The same broker cut its stance on two other utilities, however, with Severn Trent and SSE both downgraded to neutral from overweight. Youtube gas monkey SSE shares shed 1.1 per cent, or 18p at 1,607p, and Severn Trent lost 2p at 2,457p.

Retailer Marks & Spencer was the top FTSE 100 faller, dropping 4.7 per cent, or 15.8p to 319.6p after Barclays cut its rating to underweight from equal-weight.

Elsewhere on the high street, shares in FTSE 250-listed Home Retail Group gained 3.8 per cent, or 5.6p at 154.9p after the Competition and Markets Authority unconditionally cleared Sainsbury’s £1.2billion acquisition of the Argos owner. Gas x reviews ratings Sainsbury’s shares slipped 0.8p lower to 227.2p.

And shares in FTSE 250 gold miner Acacia Mining soared 6.1 per cent, or 36p higher to 557p as it reported a jump in first half revenues, earnings and pretax profits after the group sold more gold for a higher price and at a lower cost.

08.10: The Footsie made a cautious start to trading on the final session of a modestly positive week, tracking overnight falls by US and Asian markets with the Dow Jones retreating from record levels hit for nine consecutive sessions after some mixed US corporate earnings.

In opening deals, the FTSE 100 index was down 14.4 points, or 0.2 per cent at 6,685.5, having closed 29.10 points lower yesterday as US blue chips retreated from recent record highs in early deals.

European markets were lower, with France’s CAC 40 index and Germany’s Dax 30 index both down over 0.5 per cent after yesterday’s unchanged European Central Bank monetary policy decision.

By the close on Wall Street, the Dow Jones Industrial Average had snapped a nine-session winning streak, during which it hit consecutive record highs, weighed by disappointing results from Intel and key transportation companies.

‘Today we see a raft of numbers from Europe and the UK which start off at 08:00 UK time with Markit Services, Manufacturing and Composite PMI figures from France, followed at 08:30 with Germany releasing the same numbers and at 09:00 we see the Eurozone results.

‘At 09:30 the UK release Markit Manufacturing and Services PMI, all these figures are expected to show some decline from the previous month, with the UK’s Services PMI coming in below 50 which indicates contraction.’

On currency markets, sterling was essentially flat against both the dollar and the euro ahead of the data, trading at $1.3232 and €1.2007 respectively.

Oil prices resumed their declines today following a brief spell higher after fresh data pointed to record US stockpiles of gasoline and other oil products, when Iraqi crude exports are on the rise, heightening supply glut concerns.

VODAFONE – The world’s second-largest mobile operator reported a better-than-expected 2.2 per cent rise in first quarter organic service revenue, marking an eighth consecutive quarterly rise in its main growth measure, aided by a strong performance in Spain and Germany, and confirmed its outlook for the full year.

SPORTS DIRECT – UK lawmakers said that Mike Ashley, founder and majority shareholder of Sports Direct, must be held accountable for what they called ‘appalling’ working conditions and practices at the retailer’s shops and warehouse.