FTSE 100 in the red as miners prove a drag but hotel groups move higher

• FTSE 100 down 28 points
• Airlines and banks in demand
• Mixed start for US stocks

3.40pm: UK market remains under pressure

Leading shares continue to be mired in the red, not helped by a mixed performance on Wall Street.

The Dow Jones Industrial Average is now down 156 points or 0.46% while the S&P 500 is marginally in the red, down 0.04%. But the Nasdaq Composite has managed a 0.49% rise.

Investors are attempting to digest the Federal Reserve’s hints of interest rate rises coming sooner than expected, while US weekly jobless claims came in worse than forecast.

So the FTSE 100 is down 28.51 points or 0.4% at 7156.44, although it is off its low of 7132.

Travel firms continue to provide support on hopes that the goverment will relax some of the current restrictions, with International Consolidated Airlines PLC () up 3.18% or 6.26p at 202.9p, the leading riser in the blue chip index.

Premier Inn owner () is up 2.31% or 76p at 3366p after a positive update, which has also lifted Group PLC (), 1.41% or 72p better at 5188p.

Banks are also in demand, after the hints of higher interest rates which should boost their business. () is 2.2% or 3.9p better at 181.02p.

But miners are proving a drag as commodity prices come under pressure again, with () down 363% or 11.5p at 305.55p.

Michael Hewson at CMC Markets UK said: « It’s hard to escape the feeling that today’s weakness seems a little bit of an overreaction given that even allowing for the fact the Federal Reserve has potentially shifted its timeline, they are still buying $120bn of bonds on a monthly basis, though this number is likely to start reducing gradually as we head towards the end of the year…

« The FTSE100 is the worst performer [among European markets] largely as a consequence of underperformance in the basic resource sector where a stronger US dollar is weighing on commodity prices. » 

3pm: Proactive North America headlines:

Ltd () () (FRA:31R) collaborates with University of Health Sciences Antigua to pioneer clinical development of psychedelics

GameSquare Esports Inc () () company GCN forges new commercial partnership with Crossovr Collective and The Drew League

() receives unanimous approval for a Conditional Use Permit regarding a forthcoming lithium-ion battery recycling plan

LexaGene Holdings Inc () () (FRA:5XS2) says its MiQLab diagnostic testing system can detect the pathogen that causes plague

‘s () () (FRA:6F6) portfolio company GameOn secures exclusive partnership to bring cricket prediction games to Indian entertainment app

Atlas Engineered Products Ltd () () updates on organic growth initiatives at its newest acquisition, Novum Building Components

() (OTCQX:NTTHF) (FRA:NE2) achieves 99.9% purity of battery-grade lithium carbonate at 3Q pilot plant

’s () (OTCMKTS:LMDCF) (FRA:LIMA) subsidiary unveils Ola mobile app to aide English language learners on the go

() (OTCMTKS:BABYF) (FRA:0YL) introduces plant-based protein shakes for kids

Inc () () finds a new VP in multi-faceted product expert Jolie Summers

Algernon Pharmaceuticals Inc () (FRA:AGW) () targets first human study for its DMT stroke program in 4Q 2021

C3 Metals Inc () (OTCMKTS:CARCF) set for geophysics surveys at Peru project to investigate deeper copper porphyry potential

KULR Technology Group Inc (NYSEAMERICAN:KULR) gets special permit from DoT authorizing transport of prototype lithium cells and batteries for commerce

() (NYSEAMERICAN:MTA) (FRA:X9C) buys royalty on part of Côté project, set to become one of Canada’s largest gold mines

2.41pm: Wall Street opens mostly flat

The main indices on Wall Street started Thursday’s session on a somewhat static note following worse than expected jobless claims data.

Shortly after the opening bell, the Dow Jones Industrial Average was up 0.03% at 34,044, while the S&P 500 inched up 0.02% to 4,224 and the Nasdaq dropped 0.07% to 14,029.

Back in London, the FTSE 100 had recovered some of its losses but was still down 15 points at 7,170 at around 2.40pm.

1.42pm: US jobless claims surprise

US weekly jobless claims have come in worse than expected.

Analysts had been expecting a fall in the number of Americans seeking unemployment benefits to 360,000 last week from 376,000 the previous week.

Instead there has been a 37,000 increase to 412,000, althugh the previous week has been revised down by 1,000 to 375,000.

This is the first rise since late April.

The four week moving average however was down 8,000 to 395,000, the lowest level since March 14 last year.

Wall Street futures have slipped a little further, with the Dow Jones Industrial Average forecast to open down 127 points or 0.36%. The S&P 500 is indicated 0.44% lower and the Nasdaq Composite down 0.57%.

 

Jobless claims higher than expected—412k vs 360k.

With the Fed now more hawkish, bad news may start to be bad news again.

— Franklin J. Parker, CFA (@FranklinParker1) June 17, 2021

The FTSE 100 is now down 42.01 points or 0.58% at 7142.94.

12.25pm: US markets unsettled by Fed comments

Wall Street is expected to open lower after the US Federal Reserve last night revealed itself to be more hawkish on interest rates and the strength of the economy than had been expected.

Sophie Griffiths, market analyst at Oanda, said: « The US central bank now expects two interest rate hikes in 2023, up from zero in the last meeting. Even more significantly, seven policymakers out of 17 expect at least one hike in 2022. The Fed upwardly revised its growth and inflation outlook. In short, the Federal Reserve sees the US economy recovering at a faster pace than before, warranting an acceleration towards policy normalisation. »

In the wake of the Fed meeting, the three main US indices fell back and are forecast to continue that trend today.

The Dow Jones Industrial Average is set to drop 95 points or 0.27% while the S&P 500 is expected to lose 0.31% and the Nasdaq Composite is indicated 0.48% lower.

The main data for the day is the weekly jobless claim numbers.

The number of Americans seeking unemployment benefit is forecast to keep falling, down to 360,000 last week from 376,000 the previous week.

Elsewhere CureVac BV is down 46% in pre-market trading on Nasdaq after the German pharmaceutical group revealed disappointing results for its COVID-19 vaccine. Its jab is only 47% effective, one of the worst results from any of the current crop of vaccines.

Meanwhile the FTSE 100 is off its worst levels but still down 31.58 points or 0.44% at 7153.37.

11.59am: Rolls unveils environmental plans

Aero-engine maker Rolls-Royce PLC () is going green.

It has set out its plans to help achieve a net zero carbon economy, aiming to play a leading role in what are some of the least green sectors including its key areas of aviation, shipping, and power generation.

Its plan includes « the development of new technologies, enabling an accelerated take-up of sustainable fuels and driving step-change improvements in efficiency.

« One year on from joining the UN Race to Zero campaign, we are announcing plans to make all our new products compatible with net zero by 2030, and all our products in operation compatible by 2050. These products power some of the most carbon intensive parts of the economy.

« We are also introducing short-term targets – linked to executive remuneration – to accelerate the take-up of sustainable fuels, which have a key role to play in the decarbonisation of some of our markets, especially long-haul aviation. We are already well advanced with net zero and zero carbon technologies across our Power Systems portfolio and as a result have sufficiently reliable data to be able to define a science-based interim target to reduce by 35% the lifetime emissions of new products sold by the business by 2030. »

Its shares have climbed 2.16% to 112.38p, whether that is because investors like the green credentials or – more likely – they are welcoming talk of the government easing restrictions on travel which would benefit airlines and, yes, aero-engine makers.

Meanwhile the FTSE 100 remains in the red, down 0.56% or 40.34 points at 7144.61.

10.46am: Mid-cap index reflects blue chip trends

The mid-cap FTSE 250 has fallen pretty much in line with its bigger sibling, down 0.53% at 22,498.

(The FTSE 100 is currently down 0.55% at 7145.37).

And many of the themes are much the same: miners down, financial companies and banks up.

() is down 3.75% at 164.2p as commodity prices come under pressure.

But EasyJet PLC () has jumped 4.13% to 989.6p on hopes that travel restrictions will be eased, while the hint of interest rate rises has lifted () by 3.38% to 208.2p.

() has puffed up 3.17% to 279.8p. It reported a 324% year on year rise in ticket sales in the first quarter as travel resumed following lockdown.

Chief executive Jody Ford said: « It’s very encouraging to see people returning to train travel as lockdowns and restrictions gradually ease. By the end of May we were selling more tickets than we were in the same period two years ago. »

The company came under pressure recently after the government announced plans to revamp the rail network with the launch of Great British Railways, which will have its own ticket selling service.

But Ford said: « Following the publication of Williams-Shapps white paper in May, I remain confident in Trainline’s long term growth prospects in the UK and across our international markets. Our highly rated mobile app delivers a simple, consistent and friction-free booking experience to a huge installed base, with over 37 million cumulative app downloads. »

9.48am: Potential amber list changes lift travel companies

Banks are not the only ones in demand.

Travel companies have taken off on reports that UK travellers to countries on the amber list who have had two jabs could escape having to quarantine on their return.

So with this possible boost to the holiday market, British Airways owner International Consolidated Airlines PLC () has climbed 3.29%, EasyJet PLC () is 4.08% higher and PLC () has wizzed up 2.88%.

Holiday company () has also benefitted, adding 2.98%.

But this has done little to boost the FTSE 100, which is now down 35.37 points at 7149.58 as investors digest the more hawkish tone on interest rates from the US Federal Reserve.

AJ Bell financial analyst Danni Hewson said: “The US Federal Reserve has proved a bit of an unreliable partner to the markets, promising not to raise rates too far or too fast and then suddenly announcing an acceleration in its plans on this front.

“For now investors seem to largely be taking these developments in their stride – perhaps reassured by Fed chair Jay Powell’s comments that the guidance for two interest rate hikes in 2023 should be taken with a ‘grain of salt’.

“After all, we’re still talking about something which might happen in two years’ time and plenty could change in the interim, plus the reason rate rises are moving up the agenda is an improving economic outlook, so there is positive news here too.

“However, it is a reminder that investors will eventually have to confront the reality that the current ultra-loose monetary policy won’t last forever and there were signs of volatility in the bond market off the back of the Fed’s announcement with the dollar also rising to multi-month highs.”

9.11am: Financials dominate risers

Banks are among the leading lights in a so far downbeat day for the blue chip index.

The prospect of higher interest rates after the latest hints from the US Federal Reserve may have unsettled the market in general.

But the financial institutions are likely to welcome a move away from record low borrowing costs. 

So PLC (LON:) is 2.19% or 9.6p higher at 447.65p, () is 2.08% or 3.68p better at 180.8p, PLC () has climbed 1.95% or 4p to 209.2p and PLC () has been lifted by 1.65% or 0.79p to 48.48p.

That has helped pull the FTSE 100 away from its lows although it is still in negative territory.

The leading index is down 18.71 points or 0.26% at 7166.24, having earlier fallen to 7132.

The usual Thursday ex-dividends are helping pull the market lower, with 3I  Group PLC () down 3.02% or 38p at 1220p and PLC () 2.66% or 60p lower at 2193p.

Miners continue to prove a drag after the Fed news lifted the dollar and hit commodity prices. The sector had already been under pressure this week after poor Chinese data and talk that the country will act to try and push down metal prices. () is 2.3% or 68p lower at 2895p.

8.38am: Downbeat start as US central bank springs surprise

The FTSE 100 opened in negative territory after the US Federal Reserve opened the door to earlier than expected interest rate rises and an easing of monetary support against a backdrop of rising inflation expectations.

“The dot plots of future rate hikes abruptly shifted forward en masse to 2023,” said Jeffrey Halley, analyst at ONANDA, referring to a potential hike to American base rates.

“And Fed Chairman Jerome Powell said that the time was coming for a talk about starting to talk about beginning to talk about quantitative easing tapering.”

The MSCI regional benchmark for Asia was on track for its biggest slide in a month, according to Bloomberg, while US stock futures are pointing to another down day on Wall Street.

Here in the UK, the response was muted as Footsie lost 28 points to open at 7,157.29.

The stand-out feature on the blue-chip index was Whitbread (), with the budget hotelier reporting a spike in demand following the easing of many of the UK’s lockdown restrictions. The shares were up 4.2% in the early exchanges.

“The summer staycation boom in the UK is boosting prospects for Whitbread after a year in which its estate largely stood idle,” said Richard Hunter, head of markets at Interactive Investor.

“Forward booking trends are very strong throughout the summer, especially in tourist locations, if not at airports or within central London. Improving metrics are however notable as the effects of the pandemic slowly recede.”

6.50 am: Footsie called lower 

The FTSE 100 is set to start Thursday on the back foot as traders digest raised inflation forecasts at the US Federal Reserve and the chances of interest rate hikes.

CFD firm IG Markets sees London’s blue-chip benchmark falling around 31 points, making the price 7,155 to 7,158 with just over an hour to go until the open.

Global equities broadly softer following the not-wholly-unexpected statistics and narratives coming out of the Fed, which last night voted unanimously to keep rates at zero and maintain its current pace of bond-buying stimulus.

The Fed has, however, increasingly talked about inflation and guided expectations towards a change of tack in terms of policy in the coming months.

Berenberg bank, in a note, highlighted that the Fed is clearly establishing the groundwork for eventually normalizing its monetary policy.

“The Fed continues to assert that the rise in inflation is temporary,” Berenberg’s chief economist Mickey Levy said.

“If the Fed’s aggressive monetary policies and unprecedented fiscal stimulus generate sustained strong growth, as the Fed forecasts, it seems likely inflation will remain materially above 2%.  The Fed is side-stepping those risks and conducting monetary policy based on its baseline forecast. 

“We continue to expect later this summer or early Fall the Fed will announce a gradual taper program that would begin in early 2022.  That would be consistent with its new interest rate projections.”

Last night on Wall Street the Dow Jones fell 265 points or 0.77% to close at 34,033.

The S&P 500 slipped 0.54% to finish the session at 4,223 and the Nasdaq moved 0.24% lower to 14,039.

Meanwhile, the small-cap focussed Russell 2000 index lost 0.23% to 2,314.

In Asia, Japan’s Nikkei was sliding slightly more than 1% to 28,991 whilst Hong Kong’s Hang Seng was up a little, rising 0.12% to 28,471. The Shanghai Composite was only a sliver lower at 3,514.

Looking the session ahead, London’s City diary features notable names such as Premier Inn owner ‘s (), Halfords PLC (), (), and   PLC ().

Around the markets

The pound: US$1.4003, up 0.11%

Gold: US$1,817 per ounce, down 0.03%

Silver: US$27.06 per ounce, down0.42%

Brent crude: US$74.22 per barrel, up 0.3%

WTI crude: US$71.91 per barrel, down 0.29%

Bitcoin: US$38,778, down 3.96

6.50am: Early Markets – Asia / Australia

Stocks in the Asia-Pacific region were mostly lower on Thursday as Australia’s employment increased by 115,000 people in May compare to April, far higher than the 30,000 increase expected by analysts in a Reuters poll.

The Shanghai Composite in China slipped 0.10% while Hong Kong’s Hang Seng index rose 0.10%

In Japan, the Nikkei 225 slumped 1.04% and South Korea’s Kospi fell 0.38%.

Shares in Australia dipped, with the S&P/ASX 200 trading 0.40% lower.

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Proactive Australia news:

() has revealed significant results from auger drilling at the King of The West geophysical target within the Kalgoorlie Project, defining several new drilling targets.

Triangle Energy (Global) Ltd () (FRA:WMOA) has received firm commitments for $10 million in a placement to new and existing sophisticated, institutional and professional investors.

() has major drilling programs underway on all four of its projects in the prolific Paterson Province of Western Australia.

() has entered two separate binding agreements with Global Lithium Ltd () and Mercury Resources Group Pty Ltd to dispose of its Pilbara exploration tenure for a total cash consideration of $550,000 – with a trailing royalty on certain of the tenements.

() () (FRA:B9S) has begun a ‘green’ hydrogen study, the first of several initiatives being considered as part of plans to develop a zero-carbon mining operation and downstream processing facility at the flagship Ta Khoa Nickel-Copper-PGE Project in Vietnam.

() has identified a large intrusion-related gold system through further high-grade results from reverse circulation (RC) holes at Mulga Bill prospect within the Side Well Gold Project in Western Australia.

() has received further encouraging results from Bankan Gold Project in Guinea with eight reverse circulation (RC) holes and one diamond drill (DD) hole for a total of 1,182 metres producing broad mineralised intersections.

() () (FRA:MA3) is nearly finished phase one of its high-resolution heli-mag survey over the Cape Ray Gold Project that has added to the Canadian project’s high-grade potential.

‘s () positive pre-feasibility study (PFS) outlines the technical and financial payoff involved with bringing its Fountain Head gold and Hayes Creek gold-silver-zinc projects into production.

() and Firefly Resources Ltd (ASX:FFR) have entered into a binding scheme implementation deed that will see the two companies merge by way of a scheme of arrangement.