Market buzz: Miners jump on sanctions concerns, nickel and aluminium fly

Triggering the move were sharp gains in metals prices, amid ongoing concerns around possible fresh sanctions being placed on outfits with links to Russia and amid short-covering on the back of more sharp gains in prices themselves.

The focus was on nickel, with three-month LME futures for the base metal ending the session at $15,275 per metric tonne, versus a Wednesday close well below that level, at $14,300.

According to some market commentary, the concern was that Norilsk Nickel might be next firm to fall afoul of the US administration.

Aluminium put in another strong showing alongside, jumping from $2,409 per tonne at the open to finish at $2,537 per tonne, with prices having jumped by roughly a quarter over the past ten days.

"Fears of further sanctions remain elevated, though according to official Russian news sources the Russian US embassy has been notified that there were no immediate plans to impose further tariffs on Russia," said analysts at Sucden Financial.

Three-month LME copper ended at $7,022 versus a prior day close at $6,877.

1604: The White House's budget director, Mick Mulvaney, has reportedly said the Trump administration is working on a government-wide reorganisation.

1245: Analysts at HSBC have bumped up their forecasts for base and precious metals in 2018.

"The US-China trade dispute could shift from rhetoric and trade measures of limited scope into an expanding tit-for-tat sequence of proposed tariff increases. This poses risks to global growth and commodity demand, should these trade policy skirmishes escalate into a global trade war.

"Despite these risks, our HSBC economists expect China to call for a negotiated outcome to the trade dispute, and its continued focus on supply and environmental reforms will be a stabilising force for commodity markets."

1225: Citi downgrades US-based Philip Morris from 'buy' to 'neutral', says JUUl e-cigarettes are starting to "disrupt" the country's cigarette industry, with the company expected to report a 6% drop in underlying volumes in Q1.

"This is negative for BAT and Imperial as well. BAT gets 42% of operating from the U.S.; Imperial 26%," analysts Adam Spielman, Jemima Benstead and Ravi Sharma say.

1155: Micro Focus is the worst performer on the FTSE 100 as IBM saw its shares slump in pre-market trading after US tech giant's first-quarter margins missed forecasts.

Although IBM's profit and revenue were ahead of expectations, its adjusted gross profit margin declined to 43.7% from 44.5% the year before, a drop the group attributed to significant one-time charges.

1141: Andrew Sentance, former external member of the MPC during an interesting period of Oct 2006-May 2011 and now a senior economic adviser at PwC, said there remains a "very strong case" for a May hike in interest rates to 0.75%.

"Though the impact of a weakened pound appears to be dropping out of the inflation numbers, three other factors are likely to exert an offsetting upward pressure on the pace of price increases. Productivity growth remains sluggish, with GDP rising not much above the rate of employment growth. Wage increases are also picking up - and could easily reach 3%per annum in the second half of this year.

"In addition, a buoyant global economy is likely to continue to push up food and energy prices, with the oil price now already above $70/barrel.

"The Bank of England should not therefore treat this latest fallback in inflation as a dovish signal for interest rate policy. The MPC’s approach has normally been to look through short-term fluctuations and focus on the longer term influences on the inflation outlook. With unemployment at its lowest level since the mid-1970s, continued UK economic growth, a strong global economy, and inflation likely to remain above-target, there is still a very strong case for a rise in interest rates to 0.75% at next month’s MPC meeting.”

Perhaps worth noting that Sentance was at the MPC when in July 2007 the committee voted for a hike (to 5.75%) despite CPI inflation recording three successive falls from 3.1% in March 2007 to 2.8% in April, to 2.5% in May and to 2.4% in June 2007. That info from Prof Costa Milas at the University of Liverpool, who reckons the Committee would be wrong to hike.

1118: London property prices have registered their first year-on-year fall since 2009 when the economy was in recession after the financial crisis. House prices in London dropped 1% in the year to February – the first year-on-year decline since September 2009 when prices were down 3.2% from a year earlier, the ONS reported among its prices update earlier.

1117: The FTSE is off its earlier peak, lifted by the tumbling pound on the back of new uncertainty over the BoE's interest rates path. The index is up 50 points or 0.7% to 7,276.33.

Analyst Craig Erlam at Oanda has some thoughts on the UK inflation data throwing a spanner in the works for the MPC, which has for months been preparing markets for an interest rate hike, most likely in May.

"Just as it looked as though everything was falling into line for a rate hike – 43-year low in unemployment, record high employment, wages rising and inflation well above target – the data today has cast a shadow of doubt over it. If inflation is naturally trending back towards target, wage growth is only moderate and Brexit is causing uncertainty for the economic outlook of the UK, can the central bank afford to wait until later in the year before hiking?"

Erlam thinks waiting would make sense, but wondered whether policy makers will feel somewhat compelled to raise in May having spent so long hinting at doing so, and could therefore compensate for this by stressing that another this year is unlikely.

On the eurozone, he added: "While the lower inflation numbers may not get in the way of them ending the QE program, it could cause delays in the start of rate hikes next year as it will act as evidence that there is still plenty of slack in the labour market."

1047: The EY Item Club's economic adviser, Howard Archer, believes the Bank of England is "still more likely than not to hike interest rates to 0.75% in May given that the MPC is keen to gradually normalise monetary policy, and will likely still see the recent weakness in the economy as largely weather-related".

"However, it is now looking highly questionable as to whether there will be any further interest rate increases in 2018 after the probable move in May."

1005: Consumer prices in the eurozone also undershot expectations. Annual inflation increased to 1.3% from 1.1% in February, slightly below the initial estimate of 1.4% and March 2017's rate of 1.5%. It also marked the lowest level since December 2016.

0955: David Cheetham, chief market analyst at XTB said: "Whilst the reading is still comfortably above the 2% mandate for the Bank of England it could well lead to a dovish move amongst rate-setters.

"The bank has been widely expected to hike rates again next month, as inflation remains stubbornly above target, but the latest data suggest that a high-water mark may have been reached. Therefore, the bank could well now decide to stand pat in May and await further developments as it appears that inflation could now be starting to move in the right direction."

CPI's slide, said Paul Hollingsworth at Capital Economics, will make a May hike from the BoE's monetary policy committee "a close-run thing", though he thinks Carney and co will hike Bank rate to 0.75%.

0953: Across the UK house prices rose at an annual rate of 4.4% in February, down from 4.7% growth in January and lower than expectations for a 4.7% increase in the year to February. This is also from the ONS.

0940: The pound is tumbling as UK CPI eased off to 2.5% year-on-year in March, according to the Office for National Statistics, down from 2.7% the month before, a level that economists expected it would remain. This is the third fall in CPI since hitting a peak of 3.1% last November. Month on month, CPI was up just 0.1%, versus the 0.3% forecast and down from the 0.4% rise in February.

Core CPI, which excludes more volatile prices such as for fuel and food, eased down to 2.3% from 2.4%, with the market having expected a slight pick-up to 2.5%.

0928: Some small cap broker titbits? Go on then. Canaccord has upgraded its recommendation on System1 Group after a reassuring trading update from the marketing services company (formerly called the much more fun BrainJuicer), which confirmed profits materially ahead of expectations due to tighter cost control, driving more modest upgrades to 2019 forecasts.

Panmure Gordon has reiterated its 'buy' rating on Animalcare after a trading update from the animal medicines group resulted in lifting revenue estimates but lowering those for margins. The broker's 365p target price still offers plenty of upside.

0855: Rio Tinto shares are up after it issued its first quarter production figures, reporting that Pilbara iron ore shipments at 80.3 million tonnes were 5% higher than the first quarter of 2017, benefitting from productivity improvements and fewer weather disruptions.

CYBG is down 6% as it expects to increase its provisions for legacy PPI costs as at 31 March by £350m, with the provision amount subject to the finalisation of its half year results for the six months ended 31 March.

This comes not long after Arnold Schwarzenegger’s animatronic image said "I'll be back" to prompt more consumers to apply for for PPI compensation a new ad campaign for the Financial Conduct Authority.

0833: Thoughts on Hammerson's volte face over the Intu takeover from Michael Hewson at CMC Markets, noting that after French shopping mall owner Klepierre pulled out of its bid for Hammerson earlier this week and that the UK company's share price was down on the back of concern about future income due to the difficult retail environment, "it can’t have escaped the notice of bigger institutional shareholders that the risks to UK retail property were starting to become much more of a concern".

"Retail businesses are already struggling with higher business rates as well as declining footfall so today’s news that Hammerson is pulling out of its £3.5bn bid for its rival Intu Properties is quite a sensible move, particularly since some bigger shareholders were expressing disquiet about the deal.

"There is also the fact that with retail profit warnings at seven year highs any deal is likely to be extremely high risk. Why double up on retail property when stores are closing and rental income is under threat. It would be akin to doubling up on a losing position, and as we know from historical precedent that rarely prompts a positive outcome."

0831: The FTSE 100 is up just over 22 points to 7,248.33. Mediclinic is the highest riser on the blue chip index.

The Swiss-South African hospitals group said it expects profits for the year to be marginally ahead of expectations, thanks to a "significant" second half improvement in its Middle East hospitals.

Bunzl is down slightly despite posting a jump in first-quarter revenue, fresh from the completion of acquisitions in the US and the Netherlands last

Bodycote is up after signing a 15-year contract with Rolls-Royce's civil aerospace business that is expected to be worth more than £160m in incremental revenues.

Price comparison website Moneysupermarket.com reported a 4% jump in first-quarter revenue and said it remains confident of meeting current market expectations.

0750: After Hammerson's volte face, Intu is understandably rather upset, to put it mildly. Intu shares down 6% to 195p and Hammerson's are up 3%, which lets you know what investors think.

The FTSE 250 group released a fairly restrained statement pointing out that in late March Hammerson said it was "fully committed" to the Intu takeover, with both companies having issued positive trading updates in April, Intu's yesterday.

Intu said it "regards as unsatisfactory" the explanations given by Hammerson's board. "The board of Intu will be meeting to consider Hammerson’s request not to convene a shareholders’ meeting to vote on the Intu transaction."

0718: The FTSE is being called around 5-6 points higher ahead of the open. Today’s big UK data is around the March CPI numbers, which are expected to come in at 2.7%, unchanged from February, though some economists see a fall to 2.6%. Core prices are also expected to fall back as well, from 2.5% to 2.4%.

Any disappointment is likely to prompt some further selling of sterling, which came off its recent high yesterday. It’s also an important day for EU CPI for March, which has been pretty lacklustre for a while now despite fairly strong economic numbers for nearly 18 months now.

0708: Melrose Industries says all outstanding conditions to its takeover offer for GKN have now been satisfied or waived, meaning the offer will become unconditional in all respects at 0800 BST tomorrow.

"Only those GKN shareholders who have validly accepted the offer by 1200 BST today will participate in the initial settlement of consideration shares. GKN Shareholders who have not accepted the offer are therefore urged to do so as soon as possible," Melrose advised.

0702: Hammerson's board says it has concluded that the proposed acquisition of rival Intu "is no longer in the best interests of shareholders" and has withdrawn its recommendation to shareholders to vote in favour of the deal. More details to come.

0700: "Strong US markets appear to be helping shore up European stocks as a series of earnings beats pushed the S&P500 and Dow to their highest levels since the 22nd March, as well as above their 50 day moving averages," says Michael Hewson at CMC Markets after a strong performance from the tech sector led by Netflix.

Overnight the Dow closed up 0.87% at 24,786.63, the S&P 500 advanced 1.07% to 2,706.39, and the Nasdaq 100 surged 2.12% to 6,816.37.

On the corporate front, Goldman Sachs lost 1.69% even after its first-quarter earnings surged 27%. Streaming television behemoth Netflix rallied 9.19% after posting its first-quarter earnings late on Monday.