Acacia Mining yields positive trial results, Saga reports consistent growth
London open
The FTSE 100 is expected to open 24 points lower on Friday, having closed down 0.11% at 7,263.90 on Thursday.
Stocks to watch
Tanzanian gold miner Acacia Mining has yielded positive results from a trial to increase the proportion of sellable gold produced by its smallest mine in the country. Having previously intended to end gold/copper concentrate production in the second quarter of 2018 due to the export ban on this material by the Tanzanian government imposed in March, the positive results of the trial the mine has led the FTSE 250 company to decide to solely produce gold doré bars from now until the end of its life in 2020.
Specialist provider of products and services for those over 50, Saga, reported “consistent growth” of 5.5% in its underlying profit before tax for the first half on Friday, to £110.2m. The FTSE 250 company said that growth was underpinned by a 10.4% improvement in its retail broking and travel businesses. Its profit before tax for the six month period, to 31 July, was £103m, which Saga’s board said reflected costs associated with its successful refinancing and net fair value losses on derivatives.
Smiths Group reported a small decline in full year underlying revenue but 11% growth on a reported basis thanks to the weak pound and said its strategic progress set it up to return to growth next year. Underlying headline operating profit increased 3% or by 16% on a reported basis as margin expansion in all divisions was limited by increased investment.
Newspaper round-up
North Korean leader Kim Jong-un Friday mocked Donald Trump as "mentally deranged" – and warned he will make the US president "pay dearly" for threatening the destruction of his country at the United Nations. Then hours later Ri Yong Ho, the North Korean foreign minister, raised the stakes suggesting Pyongyang could consider a hydrogen bomb test on the Pacific Ocean of an unprecedented scale. - Telegraph
Donald Trump has issued a new executive order that expands US sanctions on North Korea’s shipping, banking, ports and manufacturing. Trump also claimed China’s banking system had shut down business with the country. Earlier in the day Reuters reported that China’s central bank had ordered financial institutions to implement UN sanctions rigorously after frequent complaints from Washington that Beijing was leaving open too many loopholes. - Guardian
Theresa May will call on EU leaders to be more “imaginative and creative” about Brexit in her long-awaited speech in Florence, after Michel Barnier, the EU’s chief negotiator, warned that a substantive offer to settle the UK’s bills was needed to break the deadlock in talks. The prime minister will urge her European counterparts to share her vision for building a successful new relationship between the UK and EU after Brexit, despite talks with the European commission negotiators having reached a stalemate after three rounds. - Guardian
Theresa May will today tell EU leaders that they share a “profound sense of responsibility” to forge a Brexit deal for the benefit of those who “inherit the world we leave them”. The Prime Minister will use a landmark speech in Florence to tell European negotiators and heads of state that “the eyes of the world are upon us” and that they must use imagination to make a success of “this chapter of our European history”. - Telegraph
China and Hong Kong have begun to feel the first menacing tremors from monetary tightening by the US Federal Reserve, an early warning of what may lie in store for East Asia as borrowing costs rise and dollar liquidity drains away. The Fed’s decision to start unwinding its $4.5 trillion (£3.3 trillion) balance sheet after eight years of emergency stimulus may force Asian central banks to tighten in parallel. It greatly complicates the coming task for China, shortening the window of opportunity needed to put its financial house in order. - Telegraph
US close
Stocks finished lower on Thursday, as traders tried to work out the implications of the US central bank's policy announcement on Wednesday, despite a raft of better-than-expected readings on the economy.
The Dow Jones Industrial Average closed down 0.24% at 22,359.23, the S&P 500 was off 0.3% at 2,500.60, and the Nasdaq 100 finished 0.65% softer at 5,934.91.
Overnight, the Fed stood pat on interest rates, as expected, while Chair Janet Yellen confirmed the central bank will start winding down its $4.5trn balance sheet in October and suggested that one more rate increase is likely by the end of the year.
Analysts appeared to be somewhat in agreement that the Federal Open Market Committee delivered a 'hawkish' surprise with regards to expectations for an interest rate hike in December, but a 'dovish' surprise in terms of its medium-term outlook.
In her post-meeting press conference Fed chief Janet Yellen appeared to downplay the downtrend in core inflation year-to-date and appeared to put forth an explanation for the divergence between market-pricing for Fed hikes and rate-setters' own projections.