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FTSE100 drops 40 as supermarkets struggle

Published: 16:44 30 Dec 2015 GMT

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The UK’s main index struggled to hold on to the gains made so far this week on Wednesday as supermarkets weighed heavily.

Yesterday, US giant Amazon announced it is to expand its UK Amazon Pantry service and hinted at the possibility of a future Amazon Fresh grocery service.

Joshua Mahony, at IG, said: “Ocado joined the big four supermarkets in the red today, as anxiety surrounding the potential role Amazon could have in the industry dented confidence.”

With the expansion of the UK, the entry of one of the world’s best distributors into the industry will no doubt worry the likes of Ocado and the big four.

Ocado (LON:OCDO) dropped around 3.3%, or 10p, to 315p while Sainsbury’s (LON:SBRY) lost more than 1.2% to 261p. Tesco (LON:TSCO) and Morrisons (LON:MRW) were also lower.

Oil prices didn’t help either, with a barrel of Brent crude falling 2.3% to US$36.92 while the West Texas Intermediate price dropped 2.7% to US$36.85.

The oil stocks took a hit, with BP (LON:BP.) spilling around 1.6% to 355p, while Shell (LON:RDSB) eased 13p to 1,564p.

It meant the FTSE100 ended the day 40 points, or 0.6% lower at 6,274.

In the small cap world, Webis Holdings (LON:WEB) more than doubled to 1.5p. The company said it knew of no reason for the rise in its shares, but noted that its subsidiary WatchandWager.com is in talks with the Hong Kong Jockey Club to extend the contract to provide access to the HKJC pari-mutuel pools.

Elsewhere, Moneyswap (LON:SWAP) jumped 63.4% to 0.45p after a board reshuffle.

Craig Niven, currently a non-executive director of the company, will assume the role of chairman while Yu Shu Fen, who was appointed to the board as an executive director, has been appointed as the company's chief executive officer.

Also leaping was Life Science Developments (LON:LIFE), which was up 58% to 3.3p.

The board said it is unaware of any reason that would lead to such a movement and confirms that there are no further material operational or corporate updates to report at this time

Conversely, Fitbug (LON:FITB) dropped around 21% to 0.85p. Trading in the second half is expected to show significant increases in the pre-tax losses announced at the half year primarily as a result of a challenging retail environment in the U.S.

LUNCHTIME REPORT

London’s blue-chip stocks recovered throughout the morning session, nearly back at yesterday’s close, before some profit taking at lunch sent it falling again.

Oil prices didn’t help, with a barrel of Brent crude falling 2.3% to US$36.92 while the West Texas Intermediate price dropped 2.7% to US$36.85.

Connor Campbell, at spread betting firm Spreadex, said, as a result of the fall, that “the FTSE had a battle on its hands this morning.”

The oil stocks took a hit, with BP (LON:BP.) spilling around 1.3% to 356p, while Shell (LON:RDSB) eased 5p to 1,573p.

One bright spot was the normally hefty weight of its commodity sector, which lightened by flashes of growth from the miners.

Antofagasta (LON:ANTO) led the risers, gaining almost 2.2% to 471p, while Fresnillo (LON:FRES) and Anglo American (LON:AAL) also made rare forays into the green.

Across the Eurozone, markets were down on Wednesday; the German Dax remained in the dog house, lingering in the red by around 95 points, while the French Cac40 led the European indices with a near 15 point loss.

The FTSE100 was around 30 points lower, or half a per cent, at 6,284.

On the corporate front, Mirada (LON:MIRA), shot up around  32% to 6.12p, as its interim results revealed narrowed losses and boosted sales.

Elsewhere, Crimson Tide (LON:TIDE), climbed 20% to 3.6p. The mobile enterprise group is lifted by year-end admin which, among other things, will enable the board to pay dividends in the future.

Tourism group Minoan (LON:MIN) rallied with news a presidential decree - which resembles a planning consent - for a development on the Greek island of Crete is now reaching the final stages of approval. It also triggers new options for the joint venture. Shares jumped 13% to around 7.9p.

Finally, Octagonal (LON:OCT), lifted 6.5% to just shy of 1p after a director of the wealth management group bought 7.5mln shares at 0.86p each, according to a stock market statement.

MORNING REPORT

After a solid start to the week, London’s blue-chip stocks gave back some of its gains on Wednesday.

The FTSE100 rose around 60 points on Tuesday, but was 35 points lower this morning at around 6,278.

Russ Mould, AJ Bell investment director, said: “The headline index handed back most of yesterday’s gains early on as traders seized the chance for some profit-taking on house builders following their surge but volumes remained light the run up to the New Year break.”

It wasn’t just the UK’s main index that struggled, with the German DAX falling 50 points to10,807 while the French Cac40 lost 16 points to 4,684.

Connor Campbell at spread betting firm Spreadex, said: “Kicking off the day with a warning from Christine Lagarde that global growth in 2016 would be disappointing of course didn’t help matters.

“The IMF chief pointed to the US rate hike decision and the continued slowdown in China as potential destabilisers in the New Year, helping dismiss yesterday’s cheerful trading to set a rather glum tone for the markets this Wednesday.”

On the index, the miners rebounded after slumping earlier this week.

IG’s Angus Nicholson, said: “News of copper output cuts in China and expectations for oil inventories to decline in today’s EIA data have set the scene for strong gains for materials and energy stocks in the region, as well as commodity-related currencies.”

Antofagasta (LON:ANTO) led the risers, gaining almost 1% to 465p, while Fresnillo (LON:FRES) and Anglo American (LON:AAL) also made rare forays into the green.

Of the little corporate news, Shares in Mirada (LON:MIRA) rocketed this morning as it narrowed losses and boosted sales in its interims.

The company also said the contract roll-out with South American media group Televisa was ahead of schedule, sending shares jumping 27% to 5.9p.

PRE-OPEN

The UK’s main marker looks set for a flat start to the morning, according to spread betting firm IG.

After climbing 60 points by the end of Tuesday, the FTSE100 is expected to ease back around 10 points to 6,304.

Overnight, Asian stocks performed mostly well, with Japan’s Nikkei rising 52 points to 19,034, while the Shanghai Composite nudged a couple of points.

IG’s Angus Nicholson, said: “News of copper output cuts in China and expectations for oil inventories to decline in today’s EIA data have set the scene for strong gains for materials and energy stocks in the region, as well as commodity-related currencies.”

The miners could be on the rebound, after Anglo American (LON:AAL) slid 6.3% and index heavyweight BP (LON:BP.) shed 1.4% on Tuesday.

It comes after Wall Street posted another strong finish, with the Dow Jones rising 193 points or just over 1.1% to 17,721.

The S&P 500 added about 22 points, or 1%, on Tuesday to 2,078 while the Nasdaq rose 1.3% to 5,108.

There's little on the corporate front this morning, as, it would appear, companies continue to put their feet up for the holidays.

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