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FTSE 100 closes lower as G20 summit begins and trade worries continue; housebuilders fall

The premier index of UK shares finished down nearly 59 points at 6,980. Mid-cap cousin FTSE 250 shed over 128 points at 18,480.
skyline
UK stocks closed lower on Friday
  • FTSE 100 closes down around 59

  •  US stocks mixed 

  • May talks Brexit in Buenos Aires

FTSE 100 closed lower in Friday, as did the FTSE 250, as trade worries weighed and the  G20 Summit kicked off in Buenos Aires.

The premier index of UK shares finished down nearly 59 points at 6,980.

Mid-cap cousin FTSE 250 shed  over 128 points at 18,480.

Fiona Cincotta, analyst at City Index, said: "Dragged lower by housebuilders and miners, not even a weaker pound could entice the FTSE back over 7000."

She added: "The heavy weighted miners were taking a beating after manufacturing data from China overnight highlighted the growing impact of the US trade war.

"Chinese manufacturing activity dropped to the lowest level in 2 years with a PMI of just 50, whereby 50 separate contraction from expansion."

Top loser on Footsie was NMC Health (LON:NMC), the healthcare chain, which lost 6.89% to 3,298p.

Meanwhile, news that the housing market was struggling to pick itself off a five year low, sent home builder shares lower.

Taylor Wimpey PLC (LON:TW. dropped 3.59% to 133.57p, Persimmon PLC (LON:PSN) shed 3.33% to 1,900p, while Barratt Developments plc (LON:BDEV) fell 2.97% to 458.64p.

3.05pm: Footsie lower 

Investors continued to sell down UK equities in late afternoon action, but US stocks were mixed as trading warmed up on Wall Street.

The FTSE 100 fell 45 points, or 0.6%, to 6,994, and was likely to finish November with a 1.9% decline. 

The FTSE 250 index of mid-cap shares also fell, by 111 points to 18,491.

At the same time, the Dow Jones Industrial Average dropped 25 points to 25,306 while the S&P 500 and the Nasdaq Composite were each up by 1 point. 

The Trump-Xi dinner this weekend is firmly in focus but the Brexit process is also the radar at the G-20 summit. UK lawmakers next week will start debating on the Brexit deal recently brokered by UK Prime Minister Theresa May and European Union negotiators. 

European Council President Donald Tusk said in Buenos Aires that the only viable Brexit agreement is the one crafted by May and the bloc. 

Among individual shares, Babcock International Group PLC (LON:BAB) fell 1% to 575.40p even as engineering contractor said it’s been awarded a 10-year pact to provide aerial-firefighting services in Canada that's worth around £100mln. 

1.55pm: China-exposed shares fall 

The FTSE 100 was struggling Friday afternoon, and US stocks looked primed to open with losses as equity investors cast a nervous eye toward a trade discussion set between the leaders of the world’s largest economies.

The UK’s blue-chips gauge fell 40 points, or 0.6%, to 6,998, but was off an intraday low of 6,978.96.

US stock futures pulled back, with those of the Dow Jones Industrial Average down 74 points. S&P 500 and Nasdaq-100 futures each fell 0.2%.

Futures did come off lows Friday after U.S. Trade Representative Robert Lighthizer said he anticipates “success” at a meeting between Trump and China's Xi. Lighthizer was speaking to reporters on the sidelines at the G-20 summit in Buenos Aires. Trump and Xi are slated to have dinner at the summit. 

“Chinese PMI data released overnight will do little to ease the conversation between Presidents Xi and Trump in Argentina,” as the manufacturing reading of 50 was the lowest in more than two years, said James Hughes, chief market analyst at AxiTrader. “This number is further illustration of the damaging global effect of US trade policies and as the world economy slows, failure to be a little more accommodative here has real potential to tip stocks over the cliff edge.”

In London trade, shares of companies with significant exposure to China were down. Luxury-goods seller Burberry Group PLC (LON: BRBY) fell 2.9% to 1,776, lender HSBC Holdings PLC (LON: HSBA) and miner Antofagasta Holdings PLC (LON:ANTO) fell 4.5% to 798.60.

12.45pm: FTSE 100 and Germany's DAX are struggling 

The FTSE 100 continued to fall early Friday afternoon, declining along with European stocks as weak economic data stoked global growth concerns. 

The UK’s large-cap index dropped 59 points, or 0.9%, to 6,979, eating away at its potential weekly gain of 0.4%, as mining and homebuilding shares slumped. The mid-cap FTSE 250 index slid 111 points to 18,496.

The pullback in UK shares weighed on the Stoxx Europe 600, which fell 0.5%. In Frankfurt, the DAX 30 gave up 76 points at 11,225. Data on Friday showed German retail sales declined 0.3% in October, confounding expectations for a 0.4% increase.

The “poor eurozone data continues with yet another drop in German retail sales, while in the US yesterday’s pending home sales drop provides another indication that US data is beginning to follow the downward path seen in other parts of the global economy,” said Chris Beauchamp, chief market analyst at IG.  

A fall in China’s Purchasing Managers' Index in November and the eurozone’s slowing rate of inflation in November, to 2.0%, added to Friday’s pile of soft data. 

Hefty import tariffs levied by the US and China against each other are also contributing to global growth worries. The US's Trump and China's Xi Jingping will discuss their trade fight at this weekend's G-20 summit.  

Around the market, pharmaceutical firm BTG PLC (LON:BTG) slipped 0.3% to 832.50p following a downgrade to ‘hold’ from ‘buy’ at Jefferies, which doesn’t believe another company will top Boston Scientific Corp.’s (NYSE:BSX)  offer of £3.3bn to buy BTG.

Bioquell PLC (LON:BQE) shares leapt 37% to 575.85p on the FTSE AllSmall index as US hygiene giant Ecolab Inc (NYSE:ECL) plans to buy the infection-control company in a deal valued at £140.51mln. 

READ: Bioquell agrees to £140mln buyout by Ecolab

10:25am: Footsie's loss widens 

The FTSE 100 fell further Friday morning, with losses for homebuilders contributing toward deepening the benchmark’s loss for the month of November.

The large-cap gauge slumped 49 points, or 0.7%, to 6,991.

Early Friday, Nationwide said its house price index inched up by 0.3% in November on a month-over-month basis. It also said price growth expanded by 1.9% on an annual basis, from 1.6% in October when that was the lowest rate since May 2013. The annual price growth reading for November was “relatively subdued,” said Nationwide.

“Housing market activity continues to struggle to gain any real momentum,” even as the Bank of England recently reported that mortgage approvals for house purchases rose to a 9-month high of 67,086 in October, said Howard Archer, chief economic advisor to the EY ITEM Club.  He said mortgage approvals have essentially been locked in a range of 63,000 to 68,000 for the past two years.

“We suspect that the housing market will remain stuck in low gear over the coming months,” with varying performances across regions, Archer added. “If the UK leaves the EU in March without a Brexit “deal”, house prices may fall modestly in 2019.”

Among homebuilder shares, Taylor Wimpey PLC (LON:TW) dropped 2.1% to 135.55p, Persimmon PLC (LON:PSN) shed 1.7% to 1,932.50p, and Barratt Developments (LON:BDEV) fell 2.4% to 461.30p. On the FTSE 250, Crest Nicholson Holdings PLC (LON:CRST) declined 2.7% to 344.60p.

For the week, the FTSE 100 was on course to rise 0.5%. But it was poised to fall more than 1% in November.

In other UK market moves, Sage Group PLC (LON:SGE) fell 2.6% to 590.00p after Goldman Sachs downgraded the FTSE 100-listed enterprise software maker to ‘neutral’ from ‘buy’.

Shares in Earthport PLC (LON:EPO) rose 3.1% to 6.38p after the global payments specialist posted a 5.3% rise in full-year revenue despite a “challenging” year for the business.

READ: Earthport posts revenue growth despite 'challenging year'

8.45am: FTSE 100 falls in early action 

The FTSE 100 declined as trading opened Friday, with some mining shares losing ground following downbeat Chinese economic data, figures that arrived as investors wait to see if China and the US can resolve their trade dispute.

The benchmark of blue-chips fell 31 points, or 0.4%, to 7,008, and the FTSE 250 mid-cap index dropped 57 points to 18,552.

Miners were among decliners on the FTSE 100 after China’s official gauge of factory growth unexpectedly fell in November as new orders declined.

The report “puts even more pressure on President Xi Jinping to try and move in the right direction with Trump in Buenos Aires, something that seems like a huge ask given the latter’s bellicose rhetoric this week,” said Connor Campbell, financial analyst at Spreadex.

Mining stocks can be sensitive to developments in China, the world’s largest buyer of copper and a major consumer of industrial and precious metals. Copper miner Antofagasta Holdings PLC (LON:ANTO) fell 1.4% to 824.30p, Anglo American PLC (LON:AAL) gave up 1.4% to 1,588p, and Glencore PLC (LON:GLEN) shed 1.1%.

Trump and Chinese President Xi are set to meet Saturday evening in Argentina, where the G-20 summit is getting underway.  

China’s Purchasing Managers' Index fell to 50 in November, down from 50.2 in October. The 50-level suggests neither growth nor contraction in activity.

Proactive news headlines:

The first pre-clinical data for Redx Pharma PLC’s (LON:REDX) RXC006 drug candidate has suggested that the compound has “great potential” as a fibrosis treatment.

Local government officials have said Active Energy PLC’s (LON:AEG) Canadian forestry operations will help to revitalise the sector in Newfoundland and Labrador. Earlier this week, the Ministry of Fisheries and Land Resources of the Crown Province of Newfoundland and Labrador awarded two five-year commercial timber to Active’s Timberlands subsidiary.

Live Company Group PLC’s (LON:LVCG) touring subsidiary, Bricklive Touring Limited (BTL), has inked a lease agreement with a South Korean firm for its Mythical Beasts touring assets.

Providence Resources PLC (LON:PVR) has revealed that a planned offshore work programme for the Barryroe field has been delayed by a dispute between the Irish authorities and an environmental group. The company, in a stock market statement, told investors that the Barryroe partners have decided voluntarily to not act on consents granted for a well site survey, which had been due to get underway before the end of 2018.

Pan African Resources PLC (LON:PAF) expects to complete a definitive feasibility study for the Royal Sheba project at flagship Barberton Mines in February after exploration results exceeded expectations. 

Sareum Holdings PLC (LON:SAR) shares were in demand on Friday morning after Sierra Oncology, the US firm which has licensed Sareum’s SRA737 checkpoint kinase 1 (Chk1) inhibitor candidate. Chk1 controls a cancer cell's response to DNA damage, which could be caused by the disease itself or intentionally caused by chemotherapy or radiotherapy.

BlueRock Diamonds PLC (LON:BRD) has disclosed a further claim against the company by its former chief executive Riaan Visser, which the firm said legal advice says has “no merit” and it intends to defend “vigorously”. The AIM-listed diamond mining company, which owns and operates the Kareevlei Diamond Mine in the Kimberley region of South Africa, said Visser has submitted a claim for 975,000 rand (approximately £55,000) in relation to the use of a generator in 2016.

Galantas Gold Corp (LON:GAL) has received subscription agreements for a private placing that will see it secure £4mln in funds to fuel development of its Omagh gold mine in Northern Ireland.

Metal Tiger PLC (LON:MTR) has doubled its exploration acreage in the Kalahari Copper Belt in Botswana. An earn-in agreement has been signed with Resource Exploration and Development (RED) over five recently granted exploration licences covering 4,661sq km.

Metal Tiger PLC (LON:MTR) also said it expects to resume operations in Thailand following the recruitment of the final six members of the country’s new Mineral Committee. Exploration effectively came to a halt in 2017 while a new Minerals Act was introduced.

Vast Resources PLC (LON:VAST) has reported a solid third quarter for its Pickstone-Peerless gold mine in Zimbabwe with tonnes mined and milled ahead of the record achieved in the last three-month period.

Mosman Oil And Gas Ltd (LON:MSMN) told investors it expects to see results from the Stanley-2 well during the month of December. The junior oil company, in a stock market statement, said its contracted rig is ‘in the area’, and, that the drilling will start for Stanley-2 once present operations are complete for another operator’s project.

Eland Oil & Gas PLC (LON:ELA) on Friday confirmed the refinancing of its reserve-based lending facility. A new US$75mln facility has a five year maturity and it initially carries interest at LIBOR plus 7.5%.

Range Resources Limited (LON:RRL) has published an updated company presentation that can be accessed at: https://www.asx.com.au/asxpdf/20181130/pdf/440vq9dlldf0k9.pdf

Thor Mining PLC (LON:THR) (ASX:THR) said the presentation given to shareholders at the Annual General Meeting of the Company held on 28 November 2018 is available on the company's website.

6.45am: Footsie set for opening loss 

The FTSE 100 looks to close out the month with a whimper rather than a bang as a lower open is expected for the last day of November.

Spread-betting firm IG is expecting the FTSE 100 to open around 19 points lower after finishing up 34 points at 7,038 on Thursday.

The cautious atmosphere comes ahead of the G20 summit which kicks off later today in Argentina with the US-China trading relationship firmly in focus.

“The only thing you can expect is the unexpected,” said David Madden, market analyst at CMC Markets UK.

“There has been a lot of back and forth in relation to how close they are to doing a deal. Yesterday, Mr Trump declared, they are close to do an agreement, but he doesn’t ‘know if he wants to do it’. The strained trading relationship between the two economic power houses has been one of the issues hanging over global stock markets”.

Tensions over the G20 meeting between Trump and Chinese president Xi Jinping helped drive a negative finish on Wall Street yesterday, with the Dow Jones Industrial Average closing around 28 points lower at 25,338, while the S&P 500 closed down 6 points at 2,737 and the Nasdaq finished 18.5 points lower at 7,273.

Traders nerves would not have been much calmed by news yesterday that Peter Navarro, an advisor to the US president with a tough stance on China, will be attending the dinner with Xi.

In Asia today, the prospect of eased US-China tensions at the weekend helped drive gains, with Japan’s Nikkei 225 up 88 points at 22,351 and Hong Kong’s Hang Seng up 98 points at 26,549.

On the currency markets, sterling was struggling, down 0.05% at US$1.278 against the dollar amid worries that Theresa May’s Brexit deal will be voted down in Parliament.

“MPs will vote on the deal on 11 December, and unless there is a swing in sentiment to back Mrs May, sterling is likely to remain under pressure” Madden said. 

Week and month end quietly

The end of the week, and of the month, will be a quiet one in terms of the financial diary.

There will be final results from international business payments processor Earthport, while furniture retailer DFS will be holding its annual general meeting (AGM).

The sofa seller has experienced a rough 12 months, reporting a slide in full-year profits as the UK’s summer heatwave caused an “exceptional downturn in market demand” in its fourth quarter.

For economic data, there will be one set from across the Atlantic with the latest Chicago Purchasing Managers Index (PMI), which is forecast to move up 0.1 points in November to 58.5.

There will also be UK data in the form of the GfK consumer confidence for November, expected to move down to -11 from -10, and Nationwide’s house price index which is forecast to show a rise of 0.1% compared to October and a 1.7% rise year-on-year.

Significant announcements expected on Friday November 30:

Finals: Earthport  PLC (LON:EPO)

AGMs: DFS Furniture PLC (LON:DFS)

Economic data: US Chicago PMI, UK GfK Consumer Confidence Index, Nationwide House Price Index

Around the markets:

  • Sterling: US$1.278, down 0.05%
  • Gold: US$1,224 an ounce, up 0.05%
  • Brent crude: US$59.7 a barrel, up 0.32%
  • Bitcoin: US$4,259, up 2.5%

City headlines:

  • Financial Times: Unilever chief executive Paul Polman will step down in January, months after he lost a fight with shareholders over moving its headquarters out of London.
  • The Daily Telegraph: Police raided Deutsche Bank’s Frankfurt headquarters on Thursday as part of a major money laundering probe.
  • The Times: Shares in Intu Properties, which owns 17 shopping centres in Britain and Europe, fell by more than 40% after a £2.9 billion takeover bid for the company was abandoned by Brookfield, the Canadian private equity group.

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