FTSE 100 closes nearly 101 pts lower
BT near to deal to sell historic City HQ
Ashtead Group plc biggest Footsie laggard
FTSE 100 closed nearly 101 points lower at 6,921 as trade fears and Brexit unnerved investors.
Wall Street was closed today to mark the death of George Bush (senior), who died aged 94 an and was the 41st US President.
FTSE 250 was also down - closing around 58 points lower at 18,271.
David Madden, analyst at CMC Markets in London, said: "The sour investment sentiment today, is largely down to the severe declines the US incurred yesterday.
"Longer-dated US government bond yields fell yesterday, and that rattled confidence and increased chatter about a potential recession in the largest economy in the world."
The industrial equipment firm earns the majority of its revenue in the US, which is likely to be ten reason for the decline
3.15pm: BT closes in on sale of London HQ
The report said the deal, rumoured to be with a private buyer in Hong Kong, would rake in around £220mln with the strong price reflecting the scarcity of sizeable developments sites in the City.
The sale forms part of a wider cost-cutting initiative at BT, which is aiming to make around £1.5bn in savings which included the loss of 13,000 jobs as part of the overhaul.
The current headquarters stands on the site where Guglielmo Marconi made the first public transmission of wireless signals in 1896, with the move ending BT’s association with the site that stretches back more than a century.
The company is considering a number of options for its new home, including Canary Wharf’s Wood Wharf and Stratford’s International Quarter.
In late-afternoon trading, BT shares were down 0.1% at 260.6p while the FTSE 100 was down 77 points at 6,945.
2.27pm: Deliveroo riders lose battle for union recognition; National Grid prepares to activate UK-Belgium power link
The application for judicial review, submitted by the Independent Workers Union of Great Britain, aimed to overturn a previous ruling that confirmed that those working for the delivery company were self-employed.
The Central Arbitration Committee, which considers cases involving union recognition and collective bargaining, had rejected an application in November 2017 for IWGB to represent Deliveroo riders in North London, concluding that because riders were able to pass on, substitute, or abandon a job, they were not obliged to provide a “personal service” and therefore could not be classified as workers or employees.
In the judicial review IWGB had claimed that not allowing collective bargaining breached the human rights of Deliveroo riders under the European Convention, however this was rejected by the high court who said the riders were not in an employment relationship in the context of European human rights law.
Jason Moyer-Lee, general secretary of IWGB, said the union would appeal the ruling.
The link is part of the £600mln Nemo project developed by National Grid and Belgian grid operator Elia and will enable up to 1,000 megawatts of electricity to flow between the two countries, enough to power around 1mln homes.
In mid-afternoon trading, National Grid shares were down 0.16% at 829.3p, while the FTSE 100 was down 71 points at 6,950.
1.55pm: FCA to be taken to court over RBS investigation
City watchdog the Financial Conduct Authority (FCA), is being taken to court over its handling of an investigation into the restructuring unit of Royal Bank of Scotland Group PLC (LON:RBS), which was criticised for its treatment of small businesses during the 2008 financial crash.
Neil Mitchell, a Scottish businessman and RBS critic, filed an application for judicial review against the FCA’s decision not to sanction any executives of the unit, according to court papers seen by Reuters.
The legal action could potentially reopen a long-running saga for the bank, which has already been forced to set up a £400mln compensation scheme over the matter.
The decision seeking to be overturned in the case was taken in July when the FCA said it did not have the power to sanction any bosses involved in misconduct, arguing the restructuring unit fell outside its remit.
In mid-afternoon trading, RBS shares were up 1.9% at 221p, while the FTSE 100 was down 75 points at 6,947.
12.42pm: UK refers PayPal-iZettle merger to CMA
The UK’s Competition and Markets Authority (CMA) has said the proposed merger between payment processor PayPal Holdings Inc (NASDAQ:PYPL) and Swedish startup iZettle for an in-depth review on competition concerns.
The regulator said PayPal, which was co-founded by Tesla owner Elon Musk, had not addressed its concerns on how the US$2.2bn deal could hurt competition and potentially lead to higher prices or worse quality of service.
The deadline for the final decision is 21 May 2019.
The FTSE 100 was down 72 points at 6,949.
11.53am: FTSE 100 languishes into lunchtime; Sterling seesaws on Brexit volatility
As the morning ended the FTSE 100 had done little to recover from its opening plunge and was down around 80 points at 6,942 into lunchtime.
There was far more action for the pound however, which dipped to its lowest level of the year on Tuesday before surging upwards as the odds of the UK cancelling Brexit improved according to several investment analysts including JP Morgan.
The reassessment followed three defeats for the government on Tuesday, with an amendment passed that gave MPs more control over the Brexit process than previously.
In late morning, the currency was trading around 0.5% higher at US$1.278 against the dollar having dropped to around US$1.272 earlier this morning.
David Cheetham, chief market analyst at XTB, said the Parliamentary amendments on the Brexit bill were “clear positive for the pound as a no-deal Brexit is seen by many as the most negative outcome for sterling”.
The benefits of the EU were also being pushed after data showed the UK service sector had grown at its slowest pace in 28 months in November, according to the latest services PMI.
“Given the relative size of the sectors, the services is seen as by far the most important and the most recent figures put the level of UK growth in the final quarter of the year on track for an anaemic 0.1%” Cheetham said.
11.15am: Sterling surges as JP Morgan says 40% chance of Brexit reversal
JP Morgan has said that there is now a 40% chance of no Brexit following a string of defeats for the UK government in Parliament.
The US investment bank raised the odds of the UK calling off its exit from the bloc to 40% from 20% previously, while its estimates of a no-deal Brexit dropped to 10% from 20% and an orderly Brexit to 50% from 60%.
In a note to clients, the bank said comments from the advocate general to the European Court of Justice saying the UK could unilaterally stop Brexit as well as being able to take “a period of time of its own choosing to decide what happens next".
The shift in perceptions follow comments from the pro-Brexit International Trade Secretary Liam Fox, who told a parliamentary committee that no Brexit was now a possibility.
Sterling reacted strongly to the news, surging 0.35% higher against the dollar to US$1.276.
Meanwhile, the FTSE 100 was down 72 points at 6,950.
10.43am: Eurozone takes lead from UK as growth slows, Ryanair faces legal action
The growth of business in the eurozone in November seemed to take its lead from the UK in November as the currency bloc showed signs of a slowdown.
IHS Markit’s composite PMI for the eurozone fell to 52.7 in November from 53.1 in October, its lowest level since September 2016.
The data points to only modest GDP growth of 0.3% in the fourth quarter, with Chris Williamson at IHS saying the region was “stuck in a soft patch”.
The figures will also come as a disappointment to policy heads at the European Central Bank, which is due to end its €2.6 trillion asset purchase program in less than a month.
In other news, budget carrier Ryanair Holdings PLC (LON:RYA) is facing legal action from the UK’s Civil Aviation Authority over its failure to pay compensation to passengers affected by strikes by its staff over summer.
The regulator said the strikes were not exempt from the EU’s 261 rules on compensation and had begun enforcement action against the airline.
Investors seemed unphased, however, with Ryanair’s shares up 0.5% at 11.5p in mid-morning trading.
The FTSE 100 was down 66 points at 6,956.
9.50am: UK services sector growth drops to 28-month low in November
The UK’s services sector has slowed to its lowest growth rate in over two years according to the latest purchasing managers index (PMI).
The data from IHS Markit showed that for November services PMI fell to 50.4, down from 52.2 in October and the lowest reading since July 2016.
The data group said results from its survey had suggested that subdued business and consumer spending had held back growth in the month, with some firms citing Brexit uncertainty as a factor in delays to investment decisions.
Chris Williamson, chief business economist at IHS Markit, said that the sharp deterioration in service sector growth had left the economy “flatlining” as Brexit concerns intensified.
“Measured across services, manufacturing and construction, the survey results suggest that the pace of economic growth has stalled”.
He added that while the surveys were consistent with the 0.1% GDP growth figure for the fourth quarter, growth momentum had “been lost” since October and “risks are clearly tilted to the downside”.
The FTSE 100 was down 80 points at 6,942.
9.00am: FTSE 100 plunges on open
The FTSE 100 made good on the predictions and then some this morning, plunging 89 points to 6,933 as traders continued to fret around confusion on US-China trade relations and the fears of a potential recession.
Sterling was also taking a battering, trading at US$1.271 against the dollar as Brexit fears and three successive defeats for Theresa May’s government in Parliament yesterday sent forex traders running.
Neil Wilson, chief market analyst at Markets.com, said: “The pound is on the ropes and looks set for more falls as it seems all but certain Theresa May's government will fall. A vote of no confidence and fresh general election now seem certainties after a humiliating day in parliament. The spectre of a no deal crash out looms, but equally there is building momentum behind a second referendum”.
Wilson added that in the short-term the “worse before it gets better is the mantra for sterling”, adding that a rise above US$1.27 could bring short term gains but the upside is “well and truly capped”.
Yesterday, the UK government was found in contempt of Parliament for withholding its own legal advice on the impact of Brexit, which would now be published in full. The stinging rebuke was accompanied by a cross-party amendment to strengthen the hand of -Parliament should May's Brexit deal be voted down, which seems likely.
Proactive news headlines:
Faron Pharma (LON:FARN) thinks its Traumakine drug still has the potential to treat around a third of acute respiratory distress syndrome (ARDS) patients in Europe and North America.
Eco Atlantic Oil & Gas Ltd (LON:ECO, CVE:EOG) has confirmed that it will drill at least one exploration well offshore Guyana in 2019, with the drilling of the Jethro-Lobe prospect slated for ‘late May / early June’.
Taptica International Ltd (LON:TAP) has appointed Rivi Bloch as interim chief executive after accepting the resignation of Hagai Tal. Tal proffered his resignation as CEO after being deemed liable in a fraud case relating to the sale of another business Plimus in 2011.
Bluebird Merchant Ventures (LON:BMV) is happy with initial recovery levels of gold and silver in samples taken from the Kochang Mine in Korea. Using a simple gravity separation process, recoveries of 80% of the gold and 60% of the silver from a composite sample were recorded.
Eurasia Mining plc (LON:EUA) chief executive Christian Schaffalitzky told investors that the company is “thrilled and honoured” to have received final permission to build a mine at the Monchetundra platinum and base metal project.
PCF Group Plc (LON:PCF) hiked its final dividend by 58% after delivering record profits and meeting its key strategic objectives in its first full year as a bank. The specialist lender, which became a fully operational bank in July 2017, said pre-tax profit jumped 44% to £5.2mln in the year to 30 September 2018 from £3.6mln a year ago after receiving a banking licence led to cheaper cost of funds.
SIMEC Atlantis Energy Limited (LON:SAE) has signed an EU grant agreement which will provide the firm and its supply chain partner, Asturfeito SAU with €1mln in funding to support its turbine development programme.
Block Energy Plc (LON:BLOE) has announced a successful start to its workover programmes in Georgia, where it has now completed initial operations for the first three well renovations. The company, in a stock market statement, said it had successfully re-entered the first three nominated wells at the Norio field and that it was now ‘rigging up’ at the fourth.
Mkango Resources Ltd. (LON:KKA) (TSXV:MKA) said it has been informed that its chairman, Derek Linfield, has purchased warrants over 3,333,333 common shares at an exercise price of 6.6p per warrant for a price of 2.4p per warrant - implying a value of 9p on the underlying share. The group added that Linfield has purchased the warrants from Christopher Williams who has, at the same time, sold the balance of his holding of 3,971,970 warrants to existing common shareholders in the company also at a price of 2.4p per warrant. Following the transaction, it said Williams will not have any beneficial interest in the common shares of the company or hold any warrants in the company.
BB Healthcare Trust PLC (LON:BBH) said on Tuesday that it is intending to propose a final dividend of 2.0p per ordinary share for the financial year ended 30 November 2018, the second having paid an interim dividend of 2.0p per ordinary share in August 2018. The group added that for the financial year ending 30 November 2019, the target total dividend will be 4.85p per ordinary share, being 3.5% of its unaudited net asset value per ordinary share of 138.71p per ordinary share as at 30 November 2018, with an interim dividend of 2.425p per ordinary share to be paid in August 2019, and a final dividend of 2.425p per ordinary share to be paid in March/April 2020.
Directa Plus PLC (LON:DCTA), a producer and supplier of graphene-based products for use in consumer and industrial markets, said it will be attending and presenting with Arvind Limited, one of the world's largest denim producers, at the "Smart Talks", at the Denim Première Vision event in London on Thursday, 6 December 2018 at the Smart Square, The Old Truman Brewery, London E1.
Galantas Gold Corporation (LON:GAL) (TSXV:GAL) said, further to its announcement released on November 19, 2018, the Private Placement will be at an issue price of C$0.08625 per share rather than C$0.086, and subscriber Melquart currently holds 40,224,545 common shares, representing 19.2% of the company's total issued and outstanding common shares.
6.50am: Steep drop predicted
The FTSE 100 is expected to open steeply lower on Wednesday morning as the mixture of trade and political issues that combined to drive markets lower yesterday seemed set to continue.
Spread-betting firm IG expects the FTSE 100 to open around 70 points lower this morning after sliding 40 points yesterday to close around 7,023.
The weakness in London was partially driven by volatility in Parliament on Tuesday when the government was found in contempt for failing to publish its full legal advice involving the impact of Brexit on the country, while in the US optimism over a potential resolution to the ongoing trade dispute with China was thrown into doubt following an outburst from Trump on Twitter.
An agreement by China to reduce tariffs on US cars reported earlier this week seemingly ran into confusion over the timing of such, not helped by Trump then referring to himself as “Tariff Man”.
....I am a Tariff Man. When people or countries come in to raid the great wealth of our Nation, I want them to pay for the privilege of doing so. It will always be the best way to max out our economic power. We are right now taking in $billions in Tariffs. MAKE AMERICA RICH AGAIN— Donald J. Trump (@realDonaldTrump) December 4, 2018
There is also the rising prospect of geopolitical tensions in Europe following the ongoing Italian budget dispute and the ‘gilet jaune’ protests in Paris.
Michael Hewson, chief market analyst at CMC Markets UK, said that it was understandable that “there is a certain degree of scepticism about the direction of travel with respect to a quick solution on the differences between the US and China on trade”.
However, he added that worries of a recession seemed “a little premature” given recent US data, “however along with concerns about slowing global growth in China and Europe, along with rising geopolitical risk in Europe as well as last night’s events in the UK parliament, its perhaps not surprising that investor nerves are a little frayed”.
The US markets, however, were in full negativity mode on Tuesday, with the Dow Jones Industrial Average falling 799 points to 25,027, while the S&P 500 dropped 90 points to 2,700 and the Nasdaq fell 283 points to 7,158.
The Asian markets took their lead from Wall Street today and continued the slide, with the Japanese Nikkei 225 falling 117 points to 21,919 while Hong Kong’s Hang Seng slumped 483 points to 26,777.
On the currency markets, the pound slid 0.24% to US$1.268 against the dollar while dipping 0.05% to €1.12 against the euro amid the political turmoil as Parliament inflicted three defeats on the government ahead of the vote on Theresa May’s Brexit deal next week.
UK in focus as US markets close for Bush funeral
London will be the centre of market attention on Wednesday as Wall Street shuts up shop for the funeral of former president George HW Bush.
The mourning won’t stop a selection of UK companies reporting however, with fashion retailer Joules and European booze retailer Stock Spirits scheduled to report a trading update and final results respectively.
For economic data, there will be some news from both sides of the Atlantic with both the US and UK services PMIs.
Significant announcements expected:
Wednesday December 5:
US Markets closed for President George HW Bush's funeral
Economic data: UK services PMI; US ISM non-manufacturing; US services PMI; Fed Beige Book
Around the markets:
Sterling: US$1.268, down 0.24%
Brent Crude: US$61.14 a barrel, down 1.54%
Gold: US$1,234.5 an ounce, down 0.3%
Bitcoin: US$3,845, down 1.7%
• Financial Times: Theresa May suffered a double defeat on Tuesday after MPs found the government in contempt and backed a proposal that parliament should have a free hand to determine the Brexit deal.
• The Daily Telegraph: Mark Carney and his deputies have warned that Britain’s vital financial sector could be undermined if MPs reject the Prime Minister’s Brexit deal.
• The Times: US stocks markets tumbled last night amid fresh concerns about the strength of the US economy and the future of President Trump’s trade war with China.