FTSE 100 closes 56 down
PM May pulls the plug on Brexit vote
Wall Street shares also down
FTSE 100 closed lower as Brexit chaos continues, while across the Atlantic, Wall Street shares were also seeing red as there was a dearth of corporate catalaysts.
The UK premier index finished down around 56 points at 6,721, while FTSE 250 - seen as a more UK company focused index - shed around 351 points at 17,492.
"The Brexit fiasco took yet another step into the unknown, with Theresa May choosing to postpone tomorrow’s Parliamentary vote in the face of seemingly certain defeat," noted. Joshua
Mahony, market analyst at spread better IG Index.
"The pound hit a 17-month low as uncertainty ramped up once more to push back any form of progression in the Brexit proposal."
The analyst notes that the Irish backstop has provided the biggest roadblock to support and the PM is delaying to receive assurances that it will not remain in place indefinitely.
"While Theresa May expects that such an agreement would help win over greater support for her plan, the fact is that behind much of the opposition lies a desire to shift power in a general election or new leadership bid," says Mahony.
On Wall Street, the Dow Jones Industrial Index is down around 400 points at 23,990, while the S &P 500 is off around 36. The tech heavy Nasdaq is down around 57 points at 6,911.
4pm: Footsie moves into red
The Footsie has moved back into the red, after the prime minister, Theresa May, confirmed that the parliamentary vote on Brexit had been delayed.
The FTSE 100 was down 23 (0.2%) at 6,755. The mid-cap FTSE 250 was down 1.19%, or 213 points, at 17,632.
The shares roused themselves last week on vague rumours of Chinese interest after a terrible run following a profit warning on November 27.
2.45pm: US stocks open lower
US stocks turned south at the outset, sapping some of the lift out of the Footsie’s half-hearted rally.
The FTSE 100 was up 11 at 6,789. In the US, the Dow was down 210 points at 24,175 and the S&P 500 was down 20 at 2,613.
2.00pm: FTSE 100 in wait-and-see mode ahead of May's announcement
Ahead of what is expected to be a modestly firmer start on Wall Street, the FTSE 100 was holding on to its gains.
The FTSE 100 was up 31 at 6,810.
Across the pond, the Dow Jones was tipped to open at around 24,395, up 7 points or so, while the broader-based S&P 500 was seen opening its account at around 2,634.7, up by almost a couple of points.
London’s blue-chips do not seem too fussed by the latest political machinations; quite the reverse, in fact, as many of them are likely to benefit from sterling’s tribulations on the foreign exchange markets, where the pound is proving about as popular as a bronchitis suffer standing underneath the mistletoe.
“The pound has dropped to its lowest level of the year below US$1.2660 in recent trade after reports that PM May’s key Brexit vote has been pulled,” reported David Cheetham at XTB.com.
“The move may have spared an embarrassing parliamentary defeat for the PM but it will no doubt see those calls for her to be replaced grow ever more vociferous. The negative reaction in the markets is more likely due to what it means for her position rather than the failure to win the vote - with even her staunchest supporters already highly sceptical as to whether the bill would pass - as it now seems increasingly likely that a long-touted leadership challenge will ensue.
“May is now expected to make a late dash to Brussels in a frantic bid to renegotiate the deal but her position is no doubt becoming increasingly untenable. The frontrunners to replace May as PM such as Boris and Rees-Mogg are much more likely to push for a hard Brexit and this would no doubt be negative for the pound, at least in the near term,” Cheetham said.
Away from the big-caps, Avacta Group PLC (LON:AVCT) regained its position as London’s top performer, rising 29.3% to 30p after it agreed on a development partnership and licence agreement with South Korea’s LG Group to develop Affimer therapeutics in several disease areas.
Sector peer ValiRx Plc (LON:VAL) was also wanted, rising by one-sixth to 1.4p after it reported a “statistically significant dose-dependent response” for its VAL201 treatment in a Phase I/II clinical trial regarding its effect on prostate cancer.
1.00pm: Sterling hits the skids as May bottles it
Sterling has fallen to its lowest level in 18 months on reports that prime minister Theresa May has postponed the final vote on the Brexit deal.
That’s good news for the Footsie, however, which is chock-full of international stocks that don’t mind a weak pound.
Among those driving the top-shares index 22 points higher to 6,801 were big dollar earners in the pharmaceuticals and tobacco sectors; AstraZeneca PLC (LON:AZN) was up 2.8% and GlaxoSmithKline PLC (LON:GSK) was 2.1% higher in the former sector while Imperial Brands PLC (LON:IMB) and British American Tobacco plc (LON:BATS) in the latter were up 2.9% and 2.5% respectively.
Footsie’s rise appeared to give the lie to comments from Naeem Aslam, the chief market analyst at ThinkMarkets, that the apparent decision to postpone the Brexit vote “was the last thing that you want to have as an investor”.
“Theresa May’s decision has created more chaos for the UK. Now, we are back to Square one and the re-negotiation of the current deal may never happen. The question really is: how can she renegotiate a deal when in the first place she was confident that this is the best deal that she can get? This is just ridiculous and bad for the UK’s economy , we have leaders who are playing with fire,” Aslam said.
Aslam’s analysis looks a lot more spot-on when you consider the performance of the mid-cap FTSE 250, which was down 153 points (0.86%) at 17,692. The index is considered much more representative of UK PLC and barely one-in-five index constituents were in the blue.
Among them was retirement solutions specialist Just Group PLC (LON:JUST), which shot up 22% to 99.95p after the Prudential Regulation Authority (PRA) published “Policy Statement PS31/18 Solvency II: Equity release mortgages”.
Just Group said the policy statement was a lot more friendly towards the group’s business than the consultation paper had been.
Noon: Are we going to have to go through the whole negotiation process again
The latest buzz is that tomorrow’s Brexit vote in parliament will be pulled, which seems to have perked up the Footsie.
The top-shares index was sitting in positive territory – just – at 6,780, up 2. Sterling was not reacting to happily to the prospect of the Brexit can being kicked further down the road.
The prime minister, Theresa May, is expected to make a statement today at 3.30pm.
“Money seems to be moving on the prospect that the Brexit vote will be pulled, opening up a new front of uncertainty for investors. The pound has sunk to its low of the day, giving up the 1.27 handle against the dollar amid reports that Theresa May is set to pull the meaningful vote on Brexit. If confirmed, May seems to have accepted she had no chance of winning and is seeking to save her premiership by some last minute brinkmanship. Sterling remains at the mercy of highly sensitive news flow around Brexit and this morning has been a case in point,” commented Neil Wilson, the chief market analyst at Markets.com.
“What does pulling the vote mean? The situation remains very fluid and it is hard to draw any concrete conclusions at this point.
“However, if she is pulling the vote to go back to Brussels it could suggest a renegotiation of the backstop or at least clarification. We must note that the EU has categorically said this is the only deal and it seems unlikely it would revisit.
“Alternatively, this opens up the prospect of May herself going for a second referendum, with voters asked whether they accept this deal or no deal. A complete shambles is about the only way to describe this situation and investors are right to be very cautious about UK assets,” Wilson opined.
10.30am: Calm before the storm
It may well be the calm before the storm, but the Footsie was more or less holding its own in the morning trading session.
The FTSE 100 was down 21 points (0.14%) at 6,757.
UK gross domestic product (GDP) grew by 0.4% in the three months to October 2018, driven mainly by the services sector although the production and construction sectors also made a positive contribution.
“GDP growth slowed going into the autumn after a strong summer, with a softening in services sector growth mainly due to a fall in car sales. This was offset by a strong showing from IT and accountancy,” reported Rob Kent-Smith, the head of National Accounts at the Office for National Statistics.
“Manufacturing saw no growth at all in the latest three months, mainly due to a decline in the often-erratic pharmaceutical industry. Construction, while slowing slightly, continued its recent solid performance with growth in housebuilding and infrastructure,” he added.
House-builders were off the pace after a research note from Peel Hunt contained a slew of price targets cuts and the odd downgrade.
Berkeley shares were actually 3p higher at 3,359p after the downgrade but Barratt Developments PLC (LON:BDEV) shareholders were not so lucky, with the shares off 1.8% at 454.5p after Peel Hunt downgraded to ‘add’ from ‘buy’.
9.45am: Investors proving sanguine about economic and political precipices
UK investors were proving remarkably sanguine about Chinese trade data and tomorrow’s big vote in parliament on the Brexit deal.
The FTSE 100 was down 23 at 6,754 but after the extreme market palpitations of last week that probably counts as a “could be worse” outcome.
Chinese trade data showed that the Chinese economy continued to slow in November, with weaker than expected exports and imports, which Michael Hewson, the chief market analyst at CMC Markets, suggested could indicate that the hoo-ha over tariffs “may well be starting to have an effect”.
“The resilience in imports in the lead-up to the initial start of tariffs could well have been because of an acceleration in demand, as businesses tried to beat the start date.
“More worryingly for the global economy is the decline in exports which would appear to suggest that global demand is waning, with exports to all of its main markets down from the pick-up that we saw in September and October,” Hewson opined.
In the UK, Neil Wilson at markets.com reckons it looks at present like there is no way the prime minister (PM), Theresa May, can survive.
“Once voted down we enter a new and extremely precarious period of political uncertainty that could involve in a matter of weeks a new PM, new deal, fresh General Election, and even a second referendum,” Wilson said.
Utilities, normally regarded as a safe bet in times of market stress, are among the biggest blue-chip fallers, with Centrica PLC (LON:CNA) down 3.1% at 135.3p and SSE plc (LON:SSE) down 2.6% at 1,061p, after Deutsche Bank (DB) moved its rating on the latter to ‘hold’ from ‘buy’.
DB’s new price target for SSE is 1,180p, down from 1,250p, while it has chopped its Centrica target price to 115p from 136p.
Services, maintenance and building company Interserve PLC (LON:IRV) saw its share price halved after it confirmed it is mulling a massive debt-for-equity refinancing that could see existing shareholders’ stakes materially diluted.
Given that the shares had already fallen from 95.5p at the start of the year to 24.5p on Friday, long-suffering shareholders might have greeted the dilution news with a shrug of the shoulders – they certainly seem to have turned a blind eye to Interserve’s latest news about the award of a £25mln contract – that’s almost equivalent to the company’s current market capitalisation.
The contract is from the Cwm Taf University Health Board and is part of the £36mln redevelopment of the Prince Charles Hospital in Merthyr.
8.45am: FTSE 100 starts on the back foot as investors remain wary ahead of the Brexit vote
As expected, the FTSE 100 got off on the back foot with the deteriorating state of Sino-American trade relations and Brexit souring the pre-Christmas mood.
The index of blue-chip shares fell 17 points to 6,761.04 in the first half hour of trade, a less precipitous decline than predicted by the spread-betting firms.
The shares tanked 72% after it emerged the bail-out would likely take the form of a “materially dilutive” debt for equity swap.
Dropping down to the small-caps, Avacta (LON:AVCT) provided some cheer as its shares jumped 34% after inking a deal with Korea’s LG for its affimer drug technology.
Proactive news headlines:
Minds + Machines Group Limited (LON:MMX), the top-level domain (TLD) registry company, said its initial investment into the .luxe TLD has been recouped within the first four weeks of launch.
Silence Therapeutics PLC (LON:SLN) announced on Monday that it has reached a settlement and license agreement with Alnylam Pharmaceuticals, Inc (NASDAQ: ALNY) which resolves all patent legal proceedings between the two firms.
The world’s largest producer of insulin is to use e-Therapeutics PLC’s (LON:ETX) Network-Driven Drug Discovery (NDD) platform as it looks to discover new ways of treating type-2 diabetes.
Jubilee Metals Group PLC (LON:JLP) is acquiring rights to all the chrome at the PlatCro project in South Africa, where it already controls the platinum group elements. The operation is already in production and is currently processing 75,000 tonnes of ore per month from a resource base of over 1.8mln tonnes.
Metal Tiger PLC (LON:MTR) has intersected wide zones of finely disseminated chalcocite and bornite copper mineralisation from 85 metres to 385 metres downhole a the Tshukudu exploration joint venture in Botswana.
Kibo Energy PLC (LON:KIBO) announced that its 60%-owned UK subsidiary, MAST Energy Developments Limited has secured an exclusive option for the potential acquisition of three peaking power sites totalling 31.3 megawatts (MW). The multi-asset, energy company said it has paid a nominal fee to undertake due diligence and negotiate the deal.
Range Resources Limited (LON:RRL) (ASX:RRS), the company with oil and gas projects and oilfield service businesses in Trinidad and Indonesia, announced that Yan Liu has tendered his resignation as its chief executive officer and as an executive director to allow him to focus on other business interests, effective immediately. The group said its board will consider a replacement CEO as appropriate, and added that in the interim, Zhiwei (Kerry) Gu will assume the role of executive chairman.
Solo Oil PLC (LON:SOLO) told investors it is looking forward to further updates from Tanzanian partner Aminex plc (LON:AEX) after the Kiliwani North project operator this morning confirmed the successful completion of remedial work for the production well.
Aminex plc (LON:AEX) has confirmed the successful completion of remedial work for the Kiliwani North-1 production well in Tanzania. The company, in a statement, revealed that the work had now addressed the previously reported problem with the well’s sub surface safety valve.
IronRidge Resources LTD (LON:IRR) has commenced a 3,000 metre reverse circulation drilling programme on its Cape Coast lithium portfolio in Ghana. The focus will be on the Abonko target and on the Ewoyaa project northern extension zone, where pegmatite mineralisation remains open.
Europa Metals Ltd (LON:EUZ)(ASX:EUZ) has released results of a scoping study carried out on its Toral lead-zinc-silver project in Spain.
W Resources PLC (LON:WRES) has today announced the mechanical completion of the La Parrilla crusher plant. It paves the way for commissioning of mined ore from the Spanish project during January, the company said in a stock market statement.
Alba Mineral Resources PLC (LON:ALBA) confirmed that it will be holding a shareholder update meeting and presentation followed by a Q&A session on 10 December 2018, at 6:30 pm at 1 America Square conference centre, 17 Crosswall Street, London EC3N 2LB. It said its executive chairman, George Frangeskides will host the meeting along with key members of the executive team. The group said the presentation will also be available on the company's website after the shareholder meeting.
6.20am: FTSE set to open in the red
The FTSE 100 looks set to kick off the week in the red, with fears over global trade and Brexit making an impact on sentiment.
The index of blue-chip stocks looks set to track Asia’s main markets lower, with the spread betting firms predicting it will open around 60 points lower at 6,717.11.
“Stock markets in Asia-Pacific slid following the worst week for Wall Street since March, as concerns over US-China relations remained at the fore following the arrest of a Chinese telecoms executive in Canada,” noted the Financial Times.
Back here in the UK, Theresa May is reported to be considering delaying the Commons vote on her Brexit deal in order to secure concessions from Europe that might eventually smooth its adoption.
Investors sought out gold, a haven commodity in times of market turmoil, which jumped US$2.40 to US$1,255.
A week likely to be heavy on political intrigue, backbiting and infighting looks set to be a little light on scheduled corporate news. Expected are updates from SuperDry (LON:SDRY), Sports Direct (LON:SDI) and Dixons Carphone (LON:DC.). However, the crunch period for retailers is usually after the festive season when the crucial sales count is made.
Significant announcements expected on Monday:
Economic data: UK manufacturing, industrial production; UK trade figures; UK GDP monthly estimate; UK construction output; US JOLTS job openings
Around the Markets:
- The pound was trading at US$1.2747
- Brent crude rose 32 cents to US$62.01 a barrel after the OPEC production cuts
- Financial Times
- Crossrail set to receive a further £1bn in bail-out cash
- Deloitte has fired 20 UK partners for inappropriate behaviour - chief says firm will not spare anyone involved in sexual harassment or bullying
- Deutsche Bank reports suspicious tax transactions
- Climbdowns and compromises on way to botched Brexit
- Interest payments on student loans should be scrapped to slash graduate repayments and help Britain’s controversial university funding system to survive, said Lord Willets, the scheme’s architect
- New Zealand ‘really keen’ for a trade deal post-Brexit, with conditions
- Former Autonomy boss Mike Lynch set to delay US$5bn court battle
- The embattled outsourcing firm Interserve is in rescue talks with its bankers as it attempts to convince Whitehall and the City it is not the next Carillion
- O2 is expected to receive a multimillion-pound compensation payment from technology group Ericsson over a software failure that cut off customers on Britain’s second largest mobile phone network
- BP, Chevron and ExxonMobil face a shareholder challenge to set carbon targets in line with the Paris climate agreement