FTSE 100 closes nearly 72 points lower
US stocks drop on growth concerns as Fed awaited
ASOS battered after issuing a profit warning; Boohoo suffers too
Close: Weak start to final Xmas week
The Footsie finished weaker on Monday as the unseasonal gloom continued to envelope global markets with just a week to go until Christmas, although the index managed to edge above the day’s lows as New York’s big opening drop was pared.
At the close, the FTSE 100 was down 71.93 points, or 1.1% at 6,773.24, just above the session low of 6,761.37 and well below the early high of 6,845.17.
Meanwhile on Wall Street, by London’s close, the Dow Jones Industrial Average was off 109 points, or 0.5% at 23,990, having lost nearly 300 points at open, while the broader S&P 500 index shed 0.4% and the tech-laden Nasdaq composite fell 0.3%.
Ahead of this week’s Federal Reserve monetary policy meeting, which is expected to bring another rise in US interest rates on Wednesday, investors continued to fret over economic growth worries as the Empire State showed manufacturing activity in the region grew at a much-reduced pace in December.
Chris Beauchamp, Chief Market Analyst at IG commented: “Markets will struggle to make much progress ahead of the Fed decision, but even after it there seems little to cheer investors, given slowing economic growth and the constant presence of trade wars.”
He added: “The parallels with 2015/2016 continue to mount, and include a falling oil price and a slowdown in China. Then we saw a rally into the end of the year, but the pain did not end until February. History doesn’t usually repeat itself, but at present there is no light at the end of the tunnel in sight.”
On currency markets, sterling rallied modestly from Friday’s lows against the dollar, up 0.1% to US$1.2595 but stayed flat versus the euro as prime minster Theresa May set 14 January 2019 as the new date for the House of Commons to vote on her Brexit deal, postponed from last week, although commentators think there is still little chance of it passing.
Among companies, the UK retail sector took a knock at the start of the crucial final Christmas trading week after internet fashion giant ASOS PLC (LON:ASC) saw its shares battered on the back of a profits warning, slumping 37.6% to 2,614p.
The AIM-listed group said its sales from September to November jumped by 14%, but added that there was a ‘significant deterioration’ in November.
Online peer Boohoo Group PLC (LON:BOO) also suffered, dropping 13.7% to 157.85p even though it tried to reassure investors with an upbeat trading statement.
Boohoo.com described its performance as ‘strong’ and said it registered a record Black Friday in terms of sales.
3.30pm: FTSE 100 plumbs new depths on fears over the global economy
The FTSE 100 was sleepwalking its way to a triple-digit fall as London entered the last hour of trading.
The Footsie was at its low-point for the day, down 78 points (1.14%) at 6,767.
“Equity markets in Europe are firmly in the red as investors are worried about the state of the global economy. The disappointing industrial production and retail sales figures from China on Friday are still playing on investors’ minds,” suggested David Madden at CMC Markets.
“Sentiment is sour on Wall Street as the Dow Jones and S&P 500 have fallen to multi-month lows, and both indices are in correction territory,” Madden added. “Correction territory” is defined as a fall of more than 10% from recent highs.
Sources say Corbyn WILL call for a vote of no confidence in the PM (not the govt) if she does not announce a date for a vote on her Brexit deal asap - expect the move from him in response to PM's statement at 3.30— Laura Kuenssberg (@bbclaurak) December 17, 2018
In the banking sector, Standard Chartered PLC (LON:STAN) was down 3.1% at 585.8p after announcing it is planning to spin-off its private equity business.
In intends to sell the majority of its private equity investment portfolio to funds managed by ICG Strategic Equity, which is part of Intermediate Capital Group PLC (LON:ICG); IMG was unchanged on the announcement.
2.45pm: What happened to that mixed start on Wall Street?
US markets fell out of bed with a bump, pushing the Footsie lower still.
The FTSE 100 was down 44 points (0.64%) at 6,801. In the US, the Dow Jones was 284 points (1.18%) to the worse at 23,822 while the S&P 500 was off 30 points (1.15%) at 2,570 after the Empire State index – a reading of regional industrial production – showed manufacturing activity grew at a much-reduced pace in December. The index fell 12.4 to 10.9, versus analysts expectations of a reading of 21.
In the UK, the mid-cap FTSE 250 was faring even worse than its big brother, shedding 186 points (1.05%) at 17,481, with retailers Dunelm and JD Sports, down 8.2% and 7.5% respectively, the two biggest fallers following ASOS’s shock profit warning this morning.
Travel firm Thomas Cook PLC (LON:TCG) continued on the tailspin it has been in since its profit warning on 27 November.
The shares shed another 2.1p (7.3%) today at 26.54p.
12.45am: The Footsie turns lower as attention turns Stateside to the Fed's meeting on Wednesday
With futures markets suggesting the US will open mixed, the Footsie turned lower in lunchtime trading.
The FTSE 100 was down 34 points (0.50%) at 6,811, not far off its low point for the day, as (to borrow the words of Joshua Mahony at IG) “a healthy dose of scepticism creeps into the market sentiment ahead of a week dominated by central bankers”.
“On a day devoid of any meaningful data points, traders have on eye on Wednesday’s FOMC meeting, whether the dot plot is expected to lay out the rate pathway in the wake of an easing in the hawkish tone set out by Powell & co. Hopes for further improvements to the US-China trade relationship are certainly continuing to help sentiment across certain parts of the market, with the industrials and materials segments of the commodity-heavy FTSE 100 providing the only meaningful gains thus far,” Mahony said.
If the Federal Reserve’s rate-setting meeting does not float your boat, it is unlikely the Empire Manufacturing print for December, due for release today in the US, will either.
“Some marked contraction is expected here,” said James Hughes, the chief market analyst at AXI Trader.
“Although it’s seen as a low-level reading, the absence of other data points plus the fact volumes are tailing off as we move into the weekend break could again lead to some exaggerated volatility here in the short term,” Hughes said.
“Ahead of the open, we’re calling the DOW up 54 at 24155 and the S&P up 5 at 2605,” he added.
Online gambling sites and betting shops operator GVC Holdings PLC (LON:GVC) was leading London’s top-shares index lower after a potentially damaging report in the Guardian about its Ladbrokes business.
The Guardian claims that Ladbrokes agreed to pay £1mln in hush money to the victims of a gambler who had stolen money from clients of their Dubai-based property business to feed a gambling habit.
Shares in GVC were down 6.2% at 677p, despite the announcement today of a purchase by Paul Bowtell, the company’s chief financial officer, of 100,000 shares at 732.71p a pop.
GVC CFO buys three quarter of a million pounds worth of shares— Cockney Rebel (@RebelHQ) December 17, 2018
10.55am: Retailers still suffering and it is not much better for house-builders
Housebuilders have been out of fashion for a while and it is unlikely that today’s housing report from NAEA Propertymark will change matters.
House-builders Berkeley Group Holdings PLC (LON:BKG) and Persimmon PLC (LON:PSN), down 3.1% and 2.5% respectively, were contributing to a 7 point (0.10%) fall for the Footsie at 6,838.
The number of house hunters registered per estate agent branch fell to 282 in November from 294 in October, which is the lowest number of registered buyers in November since 2012.
The supply of available housing fell by 13% for the second consecutive month; dropping from an average of 40 in October to 35 per branch, the housing report said, adding that the November supply number was the lowest recorded since April.
“Last month it was clear that uncertainty surrounding Brexit was having an impact on the sector, and this month is no different. We usually see a seasonal slow-down, but it’s unlikely that the time of year is the sole cause of today’s market conditions,” said Mark Hayward, the chief executive of NAEA Propertymark, a professional body for estate agency personnel.
“As we near the end of the year, we’d usually expect potential buyers and sellers to put their plans on hold until early next year, but it’s likely that this year we’ll just see people holding off until there’s some clarity around what the Brexit deal might look like and what it will mean for the economy,” he added.
The Footsie’s decline would be a lot more marked were it not for mining stocks, which are going well against the backdrop of a firmer gold price and a weaker dollar.
BHP Group PLC (LON:BHP), up 3.4% at 1,670.8p, was the biggest blue-chip riser with its perennial rival, Rio Tinto PLC (LON:RIO) – up 1.4% - in the bronze medal position.
In the wider market, ASOS remains the biggest faller, down 39% at 2,534p. The company, with a market capitalisation of £2bn, has seen £3bn wiped off its market value over the last year.
9.40am: Forget Black Friday - this is Blue Monday for retailers
The FTSE 100 was drifting lower, weighed down by weak retailers after the shock profit warning from ASOS.
The Footsie was down 15 (0.22%) at 6,830, with the three biggest fallers – Ocado PLC (LON:OCDO), Marks & Spencer Group PLC (LON:MKS) and Next PLC (LON:NXT) – all from the retail sector and nursing losses ranging from 3.2% to 4.1%.
Primark owner Associated British Foods PLC (LON:ABF) was not far behind them, with a loss of 2.8%.
Oilfield support services giant Wood Group PLC (LON:WG.) was down 3.1% after sector peer Hunting PLC (LON:NTG) disappointed with a trading statement.
The shares tumbled 4.9% at 488.6p after it revealed results to the end of November 2018 have remained in line with management's expectations but as previously noted in the October trading update some market softness has been observed within those businesses focussed on the US onshore.
SSE / npower merger scrapped!— Rik (@Riksmithuk) December 17, 2018
Blaming market conditions and price cap impact during period of high integration cost.
Ouch, so what will RWE do with npower now? The E.ON plan?
SSE PLC (LON:SSE) gave back 16.5p at 1,073p after it abandoned plans to merge its energy services business with Npower, saying it is no longer in the best interests of its customers, employees or shareholders.
8.25am: Glamour stock ASOS pays the price for daring to disappoint
Blue-chips got off to a subdued start although there was more carnage in the retail sector.
The FTSE 100 was down 19 points (0.47%)at 6,826 while the FTSE AIM 50 was down 24.4 (0.49%) after a profit warning from ASOS PLC (LON:ASC) wiped a third of the value off of ASOS's market capitalisation and caused collateral damage to another online retailer, Boohoo Group PLC (LON:BOO).
“If Asos is finding it tough out there, then just about every retail stock has problems,” suggested Neil Wilson at Markets.com.
Not us claimed Boohoo, which said in a brief trading update that the group’s performance remains strong and in line with expectations, with record Black Friday sales across the group.
Nevertheless, the shares tumbled 9.6% to 165.36p.
“We knew the high street was struggling due to structural shifts, but Asos slashing guidance suggests things are even worse in the run-up to Christmas than previously thought for the sector and the strife extends well beyond the high street. Still, it achieved 14% sales growth over the reported period in a very tough market – the bar was set very high for Asos,” noted Neil Wilson.
Independent retail analyst Nick Bubb noted the share price of ASOS has been under some pressure recently, “as if the City sensed that something might be amiss, but we certainly weren’t expecting the online fashion giant to issue a huge profit warning today.”
“Yet mighty ASOS has echoed Mike Ashley’s comment that November trading had been ‘unbelievably bad’ by saying that ‘Although we delivered Q1 solid growth in sales of 14%, we experienced a significant deterioration in the important trading month of November and conditions remain challenging. As a result, we have reduced our expectations for the current financial year’. UK sales growth was 19% in the 3 months to end November, but ASOS say that this was only achieved with more promotional activity than planned, and with France and Germany slowing as well and notably weak sales in the Rest of the World region (mainly Australia presumably, although that is not spelt out in the statement), ASOS has reduced its full-year sales growth guidance from 20-25% to c15% and cut its gross margin guidance to -150bps from flat,” Bubb said.
06.45AM: Modest rise expected for the Footsie at the outset
The FTSE 100 is seen starting the final full week of 2018 on the front foot, with CFD and spread-betting firm IG Markets anticipating a 14 point rise.
IG calls the London index at 6,845 to 6,849 with just over an hour to go.
It is, of course, still 2018 so certain uncertainties are never too far away from the market zeitgeist.
“After 5 consecutive weeks of loses, the prospects for the pound aren’t looking much better this week,” said Jasper Lawler, an analyst at London Capital Group.
“All things Brexit will continue driving movement in the pound. With Theresa May under increasing pressure to end the Brexit deadlock, currency markets are only too aware that things could quickly spiral towards a no deal or even a general election.
“Suggestions of a second referendum are growing in volume as an increasing number of senior minister’s view this as the only way out of the current impasse, whilst avoiding a hard no deal Brexit.”
Asian equity markets have made a mostly positive start to the week.
Japan’s Nikkei was up 132 points or 0.62% at 21,506, while Hong Kong’s Hang Seng edged 5 points or 0.019% higher and the Shanghai Composite index was just a few points lower.
Around the markets
Pound: US$1.2584, up 0.01%
Gold: SU$1,237, up 0.08%
Oil: US$60.23, down 0.08%
Bitcoin: US$3,214, down 0.66%
Proactive news headlines
A US healthcare entrepreneur is set to take a large stake in Summit Therapeutics PLC (LON:SUMM) after agreeing to pump US$25mln into the antibiotics specialist. In a separate statement, Summit confirmed chief financial officer Erik Ostrowski is to step down from his role at the end of the month to pursue another opportunity.
Plexus Holdings PLC (LON:POS) is to acquire a 49% stake in precision engineering business Kincardine Manufacturing Services for £735,000.
Concepta PLC (LON:CPT) has successfully launched in the UK its myLotus testing product for women’s fertility. Feedback from early users and fertility bloggers has been very positive, Concepta said.
Circle Property PLC (LON:CRC) has reported an increase in pre-tax profits for the first half as its net asset value (NAV) was lifted by around 30%.
BlueJay Mining PLC (LON:JAY) has upgraded the resource for its Dundas Ilmenite project in Greenland.
OptiBiotix Health PLC (LON:OPTI) has appointed Fred Narbel as the new managing director of its prebiotics division; home to its SweetBiotix, OptiBiotic and microbiome modulating technology platforms.
Investment company Kazera Global PLC (LON:KZG) remains excited by the progress of African Tantalum (Aftan), in which it has a stake, and will continue to seek out other potential customers for Aftan.
Jubilee Metals Group PLC (LON:JLP) has begun the commissioning of fine chrome operations at its PlatCro and DCM projects in South Africa.
Physiomics PLC (LON:PYC) has extended its relationship with Merck KGaA by signing another lucrative contract with the multi-billion-dollar German firm.
Solo Oil Plc (LON:SOLO) managing director Dan Maling told investors he is confident that the Tanzania focused explorer will be fully funded for 2019’s planned activities. It comes as partner Aminex updated on the progress at the Ruvuma and Kiliwani North projects.
Custodian REIT PLC (LON:CREI) has purchased a Volkswagen car dealership in Loughborough which has been leased until 2038.
Anglo African Oil & Gas Plc (LON:AAOG) told investors that the TLP-103C well over the weekend encountered hydrocarbons in three targets.
88 Energy Ltd (LON:88E) is looking forward to the February spud of the Winx-1 exploration as today confirms that it has secured most permits for the project.
Speciality pharma group Alliance Pharma PLC (LON:APH) has appointed two new non-executive directors to its board.
Investment company Kazera Global PLC (LON:KZG) remains excited by the progress of African Tantalum, in which it has a stake.
Eurasia Mining PLC (LON:EUA) is to be granted an additional 71.1 sq km exploration licence at its West Kytlim open pit mine in the Ural Mountains, Russia.
Tshukudu Exploration, Metal Tiger LImited’s (LON:MTR) new joint venture in the Kalahari Copper Belt in Botswana has had all of its exploration licences renewed.
ECR Minerals PLC (LON:ECR) has raised £680,000, a sum sufficient for the junior to fund its exploration programme in Australia until the second quarter of 2020.
App monitoring platform operator appScatter Group PLC (LON:APPS) has agreed to buy digital security firm Abilott Limited for up to £2.245mln.
Savannah Resources PLC (LON:SAV) said drilling at the Grandao and Pinheiro deposits within its Mina do Barroso project in Portugal has returned a series of significant lithium intersections.
Avacta Group PLC (LON:AVCT) is hosting a science day in February, which will focus on the “rapidly changing nature of oncology treatment being brought about by immunotherapies”. r
Trading update: Hunting PLC (LON:HTG)
Finals: APC Technology Group PLC (LON:APC)
Economic data: UK CBI industrial trends survey; US NAHB housing market index; NY Empire State manufacturing survey
Business news headlines
Laura Ashley to close 40 UK stores – BBC News
Restaurant closures at 'epidemic levels' as consumer belts tighten – Sky News
Jaguar Land Rover to 'axe up to 5,000 jobs' – The Guardian
UK outsourcers at risk of financial contagion – Financial Times
HS2 chiefs accused of ‘robbing’ property owners to slash costs – The Times
Housing market: average UK asking price dips £10,000 – The Guardian
Overseas landlords retreat from UK property market – Financial Times
FCA under fire over Lloyds compensation scheme – BBC News
Company bosses face fines in crackdown on nuisance calls – Sky News
Overseas landlords retreat from UK property market – Financial Times