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FTSE 100 registers triple-digit fall as US stock markets slide again

Last updated: 16:30 27 Dec 2018 GMT, First published: 07:00 27 Dec 2018 GMT

Santa rally
  • FTSE 100 closes down 101 points to 6,584

  • Not at this level since middle of 2016

  • Dow Jones Industrial drops more than 400 points

 

4.30pm: FTSE 100 closes more than 100 points lower

London’s blue chips rallied slightly near the close as US markets steadied but still finished a turbulent day with a triple digits decline.

At the the close, FTSE 100 was 101 points down at 6,584, though this was was above the low for the day when the Dow Jones Industrial Average saw losses of of more than 400 points shortly after it opened

FTSE100 has shed more than 5% of its value over the past month and is heading for a loss of more than 13% this year as things stand.

3.45pm: FTSE in full retreat as US markets falter

Red ink was everywhere in London as US shares gave back almost half of the record-breaking gains seen Wednesday.

Heading towards the close FTSE 100 was 125 points down at 6,560 as UK investors took fright at the 400-plus point fall by the Dow Jones Industrial Average.

London’s blue chip index had started the day higher, but that optimism quickly evaporated once Asian markets stumbled and futures pointed to heavy US falls.

FTSE 100 was last at this level in the middle of 2016.

Gold perked up on the market chaos and precious metals miners were among the few risers.

Silver and gold producer Fresnillo was top of the pile with a 3.5% gain to 864p, while the soon-to-delist gold specialist Randgold Resources PLC (LON:RRS) rose 2.5% to 6,632p.

Of the fallers, BT was unfortunate to go ex-dividend today and it topped the losers with a 5% drop to 230.1p.

2.50pm: Near triple-digit losses in London as Wall Street tumbles on open

Losses for London’s blue chip index climbed to almost 100 points as US markets retreated from their record-breaking Wednesday.

FTSE was down 98 points as 6,587 as the surge in US stocks overnight was hit by a round of profit-taking on Wall Street.

US shares jumped almost 5% yesterday, but in early trading the Dow Jones Industrial Average was 312 points lower at 22,565.

Russ Mould, investment director at wealth manager AJ Bell, suggested investors are right to be cautious.

“History shows eight of the 5%-plus gains came during the bear market of 2007-2009 and three more during the market downturn of 2000-2003, to suggest there is still a risk that this year’s Boxing Day bonanza could be no more than a wicked bear trap set to lure investors into more trouble.”

Asian markets were weak overnight on disappointing Chinese industrial data, while concerns over the state of trade relations between China and the US remain in the forefront of investors’ minds.

12.55pm: FTSE100 nervous ahead of expected US decline

All eyes are on Wall Street as a nervous London market headed lower.

UK investors were being cautious with Footsie down 66 points at lunchtime at 6,619 having originally opened higher after the Christmas break.

Early futures markets suggest a rough ride when the US opens with a drop of more than 300 points for the Dow Jones Industrial Average.

One of the issues recently has been the volatility on US markets, with a terrible Christmas Eve followed by a 5% recovery yesterday.

Among the blue chips, accountancy software group Sage PLC (LON:SGE), up 3% at 384.6p leads the risers alongside Scottish Mortgage Trust PLC (LON:SMT), which added 2% to 452p.

Scottish Mortgage is renowned as an investor in the FAANG group of US tech shares, which led the rally on Wall Street yesterday.

MicroFocus Group PLC (LON:MCRO) is the worst FTSE 100 performer with a 5% drop to 1306p, while contractor Wood Group is another notable faller shedding 4% to 484.6p.

11am: Chinese data weighs

So much for a ‘Santa rally’, London’s blue-chips are hovering around two-year lows, as the support from yesterday’s record bounce on Wall Street all but evaporated.

Data overnight showed earnings for China’s industrial firms dropped for the first time in almost three years last month.

Being one of the world’s largest economies and the biggest consumer of raw materials, China’s drop-off is being viewed as more evidence of a global economy losing momentum.

On top of that, analysts are still pointing to concerns over the China-US trade war, which they reckon will be one of the key influences on global markets in the year ahead.

After opening slightly higher, the FTSE 100 is currently down 48.0 points to 6,638.0, not helped by thin trading volumes over the holiday period.

It’s not just London struggling, the rest of the European markets are too, with the German Dax 30 down almost 2% and France’s CAC 40 also in the red.

In terms of company news, the story of the day involves payments group Earthport PLC (LON:EPO) which has agreed to be taken out by US giant Visa in a £200mln deal.

9.40am: Rally fails to last

The FTSE 100 index quickly turned lower as the morning session progressed on the first session after Christmas, tracking a retreat by US index futures with profit-taking expected following a 1,000 point surge by the Dow Jones Industrial Average yesterday.

Around 9.35am, the UK blue-chip index was 31 points weaker at 6,654, just above the day’s low of 6,651 having reversed from an opening peak of 6,728.

Naeem Aslam, chief market analyst at Think Markets UK Ltd noted that US futures are lower while gold prices are trading towards their six months high as investors factor in all the risk despite the fact that we have seen a stellar rally in the equity markets yesterday.

He commented: “There has been some progress on trade talks between the US and China nonetheless, investors are still interested to park some of their money in gold ETF.”

8.50am: Footsie gains less than predicted

The FTSE 100 index opened modestly higher on the first session after Christmas, although the gain was less than had been expected following a 1,000 point surge by the Dow Jones Industrial Average overnight on Wall Street.

Around 8.50am, the UK blue-chip index was just 7 points higher at 6,693 after finishing the half-day session on Christmas Eve an unseasonal 35 points lower at 6,685.

In New York, the mood had been equally depressing on Christmas Eve with further big losses as the Santa rally failed to arrive, but the presents were delivered late with the Dow Jones Industrials Average managing to bounce 5% higher to close at 22,878 yesterday.

Mike van Dulken, head of research at Accendo Markets noted that “data suggests heavier than usual post-Christmas equity buying and rebalancing of US portfolios, likely exacerbated by recent share price declines offering more attractive entry points (oversold?) being capitalised upon while ‘normal’ trading volumes are holiday-thinned. The bounce by consumer discretionary and Tech supports this theory.”

Wall Street investors also cheered upbeat data from Mastercard Inc showing that sales during the US holiday shopping season rose the most in six years in 2018, which helped allay concerns about the health of the US economy.

The news for UK retailers was not so good as, however, as according to data from retail analysts Springboard, up to 4 pm yesterday, overall footfall had declined by -3.1% from Boxing Day last year. 

But they pointed out that was a more modest drop than the -5.5% decline seen between 2016 and 2017 and was on par with the drop of -3.3% between 2015 and 2016. 

Springboard also said the good news is that footfall on high streets declined by just -1.1%, which was a much better result than the -6.6% fall last year and i2.8% decline in 2016.

Still, retailers featured among the biggest fallers on the London market on Thursday, with troubled department stores operator Debenhams PLC (LON:DEB) shedding 2% at 4.03p, while electricals retail Dixons Carphone PLC (LON:DC.) lost 1.8% at 120.30p.

Proactive news headlines:

Sound Energy PLC (LON:SOU) has announced positive initial results from the TE-10 well at the Tendrara project in eastern Morocco. The AIM company said intermediate wireline logs had indicated the presence of gas-bearing sands in the TAGI.

Nektan PLC (LON:NKTN) shares zipped higher on Thursday morning after the gaming software group posted a sharp rise in annual revenue as well as unveiling plans to raise £3.5mln and restructure its debt. The company, which provides technology to the likes of BetVictor, said it had received support for a £1.5mln equity placing which would see it sell shares at 15p – some 5% higher than Monday’s closing price.

A subsidiary of FTSE 100 tech firm Halma PLC (LON:HLMA) has started the commercial roll-out of SirenBW – a rapid water testing kit which uses a technology developed by Frontier IP Group PLC’s (LON:FIPP) investee company, Molendotech. Frontier IP holds a 14.1% stake in Molendotech, a spinout from the University of Plymouth.

Telit Communications PLC (LON:TCM) has confirmed that the timetable for the US$105mln acquisition of its automotive division by TUS International Limited remains that the transaction is expected to complete by 31 January 2019. In a statement, the global enabler of the Internet of Things (IoT) said that TUS shareholder approval is expected to be obtained on 29 January 2019.

Avation PLC (LON:AVAP) said it has completed the sale of one two-year-old Airbus A321 aircraft to an Asian buyer as announced on the 3 October 2018 Jeff Chatfield, Avation’s executive chairman, commented: "We sold this aircraft for risk management, credit rating and portfolio diversification reasons.  The sale was conducted in line with market conditions, at a price around the current market value (CMV), albeit that Avation's book value for the aircraft is materially lower than CMV."

7am: Bounce back forecast

The FTSE 100 index is expected to open higher on the first session after Christmas following a surge overnight on Wall Street as the Dow Jones recovered strongly from the pre-Christmas doldrums with a 1,000 point leap.

Spread betting firm IG expects the blue-chip index to open around 45 points higher at 6,730 after finishing the half-day session on Christmas Eve an unseasonal 35 points lower at 6,685.

In New York, the mood had been equally depressing on Christmas Eve with further big losses as the Santa rally failed to arrive, but the presents were delivered late with the Dow Jones Industrials Average managing to bounce 1,086 points, or 5% higher to close at 22,878 yesterday.

Wall Street investors cheered upbeat data from Mastercard Inc showing that sales during the US holiday shopping season rose the most in six years in 2018, which helped allay concerns about the health of the US economy, while a move by President’s Trump administration effort to shore up investor confidence also helped.

Stephen Innes, head of trading APAC for Oanda commented: “The surge in online purchases over the holiday season should be a reminder for the markets never to underestimate the purchasing power of the US consumer, as Mastercard payments tracking between November 1 and Christmas Eve leapt 5.1% from a year ago. This data comes at the perfect time and will provide a huge relief for investors who had to watch with sheer horror the Christmas Eve plunge.”

The positive mood fed through to Asia today, with Japan’s Nikkei 225 managing to pull out of the ‘bear market’ territory it had entered on Tuesday, jumping 3.9% higher, while Chinese blue chips gained a more modest 0.6%.

On currency markets, the pound edged higher against both the US dollar but was lower versus the euro as Brexit deal uncertainty remained a depressant, with a survey published today by the Institute of directors showing UK business leaders’ confidence in the economy has collapsed to its weakest point in 18 months as Britain’s exit from the EU ticks closer.

Bare cupboards

There is nothing scheduled on the corporate diary for the first day back after Christmas, aside from an AGM for Earthport PLC (LON:EPO), and no UK data due on the macro front.

Investors will therefore just be focused ahead to January’s splurge of trading updates from the retail sectors, kicking off with Next PLC’s (LON:NXT) pronouncements on 3 January, with reports indicating that the traditional Boxing Day sales yesterday had been pretty lacklustre.

Significant announcements expected on Thursday December 27:

AGM: Earthport PLC (LON:EPO)

FTSE 100 ex-dividends: BT Group PLC (LON:BT.A), British American Tobacco PLC (LON:BATS), Randgold Resources Limited (LON:RRS)

Economic data: US weekly jobless claims; US new home sales

Around the markets:

  • Sterling: US$1.2656, up 0.2%
  • Gold: US$1,269.20, an ounce, unchanged
  • Brent crude: US$54.28 a barrel, down 0.2%

City Headlines:

  • Christmas sales in the UK reported a lacklustre start, with the number people visiting the shops said to be down 3% compared with the last year – Financial Times
  • Business leaders’ confidence in the economy has collapsed to its weakest point in 18 months as Britain’s exit from the EU ticks closer: IoD survey– Daily Telegraph
  • Global oil prices are struggling to move higher after sliding below US$50 a barrel for the first time in more than a year – Daily Telegraph
  • Scottish Power is planning a fresh strategic alliance with Nissan to accelerate its drive into the electric car charging market – Daily Telegraph
  • Upmarket restaurant group D&D London, which owns restaurants in London, Manchester, Leeds, New York and Tokyo, saw sales rise by 7% to £9.6mln in the year to 31 March, compared with a year earlier – Daily Mail
  • Global flexible office space provider WeWork almost halved the amount of new space it signed up in London this year as competitors ramped up their own property acquisitions – Financial Times
  • Advertisers are declining to join the backlash against Facebook, according to Martin Sorrell, despite a year of scandal at the social networking giant – The Guardian

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