London’s blue-chip stocks were relatively flat today, as investors await news from European Central Bank President Mario Draghi.
Markets in Europe remained fairly flat, with the German Dax losing 32 points to 11,155 while the French Cac40 rose by 12 points to 4,917.
Alastair McCaig at IG said: “European trading floors are debating the likelihood of the ECB stealing a march on the present-giving season by announcing increased fire power for its current stimulus packages.”
In the UK, challenger banks failed to make gains despite a report suggesting a surge in buy-to-let mortgages before the government’s new tax scheme.
The Chancellor announced in his Autumn Statement that he is to raise the level of stamp duty paid with a 3% surcharge on each band, adding to earlier measures made in the July Budget.
George Osborne’s new schemes to dent the £60bn buy-to-let industry sparked a surge in landlords buying property through a company to safeguard tax reliefs, according to Kent Reliance.
The firm said it has already seen a surge in landlords borrowing through companies following the “radical changes” to the tax scheme.
Following the Statement, the Treasury said it is consulting on whether corporate entities with over 15 properties would be excluded from the new measures, an exemption that “will add further incentives for professional landlords to incorporate, boosting demand,” Kent Reliance said.
Despite the news, challenger banks made little ground, with Virgin Money (LON:VM.) up just 1.6p to 391p while Aldermore group (LON:ALD) lost 4.5p to 232p.
Meanwhile, OneSavings Bank (LON:OSB), which owns Kent Reliant, was flat at 384p.
The challenger banks were a metaphor for the FTSE100, which failed to gain any traction and was just 1 point lower at lunch to 6,419.
Away from the index, Scottish wealth management firm Brewin Dolphin (LON:BRW), gained around 6% to 285p as it continued to benefit from good full-year results released yesterday.
Conversely, Spire Healthcare (LON:SPI), tumbled 7.9% or 26p to 303.8p after Investec moved to a 'sell' rating and set a new target price of 234p.
Also lower was retailer Debenhams (LON:DEB), down 7.1% to 79p.
The department store chain fell after a note from Goldman Sachs advised selling the shares, though that was before the shares fell below Goldman's 83p target price.
In the small cap space, Starcom (LON:STAR) remained the biggest riser of the day as it said it has signed a deal worth US$5.5mln over three years – its biggest contract to date.
It will supply its Helios vehicle tracking devices to a Nairobi, Kenya-based firm called Pinnacle Systems. Shares gained some 50% to 3.4p.
Also higher was 88 Energy (LON:88E), which confirmed an active petroleum system across its Project Icewine acreage in Alaska in its shallower secondary target.
The firm, which is currently drilling its first well to a depth of 11,600 feet, encountered higher than expected levels of gas at between 10,011 and 10,121 feet. Shares gushed 12.3% to 0.6p.
LONDON OPEN
London’s blue-chip stocks opened slightly lower this morning as overseas markets slipped back overnight.
Wall Street benchmarks were in the red after Federal Reserve chair Janet Yellen spoke confidently about the likely prospect of an interest rate rise.
Meanwhile, in Asia, it was a mixed session as Japan’s Nikkei was largely unchanged while Hong Kong’s Hang Seng and Australia’s ASX 200 slipped about 0.3% and 0.6% lower to 22,417 and 5,227 respectively.
It was a weak bunch of service sector data out of Asia today that did for the markets, with Australia, China and Japan all seeing their service PMIs weaken.
Europe saw fairly flat opening across, with the German Dax gaining 8 points to 11,198 while the French Cac40 rose by 11 points to 4,916.
It’s a potentially big day for the Eurozone, with analysts expecting a stimulus-stuffed speech from ECB president Mario Draghi just after lunch, he added.
Connor Campbell, at spread-betting firm Spreadex, said it was “a case of pre-Draghi jitters leaving investors unwilling to act with too much vigour.”
In the UK, the FTSE100 was around 5 points lower at 6,416 with miners weighing on the index yet again.
The Chinese services PMI spooked the commodity sector, with Anglo American (LON:AAL) down 2.4% to 387p, BHP Billiton (LON:BLT) losing 2.3% to 1,080p and Glencore (LON:GLEN), easing 1.8% to 91p, among the morning’s big early fallers.
On the corporate front, Royal Dutch Shell (LON:RDSB) has been granted final approval in Australia for its merger with BG Group (LON:BG.), leaving China as the only country yet to support the deal. Shares in Shell and BG nudged 1p higher.
While there were few big movers in the large and midcap space, the small cap space saw a number of big gainers and fallers.
Starcom (LON:STAR) was the biggest riser of the morning session as it said it has signed a deal worth US$5.5mln over three years – its biggest contract to date.
It will supply its Helios vehicle tracking devices to a Nairobi, Kenya-based firm called Pinnacle Systems. Shares gained some 78% to 4p.
Elsewhere, Cluff Natural Resources (LON:CLNR) unveiled a third party assessment of its North Sea acreage which estimates some 845bn cubic feet (BCF) of gas across four licences. Shares gushed 15.4% to 3.75p.
Also higher was Sunrise Resources (LON:SRES), which leased out its County Line Diatomite claims to EP Minerals for 25 years.
The terms of the deal will see Sunrise receive a revenue-based royalty every six months from the start of production. Shares leapt 14.3% to 0.2p.
Conversely, DiamondCorp (LON:DCP) has agreed a debt rescheduling with main lender IDC and will launch a placing to raise a further £4mln. Shares dropped 17% to 6.1p.
LONDON PREVIEW
London’s blue chip stocks are expected to begin on the back foot, following US markets lower.
Wall Street benchmarks were unsurprisingly in the red after Federal Reserve chair Janet Yellen spoke confidently about the likely prospect of an interest rate rise.
Yellen said she was “looking forward” to the interest rate increase, which would signal America’s economic recovery.
America’s economy will remain a key focus for investors over the next 48 hours, ahead of tomorrow’s non-farm employment statistics which could play the decisive role in the Fed’s decision making at its policy meeting later this month.
In Asia, Japan’s Nikkei and Hong Kong’s Hang Seng were largely unchanged, while the Shanghai Composite rallied around 1.5% to 3,589.
Australia’s ASX 200 slipped about 0.6% lower to 5,227.
Crude oil prices dropped around 3% as the US dollar strengthened, with West Texas Intermediary futures changing hands at US$40.57 while Brent was priced at US$43.27.
The gold price was down also, at US$1,052 per ounce.
IG Markets sees London’s FTSE 100 about 25 points lower, calling the blue chip benchmark at 6,399 to 6,404.