FTSE 100 closes 67 down
Bitcoin blasts above US$11,000
UK agrees US$50bn Brexit settlement
Wall Street shares mixed
FTSE 100 closed lower as the pound strengthened amid an apparent breakthrough concerning the Brexit divorce bill.
As is often the way when the pound strengthens, the largely dollar earning FTSE 100 constituents suffer.
The blue-chip benchmark closed around 67 down at 7,393 on Wednesday, while FTSE 250 was up over 33 at 20,059.
Against the Euro, sterling is up 0.50% and against the US dollar, it is 0.62% higher.
"The FTSE 100 is being held back by the rally in the pound on the back of the announcement the UK government has agreed in principle to make a payment to the EU. The so-called ‘divorce bill’ is believed to be in the region of £50 million and this is seen as a boost to British political prospects," noted David Madden at CMC Markets.
The seeming agreement on the cost of the withdrawal is easing fears in the City over the UK government's stability and increases the likelihood that the topic of trade can now go ahead.
On Footsie, retailer Next (LON:NEXT) was top dog, adding 4.38% to 4,503p, while on the losing front, Randgold Resources Ltd (LON:RRS) was down 5.98% to 6,915p.
3:35pm: Parallel Media Group plc and Physiomics Plc led the small cap market gainers
The FTSE 100 was down 35 points at 7,425 with just under an hour to go before Wednesday’s close.
London’s international earning blue-chips were softer as a result of the pound moving higher.
Imperial Brands Plc (LON:IMB) fell 3% to 3,044p, while British American Tobacco plc (LON:BATS) was down 2% at 4,863p.
GlaxoSmithKline plc (LON:GSK) shed 1.6% to trade at 1,314p.
Consumer goods group Unilever plc (LON:ULVR) declined 1.6% at 4,261p, and Reckitt Benckiser Group Plc (LON:RB. reduced 1.6% to 6,533.
Alcohol and spirits firm Diageo plc (LON:DGE) slipped 1.6% to 2,607p.
In the small cap market: Physiomics was up 90% changing hands at 8.2p - marking a near 800% gain for the week.
Parallel Media was, meanwhile, 95% higher at 45.5p.
2:45pm: FTSE 100 down 30 points as Dow Jones and S&P 500 start higher
London’s FTSE 100 was down just over 30 points, 0.4%, changing hands at 7,428 easing somewhat from the morning’s lows.
In New York, Wall Street benchmarks had a mixed start – the Dow Jones opened just over 70 points or 0.3% higher at 23,910 and the S&P 500 edged up 0.16% to 2,631.
The Nasdaq, meanwhile, dipped 0.24% to 6,896.
2:30pm: Bitcoin cryptocurrency now soaring above US$11,000
The Bitcoin cryptocurrency continues to soar, quickly moving on from Tuesday’s US$10,000 marker to now surpass US$11,000.
Such is the pace of the value inflation market experts see it not only as a bubble, but, one that is inevitably set to pop – it is perhaps a matter of when not if.
“The madness of crowds is well documented, but it is quite something to behold in the flesh,” said Neil Wilson, senior analyst at ETX Capital.
“It’s hard to keep up with this - Bitcoin just flew past the $11k mark, leaping $200 in barely five minutes before taking another big leg higher. It’s up more than 14% today alone and the YTD chart is simply staggering.
“There are no fundamentals or technicals that explain this other than it being a massive speculative bubble. It’s hard to say precisely where we are in the curve, but the shape of the chart is parabolic and this sort of thing never, ever lasts.”
Wilson suggested the so-called ‘smart money’ will next move in, followed by their profit-taking exit before panic sets is as the bubble begins to burst.
“The big question is whether we have reached the euphoric stage or are still in the boom phase,” he added.
“The other question is when to get out before panic sets in. Whilst this appears like a classic bubble, Bitcoin could have a lot, lot further to run before it blows.”
1:00pm: Wall Street equities point higher ahead of open
New York’s headline benchmarks were seen in positive territory ahead of Wednesday’s open.
The Dow Jones is expected to start nearly 70 points higher, at 23,881, while the S&P 500 and the Nasdaq were both also above yesterday’s close.
It comes after the US Senate got closer to green-lighting Trump’s tax plan on Tuesday, with a floor vote now anticipated tomorrow.
Elsewhere, European Central Bank vice-president Vitor Constancio claimed US equity valuations are ‘overstretched’ and prices are “well-above historical averages" – he warned that the market could be facing a ‘sharp reversal’.
12:30pm: FTSE 100 stuck in the red as pound strength hits international earners
By lunchtime, the FTSE 100 was 40 points in the red changing hands at 7,421.
Lower oil prices kept Royal Dutch Shell Plc (LON:RDSB) and BP Plc (LON:BP) on the back foot, with down about 1% at 2,421p and 469p respectively.
London’s international earning blue-chips were softer as a result of the pound moving higher.
Imperial Brands Plc (LON:IMB) fell 2.6% to 3,055p, while British American Tobacco plc (LON:BATS) was down 1.6% at 4,890p.
GlaxoSmithKline plc (LON:GSK) shed 2.1% to trade at 1,308p.
Consumer goods group Unilever plc (LON:ULVR) declined 1.6% at 4,260p, and Reckitt Benckiser Group Plc (LON:RB. reduced 1.7% to 6,530.
Alcohol and spirits firm Diageo plc (LON:DGE) slipped 1.2% to 2,617p.
10:30am: FTSE 100 down 45 points as pound strengthens on Brexit settlement
Standing at 7,417, the FTSE 100 was down 45 points or 0.6% by mid-morning, meanwhile, the British pound strengthened.
Reports of a US$50bn Brexit settlement has driven the pound to its highest level for around two months, but, it is expected to remain volatile.
“Shorts are coming out as the squeeze comes on but will the rally last? It’s down to the politics again, with various risks to the bullish case still unresolved,” said Neil Wilson, analyst at ETX Capital.
“Nevertheless it may be time to turn cautiously optimistic on sterling.”
Wilson added: “Estimating exactly what the divorce bill might be is virtually impossible and not that important for fx markets.
“What matters is sentiment and whether this offer is enough to unlock the next phase of negotiations. On that front, it ticks one big box but serious questions remain, and there are three primary risks to the bullish case for sterling at present.”
9:30am: FTSE 100 down 35 points, London Stock Exchange itself drops 2% as Rolet exits
At 9:30am, the FTSE 100 was down 35 points or 0.47%, trading at 7,425 with a number of notable blue-chip stocks lower on Wednesday.
The stock exchange operator itself was among them, losing 74p or 2% to 3,726p after Xavier Rolet quit his position as chief executive.
Elsewhere, Stagecoach Group PLC (LON:SGC) shot up around 5% to 167.7p as a new ‘strategic vision’ for UK rail was unveiled, meanwhile, FirstGroup PLC (LON:FGP) edged 0.6% higher to 107.26p.
Pennon Group PLC (LON:PNN) moved up 2.6% to 815.5p as first half profit dividend increased alongside profits.
Equipment hire firm HSS Hire Group PLC (LON:HSS) rose 4.46% to 29.25p on its interim results, while Tullow Oil PLC (LON:TLW) shares were up 0.6% after it refinanced a US$2.5bn loan tied to its crude oil reserves.
8:40am: FTSE 100 on the back foot, but banks bounce back; LSE soap opera takes new turn
The FTSE 100 gave back some of the gains made Tuesday as it fell 26 points to 7,434.97 amid worries over the escalating Brexit divorce bill and in the wake of the banks' stress tests.
However there was good news for investors in Barclays (LON:BARC), which rebounded 2.4% in early trade; this in spite of a reiterated ‘sell’ recommendation from Citi in the wake of the financial health check of lenders.
Dividends at Lloyds (LON:LLOY), up 1.8%, are at risk, if it wants to keep its balance sheet as plump as it needs to be, according to Citi.
Top of the losers, down 1.8% early doors, was the London Stock Exchange Group (LON:LSEG).
Amid calls by restive shareholders for his expulsion, chief executive Xavier Rolet has exited the business, which also owns Borsa Italia.
Dropping down a division to the FTSE 250, the day’s big casualty was Cineworld (LON:CINE). The shares fell 12% after revealing it was in £2.7bn talks to acquire America’s Regal Entertainment Group – a cash deal that would catapult the picture group into the top flight but potentially funded by a rights issue as well as debt.
Proactive news headlines:
Tertiary Minerals PLC (LON:TYM) has given a major boost to its three fluorspar projects through a strategic tie-up with global commodities group Possehl. Germany-based, Possehl is part of Cremer, a commodities business with annual turnover of more than €3bn.
Challenger Acquisitions Ltd (LON:CHAL) remains tremendously confident that the stalled construction of the New York Wheel will recommence in the short-term.
Futura Medical PLC (LON:FUM) said it has begun recruitment for a pharmacokinetic study of its lead product, MED2002, which is a prelude to starting Phase III trials of the breakthrough gel for erectile dysfunction. Data from 40 men will determine the doses used in the final-stage clinical assessment MED2002, which will kick off as “soon as practicable” after the current programme.
Asiamet Resources Limited (LON:ARS,CVE:ARS) said its confidence in the BKM copper project in Indonesia has been boosted by the latest drilling results.
Bushveld Minerals Limited (LON:BMN) hailed the timing of its acquisition of South African vanadium miner Vametco. “The timing of the completion could not have been better, occurring during a time of significant increases in the vanadium price contributing to a marked improvement in Vametco's profitability and cash generation,” said Fortune Mojapelo, chief executive.
Ortac Resources Ltd (LON:OTC) said it had intercepted more gold from two holes drilled at the Akyanga gold deposit, part of the Casa Gold Project, in the Democratic Republic of the Congo. MSDD0115 was the stand-out: it found the yellow metal at decent grades from 98.4 metres and then from 110.6 metres. There was an 8.7-metre section at 3.9 grams per tonne, including 2.8 metres at 10.62 grams. This was followed by a thicker section – 27.5 metres at 2.86 grams. Big Pic in September.
Strategic Minerals PLC (LON:SML) said it has been informed that its managing director, John Peters acquired a total of 500,000 ordinary shares in the company at a price of 1.8915p per share on 28 November 2017. Following this acquisition, Peters has a beneficial interest in 20,500,000 ordinary shares, representing a 1.55% holding in the company's issued share capital.
Highlands Natural Resources PLC (LON:HNR) announced that Melvyn Davies, the company's Finance Director, today exercised 100,000 warrants at a price of 10p per warrant. Following the warrant exercise, it said Davies' interest in Highlands' ordinary shares has increased from 200,000 to 300,000 ordinary shares, or 0.26% of the company's total voting rights.
Eco (Atlantic) Oil & Gas Ltd. (LON:ECO) (TSX-V:EOG) has announced the appointment of Keith Hill as a non-executive director of the company with immediate effect, following the subscription and strategic alliance agreement with Africa Oil Corp, announced on 13 November.
Capital Networks has issued a research report on staffing firm Robert Walters PLC (LON:RWA), examining some of the drivers which underpin its “sustained organic growth trend”. Analyst Ed Stacey concluded: “We believe that the growth dynamics which have driven the share price in recent years will continue over the coming years.”
Capital Networks has issued a research report on Empresaria Group PLC (LON:EMR) following the support services firm’s recent trading update. Analyst Ed Stacey concluded: “Looking at the 5 year share price chart, there have been two big dips – H2 2014, and H1 2016. These proved to be good buying opportunities, and we argue that the current share price weakness should encourage investors to take a closer look at Empresaria.”
Capital Networks has issued a research report on Gamma Communications PLC (LON:GAMMA) with analyst Ed Stacey noting that the shares currently trade on an EV/EBITDA multiple of 11 times 2018 estimates. He argues that this is an attractive valuation given the company’s “unique market position and strong growth trajectory”.
6.45am: Brexit bill shocker
Stocks were expected to give back some of yesterday's gains, despite a storming session in the US that saw indices hit new highs.
The US Senate's budget committee voted by a small margin to send the tax bill to the Senate floor, where a vote will be held on Thursday, sending the Dow Jones average up 256 to 23,837 and the S&P 500 up 26 to 2,627.
Heading towards the close of trading, Asian markets were generally firmer.
In Tokyo, the Nikkei 225 was 111 points to the good at 22,597, while the Hang Seng in Hong Kong was up 12 at 29,693.
In the UK, the FTSE 100 rose 77 points on Tuesday to 7,461, but was expected to open on Wednesday at around 7,439, down 22 points.
Reports indicated that the UK and the EU have reached a deal on the settlement bill for Brexit, with the divorce settlement coming somewhere between €45 – 55bln.
“According to the FT, the UK could even assume liabilities up to 100 billion euros. It is a hefty price tag, but it will allow both sides to start the post-Brexit trade negotiations off on the right foot. This is an encouraging development for the UK businesses and the pound,” suggested Ipek Ozkardeskaya, the senior market analyst at LCG.
On the corporate front, the field looked like it was largely left to second-liners.
Utility Pennon was expected to report a solid set of results, but the main focus could be on Viridor, the recycling and waste management business.
Deutsche Bank was expecting an update on the termination process for the Greater Manchester PFI contract and on the delayed Glasgow energy-from-waste plant.
The Greater Manchester Waste Disposal Authority wants to exit its contract to recycle water and use some of it as fuel to generate electricity 17 years early. In its last update, Pennon said progress was being made on the final agreement with the authority.
As Deutsche (DB) also observed, the results will be overshadowed by events on the regulatory front and the attempts by political parties to jump on the Ed Miliband bandwagon and keep a lid on utility price rises.
DB is tipping a 6% increase in underlying earnings (EBITDA) to £259mln from £245mln at the halfway stage last year.
Earnings per share are expected to rise 5% to 24.8p from 23.6p, while the all-important dividend should rise to 11.9p from 11.1p, in line with the company’s policy.
The company plans to increase its dividend pay-out by four percentage points above the rate of retail price index inflation over the next 10 years.
Not too many surprises are expected from Britvic's full-year results, with the drinks maker recently stating that revenue and operating profit expectations are on track.
The UK accounts for slightly more than 40% of group revenue, so poor weather might have dampened sales slightly in Britvic’s home market in the final quarter.
The re-launch of Britvic’s iconic mixer range, complete with new bottles, has helped to boost sales of its carbonated drinks, although growth there has been offset by declining sales of its still drinks.
The company still faces an uphill battle to wrest the initiative back from Fever Tree.
Analysts expect the rapid 11% like-for-like revenue growth seen in France in the third quarter to have turned negative in the final few months of the year, while trading conditions are also expected to have toughened in Brazil where it bought concentrates and juices business Bela Ischia Alimentos for £55mln earlier this year.
Significant announcements expected
Trading updates: Eve Sleep PLC (LON:EVE), Softcat PLC (LON:SCT)
Interims: Findel PLC (LON:FDL), LondonMetric Property PLC (LON:LMP), Motorpoint Group PLC (LON:MOTR), Pennon PLC (LON:PNN), Redcentric PLC (LON:RCN), RPC Group PLC (LON:RPC), Telford Homes PLC (LON:TEF), Versarien PLC (LON:VRS),
Finals: Brewin Dolphin Holdings PLC (LON:BRW), Britvic PLC (LON:BVIC), Impax Asset Management Group PLC (LON:IPX), ZPG PLC (LON:ZPG)
Economic data: UK consumer credit, mortgage approvals; US preliminary Q3 GDP; US pending home sales; US Beige Book
Around the markets
- Pound: US$1.3384, up 0.45 cents
- 10-year gilt: yielding 1.255%
- Gold: US$1,299.30 an ounce, up 10 cents
- Brent crude: US$63.19 a barrel, down 42 cents
Business headlines
The Times
Regal deal is big picture for Cineworld: Cineworld is in talks to buy Regal Entertainment, its American peer, in a deal that would create the world’s largest cinema chain.
RBS bosses ‘may be liable’ over restructuring division scandal: The City regulator has warned Royal Bank of Scotland’s senior managers that they will be held personally accountable if there is any failure in the bank’s response to the scandal in its restructuring division, which mistreated thousands of small companies.
Motor chief urges government to stop ‘demonisation of diesel’: The head of the British motor industry has launched a withering attack on the government over its demonisation of diesel.
Copper at the double for BHP: BHP Billiton plans to cut costs further at its Australian business after forecasting strong Chinese demand for steel-making ingredients.
Pets at Home price cuts bite into profits: The chief executive of Pets at Home is stepping down in the wake of an 11% fall in half year profits at Britain’s biggest pet products retailer.
One-off costs slice earnings at Greencore: Greencore’s annual pre-tax profits have slumped by almost £36 million as one-off costs hurt the food-maker’s bottom line. The pre-packed sandwich and sushi producer recorded a 74% drop in pre-tax profits to £12.4 million in the year, despite improving revenues.
The Independent
Brexit forced delay in Unilever’s headquarters decision: Anglo-Dutch consumer-goods giant Unilever wants to consolidate its headquarters in the UK or the Netherlands, but Brexit is making it harder to choose.
MPs seek assurances over accessibility of free cash machines: MPs are seeking assurances over the accessibility of free-to-use ATMs amid concerns that proposals for the future funding of cash dispensers could see a significant reduction in their numbers.
Brexit: UK construction industry facing ‘cliff edge’ due to EU departure: The UK construction industry has warned that the sector faces a Brexit ‘cliff edge’ if the Government doesn’t provide more details on its plans to implement a two-year grace period for EU citizens looking to apply for settled status after the split.
Yorkshire Water pledges action on leaks and sewage problems: Firm pledges to reduce sewage escapes causing pollution by 40% and incidents resulting in internal sewer flooding by 70%
Financial Times
Shell restored its all-cash dividend signalling the oil industry’s financial comeback
Apax sells close to half its stake in cyber-security firm Sophos
BoE instructs banks to boost buffer by £6bn
SoftBank share offer for Uber implies 30.0% haircut for existing shareholders from the previous round of fund-raising
The Daily Telegraph
Lack of clarity over UK combat aircraft plans contributed to hundreds of job cuts, BAE tells MPs: A lack of “vision” from the Government about future combat aircraft in the UK contributed to BAE Systems’ decision to axe hundreds of British jobs, MPs have been told.
Virgin Media owner Liberty Global eyes Swiss exit in latest manoeuvre towards Vodafone deal: The cable giant Liberty Global is exploring a sale of its Swiss and Austrian arms, a move that could help pave the way for a US$175 billion (£131 billion) mega-merger with Vodafone.
Former chairman attacks Van Elle over £330,000 bill for chief executive’s house: The embattled ground engineer Van Elle faces governance questions from its former chairman after it wrote off more than £330,000 of work building a new house for its chief executive.
The Guardian
Rising household debt and stagnant pay major threats to UK, says OECD: Rising household debt and flat-lining wages are becoming a major financial stability risk as Britain slows as a consequence of Brexit, the Organisation for Economic Co-operation and Development has said.
Thames Water to halve price increases after failing leak targets: Thames Water is to halve planned price increases next year after admitting it has let down customers by failing to meet its leakage targets. Britain’s biggest water company said it would now raise prices by 2.3% in 2018-19, meaning the average annual bill will be about £8 less than it would otherwise have been for 5 million households.
Oxford University to issue 100-year bond worth £250 million: The University of Oxford has become the latest higher education institution in Britain to raise money for investment through the international capital markets, by issuing a bond worth £250 million that it plans to pay back in 100 years’ time.
Daily Mail
Ocado sells its pioneering robotic warehouse technology to French chain Casino: The British online supermarket will replicate its own warehouse in Andover – where stock is managed and customer orders are prepared using robots – for French supermarket group Groupe Casino.
Some 2,500 jobs lost as wholesaler to High Street shops goes bust: Palmer & Harvey collapses after heavy losses: Britain’s biggest delivery wholesaler for High Street stores went bust last night – putting more than 2,500 staff out of work. Palmer & Harvey, which supplies more than 90,000 outlets from corner shops to Tesco, and employs some 3,400 people, collapsed into administration.
Why vinyl is set for comeback at HMV: Retailer expects to sell 1.5 million records this year, thanks to acts like Ed Sheeran: HMV is expecting a surge in vinyl sales in the run-up to Christmas as the format continues its revival. Demand for records peaked in the 1980s but began to fall in the face of competition, first from tapes, then CDs and eventually the internet.
Topps Tiles’ rallies from its four-year low with 7% share rise after reporting a return to sales growth: The tile retailer, which has been dragged down by a fall in consumer confidence and changes to stamp duty, said sales had picked up in the eight weeks since the end of its financial year in September – increasing 3.2% compared to a 0.3% fall the year before.
Game sells online game-hosting business Multiplay Digital for £19 million: Retailer Game has sold its online game-hosting business Multiplay Digital to Unity Technologies for £19 million.
Daily Express
Cyber Monday is biggest ever online shopping day with £5 billion in sales: Cyber Monday was on track to become the biggest-ever internet shopping day in the United States as people snapped up bargains on toys and electronics, with many more buying from their phones.
‘World’s energy Tsar’ Putin leaves global prices on a knife edge: Global prices have been kept steady by the deal but concerns are rising this will be thrown into chaos by the Russian president.
The Scottish Herald
Boardroom upheaval continues after oil firm moves base from Edinburgh to London: Former Bowleven chief executive Kevin Hart received US$444,000 (£330,000) compensation after being ousted from the board of the firm, which is parting company with the last member of the old guard of directors under a cost saving drive.
The Scotsman
£17 billion to be spent on North Sea decommissioning by 2025: Spending on decommissioning in the UK sector of the North Sea could total £17 billion over the next eight years, an industry expert has said. Mike Tholen, of Oil and Gas UK, said that was the figure which was expected to be spent on such work in the UK Continental Shelf (UKCS) between now and 2025.
City AM
UDG Healthcare’s full year profits have jumped, but shares are down: Dublin-based UDG Healthcare reported a rise in profits for the full year as the FTSE 250 company grew through acquisitions. The healthcare services provider said profit before tax rose 17%, or 23% on a constant currency basis, to US$118.9 million (£89.6 million).
WPP investors buoyed by Ford contract extension talks: WPP, the world’s largest advertising company, today announced car giant Ford has approached it with a view to agreeing to a contract extension.
Electronic parts maker Acal reveals its new name will be DiscoverIE as business booms: Acal, the company that supplies electronic components for everything from Nespresso machines to wind turbines, has announced it will change its name to DiscoverIE from today, signifying a shift in the company’s ambitions.