FTSE 100 closes down 11.47 at 7,327
Miners under the cosh
Tesco up 3% after Goldman upgrade
Miners lagged on FTSE 100 today and the UK blue chip index finished over 11 points down at 7,327.
The FTSE 250 also lagged, plunging almost 65 points to close at 19,871.
It came as US stocks came off recent highs on Wall Street - the Dow Jones is down over 52 at the time of writing.
The pound was up 0.205 against the Euro, but down 0.22% against the US dollar.
Standard Chartered (LON:STAN) was top dog on Footsie, up 3.03% to 749.20p, as US investment bank JPMorgan Cazenove upped its rating and included the stock in its European bank top picks for 2018.
JPMorgan’s analysts said they had raised their stance on the emerging-markets-focused firm to ‘overweight' from 'neutral'.
Tesco PLC (LON:TSCO) was given a big boost by Goldman Sachs, which effectively did an about-turn on the shares - upgrading to ‘buy’ from ‘sell’, while boosting its price target from 155p to 220p (current price 201p). Tesco shares gained 3% on the day to stand at 201p each.
On the losing front, big cap miner Anglo American plc (LON:AAL) was the biggest loser, down 2.45% to 1,351p. Brent crude lost 2.01% on the day, while gold nudged lower, losing 0.16% to US$1,273.45 per ounce.
Also lower was commodity giant Glencore plc (LON:GLEN), down 2.27% to 334p, while copper titan Rio Tinto (LON:RIO) lost 2.02% to stand at 3,468.50p.
US picture mixed..
US stocks were once again sending confused signals, with the Dow Jones pulling back from its record high, though the S&P 500 rebounded.
The Dow, which advanced yesterday, gave back 6 points at 24,284 while the S&P 500, which gave ground yesterday, was up 3 at 2,643 as tech stocks bounced back.
Back in Blighty, the FTSE 100 slipped into negative territory as the expected firm start on Wall Street failed to materialise. The blue-chip index was down 8 at 7,331.
Among the mid-caps, spread betting firm IG Group Holdings PLC (LON:IGG) was 5.5p higher at 658p after an upbeat pre-close trading update.
Net trading revenue in the first half is expected to be around 9% higher than in the same period a year ago., the company reported.
Bid target Booker Group PLC (LON:BOK) rose 2% to 223.6p despite being downgraded to 'neutral' by Goldman Sachs.
1.00pm: Stocks modestly higher ahead of expected firmer start on Wall Street
It's not exactly the US cavalry, but the prospect of a firmer start on Wall Street gave a small lift to London in the mid-session.
The FTSE 100 was up 12 at 7,351, with gains on supermarkets outweighing losses on miners.
Not all miners were friendless; precious metals miner Fresnillo PLC (LON:FRES) was 1.2% higher, despite a dip in the prices of silver and gold.
Among the mining tiddlers, Herencia Resources PLC (LON:HER) continued on the comeback trail, surging 52% to 0.10p on news that it has commenced a significant drill programme on its highly prospective Pastizal/Picachos copper field in central Chile.
A softer pound was also boosting sentiment, as the top-shares index is stacked with companies that make a lot of moolah overseas.
“November’s UK services PMI did nothing to alleviate the pound’s Brexit headache, with the reading falling short of expectations,” reported Connor Campbell at Spreadex.
“Unlike the stellar numbers put on the board by its manufacturing and construction PMI peers, the services data drastically missed forecasts, coming in at 53.8 against the 55.2 expected and the 55.6 seen in October. Yet that slowdown was just the latest kick in the gut for an already battered pound, as the currency continued to fall following Monday’s Irish border Brexit bait and switch,” he added.
Among the small caps, Cerillion PLC (LON:CER), the billing, charging and customer relationship management software solutions provider, was wanted after announcing a significant new contract with a European telecommunications provider.
The contract is worth an initial £5.0mln and a total of £8.4mln over five years.
Cerillion shares were up 9%.
11.30: Miners drag the FTSE 100 back to par
Most of the morning's gains have evaporated, with mining stocks largely responsible for the Footsie's pull-back.
The FTSE 100 was up 3 at 7,342.
Mining giants such as Glencore PLC (LON:GLEN), Antofagasta PLC (LON:AAL), Anglo Amerrican PLC (LON:AAL) and Rio Tinto PLC (LON:RIO) were all down 1% or more – the last mentioned after Barclays trimmed its price target to 4,300p from 4,500p.
Among the mid-caps Provident Financial PLC (LON:PFG) lost around a tenth of its value as it revealed that the Financial Conduct Authority has started an investigation into the group's Moneybarn consumer credit division.
“Just when you thought nothing else could go wrong,” was how Numis Securities put it in a note on the accident-prone consumer credit firm.
“This is a little surprising given the FCA gave authorisation to Moneybarn on the 3rd June 2016. Since then Moneybarn has changed its loan terminations process. Moneybarn made an operating profit of £31m last year out of a total of £334m. We expect further process change as a consequence of this but this is not expected to substantially change group profit, but sentiment is expected to be negatively impacted in the short term,” Numis admitted, while sticking with its 'buy' recommendation and ambitious 1,150p price target.
Talking of being ambitious, cinemas chain operator Cineworld Group PLC (LON:CINE) has pulled the trigger on its mooted acquisition of US peer Real Entertainment for US$5.8bn.
The UK company is raising £1.7bn through an underwritten rights issue.
The shares were down 3.1% at 529p.
10.30am: Modest gains for Footsie after PMI Output Index dips in November
Blue-chip stocks were modestly higher in mid-morning trade despite a small fall in the IHS Markit/CIPS PMI Output Index in November.
Thanks largely to the strength of the supermarket sector, the FTSE 100 was up 17 at 7,356.
Morrisons, Tesco and Sainsbury's were the top three risers on the Footsie, as Goldman Sachs pronounced that margin pressure in the UK grocery market is easing off.
On the macro front, the IHS Markit/CIPS PMI Output Index declined to 54.7 in November from 55.4, though it is worth noting that any value above 50 indicates an expansion in activity.
“Despite the decline, the latest reading was the second-strongest registered over the past seven months and adds to indications that the economy is on course to enjoy robust growth in the fourth quarter. The survey data are so far consistent with the economy growing at a quarterly rate of 0.45% in the closing months of 2017,” said Chris Williamson at IHS Markit.
“The big news is in relation to prices, with the PMI surveys pointing to the largest monthly increase in average prices charged for goods and services since August 2008; a time when oil prices soared just before the global financial crisis.
“Rising oil prices were again to blame in November, with firms also reporting the need to pass higher costs of a wide variety of other inputs on to customers as a result of the weak pound having driven up import prices. As such, the survey data add to suspicions that inflationary pressures have yet to peak,” Williamson added.
Elsewhere, private new car registrations fell 5.1% year-on-year in November, which at least was an improvement on October’s 10.1% decline and the 7.3% average decline of the previous 12 months.
Pendragon PLC (LON:PDG), the nation's largest car dealer, was up 2.9% at 26.75p following the news, though it may still have been basking in the warm reception given to its strategic review yesterday.
READ Pendragon to sell its US motor business
Sector peer Northgate PLC (LON:NTG), the commercial vehicle hire firm, was down 2.1% at 415.5p after reporting half-year results that covered a “period of reset”, according to chief executive Kevin Bradshaw.
8.30am: Grocers drive the Footsie higher
The grocers were at the vanguard as the FTSE 100 advanced 24 points to 7,362.52.
The big talking point was Goldman Sachs’ more positive stance on Britain’s big supermarket groups and specifically its volte face on Tesco (LON:TSCO) as it moved to ‘buy’ from ‘sell’ on UK’s biggest food retailer.
“Margin pressure in the UK grocery market is easing,” the influential London arm of the US broker told clients.
“Competitive intensity is still high, but multiple datapoints suggest 2018 will see greater industry margin expansion than 2017.”
The upgrade pushed Tesco share up 4%, adding almost £300mln to its stockmarket valuation.
Not far behind was Wm Morrison Supermarkets (LON:MRW), which advanced 3% after Goldman upgraded its shares to ‘neutral’. Even Sainsbury (LON:SBRY) was dragged along in the re-rating even though it remained a ‘sell’. Its price target was, however, tweaked higher.
6.45am: FTSE 100 to open flat
UK stocks were expected to start virtually unchanged, as investors await further development in Brexit negotiations.
Yesterday, the FTSE 100 rose 38 points to 7,339 and spread betting quotes indicate that level will be more or less maintained when trading starts today, following mixed signals from US markets.
The major US indices started like trains yesterday in the wake of the passing of President Trump's tax bill in the Senate on Saturday morning, but although the Dow Jones Average closed at another record level, the broader-based S&P 500 and the tech-heavy Nasdaq Composite both finished in the red.
The Dow rose 58 to 24,290 but the S&P shed 3 points at 2,639 while the Nasdaq slumped 72 points to 6,775 as the so-called “FANG” tech giants – Facebook, Apple, Netflix and Google-owner Alphabet - took a beating.
Tech stocks were also taking a thumping in Asian markets this morning, with the Nikkei 225 down 85 at 22,622 in Tokyo and the Hang Seng off 168 points at 28.971 in Hong Kong.
Back in London, a familiar company with an unfamiliar name will be updating the market; Wolseley’s name change in July to Ferguson PLC (LON:FERG) reflected the fact that the plumbing supplies group‘s US business accounts for the lion’s share of its revenues and profits.
Recent statistics suggest conditions in the US construction market remain favourable, particularly in the residential and commercial sectors that account for 85% of Ferguson’s sales, and Hargreaves Lansdown equity analyst George Salmon believes that should feed through to profits.
Analysts at JPMorgan Cazenove said they expect Ferguson’s first quarter group revenue growth to be similar to the year-to-date commentary with its full year results, at around 6% group organic growth.
The three month period to the end of August – the first quarter of the group’s current financial year – was a record quarter for IG, with revenue up 21% year-on-year.
Investors will be keeping an eye out for a range of key performance indicators, including number of active clients and revenue per client.
In the first quarter, the number of clients was up 9% year-on-year to 124,900 and the revenue per client was up 11%, so those are the run-rates the group will be looking to maintain or improve.
The group may comment on the regulatory threat that the sector is facing, particularly in Europe (including the UK).
In September, IG said: “Although none of the recently announced regulatory changes have adversely impacted the business to date, as previously noted, the nature and timing of potential regulatory changes in the UK and some other key markets for the group remain uncertain. It is therefore difficult to predict what impact, if any, regulatory change may have on the group this financial year and beyond.”
Significant events expected on Tuesday December 5:
Trading updates: Ferguson PLC (Q1) (LON:FERG), IG Group Holdings PLC (LON:IGG)
Interims: Collagen Solutions PLC (LON:COS), Consort Medical PLC (LON:CSRT), Gately Holdings PLC (LON:GTLY), Iomart Group PLC (LON:IOM), Northgate PLC (LON:NTG), Tatton Asset Management Plc (LON:TAM), Vianet Group PLC (LON:VNET), WYG PLC (LON:WYG)
Economic data: UK services PMI; US international trade; US non-manufacturing ISM
Business headlines
The Daily Telegraph
Uber request to take drivers’ rights case directly to top UK court rejected: Uber’s request to take its appeal to overturn a ruling over drivers’ rights directly to the UK’s highest court, skipping the Court of Appeal, has been rejected.
Sale of Monarch slots ‘could damage airline competition’: The decision by the Court of Appeal to allow defunct airline Monarch to sell its take-off and landing slots could hamper competition in the airline industry, critics have claimed.
Energy networks to unveil plan for £17 billion smart-grid boom: British households and businesses will soon be able to buy and sell their own energy directly within a local energy market under ambitious new ‘smart-grid’ plans to be unveiled this week.
Number 10 wine supplier says Britons will ‘starve’ if door is closed to fruit pickers: The chief executive of Chapel Down, an official wine supplier to 10 Downing Street, has warned that Britons will “starve” if the door is closed to foreign fruit pickers after Brexit.
The Guardian
Gucci confirms its offices were raided over suspected tax evasion: The Italian fashion house Gucci has confirmed that its offices in Milan and Florence were raided last week over suspected tax evasion.
Co-op to sell food past its ‘best before’ date in bid to cut waste: A major retailer has become the first to start selling food that is past its “best before” date in a drive to reduce food waste.
UK and EU plan crackdown amid crime and tax evasion fears: The UK and other EU governments are planning a crackdown on bitcoin amid growing concerns that the digital currency is being used for money laundering and tax evasion.
The Times
City chiefs seek Saudi Aramco float: The London Stock Exchange is sending a senior Executive for meetings in Saudi Arabia this weekend as it fights to secure the stock market début of the country’s state oil group.
Vijay Mallya ‘took out fraudulent loans’ for airline: Vijay Mallya secured hundreds of millions of pounds in bank loans for an airline that he knew to be in financial trouble before laundering the cash to fund his Formula One motor racing team, a court was told yesterday.
Watchdog ‘forced’ to keep RBS scandal report secret over fears bank would sue: The Financial Conduct Authority decided not to publish a highly critical investigation into Royal Bank of Scotland’s systematic mishandling of thousands of small and medium-sized companies because it feared being sued for “unfair treatment” by the bank.
Progress on corporate tax cuts is trump card for fresh bets on Wall Street: Wall Street surged to a new high and world stock markets climbed yesterday as investors cheered significant progress on President Trump’s tax cuts.
Spanish suitor Meliá checks out of talks over Elegant Hotels takeover: An AIM-listed operator of hotels in the Caribbean has confirmed that it received a bid approach from a Spanish rival, but added that the talks had ended.
The Independent
Black Friday fails to lure cash-conscious savers into shops in November: Black Friday sales failed to lure cash-conscious savers onto high streets and into shopping centres during November, as inflation concerns and Brexit uncertainty continued to bite.
Toys ‘R’ Us to close at least 26 stores next year putting up to 800 jobs at risk: Toys ‘R’ Us has announced plans to close at least 26 stores across the UK, a move that is believed could put up to 800 jobs at risk.
Financial Times
Kazakhstan’s state-owned uranium producer Kazatomprom is to cut production by 20% over the next three years
Citi nabs eBay’s chief data officer for its retail operations in Asia
Bob Diamond’s Atlas Merchant Capital signs its biggest deal
Google and Facebook set to continue to attract lion's share of digital advertising spend
Facebook targets kids as young as six with new messaging app
Broadcom goes hostile in Qualcomm bid
Daily Mail
US Hedge fund will make £500 million on struggling care homes: H/2 Capital Partners could take over Four Seasons within a fortnight: A US hedge fund could make up to £500 million from the collapse of heavily indebted care home chain Four Seasons. Key creditor H/2 Capital Partners could take over the group within a fortnight after buying up most of the firm’s debt.
Departing Tesco Bank boss Benny Higgins to become chairman of financial tech firm Kyckr: Departing Tesco Bank boss Benny Higgins is joining the board of a financial technology company as he moves on from mainstream banking.
Local shop chain McColl’s in talks with suppliers after P&H collapses as sales pass £1 billion mark: Local shop chain McColl’s said it has a contingency plan in place to avoid a supply shortage after supplier Palmer & Harvey went bust last week as it reported annual revenues of over £1 billion.
Film production company FFI powers ahead thanks to acquisition: Film making is a risky business and before any cameras start rolling a visit to FFI Holdings is usually in order. They do what it says on the can. If a film is not completed or runs late, the contract kicks in and it is beholden on the contract issuer to make sure the film gets made or the backers get some or all of their investment back.
Chip-maker Dialog Semiconductor dives £600 million after it admits Apple could move its business in-house: Chip-maker Dialog Semiconductor saw more than £600 million knocked off its value after it admitted Apple could move its business in-house by 2019. The company has seen its shares plunge 35.8% since 30 November when speculation of a possible pull out by Apple first broke.
Daily Express
Institute of Economic Affairs believes UK to have a strong future despite Brexit: Despite gloomy predictions over Brexit, the Institute of Economic Affairs believes the UK will enjoy a strong few years as nervousness surround Brexit dies out.
Brexit Beer Mats distributed in Wetherspoon pubs to slam ‘misleading’ business leaders: Pub operator JD Wetherspoon issued a new beer mat today highlighting its support for the British fishing industry and accusing business leaders of “misleading” the public on Brexit.
Berkeley half year results in the spotlight amid London property market slowdown: Half year results from house-builder Berkeley will be in the spotlight this week amid further signs of a slowdown in the London property market and in light of the Budget stamp duty give-away.
The Scotsman
Transport boss Brian Souter raps pension funds ‘pessimism’: Transport boss Sir Brian Souter has hit out at the “pessimism” of the pensions industry, claiming that a switch from investing in businesses to putting money into gilts and bonds has triggered an “ever-increasing cycle of unaffordable funding”.
City AM
Progress on highly secretive Royal Mail strike talks to be revealed: Details of progress in highly secretive talks aimed at averting a mass Christmas walk-out by postal workers are to be revealed tomorrow. Negotiations have been taking place between Royal Mail and the Communication Workers Union (CWU) since the end of October, as both sides hope to thrash out a deal on proposed changes to pensions and working conditions.
De Beers lifts the curtain on plans for a blockchain-based diamond platform: The world’s top diamond supplier has revealed plans to invest in a blockchain-based platform enabling a traceable record for its gemstones.
Poundstretcher’s sales fall but chain hopes to benefit from changes in shopping habits: Poundstretcher’s sales fell last year, but the budget chain is hoping a squeeze on consumer spending will send shoppers through its doors.
Bombardier’s UK operations boosted as Belfast plant chosen to make components for Airbus: Bombardier’s UK operations have been given a boost today, after it was revealed that the aerospace giant’s Belfast plant had been chosen to develop and manufacture a new engine component for Airbus’ A320neo series of aircraft.
Alliance Pharma itching for new deals as it buys head lice treatment Vamousse for US$17.5 million: Speciality pharmaceuticals firm Alliance today unveiled a deal to acquire the global rights to Tyratech’s head lice treatment, Vamousse, for up to US$17.5 million (£13 million).
Around the markets
Pound: US$1.3438, down 0.04 cents
10-year gilt: yielding 1.288%
Gold: US$1.275.50 an ounce, up US$1.20
Brent crude: US$62.36 a barrel, down 9 cents