FTSE 100 closes down 48pts
Vernalis and Dialight among the big small-cap losers
No change - as expected - on interest rate policy by the Bank of England and the European Central Bank
FTSE 100 closed lower after a busy day for Central banks but not much doing on the comapny side.
The index of top UK shares closed down over 48 points at 7,448, while mid-cap index FTSE 250 shed over 55 points at 20,006.
The Old Lady of Threadneedle Street decided, to no-one's surprise, to keep interest rates on hold, and keep the stimulus package as is too.
Meanwhile, the European Central Bank (ECB) also kept rates on hold but President Mario Draghi did leave open the possibility of additional or extended monetary easing.
In the currency markets, sterling gained. It is up 0.46% against the Euro and up 0.16% against the US dollar.
Land Securities Group (LON:LAND) was the biggest Footsie gainer, up 3.22% to 978.5p, while Standard Life Aberdeen plc (LON:SLA) was the top loser, off 3.20% at 413.80p.
Footsie floundering
Heading into the last half-hour of trading the FTSE 100 was floundering close to its low point of the day.
The top-shares index was down 19 at 7,478, some seven points above its intra-day low.
Investors had plenty of news to chew on – the Tories defeat in parliament on a Brexit vote; yesterday’s rate hike by the US central bank; today’s “as you were” announcements from the Bank of England the European Central Bank – but none of it appeared to float the boat of the bulls.
What volatility there was in the market was at the minnows end, with Vernalis plc (LON:VER) a case in point.
The biotech’s shares fell 28% as it said it needed to see an acceleration in prescription growth for Tuzistra XR in order to meet market guidance for the year.
Also feeling the pinch was Dialight PLC (LON:DIA), the industrial LED lighting technology company, which continues to experience production volume shortfalls at the plant in Guadalajara, Mexico.
“Following the most recent unexpected update from its manufacturing partner, the board now believes a significant number of orders are unlikely to be fulfilled in this financial year,” the company said, sending the shares down by one-sixth.
3.00pm: Footsie remains subdued despite bright start by stocks on Wall Street
US stocks opened higher but this had zero impact on sentiment in London, and neither did the European Central Bank leaving its interest rate unchanged.
The FTSE 100 remained resolutely in the red, down 13 at 7,483.
Across the pond, the Dow Jones was up 63 at 24,649 and the S&P 500 was up 3 at 2,666.
“At today’s meeting, the ECB left its policy stance and forward guidance unchanged. Upbeat forecasts on growth suggest that the bank will end its asset purchases on schedule in September 2018 and start to raise rates in the first half of 2019,” suggested Holger Schmieding at Berenberg.
Ending a saga that has run almost as long as the promotional campaign for the new Star Wars film, Walt Disney Co (NYSE:DIS), which now owns the Star Wars franchise, has bought a shed-load of assets from 21st Century Fox (NASDAQ:FOX), including the latter’s stake in British pay-TV and internet service provider Sky PLC (LON:SKY).
Shares in Sky barely moved on the news.
While the top end of the market saw little volatility, there were plenty of small caps racking up eye-catching gains.
Eurasia Mining plc (LON:EUA) shot up 22% to 0.275p after an amendment to a loan agreement with Riverfort Global.
For the next four months there will be no conversion of principal amount if the share price of the company remains below 0.34p and the final repayment date of 15 May 2018 has been extended to 15 September 2018 to cover the main production season at West Kytlim.
Directa Plus (LON:DCTA) advanced 8% after it said Romanian energy firm GSP is to evaluate Directa’s Grafysorber decontamination product.
Grafysorber has proved very effective in tests at removing hydrocarbons from water that has been contaminated as a by-product of oil and gas activities.
1.00pm: FTSE 100 nurses small loss
Just as yesterday the Footsie spent almost all day nursing a small gain, so today the index has been mildly lower from the get-go.
The FTSE 100 was down 16 at 7,481, while the FTSE 250 was off 51 at 20,010.
The mid-cap index at least had a bit of news flow to get the animal spirits rising, with Capita, PZ Cussons and Sports Direct all in the dog-house after trading updates.
On the plus side, groceries delivery outfit Ocado Group PLC (LON:OCDO) was 3.2% higher after its fiscal fourth-quarter trading update in which it reported retail sales growth of 11.6%.
“Notwithstanding the short-term impact on top-line momentum from driver shortages, we are encouraged by the improved trend in basket size and the successful ramp-up of CFC3 [customer fulfilment centre],” said Numis, which reiterated its ‘buy’ recommendation.
“Looking ahead, the driver shortage issue has now been ‘largely resolved’ (we would assume a small impact on costs), but we see scope for capacity constraints to present a continued headwind as capacity at Andover is steadily ramped,” the broker added.
Pizza delivery firm Domino’s Pizza Group PLC (LON:DOM) advanced 3.8% to 334.6p after it proposed to acquire a further 44.3% of Domino’s Iceland for €30.2mln, taking its ownership to 95.3%.
Meanwhile, economists have now had a bit of time to pore over the Bank of England’s policy statement following today’s decision to leave interest rates unchanged.
James Smith at ING noted a slight change in the Bank’s views on Brexit.
“Back in November, it caught a few people off-guard by saying there [are] ‘considerable risks to the outlook’. This time, that phrase has disappeared, replaced instead by an acknowledgement of the recent positive steps made in the negotiations,” Smith observed.
“Bank officials - Governor Carney in particular - have been vocal about the importance of a transition period, and the latest set of minutes note that a swift announcement of this in the new year would ‘reduce the likelihood of a disorderly exit’,” he added.
“The question now is whether this is enough for the Bank to hike again in 2018. Well, both in this latest statement and back in November, the BoE effectively have told markets that it would be comfortable with a follow-up hike next year, but we still think this is far from a done deal, at least for now,” Smith said.
12.15am: BoE leaves interest rate unchanged
As expected, the Bank of England has left its benchmark interest rate unchanged.
“With lagging wage growth and weak consumer confidence, no-one will be surprised that Governor Carney has opted to keep rates unchanged following last month’s historic hike," said Kerim Derhalli, the chief executive officer of invstr.
“The bigger question now is when we can expect further rate rises. While inflationary pressures are continuing to boil over, the committee needs more clarity on how consumer spending and wage growth will develop over the course of 2018 before making a decision.
“As ever, Brexit remains a real sticking point. Some clarity has been achieved with the exit fee agreement but ahead of crucial trade talks it’s difficult to see how business investment is set to be impacted,” he added.
Nancy Curtin, chief investment officer at Close Brothers Asset Management, said: “Inflation may have hit a near six-year high, it’s clear that now is not the time for a further rate rise.
"Even last month’s decision may have been too hasty given the strain the economy is under, and we certainly don’t expect further moves from the MPC in the short-term. Employment may still be near a record high, but wage growth continues to lag inflation, which will limit consumer spending. Productivity tops the list of concerns for the Treasury and MPC alike.
"The Chancellor’s promise to bridge the productivity gap will go some way to improving supply-side issues, but it will not bring the scale of improvement we need. The amount of capital committed to reforming this economic driver is a drop in the ocean compared to the amount committed to issues like the UK’s divorce bill from the EU. The government clearly has little fiscal room to manoeuvre," she added.
The FTSE 100 perked up a little following the announcement, but remained in the red, down 12 at 7,485.
11.00am: Strong retail sales fail to translate into boost for retailers
Blue-chips drifted lower throughout the morning sessions, with investors waiting on the Bank of England interest rate statement today.
Anything other than zero change to interest rates would be a major shock.
The FTSE 100 was down 18 at 7,479, having traded all morning in a narrow range spanning from 7,471 to 7,497.
A strong set of retail sales has not translated into any noticeable lift for retailers.
James Smith, the economist covering developed markets at ING, said it was worth treating the latest retail sales data with some caution.
“At 1.2%, UK retail sales grew at the fastest monthly pace since April as Black Friday saw another surge in sales of household and electrical goods; that said, it's worth treating these numbers with some caution. Black Friday is a relatively new and ever-changing beast, which makes it a nightmare for statisticians to seasonally adjust.
“The British Retail Consortium and Visa have both suggested that this year's event wasn't quite the usual bonanza, as consumers continue to cut back on non-essentials, but even if this month's retail sales figures are accurate, it's fairly likely that there will be a reversal in December as many consumers simply do their Christmas shopping earlier to benefit from the discounts,” Smith suggested.
A company once described as “the unacceptable face of capitalism” looks to be coming to the end of the road as an independent company.
Lonmin PLC (LON:LMI), once known as Lonrho, has agreed to be taken over by South African miner Sabanye-Stillwater in a deal valuing the troubled platinum miner at about £285mln.
Lonmin’s shares rose 14.5p to 78.25p on the news.
Lonmin agrees to be taken over by South African miner Sabanye-Stillwater - Lonmin PLC (LON:LMI) has agreed to be taken over by South African miner Sabanye-Stillwater in a deal valuing the troubled platinum miner at about £285mln. Shares in Lonmin jump... https://t.co/jt3QwdaVIY
— Proactive Investors (@proactive_uk) December 14, 2017
The top riser on the London stock market this morning was Synairgen plc (LON:SNG) after the drug discovery tiddler received a £5mln cash boost.
The shares shot up 39% to 15.25p, lifting the market capitalisation to £18.3mln.
The company has handed responsibility for its fibrosis treatment programme to Pharmaxis (ASX:PXS) in return for a payment of £5mln and 17% of any partnership agreement.
#proactive Synairgen chief delighted with amended fibrosis collaboration deal - Richard Marsden, chief executive of Synairgen plc (LON:SNG), tells Proactive they've handed responsibility for their fibrosis treatment programme to Pharmaxis (ASX:PXS) in... https://t.co/Rcbaxz70rX
— Proactive Investors (@proactive_uk) December 14, 2017
10.00am: Retail sales (excluding fuel) rise 1.2% month-on-month
UK retail sales in November rose 1.1% (seasonally adjusted) from the previous month. Excluding fuel, the volume of sales was up 1.2% month-on-month.
The adoption of the US shopping event “Black Friday” appears to have contributed to the monthly increase in sales of household goods, according to feedback from retailers.
The year-on-year growth rate shows the quantity bought increased by 1.6%, the Office for National Statistics (ONS) reported.
“Total average store prices increased by 3.1% in November 2017 when compared with the same period last year, with price increases across all store types, in particular food stores had the largest price increase of 3.6% since September 2013,” the ONS said.
“This is a very strong number and the initial reaction was a sharp spike higher in sterling although this reversed quickly; however, it’s unlikely that a blip up in Retail Sales will push the Bank of England towards another rate hike anytime soon, despite inflation being well above target,” opined David Morrison, senior market strategist at GKFX.
November UK retail sales figures are good, but pity the @ONS who have to seasonally adjust this pic.twitter.com/nYQ0bOs9HX
— Chris Giles (@ChrisGiles_) December 14, 2017
The Footsie showed little reaction to the release, with the likes of Marks & Spencer Group PLC (LON:MKS) and Kingfisher PLC (LON:KGF) remaining slightly in the red.
The FTSE 100 was down 13 at 7,483.
9.30am: FTSE 250 takes a hammering after slew of disappointing trading updates
As per yesterday, the FTSE 100 was not straying far from its previous day’s level, with blue-chips modestly lower on balance.
The FTSE 100 was down 7 at 7,490, with news flow from the big hitters thin on the ground and investors more than happy to sit on their hands ahead of the Bank of England policy meeting today.
The FTSE 250, down 93 at 19,969, saw a lot more activity, much of it of the “wish we hadn’t bothered” variety.
Capita PLC (LON:CPI), the accident-prone outsourcing company, was the biggest mid-cap faller a pre-close trading update.
“The market for major business process management contracts has remained subdued throughout 2017, particularly in the public sector,” the company noted.
The shares were down 13.4% at 403.42p.
Sports Direct International PLC (LON:SPD) fell 8.5% to 350.9p after its interims disappointed. Revenue at its UK Sports Retail arm fell 1.0% year-on-year and gross margins contracted.
Liberum Capital Markets, which has a target price of 400p for the Mike Ashley vehicle, stuck with its ‘hold’ rating and said it expects no material changes to consensus profit & loss forecasts following today’s update.
Shareholders in Imperial Leather soap maker PZ Cussons PLC (LON:PZC) were in a lather following the company’s trading update.
The shares shed 7% at 304.94p as the company reported that first-half operating profits will be roughly 10% lower than the previous period, with strong profitability in Asia offset by reduced margins in some business units in Europe and in particular Africa as a result of the economic environment and competitive trading conditions.
Numis Securities trimmed its full-year forecasts and cut its price target from 340p to 325p.
“We have reduced our PBT expectations from £103.5m to £100.1m for FY 2018e which indicates adj EPS will be down c.1% for FY 2018,” Numis said.
8.30am: FTSE 100 drifts lower ahead of BoE meeting
UK stocks opened lower in the wake of last night’s quarter-point increase in US interest rates.
The FTSE 100, which closed four points lower at 7,497 yesterday, resumed its retreat this morning, sliding 13 points to 7,484.
The dollar fell following the Fed’s statement, with forex traders expecting the central bank’s commentary to be a bit more gung-ho in terms of future interest rate hikes.
“Fed policy makers voted 7 – 2 in favour of raising rates, with the two dissenters, Evans and Kaskari, representing concerns over stubbornly low inflation. Fed Chair Janet Yellen also hinted that low inflation could be more ingrained than temporary,” commented Jasper Lawler, at LCG.
“Fears over low inflation appear to be concerning the market more than the Fed right now. The Fed still believes it will hike three times next year; the market is not so sure that this is achievable while inflation refuses to tick higher. Whilst the Fed Funds did not actually register a change following the meeting, the sell-off in 10-year Treasury yields and the tanking of the dollar tell us that investors were not convinced by the Fed,” he added.
A weaker dollar does not do many favours to FTSE 100 constituents as a large proportion of them are big dollar earners.
A weak dollar is good news, usually, for mining stocks, however, as commodities are priced in the US currency.
Unsurprisingly, miners defied the trend this morning, with precious metals miners Randgold Resources Ltd (LON:RRS) and Fresnillo PLC (LON:FRES) the pick of the bunch, up 1.2% and 1.0% respectively.
Rio Tinto PLC (LON:RIO) advanced 0.4% to 3,559.5p ahead of its copper & diamonds investor roadshow presentation in Paris today.
Bunzl PLC (LON:BNZL), the international distribution and outsourcing group, left the market unmoved with its pre-close trading statement.
“Overall trading is consistent with expectations at the time of the third quarter trading statement in October,” it said.
United Utilities Group PLC (LON:UU. dipped 0.3% to 808.75p after it said it is advanced in its plans for the 2019 price review by industry regulator Ofwat.
Proactive news headlines:
Synairgen plc (LON:SNG) has handed responsibility for its fibrosis treatment programme to Pharmaxis (ASX:PXS) in return for a payment of £5mln and 17% of any partnership agreement.
Iofina plc (LON:IOF) said crystalline iodine production at the company's four operating IOsorb® plants has continued to deliver encouraging results, with better than expected iodine volumes in the second half, and construction of its IO#7 plant remains on track.
Atlantis Resources Limited (LON:ARL) is to transform itself into a diversified renewable energy company with the acquisition of a significant power generation asset leading to a change of name. The AIM-listed tidal power developer has agreed to acquire SIMEC Uskmouth Power Limited (SUP) from SIMEC UK Energy Holdings Limited, a GFG Alliance company, the owner of a 220 megawatt capacity power plant in South Wales which will be converted to use an end-of-waste energy pellet as fuel.
Premier African Minerals PLC (LON:PREM) has reported more high grade mineralisation from its latest drill hole at Zulu in Zimbabwe.
Directa Plus Plc (LON:DCTA) said Romanian energy firm GSP is to evaluate the use of Grafysorber, Directa’s graphene-based product for environmental applications.
Cyber-security specialist Corero Network Security PLC (LON:CNS) has displaced a competitor with its SmartWall technology at a North American regional internet service provider (ISP).
Digital media and social video specialist Brave Bison Group PLC (LON:BBSN) has extended its commercial partnership with Royal Dutch Shell PLC (LON:RDSA) by two years.
ReNeuron Group Plc (LON:RENE) has been given the green light from US authorities to kick off a phase IIb study of its CTX cell therapy candidate for stroke disability. Long-term data from the PISCES II trial earlier this year showed the treatment has the potential to improve the disability of stroke patients.
Sareum Holdings Plc’s (LON:SAR) chairman Stephen Parker will tell shareholders at Thursday’s annual general meeting that the cancer drug discovery and development firm has enjoyed a “year of significant progress”. The AIM-listed group licensed its Chk1 inhibitor and lead candidate SRA737 to US firm Sierra Oncology just over a year ago.
C4X Discovery Holdings plc (LON:C4XD) boss Clive Dix expects the drug discovery firm to make “significant progress” over the coming months after laying down the foundations for success over that past year. Back in November the company released data on an antagonist it has developed for the Orexin-1 receptor – the part of the brain which governs a person’s addictive behaviour.
Avation PLC (LON:AVAP) has entered into a secured aircraft revolving facility agreement with a leading international bank which will be used to finance aircraft or part portfolios of passenger aircraft on lease to commercial airlines. The AIM listed firm said the initial facility amount is US$100mln with interest based on either fixed or floating rates. The optimal duration for loans under the facility is up to 36 months.
Scancell Holdings Plc (LON:SCLP), a developer of novel immunotherapies for the treatment of cancer, and Cancer Research UK, the world's leading cancer have entered into a Clinical Development Partnership to develop Scancell's ImmunoBody® vaccine, SCIB2, for the treatment of patients with solid tumours, including non-small cell lung cancer (NSCLC).
Europa Oil & Gas (Holdings) PLC (LON:EOG) has had a “record year” for corporate activity, chairman Colin Bousfield told investors ahead of today’s AGM. “The company agreed no fewer than seven transactions for the financial year ending 31 July 2017, all of which are in line with our strategy to advance our asset base towards value trigger events such as drilling, whilst managing the associated risks,” Bousfield said in a statement.
Sound Energy PLC (LON:SOU) told investors that it has now completed the first phase of 2D seismic and magneto-telluric (MT) data acquisition for its Eastern Morocco. It is the first of four phase programme which is designed to assess the exploration potential of the assets, which will be followed up by drilling.
Savannah Petroleum PLC (LON:SAVP) told investors that its proposed US$250mln equity funding will be priced between 40p and 50p per share. At this level, the company would be worth between £375mln and £400mln. Big Pic in March.
Sunrise Resources Plc (LON:SRES) highlighted project milestones and looked forward to an active 2018 as it released its full year results statement at Wednesday’s stock market close. The AIM-quoted mining group, focussed on projects in Nevada, put the spotlight on its strategic decision to focus on the CS Pozzolan-Perlite project where it is advancing towards a production start-up target in 2019.
Tertiary Minerals plc (LON:TYM) has given a bullish assessment of prospects following an uptick in the fluorspar price and a recent strategic relationship with commodities group Possehl.
Tanzania focused Katoro Gold PLC (LON:KAT) has completed a Light Detection and Ranging (LiDAR) survey at its Imweru gold project.
Concepta PLC (LON:CPT) said its myLotus fertility product got an “excellent reception” at its inaugural meeting for potential China distributors in Shanghai on 22 November 2017, and added that it anticipates 2018 to be “a transformational year” for the group.
Faron Pharmaceuticals Ltd (LON:FARN), the clinical stage biopharmaceutical company, has said it plans to host an R&D Day on Wednesday, 21 February 2018, at Panmure Gordon's offices, One New Change, London, EC4M 9AF. The group said the event will provide an opportunity to hear about the company, its R&D strategy and pipeline developments, with a focus on Clevegen, Faron's second wholly-owned pipeline product approaching the start of Phase I/II development in 2018.
Solo Oil PLC (LON:SOLO) said it was informed today that Neil Ritson, the natural resources group’s executive chairman has added to his holding in the firm with the purchase of a further 3mln shares at 3.75p each. It said the purchase takes Ritson’s holding in the company to 4.65mln ordinary shares, representing a 1.19% stake.
Collagen Solutions PLC (AIM:COS) has confirmed the appointment of Hilary Spence as its chief financial officer with effect from 3 January 2018, taking over from Gill Black who has decided to step down as CFO and from the board for family reasons.
CentralNic PLC (LON:CNIC), the global software platform company supporting subscription web services including domain names, has bolstered its senior leadership team with the appointment of Vladimir Vano as group economist and head of communications for the Slovak market. Vano has a career of over twenty years in the banking, research, consulting and media sectors, having also served as external advisor for monetary affairs to the deputy prime minister and minister of finance of the Slovak Republic.
Aminex plc (LON:AEX) announced the appointment of Brian Cassidy, group general counsel, as its company secretary with immediate effect. The group added that Max Williams will continue in his other roles of director and chief financial officer.
Capital Networks has issued a research note on PCF Group Plc (LON:PCF) following the specialist lender’s recent full year results. Analyst James Dolman said he has maintained his EPS target for PCF for 2020 at 3.84p based on a net interest margin of 8.0%, which Dolman considers “inexpensive especially given the portfolio asset growth of 20% in the financial year”.
Capital Networks has issued a research note on Harvest Minerals Limited (LON:HMI), with analyst Sam Catalano saying he continues to believe that “the near-term cashflow generation potential for Harvest Mineral shareholders is compelling.”
6.50am: Weaker start expected
London’s FTSE 100 is expected to start Thursday’s session lower, though it is the central bankers that remain in focus.
Last night Janet Yellen lifted US interest rates, by 25 basis points to 1.5%, with her final policy decision before she is replaced as Federal Reserve chair by Jerome Powell, and later today both the Bank of England and European Central Bank hold their respective committees for December.
Monetary management will be the narrative for the morning at least, though it may be somewhat muted.
“The BoE only raised rates last month, so no action is expected today,” said Jasper Lawler, analyst at London Capital Group.
“There will be no press conference following the meeting, so the impact of this months MPC could be limited and investors will have to rely on the meeting minutes.”
The analyst added: “A holding tone is most likely from Mark Carney & Co. The recent Brexit deal, six-year high level of inflation and the uptick in wages are unlikely to waver the BoE, who will be looking to analyse the impact of the first-rate hike in a decade, with no intention of further hikes until late next year, at the earliest.”
On Wall Street, the Dow Jones closed Wednesday up 80 points, 0.33%, at 24,585 whereas the S&P 500 moved 0.5% lower to finish the session at 2,662.
The Nasdaq meanwhile edged 0.2% higher with the tech heavy benchmark ended the day at 6,875.
In Asia, Japan’s Nikkei lowered 0.28% to 22,694 while Hong Kong’s Hang Seng was down 0.3% to 29,130 and the Shanghai Composite dipped 0.36% to 3,291.
London’s FTSE 100 is seen lower, with CFD and spreadbetting firm IG Markets having the blue chip benchmark down 18.5 points, calling it at 7,481 to 7,485 with just over an hour to go before Thursday’s open.
Significant announcements expected Thursday December 14:
Trading updates: Bunzl PLC (LON:BNZL), Ocado Group PLC (Q4) (LON:OCDO), Petrofac PLC (LON:PFC), PZ Cussons PLC (LON:PZC)
Interims: Omega Diagnostics Group Plc (LON:ODX), ReNeuron Group Plc (LON:RENE), Sports Direct International PLC (LON:SPD), Tungsten Corporation PLC (LON:TUNG)
Finals: Jersey Electricity PLC (LON:JEL), Titon Holdings PLC (LON:TON)
Economic data: BoE, ECB rate decisions; RICS UK house prices; UK retail sales; US weekly jobless claims; US retail sales
Ex-dividends: To clip 0.7 points off FTSE 100 index - Associated British Foods plc (LON:ABF), 3i Group PLC (LON:III)
Around the markets:
Sterling: US$1.3430, up 0.07%
Gold: US$1,257 an ounce, up O.95%
Brent crude: US$62.86 a barrel, down 0.76%
Headlines:
Link ATM network vows to retain free cash machines, 1km apart - The Guardian
Criminals on probation are monitored with a phone call - The Times
Sports Direct investors block £11m award to Mike Ashley's brother -Financial Times
The number of homes being put up for sale has fallen again - City A.M.
'Scrooge' union RMT announces more rail strikes - The Times
Customers won't pay £1000 for a new iPhone, moans Carphone Warehouse boss as sales fall - This is Money
Starbucks Wi-Fi Hijacked People's Laptops to Mine Cryptocurrency – Motherboard