FTSE 100 closes down 18.87 pts
Pound fairly flat versus both dollar and euro
BoE boss Carney reassures on European banking
IMF boss says Brexit impacting UK economy
FTSE 100 closed in the red, joining European and US indices, as the bullish momentum evaporated.
The UK's premier share index finished almost 19 points lower at 7,525. The FTSE 250 on the other hand, added almost nine points to close at 20,350.
In the currency markets, the pound is down 0.23% against the Euro and up a tad- 0.06% - against the US dollar.
In the US, the S&P 500 index is off 0.29% to 2,682 at the time of writing as the US tax bill continues journeying through the legislature
"Investors have been looking forward to this day since Donald Trump won the Presidential election, and now that it has arrived, traders are unwinding down their positions. Dealers are squaring up their books ahead of Christmas and some of the froth is being taken off of the top of the equity markets," said David Madden, analyst at CMC Markets.
Miners did well on Footsie today, as did paper & packaging giant Mondi Plc (LON:MNDI), which was top riser on the index, with shares firming 2.57% to 1,874p.
It came as Goldman Sachs has upgraded the firm, emulating Deutsche Bank's move yesterday.
Like Deutsche Bank (DB), Goldman Sachs has moved from a neutral position to a 'buy'.
The biggest loser on FTSE 100 was NMC Health (LON:NMC), which shed 4% to 2,738p.
In macro news, the IMF (International Monetary Fund) downgraded UK forecasts for growth due to Brexit uncertainty. It now expects 1.6% growth this year, down from 1.7% previously.
2.55pm: Retreat as Wall Street eases
The Footsie dropped lower again in late afternoon trading, falling back from earlier modest gains as US stocks made mixed early progress following fresh record highs on Tuesday with the final vote on US tax reform plans due.
Around 2.50pm, the FTSE 100 index was about 11 points lower at 7,532, dropping back from the lunchtime peak of 7,550.60, but holding off the day’s low of 7,529.13.
In early New York trading, the Dow Jones was volatile, ticking 3 points higher at 24,757 after an early retreat from opening gains, with the broader S&P 500 index pretty flat, but the tech-laden Nasdaq composite lower.
In London, the UK blue chip had pushed marginally into positive territory after Bank of England governor Mark Carney’s speech to lawmakers provided a little Christmas cheer for the City
Dennis de Jong, managing director at UFX.com, said: “The Bank of England governor reassured the market that the BoE would go easy on wholesale banks operating in the EU, with no additional capital requirements after Brexit.”
He added: “Allowing EU banks to operate as usual after March 2019 is encouraging news. But such pledges will all come to nought, if Theresa May’s current Brexit talks are unsuccessful.
“So, even some 18 months after the EU referendum, the negotiations hang like the sword of Damocles over the Prime Minister and the UK economy, which can’t escape their shadow to mirror growth rates abroad.”
2.20pm: Carney Borathon
The FTSE 100 marked time at 7,544.37 as Bank of England Governor Mark Carney addressed the Treasury Select Committee.
Early discussion has focused on European banks, which are sitting on around £4trln of goods and assets here in the UK, and how they will be dealt with in the run-up to and post-Brexit.
All fairly tame stuff, though we have learned a new word here at Proactive thanks to the exchanges between Carney and the Committee chairman, Nicky Morgan.
That word is ‘subsidiarise’, which describe the process of EU financial services group setting up bespoke London units until formal accord between the union and the UK is brokered. Carney apparently isn’t a fan at this point in time.
“I don’t think this is a good outcome for system, for UK, for EU,” he said.
Just checking, are you still awake?
11.45am: Grocers main driver of retail sales growth
UK retail sales and orders rose in the year to December, according to the latest monthly CBI Distributive Trades Survey, although both disappointed expectations of somewhat stronger growth.
The CBI survey showed that 37% of retailers said sales volumes were up in December on a year ago, whilst 17% said they were down, giving a balance of +20%. That was slower than the +30% expected, and slightly slower than November’s +26% reading.
Meanwhile 31% of retailers placed more orders with suppliers in December than they did a year ago, whilst 20% placed fewer orders, giving a balance of +11%, which was well below expectations for +22%.
The report showed growth in online sales remained reasonably firm in the year to December, at a pace just below the long-run average - indicating that the internet sales of Black Friday and Cyber Monday were unspectacular - and is expected to slow further in the year to January.
Grocers were the main driver of retail sales growth in December, but other sectors also performed well: notably, mail order retailers, hardware & DIY and other sales, such as flowers and jewellery, but specialist food & drink and footwear & leather saw sales fall on a year ago.
Alpesh Paleja, the CBI’s principal economist, said: “Notwithstanding the sales growth seen in the last couple of months, underlying trading conditions are tough for retailers.
“We expect the squeeze on real pay for households to last a while longer, so retailers will still face challenging conditions ahead. “
The latest CBI report saw sterling ease back from earlier modest highs, but it was still up around 0.1% at US$1.3402 and €1.1314.
Meanwhile, the FTSE 100 index remained about 13 points lower at 7,530.
11.15am: IMF UK growth forecast unchanged
The UK economy is feeling the impact of last year’s decision by voters to leave the European Union and the government’s resolution to press ahead with Brexit, according to Christine Lagarde, the head of the International Monetary Fund.
At the publication of an annual report on the British economy, the IMF boss said: “These two decisions are already having an impact in the economy even though the UK is not expected to leave the EU until 2019.”
Lagarde added that firms were delaying investment until they have greater clarity about future trade rules and she urged Britain and the EU to reach a deal soon on transitional arrangements for March 2019.
The IMF said Britain’s economy was set to grow by around 1.5% in 2018, in line with its previous forecast, after growth of 1.6% in 2017, slower than in many other advanced economies.
On currency markets, the pound perked up slightly after the IMF boss’ comments, adding 0.2% versus the dollar at US$1.3413 and 0.1% against the euro at €1.1319.
But the FTSE 100 index remained weaker, down around 13 points at 7,531.
10.05am: BoE offers average pay rise prediction
UK businesses are expected to offer pay deals averaging around 3% next year, up from about 2.5% this year, the Bank of England said today in a regular report on economic conditions from its regional staff, mirroring an annual CBI jobs and pay report published on Tuesday.
The BoE’s regional agents report said: “A significant number of contacts expected pay awards to increase towards 2.5-3.5% over the next year, from 2–3% in 2017. That uplift showed some signs of coming through for the minority making decisions in late 2017.”
The central bank also said that businesses reported growing labour shortages and investment plans that were “consistent with modest growth”.
The report did little to stir sterling which remained fairly moribund on currency markets, fairly flat against both the dollar and the euro at US$1.3393 and €1.1314 respectively.
Among equities, the FTSE 100 index was also pretty dull, just 8.5 points lower at 7,535, consolidating yesterday’s gains.
Rebecca O’Keeffe, head of investment at interactive investor commented: “Global equity markets are struggling to find any significant direction or momentum as we approach Christmas, with low volumes and little news to move markets.”
She added: “Even the US tax reform bill passing its last major hurdle in the US Senate, and a foregone conclusion to be passed in the House later today, had been so priced in that the muted reaction was not a surprise.
“The US tax reform bill has been a buy signal every step of the way for US equities, on anticipation of reform; on the initial detail; on the final detail; leaving little room for more enthusiasm.”
8.45am: Quiet start awaiting Lagarde, Carney
The FTSE 100 made a quiet start ahead of a big news day, with the health of the UK economy front and centre.
Traders were keeping their powder dry ahead of a London visit from International Monetary Fund supremo Christine Lagarde with the index of blue chip shares down about 4 points at 7,539.84 on thin volumes.
Focus will shift early afternoon to the Westminster and specifically the Treasury Select Committee, which will interrogate Bank of England Governor Mark Carney, who will give his take on inflation and growth prospects.
In between, the Confederation of British Industry’s distributive trades survey will provide some sense of what’s occurring on the High Street in the run-up to Christmas.
Turning to the markets, there was a muted reaction to the regulatory green light received by Tesco PLC (LON:TSCO) for its £3.7bn takeover of cash and carry group Booker (LON:BOK).
Next (LON:NXT) topped the FTSE 100 gainers, rallying after recent falls with traders betting on a benign CBI report for the retailers. Remember, the group is first cab off the rank in reporting season with a trading update due on January 3.
The mood music suggests that range changes at Next have helped – though it still faces the stiff competition from online operators such as ASOS, Boohoo and, of course, Amazon.
Dropping down to the FTSE 250, shares in Tullow Oil (LON:TLW) topped the risers’ list after being upgraded by Jefferies International.
Proactive news headlines:
Victoria Oil & Gas PLC (LON:VOG) has reported better-than-expected results after it kicked off flow testing of the La-108 well at the Logbaba gas field in Cameroon.
Cabot Energy PLC (LON:CAB) is to increase its ownership of its Canadian assets, acquiring a 25% stake that it didn’t already own in a deal worth US$8.71mln. At the same time it is raising US$16.5mln of new funds through a share sale, with new shares priced at 5p each.
Kennedy Ventures PLC (LON:KENV) said investee company, African Tantalum (Aftan), continued to make “significant progress” operationally. Aftan owns the Namibia Tantalite Investment Mine (NTI), which mines and supplies tantalum at high-purity to a single, unnamed customer based in North America.
Aircraft leasing specialist Avation PLC (LON:AVAP) expects to see growth in reported revenues in the second half of the current financial year, it said in an AGM statement.
The first half of the financial year of Mirada PLC (LON:MIRA) saw the company start to reap the benefit of its heavy investment in marketing, with contract wins in the Caribbean and Bolivia.
The US subsidiary of specialty pharma group Midatech Pharma PLC (LON:MTPH) has kicked off a Phase IV clinical trial of its Gelclair oral gel. Gelclair is already used to treat oral mucositis (OM) – which causes sores and inflation of the mouth – in cancer patients undergoing chemotherapy.
Amryt Pharmaceuticals PLC (LON:AMYT) has appointed Patrick Jordan as vice-president of global distributor markets. He is an 18-year veteran of the healthcare industry and has held senior roles at Pfizer and MSD (Merck & Co).
The year to the end of September was, by the company's own admission, an extraordinary one for drugs company Redx Pharma PLC (LON:REDX), but it has emerged from administration with a healthy cash balance, a reduced cost base and a strengthened management team.
Sound Energy PLC (LON:SOU) revealed that preliminary results of a volume certification process (being conducted by consultant RPS Energy) regarding the TE-5 Horst well location validate the group’s prior estimate, which put mid-case gross Gas Originally in Place at some 0.63 trillion cubic feet.
6.45am: Little change predicted
To misquote Christmas, the London stock market is winding down for Christmas, with the Footsie set to open little changed this morning.
After eking out a 7 point gain to 7,544 yesterday, the FTSE 100 was expected to open at around the 7,541 level this morning on what is expected to be a quiet day for corporate news flow.
Traders will have something of interest to ruminate over, however, in the form of the US tax reform bill.
“The House passed the Republican US tax reform bill with a comfortable majority along party lines on Tuesday, enabling the bill to move ahead to the Senate where again it passed; however, a procedural spanner in the works means that a revote will be necessary in the House,” noted Jasper Lawler at LCG.
“Despite the Republican victory, the US market dipped lower, in a classic example of buy the rumour sell the fact. All three US major indices lost ground; the Dow 0.1%, the S&P 0.3% and the Nasdaq 0.5%; however, the dip could be short-lived as US futures are once again on the up,” he added.
The United States Senate just passed the biggest in history Tax Cut and Reform Bill. Terrible Individual Mandate (ObamaCare)Repealed. Goes to the House tomorrow morning for final vote. If approved, there will be a News Conference at The White House at approximately 1:00 P.M.
— Donald J. Trump (@realDonaldTrump) December 20, 2017
Heading into the last knockings, Asian markets were mixed with Japan's Nikkei 225 up 24 at 22,892 and Hong Kong's Hang Seng down 32 at 29,221.
Meanwhile, in the crazy world of cryptocurrencies, should you be thinking of buying your loved one some bitcoin for Christmas, it has just got considerably cheaper.
The price plunged overnight by 14% from US$18,125 to US$15,578 before recovering to US$16,130.
On the subject of Christmas, it is the make-or-break time of year for retailers, so there will be keen interest in today's CBI Distributive Trades Survey.
Last month, the survey reported a pick-up in retail sales following a dip in October, but the report also highlighted the strongest growth in average selling price in over 26 years, highlighting the march of inflation.
Official November data recently from the Office for National Statistics showed that ‘Black Friday’ helped to propel retail sales 1.6% higher from a year earlier, with a particular uplift in sales of electrical household appliances.
However, analysts said that Black Friday had distorted sales and retailers still face challenging conditions, so the early signs from the CBI report for the key pre-Christmas December period will be closely eyed.
The annual general meeting of aircraft leasing company Avation is likely to be an upbeat affair, after a year in which the company has successfully freshened up its fleet.
On Monday the company announced it had acquired and delivered into service a new Boeing 777-300ER commercial passenger aircraft.
It’s the first twin-aisle aircraft it has delivered and according to executive chairman Jeff Chatfield, the 777 is “the marquee airplane in its class”.
Significant announcements expected:
AGMs: Avation PLC (LON:AVAP). Creo Medical Group PLC (LON:CREO), Green Dragon Gas Limited (LON:GDG), Webis Holdings PLC (LON:WEB)
Economic data: CBI distributive trades survey; US existing home sales
Around the markets:
- Sterling: US$1.3384, down 0.01 cents
- 10-year gilt: yielding 1.211%
- Gold: US$1,266.50 an ounce, up US$2.30
- Brent crude: US$63.95 a barrel, up 15 cents
- Bitcoin: £12,171, down £574
Business headlines:
The Daily Telegraph
Innogy’s chief executive leaves days after Npower unit prompts profit warning: The chief executive of Npower’s long-suffering parent company Innogy, Peter Terium, is stepping down from the business immediately, just days after the group trimmed its guidance.
Facebook abusing its power with ‘limitless’ collection of people’s data, Germany says: Facebook has been accused of “limitless” collection of its users’ data by Germany’s competition watchdog, in the first major assessment of the social network’s market dominance.
Allianz pumps US$100mln into micro-insurer targeting world’s poorest: German insurance giant Allianz has poured almost US$100mln (£75mln) into a micro-insurer that targets those living on less than US$2 a day.
The Guardian
Tesco found issues at second 2 Sisters plant as scandal-hit site was closed: Tesco food standards inspectors unearthed a series of “major” process issues at a second 2 Sisters Food Group factory, on the same weekend that separate concerns prompted the closure of the UK’s largest chicken supplier’s West Bromwich site.
First pilots, now cabin crew – Ryanair to recognise other unions: Ryanair has said it will recognise cabin crew unions and hold meetings in the new year, as it prepared to start its first ever talks with pilots’ unions in Dublin on Tuesday.
The Times
Hong Kong vies with The City for Saudi Aramco listing: Hong Kong is emerging as a serious contender to host the initial public offering of Saudi Aramco in a challenge for London and New York. The Chinese special administrative region’s exchange has stepped up its lobbying in recent months as Saudi Arabia continues to prevaricate over its plans for the flotation.
It’s right for switchers to get best deal, says Eon boss: People who do not take the time to switch energy supplier deserve to pay more for their gas and electricity, Eon’s UK chief executive has said.
Tesla charges ahead but still makes loss in UK: Opening showrooms and service centres and installing its charging infrastructure sent Tesla into the red in the UK last year despite a 50% surge in revenues.
Bitcoin fears fuelled by South Korea hack attack: Fears about the safety of bitcoin investments were heightened yesterday after a digital currency exchange in South Korea collapsed, saying that hackers had stolen a significant proportion of its assets.
The Independent
Mobile network customer to be able to switch providers by text under new Ofcom rules: Mobile customers will in future be able to switch providers by sending a free text message under new rules introduced by the communications regulator.
UK house price growth expected to grind to a halt in 2018 as Brexit uncertainty continues: The housing market is expected to grind to a halt next year but a shortfall in supply will prevent a significant drop in prices, according the Royal Institution of Chartered Surveyors (RICS).
Amazon pulls ‘irresponsible’ infant circumcision training kits from sale over child safety fears: Amazon has withdrawn “irresponsible” circumcision training kits from sale after a complaint from secular groups, who warned they could put babies at risk by encouraging unqualified practitioners to attempt the procedure.
Daily Mail
Sky News staff warn watchdog that blocking takeover will mean 500 job losses: Staff at Sky News have piled into the debate over the broadcaster’s potential takeover, warning the competition watchdog that blocking the deal would trigger 500 job losses and deliver a ‘deeply damaging’ blow to British journalism.
Steelworkers facing threat to pensions as they rush to close their retirement schemes before it gets too expensive: Thousands of steelworkers are likely to lose some of their pension benefits in the rush to close their retirement scheme before it gets too expensive, the man in charge has warned.
Clydesdale and Yorkshire boss earns more than £2mln despite announcing plans to axe dozens of branches: The boss of Clydesdale and Yorkshire Banking Group has earned more than £2mln after announcing plans to axe dozens of branches. The lender sparked anger in January with a proposal to shutter 79 outlets – mostly in isolated northern towns and villages – and sack 400 staff.
Poundland distances itself from South African owner as fraud scandal threatens to bring it down: Poundland has distanced itself from owner Steinhoff as an accounting scandal threatens to derail the South African investment firm. Steinhoff has lost two chief executives this month amid a fraud scandal which has seen shares crash more than 87%, wiping £7.5bn off its value.
Daily Express
‘Not effective!’ Bank of Italy blames EU for country plunging into economic meltdown: The European Union has been blamed for plunging the Italian economy into crisis, and some politicians believe the country still isn’t prepared to stop another financial disaster.
The Scottish Herald
Standard Life Aberdeen said to back London Stock Exchange Group chairman: Standard Life Aberdeen is reported to be ready to throw its weight behind the Scot who chairs London Stock Exchange Group, Donald Brydon, in his attempt to fend off a bid to have him voted off the board.
Sterling falls as Downing Street eyes ‘ambitious’ EU trade deal: Sterling slumped on Tuesday as traders took a dim view of comments from Downing Street saying Britain was seeking a more ambitious European trade agreement than the EU-Canada deal.
City AM
BBC One dances to the top with its new festive advert: For its 2017 Christmas advert, BBC One has opted for an animation-style film that showcases a tale of togetherness in modern Britain.
Over 100 Feather & Black jobs saved as Hilding Anders returns to UK market: Swedish bedding giant Hilding Anders today came to the rescue of stricken UK bedding and furniture retailer Feather & Black. Saving 104 jobs across the country, Hilding Anders bought 17 of Feather & Black’s 20 UK stores from the firm’s administrators.
Big Six energy firms criticise price cap plans as harming competition and say customer engagement is the real issue: bosses at the Big Six energy firms today hit back at government plans for caps on energy tariffs, telling MPs the market had become increasingly competitive in recent years and would be hindered by a price cap.
Is Uber a tech or transport firm? Europe’s highest court’s about to decide: A major question of modern times asking whether Uber is a transport or technology company is set to be answered by Europe’s highest court on Wednesday. The European Court of Justice will make a ruling in a long-running case originating in Spain and is expected to decide that Uber is a transport company.