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FTSE 100 closes lower after another day of unease on Brexit and trade

The UK's premier blue-chip index closed down around 12 points at 7,004

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Footsie closed lower on Wednesday
  • FTSE 100 closes down

  • UK stress tests on deck    

  • Bank stocks mixed      

FTSE 100 closed the day lower as traders fretted about trade and Brexit though Wall Street shares were higher.

The UK's premier blue-chip index closed down around 12 points at 7,004, while the FTSE 250 shed around 21 points at 18,693.

House builders bore the brunt of selling and made up three of the top five losers on the share index.

The biggest faller among them was Persimmon (LON:PSN), whose shares shed 4.69% to 2,014p.

In Europe, the German DAX fell ten points, while on Wall Street, the Dow Jones surged over 423 points.

David Madden, market analyst at CMC Markets, said: "European stock markets are mixed as investors remain nervous about the geopolitical situation. Uncertainty surrounding Brexit, US-China trade relations, and the Italian budget are acting as a ceiling to equity markets."

3:55pm: Banks expected to pass stress tests 

UK’s blue-chips appeared set to finish Wednesday’s session in the red ahead of the release of the Bank of England’s annual stress tests for banks.

The FTSE 100 index fell 21 points, or 0.3%, to 6,995. It’s been darting between gains and losses during the day. The FTSE 250 also headed lower, down 42 points to 18,619.

Bank shares were mixed before the UK’s central bank issued results from its tests of banks to determine whether they can withstand an economic shock. Britain’s seven largest banks are each expected to pass the tests, which come before the UK is expected to leave the European Union next year. The results are due at 4:30 pm London time. 

Shares of Barclays PLC (LON:BARC) turned lower, down 0.9% to 166.82p, and Royal Bank of Scotland PLC (LON:RBS) gave up 0.6% to trade at 222.20p.

HSBC Holdings PLC (LON:HSBA) fell 0.7% to 668.80p, but Standard Chartered PLC (LON:STAN) moved up 0.4% to 613.20p, but was off session highs. Lloyds Banking Group PLC (LON:LLOY) edged up 0.2% to 56.51p.

“Banking stocks in the UK have had a disappointing year, weighed down by concerns about a no-deal Brexit which would suggest that a lot of the bad news is already baked into the price,” said Michael Hewson, chief market analyst at CMC Markets, adding that shares of Lloyds and RBS have each lost more than 15% year-to-date.

READ: Lloyds, RBS, Barclays and other UK banks expected to pass 2018 stress tests 

The Bank of England will also release its assessment of Brexit risks on the UK economy. Earlier Wednesday, the UK government warned that the British economy would shrink by 9.3% about 15 years after Brexit if the UK leaves the European Union without a deal. With a deal, the economy would be smaller by 3.9% over the same period.

READ: Government warns of big hit to UK economy without Brexit deal

 

2.55pm: Footsie finds stronger footing 

The FTSE 100 turned higher Wednesday afternoon, keying off gains for Wall Street after data showed the world’s largest economy held to its growth rate during the third quarter.

The large-cap index was up 14 points to 7,031, while the mid-cap FTSE 250 edged up 8 points.

Over on Wall Street, the Dow Jones Industrial Average sprang up 200 points as trading started. The broader S&P 500 index picked up 0.4% and the Nasdaq Composite claimed a 0.6% rise. Among tech stocks, Salesforce.com Inc. shares (NYSE:CRM) leapt more than 8% following stronger-than-expected quarterly earnings released late Tuesday.

US stocks advanced on Wednesday after the US Commerce Department said the economy grew 3.5% in the third quarter, unrevised from the agency’s first estimate but meeting widely held expectations.

The FTSE 100, meanwhile, improved from an intraday low of 6,995.07. 

“An area of resistance over the past week has been 7060, so a move above this would be a bullish development,” said Chris Beauchamp, market analyst at IG. “Both 7100 and then 7127 come into view. A move below 6980 is needed to suggest a more bearish view has developed.”

In individual moves in the UK markets, Telford Homes plc (LON:TEF) rose 3.2% to 309.00p after the buy-to-rent property developer posted in-line interim results.

READ: Telford Homes posts in-line interim results but brokers still trim estimates, targets on slowing London market

Meanwhile, Amedeo Resources PLC (LON:AMED) shares plunged 56% to 4.00p after the resources investment firm proposed the cancellation of its AIM-traded shares from trading, saying the move would be in the best interest of shareholders.  

 

12.45pm: UK sees economy shrinking post-Brexit 

UK blue-chips lost ground early Wednesday afternoon as the UK government released a report on how different Brexit scenarios would impact the economy, while US stock futures suggested a higher start for Wall Street.

The FTSE 100 shed 9 points to 7,008, backing off earlier gains, while the mid-cap FTSE 250 index clung to a rise of 2 points at 18,662.

In New York, futures for the Dow Jones Industrial Average stepped up 111 points and S&P 500 futures picked up 0.3%. Nasdaq-100 futures popped up 0.5%. Those moves came before the US Commerce Department released data on third-quarter GDP, and before Federal Reserve Chairman Jerome Powell speaks at the Economic Club of New York at around 12 pm Eastern Time.

Back in the UK, the government warned that the British economy would shrink by 9.3% about 15 years after Brexit if the UK leaves the European Union without a deal.

A deal, however, would leave the economy smaller by 3.9% over the same period.

READ: Government warns of big hit to UK economy without Brexit deal

Rain Newton-Smith, CBI chief economist, said: “Politicians of all parties should speak to businesses in their constituency to hear about the impact a bad Brexit will have on them and their workforce. And the longer a ‘no deal’ scenario remains possible, the more corrosive the impact on jobs and investment plans.”

In UK stock movers, shares of Brewin Dolphin PLC (LON:BRW) dropped 4.5% to 317.80p as Liberum cut its price target on the wealth manager, to 394p from 481p, even as the company posted strong yearly fund inflows.

READ: Brewin Dolphin knocked as house broker cuts price target

Meanwhile, Just Eat shares (LON:JSE) picked up 2.3% to 591.20p as Liberum raised its price target on the food-delivery portal.

READ: Liberum hikes price target for Just Eat in vote of confidence in investment strategy

11.45am: Blue-chips swing down

The FTSE 100 was in the red during late-morning trade Wednesday as early efforts to push higher fizzled.

The large-cap benchmark fell 12 points, or 0.2%, to 7,004, with travel-related and homebuilder shares ranking among the worst performers. A number of travel and leisure stocks have been under pressure after tours operator Thomas Cook Group PLC (LON:TCG) on Tuesday issued a profit warning before the release of its annual results on Thursday.

Rival travel-services provider TUI AG (LON:TUI) slumped 2.1% to 1,193.50p on the FTSE 100, and British Airways parent International Consolidated Airlines Group PLC (LON:IAG) shed 1.6% to 646.60p.

But shares of On The Beach Group PLC (LON:OTB) advanced 2.8% to 413.41, off the main benchmark, as the online beach-holidays company on Wednesday posted an increase in full-year profit and revenue.

READ: On the Beach profits shine despite impact of hot weather and World Cup on demand

Gains in the pound during the session may have also been hurting the FTSE 100.

“Realistically, sterling’s gains came from issues with the dollar and the euro, not any domestic strength,” said Connor Campbell, financial analyst at Spreadex.

“The greenback may be in retreat following Larry Kudlow’s attempts to ease investors’ trade war fears, the dollar now less immediately needed as a safe haven, while the single currency was hurt by a dip in German consumer confidence. Regardless of the reason, the pound found itself up around 0.4% against both, sitting at $1.278 and €1.132 respectively,” he added.

10.20am: Footsie steps off the gas 

UK’s blue-chips have sharply pared their gains Wednesday morning, with investors appearing cautious before they receive key assessments about the British economy if a no-deal Brexit scenario materialises.

The FTSE 100 was up 2 points at 7,020, retreating from an intraday high of 7,057.03. The move came in part as shares of oil producers turned mixed after earlier gains. BP PLC (LON:BP) turned lower, falling less than 1 point at 524.20, while Royal Dutch Shell PLC (LON:RDSB) was 0.3% higher at 2,390p.

The UK government and the Bank of England are due later Wednesday to separately release their view of the economy before the UK is due to exit the European Union in March 2019.

The government and the central bank are expected to ramp up their warnings about the risks of emerging from the bloc with no deal in hand, according to a Reuters report.

Lukman Otunuga, research analyst at FXTM, said: “Some parts of the Treasury report have already been leaked by the Telegraph this morning with the UK seen to be £150bn worse off under a no-deal. With GDP also projected to be 7.6% lower under a no-deal scenario over a 15-year period, things could get very messy to the run-up of the official Brexit deadline.”

UK Chancellor Philip Hammond told the BBC on Wednesday that the agreement reached between EU negotiators and UK Prime Minister Theresa May is the best available and should support the economy moving forward. 

Turning to individual movers, Cluff Natural Resources PLC (LON:CLNR) surged 24% to 2.76p after the AIM-listed natural resources investor said it has signed an exclusivity agreement with a major international oil and gas company.

EasyJet PLC (LON:EZJ) shares dropped 3.2% to 1,179.50p as Kepler Cheuvreux cut the airline to ‘hold’ from ‘buy’. But shares of air carrier Flybe Group PLC (LON:FLYB) rose 1.2% to 21.00p despite a downgrade from HSBC to ‘hold’ from ‘buy’.

8.45am: Blue-chips open higher

The FTSE 100 made a modest advance as trading opened Wednesday, with gains for oil shares helping the index recover from its loss in the previous session.

The blue-chip benchmark picked up 16 points, or 0.3%, to 7,034, with bank and industrial shares also among advancers. The index on Monday fell 19 points, hurt by worries surrounding the trade dispute between the US and China and persistent uncertainty surrounding Brexit.

Bank shares on Wednesday were mostly higher ahead of the release of the Bank of England’s annual stress tests for banks, due after trading closes. Lloyds Banking Group PLC (LON:LLOY) rose 1.4% to 57.19p, Barclays PLC (LON:BARC) picked up 0.5% to 169.12p, and Standard Chartered PLC (LON:STAN) bulked up by 0.9% to 615.90p. But HSBC Holdings PLC (LON:HSBA) slipped 0.1% to 672.40p.

BP PLC (LON:BP) was up 0.6% to 527.32p and rival Royal Dutch Shell PLC (LON:RDSB) tacked on 0.7% at 2,399.50p, with the oil producers rising as oil prices jumped by more than 1%. Traders have been cautious lately ahead of next week’s OPEC meeting.

In other moves, Marks and Spencer Group PLC (LON:MKS) fell 0.8% to 307.10p after RBC Capital Markets downgraded the department stores operator to ‘sector perform’ from ‘outperform’.

Thomas Cook Group PLC (LON:TCG) shares slid 6.7% to 35.05p, extending Tuesday’s plunge after Barclays slashed its price target by 62% on the tours operator, to 46p from 120p.

Proactive news headlines:

Regency Mines PLC’s (LON:RGM) US coal associate Mining Equity Trust saw sales volumes ease slightly in October though revenues increased. MET sold 43,530 tons of metallurgical coal worth US$2mln compared to 44,020 tons and revenues of US$1.96mln in September.

IQ-AI Limited’s (LON:IQAI) subsidiary, Imaging Biometrics (IB), has appointed a South Korean distributor for its diagnostic imaging products as the firm received ISO certification for its medical devices and quality management systems.

George Botanicals, the CBD products maker owned by Sativa Investments PLC (LON:SATI) has launched a balm and expanded its range of drinkable oils infused with the cannabinoid extract. Demand for CBD products is growing due to their perceived health and well-being benefits that include pain and stress relief.

Tharisa PLC (LON:THS) today released financial results for a year marked for its record production but also transition away from toll mining with a contractor to a company-owned fleet operation.

appScatter Group PLC (LON:APPS) has signed an agreement with global information firm IHS Markit Ltd (NASDAQ:INFO) to provide mobile app data.

Eco Atlantic Oil & Gas Ltd (LON:ECO) has confirmed the completion of its farm-out transaction with Total. The French oil major has now paid US$12.5mln to Eco, and in return, it has received a 25% working interest in the Orinduik exploration project offshore Guyana.

ANGLE PLC (LON:AGL) (OTCQX:ANPCY) has announced the appointment of Dr Joseph D Khoury as a scientific advisor to the company's established Scientific Advisory Board. The AIM-listed liquid biopsy company pointed out that Khoury is a recognised expert in diagnostic pathology and has significant experience in the cytological and morphological analysis of cancer cells.

Clinigen Group PLC (LON:CLIN), the global pharmaceuticals and services company, is holding a Capital Markets Day for institutional investors and analysts today in London. The event is being hosted by Shaun Chilton, Clinigen’s group chief executive officer, and will include presentations by Senior executives, including representatives from each of the Group's three businesses - Clinical Trial Services, Unlicensed Medicines and Commercial Medicines.

StatPro Group PLC (LON:SOG), the AIM-listed provider of cloud-based portfolio analytics and asset pricing services for the global asset management industry, is holding a Capital Markets Day for institutional investors and analysts this afternoon in London. The event is being hosted by Justin Wheatley, StatPro’s CEO, and will include presentations from Dario Cintioli, (Managing Director, Revolution), Craig Arenhold (Managing Director, Infovest) and Gordon Bloor (Managing Director, Source: StatPro). No new material information will be provided, the group said.

United Oil & Gas PLC (LON:UOG), the oil and gas exploration and development company, said it will be hosting an investor evening at 6pm on Wednesday 12 December at the Jamaica Wine House, Saint Michael's Alley, Cornhill, London EC3V 9DS.

6.30am: Footsie eyes gain 

The FTSE 100 looks likely to take its lead from Asia’s main markets rather than a wobbly Wall Street, with the index of blue-chip shares set to raise 24 points to 7040.85.

This is inspite a fresh salvo by the Trump administration making more remote the potential for a Sino-American trade deal.

Ahead of a weekend meeting between Chinese President Xi Jinping and President Donald Trump, Larry Kudlow, US National Economic Council Director, said of his boss: “I don’t know if the Chinese take him seriously. They ought to.”

“I am very disappointed and I know the president is extremely disappointed, and hence the dinner on Saturday night … is an opportunity to turn a new page, breakthrough,” he added. “President Xi can step up and come up with some new ideas for us.”

Back here in the UK, scheduled corporate news consists mainly of mid-caps led by catalogue retailer Findel (LON:FDL) and engineer Senior (LON:SNR).

Around the Markets:  

  • Pound worth US$1.2753
  • Gold changing hands for US$1,222.40 an ounce, up 50 cents
  • Brent crude 61.21, up US$1 a barrel

City Headlines:

Financial Times

  • Unilever in exclusive talks to buy GSK’s Horlicks unit - Anglo-Dutch consumer company beats out rival bid from Nestlé for $4bn nutrition business
  • Uber and Deliveroo talks ‘miles apart’ on valuation - deal stalls as ride-hailing app offers less than half £4bn price tag
  • Cutting emissions to zero will cost billions, says EU
  • Ofcom head calls for British rival to Netflix - Sharon White says ‘viewers will flock to single destinations’ with wide content

Times

  • The collapse of Spark Energy has left customers of all other energy suppliers facing a bill of up to £50mln
  • General Motors feels heat as president threatens subsidies
  • Amigo makes friends with quickfire dividend payout
  • Google has paid $1bn for a business park in Silicon Valley, meaning it has completed the two largest property deals in America this year
  • Britain is the seventh best country in the world to live in, according to a prosperity measure that values wellbeing above GDP wealth

Guardian

  • Customers of Britain’s 7,000 biggest companies would be given the right to vote on the pay of top executives under plans for a clampdown on boardroom pay being considered by Labour
  • Britain is running out of food warehousing facilities needed by retailers and manufacturers to stockpile goods before a possible no-deal Brexit
  • Black Friday drives record sales week for John Lewis

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