FTSE 100 sheds 35 points
London markets shut at 12.30pm
US stocks seen weaker on Christmas Eve
Close: Bah humbug
The FTSE 100 index ended its half-day Christmas Eve session off lows but still posted an unseasonal decline as investors shunned the market ahead of the festive break amid concern about the trifecta of worries over global growth, US/China trade wars and Brexit.
At the 12.30pm close, the UK blue chip index was down 35 points at 6,685, just bouncing off the late session low of 6,661.04, with Friday’s 9 point Santa rally proving a false dawn.
Wall Street is expected to extend its pre-weekend plunge when its final half-day session before the holidays starts in two hours but some commentators were still hoping Santa Claus might still make a late appearance across the pond.
Investors, however, remained nervous after reports that US Treasury Secretary Steve Mnuchin held calls with top US bankers over the weekend following the recent sell-off in equity markets and convened a "Plunge Protection Team".
Rumours suggesting that President Donald Trump had asked officials whether he could fire Jerome Powell as chair of the Federal Reserve were also swirling over the weekend.
Chris Beauchamp, chief market analyst at IG, commented: “The Christmas rally has not arrived for European markets, who have, it must be said, been on the naughty list for investors for almost two years now, having lagged far behind the US.”
“But,” he added, “Wall Street has done its best to catch up these past few months, and the reports of Steve Mnuchin meeting with decision-makers will not provide much Christmas cheer.
“Mr Mnuchin is most likely worried about his job, but everyone else will draw the conclusion that there is perhaps much more to worry about.”
Beauchamp concluded: "US markets might bounce a bit today, in a feeble attempt to revive the spirit of Christmas, but investors head to the feast in a very different mood to a year ago."
10.30am: Grinch holds sway
The FTSE 100 index remained unseasonally gloomy as the half-day Christmas Eve session progressed, with little to provide any relief as investors could only look ahead of more worries over global growth, US/China trade wars and Brexit once the turkey has been eaten.
Around 10.30am, the UK’s leading stock index was 39 points lower at 6,682 barely shifting from its opening position in a market set to close at 12.30pm before the Wall Street restart, although no relief is likely across the pound following Friday’s plunge.
Naeem Aslam, chief market analyst at Think Markets UK Ltd noted: “US futures are trading lower as investors focus on the US partial government shutdown. The disappointing fact is that there is no immediate end in sight for this resolution.
“Trading volume is going to remain very thin today as most of the traders are out for the holiday season. We do not expect any major moves in the market. The ongoing downtrend would continue to dominate today and markets are likely to close lower again.”
There was, however, some positive corporate news further down the market in London, with Premier African Minerals Limited (LON:PREM) shares shooting 15% higher mid-morning to 0.115p after the group said it has been informed that the Zimbabwean Government is willing to inject the funds required to resuscitate the RHA tungsten mine.
In a statement, the AIM-listed firm said the indication was made in a letter received on the afternoon of 21 December 2018 from the Zimbabwean Minister of Industry, Commerce and Enterprise Development which asked for some further clarification on the history of Premier's involvement and the restructuring of RHA Tungsten Pvt Limited.
Westminster Group PLC (LON:WSG) was also a good gainer, up 7.3% to 9.5p after it revealed that the majority of issues and challenges created by the US sanctions renewal against Iran have now been addressed and the security contract for one of 60 airports in the country, which was signed in May 2018, remains a key focus for the company.
Dukemount Capital PLC (LON:DKE) saw its shares rise on Christmas Eve after it announced that it has forward-funded and pre-sold the first project in West Derby to a segregated mandate limited partnership managed by Alpha Real Capital.
The first stage of the process will result in a payment to Dukemount of £570,000 for the enhanced value of the site and the preliminary costs, with the total funding package from Alpha for the complete development being £3mln.
8.40am: Glum start on Christmas Eve
The FTSE 100 index took a tumble in early trading on Christmas Eve with the half-day session looking to be unseasonally glum following a sharp sell-off last week on Wall Street amid global growth, trade war, and US government shutdown worries
Around 8.40am, the blue-chip index was 38 points, or 0.6% lower at 6,682, reversing after having posted a 9.34 point gain on Friday which had raised some hopes for a very late Santa rally.
But those hopes were dashed after New York stocks posted further hefty falls pre-weekend, with the Nasdaq Composite index entering bear market territory after a 3% drop and the other two US indexes not far behind.
Mike van Dulken, head of research at Accendo Markets, commented: “Markets still under pressure from last week’s more hawkish Fed update, exacerbating fears about slowing growth and more expensive refinancing following years of stimulus.
“This is on top of pre-existing trade war fears with the US Trade Secretary saying “All auto tariff options still on the table”. That said, China says it will remove some import and export tariffs on 1 Jan which has helped improve sentiment overnight.”
He added: Countering this nugget of positivity, however, we have; 1) a US government shutdown (Senate Democrats refusing the President’s demands for border wall funds); 2) US Defence Chief leaving even earlier than expected, and; 3) Treasury Secretary awkwardly calling Bank executives about market stability after a) market sell-off, b) government shutdown and c) rumours the President asked if he could fire Fed Chair Powell. Mixed signals aplenty into Christmas!”
There was little corporate news to counter the glum pre-Christmas mood, and what there was proved mostly negative.
Playtech PLC (LON:PTEC) shares dropped 4.7% to 379p after the FTSE 250-listed gaming technology company said it expects a new Italian tax on gambling to reduce its 2019 adjusted underlying earnings (EBITDA) by approximately €20mln-€25mln before any mitigating actions.
Under pressure department stores operator Debenhams PLC (LON:DEB) was even worse off, shedding 10.4% to 3.5p as investors worried that ‘Super Saturday’ Christmas trading on the high street won’t prove strong enough.
But among the minority gainers, AIM-listed Victoria Oil & Gas PLC (LON:VOG) leapt 19% higher to 18.90p after it revealed that its wholly-owned subsidiary Gaz du Cameroun SA is to resume gas supply to the Logbaba 30 megawatt (MW) power station after signed a binding term sheet with grid power provider, Eneo Cameroon SA.
Proactive news headlines:
Westminster Group PLC (LON:WSG) has revealed that the majority of issues and challenges created by the US sanctions renewal against Iran have now been addressed and the security contract for one of 60 airports in the country, which was signed in May 2018, remains a key focus for the company.
Victoria Oil & Gas PLC (LON:VOG) has announced that its wholly-owned subsidiary Gaz du Cameroun SA (GDC) is to resume gas supply to the Logbaba 30 megawatt (MW) power station after signed a binding term sheet with grid power provider, Eneo Cameroon SA (ENEO).
Eland Oil & Gas PLC (LON:ELA) said that drilling on the third appraisal well on the Gbetiokun field in Nigeria has successfully encountered hydrocarbon-bearing sands and added that operations will continue down to the remaining target reservoir.
Savannah Resources PLC (LON:SAV) has appointed SP Angel Corporate Finance as its nominated adviser with immediate effect. The group said the appointment comes as a result of the proposed merger between SP Angel and Savannah's previous Nomad, Northland Capital.
Eight Peaks Group PLC (LON:8PG) announced that, further to its previous announcement of 20 December 2018, Zafar Karim, its executive chairman, and Lord Nicholas Monson, a non-executive director of the company, have now subscribed for a total of 1,000,000 and 700,000 new ordinary shares, respectively, at a price of 10p each. Following the subscription, the group added, Karim and Monson, will have beneficial interests representing approximately 7.9% and 4.0%, respectively, of the company’s enlarged ordinary share capital.
Chaarat Gold Holdings Limited (LON:CGH) announced on Friday that it has raised US$350,000 after entering into an agreement with an unnamed investor for the subscription and issue of secured convertible loan notes exercisable in 2021.
6.30am: Unseasonal greetings
The FTSE 100 index is expected to post an unseasonal plunge on Christmas Eve as more weakness pre-weekend on Wall Street curtails Friday’s late modest Santa rally, pulling London back to the Grinch-like performance during the rest of Advent.
Spread betting firm IG expects the blue-chip index to open around 46 points lower at 6,675 on the final half-day trading session before the festive break.
The Footsie had managed to finish 9.24 points higher at 6,721.17 on Friday, the last full trading session before the holidays providing some hope that the fabled Santa rally might finally arrive.
However, on Wall Street, after starting modestly higher, the Dow Jones Industrials Average swiftly reversed, shedding 414 points at the close, or 1.8% to reach 22,445 its lowest level since October 2017.
The falls were worse for the broader S&P 500 index which lost 2%, while the tech-laden Nasdaq Composite tumbled 3% to become the first of the three major indexes to enter official ‘bear’ market territory – down nearly 22% from its 29 August record closing high, to exceeding the 20% drop considered the threshold for that nomenclature.
Growth, shut-down and trade worries
The fresh falls came two days after the Federal Reserve raised interest rates for a fourth time this year despite concerns over slowing economic growth which has led investors to flee stocks in high-valuation sectors such as technology.
The wrangling between President Trump and Congress over the inclusion of the Mexican border wall costs in the Federal budget which has led to a temporary shutdown of government services also caused concern.
And US markets were also spooked by comments from White House trade adviser Peter Navarro who said the United States and China might not reach a trade deal at the close of a 90-day negotiating window unless Beijing can agree to a profound overhaul of its economic policies.
Those comments kept the mood equally glum today in Asia, with Hong Kong’s Hang Seng index shedding 0.4% and the Shanghai Composite off 0.02%, while Japan’s Nikkei 225 index was closed for a public holiday.
On currency markets, the pound managed to edge 0.3% higher against the US dollar but stayed flat versus the euro on that heady mix of global growth worries, ongoing trade war fears, plus Brexit deal uncertainty.
Empty presents
There is nothing scheduled on the corporate diary for Christmas Eve and just a UK CBI growth indicator survey due on the macro front.
Investors will therefore likely fixate on the traditional Christmas fare of presents and the turkey dinner, whilst also thinking ahead to January’s splurge of trading updates from the general and food retail sectors, kicking off with Next PLC’s (LON:NXT) pronouncements on 3 January.
However, the half-day London session – which will see markets close at 12.30pm – can often spring some surprises, so investors will also keep a watch out for any unseasonal early warnings.
Significant announcements expected on Dec 24:
Half-day trading London market closes at 12.30pm
Economic data: UK CBI growth indicator survey
Around the markets:
- Sterling: US$1.2664, up 0.3%
- Gold: US$1,260.50, an ounce, up 0.5%
- Brent crude: US$45.91 a barrel, up 0.7%
City Headlines:
- RBS is seeking a German banking licence to maintain access to European markets with regional payments hub in Frankfurt – Financial Times
- A shareholder rebellion against Just Eat is gathering momentum after two of its biggest investors, Capital Group and Fidelity, threw their weight behind activist Cat Rock Capital’s demands – Sunday Telegraph
- Julian Dunkerton, the co-founder of fashion brand Superdry, is plotting a shareholder vote to force his way back into the company – Sunday Times
- Sirius Minerals faces a critical month, with a target of the end of January to secure commitments from lenders for up to US$3.6bn of debt – Sunday Times
- Fashion chain New Look is considering to slash its £1.3bn debt mountain as it battles to return to financial health – Mail on Sunday
- Economists believe that the US Government shutdown will start to trim growth after Christmas, as Washington's budget deadlock threatens to spill over the holiday season – Daily Telegraph
- Hedge funds have taken large bets against retailers’ share prices to capitalise on weak Christmas trading updates from the high street – The Times
- At least three members of the Patisserie Holdings team have left the company after the arrest of its chief financial officer and the discovery of a £40mln black hole in its accounts – The Times
- Snapchat’s parent Snap has told workers they will not get cash bonuses this year, capping a horrendous period in which the shares have collapsed, key executives have left and losses have piled up – Sunday Times
- Gatwick Airport’s third-largest airline Norwegian Air may have to go cap in hand to investors this Christmas as it spirals towards a new year cash crunch – Daily Telegraph
- Dubai is to launch a company with Careem, the regional rival to Uber, to manage the ride-hailing system for all taxis operating in the Gulf’s commercial hub – Financial Times
- UK liqueurs recorded a bumper year for bottle sales over the 12 months to early September, with British people consuming 42 million bottles at home or in pubs, bars and restaurants in an attempt to keep up with the social media cocktail craze – The Guardian
- Independent shops hit by the turmoil on Britain’s High Street have turned to the internet to double their Christmas sales, with more than 500 small stores across the country now listing their products on Trouva – Daily Mail