- FTSE 100 closes lower
- US stocks down
- Chances of another hung parliament recede after Brexit Party backs down
- More violence in Hong Kong
5.05pm: FTSE 100 finishes in red
FTSE 100 index closed in the red, hit by a strong pound, and as traders fretted over global trade and the latest violence in Hong Kong.
The UK's premier share index shed nearly 31 points at 7,328 with resource stocks, unsurprisingly, among the top laggards.
In the US, major benchmarks were also lower, with the Dow Jones Industrial Average down over 95 points, while the tech-laden Nasdaq exchange lost around 25.
In Hong Kong, there has been another day of clashes between anti-government protesters and police that have reportedly left two people in a critical condition and dozens more injured.
"Stock markets are largely lower as traders are worried about the US-China trading relationship as well as the violence in Hong Kong," noted market analyst David Madden, at CMC Markets, on Monday.
"Global equites rallied last week as progress was made in relation to the US-China trade discussions, but since then the situation doesn’t look as rosy. President Trump said he never agreed to roll back all the tariffs that were imposed in September, and more recently he said he would only sign a deal if it was the ‘right deal’".
The pound gained 0.63% against the US dollar as the Conservative party were perceived to have been given a boost in the forthcoming general election as leader of the Brexit party Nigel Farage said it would not contest previously Conservative held seats.
Conversely to its bigger cousin, FTSE 250, the midcap index, gained over 52 points at 20,410.
4.05pm: Footsie stages late rally
Banks and housebuilders were leading the Footsie's rally late in the trading session.
The index of blue-chip shares was down 38 points (0.5%) at 7,321, more than 60 points above its intra-day low.
Housebuilders such as Persimmon PLC (LON:PSN), Barratt Developments PLC (LON:BDEV), Berkeley Group Holdings PLC (LON:BKG) and Taylor Wimpey PLC (LON:TW.) were wanted, with rises ranging from 2.4% to 4.3%.
Sentiment for some sectors has been boosted by the Brexit Party's decision not to contest seats in the next General Election that are currently held by Conservative MPs, which has reduced the chances of another hung parliament.
3.00pm: US markets open lower
US markets opened lower, as doubts grow that a phase one trade deal between the US and China will happen anytime soon.
The Dow Jones industrial average was down 98 points (0.4%) at 27,584 and the S&P 500 was off 11 points (0.3%) at 3,083.
“We all love a bit of transparency in the markets, forever keen to get that little bit of extra insight, something that will give us an extra edge but the trade war headlines are just getting a little silly and investors are lapping them up each and every time. We swing from optimism to pessimism on a daily basis and never feel any-the-wiser,” grumbled Craig Erlam at Oanda.
“This time it was Trump's turn to pour cold water on suggestions that not only is a deal in the offing, but it comes with the cherry on top that is the removal of tariffs. It's difficult to say who stands to lose more from this deal falling apart but this last-minute jostling does not inspire confidence,” he added.
In the UK, the FTSE 100’s losses have been pared back to 51 points (0.7%), with the index at 7,309.
The pound continues to be more popular than a Cornish pasty on a winter’s eve following the decision by the Brexit Party to go easy on the Conservative Party in the next election.
Betting firm Sporting Index is now predicting that the Conservative Party will have a majority of 15 seats in the House of Commons following the General Election in December.
“With Labour backing a public vote and the Liberal Democrats’ ‘Stop Brexit’ message, the Conservatives are now the clear party for delivering Brexit and we’re predicting this will be enough to for them to win 341 seats,” said Phill Fairclough, the political trading spokesman for Sporting Index.
The mid-cap FTSE 250 has received a lift from the Brexit Party's withdrawal of its threat to compete in all of the constituencies where the Tory Party has a candidate.
The company announced the acquisition of Formulate and Implexa; the former is a financial and business planning software business and the latter a Hamburg-based software house.
1.45pm: Brexit Party pledges not to fight Conservative Party incumbents in next General Election
The Footsie did briefly suffer a triple-digit fall before trimming its losses a little.
London's index of leading shares was down 89 points (1.2%) at 7,270.
On the foreign exchange markets, sterling has risen by a cent against the US dollar, which is hitting demand for the shares of the multi-national companies that comprise the bulk of the FTSE 100.
On the political horse-trading front, the Brexit party has announced that it will not stand in seats in the forthcoming election where the incumbent MP is a Conservative candidate.
whilst i suggested in the flash note on Farage the the FTSE didn't like the news, just to make clear that the 250 did - still just negative but massive divergence from the 100 today pic.twitter.com/6gk3T77lMk— Neil Wilson (@marketsneil) November 11, 2019
“The pound will receive a welcome boost after Nigel Farage’s Brexit Party will not be pitted against Conservatives in almost 320 seats in next month’s election,” opined Nigel Green of the deVere Group.
“The move reduces the likelihood of another hung parliament, which would have led to more parliamentary paralysis and more crippling delays on Brexit.
“All of this would have generated yet more, intensified uncertainty – something financial markets loathe. This is why the pound has jumped on the news of the Informal Johnson-Farage pact.
“Looking ahead, a Conservative majority would give the government the enhanced ability to move on with the Brexit process,” Green said.
While the FTSE 100 is weighed down by the strength of sterling, the constituents of the FTSE 250 are not, and the mid-cap index has recovered to 20,348 following the Brexit party decision, from around 20,250 before the announcement; the index still remains in the red, however, with a 9 point (0.0%) loss.
11.45am: Miners routed as sterling rallies against the dollar
Somewhat overshadowed by this morning's gross domestic product data was the UK trade deficit, which widened to £3.4bn in September from £1.8ibn in August.
The consensus forecast had been for a deficit of £2.0bn.
“Stockpiling by firms on both sides of the Channel has not been as pronounced recently as it was before the original Brexit deadline,” declared Samuel Tombs, the chief UK economist at Pantheon Macroeconomics.
“The volume of goods and services exports in September was just 1.4% above its average level in the previous two years and 1.4% below its Q1 [first quarter] average. Exporters’ customers appear to have held on to stocks that they accumulated in Q1, and so have no need to rebuild inventories at present. This picture is even more pronounced regarding imports, which were 9.6% below their Q1 average, despite picking up in September,” he added.
Sterling has picked up on foreign exchange markets, rising by half a cent to US$1.2825.
A strong UK exchange rate is generally viewed as a bad thing for stocks in the FTSE 100, stuffed full of miners and drugs companies as it is, and sure enough, the FTSE 100 has fallen 97 points (1.3%) to 7,262.
Mining giants and fellow traveller Evraz PLC (LON:EVR), the Russian steel producer, figure prominently among the big losers, as does fashion firm Burberry Group plc (LON:BRBY), which is heavily reliant on the Asian markets; the latter was down 2.8% at 1,987.5p.
Hong Kong’s financial centrepic.twitter.com/Kc2H3zOaH8— Alfons López Tena #FBPE (@alfonslopeztena) November 11, 2019
Analogy of the day from Nick Timothy:— Jim Pickard (@PickardJE) November 11, 2019
“When Frodo finally reaches the Fire of Mount Doom, he succumbs to temptation and chooses not to destroy the ring, but keep it for himself. Recently, friends of Nigel Farage have taken to comparing him to Frodo” https://t.co/bgiujDlXqU
9.45am: GDP rises in the third quarter
UK gross domestic product (GDP) increased by 0.3% in the third quarter of 2019, according to the Office for National Statistics (ONS).
The increase followed a 0.2% decline in the preceding quarter and was a tad below the 0.4% increase economists had been expecting.
Third-quarter GDP was up 1.0% year-on-year, which the ONS said was the slowest annual growth rate since the first quarter of 2010 when the economy was suffering from the shock of the credit crunch.
“GDP grew steadily in the third quarter, mainly thanks to a strong July. Services again led the way with construction also performing well. Manufacturing failed to grow as falls in many industries were offset by car production bouncing back following April shutdowns,” the ONS said.
“Looking at the picture over the last year, growth slowed to its lowest rate in almost a decade.
“The underlying trade deficit narrowed, mainly due to growing exports of both goods and services,” it added.
David Cheetham, the chief market analyst at XTB, said that the worst news came from the production readings in the manufacturing and industrial sectors, which both contracted more than forecast.
“While the positive GDP reading means that the UK has managed to stave off a recession for another year there is little doubt that the economy is spluttering, with political uncertainty and a slowdown in global activity clearly taking their toll,” Cheetham said.
Q3 UK GDP is 0.3 - a touch lower than expectations, but recession avoided - ONS: “over last year, growth slowed to lowest rate in almost a decade” ie since the financial crisis.— Faisal Islam (@faisalislam) November 11, 2019
Nancy Curtin, the chief investment officer of Close Brothers Asset Management, said: “The economy is struggling, and kicking the Brexit can down the road has denied businesses the certainty they so sorely need, with investment spending collapsing as a result. A higher household saving ratio suggests that consumers are also cautious.
“The BoE [Bank of England] forecasts an investment rebound if a Brexit deal removes no-deal risk but we think this is optimistic. If uncertainty does indeed continue, in concert with a weak external environment, the MPC is likely to act. We have now seen the first split interest rate vote since June 2018 and, even if a Brexit deal is delivered, a rate cut looks probable in 2020,” she added.
The FTSE 100 reacted phlegmatically to the figures, changing little from its station at around 7,321, down 38 points (0.5%) on the day.
8.30am: Big drop for Footsie
The FTSE 100 defied predictions for a quiet start, dropping 48 points to 7,311.39.
Taking its cue from the fast-deteriorating markets in Asia, the drivers were the latest turmoil in Hong Kong allied to some fairly negative economic data from China.
Also dragging sentiment downwards was the inability of the two sides in the Sino-American trade war to broker a phase-one 'peace deal' when a week ago they seemed on the brink of an accord.
Closer to home, in Europe, the political deadlock in Spain hasn’t helped market sentiment. While the socialist party won the most seats, a surge to the right meant leader Pedro Sánchez hasn’t enough to form a government.
A domestic driver for the will be the latest GDP print, which should reveal that the UK avoided recession.
“We are starting the week in risk-off mode,” said Neil Wilson, senior analyst at Markets.com. “Fiery protests in Hong Kong and the US-China trade war are conspiring to dampen the mood in markets on Monday. As usual expect the risk switch to be flicked to ‘on’ pretty quickly with the standard trade war pump in due course."
"And in terms of Hong Kong, we wonder how long term this de-risking kneejerk will last. Asian shares were broadly weaker after another weekend of clashes in Hong Kong, in which at least one protestor was shot," Wilson added.
Bakery chain Greggs (LON:GRG) is the gift that keeps on giving for investors. Shares in the maker of the vegan sausage roll powered 7.4% higher after it said like-for-like sales surged more than 8% in the six weeks to November 9.
On the flipside, Finablr (LON:FIN), the owner of bureaux de change group Travelex, was marked down almost 6% after its latest trading update.
Proactive news headlines:
Sirius Minerals PLC (LON:SXX) has slowed development work on its project in the north of England to allow for a six month strategic review period, funded by existing cash resources. The thinking is that Sirius will develop the mine in stages now, or in what it calls “scopes”, thus limiting the requirement for one huge up-front funding package. The first stage of development is likely to cost US$600mln.
Union Jack Oil PLC (LON:UJO) has been informed by operator Rathlin Energy that the Kirkham Abbey reservoir in the West Newton project area contains a base case 146mln barrels of oil-in-place and a best case of 283mln barrels. This liquid element is much higher than originally estimated, David Bramhill, Union Jack’s executive chairman said in a statement.
Zoetic International PLC (LON:ZOE) said its shares will start trading on the over-the-counter (OTC) market in the USA on Tuesday 12 November 2019. The cannabidiol (CBD) company's ordinary shares will cross-trade onto the OTCQB Venture Market, which is a market designed to enable developing international companies to be publicly traded in the United States.
AFC Energy PLC (LON:AFC) says it is “encouraged by early market interest” in its AlkaMem membrane technology following tests by one of the world’s largest electrolyser manufacturers. AlkaMem is a membrane for electrolysis, a process where electricity is used to cause chemical reactions that can produce elements such as hydrogen, aluminium or copper.
Paul Fletcher, the chief financial officer of Vast Resources PLC (LON:VAST), has been appointed as the company's finance director. Roy Tucker, who was the finance director, will continue as business director of the company.
Thor Mining PLC (LON:THR) (ASX:THR) has revealed the preliminary results from the second round of drilling at the White Violet deposit on the Bonya project, adjacent to the company's Molyhil project, in the Northern Territory of Australia. A total of 11 holes were drilled at White Violet to complete the program for that deposit. The drill rig has now moved to the Samarkand deposit for the second part of the program. Among the highlights revealed by XRF analysis were 20 metres grading 0.24% WO3 (tungsten tri-oxide) from two metres, including eight metres at 0.38% copper, eight metres at 0.24% WO3, 14metres at 0.23% WO3 and two metres at 0.71% WO3.
Aminex PLC (LON:AEX) and Solo Oil PLC (LON:SOLO) have clarified the budgetary situation for the work programme to develop the Ntorya field in Tanzania. The firm approved budget for 2020 is US$1.447mln (gross), principally relating to licence maintenance and planning activity.
Solo Oil also announced a further strengthening of its board with the appointment of Don Nicolson as an Independent non-executive director with immediate effect. The firm noted that Nicolson is a senior business leader with over 35 years' experience in the oil, gas, mining and natural stone sectors, including 26 years with BP where he ran oil and gas businesses in the UK, United States and Canada.
Columbus Energy Resources PLC (LON:CERP) has agreed a US$4.5mln funding agreement with investment manager Lind Partners to speed up the drilling of its Saffron well in Trinidad. The additional funds will be used to cover any extra costs that arise from the drilling of the well, as well as to fast track the appraisal and development of any discovery. Columbus will also use the cash to speed up technical and operational activities for its Weg Naar Zee licence in Suriname including the development of the field following well tests.
Oriole Resources PLC (LON:ORR) has received another £105,000 in research and development (R&D) rebates from the UK tax authorities. The Europe and Africa-focused miner received £40,000 in a similar rebate in 2016 as part of what it says are tax relief claims for “geoscientific advances” made during its exploration work.
Open Orphan Plc (LON:ORPH) has announced plans to make its Venn Life Sciences business profitable by way of a three-year preferred partnership agreement with French pharma company Ipsen Group. In a statement on Monday, the AIM-listed rare disease drug developer said that Venn Life Sciences, which the Open Orphan group reversed into this year, will be the preferred partner for Ipsen's data management and biostatistics divisions.
Benchmark Holdings PLC (LON:BMK) told investors its incumbent chief financial officer has now joined the company and will take up her new post on 18 December to ensure a smooth transition. Septima Maguire was previously at veterinary pharmaceuticals firm Dechra Pharmaceutical PLC (LON:DPH), where she held a number of senior roles during her four years at the company.
Chaarat Gold Holdings Ltd (LON:CGH) has revealed its first ore reserve statement for the Kapan mine in Armenia since acquiring it in February 2019. The resources have been updated to account for depletion as well as new assay and geological data derived from 627 meters of underground drilling completed since July, and the 24,321 meters of underground drilling completed to date in 2019. The new resource allows for a mine life of seven years, with gold equivalent production averaging 60,000 per year.
Argo Blockchain Plc (LON:ARB) says the number of cryptocurrency mining machines in production at its facilities has now reached 7,000.Another 10,000 machines are currently on order and are expected to be delivered in batches from early December, with Argo planning to increase its production base to 17,000 by the end of the first quarter of 2020.
Adamas Finance Asia Limited (LON:ADAM) has reported continuing good progress at Future Metal with the management team onsite nearing completion of the necessary works to prepare the dolomite quarry to restart production as planned in late 2019, with a test production run scheduled to occur later this month. The company holds an 85% shareholding in Future Metal, representing Adamas’ largest investment by value in its portfolio.
Motif Bio PLC has confirmed it won’t have to pay US$2.4mln listed in the last full accounts as outstanding to a contract research group following a settlement with the firm The deal will see the accounting reversal of a previously recognised expense and the reduction of US subsidiary Motif BioSciences Inc's trade payables and accruals in the amount above
Bacanora Lithium PLC (LON:BCN) is continuing with work on the final design for the mine, infrastructure and plant at the Sonora project in Mexico. Leading global lithium company Ganfeng, which recently invested in Bacanora, has begun a technical review of the hydrometallurgical circuit, with a view to potentially sourcing key sections of the lithium production equipment from equipment suppliers in China.
Genel Energy PLC (LON:GENL) has bought out its partner in the SL10B13 block, onshore Somaliland. The company acquired East Africa Resource Group's 25% stake for an undisclosed sum. As previously announced, a farm-out process relating to the block is now underway.
Tissue Regenix Group said it is in talks regarding the financial covenants on a term loan and revolving credit facility from MidCap Financial Trust. The company said it is “proactively engaged” in negotiations over a revenue test, which it looks likely to fail.
Salt Lake Potash Limited (LON:SO4) (ASX:SO4) said that at the Annual General Meeting of shareholders of the AIM and ASX listed company held earlier today, 11 November 2019, all resolutions were duly passed.
Verona Pharma PLC (LON:VRP) (NASDAQ:VRNA), clinical-stage biopharmaceutical company focused on respiratory diseases, announced that Jan-Anders Karlsson, its CEO, and Piers Morgan, its CFO, will participate in two institutional investor conferences later this month. It said they will take part in the Guggenheim Healthcare Talks Idea Forum Neuro/Immunology Day on Monday, November 18, 2019 and the Stifel 2019 Healthcare Conference on Tuesday, November 19, 2019, both of which are taking place in New York.
6.25am: Flat start predicted
The FTSE 100 looks set to open flat at 7,359.38 amid worries that last week’s trade deal optimism may have been misplaced.
Over the weekend President Trump said negotiations over the first phase of a Sino-American pact were taking longer than he anticipated.
The Hang Seng, meanwhile, tumbled almost 2.4% as violence spread across the territory with police using tear gas and water cannons to break up anti-government protests.
Mainland China provided an economic conundrum. While the country’s monthly inflation print came in far higher than anticipated, driven by sky high pork prices of all things, there was a worrying undercurrent.
Factory-gate prices were actually in reverse gear. “These figures confirm waning demand and slowing economic activity in the world’s most populated nation,” said Ipek Ozkardeskaya, senior markets analyst at London Capital Group.
Here in the UK, the quarterly GDP read-out will, according to economists, show Britain’s flirtation with recession was merely that. The economy is expected to have grown 0.3% in the three months ended September, offsetting a contraction in Q2.
“The rebound is largely expected to have been driven by the services sector, which makes up almost 80% of the UK economy and tends to do all the heavy lifting in most cases,” said Michael Hewson, analyst at CMC Markets.
Expected this week is a deluge of corporate news from the likes of ITV (LON:ITV), Vodafone (LON:VOD), British Land (LON:BLND), Land Securities (LON:LAND), Burberry (LON:BRBY), SSE (LON:SSE) and Taylor Wimpey (LON:TW.).
Around the markets:
Pound worth US$1.2799
Gold US$1,463.50, down 60 cents an ounce
Brent crude US$61.92, off 59 cents a barrel
Significant news expected on Monday:
Economic data: Rightmove house prices, UK GDP and industrial production
- Far right makes gains as Socialists top inconclusive Spanish poll
- Lagarde faces ECB push to overhaul policymaking
- CBI chief urges parties to reconnect with business
- Invest in us at your risk, says Aramco
- Easyjet decides there’s still life left in the package holiday business
- Swedish energy giant Vattenfall ready to pull plug on Britain
- Jetblue may fly to Norwegian’s rescue
- British company backed by rock star aims to revive the age of the Zeppelin
- Prosus threatens to walk away from Just Eat
- Private equity firm Alchemy pushes for break-up of lender Non-Standard Finance
- Lenders order £100m Pizza Express rescue
- Thousands of UK workers' pay to rise as living wage increases
- BA to review 'fuel tankering' after Panorama revelations - carrying excess fuel saves airlines on fuel bills but has adverse environmental impact
- Chinese industrial giant poised to buy up British Steel for £70mln