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FTSE 100 ends modestly lower as late rally curtailed; sterling still resillient

At the close, the UK blue-chip index was down 5.76 points, or 0.1% at 7,233.90, have fallen back from a session peak of 7,255.73

Trading room
  • FTSE 100 ends 5 points lower
  • US stocks slip back after Friday's leap
  • Sterling holds firm although Tory lead narrows
  • Tesco leads UK blue-chip gainers

4.50pm: Subdued close for Footsie

The FTSE 100 index ended a touch lower as a late afternoon rally ran out of steam in tandem with a lacklustre showing on Wall Street and further gains by the pound as traders positioned for what is still currently expected to be a Conservation election victory on Friday.

At the close, the UK blue-chip index was down 5.76 points, or 0.1% at 7,233.90, have fallen back from a session peak of 7,255.73 while holding above the day’s low of 7,217.80.

In New York, around London’s close, the Dow Jones Industrials Average was down 62.62 points, or 0.2% at 27,952, with the broader S&P 500 index and the tech-laden Nasdaq Composite index both off 0.1%, giving back some of the strong gains made on Friday following upbeat US jobs data as traders look ahead to this week’s US rate decision.

Chris Beauchamp, chief market analyst at IG commented: “It has been a mixed day for most indices, with equities not entirely able to follow up on Friday’s strong gains. Anyone looking at trying to get a decent pre-Christmas rally going will have to contend with trade war headlines, with attention now fixed on 15 December and the imposition of the next round of US tariffs on China.

“These have been widely-trailed, so their impact may be limited, but it would represent another escalation in a trade war that should have been winding down by now. Perhaps a Christmas truce is all we can hope for, but with the election getting ever closer Donald Trump must be keen to find a solution, and soon.”

He added: “As we head towards the Fed meeting on Wednesday the dollar appears to be regaining strength. A significant part of today has seen the greenback edge lower from Friday’s highs, but already the dollar basket is beginning to recover. The Fed may well be back to making policy for a ‘Goldilocks’ world, where job growth is strong but wage growth is not excessive. Whether it will be enough to avoid further criticism from the White House remains to be seen.”

3.30pm: Labour Party closes the gap a little on the Tories

London's index of leading shares has ventured into positive territory after sterling ebbed a little following publication of the latest General Election opinion poll.

The FTSE 100 was up 14 points (0.2%) at 7,254, led by Tesco PLC (LON:TSCO), which was up 4.8% following expressions of interest from potential buyers of its businesses in Thailand and Singapore.

An opinion poll by ICM for the Reuters news agency ahead of Thursday’s election shows the Conservative Party's lead over the Labour Party narrowing to six points.

Support for the Conservatives stood at 42%, unchanged from ICM’s previous poll a week ago. The Labour Party was up one point at 36%, Reuters reported.

2.50pm: The Footsie struggles back to ground zero

As expected, US markets opened lower after the handsome gains racked up last Friday in the wake of US jobs figures.

The Dow Jones industrial average was down 31 points (0.1%) at 27,984 and the S&P 500 was 4 points (0.1%) lighter at 3,142.

In the UK, the FTSE 100 was more or less back to Friday night's close as sterling saw its rise against the US dollar reined in slightly.

“Global equities remain hostage to the incessant swings in sentiment over the state of the US-China trade talks,” opined Rupert Thompson, the head of research at asset management firm Kingswood.

“The big question looming is whether sufficient progress will be made to allow the US to postpone the implementation of the tariffs scheduled for 15 December. We assume it will and that a limited deal will be agreed over coming weeks/months,” Thompson said.

The day's big news has been the board room shake-up at fallen glamour stock, Tullow Oil plc (LON:TLW).

The shares initially halved on news of the chief executive's departure, a dramatic scaling back of production expectations and the binning of the dividend; the shares are now down by two-thirds.

“While the sharp decline highlights the unexpected nature of this announcement, it is part of a wider trend of decline which has seen the stock loss 75% since the September peak,” said Joshua Mahony at IG Group.

“Issues found within both Enyenra and Jubilee oil and gas fields in Ghana have had a material impact upon expected output, with investors likely to worry over the 'faster than anticipated decline' in production,” Mahony added.

 

 

2.00pm: US benchmarks expected to give back a soupcon of Friday's gains

US markets look to start the trading day in as desultory fashion as their UK counterparts did.

Spread betting quotes suggest the 30-share Dow Jones will open at around 27,980, down 35 points from Friday's close; the S&P 500, meanwhile, is expected to open a bit below 3,143, down three points,

In the UK, the FTSE 100 continues its slow-motion journey, down 8 points (0.1%) at 7,232.

In company news, shareholders have welcomed the return to the board of Amigo Holdings PLC (LON:AMGO) by James Benamor.

The shares surged 12.2% after chief executive Hamish Paton, chairman Stephan Wilcke and chair of the remuneration committee Clare Salmon offered their resignations en masse, with effective leaving dates to be confirmed.

12.30pm: All quiet on the Western front

The Footsie continues to do its impression of a stopped clock.

For the last hour or so the index has moved in a narrow band ranging from 7,230 to 7,235; it's currently at 7,230, down 10 10 points (0.1%) on the day.

Among the mid-caps, Senior Plc (LON:SNR) has responded to media speculation and confirmed it has been reviewing all strategic options for its Aerostructures business, which includes an early-stage assessment of a potential sale of the division.

The shares were up 6.2% at 189p following the news, making it the top riser on the FTSE 250.

Close behind was retailer Marks and Spencer Group PLC (LON:MKS), which was 3.7% better at 208.6p after Goldman Sachs abandoned its bearish stance and switched to a “buy” recommendation.

In contrast, sweeteners group Tate & Lyle PLC (LON:TATE) was down 0.3% at 745p despite Jefferies International moving to a 'hold' recommendation from its previous rating of 'underperform'.


 

11.10am: Pre-election stupor continues

London's leading shares remain in sleepwalk mode as the countdown to Thursday's General Election continues.

Miners, banks and retailers are going well, despite which the FTSE 100 is down 11 points (0.2%) at 7,229.

“The UK election on Thursday has been a long time coming and could finally break the Brexit impasse, one way or another. Polls haven't been particularly reliable in the past and I don't think anyone would be shocked to see another hung parliament, given how the last few years have gone, but traders appear to be feeling pretty confident about it,” surmised Craig Erlam at Oanda.

Commodity stocks are wanted despite a fall in the Chinese trade surplus announced over the weekend.

“The trade surplus fell to US$38.7bn, from a trivially revised US$42.5bn in October, below the consensus, US$44.5bn. The surplus declined to US$31.6bn, on our adjustment, from US$34.9bn,” reported Pantheon Macroeconomics.

“The drop in exports was in line with our expectations, with a minor downtick of 0.2% m/m [month-on-month], after the 0.5% increase in October but the import turnaround caught us off guard, with a rise of 1.7%, after October’s 0.9% increase,” Pantheon admitted.

“November was not a tariff-increase month, whereas October was, so the m/m profile probably was flattered. Moreover, imports from the US jumped 4.2% in, after edging down 0.1% in October, as China attempts to woo the U.S. into a phase one deal. It’s fair to say, though that imports from other countries were generally strong too,” the forecasting unit continued.

“Tech products were largely responsible for the rebound in imports excluding soybeans, metals and energy. At the same time, the overall story in volumes terms is weaker, with imports likely merely sneaking higher, while exports continued falling substantially,” it added.

In mergers & acquisitions news, South African company Prosus has surprised few by increasing its bid for Just Eat PLC (LON:JE.).

The new offer is worth 740p per share; Just Eat shares trade at 783.8p, up 0.9%, so clearly the market is expecting someone to come back for seconds – or thirds.

10.15am: Sterling's strength weighs on blue-chips

With the Conservative Party apparently cruising to a workable parliamentary majority in election week, sterling has hardened, which is bad news for UK blue-chips.

Sterling was up a quarter of a cent against the US dollar but with so many big dollar earners among the FTSE 100, this was not a welcome development for the UK's index of big-cap shares, which was down 16 points (0.2%) at 7,223.

“The pound nudged ahead to US$1.3162 as the latest polls showed the Conservative Party extending its lead ahead of the General Election later this week,” reported Russ Mould at AJ Bell.

“The key question for investors is by how much UK shares could bounce on a Tory majority win. This scenario would remove various negative factors which have been weighing on markets such as Labour renationalising transport companies. Yet there is still Brexit to tackle which sustains some level of uncertainty among investors,” he added.

Life assurance and pension funds consolidator Phoenix Group Holdings PLC (LON:PHNX) was the worst-performing blue-chip, shedding 3.8% at 712.9p after analysts had a weekend to mull over Friday's announcement of the planned acquisition of ReAssure Group.

Away from the blue-chips, DeepMatter Group PLC (LON:DMTR) was the market's top riser, soaring 78% to 3.65p after the company announced a collaboration with drugs giant AstraZeneca PLC (LON:AZN).

Scientists from the two organisations will work together to improve the productivity of synthesising single compounds and compound libraries based on unique, structured data harvested from the DeepMatter's DigitalGlassware technology.

8.45am: Weak start for Footsie

The FTSE 100 index has opened lower as expected but the decline would have been worse but for Tesco PLC (LON:TSCO).

Shares in the supermarket giant were up 5.1% at 244.1p after it confirmed it had received enquiries from interested parties wondering whether the group's businesses in Thailand and Malaysia are up for sale.

Despite Tesco's surge, the Footsie was down 11 points at 7,228 despite what Connor Campbell at Spreadex called “some general positive chatter regarding a trade deal” between the US and China.

“Assistant Commerce Minister Ren Hongbin said that China wants to reach an agreement that ‘satisfies all sides as soon as possible’; however, given Sunday 15th December is set to see the US impose tariffs on another US$156 billion in Chinese goods, ‘as soon as possible’ still might not be soon enough. Especially since, at present, there are no plans for face-to-face talks between Trump and Xi Jinping,” Campbell noted.

If Tesco is doing its bit to shore up the FTSE 100, oil company Tullow Oil plc (LON:TLW), down 50% at 70.3p, is weighing down the FTSE 250, which is off 71 points (0.3%) at 20,862.

Tullow has slashed its output guidance for 2020 and has parted company with Paul McDade, its chief executive officer, and Angus McCoss, its exploration director.

Proactive news headlines:

CentralNic Group PLC (LON:CNIC), the global internet platform that derives revenue from the subscription sales of domain names and web services, has announced the appointment of Iain McDonald as its non-executive chairman with immediate effect. In a statement, the group noted that McDonald will replace Mike Turner, who, while stepping down as chairman, will remain a non-executive director of the company.

Savannah Resources PLC (LON:SAV) has been granted a mining licence for its Mutamba mineral sands project in Mozambique, which the firm operates under a joint venture with mining major Rio Tinto plc (LON:RIO).  The licence covers 11,948 hectares and is valid to April 2044, with the possibility of an additional 25-year extension. The licence is the first of three contiguous concessions to be issued that will result in the full tenement permitting of Mutamba.

Landore Resources Ltd (LON:LND) has revealed the results of its 2019 soil sampling program carried out along strike to the east and west of its BAM gold project on the Junior Lake property in Ontario, Canada. The program has provided drill targets from the western extent of the BAM gold resource all the way to Juno Lake, a distance of approximately 1,300 metres. It has also provided targets to the east.

Ariana Resources PLC’s (LON:AAU) proposed new partner in Turkey has commissioned an independent review of the Kiziltepe, Tavsan and Salinbas projects in Turkey as part of its farm-in due diligence. The unnamed group has offered to buy of 17% of Salinbas directly from Ariana for US$5mln and will inject a further US$8mln to get the project up and running.

Two of AIM's pharmaceutical services providers - Open Orphan PLC (LON:ORPH) and hVIVO PLC (LON:HVO) - are planning to merge. The boards of the two companies have agreed on a merger whereby hVIVO shareholders will receive 2.47 Open Orphan shares for every hVIVO share they hold. Based on Friday's closing price for Open Orphan shares, the terms value each hVIVO share at 15.56p and hVIVO in its entirety at around £12.96mln.

OptiBiotix Health PLC (LON:OPTI) said its fully-owned subsidiary ProBiotix Health Ltd. has signed an exclusive agreement with CTC Far East Philippines, a subsidiary of the CTC Group, for the distribution of its proprietary formulation CholBiome®x3, in the Philippines. In a statement, the life sciences business developing compounds to tackle obesity, cardiovascular disease and diabetes, said the agreement will see ProBiotix supply CholBiome®x3,  featuring its cholesterol and blood pressure-reducing probiotic strain Lactobacillus plantarum LPLDL®, to CTC for distribution in the Asian country.

IronRidge Resources Ltd (LON:IRR) has commenced drilling at its Zaranou gold project in Côte d'Ivoire. The aim is to test approximately eight kilometres of strike, consisting of hard-rock artisanal mining, anomalous geochemistry and coincident magnetic anomalies. The company will undertake approximately 6,500 metres of air core drilling and approximately 1,500 metres of deeper reverse circulation drilling.

Directa Plus PLC (LON:DCTA) said its newly acquired subsidiary Setcar has been awarded a US$1mln contract to provide environmental decontamination services at a gas field offshore Romania. The three-month contract covers the period of the appraisal of the Trident gas field, contained in Block 30 of the Trinity-1X gas project, which is operated by Lukoil and Romgaz. The field's contractor, GSP will use Directa’s Grafysorber, a graphene-based oil pollution treatment which is sustainably produced, non-flammable and reusable and allows the recovery of absorbed hydrocarbons.

Angling Direct PLC (LON:ANG) has announced the opening of its latest retail store and revealed details of what it described as a record-breaking trading performance for ‘Black Friday’. The leisure retailer said that sales for the week of Black Friday amounted to £1.86mln, up 11.3% on last year, and, that in this busy pre-Christmas sales period it served some 5,868 customers.

ADES International Holding PLC (LON:ADES) has landed its first onshore deep drilling contracts in Kuwait, under its lump-sum turnkey arrangement with Baker Hughes. Two contracts were awarded by Baker Hughes. Each come with an initial two-year term. Both are expected to commence in the second quarter of 2020, and, the day rates are said to be similar to ADE’s existing fleet in Kuwait.

Shefa Gems Ltd (LON:SEFA) said that a competent person acting for the group has established that the gemstone resource at its Kishon Mid-Reach Zone 1 and Zone 2 projects in Israel should generate revenue of US$41 for every tonne of rock mined. Shefa Gems is now at an advanced stage of planning and development in its trial mining phase.

Regional offices owner Circle Property PLC (LON:CRC) said it is well-positioned to deliver full-year expectations of strong growth in net asset value (NAV). In its interim results statement covering the six months to the end of September, Circle said the estimated NAV per share on 30 September stood at 278p, up from 275p a year earlier and 277p at the end of March.

Integumen PLC (LON:SKIN) has said it will raise approximately £1.368mln from a share subscription and placing to provide working capital to help it deliver the £4mln in revenues guided for 2020. In a statement, the AIM-listed company said its broker, Turner Pope will issue, in aggregate, 91,253,530 new ordinary shares at 1.5p each, utilising all of the funding headroom currently available to the group without the need for further shareholder approval.

United Oil & Gas PLC (LON:UOG) confirmed a US$6.25mln equity raise and gave further details on the timeline for its acquisition of Rockhopper’s Egypt business. The Rockhopper Egypt acquisition will have an effective date of 1 January 2020, delivering United O&G some 1,100 barrels oil equivalent per day (boepd) of net production plus ‘low risk’ development and appraisal upside. United O&G is raising US$6.25mln with the sale of some 159mln new shares priced at 3p each, as part of the funding package for the acquisition. It is also securing pre-payment financing with BP for US$8mln.

Brady PLC (LON:BRY), which is in the process of being taken over by Hanover Acquisition Limited, has announced that Martin Thorneycroft is stepping down as its chief financial officer with immediate effect. The group said Thorneycroft will continue to support the business through a transition period to the end of January 2020 to coincide with the appointment of Nadya Bentley as chief financial officer, who will assume the role effective 2 January 2020, Brady shares are due to be cancelled from trading on AIM on 8 January 2020.

Chaarat Gold Ltd. (LON:CGH), the AIM-quoted gold mining company with assets in the Kyrgyz Republic and Armenia, said it has been informed that Labro Investments Limited, in which its chairman Martin Andersson is indirectly beneficially interested in the majority of shares, purchased 230,324 shares in the company on the market at an aggregate share price of approximately 29.4p per share on 5 December 2019 and 230,000 Chaarat shares on the market at an aggregate share price of approximately 29.6p per share on 6 December 2019. Following this purchase, it noted, Labro Investments Limited holds 164,366,870 Chaarat shares, representing 35.06% of the issued share capital of the company.

SDX Energy PLC (LON:SDX) said that, following the acquisition of the business and assets of FirstEnergy Capital LLP by Stifel Nicolaus Europe Limited, the company's joint corporate brokers are now Stifel and Cantor Fitzgerald Europe, and Stifel continues to act as its Nominated Adviser.

6.50am: Big week for global markets

The FTSE 100 index is expected to make a cautious start on Monday ahead of a very big week for global markets, with rate decisions expected from both the US Federal Reserve and the European Central Bank and the UK general election result due.

Spread betting firm IG expects the UK blue-chip index to open around 19 points lower at 7,220 albeit having leapt 101 points higher on Friday after above forecast-US jobs data and US/China trade talk optimism boosted global markets

Pre-weekend on Wall Street, the Dow Jones Industrials Average closed 337 points, or 1.2% higher at 28,015, near record highs, while the broader S&P 500 index added 0.9% and the tech-laden Nasdaq Composite gained 1%

But the mood was more subdued today in Asia as next weekend also brings a key deadline for Sino/US trade negotiations, with Japan’s Nikkei 225 index up 0.3% but Hong Kong’s Hang Seng and the Shanghai Composite flat as China export data shrank for a fourth consecutive month in November.

Election fever

The big UK event next week is obviously the general election, with prospects for the populace, the economy, the pound and a host of different industries resting on the result.

Taking recent polling on face value, most analysts predict that the first December election since 1923 will deliver a victory for the Conservatives and raise the chances that the Brexit process will be kicked off at the end of January.

But looking back to 2017 should make forecasters aware of the distinct possibility for a surprise upset that could lead to another hung parliament or a Labour-led government.

If the Conservatives manage to eke out a majority, Friday’s session is likely to see further gains for the pound, which has moved up to seven-month highs above US$1.30 on such optimism.

On currency markets Monday, sterling consolidated its gains on those election hopes, although it dipped slightly versus the dollar as Friday’s strong US jobs report added to expectations that the Fed will leave interest rates unchanged.

Fed and ECB rates both unmoved

US central bank chief Jerome Powell’s less dovish language has already made it fairly clear that the Fed is “on hold” as regards interest rates for a while, so no change is expected to be signalled after the London close on Wednesday.

The meeting “should come and go with little fanfare”, reckon economists at RBC Capital Markets.

“With financial conditions in ‘easy’ terrain and largely unchanged since the October meeting and a phase one trade deal still seemingly on the table, the Fed is unlikely to make any substantive changes to the forward-looking language in the statement,” is the RBC view.

Meanwhile, Christine Lagarde will chair her first meeting as ECB President on Thursday against a backdrop of emergent, if tentative, macro stability in the region.

The bank’s forecasts for GDP growth, headline inflation and core inflation are likely to be stable for the first time since exit from its asset purchase programme was announced in mid-2018.

The ECB Council will likely remain cautious, however, and view the balance of risks as still tilted to the downside, so its accommodative policy stance will remain appropriate, according to economists at ING.

“However, Lagarde is likely to oversee one immediate change: we expect the willingness to use ‘all instruments’ to be conditioned on an assessment of the possible side effects of policy,” they added.

Nothing much is due on the corporate front on Monday, but there will be a last pre-Christmas hurrah from a number of firms later in the week, notably retailers SuperDry PLC (LON:SDRY), Ted Baker plc (LON:TED) and Dixons Carphone PLC (LON:DC.), plus online grocery platform Ocado PLC (LON:OCDO), and tour operator TUI AG (LON:TUI).

Significant announcements expected on Monday:

Finals: Hardide Plc (LON:HDD), Schroder European REIT PLC (LON:SERE)

Interims: Circle Property PLC (LON:CRC), The Panoply Holdings Plc (LON:TPX)

AGMs: Hadrian’s Wall Secured Investments Ltd (LON:HWSL), River and Mercantile Group PLC (LON:RIV)

Around the markets:

Sterling: US$1.3144, flat

Gold: US$1,193.71 an ounce, down 0.1%

Brent crude: US$64.14 a barrel, down 0.1%

City headlines:

Britain’s largest supermarket chain Tesco is weighing up the sale of its Asian grocery empire, which could value its retail operations across Thailand and Malaysia at up to $9bn - The Times

The Royal Bank of Scotland has been accused of writing fake reviews for its new banking app Bó before it was officially available to download - The Daily Telegraph

Ted Baker is hunting for a new chairman as part of a shake-up of its top ranks after a catastrophic year that has plunged the fashion retailer into crisis – The Sunday Times

Standard Life Aberdeen is monitoring its £1.3 billion UK property fund closely after a wave of redemptions – The Sunday Times

Goldman Sachs will offer digital wealth management services to individuals with as little as $5,000 from next year - Financial Times

Snapchat is becoming an increasingly popular platform for political advertising, as popular app allows campaigns to target highly specific groups of younger voters - Financial Times

Chinese exports have fallen for a fourth consecutive month, with shipments slipping by 1.1% in November, as its acrimonious trade war with the US takes its toll - The Times

The Financial Conduct Authority is monitoring funds invested in Neil Woodford’s Equity Income fund to prevent the liquidity crisis spreading - Daily Mail

Rajesh Gopinathan, the head of India’s largest outsourcing company Tata Consultancy Services, says Brexit uncertainty is making planning for its consequences almost impossible - Financial Times

The World Trade Organization is set to plunge into the biggest crisis in its 25-year history later this week as the climax to a long-running and bitter dispute means the Geneva-based body will cease to be able to settle disputes between its member states ­ The Guardian

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