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FTSE 100 closes near day's high on final full session before Christmas

At the close, the UK blue-chip index was up 41.11 points, or 0.4% at 7,623,59, slightly below the session high of 7,628.20

Tower Bridge
Around London’s close, the Dow Jones Industrials Average was ahead 114 points, or 0.4% at 28,569
  • FTSE 100 index ahead 41 points
  • US stocks post strong gains
  • Pound weak as election euphoria fades

5.00pm: Solid gains as Christmas nears

The FTSE 100 index closed just off the session's peak on the final full-day of trading before the Christmas break, helped by weakness in the pound and early strong gains on Wall Street amid hopes for a US/China trade accord.

At the close, the UK blue-chip index was up 41.11 points, or 0.4% at 7,623,59, slightly below the session high of 7,628.20, having recovered from an early dip back to 7,559.63.

Chris Beauchamp, chief market analyst at IG, commented: “The final full day of London trading before Christmas is finishing on a strong note. The FTSE 100 has risen another half of one percent, hitting levels not seen since the end of July. Unsurprisingly, there has not been much news to drive the market forward, but hopes of a US-China deal continue to be dangled like a carrot in front of investors.

Boeing’s decision to sack its CEO just before Christmas, as a way of putting 2019 and its 737-MAX troubles behind it, has helped lift the Dow to a new record, with US markets maintaining a positive, if more cautious outlook, compared to London.”

Around London’s close, the Dow Jones Industrials Average was ahead 114 points, or 0.4% at 28,569, with the broader S&P 500 index up 0.2%, while the tech-laden Nasdaq Composite added 0.4%.

On currency markets, sterling beat a retreat as the post-election euphoria faded further, losing 0.6% versus the US dollar at US$1.2918 and down 0.7% against the euro at €1.1652.

Beauchamp noted: “Boris Johnson’s opponents will take some comfort from the ongoing fall in sterling, which continues to hit new post-election lows. Peak bearishness on sterling was some months ago, when the crowd had decided the new PM was going to fail in his efforts, and we certainly haven’t reached anything like the level of negativity of late August.

“But markets should be careful – crowing over the pound didn’t work out when it was down at $1.20 – there are bound to be some eyeing up GBPUSD as a possible buy, especially if the more pleasant utterances of late from the likes of Michel Barnier are echoed elsewhere in the EU,” he concluded.

3.35pm: US markets open higher

US markets opened higher with the Dow Jones notching up a triple-digit gain on the back of positive developments in US-Sino trade relations.

The Dow Jones was up 104 points (0.4%) at 28,559 while the broader-based S&P 500 was 5 points (0.2%) firmer at 3,226.

On the foreign exchange markets, sterling has recovered a bit, reducing its loss against the greenback to just over half a cent, and that has sapped a bit of enthusiasm for London-listed multinationals, as a result of which the FTSE 100 is now only 32 points (0.4%) at 7,614.

“The FTSE 100 is enjoying a broad-based rally as consumer, industrial, mining as well as health care stocks are higher this afternoon. Market movements are low as some traders are tapering off their activity as Christmas is getting closer,” observed CMC’s David Madden.

“Continental equity markets are largely showing small losses. Volatility has been low despite the news that China will lower tariffs on more than 850 US products come January. It is almost as if traders are indifferent to the positive US-China news,” he added.

2.20pm: Sterling takes a licking

Barely a dozen FTSE 100 stocks are in the red as the benchmark index moves within 100 points of a thousand point gain in 2019.

The FTSE 100 was up 42 points (0.6%) at 7,624, with sentiment helped by sterling, which is taking a pasting on the foreign exchange markets against the US dollar.

Sterling is down by four-fifths of a cent at US$1.2924 against the US dollar and three-quarters of a cent against the euro at €1.1659.

As the Christmas shopping frenzy moves to the last knockings (to be replaced by the Boxing Day shopping frenzy) there was some worrying news for retailers from insolvency expert Begbies Traynor.

Its latest Red Flag Alert for the retail trade reckons 97 “general retailers” are in critical distress – a condition that is often a precursor to formal insolvency.

The number of retailers facing significant financial distress has increased to nearly 27,000 in the final quarter of 2019 from 26,930 in the preceding three-months, with distress amongst online retailers increasing to more than 9,000.

The number of online retail companies in significant financial distress has increased by 65% over the past three years, Begbies Traynor revealed.

“Looking to 2020, it seems as if the accelerating numbers of online retailers in distress will continue. The competition online is ferocious, but the rewards for those that succeed – such as BooHoo – are huge,” observed Julie Palmer, a partner at Begbies Traynor.

“In the New Year, strong leadership will be key. There are some tough decisions to be made and some hefty modernisations to bring forward. Even retailers that are performing well will have to keep on their toes. As Ted Baker will attest, 12 months is an awfully long time in retail. In the coming months, many businesses will have to make a decision on whether to stick or twist with investment, innovation and expansion,” she opined.

Richard Parfect, a fund manager at Seneca Investment Managers, reckons that the retail sector is not dying; it’s just changing.

“We have also heard repeated tales of the death of the retail sector, with numerous household names (Marks & Spencer, John Lewis et al) flagging stalling sales figures. We believe that, rather than dying, this sector is simply in the midst of a transformation,” Parfect said.

“Traditional retail giants do not have a ‘right’ to survive, they must adapt to the online shopping revolution just like everyone else. In our opinion, location and product offering is absolutely key," he continued.

“Despite retailers like NEXT going on record to say their rents are too high, our own research has unearthed numerous retail assets which are not overpriced for rent. It takes a trained eye to spot where the opportunities are in this sector and strength of brand is not enough to please an increasingly discerning customer,” according to Parfect.

1.00pm: US markets tipped to open higher

After a mid-morning burst of activity, the FTSE 100 has moved into consolidation mode ahead of what should be a firmer start in the US.

The FTSE 100 remains above 7,600, at 7,617, up 35 points (0.5%).

In the US, the Dow Jones is seen opening at around 28,535, up 80 points on Friday’s close; the S&P 500 is expected to start at around 3,220, up 8 points.

As is usually the case, most of the sharp movements in UK share prices are taking place among the tiddlers, with Malvern International PLC (LON:MLVN) leading the pack with a 77% rise following the sale of its Malaysian business.

The prospect of getting a chunk of money it is owned by its Wipac business, which has gone into administration, has lifted Carclo PLC (LON:CAR), the manufacturer of injection moulded plastic parts, to 14.55p from Friday’s close of 10.5p.

Oracle Power PLC (LON:ORCP) was burning brighter after it was revealed Shaikh Ahmed Dalmook Juma AL Maktoum had increased his stake in the company to 24.5% from 6.41%.

The shares were up 22% at 1.125p.

11.15am: Sterling's slide injects a bit of life into the Footsie

The FTSE 100 has produced an unexpected turn of foot to rise above the 7,600 level as sterling resumes its prone position on forex markets.

The pound is down by a fifth of a cent at US$1.2981 and that's good news for the plethora of big dollar-earners in the Footsie; the index has responded by rising 30 points to 7,612.

“The pound has been on a wild ride since the election last week, with it seeing a surge as the exit polls correctly predicted the Conservative’s would be triumphant. Eventually, this surge surpassed US$1.34, its highest level in over a year,” said Joe Healey, an investment research analyst at The Share Centre.

“This optimism quickly subsided as markets digested the inevitable formality that Brexit is not yet over. As Boris Johnson mentioned his intentions to publish Brexit legislation that would prohibit him from extending the transition period past 2020, the pound plunged over 3% passing below its starting point pre-election. This is what has largely been spurring FTSE 100 gains in the last full week of the year.,” he added.

Having said all that, the FTSE 250 – less enamoured of a decline in the value of the pounds – is outstripping its bigger brother, with a 226 point (1.0%) rise to 21,900.

Imperial Leather soap maker PZ Cussons PLC (LON:PZC) leads the index higher, with an 8.8% rise to 202.5p.

Balfour Beatty plc (LON:BBY) was up 1.3% at 266.4p after it revealed it could be in line for a £32mln settlement of its claim for compensation for its involvement in the troublesome Aberdeen Western Peripheral Route.

10.00am: Pre-Christmas torpor

The FTSE 100 has just been prodded with a stick and it is awake – barely.

London’s index of leading shares has crawled into positive territory despite the heavily-weighted miners and drugs makers being out of favour.

The Footsie is up 3 points (0.0%) at 7,586, helped in no small part by short-selling target NMC Health PLC (LON:NMC), which is now up 22% at 1,590.5p after it commissioned an independent third-party review, undertaken by a leading accounting firm, to review the assertions made by “certain third parties”, notably the hedge fund, Muddy Waters.

The company’s initial attempt at rebuffing the allegations made by Muddy Waters went down like a bag of lukewarm cabbage stew at a kids’ party but the decision to instigate an independent review that will be overseen by a committee made up of a majority of independent NMC non-executive directors has perked up the share price, even if NMC already seems to have made up its mind what the outcome will be: “ We are confident that this review, when complete, will be entirely confirmatory of the disclosures provided by the company to date,” it said.

Another stock that has been up and down like a heavy drinker’s Adam’s Apple is the publishing group, Pearson PLC (LON:PSON). The shares, which have collapsed from 831p to around 646p in the final quarter of this year are up 3.4% this morning.

Last week the company announced its chief executive officer John Fallon would be retiring next year after a difficult period for the group in which its US academic textbooks business has taken a bashing.

8.40am: Bring on the turkeys

The FTSE 100 made a rather limp and listless start as London’s price-makers took stock ahead of the Christmas break.

The index of blue-chip shares opened 12 points lower at 7,570.68

There was almost an air of disbelief that, after months of wrangling, it would seem Washington and Beijing are about to bury their trade differences with a bilateral deal.

Already the Chinese have agreed to lift tariffs on over 850 goods on January 1 as a prelude to the accord.

Still, Asia’s main markets, which are currently in nose-bleed territory, reacted cautiously with much of the good news already priced in.

It remains to be seen whether Wall Street, which is also at record levels, lifts the mood a little later.

Here in the UK, the notable mover was NMC Health (LON:NMC), the Gulf-focused provider of private hospitals and the recent target of short-sellers.

Its shares, which were heavily sold off after a full-frontal attack by the hedge fund Muddy Waters, bounced 9% after it comprehensively rebuffed accusations made by the US investor.

The prospect of an imminent trade deal lifted the mining sector.

Proactive news headlines:

Futura Medical PLC (LON:FUM) late on Friday unveiled plans to raise up to £3.25mln with backing from private and professional investors. A £1.5mln tranche is being undertaken via the financial platform Primary bid at 8p a share, a 26% discount to the close last Thursday. Lombard Odier, meanwhile, will pay £1.75mln for 21.875mln Futura shares.

Regency Mines PLC (LON:RGM) the battery metals and energy storage company has announced a partnership deal with ion Ventures Ltd, an investor in and developer of energy storage and flexibility assets.  In a statement, Regency - which is strategically focused around battery metals - said the parties have executed a memorandum of understanding (MOU) to partner on Regency's existing pipeline of projects, with a view to identifying and prioritising the most commercially attractive projects, securing funding and then moving quickly to first cash flow.

Augmented and virtual reality investor Sure Ventures PLC (LON:SURE) has notched up its first realised gain with the sale of 3D artificial intelligence platform Artomatix. The investment was held by 25.9% owned associate Suir Valley Ventures (SVV) with the sale price a cash multiple of approximately five times its initial investment. Sure Ventures will book a profit of €1.6mln from the sale.

Eden Research plc (LON:EDEN) has signed its second exclusive distribution contract in a week for grape fungicide Mevalone. Italian group Sipcam will market, distribute and sell the product in Portugal and the Benelux region.

IXICO PLC (LON:IXI), the data analytics company delivering insights in neuroscience, has got a pre-Christmas boost, revealing a  £2.4mln expansion of study programmes with two large pharma client contracts. In a brief statement, the AIM-listed firm said it has agreed around a £1.8mln extension to a Phase III study in Huntington's Disease (HD), previously announced in September 2018. In addition, it continued, it has been awarded around a £0.6mln extension to a study programme in Progressive Supranuclear Palsy (PSP), previously announced in October 2019.

Zoetic International PLC (LON:ZOE) said its interim results revealed the CBD specialist’s ‘seed to shelf’ strategy was working, with the company’s chief executive upbeat on the prospects for next year. “Shareholders have come to know me for my conservative approach and I am not one for grand predictions but I remain confident that our multi-channel sales approach can bring success to our company,” said Nick Tulloch in comments accompanying its first-half update.

Just in time for a bit of last-minute Christmas shopping for the devoted angler, Angling Direct PLC (LON:ANG) has opened a new store. It is located in Swinton, Greater Manchester and brings the total number of Angling Direct stores across the UK to 34, ten of which have been opened this year.

Minds + Machines Group Limited (LON:MMX), the top-level domain registry company, has revealed that it has continued to trade well in the fourth quarter as it announced the completed renegotiation of an onerous legacy contract. In a brief statement, the group said that further to its announcement of 18 July 2019, all existing and future liabilities, estimated at US$7.9mln, arising from that contract have been settled through a single one-off payment of US$5.1mln.

U.S. Oil & Gas PLC (USOIL) told investors that it is presently preparing applications for permits to drill three new wells. The company said it hopes to drill a well in the first quarter of 2020, subject to regulatory approvals, and subsequent drilling would depend upon the outcome of the first well

Vast Resources PLC (LON:VAST) has told investors it has kicked off a new drill programme at the Baita Plai polymetallic mine in Romania. Findings from the programme will be used to further define the grades and resource, the company said. It will support existing efforts to confirm a JORC compliant resource statement for the project. Operations are advancing at Baita Plai where the cold commissioning of new mine operations also started last week.

Alba Mineral Resources PLC (LON:ALBA) has updated on the Horse Hill oil project where the new horizontal well has completed its initial flow testing period, showing positive rates but also a requirement for certain interventions. Fellow Horse Hill stakeholder UK Oil & Gas PLC (LON:UKOG) highlighted that the new horizontal well initially flowed at some 1,087 barrels of fluid per day during ‘clean-up’ with oil cuts of up to 60%.

Kazera Global PLC (LON:KZG) is looking forward to commencing phase 2 of its drilling programme at the Namibia Tantalite Investment (NTI) Mine. In its final results statement covering the year to the end of June, the Namibia-focused company said Phase 2 exploration step-out drilling should be completed in the first half of 2020 and is expected to identify further mineral resources.

5.55am: Tentative start predicted 

The FTSE 100 looks set to make a tentative start to the last full day of trading before the Christmas break.

Asia’s main markets failed to inspire. They edged lower ahead of the signing of the long-awaited first phase trade deal between the US and China.

Overnight, China said it would lower import tariffs on January 1 on over 850 products ranging from frozen pork to IT.

While the rhetoric from both sides has been positive, there were still some last-minute nerves, analysts said.

“The trade story has been at the forefront of traders’ minds for months and the fact that stage-one has been agreed upon has been a major boon to the markets,” said David Madden, analyst at CMC Markets.

“Commodities received a nice boost from the US-China story as copper, as well as oil, have both racked up multi-month highs.

“The gap between these commodities and equities is huge as some indices are essentially at all-time highs, while the commodities are nowhere near their-respective record-highs.

“Given the slowdown in the global economy, it is fair to say that stocks have lofty valuations also due to loose monetary policy.”

Here in the UK, scheduled corporate news is at a premium with the City well and truly winding down to the festive period.

Around the markets:

Pound worth US$1.3011, up 0.09%

Gold worth US$1,484.80, down US$3.90 an ounce

Brent crude at US$65.89, down 25 cents a barrel

Monday’s scheduled corporate news:

Interims: Zoetic International PLC (LON:ZOE)

Economic data: US new home sales         

City Headlines:

Financial Times

  • Pentagon wants open-source 5G plan to take on Huawei
  • Heathrow shows detailed costings for third runway
  • Southern manufacturing outpaces North and Midlands

Times

  • High street gloom spreads online after web sales fall
  • Aviva open to attack after chief rejects split
  • New car buyers still stalling in backlash against diesel

Telegraph

  • Cobham to load up with debt in wake of £4bn deal
  • AJ Bell chief: ‘I’m in the minority, but I stick up for Woodford’
  • British American Tobacco prepares to fight landmark court case

Guardian

  • Some of the world’s biggest fossil fuel companies, including Russia’s state oil giant Rosneft, have been added to the London Stock Exchange’s “ethical” investment lists
  • Pressure on FAA to approve its 737 Max jets backfires for Boeing

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