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FTSE 100 closes lower as IMF's global growth downgrades spook traders

The FTSE 100 index finished around 23 points lower at 7,651, while the FTSE 250 shed over 39 points at 21,847

ASOS PLC -
London stocks went lower amid lower volume and no cue from Wall Street
  • FTSE 100 index closes 23 points lower
  • Housebuilders gain
  • Bonhill slides after lowering full-year guidance
  • Wall Street closed for Martin Luther King Day

5pm: FTSE ends in the red

FTSE 100 index closed down on Monday as traders fretted about the IMF's downgrade to global growth forecasts and there was no stimulus from the US.

Wall Street is closed today for Martin Luther King Day so trading volumes were low amid not much newsflow.

The FTSE 100 index finished around 23 points lower at 7,651, while the FTSE 250 shed over 39 points at 21,847.

Earlier, Washington-based the International Monetary Fund (IMF) had said the projected recovery for global growth remained "uncertain".

In October last year, the organization had predicted 3% for 2019 and 3.4% for 2020 but has now revised these down to 2.9% and 3.3% respectively.

"The IMF decision to write down growth forecasts flies in the face of the notion that Trumps deal with China will help remedy the recent global slowdown," said Joshua Mahony, senior market analyst at IG.

Mahony said the focus now shifts to Switzerland and the 50th world economic forum in Davos, which kicks off today, and will feature an appearance from President Trump tomorrow. He is expected to strike a significantly  more positive tone compared with 2011.

"With the US retaining sizeable tariffs on Chinese goods, there is plenty of anxiety over whether this deal will indeed help global trade flow outside of the US. Thus, traders will be looking for discussions on growth and exactly how leaders envisage policy shaping a more optimistic outlook going forward," said Mahony.

3.30pm: US markets are closed today - and they are still more interesting than London has been

Entering the final hour of trading, the Footsie was making another attempt to rally, halving its worst losses of the day.

The top-shares index was down 19 points (0.2%) at 7,656.

“Without the Dow Jones for guidance – the US tends to dictate the pace of trading when region-specific news is lacking – the European indices drifted their way through Monday’s session, not helped by the IMF cutting growth forecasts in Davos,” said Spreadex’s Connor Campbell.

“The Washington-based organisation said it is now expecting the global economy to expand by 3.3% in 2020, a slight revision from the 3.4% estimate released 3-months ago. 2021 saw a similar tweak, from 3.6% to 3.4%. Compounding the negative news, the Fund said growth was just 2.9% last year, a post-financial crisis low,” he added.

There was little activity among the big caps leaving the field open to tiddlers such as Bonhill Group plc (LON:BONH), the business-to-business media group, which fell 5.4% to 35p after lowering full-year guidance.

1.45pm: Sleepwalk continues

A late morning half-hearted rally fizzled out over the lunchtime trading session.

The FTSE 100 was down 29 points (0.4%) at 7,645.

“It's been a slow start to an otherwise frenetic week, with the bank holiday in the US only adding to the light volumes and absent news flow,” said Craig Erlam, the senior market analyst at Oanda Europe.

“This comes following a rather eventful start to the year, since which markets have largely stabilised. The signing of the phase one trade deal will allow investors to turn their attention elsewhere and this week that place will be the mountains, more specifically, Davos,” he added.

12.20pm: No sign of Davostation

The World Economic Forum starts tomorrow in Davos but if you want an early taster of pointless tedium, today’s London stock market is the place to be.

The FTSE 100 is down 29 points (0.4%) at 7,646 and has moved in a five-point range for the last 90 minutes.

As usual, a good deal more excitement is to be found among the minnows, with Rockfire Resources PLC (LON:ROCK) comfortably the best performer today.The stock is both rocking and on fire, up 36% at 1.125p, after it started a new round of drilling at the Plateau gold project in Queensland.

Scancell Holdings PLC (LON:SCLP) surged 14% to 7.15p after it signed the third collaboration agreement for its AvidiMab technology with a US antibody company.

The shares of Henry Boot PLC (LON:BOTH) received a shoeing after the property investment company issued a mild profit warning.

“Overall group performance for 2019 was marginally lower than the board's original expectations, driven by the successful disposal of the majority of our retail investments during the second half of the year, which reduced rental income,” the company said in a trading update covering 2019.

The shares were down 4.4% at 327p.


 

11.00am: Footsie at its lowest point for the day

Leading shares continue to drift lower in the absence of many macroeconomic data releases on which to trade.

With the US closed for Martin Luther King Day volatility is not likely to be much of a feature this afternoon, either.

Short-selling target NMC Health PLC (LON:NMC) leads the Footsie lower, with the shares down 4.5% at 1,487p.5p. The index is off 30 points (0.4%) at 7,644 – its lowest point of the day.

Things are not much better in the mid-cap FTSE 250, which is down 48 points (0.2%) at 21,838.

The Rightmove house price index suggested the semi-moribund UK housing market received a post-election lift in December.

The property listings website operator’s report covering 13 December to 9 January indicated a 2.3% increase in the price of property listed for sale, which is the largest monthly rise ever recorded by Rightmove for the final month of the year.

“These statistics seem to indicate that many buyers and sellers feel that the election result gives a window of stability,” said Miles Shipside, who is described as Rightmove’s property expert.

“The housing market dislikes uncertainty, and the unsettled political outlook over the last three and a half years since the EU referendum caused some potential home-movers to hesitate. There now seems to be a release of this pent-up demand, which suggests we are in store for an active spring market,” he added.

Meanwhile, Goldman Sachs has upgraded housebuilder Barratt Developments PLC (LON:BDEV) to ‘neutral’ from ‘sell’, giving a 1.2% lift to the shares at 808.6p.
 

9.50am: That Monday morning feeling

Like a lot of us, the Footsie is having trouble getting going on a Monday morning, with the index pulling back from Friday’s six-month peak.

London’s index of heavyweight shares was down 16 points (0.2%) at 7,659.

“With the US off for Martin Luther King Day, it could be a quiet session, the European indices losing their de facto leader in the Dow Jones,” predicted Connor Campbell at Spreadex.

“It doesn’t help that on top of its absence, the Dow ended last week by pulling back slightly from its all-time highs, the index seeming to settle at 29300. That means the momentum that seemed to be building has, for now, fizzled out, leading to a rather drab open,” he added.

Anglo American plc (LON:AAL) performed in line with the wider market with a 0.4% fall to 2,237.5p after pulling the trigger on the bid for Sirius Minerals PLC (LON:SXX).

READ Anglo American confirms formal recommended Sirius Minerals takeover offer

Shares in Sirius edged up 1.9% to 5.5p.

In other acquisition news, defence company BAE Systems PLC (LON:BA.) rose 2.1% after it agreed to acquire Collins Aerospace's military global positioning system business for US$1.925bn in cash, subject to customary closing adjustments.

Fevertree Drinks PLC’s (LON:FEVR) days as a stock market star may be behind it after it issued another disappointing update.

The shares plunged 21% to 1,578p following a profit warning.

“Fevertree’s shares have halved from their highs but, as a growth stock, it may find itself out of favour as a result of today’s announcement,” suggested Langton Capital.

Joe Healey, an investment research analyst at The Share Centre, said it was another updating highlighting a difficult 2019 for markets.

“Brexit uncertainty has lagged consumer spending which as expected has had a knock-on effect on luxury items such as Fevertree tonics. It’s likely these conditions are here to remain particularly in the first half of 2020 so there are no signs of this slowdown dissipating in the shorter term.

“Despite this uncertainty, the company remain in a promising position with a solid balance sheet allowing them to invest in high-potential international markets. With the trend towards premium spirits continuing to grow on a worldwide basis the company’s outlook may not be as dull as the share price investors have made it seem. The question will be how far Fevertree can maintain penetration into these markets and whether or not they can adapt to the economic conditions in the UK to return to growth over 2020,” Healey said.

9.00am: Slow progress for Footsie

The FTSE 100 made the exceptionally dull start predicted pre-trade after a quiet session in Asia.

The blue-chip stocks opened 3 points higher at 7,677.62 

Zero direction will be provided by the US later, with the markets there closed for Martin Luther King Day.

For the battalions of investors that have backed Sirius Minerals (LON:SXX), the potash mine developer’s capitulation to a 5.5p a share bid from Anglo American (LON:AAL) will more than rankle.

The stock was above 45p in 2016 and even a year ago, after some serious fundraising activity, was trading just shy of 25p.

Sirius’ fall from grace is well-documented as it failed to secure debt backing for its hole in the ground on the North York Moors.

Russell Scrimshaw, Sirius chairman, explained the financial review launched in the aftermath of the company’s project financing collapse had failed to unearth any new strategic investors nor did it yield acceptable alternative financing solutions.

The stock opened 1.85% higher at exactly the Anglo offer price of 5.5p, suggesting the market is expecting zero interest from competing bidders.

BAE Systems (LON:BA.) was the blue-chip index’s top riser as it flew 3% higher on the back of news it is to acquire Collins Aerospace’s military GPS business for £1.5bn.

The stand-out amongst the tiddlers was MaxCyte (LON:MXCT), the drug developer and cell technology group whose revenues smashed expectations. The shares rose 10%.

Proactive news headlines:

Anglo American PLC (LON:AAL) today confirmed it has now made a formal offer to acquire Sirius Minerals PLC (LON:SXX), priced at 5.5p per share, and, the offer has been recommended by the Sirius board. In a stock market statement, the multinational mining major said that the proposed transaction values Sirius at £404.9mln.

Anglo African Oil & Gas PLC (LON:AAOG) has given consent to the sale of shares held by Riverfort and YA in transactions worth £420,205. The transactions will result in the company receiving £361,376 from the pair of investment groups. AAOG told investors that the proceeds will be applied to its creditors, and, alongside separate £250,000 proceeds received from Zenith Energy the company now expects it will have sufficient working capital for the next six months “absent of any unforeseen legitimate claims”.

MaxCyte Inc’s (LON:MXCT) chief executive Doug Doerfler said the life sciences group’s outlook for the current year and beyond was “exceptionally positive” after its full-year revenues exceeded market expectations. The company is at the cutting edge of cell-therapy and immuno-oncology, with commercial deals worth more than US$650mln in milestone payments.

Rockfire Resources PLC (LON: ROCK) has started a new round of drilling at the Plateau gold project in Queensland. The aim is to expand on gold mineralisation encountered recently in earlier drilling, in particular at hole BPL025, where an intercept of 177 metres grading 0.5 grams per tonne gold was returned.

IQ-AI Limited (LON:IQAI) said Korea’s regulator has cleared the company’s StoneChecker Software for sale in the country. The sign-off by the KFDA means the local distributor’s marketing plans can now be “fully implemented”.

88 Energy PLC (LON:88E) says it is on schedule to spud the Charlie-1 well with contracting and logistical work proceeding as planned. Approval to drill has been submitted and is expected this month, with drilling scheduled to start in February and flow testing to conclude in April. Charlie-1 will intersect seven stacked prospects, four of which are considered appraisal targets.

Touchstone Exploration Inc (LON:TXP) told investors that the first stage of testing at the Cascadura-1ST1 well, at the Ortoire exploration project in Trinidad, has been suspended so the company can source alternative equipment capable of handling higher volumes of both natural gas and liquids. The company, in a statement, said that significant pressures and natural gas volumes were encountered upon commencement of ‘clean up’ flows.

Argo Blockchain PLC (LON:ARB) has reported a ten-fold increase in revenues for 2019 as it concluded its first full year of operations. The cryptocurrency mining firm said in a trading update that it expects revenues for the year ended 31 December to be £.8.5mln, up from £760,000 in 2018.

Scancell Holdings PLC (LON:SCLP) shares surged on Monday as it signed the third collaboration agreement for its AvidiMab technology with a US antibody company. The AIM-listed firm said the research deal will see both groups assess monoclonal antibodies (mAbs) targeting tumour-associated glycans (TaGs), including those that have been enhanced by the AvidiMab platform.

Hydrogen power generation technology company AFC Energy PLC (LON:AFC), has raised £1m by issuing shares to a single shareholder. The shareholder subscribed for 5.88mln shares at 17p a pop. AFC Energy shares closed at 21.8p on Friday. The funds raised have been earmarked to pay part of the cost of the manufacture of AFC Energy’s largest electrical vehicle charger unit with a nameplate capacity of 160 kilowatts (kW), which will support demonstration and commercial activity this year.

Echo Energy PLC (LON:ECHO) told investors that drilling and wireline logging is now complete for the Campo Limite exploration well (CLix-1001), and, amid encouraging results the explorer and its partners will now move the well into testing. The company, in a statement, revealed the CLix-1001 encountered the targeted Springhill formation, at a depth of 2,124 metres, and, wireline logging has highlighted a zone of interest which coincides with elevated gas shows.

Revenues generated by the royalty portfolio held by Anglo Pacific Group PLC (LON:APF)(TSE:APY) hit £57.6mln in 2019, a 20% increase on the revenue generated in 2018, and another record. Five years earlier the portfolio generated just £3.4mln. Significant volume increases at the Kestrel coal mine in Australia were central to the performance.

Tekcapital PLC’s (LON:TEK) portfolio firm, Lucyd, is to launch the third edition of its Loud range of Bluetooth-enabled glasses on 27 January. The prescription compatible eyewear allows wearers to make calls and listen to music through their glasses as well as use smartphone functions such as voice assistants, ride-hailing and money transfers.

The Vaccine Group, one of the companies backed by Frontier IP Group PLC (LON:FIPP), has raised £680,000 in its first equity funding round. The intellectual property commercialisation company said the fundraising values the University of Plymouth spin-off at £9.5mln, thus giving an assumed value of £1.6mln to Frontier’s 17% stake.

Open Orphan PLC (LON:ORPH) said it expects to extract £3.1mln of “operational synergies” this year from the merger with hVIVO PLC (LON:HVO), as shares began trading again after the deal was completed. The company has proposed a £5mln fundraising, of which up to half is being underwritten by executive chairman Cathal Friel, designed to provide the stronger balance sheet to help hVIVO to convert its pipeline of proposals.

Directa Plus PLC (LON:DCTA), the graphene nanoplatelets-based products developer, has signed a research & development (R&D) agreement with Comerio Ercole, the Italian rubber products specialist. The two companies will pursue joint research and development projects using Directa Plus’s G+ technology to develop products in the rubber and tyres, plastic and non-woven materials industries.

ADES International Holding PLC (LON:ADES), a leading oil & gas drilling and production services provider in the Middle East and North Africa, announced that it has extended the contract for ADMARINE 261 in Saudi Arabia. The group said the performance of the high-efficiency jack-up rig ADMARINE 261 has resulted in a contract extension of one-year tenor, which will be effective upon the expiry of the current contract in February 2020, with the same daily rates.

Tlou Energy Limited (LON:TLOU) says rates of production from its Lesedi coal bed methane project in Botswana remain variable with gas flow rates fluctuating up and down. Gas and water are being produced at the Lesedi 3 and 4 production pods, but having started at 20 Mscf (thousand standard cubic feet gas per day)  attempts to stabilise production at a higher rate of 80-100Mscf from each pod have been hampered by the changing flow rates.

Ergomed PLC (LON:ERGO), a company focused on providing specialised services to the pharmaceutical industry, confirmed that, as announced on 2 December 2019, Lewis Cameron today commenced his role as the group’s chief operating officer and his appointment to the board has been effected.

Three of the directors of W Resources PLC (AIM:WRES) have converted short-term loans provided to the company in November into shares. The conversion price was 0.307p per share, the volume-weighted average for the week ended 10 January 2020.

Chaarat Gold Holdings Ltd (LON:CGH) has issued just over 1.3mln new ordinary shares of US$0.01 each in settlement of loan agreement fees and following the exercise of warrants. The loan agreement was with Labro, a company in which Martin Andersson, the executive chairman of Chaarat, is directly beneficially interested. Following the issue Labro  holds 165 mln shares in Chaarat, representing 35.15% of the company.

Eden Research plc (LON:EDEN), the AIM-listed company that develops and supplies breakthrough biopesticide products and natural microencapsulation technologies to the global crop protection, animal health and consumer products industries, today announced the appointment of Hawthorn Advisors as its financial and corporate public relations adviser with immediate effect.

6.35am: Quiet start predicted 

London looks set to get off to a quiet start to the trading week, taking its cue from Asia’s main benchmarks, with US markets to be closed today for the Martin Luther King Day public holiday.

Only Hong Kong’s Hang Seng failed to nudge into positive territory after the Chinese kept lending rates on hold.

“With central banks seemingly content to keep monetary policy on the easy side, there is a feeling that despite some expensive valuations, on the balance of probabilities stocks are still the best place to be,” said Michael Hewson, analyst at CMC Markets.

The main excitement overnight was the political and military friction inside Libya that has seen oil production there vastly reduced.

This and the inconsistent supply from Iran sent the price of Brent crude some 1.25% higher to US$65.66 a barrel.

Here in Europe, the international talking shop for politicians and billionaires that is the Davos World Economic Forum kicks off this week.

Prime Minister Boris Johnson is expected to be a notable no-show as he focuses on more pressing matters closer to home, including preparations for Brexit trade negotiations with Europe.

Corporate news this week will be dominated by the retailers with ASOS (LON:ASC), Burberry (LON:BRBY) and Dixons Carphone (LON:CPW) all providing post-Christmas updates.

London traders are also expecting trading news from budget airline easyJet (LON:EZJ) and posh mixers firm Fevertree (LON:FVR).

Around the markets:

  • Pound worth US$1.2944 (down 0.14%)
  • Bitcoin worth US$8,669.39, down US$4.93
  • Gold changing hands for US$1,561.60 an ounce, up US$1.50       

Significant events expected on Monday:

Trading announcements: BHP Group PLC (LON:BHP), Audioboom Group PLC (LON:BOOM), Henry Boot PLC (LON:BOOT)

City Headlines: 

Financial Times

  • HS2 costs could hit £106bn, warns official review
  • Johnson calls off meeting on defence review after policy split
  • Brussels alarmed by UK vow to diverge from EU rules
  • ICAP founder gives backing to £100m fintech fund

Times

  • Housing market enjoys ‘Boris boost’ as prices rise at record rate
  • Ailing department store chain Beales set to enter administration today
  • Octopus Energy to acquire 70,000 customers from French power group Engie

Telegraph

  • Bailed out Flybe to mount attack on lucrative Heathrow-to-Dusseldorf route
  • Stagecoach sues Department for Transport over 'uber aggressive' railways pension scheme

Guardian

  • Richer Sounds founder bankrolls push to end zero-hours contracts
  • EU could waste €29bn on gas projects despite climate action plan

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