• FTSE 100 closes up 5 pts
  • US indices nudge higher
  • RBS and Schroders hit by broker downgrades

5.15pm : FTSE closes only a shade higher

FTSE 100 index came off its recent boil to close a tad higher on Tuesday as traders were spooked by  fears of a no-deal Brexit.

The UK index of premier shares added nearly five points  to 7,524, while the midcap FTSE 250, and more UK-focused index, plunged over 263 points to close at 21,657. 

Yes, the ‘B’ word of course hasn’t gone away after last week’s landslide conservative win in the general election and Prime Minister Boris Johnson just sent a shiver through the financial markets.

He is keen to introduce legislation that will ensure the transition period will not be extended, which heightens the possibility of no-deal scenario.

“Boris Johnson has put an end to the party before it barely got started, with the PM deciding to raise the temperature in trade negotiations with the EU by ruling out any extension to the transitional period beyond 2020,” noted Joshua Mahony, market analyst at online trading group IG.

“In a move that Johnson will hope will hasten and fast track trade negotiations, markets are well and truly aware that this move could come to the detriment of the UK-EU relationship.”

The pound slipped 1.67% against the US dollar to stand at 1.3112.

“…with Johnson introducing yet another needless cliff-edge, he has dented hopes of a sentiment driven boost in economic  activity which has in turn put an end to the recent recovery in UK markets,” added the analyst.

Meanwhile, on Wall Street, the S&P 500 reached another record-high due to optimism on US, China trade and decent housing data.

3.45pm:  FTSE 100 in holding pattern

As it has been for most of the day, the Footsie is in a holding pattern.

London’s index of leading shares was down 8 points (0.1%) at 7,511, despite the heavily weighted resource stocks generally enjoying a good day – especially the oil giants Royal Dutch Shell (LON:RDSB) and BP PLC (LON:BP.), which were up 2.9% and 2.2% respectively.

At the other end of the Footsie leader-board, Royal Bank of Scotland was down 4.0% at 250.7p after Citigroup climbed onto the fence, abandoning its previous bullish stance.

In other broker action, asset management firm Schroders PLC (LON:SDR) fell 1.3% to 3,376p after Berenberg moved to ‘hold’ from ‘buy’.

In the US, the Dow Jones was up 61 points (0.2%) at 28,296 and the S&P 500 was 4 points (0.1%) firmer at 3,195.

2.15pm: US stocks to open a bit higher

US indices are set to open modestly higher in a few minutes’ time.

The Dow Jones is seen opening at around 28,246, up 10points from last night’s close, while the S&P 500 is expected to start at 3,196, up 5 points.

In the UK, the FTSE 100 is down 17 points (0.2%) at 7,502.

1.20pm: FTSE 100 dragged into the red by NMC Health and Unilever 

Foreign exchange markets might not have taken Boris Johnson’s plans for a fast Brexit well but the CBI seems on board.

“Business has had enough of uncertainty and shares the Prime Minister’s ambition for a fast EU trade deal. With only a year to go, we are committed to working with the government to secure an ambitious deal that supports all sectors of the economy. Every step in the negotiations will have an impact on jobs, firms and communities,” said Carolyn Fairbairn, the director-general of the pressure group.

“Speed and ambition can go hand in hand if the right approach is taken. There’s no time to lose, with a top priority being to build a best-in-class trade architecture, with business round the table, enabling EU trade talks to begin early in the new year. Firms stand ready to bring the evidence needed from factories and boardrooms across the UK to enable a good trade deal to be agreed as quickly as possible,” she added.

The FTSE 100 was down 9 points (0.1%) at 7,510 thanks largely to healthcare operator NMC Health seeing a quarter of its value wiped out as short sellers got their teeth into the stock and Unilever diving 6.1% after a gloomy trading update.

Logistics firm Bunzl PLC (LON:BNZL) also failed to please with its trading statement; the shares shed 1% after the company said overall trading this year has been consistent with the slowing underlying revenue growth indicated in previous announcements.

12.30pm: NMC Health added to the Muddy Waters songbook

Middle East-focused healthcare operator NMC Health PLC (LON:NMC) has led the Footsie into the red.

Hedge fund Muddy Waters has got its teeth into NMC, wiping out a quarter of the stock’s value.

“We have serious doubts about the company’s financial statements, including its asset values, cash balance, reported profits, and reported debt levels,” Muddy Water said, in a statement revealing its short position in NMC.

Selling short is the practice of selling shares you do not own in a company in the expectation of buying them back cheaper later.

The hedge fund is probably best known for having a pop at Burford Capital Limited (LON:BUR), the litigation finance specialist.

READ NMC Health shares tumble 23% after short seller Muddy Waters takes aim

Shares in Burford were down 3.4% in lunchtime trading.

The FTSE 100 was down 9 points (0.1%) at 7,510

11.15am: FTSE 100 idling; Boeing suppliers hit by 737 Max decision

The UK jobs data suggests the Bank of England will hold fire on rate cuts for the time being, according to ING Economics.

This morning’s jobs and earnings data largely left the market unmoved, and the FTSE 100 remains little changed – down 6 points (0.1%) at 7,513 – as the effects of a slumping pound are offset by concerns over the possibility of Britain exiting the European Union at the end of 2020 without a deal being negotiated.

“For now the official jobs data doesn’t look quite as bad as other hiring indicators have signalled but with Brexit uncertainty already making a comeback and investment set to remain low in 2020, hiring appetite is unlikely to improve significantly any time soon,” predicted James Smith, the economist covering developed markets at ING.

Smith reckons the Bank of England‘s Monetary Policy Committee will hold off, for now, on cutting interest rates but that could change if the jobs market deteriorate further.

“There are undoubtedly early signs of weakness. Vacancy levels have consistently dropped through 2019. The latest Markit/RECS jobs report points to another fall in permanent placements, while some other recent PMIs [Purchasing Managers’ Indices] have anecdotally indicated that some staff are not being replaced and in some cases, they’re being made redundant.

“However, all of this is only partially reflected in the latest official figures. Jobs’ growth grew by a modest, but positive, 24,000 in the three months to October. As we’ve seen in the past few readings, a lot of the weakness is concentrated in part-time and 18 to 24-year-old workers. This can be a fairly volatile part of the data and, once removed, the picture has been slightly less negative over recent months,” Smith said.

The FTSE 250, whose mid-cap constituents tend to benefit less from a weaker exchange rate, has been harder hit this morning than the FTSE 100 and is down 310 points (1.4%) at 21,611.

Senior Engineering PLC (LON:SNR), down 8.3% at 170.9p, led the mid-cap index lower after US aircraft builder Boeing said it would suspend production of its troublesome 737 Max aeroplane.

QinetiQ PLC (LON:QQ.) and Meggitt PLC (LON:MGGT), both of which are, like Senior, Boeing suppliers, were down 0.9%.

The number of people claiming unemployment benefits decreased by 13,000 to 1.28 million in the August-October quarter, the Office for National Statistics (ONS) said.

The UK employment rate was estimated at 76.2%, 0.4 percentage points higher than a year earlier but little changed on the previous quarter.

The UK unemployment rate was estimated at 3.8%, 0.3 percentage points lower than a year earlier but largely unchanged on the previous quarter.

Estimated annual growth in average weekly earnings for employees in Great Britain slowed to 3.2% for total pay (including bonuses) and 3.5% for regular pay (excluding bonuses).

The ONS said the annual growth in total pay was weakened by unusually high bonus payments paid in October 2018 compared with more typical average bonus payments paid in October 2019.

In real terms (after adjusting for inflation), annual growth in total pay is estimated to be 1.5%, and annual growth in regular pay is estimated to be 1.8%.

There were an estimated 794,000 vacancies in the UK for September to November 2019, which was 20,000 fewer than in the preceding quarter and 59,000 fewer than a year earlier.

Traders largely shrugged their shoulders at the data, having bigger things on their mind (such as Boris Johnson’s latest “Brexit or bust” pronouncement), and the FTSE 100 remained little changed.

9.40am: Sterling slams into reverse

The threat of a no-deal Brexit has resurfaced and ended the party mood in London.

Although sterling has fallen sharply against the dollar following prime minister Boris Johnson’s pledge to rule out any extension to the Brexit deadline, this has not resulted in the usual boost for blue-chip equities.

Sterling was down by 1.39 cents at US$1.3196 against the US dollar but the FTSE 100 was more or less unchanged.

UK-focused banks were off the pace after the latest stress tests from the Bank of England.

The results, released after the close on Monday, showed that the UK banking system is “resilient to deep simultaneous recessions in the UK and global economies” and would be able to meet credit demand from UK business and consumers despite an economic crash, the central bank said.

Barclays PLC (LON:BARC) came in the last place as a result of risks connected to its UK and international credit card business. The shares were down 3.4%.

Sector peers Lloyds Banking Group PLC (LON:LLOY) and Royal Bank of Scotland Group PLC (LON:RBS) were down 4.8% and 3.3% respectively.

8.40am: Pause for breath

Having advanced around 250 points in two days, the index of blue-chips paused for breath.

Nudging 15 points higher in the first 30 minutes it subsided back to register virtually zero change.

The major action was on the foreign exchange markets where PM Johnson’s plan to exit the EU fully by 2020 pushed sterling below US$1.32 as traders became a little queasy about the prospect.

“That means no possible way to extend the transition period,” explained Neil Wilson, an analyst at Markets.com.

“I must confess to believing he wouldn’t need to be so drastic, that a large majority offered the flexibility yet strength a government craves in deal-making.

“This sets up another cliff-edge and could create yet more months of uncertainty for investors just when we thought all was squared away.”

The big mover on the stock market was Unilever (LON:ULVR) after the consumer goods firm lowered its sales targets. The shares shed more than 5%.

Proactive news headlines

Keywords Studios PLC (LON:KWS) has acquired a trio of companies in a move to boost its translation, marketing and audio recording capabilities.

Applied Graphene Materials Group PLC (LON:AGM) is eyeing new product opportunities in the Asia markets after successfully completing a re-alignment of its business.

Intellectual property investment group Tekcapital PLC (LON:TEK) said its wholly-owned portfolio company Lucyd has filed five new patents and a trademark on its soon-to-be-launched line of Bluetooth audio glasses.

Natural pesticide group Eden Research plc (LON:EDEN) has signed an exclusive distribution agreement in Central Europe for fungicide Mevalone with SumiAgro.

Healthcare facilities investor Primary Health Properties PLC (LON:PHP) has added an existing site in Bolton and agreed to fund a purpose-built centre in Banagher in Ireland. 

OptiBiotix Health PLC (LON:OPTI) said its weight loss technology, SlimBiome, has been incorporated in two products launched on the Indian market by Anthem BioPharma and Zeon Life Sciences.

Symphony Environmental Technologies PLC (LON:SYM) said a number of orders it had expected in late 2019 have been deferred, but it said it believed this will be in the short rather than longer-term.

ClearStar Inc (LON:CLSU) said its order book is at the “highest ever” level, with a “healthy” pipeline for further orders next year, while the background and medical screening group said adjusted underlying earnings for the current year will come in at US$300,000.

Sareum Holdings PLC has reiterated its plans to focus on the development of its TYK2/JAK1 programmes: SDC-1801, for autoimmune diseases, and SDC-1802, targeting cancer.

Eurasia Mining PLC (LON:EUA) shares rose after announcing the Russian ministry of defence has approved the application for the Monchetundra flanks project.

Ariana Resources PLC (LON:AAU) has revealed its latest drilling results from resource drilling at the producing Kiziltepe mine in Turkey. Among the highlights of drilling testing for deeper extensions at Arzu South were 16 metres at 2.04 grams per tonne gold and 67 grams silver, and three metres at 6.25 grams and 129 grams silver.

Bluebird Merchant Ventures Ltd (LON:BMV) has received a permit to develop the Kochang mine in South Korea. Production is now expected in 2020, with the potential to grow from an initial rate of 10,000 ounces per year to 30,000 ounces over three years. 

Alien Metals Ltd (LON:UFO) has completed an initial review of data supplied by Karratha Metals Group in relation to the acquisition of the Elizabeth Hill silver project in Western Australia. Alien signed an option to acquire Elizabeth Hill on 4 December 2019.

Metal Tiger PLC (LON:MTR), the natural resources investment company, has entered into a financing arrangement with a global investment bank.

Block Energy PLC (LON:BLOE) told investors that the latest well at the flagship West Rustavi field, WR-38Z, is flowing naturally following clean-up operations.

Anglo Pacific Group PLC’s (LON:APF) company secretary Kevin Flynn is set to become an executive director on 1 January 2020, a move that “formalises the role that he has been undertaking for the past number of years”.

Shefa Gems Ltd (LON:SEFA) said that the son of the company’s late chief executive, Avi Taub, has joined its board of directors.

Silence Therapeutics PLC (LON:SLN) has appointed Iain Ross as executive chairman from the start of next year with chief executive David Horn Solomon to shift his focus towards the US.

APQ Global Limited (LON:APQ) reported an unaudited book value per share of 87.89 US cents (67.95p) as at the close of business on 30 November. 

Kromek (LON:KMK) non-executive director Christopher Wilks yesterday bought 50,000 ordinary shares in the company at a price of 21.95p apiece, for a total of £10,975 plus costs. 

ImmuPharma PLC (LON:IMM) shares will today be admitted to trading on Euronext Growth Brussels under ticker ‘ALIMM, with an information note published alongside this.

6.46am: FTSE 100 called lower 

The FTSE 100 is expected to start lower on Tuesday as traders await new jobs figures to gauge the health of the UK economy.

Spread-better IG is expecting the FTSE 100 to open down 23 points after ending Monday’s session 166 points higher at 7,519.

Economists on average expect the unemployment rate to have picked up slightly to 3.9% in the three-month period to October from the recent 3.8%, while wage growth is forecast to have weakened.

“Wages will be the main thing to watch in this month’s labour market release,” said RBC Capital Markets, with average weekly wage growth seen easing to 3.4% from 3.6% for both the total and ex-bonus measures, with some predicting a rate of 3.3%.

Unemployment and wage figures will also be closely eyed in relation to inflation, due on Wednesday, and ahead of the Bank of England’s interest rate decision on Thursday.

The employment data may also provide some movement catalysts for the pound, which was trading 0.32% lower at US$1.3286 following a recent surge in the wake of the Conservative Party’s victory in last week’s general election.

Lingering optimism over last weeks ‘phase-one’ trade deal signed between the US and China last week continued to lift US markets to record closes overnight as traders expected a reduction in existing tariffs between the two nations as well as the lack of any new ones.

The Dow ended Monday’s session up 100 points, or 0.36% at 28,236, while the S&P 500 climbed 23 points, or 0.7% to 3,191 and the Nasdaq jumped 79 points, or 0.9%, to 8.814.

Asian markets were given a boost by Wall Street’s record performance in addition to strong Chinese economic data, with the Japanese Nikkei 225 rising 0.47% while Hong Kong’s Hang Seng was 1.1% higher.

Significant announcements on Tuesday December 17:

Finals: Pressure Technologies PLC (LON:PRES),

Interims: Smart Metering Systems PLC (LON:SMS)

Trading statements: Bunzl PLC (LON:BNZL), Hunting PLC (LON:HTG), Petrofac Ltd (LON:PFC), Trainline PLC (LON:TRN)

AGMs: Applied Graphene Materials PLC (LON:AGM), Sareum Holdings PLC (LON:SAR)

Economic data: UK unemployment

Around the markets:

Sterling: US$1.3286, down 0.32%

Brent crude: US$65.40 a barrel, no change

Gold: US$1,477.10 an ounce, up 0.14%

Bitcoin: US$6,873.82, down 2.8%

City headlines:

Boris Johnson will redraw his Brexit bill this week to make it illegal for parliament to extend the transition period – Times

Regulators could bar savers who back Neil Woodford-style funds from accessing their cash instantly – or force them to take a big loss if they want the money right away – Telegraph

Boeing is temporarily halting production of its grounded 737 Max after the Federal Aviation Administration (FAA) said last week it would not approve the plane’s return to service before 2020 – Guardian

Two former Serco directors have been charged with fraud and false accounting over its electronic tagging scandal – Daily Mail