Gold bullion on american dollar banknotes close up
  • FTSE 100 closes 33 points up
  • Downgrade hits JD Wetherspoon
  • Sterling down against the US dollar

5.30pm: FTSE closes up

FTSE 100 index finished ahead on Thursday, boosted by a weaker pound and the positive mood surrounding the US, China trade deal.

The Footsie closed up around 33 points at 7,573,

FTSE 250 was a little more muted, up around three points, at 21,666.

Meanwhile, sterling fell 0.33% against the US dollar.

On Wall Street, markets surged. The Dow Jones added over 107 points and the S&P 500 added around 11 points at 3,202. The Nasdaq gained over 43 at 8,871.

“Wall Street has shrugged off the impeachment news as the odds of the Senate voting by a two thirds majority to impeach President Trump are essentially zero. It is making big political news, but it isn’t cutting any mustard with traders. The Dow Jones and S&P 500 are showing decent gains as the bullish mood from the trade deal with China is still circulating,” said David Madden, analyst at CMC Markets.

3.45pm : Sterling slumps

With the pound slumping on foreign exchange markets, the FTSE 100 and FTSE 250 have gone their separate ways today.

The former is up 21 points (0.3%) at 7,562, helped by sterling losing three-fifths of a cent against the US dollar, while the latter is down 8 points (0.0%) at 21,656.

Pubs group JD Wetherspoon PLC (LON:JDW), down 5.8% at 1,625p, leads the FTSE 250 lower after HSBC downgraded the stock to ‘hold’ from ‘buy’.

Controversial outsourcing group Capita Group PLC (LON:CPI) was the second-worst mid-cap performer, sliding 5.6% to 168.15p after Deutsche Bank reiterated its ‘sell’ recommendation.

2.45pm: Same result at the BoE meeting and another Queen’s Speech … it’s deja vu all over again

London’s index of leading shares continues to drift in a sea of apathy and much the same seems to hold true for US markets.

The FTSE 100 was up 12 points (0.2%) at 7,553 while in the US, while the Dow Jones has kicked off 77 points (0.3%) higher at 28,316, the S&P 500 has dipped 1.4 points (0.0%) to 3,191.

Publisher Pearson PLC (LON:PSON) has run into some profit-taking – and then some – today.

Yesterday, the shares reacted well to the sale of the group’s remaining stake in Penguin Random House, the announcement of a share buyback and the imminent retirement of its chief executive officer, John Fallon, rising from 644p to 655p; today, they are languishing at 617p, down 5.8% on the day.

On the macroeconomic front, there has been some analysis of the minutes from the minutes of the Bank of England‘s policy-setting committee.

The committee left the central bank’s key lending rate unchanged but as happened last month, two committee members voted for a rate cut.

“The minutes indicated that the other seven MPC members would be prepared to cut interest rates if downside risks materialised – noting that if Brexit uncertainties become entrenched or global growth fails to stabilise, monetary policy may need to reinforce the expected recovery in UK growth and inflation,” reported Howard Archer, the chief economic advisor to the EY ITEM Club.

“For the time being, the MPC maintained the view that growth would pick up from early 2020 due to easing in Brexit uncertainty, higher government spending and an improving global economic outlook.

“The MPC observed that there continue to be signs that the labour market is loosening although it remains tight. They also note that pay growth has slowed from peak levels around July although unit costs are still rising at a rate above that consistent with meeting the inflation target. The MPC expect private sector earnings growth to remain around 3½% – although they see some downside risk to this,” Archer said.

12.45pm: Bank of England stands pat

The Bank of England‘s Monetary Policy Committee (MPC) has voted 7-2 in favour of leaving its prime lending rate unchanged.

The FTSE 100 was up 19 points (0.3%) at 7,560.

“Investors will be breathing a sigh of relief following the election last week especially as the ‘Boris Bounce’ has taken such quick effect. The prospect of Brexit uncertainty being removed will allow businesses to turn the investment taps back on, and consumers should once more feel confident enough to spend their well-deserved wage gains; however, the Bank of England will come under pressure to raise interest rates should the economy pick up,” said Phil Smeaton, the chief investment officer at Sanlam UK.

12.15pm: On a high

The FTSE 100 was close to its intra-day high after the Queen’s speech in parliament, outlining the government’s legislative programme.

The index of leading shares was up 18 points (0.2%) at 7,559.

Among the proposals was an increase in tax credits available to companies via the government’s research & development (R&D) scheme.

“Although the R&D tax credit regime is still lesser known that SEIS and EIS and Entrepreneur’s Tax Relief, it is a relief that benefits UK business to the tune of over four billion pounds each year and can be worth hundreds of thousands of pounds to those companies investing in tech, research and new ways of working,” noted Sarah Collins, the director of RIFT Research and Development.

Meanwhile, the CBS Distributive Trades Survey for December is out, with the balance improving to zero from -3 in November; economists had expected a reading of -5.

“The CBI’s survey is giving mixed messages on the strength of retail sales in the run-up to Christmas. The reported sales balance picked up to its highest level since February and nearly matched its average level over the last three years, +2 but the sales-for-the-time-of-year balance—which has a marginally better relationship with the official data than the overall reported sales balance—collapsed to a seven-month low of -31 in December, from +8 in November,” observed Samuel Tombs, the chief UK economist at Pantheon Macroeconomics.

“One plausible interpretation is that the late Black Friday this year has boosted the reported sales balance—which is a direct year-over-year comparison of sales—but that retailers have been disappointed by the size of the uptick. Regardless, the survey’s small sample size and its omission of trading in the week before Christmas suggests that it should not be seen as a good guide to December’s official data,” he added.

Elsewhere in the retail sector, Howard Archer, the chief economic advisor to the EY ITEM Club, has commented on this morning’s retail sales figures, suggesting that consumers possibly held off from buying during the period covered by the November update as they were waiting for Black Friday.

“Nevertheless, it is notable that November marked the fourth successive month that retail sales volumes had either fallen or been flat – the first time this has happened since at least 1996. This includes a flat performance in October,” Archer recorded.

“Consequently, retail sales were down 0.4% in the three months to November compared to the three months to August.

“Year-on-year growth in retail sales volumes slumped to 1.0% in November from 3.1% in October, the lowest level since April 2018. This reflected the fact that sales had spiked 1.5% month-on-month in November 2018 when the data included Black Friday sales,” he added.

“Even allowing for the Black Friday effect weighing down on sales in November, – the recent softer retail sales data suggests that consumers have recently become more concerned by the combination of a struggling domestic economy, heightened domestic political and Brexit uncertainties and a deteriorating and more fractious global economic environment. Indeed, GfK reported consumer confidence weakened in October to be at its equal lowest level so far in 2019 (and since mid-2013) with a reduced willingness to make major purchases,” Archer declared.

10.30am: FTSE 100 marking time 

The nearer we get to Christmas, the less chance there is of traders going out on a limb, which possibly explains Footsie’s listlessness.

There is also the matter of the Queen’s Speech in parliament this afternoon that will set out the government’s legislative programme; in the circumstance, a measly 11 point (0.1%) gain to 7,552 for the top shares index is understandable.

Furthermore, although the Bank of England‘s interest rate setters are meeting today, few people – if any – are expecting any change from that quarter.

The best we can probably hope for in terms of newsworthiness is that the two monetary policy committee (MPC) members (Haskel and Saunders) that voted for a quarter point rate cut in November (which was the first split decision on the MPC since June 2018) vote for monetary easing again.

“The policy statement will, however, certainly be closely watched for the Bank’s judgement on recent developments,” declared Daiwa Capital Markets.

“Near-term political uncertainties – both domestic and external – have diminished somewhat but GDP [gross domestic product] has failed to rise in any month since August, and sentiment indicators remain consistent with contraction in Q4 [fourth quarter], compared to the BoE’s previous expectation of growth of 0.2%Q/Q.” Daiwa added.

Short-selling target NMC Health PLC (LON:NMC), down 13% at 1,562.5p is in the wars again today despite the company buying 100,000 shares yesterday at prices ranging from 1,705p to 1,749p as part of its share buyback programme.

XLMedia PLC  (LON:XLM), which describes itself as a digital performance publisher, lost more than a fifth of its value after it issued a profit warning and revealed management plans to spend its way out of trouble.

Bilby PLC (LOBN:BLBY) – no stranger to profit warnings itself (it had a massive one in March) – went the other way, rising 20% to 24.25p after a reassuring set of interim results.

The gas heating, electrical and building services provider said the board remains confident of at least maintaining underlying revenues of £59mln over the full-year (to 31 March 2020) with underlying earnings (EBITDA) of not less than £4.5mln.

9.45am: Retail sales fall in November

UK retail sales fell by 0.6% in November, with only household goods stores reporting growth, the Office for National Statistics (ONS) said.

Year-on-year growth was 1.0% , which is the lowest growth since April 2018, owing to a decline of 1.1% in non-food stores.

The ONS noted that Black Friday was on 29 November this year and therefore outside of its reporting period, which runs from 27 October to 23 November.

Online sales as a proportion of all retailing clocked in at 18.7% in November 2019, compared with the 19.1% reported in October 2019.

8.40am: FTSE 100 makes nervous start ahead of Queen’s Speech and interest rate call

The FTSE 100 made a slightly nervous start to proceedings in the aftermath of Donald Trump’s impeachment and ahead of the Queen’s Speech.

On the foreign exchange markets, the pound pulled out of its recent slump, prompted by the prospect of a hard Brexit. Sterling stabilised at US$1.3127.

“Discretion is the better part of valour. Caution is preferable to rash bravery. Falstaff’s words probably can be applied to markets as we head into the year-end,” said Neil Wilson, quoting William Shakespeare’s rotund comic character.

“For sterling traders today we have the double spectacle of the Queen’s Speech and the Bank of England meeting. Caution and discretion will be the watchwords for the Monetary Policy Committee; less so the government’s likely agenda.”

The Bank’s Monetary Policy Committee will likely keep its powder dry this month.

Sought will be signs that the Committee is setting the scene for a cut to borrowing costs early in the New Year in a bid to stave off, or at least mitigate the impact of recession.

TUI (LON:TUI) was the Footsie’s biggest casualty, falling 2.2% in the wake of the 737 Max problems that make up a portion of its fleet and with analysts at Berenberg downgrading the tour operator to a ‘hold’ recommendation.

The miners, including Anglo American (LON:AAL) and Antofagasta (LON:ANTO), were downgraded by analysts at HSBC, which went to ‘hold’ from ‘buy’ on the pair as well as KAZ Minerals (LON:KAZ) and Rio Tinto (LON:RIO).

Proactive news headlines

Touchstone Exploration Inc (LON:TXP, TSE:TXP) said gas flow rates from its latest Trinidad onshore well “greatly exceeded” expectations.

Mineral and Financial Investments Limited (LON:MAFL) saw a sharp uplift in its net asset value (NAV) in the year to 30 September, 2019.

Metal Tiger PLC (LON:MTR), the investor in strategic natural resource opportunities, has announced plans to buy back up to 10% of its shares in issue.

Echo Energy PLC (LON:ECHO) has switched its drill rig in Argentina from its Tapi Aike licence to its new prospect at Santa Cruz Sur where drilling of the first well at Camp Limite is scheduled to start next week.

US Oil & Gas PLC (LON:USOP) said it expects to drill East Play in the fourth quarter this year or first quarter next year if drill costings remain as currently indicated.

Regency Mines PLC (LON:RGM) has bought out minority shareholders in its UK energy storage business, Allied Energy Services, to bring the company fully under its ownership.

NQ Minerals PLC (LON:NQMI) has raised £300,000 from a UK institutional investor, which the miner said will allow it to launch an exploration programme to add higher grade resources to its Hellyer mine in Tasmania.

Eden Research plc (LON:EDEN) has received full authorisation for its nematicide formulation Cedroz in Mexico, potentially opening up the US market to the natural pesticide.

MaxCyte Inc (LON:MXCT) has appointed a new executive vice president as it continued with a Phase I trial of its MCY-M11 cancer drug.

OptiBiotix Health PLC (LON:OPTI) shares were higher on Thursday as it inked a distribution deal for its SlimBiome weight management product in the German market.

Amryt Pharma PLC (LON:AMYT) said the integration of Aegerion Pharmaceuticals is progressing “well” and “ahead of expectations” after its acquisition in September.

OptiBiotix Health PLC (LON:OPTI) has inked a distribution deal for its SlimBiome weight management product in the German market.

Corero Network Security PLC (LON:CNS) has secured US$1.8mln in contracts with new and existing customers to supply its Smartwall software.

ImmuPharma PLC (LON:IMM) this morning began trading on Euronext Growth Brussels under the ticker ‘ALIMM’, a new listing that does not affect the trading of the shares on AIM nor, said the company, is there any intention to raise additional funds.

Circassia Pharmaceuticals PLC (LON:CIR) has rejected claims by a licensing partner that it materially breached terms of their agreement over a product for babies with breathing difficulties.

Summit Therapeutics PLC (LON:SUMM) has brought forward the date of a meeting for shareholders to approve a US$50mln fundraising to 24 December from 30 December.

Diversified Gas & Oil PLC (LON:DGOC) has appointed Melanie Little as an independent non-executive director, effective immediately, taking the size of the board to eight. Little, who is currently in charge of operations and environmental health, safety & security at NYSE-listed Magellan Midstream Partners, “brings significant experience in compliance, operations and sustainability which will continue to be a key focus as we further grow the business and service our existing assets”, said chairman David Johnson.

Nektan PLC (LON:NKTN) has appointed Paul Hughes as a non-executive director with immediate effect, citing his “extensive corporate banking and commercial experience, with a focus on fundraising, the turnaround of loss-making businesses, risk management and fast-growing private and public companies” as key attributes.

6.54am: FTSE 100 called higher

The FTSE 100 is set for another slow morning on Thursday but should come alive later as the Bank of England meeting and Queen’s speech inject a bit of va-va-voom into the pre-Christmas lull.   

London’s blue chip index is predicted to add six points to around 7,559, according to spread-betting platforms, having been one of the few European indices to finish in the green a day earlier. 

This was thanks to the pound giving up all its post-election gains as Boris Johnson sparked worries as he again wielded his hard-Brexit threat.

“It seems that traders are winding down for Christmas as volatility in the markets was low yesterday,” said market analyst David Madden at CMC.

“The major headlines in the past few days have been Brexit related. There is a fear the UK could end up leaving the trading bloc without a deal, and that has encouraged some traders to lock-in profits on stocks as well as the pound.

“Declines in equites and sterling must be put in context with the gains that were racked up recently.”

Overnight, although the S&P 500 hit another all-time high along the way, it finished on a downward spiral, but just over 1 point lower, along with the Dow Jones, which dipped 28 points.

The Nasdaq stood out by inching up 4 points.  

Traders were watching the telly as Donald Trump became only the third US president to be impeached after Democrats in the House of Representatives led charges against him over abuse of power and obstruction of Congress.

The impeachment process will now pass to the Republican-controlled Senate, where 67 of the 100 lawmakers in the upper chamber will need to vote in favour of impeachment in order to remove the president from office, which is widely regarded as very unlikely. 

BoE decision and Queen’s speech

Turning attention back home, the BoE meeting comes at midday, a month after the monetary policy committee’s surprising split decision over interest rates, when external members Michael Saunders and Jonathan Haskel voted for a cut.

With the base rate currently at 0.75%, where it has been since August last year, it is widely expected to remain unchanged as the decade comes to a close.

The odds strongly favour the MPC keeping rates unchanged on Thursday, but “there will be much interest in the voting margin and the tone of the minutes of the meeting”, said economist Howard Archer of the EY Item Club, wondering if any of the other seven members will vote for a cut and whether the minutes come across as more dovish.

Last month’s 7-2 split vote “revealed a degree of concern within the MPC” on the outlook for UK growth, said economists at RBC Capital Markets, in particular the downside risks to growth overseas.

But coming just a week after a general election and with neither a press conference nor a refreshed set of forecasts due today, “it is very difficult to see the MPC making any change to policy on this occasion”, RBC concluded.

Around the markets: Pound flat at US$1.3089; gold flat at US$1478.90 an ounce; Brent crude changing hands for US$66.23 a barrel, near three-month highs

Significant announcements expected for Thursday December 19:

AGMs: Haydale Graphene Industries PLC (LON:HAYD), SkinBioTherapeutics PLC (LON:SBTX)

FTSE 100 ex-dividends clip 0.5 points from the index: Burberry Group PLC (LON:BRBY), United Utilities Group PLC (LON:UU.)

Economic announcementsBank of England policy decision, UK retail sales, US jobless claims

Business headlines

FT

A toughening-up of the accounting watchdog is one element planned in today Queen’s speech, with directors facing criminal prosecution if they are found to have made misleading statements to markets.

A funding crisis raises concerns on UK armed forces readiness, with military chiefs called to a meeting over a feared £1bn defence budget gap.

The Times

Hedge funds have been eavesdropping on the Bank of England’s press conferences before they are officially broadcast after its internal systems were hijacked.

A flurry of profit warnings rocked London’s junior market yesterday, prompting concerns that political uncertainty and a global economic slowdown have hit smaller British businesses.

The boss of AJ Bell, one of Britain’s biggest investment platforms, has raised £23 million by selling shares in the company after its sharp stock market rise.

Guardian

Britain’s audit sector should be made independent from the wider accounting profession as part of sweeping changes aimed at preventing further scandals, a report has recommended.

British Airways has taken a nosedive in UK passengers’ opinions and is now rated just above Ryanair at the bottom end of the airline rankings.

Telegraph

The United States Department of Agriculture (USDA) removed the fictional country of Wakanda from an online list of nations that have free trade agreements with the US on Thursday.

The Bank of England is to become the first central bank to test how well banks and insurers can weather the threat of economic shocks and market turmoil inspired by climate change.