London close: Santa's a no-show as stocks end at more than two-year low
As traders reached for the mince pies and eggnog, the Santa rally failed to materialise on Christmas Eve, with stocks in London suffering their worst close in more than two years as global growth concerns, Sino-US relations and Brexit woes continued to plague investors.
The FTSE 100 closed down 0.5% at 6,685.99 - its lowest finish since September 2016 - amid holiday-thinned volumes, with many traders already away from their desks for the Christmas break. Meanwhile, the pound was up 0.1% at 1.2657 and 0.1% lower versus the euro at 1.1100.
Equity markets had taken their cue from heavy losses on Wall Street on Friday, as investors fretted about global economic growth and the temporary US government shutdown, with the Nasdaq officially entering bear market territory as it traded down 22% from its highs at the end of August.
Comments from Trump’s acting chief of staff, Mick Mulvaney, did little to boost sentiment, as he suggested that the government shutdown that kicked off at midnight on Friday after Trump and the Democrats remained at odds over funding for a border wall with Mexico, could continue right up to the opening of the next Congress on 3 January.
Meanwhile, Sino-US relations were back in focus as White House trade adviser Peter Navarro said the US might not reach a trade deal with China in the next three months unless Beijing can agree to a "profound overhaul" of its trade and industrial practices.
Adding to the gloomy mood, US Treasury Secretary Steve Mnuchin’s attempt to calm investors’ nerves following the recent market selloff had the opposite effect. In a statement on Sunday, Mnuchin said the chiefs of the country’s biggest banks had confirmed to him that they had ample liquidity.
Mnuchin, who held calls with top US bankers over the weekend, said he had convened a "Plunge Protection Team".
IG market analyst Chris Beauchamp said: "The reports of Steve Mnuchin meeting with decision-makers will not provide much Christmas cheer. Mr Mnuchin is most likely worried about his job, but everyone else will draw the conclusion that there is perhaps much more to worry about."
Rumours about Trump asking whether he could fire Jerome Powell as chair of the Federal Reserve were also swirling over the weekend.
As far as Brexit is concerned, CMC Markets analyst Michael Hewson said the withdrawal agreement remains on the table, with no majority in the house for it to pass, and all options on the table as to what might happen next.
"It remains surprising that Theresa May is still Prime Minister despite confidence votes, cabinet rebellions, and multiple resignations. We still can’t rule out even at this late stage with the March 29th 2019 hard deadline looming of a government collapse, an extension of article 50, a revocation of article 50, another referendum, or even a general election.
"If 2018 was the beginning of the end of the 10 year bull market, 2019 could well give stocks an additional shove to the downside.
"We have already broken key levels this year on European markets with the FTSE 100, CAC 40 and German DAX all breaking below some key long term directional moving averages. We’ve also seen a death cross on the daily S&P500 and Nasdaq 100 daily charts, which has now only just this week been replicated on the Dow Jones. If markets are unable to recover their momentum above these key technical break down levels then we could well see further losses as we head into 2019."
Unsurprisingly, UK corporate news was scarce.
Indivior was the standout loser on the FTSE 250 after US-based Braeburn Pharmaceutical said over the weekend that the US Food and Drug Administration had granted tentative approval for Brixadi extended-release weekly injections - a buprenorphine treatment for opioid use disorder that is expected to be a key competitor to Indivior’s Sublocade.
Anglo American retreated despite raising its 2019 guidance for its Minas-Rio iron ore operation in Brazil after receiving regulatory approval relating to the Step 3 licence area. The mining giant said it now expected production to be 18m -20m tonnes (wet basis), from the previous guidance of 16m -19m.
Online gaming company Playtech suffered heavy losses as it said new Italian gambling taxes would hit Adjusted EBITDA by approximately €20m-25m. The Italian Senate on Sunday passed the government's 2019 budget which includes legislation to increase taxation on various types of gambling activities.
Premier Inn owner Whitbread was on the front foot after saying late on Friday that the EU had cleared its sale of the Costa coffee chain to Coca-Cola and announcing a £500m share buyback.
Market Movers
FTSE 100 (UKX) 6,685.99 -0.52%
FTSE 250 (MCX) 17,319.35 -0.71%
techMARK (TASX) 3,282.21 -0.69%
FTSE 100 - Risers
Spirax-Sarco Engineering (SPX) 6,085.00p 3.14%
Micro Focus International (MCRO) 1,385.50p 2.97%
Ashtead Group (AHT) 1,643.00p 2.59%
Hiscox Limited (DI) (HSX) 1,557.00p 1.76%
Whitbread (WTB) 4,518.00p 1.28%
NMC Health (NMC) 2,732.00p 1.19%
Informa (INF) 624.20p 1.17%
Prudential (PRU) 1,374.50p 1.07%
Rightmove (RMV) 425.30p 1.05%
RSA Insurance Group (RSA) 503.00p 0.94%
FTSE 100 - Fallers
United Utilities Group (UU.) 728.80p -5.25%
3i Group (III) 756.20p -4.23%
London Stock Exchange Group (LSE) 3,907.00p -3.93%
Evraz (EVR) 469.80p -3.27%
Severn Trent (SVT) 1,812.00p -3.23%
Carnival (CCL) 3,668.00p -2.99%
BT Group (BT.A) 242.40p -2.65%
Scottish Mortgage Inv Trust (SMT) 442.95p -2.65%
Imperial Brands (IMB) 2,309.00p -2.55%
International Consolidated Airlines Group SA (CDI) (IAG) 598.00p -2.54%
FTSE 250 - Risers
Funding Circle Holdings (FCH) 275.00p 8.14%
Amigo Holdings (AMGO) 272.45p 4.77%
Convatec Group (CTEC) 141.05p 3.83%
Hill & Smith Holdings (HILS) 1,169.00p 3.63%
Sanne Group (SNN) 573.00p 3.43%
Mediclinic International (MDC) 316.00p 3.40%
Hunting (HTG) 470.20p 3.11%
IntegraFin Holding (IHP) 289.00p 2.94%
Equiniti Group (EQN) 209.50p 2.70%
Weir Group (WEIR) 1,283.00p 2.56%
FTSE 250 - Fallers
Indivior (INDV) 108.85p -12.29%
Playtech (PTEC) 368.90p -7.24%
Superdry (SDRY) 431.40p -5.56%
Rank Group (RNK) 135.00p -5.20%
888 Holdings (888) 161.30p -5.17%
IP Group (IPO) 116.40p -4.59%
Pennon Group (PNN) 693.00p -4.55%
Cranswick (CWK) 2,600.00p -4.41%
Dechra Pharmaceuticals (DPH) 2,022.00p -3.62%
Just Group (JUST) 90.60p -3.62%