- FTSE 100 closes 65 points lower
- US manufacturing misses expectations
- UK manfacturing PMI better than feared
- China manufacturing PMI upbeat
5pm: FTSE closes in red
FTSE 100 index sank lower on Monday, the first trading day of December, joining global markets to head into the red after a lacklustre few days.
"Investors found themselves wishing for some movement over the desperately quiet sessions on Thursday and Friday last week," noted Chris Beauchamp, the chief market analyst at online trading group IG.
"Today they have got their wish, and in abundance. Almost a whole 1% wiped off the Dow and S&P 500, and a 250-point drop in the Dax that will have jolted many out of their complacency."
Britain's blue-chip benchmark finished around 65 points lower at 7,281, while mid-cap cousin FTSE 250 lost over 137 points at 20,675.
On Wall Street, the Dow Jones Industrial Average plunged around 233 points, while the S&P 500 lost over 20. Traders were selling equities on continued trade fears and weak data.
Top laggard on FTSE was online grocer Ocado (LON:OCDO), which lost around 7% to stand at 1,232p after it issued a £500 million convertible bond, along with a retail update, which fell slightly shy of expectations. Last weekl, shares headed north after it announced a deal with one of Japans largest supermarkets, Aeon.
3.40pm: Footsie sinking on weak economic data from US
The FTSE 100 index continued to shoot for the ground, down 37 points to 7,309, amid weak US data and renewed trade fears.
Traders were jittery as they responded to a mixed bag of US data, with two sets of manufacturing figures out today.
The ISM, which represents the percentage of manufacturers planning to expand operations, shrank to 48.1 in November, coming in below the expectation of 49.4 as inventories and new orders lagged.
Manufacturing is often seen as a bellwether for how the rest of the economy is doing.
Ian Shepherdson at Pantheon Macroeconomics said the figures were “disappointing”
and said that a “fall in orders, if sustained, suggests the headline index could dip a bit further in December”.
“Wed be surprised to see a further significant decline, but the sector is stuck in a mild recession with little prospect of a real near-term revival.
This will weigh on job growth and capex over the next few months, to the point where we are not ready to rule out a further easing in January.”
But he added: “The chart shows that the ISM continues to run well below level implied by the Chinese PMIs; we doubt the gap will close anytime soon, absent a resolution to the trade war”.
Unless a deal is agreed between US and China by 15 December, new tariffs will be put on Chinese goods.
Also released today was the Markit manufacturing reading, known as the Purchasing Managers Index, which indicated expansion, coming in above expectations at 52.6.
Dow Jones Industrial Average slumped 166 points to 27,885.68.
3pm: Wall Street backslides after positive open
The FTSE 100 index saw another downturn in the afternoon, falling 32 points to 7,315 as trade uncertainty continued to punish markets.
Trumps tweet in the morning, saying that he was restoring steel and aluminium tariffs on Argentina and Brazil effective immediately, gave traders jitters after the US markets opened.
The Dow Jones Industrial Average opened in the green, but quickly backslid 26 points to 28,025.
Timme Spakman at ING Economics said that with regard to tariffs, “it is unclear however, if Trump still has the authority to do this”.
“The US Court for International Trade ruled on 15 November that an earlier 50% increase in steel and aluminium tariffs was unlawful, as the decision had been taken after the Presidents authority to act on the national security report had phased out,” Spakman said.
Spakman added that it casts a shadow over potential trade deals with China.
“The move by Trump signals that trade deals with the US are of limited value,” he added, since the two South American nations were previously granted an exemption from tariffs because they fulfilled the conditions the US set.
“China will be watching this closely and asking itself just how far it wants to go in negotiations with Trump, knowing that a deal could very well be short-lived.”
2.15pm: Trump restores tariffs
The FTSE 100 index took another step back after US President Donald Trump threatened global trade in a tweet, saying he would restore tariffs on some imports from Brazil and Argentina, adding to the index's earlier declines engendered by sterling strength on election hopes and UK data.
Londons blue-chip index, made up mostly of stocks that do not have a domestic focus, was down 11 points at 7,335.
US stock futures lost some of their gains, but the Dow Jones Industrials Average was still indicated around 0.1% higher.
“Brazil and Argentina have been presiding over a massive devaluation of their currencies. which is not good for our farmers. Therefore, effective immediately, I will restore the Tariffs on all Steel & Aluminum that is shipped into the U.S. from those countries,” Trump said in a tweet at 11am.
Before receiving an exemption in May last year, Brazil and Argentina were both lumbered with 25% steel tariffs and 10% aluminium tariffs.
Trumps eagerness to enforce tariffs comes as a US-China trade deal hangs in the balance, with reports that negotiations stalled over the weekend when the President passed a pro-Hong Kong bill into law.
In a series of tweets, Trump also called for the Fed to cut interest rates to weaken the dollar, and celebrated the US stock markets progress so far this year.
Brazil and Argentina have been presiding over a massive devaluation of their currencies. which is not good for our farmers. Therefore, effective immediately, I will restore the Tariffs on all Steel & Aluminum that is shipped into the U.S. from those countries. The Federal….
— Donald J. Trump (@realDonaldTrump) December 2, 2019
12.45pm: FTSE down
The FTSE 100 dipped lower in lunchtime trading, deleting all the mornings gains as the pound continued to rise against the dollar on election hopes and positive manufacturing data.
The UK blue-chip index was 5 points lower at 7,341, having reversed from an early peak of 7,400.27.
US markets are expected to return fully from the US Thanksgiving break in positive form reflecting gains in Asia, as it kicks off a busy week with data from its manufacturing sector.
The Dow Jones Industrials Average is forecast to open 139 points higher at 28,190, with the S&P 500 index seen 15 points higher at 3,156.
Michael Hewson of CMC Markets said: “On-line Black Friday sales hit a record last week in the US, good news for retailers who have been hit hard by changing consumer habits this week, with retailers likely to be in focus when US markets return to a full days trading after the Thanksgiving break last week”.
Figures from the US ISM manufacturing survey and Markit PMIs for the sector are also expected to drive markets, with non-manufacturing ISM and services PMIs coming on Wednesday.
Earlier manufacturing data from China and the UK came in better than feared, and market watchers will be hoping the worlds largest economy can keep up.
Elsewhere, any news from the trade talks with China will likely cause jitters, especially since weekend reports that negotiations have stalled because of the pro-Hong Kong legislation passed by President Donald Trump.
China reacted to the US bill on Hong Kong with some countermeasures of their own, including delaying a decision on US warships stopping in Hong Kong
A trade deal with China needs to be signed before the December 15 deadline for a new round of import US tariffs on Chinese goods.
11.45am: Pound rallies as polls put Boris Johnson in lead
Londons blue-chip index lost more of its early gains, still up 20 points, as sterling rallied after polls came out backing the Conservative Party to win the general election in ten days time.
Sterling rose to $1.2953, its highest since November 21, after the poll was released.
This pushed the Footsie down to 7,366, still up 20 points but wiping out half of its earlier gains.
Betfair Exchange showed odds on a Conservative majority hit 70% on Thursday, their highest this year.
This would help Prime Minister Boris Johnsons mandate to “get Brexit done”, and take Britain out of the European Union on 31 January.
The pound already rose this morning on PMI data which beat pessimistic expectations, and the Confederation of British Industry predicted that UK economic growth could hit 1.8% in 2021, as long as Johnson can secure a trade deal with the EU that leads to no tariffs.
11.00am: Markets mull British manufacturing
The Footsie edged lower off its morning highs, as markets continued to digest British manufacturing figures.
The index was up 34 points at 7,381.
When the Markit/CIPS reported its manufacturing Purchasing Managers Index, the pound rose and the non-domestically focused FTSE 100 dipped slightly on a better-than-feared 48.9 reading for November, from 49.6 in October.
Samuel Tombs at Pantheon Macroeconomics said “the contraction in manufacturing output signalled by the PMI in November primarily reflected companies running down stockpiles they had accumulated before the October 31 Brexit 'deadline'”.
For now, he said, “firms are not confident enough about the business outlook to hire more workers”, with figures remaining below 50 for the eighth consecutive month.
However, Tombs said: “Amid this volatility, we see tentative signs that underlying demand is recovering; both the new orders and output expectations balances increased to their highest levels since May, mirroring the slight recent improvement in the Eurozones manufacturing PMI.”
Miners and tobacco companies were among the morning's notable risers, with Imperial Brands (LON:IMP) up 2.24% at 1,741.40 and British American Tobacco (LON:BAT) up 2.09% at 3,124.
10.00am: FTSE 100 nudges lower as PMI data beat expectations
The FTSE 100 lost some of its early gains as PMI data came in better than feared.
London's blue-chip index was still up 0.5% at 7,383.49, rising 37 points.
Nevertheless, the UKs latest Purchasing Managers Index data showed manufacturers cutting jobs last month at the fastest rate since 2012, as Brexit and global trade continue to cause concerns.
The IHS Markit/CIPS manufacturing PMI sank to 48.9 in November from 49.6 in October, beating the initial flash estimate of 48.3.
David Cheetham at XTB said that figures were better than expected “largely due to pessimistic forecasts”, and that “overall it is probably fair to say that while there has been an improvement in recent months, the big picture still looks pretty bleak.”
“In terms of market reaction the pound has ticked a little higher in response, although it remains a little lower on balance after a slightly soft start to the week,” he added, saying with a Conservatives lead narrowing in the weekend polls, any further could see “additional weakness in the pound”.
Sterling rested 0.16% down against the dollar at US$1.291.
8.45am: Advent starts well for Footsie
The FTSE 100 index zoomed ahead in early deals lifted by strength in heavyweight miners following upbeat manufacturing data from top commodities consumer China.
In early deals, the blue-chip index was up 0.6%, or 43 points, at 7,389.
Connor Campbell, financial analyst at Spreadex commented: "A marginally better than forecast Chinese manufacturing PMI set the European markets up for a solid start to December.
"At 51.8 against the 51.5 expected and the 51.7 released in November, the latest Caixin PMI showed the sector firming up slightly, making it 5 consecutive months of improvements. In contrast the final Eurozone reading is estimated at 46.6 – the German figure is looking even worse – while the UK number is forecast to arrive at 48.3."
However, Campbell noted: "Europes gains may have been greater if it werent for a report from Axios, citing a source close to Trumps negotiating team, stating a phase one trade deal between the US and China has – as expected – been stalled because of Hong Kong legislation. The site went on to claim that the agreement would go through year-end at the earliest. Remember, this thing was meant to be signed at the cancelled APEC summit in Chile in mid-November."
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