- FTSE 100 little changed
- US markets to open higher
- Bank of England leaves policies unchanged
12.30pm: Bank of England stands pat, as expected
US stocks are expected to open on the front foot as traders continue to expect politicians to come to an accommodation over a US$900bn fiscal stimulus package.
Spread betting quotes suggest that the Dow Jones industrial average, which lost ground yesterday, will rise 137 points to open at around 30,292.
The S&P 500 is expected to advance 20 points to 3,721 and the Nasdaq Composite is tipped to rise 63 points to 12,721.
“Stimulus talks in Washington DC have made significant progress and markets are already pricing in a deal by year-end,” ventured Milan Cutkovic, a market analyst at Axi.
“The pressure to reach a deal is rising on both parties as the US economy could be sliding into another recession, and investors remain optimistic that another aid package is just around the corner.
“No surprises from yesterday’s FOMC meeting, where central bank once again confirmed that rates are likely to stay near zero until late 2023, and stressed the need for further fiscal support.
“The US Fed revised its economic outlook slightly higher, but significant risks remain in the short-term. While the vaccine development is great news, it is clear that it will take time for life to return to some form of normality; however, the mood on Wall Street remained upbeat,” he added.
Rabobank said that if recent indications from US initial jobless claims and payrolls data were not convincing enough, “yesterday’s release of November retail sales data provided further evidence that the pace of the US economic has been slowing”.
“While the US economic outlook will be lifted by policy support, the headwinds are strong. Covid-19 related hospitalisations continue to hit record highs necessitating various restrictions around the country. The Fed’s two-day policy meeting ended last night with Chair Powell stating that the case for further fiscal policy was ‘very, very strong’, noted Rabobank.
On the economic front today, the US has housing starts data, where a modest decline is expected for November. Traders will also be keeping an eye out for the Philadelphia Fed’s manufacturing survey for December and the weekly jobless claims.
#UK #monetary policy – Bank of England keeps interest rates at 0.10% & targeted stock of asset purchases at GBP895 billion, having added GBP150 billion at November meeting. Both decisions result of 9-0 votes by Monetary Policy Committee #MPC #BankofEngland #interestrates #QE
— Howard Archer (@HowardArcherUK) December 17, 2020
In London, the Bank of England’s Monetary Policy Committee (MPC) has voted unanimously to keep its bank rate at 0.1%, a news factoid that ranks up there with “sun rises again” in terms of predictability.
The MPC also maintained its targets for the stock of government and corporate bond purchases.
“The Committee was under little pressure this week to take further steps to support the economic recovery, as it had just lifted its target for government bond purchases by GBP150bn at its prior meeting in November. Recent economic data also have surprised its expectations to the upside. Indeed, the Committee revised its forecast for the quarter-on-quarter decline in Q4 GDP to ‘a little over 1%’, from 2.0%. The Committee noted that the main positive news since its early November meeting was on vaccine development and deployment, though it stated that this merely reinforced its existing forecast for GDP next year, which already was conditioned on Covid-19’s impact fading rapidly. The Committee did, however, note that additional fiscal measures in the Spending Review likely would boost GDP by up to 1% during 2021/22,” reported Samuel Tombs, the chief UK economist at Pantheon Macroeconomics.
“The MPC continues to assume–sensibly–that the UK will move immediately to a free trade agreement with the EU in January,” Tombs added.
“Nonetheless, it gave its clearest indication yet that it would ease monetary policy further, in the event of no-deal: ‘compared with previous periods during which non-negotiated Brexit outcomes had been possible, the economy was starting from a weaker position with greater spare capacity, increasing the Committee’s tolerance for a temporary overshoot in inflation.’ It did not, however, mention how it would ease, if the need arose; the conclusions from its recent consultation with lenders about how to implement negative rates likely will be revealed in February instead,” Tombs observed.
The announcement had little effect on the FTSE 100, which remained moored to last night’s closing level.
The Bank of England, the Fed and the ECB send a uniform message at the end of 2020:
Emergency liquidity remains critical for economies
Closing the Covid output gap will require years of sub-zero real rates
In times of disrupted interconnectedness, we remain deeply interdependent
— Lena Komileva (@komileva) December 17, 2020
10.15am: Back to square one as market waits for the Bank of England
After a positive start – albeit a modest one – the FTSE 100 is back to square one as sterling continues to appreciate on foreign exchange markets.
London’s index of leading shares was more or less unchanged, its thunder stolen by Bitcoin, which is hitting new highs. The cryptocurrency is up 7.3% at US$22,793 and has the crypto evangelists frothing at the mouth but then when aren’t they?
Scott Minerd, the chief investment officer at Guggenheim Global, said its firm has done some fundamental analysis “and shows that Bitcoin should be worth about US$400,000”.
To be fair, if the crypto crowd at frothing at the mouth, the doubters have their frowny faces on, probably upset at all of the profits they have missed out on.
Market pundits suggest that Bitcoin’s surge has been sparked by reports that cryptocurrencies are being given the once-over by central banks; meanwhile, those of us who have been hitting eBay hard for uninspired Christmas presents might have noticed when paying for them that online payments specialist PayPal is offering a Bitcoin option.
That being said, with the value of Bitcoin going through the roof, why would anyone use it to pay for anything? Like 100-year-old wine, its main function seems to be as an investment.
The market’s lethargy this morning might be because traders are waiting for the outcome of today’s meeting of the Bank of England’s Monetary Policy Committee.
“The Bank of England will be keeping a close eye on the Brexit negotiations, like most of us in this industry. Last week, there was a greater possibility that the central bank was going to introduce fresh measures had the two sides agreed to a no-deal exit but as the deadline was extended and negotiations are now going to go to the wire, the BoE will most likely refrain from taking any actions at its meeting today,” suggested Fawad Razaqzada at ThinkMarkets.
“Instead, it will probably tell us that it pans to provide more support in a potential emerging meeting should the UK exit the EU without a deal before the year is out. A no-deal exit will likely cause severe economic damage to the UK, which is why the BoE will have to provide it as much support as it will need. So be prepared for a potential ramping up of QE purchases in the event of a confirmed no-deal exit in the weeks ahead; however, if the two sides agree on a deal then the BoE will probably steer clear of providing further stimulus,” Razaqzada added.
8.45am: UK-focused banks and housebuilders push the index higher
A modicum of optimism was evident in London, with housebuilders and banks leading the advance on hopes of the conclusion of a Brexit deal.
The FTSE 100 was up 20 points (0.3%) at 6,5901.
While housebuilders and UK-focused banks are on the shopping lists of many investors, the fact that defensive favourites such as utilities and supermarkets are prominent among the losers suggests this is the proverbial “risk-off” day.
Talking of supermarkets, Sainsbury (J) PLC (LON:SBRY) has appointed Lesley Jones as the replacement for Roger Davis, who is quitting as the chair of Sainsbury’s Bank at the end of January 2021.
Jones was group chief credit officer at RBS Group – now known as NatWest – between 2008 and 2014; she is a non-executive director at retailer N Brown and merchant bank Close Brothers.
Shares in Sainsbury (J) PLC (LON:SBRY) were down 0.6% at 229.9p but not because of news of the appointment.
In other management news, Rio Tinto PLC (LON:RIO) has chosen chief financial officer Jakob Stausholm as its new chief executive officer.
READ The departure of Rio Tinto’s chief executive is the very least that was required after the destruction of sacred aboriginal sites
Rio’s shares were up 1.8% at 5,647p, making it one of the lesser risers in a buoyant mining sector.
Proactive news headlines
Powerhouse Energy Group plc (LON:PHE) says its project partner has begun groundworks and infrastructure preparations for the landmark first DMG waste-plastic-to-hydrogen plant, at the Protos hub in north-west England. The AIM-listed company has also been busy, having developed a design that will enable the plant to export larger volumes of hydrogen, strengthened its operational team and made progress on procurement and contracts in preparation for subsequent stages of the project’s construction and operation.
ReNeuron Group PLC (LON:RENE) shares jumped on Thursday after the company said the US Patent and Trademark Office (USPTO) has granted it a patent entitled: “Low oxygen culture conditions for maintaining retinal progenitor cell multipotency”. The AIM-listed firm said the patent will protect both the composition of its hRPC cell-based therapy candidate and its method of use, so constitutes a “principal layer of intellectual property” pertaining to its retinal disease programme.
Keyword Studios PLC (LON:KWS) acquired Jinglebell, a boutique audio studio in Milan, as one of two acquisitions announced on Thursday. The other is Indigo Pearl, a London-based video game centred PR agency.
Coinsilium Group Limited (LON:COIN) said it has signed an agreement with the Gibraltar Philatelic Bureau for the creation of a commemorative limited edition cryptocurrency postage stamp for release in the second quarter of 2021. The blockchain and crypto venture firm said the crypto postage stamp will be tied to the release of a blockchain-based digital collectable, or non-fungible token (NFT) counterpart, to be exclusively produced by Coinsilium in collaboration with RedFOX Labs under an agreement announced on December 10.
Amryt Pharma PLC (LON:AMYT) said Ministry of Health reimbursement approval has been granted for its Lojuxta cholesterol-reduction medicine in Saudi Arabia.
Kodal Minerals PLC (LON:KOD) has acquired the Fatou Gold Project in southern Mali. Fatou already has a historical compliant NI 43-101 resource of more than 350,000 ounces that is expected to increase based on a funded nine-month drilling programme, Kodal said.
Caledonia Mining Corporation PLC (LON:CMCL, NYSEAMERICAN:CMCL) has now entered into an additional option deal to acquire new prospecting acreage in Zimbabwe. On top of the Glen Hume option deal announced last week, the company now has an additional option for an area known as Connemara North which is also located within the Gweru mining district in the Zimbabwe Midlands.
Sunrise Resources PLC (LON:SRES) said it has started extracting a large bulk sample of natural pozzolan from its CS Pozzolan-Perlite project in Nevada as part of a collaborative concrete trail with a large cement and ready-mix company. The AIM-listed company said it will mine a 500-ton sample of pozzolan which will then be ground in the cement firm’s existing mill and used in a number of separate commercial concrete pours where the natural pozzolan will be substituted for a proportion of ordinary Portland cement in the concrete mixes.
IronRidge Resources Limited (LON:IRR ) told investors it has completed the acquisition of the Bodite and Bianouan gold licenses in Cote d’Ivoire. The company, in a statement, confirmed it has acquired Major Star SA to gain 100% ownership of the licences – issuing 1.5mln new shares priced at 18p each.
Panthera Resources PLC (LON:PAT) said it expects to see the results from exploration at a number of projects in the coming months. Panthera undertook a major restructuring earlier in the year that saw its interests in the Labola and Kalaka gold projects, in Burkina Faso and Mali respectively, spun out into Moydow Holdings. A gain from that transaction helped Panthera post a net profit of US$2.232mln in the six months to end September, 2020.
Panther Metals PLC (LON:PALM) has completed the acquisition of the Merolia Gold Project in the Eastern Goldfields of Western Australia from White Cliff Minerals. Panther paid the ASX-listed firm A$112,500 plus 734,470 Panther shares, on top of which White Cliff will be entitled to a payment of A$1.25 per ounce of gold contained within any JORC (or similar reporting code) mineral resource estimate derived from the acquired project.
Trident Royalties PLC (LON:TRR) told investors that Calidus Resources Limited’s (ASX:CAI) Warrawoona gold project is “on-track to production”. The project – for which Trident is acquiring a 1.5% net smelter royalty covering the ‘eastern part’ of the deposit – has successfully passed a number of important development and finance milestones, the AIM-quoted company said.
SIMEC Atlantis Energy Ltd (LON:SAE) said it looks forward to “an exciting 2021” following the GBP12mln funding deal announced on Wednesday. Chief executive Tim Cornelius said in a statement that the new funding facility will allow the renewable and sustainable energy firm to capitalise on new opportunities and ensure it has access to a pool of capital, so it is not “left second-guessing what will happen with equity capital markets post Brexit”.
Falcon Oil & Gas Ltd (LON:FOG) has highlighted an announcement by the Australian government, which intends to back exploration in the Beetaloo sub-basin with up to A$50mln of funding. AIM-quoted Falcon is among the early movers in the Beetaloo, via its partnership with Origin Energy, with some 4.6mln acres worth of permits covering what is believed to be the most prospective core area of the sub-basin.
Mosman Oil and Gas Ltd (LON:MSMN) told investors that the Duff-2 well, part of the Greater Stanley project, is back on production. It comes after a workover programme was successfully completed, to replace a pump and a broken rod.
RM Secured Direct Lending PLC (LON:RMDL) has said it has reclassified its interim dividend of 1.625p per share in respect of the period from 1 July 2020 to 30 September 2020 in order to reduce its taxable income and negate additional tax liability for 2019. The payment will now consist of a payment of 0.258p per share in respect of the period from 1 July 2020 to 30 September 2020, and another payment of 1.367p per share in respect of the period from 1 January 2019 to 31 December 2019. RM said as a result of the reclassification any additional tax for this year is expected to be minimal and addressed in 2021.
6.35am: Firm start expected
The FTSE 100 is set to start Thursday on the front foot and whilst 2020 has been a year of exceptional circumstances, it is beginning to look a lot like Christmas trading is coming to town.
CFD and spreadbetting firm IG see the FTSE 100 up around 22 points, making the blue chip benchmark’s price 6,582 to 6,585 with just over an hour to go before the open.
Activity levels are dropping off somewhat and this morning may also seem investors sit on their hands ahead of a Bank of England announcement.
For the most part, expectations are that the December policy will come and go without any changes though speculation has been building that negative interest rates are possible on the way to the UK.
This month may be too early, however.
“There has been some idle chatter about the prospect of negative rates in the past couple of weeks, however with the latest PMIs looking a little more resilient than expected in the last few weeks, it’s unlikely that the Bank will make any serious mention of them on this occasion, given that it seems possible we could see a landing zone for an EU/UK trade deal in the coming days,” said Michael Hewson, analyst at CMC Markets.
“Furthermore, when the central bank meets for the first time in 2021, the MPC is much more likely to have a better idea of where the UK economy is in relation to further restrictions, as well as having a clearer route map for vaccinations, as well as the extent of the new EU/UK trade relationship.”
Over in the United States, Wall Street saw a mixed and temperate close to trading on Wednesday.
The Dow Jones finished Wednesday down 44 points, or 0.15%, at 30,154 whilst the S&P 500 edged 0.18 into positive territory as it closed at 3,701. The Nasdaq Composite was stronger, slightly, as it ended the session up 0.5% at 12,658.
The small cap Russell 2000 Index dipped 0.36% to end at 1,952.
Around the markets
- The pound: US$1.3560, up 0.38%
- Gold: US$1,870 per ounce, up 0.37
- Silver: US$25.55 per ounce, up 0.86%
- Brent crude: US$51.62 per barrel, up 1.7%
- WTI crude: US$48.39 per barrel, up 1.6%
- Bitcoin: US$22,113, up 14%
6.45 am: Early Markets: Asia / Australia
Asia-Pacific shares were mostly higher today after the US Federal Reserve said it will buy at least US$120 billion of bonds each month until substantial further progress has been made toward its maximum employment and price stability goals.
Chinese stocks were higher, with the Shanghai composite gaining 1.04% while the Hang Seng index in Hong Kong rose 0.30%.
In Japan, the Nikkei 225 was 0.18% higher but South Korea’s Kospi declined 0.08%.
Shares in Australia surged, with the S&P/ASX 200 closing 1.16% higher after a larger than expected lift in jobs across the country in November with 90,000 jobs added over the month.
Proactive Australia news:
Arrow Minerals Ltd (ASX:AMD) has started a 3,100-metre reverse circulation (RC) drilling program at Dassa gold discovery on the Divole West exploration permit in Burkina Faso, West Africa.
Orthocell Ltd (ASX:OCC) is moving towards Therapeutic Goods Administration (TGA) approval of its CelGro(R) collagen medical device for introduction into the Australian dental bone and tissue regeneration market.
Predictive Discovery Ltd (ASX:PDI) has started the next phase of diamond and reverse circulation (RC) drilling at the Bankan Gold Project in Guinea, focusing on two prospects discovered in early 2020.
Carnavale Resources Limited (ASX:CAV) (FRA:YBB) has set the stage for strong newsflow from the high-grade Kookynie Gold Project, around 60 kilometres south of Leonora in the West Australian Goldfields after completing soil sampling, an aeromagnetic survey and extensive aircore drilling.
Artemis Resources Ltd (ASX:ARV) is highly encouraged by results from the first drilling at Paterson Central project that reveal the potential to host gold and copper mineralisation similar to that at the neighbouring Havieron project of Newcrest Mining Ltd (ASX:NCM) and Greatland Gold PLC (LON:GGP).
Imugene Ltd (ASX:IMU) (OTCMKTS:IUGNF) has completed enrolment of the first cohort of patients in a Phase I clinical trial of its checkpoint immunotherapy candidate, PD1-Vaxx.
XTEK Limited (ASX:XTE) has signed a Memorandum of Understanding (MOU) with leading European robotics and autonomous systems developer, Milrem Robotics, to act as Milrem’s unmanned ground vehicle (UGV) representative in Australian and New Zealand.
Brookside Energy Ltd (ASX:BRK) and Stonehorse Energy Ltd (ASX:SHE) have sold the first load of oil (169 barrels) on December 2, 2020, from the Mitchell 12-1 well, within Brookside’s Jewell Drilling Spacing Unit (DSU) in the SWISH AOI in the southern part of the SCOOP Play.
Euro Manganese Inc.(ASX:EMN) (CVE:EMN) (FRA:E06) has closed the second tranche of its private placement following shareholder approval at a special meeting held on December 10, 2020.
PolarX assays extend Zackly East mineralisation with intersection of 5 g/t gold and 3.15% copper
PolarX Ltd (ASX:PXX) has received more high-grade gold and copper assays which extend mineralisation by a further 200 metres at the Zackly East prospect within its Alaska Range project.