FTSE 100 rallies as sterling collapses on Brexit fears

• FTSE 100 index up 21 points
• Run on sterling after weekend Brexit talks end in stalemate
• Gove to head to Brussels for talks on Irish sea border

11.15am: Gove to discuss Irish protocol with European commission vice-president today

The Footsie remains in positive territory, largely thanks to sterling’s plunge as currency traders get nervous over the prospect of Brexit talks collapsing.

London’s index of leading shares was up 21 points (0.3%) at 6,571. Sterling, meanwhile, has crashed 1.6 cents against the US dollar to US$1.3273. Against the euro, the pound has given up 1.25 cents at EUR1,0962.

The Chancellor of the Duchy of Lancaster, Michael Gove – the Scottish pronunciation of his surname rhymes with “move” apparently – is set to meet the European commission vice-president, Maros Sefcovic – the pronunciation of his surname rhymes with nothing I can think of – is to discuss the implementation of the Withdrawal Agreement, including the Protocol on Ireland and Northern Ireland.

???????????????? I will meet @michaelgove today in Brussels to discuss the implementation of the Withdrawal Agreement, including the Protocol on Ireland and Northern Ireland. We are working hard to make sure it is fully operational as of 1 January 2021.

— Maros Sefcovic???????? (@MarosSefcovic) December 7, 2020

Nervousness over the completion of a Brexit deal has risen sharply after weekend talks between the European Union (EU) and the UK ended without an agreement being reached.

Even the apparent progress on fishing rights has been downplayed by EU negotiator, Michel Barnier.

The British fishing industry contributes around 0.1% to the UK gross domestic and employs fewer people than just about any of the high-profile retail chains that have gone bust during the coronavirus pandemic.

Source say Michel Barnier has told EU ambassadors that there has been no breakthrough on the fisheries question, and that reports to that effect were “completely untrue”

— Tony Connelly (@tconnellyRTE) December 7, 2020

Nevertheless, it remains one of the key sticking points in negotiations, along with the Irish sea border question and the question of a level playing field in trading regulations.

About the size of it #BrexitShambles #BrexitReality pic.twitter.com/jUaBo2c7n1

— Anna (@AnnaSkiing) December 7, 2020

10.00am: House price boom fails to resuscitate housebuilders

The Halifax House Price Index rose 1.2% month-on-month in November.

The mortgage lender’s data indicated house prices were 7.6% higher than in November the previous year, representing the highest year-on-year gain since June 2016. In October, house prices were up 7.5% in October.

“Halifax reported house prices rose a robust 1.2% month-on-month in November, indicating that house prices remain firm after a much-reduced increase of 0.3% in October. This followed gains of 1.5-1.7% during July-September, and had hinted that prices could be starting to come off the boil,” reported Howard Archer, the chief economic advisor to the EY ITEM Club.

“The strength in house prices has occurred amid a strong rebound in housing market activity after the lows seen in April and May. Housing market activity in the UK picked up from May onwards after the lockdown restrictions were eased. There was an immediate pick-up in housing market activity as pent-up activity was released.

“This lift was then reinforced by the Chancellor’s raising of the Stamp Duty threshold to GBP500,000 from mid-July until 31 March 2021,” Archer noted.

“The EY ITEM Club suspects elevated housing market activity and robust prices will prove unsustainable sooner rather than later – although, in the immediate future, activity may still benefit from people looking to make a move in time to complete before the Stamp Duty threshold increase ends,” Archer continued.

The EY ITEM Club has forecast that house prices will decline by around 5% over the first half of 2021.

The FTSE 100 was up 24 points (0.4%) at 6,574, helped by sterling losing more than a cent against the US dollar on Brexit fears but the major housebuilders were not contributing to the advance, as investors’ attention was focused more on the possibility of a “no-deal” Brexit.

Berkeley Group Holdings PLC (LON:BKG) was the worst performer, tumbling 6.9% to 4,437p. Persimmon PLC (LON:PSN), Barratt Development PLC (LON:BDEV) and Taylor Wimpey PLC (LON:TW.) were in the same boat, albeit at the less leaky end, with losses ranging from 3.4% to 4.7%.

9.10am: Slow start to the week

The FTSE 100 opened Monday’s session fairly flat with the last-minute drama over a Brexit deal keeping a lid on any residual coronavirus (COVID-19) vaccine euphoria.

The index of UK blue-chip stocks had lost 8 points at 6,542.06 after an hour of trading.

Brexit talks resumed in Brussels on Sunday with three issues – fishing, state aid and dispute resolution – seen as significant obstacles to an accord.

France’s president Emmanuel Macron is being accused of adding further tension to the discussions by insisting on last-minute changes to negotiated terms, while UK prime minister Boris Johnson stands charged with trying to divide the EU with his brinksmanship.

“Sterling came under some pressure as previous optimism on a deal evaporated to some extent, with the outcome remaining unclear, undecided and with time quickly running out,” said Richard Hunter, head of markets at Interactive Investor.

With traders twitchy over the prospect of a ‘no deal’ Brexit it was no surprise to see the builders on offer given the correlation we have seen over the past two years between the movements of the sector and status of negotiations.

The theory at play is that a departure from the EU without a trade agreement will hit UK growth and by extension the new homes market, which relies on a reasonably buoyant economy to prosper (the current government aid such as Help to Buy and Stamp Duty cuts notwithstanding).

Leading the pack lower was Berkeley Group (LON:BKG), which was off 3.7%. Barratt Developments (LON:BDEV) and Persimmon (LON:PSN) were not far behind.

On the up was AstraZeneca (LON:AZN), whose shares advanced 2% on the back of a Morgan Stanley upgrade to ‘overweight’.

The surprise reaction of the morning was Micro Focus’ (LON:MCRO) 15% jump on the back of Goldman Sachs move to ‘buy’ from ‘neutral’. The Wall Street bank’s 650p price target is still a full 150p ahead of the current share price.

Proactive news headlines:

Iconic Labs PLC (LON:ICON) has announced that the JOE and HER media group has entered into a strategic partnership with Premier Media Broadcasting Limited (Premier Sports), which will see the UK & Ireland sports broadcaster make an equity investment into the media group, with JOE and HER to provide digital content rights across multiple sports. The main market–listed company pointed out that is a landmark agreement between a digital publisher and a broadcaster to share rights and formats across both entities’ audiences. The multidivisional new media and technology business noted that the JOE and HER media group is managed by the company, Greencastle Acquisition Limited and Premier Sports.

AfriTin Mining Ltd (LON:ATM) has achieved nameplate tin concentrate production at its Uis mine in Namibia. The company completed production ramp-up for stage I of phase 1 during November 2020. Tin concentrate production totalled 63.9 tonnes for November 2020, representing a 32% month-on-month increase.

88 Energy Ltd (LON:88E) has signed-up a rig contractor for the proposed Merlin and Harrier exploration wells, drilling on the first of which is slated for February. The move follows Friday’s farm-out news which sees an American oil and gas consortium, Alaska Peregrine Development Company (APDC) agree to acquire 50% of Project Peregrine. In return, APDC will fund the majority of drill costs for the Merlin-1 well, located within Project Peregrine. It has committed to spending up to US$11.3mln on the project. 88 Energy today announced it had executed a rig contract All American Oilfield for the use of Rig 111 to drill the Merlin-1 and Harrier-1 wells.

Open Orphan PLC (LON:ORPH) said its Venn Life Sciences drug development subsidiary has been awarded two new contracts that start immediately. The first will see Venn’s Paris team manage the randomisation and supply management for a coronavirus (COVID-19) trial to be conducted by an unnamed European pharmaceutical company. The team in Breda, in the Netherlands, meanwhile, will deploy its expertise to deliver process improvements in clinical development for the second new client.

United Oil & Gas PLC (LON:UOG) has highlighted estimates by consultant Gaffney Cline & Associates which sees some 2.4bn barrels of potential resources in the Walton Morant licence, offshore Jamaica. It comes as the company advances a farm-out process to bring a new partner into the Walton Morant project. The prospective resource is estimated across a total of 11 prospects. Colibri, the most advanced of the prospects, is now estimated to host some 406mln barrels, up around 77% from prior estimates, meanwhile, the Thunderball prospect is another stand-out prospect with an estimated 603mln barrels.

Learning Technologies Group PLC (LON:LTG) has said it is to acquire privately-owned eThink Education for an initial cash consideration of US$20mln. eThink is a North American company operating in the high-growth open-source learning management systems (LMS) market. The newly acquired company will be integrated into Learning Technologies’ (LTG’s) Open LMS business acquired in April 2020. The eThink deal follows Learning Tech’s acquisition of eCreators in September 2020 and marks a further step in the group’s strategic goal of consolidating the Moodle market – Moodle being the world’s most popular learning management system – building further complementary expertise and geographical reach into Open LMS.

Brickability Group PLC (LON:BRCK) said it has bought McCann Limited, a logistics firm that specialises in transporting building materials from factories in Europe to construction sites in the UK. The GBP1.75mln deal helps secure supply lines and reduce the risk of “Brexit-related delays to logistics and haulage” after January 1, said chief executive Alan Simpson. Brickability, a supplier of construction materials, paid GBP1.25mln upfront with the remainder being paid in three annual tranches.

BATM Advanced Communications Limited (LON:BVC) said an animal feedstock producer has received a protein recovery instrument from the company’s Celitron subsidiary. The unnamed Belgian customer is focused on commercialising industrial-scale insect-based technologies to produce feedstock. It intends to use BATM’s machinery to produce insect protein powder that can be used as a substitute for fishmeal and oils used in aquaculture feed. The entry into a new market segment with the first delivery of this instrument marks a further milestone achieved by Celitron in 2020, BATM said.

Arix Bioscience PLC (LON:ARIX) has noted the presentation by portfolio company Autolus Therapeutics PLC (NASDAQ:AUTL) of new data highlighting positive progress on its AUTO1 programme. AUTO1 is an anti-cancer CAR T-cell therapy currently going through a phase 1 clinical trial as a treatment for relapsed/refractory adult B-Acute Lymphocytic Leukaemia (ALL). In a statement, Autolus said that out of 19 patients evaluable for efficacy, 16, or 84% of the patients achieved minimum residual disease (MRD)-negative complete response (CR) at one month.

Cornish Lithium Ltd is to accelerate the Trelavour hard rock lithium project near St Austell, following the successful production of nominal battery-grade lithium hydroxide. This was achieved using proprietary L-Max and LOH-Max process technologies owned by Lepidico Ltd (ASX:LPD) on lithium mica samples obtained during the maiden hard rock lithium drilling programme earlier this year. Cornish Lithium has now acquired a technology licence from Lepidico which provides Cornish Lithium with an innovative and environmentally responsible metallurgical processing solution for the Trelavour project.

World High Life PLC (LON:LIFE) said it has significant sales growth during the coronavirus (COVID-19) pandemic. In its results statement for the year to the end of June 2020, the investment company focused on the cannabidiol (CBD) health and wellness space said online sales in July were 57% higher than they were in June. The focus at its Love Hemp subsidiary is on increasing market share in the UK and continental Europe. Work is underway on a new production facility that will provide additional capacity to expand beyond Europe.

Condor Gold PLC (LON:CNR) (TSE:COG) has commenced a 4,000-metre close-spaced infill diamond drilling programme within the permitted open pit at La India project, Nicaragua. The programme’s objectives are to tighten the drill hole spacing within the planned high-grade starter pits on the principal La India vein, to provide the sample density required to finalize pit designs and mine schedules ahead of production. The drilling is also targeting nearby inferred resources to upgrade to the indicated level, to include them in the mine plan.

Ariana Resources PLC (LON:AAU) has completed conditional agreements on its joint venture with Ozaltin Holding A.S and with Proccea Construction. Under the terms of this agreement, Ozaltin will be acquiring 53% of both Pontid Madencilik Sanayi ve Ticaret A.S, the owner of the Salinbas project, and the existing Zenit Madencilik San. ve Tic. A.S. joint venture, which is currently owned by Ariana in a 50:50 partnership with Proccea. The joint venture with Ozaltin and Proccea involves the partial disposal of the interests of the company in Zenit and Pontid in exchange for US $35.75mln in cash.

Personal Group PLC (LON:PGH), a leading provider of employee services in the UK, has announced the appointment of Martin Bennett as a non-executive director from January 1, 2021. The group noted that Bennett is an experienced public company director having held several executive and non-executive roles for companies within the consumer, technology and other sectors. He currently chairs the boards of two privately-owned technology-led companies, Ventureprise PLC and Foreign Currency Direct PLC, together with the Association of Foreign Exchange and Payments Companies (AFEP), a trade body responsible for the UK payments industry. Before these appointments, Bennett held the role of chief executive officer UK of Homeserve PLC having been chief financial officer until 2012, where he led the successful strategic turnaround of Homeserve’s UK business. Mark Winlow, Personal Group’s chairman, commented: “Personal Group and its board will benefit greatly from Martin’s business and technical experience. In particular, he has led regulated businesses and held listed company positions where, amongst other roles, he was responsible for investor relations. I look forward to working with Martin in 2021.”

Power Metal Resources PLC (LON:POW) the AIM-listed metals exploration and development company said it has received a notice to exercise warrants over 8,000,000 new ordinary shares of 0.1p each in the company at an exercise price of 1.0p per ordinary share. The company noted that subscription monies of GBP80,000 have been received by Power Metal in respect of this exercise.

Block Energy PLC (LON:BLOE), the exploration and production company focused on Georgia, has announced that an employee has exercised nil-cost options to acquire 65,415 ordinary shares of 0.25p each in the company which will be satisfied using existing shares held in the Block Energy Employee Benefit Trust (EBT). Following the exercise of these options, the remaining number of shares held by the EBT will be 37,972,141, representing 8.66% of the current total issued share capital.

W Resources PLC LON:WRES), the tungsten, tin and gold mining and exploration company with assets in Spain and Portugal, said it has received a conversion notice from Atlas Capital Markets for GBP100,000 of Convertible Bonds plus interest relating to August to November 2020, being the second conversion notice in respect of the first GBP500,000 tranche drawn from the GBP4mln facility that was first announced on March 30, 2020. The company said it will issue 96,300,548 ordinary shares of 0.1p per share at a conversion price of 0.1111p per ordinary share.

IQ-AI Ltd Ltd (LON:IQAI) said that further to its announcement dated November 9, 2020, the group has allotted 282,460 ordinary shares in IQ-AI to Mayo Clinic at 13.21p per ordinary share. The new ordinary shares were issued under the research and collaboration agreement regarding IB Trax between Mayo Clinic and Imaging Biometrics, a subsidiary of IQ-AI.

Deltic Energy PLC (LON:DELT), the AIM-quoted natural resources investing company progressing its high impact exploration and appraisal portfolio focused on the Southern and Central North Sea, said it has released a new corporate presentation. This presentation reflects recent developments, with particular focus on the award of six new licences covering twelve full and part blocks in the 32nd licensing round, announced on December 1, 2020, and the recent prospectivity update on the Licence P2428, which contains the Cupertino Area. The corporate presentation is available on the homepage at the company’s website: www.delticenergy.com

Incanthera PLC (AQSE:INC) has announced that it will report its interim results for the six months ended September 30, 2020, on Tuesday, December 8, 2020. The company said it will provide a live presentation of its results via the Investor Meet Company platform on Tuesday 8 December at 12.30pm GMT. Investors can sign up to Investor Meet Company for free and add to meet Incanthera via the following link: https://www.investormeetcompany.com/incanthera-plc/register-investor

6.50am: Subdued start seen

The FTSE 100 looks set to make a subdued but positive start to proceedings with coronavirus vaccine hopes marginally outweighing the deteriorating state of Brexit negotiations.

According to one report, UK prime minister Boris Johnson is ready to pull the pin on a ‘no deal’ departure from the EU if there isn’t a quick compromise over fishing rights, state aid and dispute resolution.

“There has undoubtedly been a ratcheting up of the stakes in the last few days, with France threatening to use its veto, in perhaps a calculated attempt to try and exert its influence in the final terms, while the UK has also said it would not shift on its red lines of fishing, level playing field and oversight and governance,” said Michael Hewson, an analyst at CMC Markets.

“With talks resuming over the weekend, we’ve been treated with various outbursts of optimism from the likes of Ireland’s foreign minister Simon Coveney who was saying that a deal was 97% to 98% done to the Irish Prime Minister saying that a deal was no more than 50-50.”

In Asia, stocks retreated from record highs on Monday in a bout of profit-taking, which ignored better than expected export data from China.

A big worry in the region is a potential parting shot from the Trump administration, which is threatening to sanction at least a dozen officials from the People’s Republic.

American coronavirus case, meanwhile, topped one million in just five days.

Back here at home, it is expected to be a reasonably busy week for corporate news. Scheduled are updates from online grocer Ocado (LON:OCDO), aero-engineer Rolls Royce (LON:RR.) and clothier Ted Baker (LON:TED).

On the market:

• Pound worth US$1.3407, down 0.25%
• Bitcoin US$19,326.05, up 0.57%
• Gold US$1,844.50, up 0.24%
• Brent crude US$49.14, down 0.11%

6.45am: Early Markets – Asia/Australia

Asia-Pacific markets were mostly lower on Monday following a surge last week underpinned by coronavirus (COVID-19) vaccine rollouts and US stimulus hopes.

In Japan, the Nikkei 225 slipped 0.76% while South Korea’s Kospi index regained earlier losses to trade 0.40% higher.

Chinese shares fell with the Shanghai composite dipping 0.76% while Hong Kong’s Hang Seng index dropped 1.33%.

Australia’s ASX 200 rose 0.62% to 6,675 supported by the materials sector following the rise in iron ore prices to seven-year highs.

READ OUR ASX REPORT HERE

Proactive Australia news:

Latin Resources Ltd (ASX:LRS) (FRA:XL5) has received firm commitments to raise $5 million via a placement of more than 166 million shares at an issue price of 0.3 cents per share.

GTI Resources Ltd (ASX:GTR) has started reverse circulation (RC) drilling at the Niagara Gold Project near Kookynie in the Eastern Goldfields of Western Australia.

Ironbark Zinc Limited (ASX:IBG) has welcomed the receipt of its Section 19-43 Permit from the Government of Greenland setting out the exploitation plan and closure requirements for the Citronen Project.

Nexus Minerals Ltd (ASX:NXM) (FRA:YAK) has hit gold grades of up to 1-metre at 42.59 g/t during deeper drilling beneath the existing Crusader resource at Wallbrook Gold Project in the Eastern Goldfields of Western Australia.

Roots Sustainable Agricultural Technologies Limited (ASX:ROO) has secured a new sales contract for its proprietary Root Zone Temperature Optimisation (RZTO) technology valued at $58,000 from My Green Fields, a medicinal cannabis farm in northern Israel.

MGC Pharmaceuticals Ltd‘s (ASX:MXC) (OTCMKTS:MGCLF) (FRA:MGC) independent statistical verification of the results of its 50-patient Phase II double-blind, placebo-controlled clinical trial to evaluate the safety and efficacy of the natural anti-inflammatory formulation ArtemiC on patients diagnosed with COVID-19 are nearly complete.

Creso Pharma Ltd (ASX:CPH) (FRA:1X8) is exploring several near-term opportunities to enter the world’s largest recreational and medical cannabis market after the US House of Representatives passed the Marijuana Opportunity Reinvestment and Expungement (MORE) Act to decriminalise cannabis for the first time on a national level.

Latin Resources Ltd (ASX:LRS) is expanding its presence in the prolific yet underexplored Lachlan Fold Belt of Central West NSW that hosts world-class gold and copper-gold operations through the proposed acquisition of a portion of a historical goldfield.

Cirralto Ltd (ASX:CRO) has entered into a milestone Business Payments Service Provider (BPSP) agreement with Fiserv (NASDAQ:FISV) and Visa International Limited (NYSE:V) in which Fiserv will serve as the exclusive merchant acquirer for Cirralto.

Maximus Resources Ltd (ASX:MXR) (FRA:M5F) has started an initial 2,500-metre diamond drilling program at Redback Gold Deposit within its 100%-owned Spargoville tenements in Western Australia.