Mixed day for European markets
The FTSE 100 may have hit a new closing peak, supported by rising commodity prices, but it was a more mixed picture elsewhere.
In rather muted trading ahead of the new year break, most European markets slipped back, while Wall Street is holding on to its early gains. The final scores in Europe showed:
- The FTSE 100 finished up 0.03% at 7622.88
- Germany’s Dax dipped 0.69% to 12,979.94
- France’s Cac closed 0.55% lower at 5339.42
- Italy’s FTSE MIB fell 0.36% to 22,120.95
- Spain’s Ibex ended down 0.71% at 10,093.1
- In Greece, the Athens market lost 1.26% to 799.05
On Wall Street, the Dow Jones Industrial Average is currently up 35 points or 0.14%.
Meanwhile bitcoin is down just over 9% at $13,941.
On that note, it’s time to close for the evening. Thanks for all your comments, and we’ll be back tomorrow for the last trading session of the year.
Updated
FTSE 100 closes at new peak - just
Breaking news:
The FTSE 100 has hit another record closing high - but only just. The index ended the last full trading day of the year (tomorrow traders knock off work at 12.30) up a magnificent 0.03% at 7622.88.
Earlier, it also managed an intra-day high of 7633.55 before slipping back from that peak.
Updated
Wall Street is still in positive territory, but European markets are drifting lower as we head to the close. Chris Beauchamp, chief market analyst at IG, said:
The final full session of the year has seen European markets drop slightly, with an absence of catalysts prompting a drift to the downside. London’s ability to hold above 7600 should come as encouragement to UK investors, even with several heavyweights going ex-dividend today.
However, stocks on the continent have continued their sideways pattern of the past two weeks, as they look ahead into a 2018 that will see the ECB cut back its monthly purchase levels and a host of political issues. However, as the big investors cut back on their European exposure, one of the big themes of this year, there will be plenty of opportunities for ordinary investors to pick up bargains and gain exposure to one of the healthier parts of the global economy, assuming they can stomach the potential volatility from various elections.
Over with bitcoin, and the cryptocurrency is off its lows of the day but still down nearly 8% at $14,152.
On the Chicago data, Jamie Satchi, economist at MNI Indicators, said:
Sentiment among businesses started 2017 in good shape and only impressed more as the year progressed. December’s result secured the MNI Chicago Business Barometer’s first full year of expansion since 2014 and with new orders ending the quarter in fine shape there is every chance this form could be carried over into 2018.
Chicago purchasing managers index hits more than six year high
Some strong US data, in the shape of the Chicago purchasing managers index.
The index has jumped from 63.9 in November to 67.6 in the final month of the year. This is far better than the decline to 62 which had been expected, and marks the highest level since March 2011.
Wall Street opens higher
US markets are on the rise, helped by a weaker dollar and a rally in commodity prices, although trading is thin in the run up to the new year break.
The Dow Jones Industrial Average is up 39 points or 0.15% while the S&P 500 opened up 0.14% and the Nasdaq Composite 0.21%.
Just in: America’s labour market remains strong, with just 245,000 people filing new claims for unemployment benefit last week.
Although more than expected, it’s still a low figure by historical standards.
US weekly jobless claims total 245,000, vs 240,000 estimate https://t.co/Ny3t3rC1La
— CNBC (@CNBC) December 28, 2017
Bitcoin is on track to post its ninth daily fall in 12 days.
Lots of red on that bitcoin table recently. pic.twitter.com/JtFyzdmIrn
— Eddie van der Walt (@EdVanDerWalt) December 28, 2017
Bitcoin: What the experts say
Bitcoin has now clawed its way back over $14,000, but it’s still down over 7% today since South Korea announced its clampdown (details here).
Naeem Aslam of Think Markets says regulatory threats have triggered the selloff, but points out that bitcoin has suffered similar slumps before.
He says:
After forming a high of $16,416 this week, the cryptocurrency came under a selling pressure as traders showed their reaction to South Korea’s news. The country is determined to curb the speculative market and it would take measures to stop and review various crypto-exchanges.
The reality is that the market is way too overheated and no one wants the cryptocurrency popping on their door steps. However, this is surely not the first time that we have witnessed this kind of reaction in the Bitcoin price.
Throughout this years, we have heard many similar messages (followed by actions) from China and yet Bitcoin made a high of $19,338 [earlier this month].
But.... Craig Erlam of Oanda suspects that anxiety over bitcoin’s future may be rising.....
Bitcoin is coming under selling pressure once again, with efforts by South Korean authorities to rein in speculation being blamed....
While this is likely a contributing factor, I wonder if given the pre-holiday drop, whether speculators have become more sensitive to negative news.
We saw plenty of this in reverse on the way up, with positive news triggering significant rises and negative news being brushed aside. It wouldn’t surprise me if we see prices heading back below $10,000 before they find their feet again.
Readers might assume that shares in London are up because the pound is having one of its wobbles (because a falling pound boosts the profits of multinational companies listed in London).
But actually, sterling is up 0.25% against the US dollar today, at $1.343.
And during 2017 as a whole, the pound has gained over 8% against the greenback, having started the year at $1.235.
The dollar is losing ground against most currencies today.
Some traders are fretting that Donald Trump’s cuts to US corporation tax will push America’s deficit higher, prompting even more borrowing.
Another factor is that US consumer confidence dropped yesterday, which might signal some economic softness next year.
US Dollar Touches 1-Month Low as It Heads for Worst Year Since 2003 https://t.co/eNd9sCz2lv via @markets pic.twitter.com/lUS2iesyPm
— Dan Popescu (@PopescuCo) December 28, 2017
The FTSE 250 index of medium-sized companies has also hit a new all-time high.
It’s up a modest 23 points at 29,663.
Familiar names like baking firm Greggs (+2.2%) and transport group Stobart (+1.9%) are among the risers.
FTSE 100 hits fresh all-time high
Newsflash: Britain’s FTSE 100 has just hit a new all-time high!
The Footsie has gained another 13 points, in a quiet trading session, hitting 7,633 points for the first time ever.
Mining stocks such as Rio Tinto and Anglo American are up this morning, as commodity prices rise thanks to the weak dollar (as investors react to Donald Trump’s tax cuts).
UK retailer Next and supermarket chain J Sainsbury are also in the top risers (up around 0.8% each).
The FTSE 100 has gained more than 6.6% during 2017 - a solid performance, but one that is overshadowed by European and US markets.
US companies involved in the blockchain - the ‘digital ledger’ technology that underpins bitcoin - are also under pressure in premarket trading.
Reuters reports that Riot Blockchain is down 7.7% premarket, LongFin Corp has lost 5.7% percent, Overstock.com has dipped by 4.8%, while Nova LifeStyle has shed 4.1%.
JUST IN: Stocks of blockchain-related companies down premarket after South Korea to impose new curbs on cryptocurrency trading pic.twitter.com/Ll87BT1D8k
— Reuters Business (@ReutersBiz) December 28, 2017
Yikes, a sudden squall of selling just swept bitcoin down to $13,500, wiping a few hundred dollar off its value in under a minute.
It’s now clawing its way back, though -- a reminder of how volatile digital currencies can be (not an ideal characteristic in a store of value...)
Bitcoin update: It’s currently bobbing around $13,990 on the BitStamp exchange in Luxembourg, down 8.5% so far today (and 28% below last week’s record highs).
UK mortgage approvals hit 15-month low
Looking away from bitcoin, we’ve just learned that UK mortgage approvals dropped to a 15-month low last month.
Just 39,507 home purchase loans were approved in November, down from 41,702 a year ago, according to industry body UK Finance.
That may show that the market is cooling, as the Bank of England raised interest rates at the start of November from 0.25% to 0.5%.
Today the financial markets are mostly “watching Bitcoin (fanatics vs the controlling tendencies of governments and central banks) and dealing with year-end tidying-up operations” says Kit Juckes of Societe Generale.
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Why South Korea is clamping down on bitcoin
The Financial Times says today’s clampdown shows South Korea is keen to take some heat out of its domestic bitcoin market:
The measures include a ban on opening anonymous cryptocurrency accounts to boost transparency and legislation to allow regulators to close digital currency exchanges if needed, a recommendation made by the justice ministry worried about scams involving cryptocurrency trading.
“The regulator is saying to exchanges to have proper cyber security and proper know-your-client processes in place,” said Cedric Jeanson, chief executive of BitSpread, a cryptocurrency market maker. “With the market overheating in Korea, it is quite natural that the regulator thinks, ‘let’s make sure this is done properly’.”
The government noted that most virtual currencies were trading at a premium on South Korean exchanges, despite a string of regulatory measures announced by the government this month designed to cool demand.
South Korean traders are paying about 30 per cent over international rates for bitcoin, reflecting the popularity of the asset in the country and the difficulty in arbitraging among markets.
Koreans prefer to use bitcoin exchanges in their home country rather than the US because they need to open a bank account in the US to buy the currency in that market — a cumbersome requirement.
Bitcoin slips as South Korea threatens to shut exchanges https://t.co/VBvnrrwAxv
— FT Markets (@FTMarkets) December 28, 2017
South Korea’s new curbs on bitcoin come just nine days after a Seoul-based digital currency exchange declared itself bankrupt after being hacked for the second time.
The Youbut exchange shut down after losing 17% of its assets in a cyber attack which was later blamed on North Korean hackers.
Earlier this month, a cryto-mining marketplace called NiceHash said it had also been hacked, losing around 4,700 bitcoins. Both incidences highlighted one potential problem with digital currencies.
Bitcoin futures take a tumble
Bitcoin futures are also falling sharply today, on CME’s new derivatives platform (launched last week).
The January bitcoin contract has shed $640 to $14,050 - broadly matching today’s ‘spot’ price of bitcoin. The February and March futures contracts have also dropped to similar levels.
But what does that mean?
Well, these derivative contracts allow investors to wager that an asset will either rise or fall in value by a certain time. So you could conclude that traders don’t expect bitcoin to recover much ground in the next few months.
But it’s more likely that the futures prices is basically just tracking the spot price. After all, it would take a brave investor to put their shirt on bitcoin’s value in three months time (or three days, frankly...)
Updated
European stock markets are subdued this morning, in a sharp contrast to bitcoin.
Britain’s FTSE 100 rose by just 10 points to 7,630, which wasn’t quite enough to catch yesterday’s record high.
Politicians in Seoul have been fretting about bitcoin for some time, leading up to today’s crackdown on anonymous trading and the threat to close exchanges.
Bloomberg explains:
South Korea has been ground zero for a global surge in interest in bitcoin and other cryptocurrencies as prices surged this year, prompting the nation’s prime minister to worry over the impact on Korean youth.
While there’s no immediate indication Asia’s No. 4 economy will shutter exchanges that have accounted by some measures for more than fifth of global trading, the news poses a warning as regulators the world over express concerns about private digital currencies.
Today’s selloff has dragged bitcoin away from its pre-Christmas peak, but its still up around 1,400% this year.
South Korea’s cryptocurrency curbs suggest that officials are getting worried about the consequences of a digital currency crash.
Stephen Innes, head of trading for Asia Pacific at Oanda, says (via Bloomberg):
“Regulators are getting so concerned that this is primarily and predominantly a retail phenomenon.
“Regulators not only in Asia but globally are going to start addressing this fact because I don’t think they’ve actually come to terms with what the absolute downside of a complete drop in crypto means for the economy.”
Bitcoin hit by South Korea clampdown
Bitcoin is suffering fresh losses today after South Korea’s government announced a clampdown on digital currencies.
Bitcoin tumbled by 11% to below $14,000, meaning it has shed a quarter of its value since hitting its latest record high on 17th December.
The selloff came as South Korea revealed it is taking several steps to combat speculation in cryptocurrencies.
The measures include a ban on opening anonymous cryptocurrency accounts, and new legislation to allow regulators to close virtual coin exchanges if needed.
Bitcoin has taken South Korea by storm - reportedly, 20% of all bitcoin transactions take place in the country.
The government fears that the boom has gone too far. In a statement, it says:
“Officials share the view that virtual currency trading is overheating irrationally ... and we can no longer overlook this abnormal speculative situation.
South Korea is also keen to clamp down on criminals who use bitcoin to launder money, or fraudulently manipulate the price.
AFP reports:
“We will ... resolutely respond to such crimes by slapping maximum sentences possible on offenders,” the government said, vowing to “leave all policy options open, including closure of a cryptocurrency exchange when deemed necessary.”
This sent the bitcoin price reeling:
South Korea warns of shutting and reviewing of exchanges, #Bitcoin drops over $2800 pic.twitter.com/30fXXqkHh9
— Naeem Aslam (@NaeemAslam23) December 28, 2017
Updated
The agenda: Can FTSE 100 hit another high?
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
2017 has been a good year for shares, with most stock markets posting double-digit gains. And last night, the bull market swept Britain’s FTSE 100 to a new closing high of 7,620 points.
Can it do it again today? Possibly -- the futures markets are suggesting that the Footsie could creep a little higher today as more traders return to the City after the Christmas break.
European opening calls suggest a sedentary session though mining stocks may help FTSE - FTSE +8, DAX -23, CAC -10 (futures) courtesy of IG at 7.15am
— David Buik (@truemagic68) December 28, 2017
It will probably be a quiet trading session, though, as the markets stagger towards 2018.
Hussein Sayed, Chief Market Strategist at FXTM, says:
With only two trading sessions remaining for 2017, liquidity dried up across the global markets. This has been obvious in U.S. and European equities, where volumes dropped significantly.
However, some investors continued to tweak their portfolios slightly, leading to insignificant price action. I don’t expect equities to deviate much throughout Thursday and Friday.
Investors will also be watching for the European Central Bank’s latest assessment of the eurozone economy, new UK home loan figures, and fresh trade and unemployment data from America.
Here’s the agenda:
- 9am GMT: European Central Bank publishes its economic bulletin
- 9:30am GMT: UK mortgage loans for November
- 1.30pm GMT: US trade balance for November
- 1.30pm GMT: US weekly jobless figures
