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The Guardian - UK
The Guardian - UK
Business
Graeme Wearden

FTSE 100 hit new all-time closing high - as it happened

The sun sets over the city of London today, as shares hit record highs
The sun sets over the city of London today, as shares hit record highs Photograph: Daniel Sorabji/AFP/Getty Images

Closing post

Right, that’s all for today.

Here’s my news story about the FTSE 100 hitting a new record high tonight, for anyone just tuning in.

I’ll be back tomorrow for more live coverage of events in the markets and the world economy. Thanks, and goodnight (and enjoy the holidays, if you’re not back at work yet...). GW

Wall Street is failing to match the City’s lead.

Shares are dropping back, so the Dow Jones is down almost 100 points at 19,847. That suggests that the Dow is not going to hit the 20,000 mark today. At least that gives us something to watch out for tomorrow.

This is what I was banging on about earlier -- the FTSE 100 is actually down 6% this year if you measure it in US dollars (rather than up 13% in pounds).

The London stock market’s rally has helped to drive up the wealth of the richest in society, as well as boosting the value of pension funds and other asset managers.

Indeed, 2016 has been a vintage year for the ultra-rich - despite the backlash against populism this year (or perhaps helping to trigger it).

Bloomberg has calculated that the world’s billionaires are ending the year owning $237 billion more than on January 1st. Some of the most famous, including Warren Buffett and Bill Gates, did particularly well – so it’s nice to remember that they’re donating much of their wealth to charity.

It was a turbulent year, though, with the US election, the Brexit vote, and various other shocks and panics meaning fortunes fluctuated over the last 12 months.

US billionaire

Here’s the full story:

The World’s Richest Made $237 Billion This Year

Updated

With excellent timing, Bloomberg’s JP Spinetto has highlighted how the British pound has been one of the worst-performing currencies this year.

Sterling has shed 17%, which puts the 13% jump in the FTSE 100’s value this year into some context.

This chart of the FTSE 100’s best-performing shares shows how mining stocks drove the market to tonight’s record close:

.
Top risers on the Footsie today Photograph: Thomson Reuters

But property firms fell, after housebuilder Bovis warned on profits early this morning after failing to build as many homes as planned.

.
Top fallers on the Footie today Photograph: Thomson Reuters

With just two trading days to go, the City’s mining sector in on track for its best year the aftermath of the financial crisis.

The Telegraph’s Tara Cunningham explains:

London-listed miners are poised for their biggest annual gain since 2009 as firmer oil and commodity prices pushed the sector higher.

So far this year, the FTSE 350 mining index has rallied by 102%.

Here’s her full report.

Ruth Lea, economic adviser at Arbuthnot Banking Group, points out that the FTSE 250 index of smaller UK firms has also rallied since June:

City traders often talk about a “Santa Rally” this time of year, and once again the markets have provided.

David Cheetham, market analyst at online trading group XTB, explains:

“Observers of the markets have for many years noticed a strong propensity for stocks to rise in the period between Christmas and the New Year and this phenomenon appears to be playing out once more.”

(thanks to the Press Association for the quote).

Updated

Today’s FTSE 100 record high comes 20 months after the previous historic closing level.

That closing high, in April 2015, was followed by a sharp summer selloff triggered by fears over China’s economy.

This was compounded by concerns of a global slowdown in December 2015 when the US central bank raised interest rates for the first time in a decade.

But shares then recovered from February this year, and even the Brexit vote was only a blip in the FTSE’s march back over 7100 points.

The FTSE 100
The FTSE 100 over the last two years

Footsie up 12% since Brexit vote, but....

Today’s rally means the FTSE 100 is now 12% higher than on the day of the EU referendum in June.

That means that the value of Britain’s biggest listed companies jumped by 12% in sterling terms since the vote.

But... the pound is down by 10% against the euro since June, and around 17% weaker against the US dollar.

Updated

FTSE 100 hits record closing high

NEWSFLASH: Britain’s stock market has hit its new all-time closing high, driven by strong gains in the mining sector.

The blue-chip FTSE 100 just closed 37 points higher at 7106.08, beating the 7103.98 point mark set in April 2015.

Mining companies drove the rally, on hopes of robust US economic growth next year. That sent the prices of copper, oil, etc up today, along with precious metals producers.

Silver miner Fresnillo and gold producer Randgold both gained around 5% today, followed by BHP Billiton (+4.2%) and Rio Tinto (+3.3%).

Internationally focused companies also benefitted from the weaker pound today, as it makes their exports more competitive.

However, housebuilding shares suffered following this morning’s profit warning from Bovis Homes (which ended down 5.2%).

Chris Beauchamp, Chief Market Analyst at IG, says London’s traders came back from Christmas with “a festive bounce in their step”.

The FTSE 100 is the star performer today, helped on its way higher by an excellent turn from the index’s mining contingent. The sector was one of the really big winners in 2016, making a remarkable comeback over the past twelve months, and it makes sense to think that investors are looking to juice a few more points out of the rally as the year-end approaches. Meanwhile, Bovis Homes is down over 5%, dragging the housebuilder sector with it, as it issues an unexpected warning on completion levels.

It is always tough to issue a profit warning, but doubly so in the fallow period between Christmas and the New Year. The sector has gone from being a star performer in recent years to one of the hardest hit since Brexit; miners were the contrarian play for 2016, so the same could be said of a housing sector still supported by healthy demand and constricted supply.

As flagged earlier, though, there is one proviso -- the FTSE 100 is priced in sterling, so today’s record high has not been adjusted for the fall in sterling since the Brexit vote.

Updated

Right, the FTSE 100 has entered its closing auction.....so we’ll find out any moment if it’s hit a new all-time closing high.

Back in the City, the FTSE 100 is hovering around its highest ever closing level in late trading.

The index is up 31 points at 7099, having earlier burst over its record closing level (7103.98).

So we might get a new record high in around 30 minutes....

The Dow has now dropped into the red, down 23 points at 19,921, as the 20k mark proves a hurdle too far.....

Wall Street goes to the dogs

We haven’t seen the Dow hitting 20,000 points yet, but we have had the next best thing -- a group of pets helping to ring the opening bell on Wall Street.

Best Friends Animal Society had the honour of opening the session, to highlight their work preventing dogs and cats at America’s shelters being put down.

And the group delighted traders by turning up with several impeccably behaved pooches, as this video shows.

The open of Wall Street

Updated

The Dow’s early rally is fizzling out, after just 20 minutes of trading.

Rather than powering over the 20,000 point mark, the benchmark index has subsided back to its opening levels - like a Christmas diner who over-indulged on the mince pies and rather fancies a quiet day.

Updated

US stock market watchers are bracing for another day of tension....

US stock market rises at the open

The Dow is rising at the start of trading... up 29 points to 19,974, and bringing the 20k landmark even closer.

And the tech-heavy Nasdaq index has hit a new all-time high at the open, as the Trump Rally continues to drive shares higher.

.

Updated

The opening bell is ringing on Wall Street, and traders are squinting at their screens to see if the Dow Jones will hit the 20,000 mark for the first time ever....

Could Dow hit 20,000 today?

Tensions is building on Wall Street as traders wonder whether the Dow Jones industrial average could smash through the 20,000 point mark today.

Last night, the Dow ended the day just 55 points shy of this new record. And the futures market suggests that the index could open higher at 9.30am local time (2.30pm GMT).

Naeem Aslam of Think Markets says:

Thee Santa rally for the equity market continues and every single day investors hope that the DOW index breaks that 20K mark, but so far their wish has not been granted.

The 20K mark for the Dow has become a remarkable resistance and a break of this, could attract fresh capital.

The London stock market isn’t the only one rallying today.

Overnight, the Australian ASX 100 index jumped by 1% to its highest level in 2016, also thanks to demand for mining company shares.

Ipek Ozkardeskaya, analyst at London Capital Group, explains:

Australian stocks hit the highest levels of this year and are set for a strong close on the back of higher commodity prices and firm appetite in global stock markets following Donald Trump’s victory in the US presidential election.

The FTSE 100 is rising partly because the pound is falling.

Sterling remains at a two-month low against the US dollar, which pushes up the value of international firms listed in London.

The euro is also losing ground against the dollar, down almost one cent at $1.0397:

This chart shows how the FTSE 100 is back at April 2015’s record closing level, in sterling terms anyway (ignoring the pound’s fall against the US dollar since the Brexit vote)

The FTSE 100 over the last two years
The FTSE 100 over the last two years Photograph: Thomson Reuters

Updated

FTSE 100 breaks through record closing high

Britain’s blue-chip index of the biggest listed companies has just crept above its alltime closing high.

In quiet trading, the FTSE 100 has risen by 35 points to above 7104 points, driven up by mining companies.

That takes the index a whisker over the previous record closing high, of 7103.98, set in April 2015.

c

This also puts the Footsie close to its highest ever level -- the all-time intraday high of 7128 points recorded in October.

We should note that trading volumes are really rather thin, with many traders still off for Christmas (having banked their profits/losses for the year).

And these figures don’t take account of the slump in the value of the pound since the Brexit vote.

But still, it illustrates that investors are anticipating a US fiscal stimulus package next year. Yesterday’s strong American consumer confidence figures, which were the best in 15 years, have also bolstered sentiment, helping to push up the price of copper and oil today.

BHP Billiton, which produces iron ore, copper, coal and gold, is leading the risers with a 4.3% gain, with silver miner Fresnillo close behind, followed by fellow mining giants Anglo American (+4%) and Rio Tinto (+3.5%).

Mike van Dulken, head of research at Accendo Markets says:

“Equities are posting small gains amid thin intra-holiday trading that is maintaining the Santa Rally into year-end.

The FTSE is boosted by higher oil prices supporting the commodities space, offsetting weakness among some big defensives, airlines (Airbus problems) and real estate (rates to rise and prices to fall in 2017?)

Pound hits two-month low, and worse may be ahead

Sterling has fallen to its lowest level since late October, as it ends the year on a weak note.

The pound has dropped by 0.4% this morning against the US dollar, to $1.223.

There’s no obvious trigger for the move, which comes as City experts predict further losses next year.

A new survey by financial services firm Hargreaves Lansdown found that a majority of respondents expect the sterling/US dollar rate to end 2017 at lower than $1.25. Some 40% predicting steeper declines to under $1.20.

Sterling predictions
Where will be the Sterling/US dollar exchange rate be in a year’s time? Photograph: Hargreaves Lansdown

Many of those polled predicted that the US dollar could rally, if Donald Trump pushes through a new fiscal stimulus plan.

One respondent says:

Full implementation will likely [lead to] a second material leg higher of the US dollar as the Fed is priced to react to inflationary pressures such a package would bring. However, implementation of President Trump’s protectionist and isolationist rhetoric would narrow the breadth of any dollar rally, with the Japanese yen and the euro the beneficiaries.’

Other forecasters, though, think the pound has been oversold, and could bounce back once Brexit negotiations begin.

Stockbroking firm Numis is hopeful that Bovis will get back on track next year, despite missing its housebuilding targets for 2016.

They say:

Bovis has announced that due to production delays and the deferral of 180 completions into 2017, it now anticipates full year results to be c11% below Numis expectations.

We are leaving 2017 estimates unchanged reflecting the expected completion of the deferred units and a better position with regard to planning and production.

The drop in UK mortgage approvals last month could be a sign that the property sector will struggle next year.

Howard Archer of IHS Global Insight believes that prices could actually fall, after several years of strong increases.

Here’s his reaction to today’s BBA report:

  • We believe the fundamentals for house buyers will progressively deteriorate during 2017 with consumers’ purchasing power weakening markedly and the labour market likely softening. Increasing economic uncertainty is also likely to weigh down on consumer confidence and willingness to engage in major transactions such as buying a house. Housing market activity and prices are also likely to be pressurized by stretched house prices to earnings ratios and tight checking of prospective mortgage borrowers by lenders
  • However, the downside for house prices will be limited markedly by a shortage of houses for sale.
  • On balance, we suspect that house prices will be essentially flat over the year. Indeed, we believe that a small drop in house prices in 2017 is just as likely to occur as a small rise.

UK mortgage approvals fall

BREAKING: The number of new mortgage approved in the UK fell last month, in another sign that the property sector is slowing.

High street banks approved 40,659 new loans for home purchases in November, down from 40,835 in October, and 9% lower than a year ago.

That’s also rather less than City expectations -- some economists expected as many as 41,400 new loans to be approved:

The British Bankers Association also reports that gross mortgage borrowing fell by 5% compared to November 2015, to £12.2bn.

Here’s the key slide from the BBA’s monthly report:

BBA mortgage approvals

The report also shows that consumers are continuing to borrow to fund their shopping.

The BBA says:

Consumer credit annual growth fell back in November to around 6% despite strong retail sales. Growth continues to be supported in the case of personal loans by favourable interest rates.

Analyst: Bovis warning is 'another crack in the wall'

Bovis’s failure to hit its sales targets this year could be a sign that the UK housing sector is now suffering from the Brexit vote.

Analyst Russ Mould of stockbrokers AJ Bell says:

A profit warning from FTSE 250 firm Bovis is another crack in the wall when it comes to the house builders sector....

Bovis has today stated that legal completion volumes will rise by just 1% to 2% in 2016 year, rather than the targeted 5% as the sale of 180 homes has slipped from this year to next, owing to slower-than-expected build production in December.

This means completion volumes fell by 1% to 2% year on year in the second half, raising questions as to whether the market is slowing down in a post-Brexit world after all. Even if Bovis’ average selling price rose 10% to around £255,000 for the year that again implies a marked second-half deceleration, as prices rose 14% to an average of £254,500 in the first six months of this year.

Management guidance for pre-tax profits of between £160 million and £170 million implies a 10% miss relative to the analysts’ consensus of £184 million at the mid-point and that helps to explain why the shares are down 4% this morning at the opening.

..

Despite Bovis’s woes, the London stock market has risen slightly in the first trading day of the week.

The blue-chip FTSE 100 has gained 15 points to 7084, led by mining companies such as BHP Billiton (+4%) and Anglo American (+3%).

xx
. Photograph: Thomson Reuters

Yesterday’s jump in US consumer confidence to the highest level since 2001 is fuelling hopes for robust economic growth in 2017, which would drive demand for copper, iron ore, nickel and the like.

Bovis warning hits UK building sector

Shares in UK housebuilders are falling in early trading, following Bovis’s unscheduled warning on profits.

Bovis fell over 5%, followed by rival building firms Crest Nicholson (-1.7%), Berkeley Group (-1.6%) and John Laing (-1.3%).

Traders must be worried that Bovis isn’t the only company to experience a slowdown last month.

Financial journalist Daniel Coatsworth points out that Bovis weren’t expected to released results until early January.

Here’s more reaction:

Bovis warns on profits after December slowdown

A Bovis Homes construction site in Nottinghamshire.

Newsflash: One of Britain’s largest housebuilders has warned that it will fail to sell as many homes as planned this year.

Bovis Homes has sent an early shiver through the chilly City of London, by reporting that production was slower than expected this month.

That means Bovis will sell around 180 homes less than expected, which will make a dent in its profits for the year too.

In a statement to the City, Bovis warns:

We expect the volume delivery for 2016 will be lower than previously anticipated at between 3,950 and 4,000 homes, the exact number depending on the extent of legal completions in the remaining days of the year.

We have experienced slower than expected build production across the Group’s sites during December, resulting in approximately 180 largely built and sold private homes which were expected to complete in 2016 being deferred into early 2017.

Bovis now expects to bank pre-tax profits of around £160m to £170m for 2016 -- compared with £160.1m in 2015. Analysts had expected around £183m, so the City will be disappointed.

Reaction to follow....

Updated

The agenda: Brexit fears loom over misty City

St Paul’s Cathedral
St Paul’s Cathedral Photograph: Neil Hall/Reuters

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

London’s financial workers are making their way back to their desks through the fog this morning, after a four-day Christmas holiday.

Hopefully everyone had a lovely break, even though fears over what the future will bring may have dampened the atmosphere over the turkey and trimmings.

In particular, the prospect of a new president in the Oval Office, and Britain triggering the process of exiting the European Union, is worrying many UK executives.

The Chartered Management Institute is warning this morning that a majority of managers in the UK believe Brexit-related uncertainty will hold back economic growth in 2017, with many also expecting long-term economic damage.

My colleague Katie Allen explains:

In a survey of 1,118 managers, the CMI found 65% were pessimistic about the UK’s economic outlook for the next 12-18 months. Their caution over 2017 followed what appeared to be a tough year for many organisations, when only 39% said they had grown, the lowest proportion since 2012 when the shockwaves from the eurozone debt crisis hit the UK economy. A further 39% said business levels had stayed roughly the same in 2016 and 22% said their business had declined.

Asked about the impact of Brexit on economic growth in the next three to five years, 49% thought it would be negative. But a sizeable 37% believed leaving the EU would have a positive impact on the UK economy and 14% said it would have no impact.

The findings follow signs that businesses are becoming more nervous about hiring and investing as Brexit negotiations approach. Companies and individuals have also become more concerned about costs because the pound’s sharp fall since the referendum has made imports such as fuel and food ingredients to the UK more expensive.

Here’s the full story:

Also coming up today

At 9.30am, the British Bankers Association will report how many new mortgage loans were approved in November. Economists expect a small rise, from 40,851 to 41,100, despite that Brexit uncertainty.

European stock markets are likely to be fairly subdued, after a thin trading day yesterday.

Wall Street was also open on Tuesday, but the Dow Jones index again failed to smash through the 20,000 point mark even though US consumer confidence jumped to a 15-year high.

The figures underline how the US economy has strengthened this year. However, a certain someone thinks he should get the credit....

We’ll be tracking all the main events through the day....

Updated

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