30th Nov 2018 17:10
LONDON (Alliance News) - Stocks in London suffered as the G20 Summit started in Buenos Aires, with homebuilders and miners taking a hit - pushing London's blue chip index below 7,000 mark. The FTSE 100 index closed down 44.50 points, or 0.6%, at 6,994.45. The blue chip index ended the week up 0.6% from Monday's open. The FTSE 250 ended down 117.40 points, or 0.6%, at 18,491.63, and the AIM All-Share closed 1.70 points lower, or 0.2%, at 930.69.The Cboe UK 100 ended down 1.2% at 11,827.10, the Cboe 250 closed down 1.1% at 16,526.24, and the Cboe Small Companies ended marginally higher at 11,471.69."Stock markets are broadly lower today as dealers are a little nervous ahead of the G20 summit. Trade talks between the US and China will be the main event of the gathering, and investors are likely to remain a little cautious until some clarity is provided," said CMC Market's David Madden.Bilateral meetings were already in full swing in Buenos Aires by London equities close as world leaders were set to open a two-day group of 20 summit in the Argentine capital on Friday.Global trade concerns are set to dominate the gathering, while the flare up in Russia-Ukraine tensions and the fallout from the murder of Saudi dissident Jamal Khashoggi are also likely to feature.While there have been some signs that the Chinese and US delegations could reach a ceasefire in their trade spat, there are growing worries that Donald Trump and Xi Jinping will not be able to make a breakthrough at their highly-anticipated meeting at the summit.The summit was kicked off with US President Donald Trump, Canadian Prime Minister Justin Trudeau and outgoing Mexican President Enrique Pena Nieto signing an updated free trade agreement, aimed at replacing NAFTA, on the sidelines.The UK Prime Minister spent the first day of the G20 Summits laying out her plans to discuss with other G20 leaders potential free-trade deals that Britain could sign after it leaves the EU."For the first time in more than four decades, the UK will have an independent trade policy," May is expected to say, according to advance remarks reported by British media."We will play a full and active role on trade on the global stage, working with friends new and old, at a time of unprecedented global inter-connectedness," she plans to say.The pound was quoted at USD1.2770 at the London equities close, flat compared to USD1.2780 at the same time on Thursday. CMC's Madden said: "Sterling is lower on account of the firmer US and uncertainty surround Brexit. There is little support for Theresa May's deal, some MPs are fearful of a 'no-deal' Brexit and now, Donald Tusk, the President of the European Council said its 'no deal or no Brexit'. The pressure is mounting on May, and the pound."In Paris the CAC 40 ended down 0.1%, while the DAX 30 in Frankfurt ended 0.4% lower. Back in Europe, EU member states have agreed with the European Commission's assessment that Italy's 2019 budget contravenes the bloc's fiscal rules, EU sources said.The commission rejected Italy's budget on Wednesday last week, a move that paves the way for an EU sanctions process - known as an excessive deficit procedure - against Rome.Italy's public debt stands at more than 130% of gross domestic product, the second-highest ratio in the eurozone and more than twice the 60% allowed under EU rules.Agreement among member states, which had been expected, is needed for the commission to take the next steps on sanctions.The procedure would subject Italy to tighter EU monitoring of its finances. In case of continued non-compliance with EU fiscal rules, it could in theory lead to hefty fines of up to 0.2% of GDP.Finance ministers from the eurozone and the broader 28-member EU will meet on Monday and Tuesday, and a statement on Italy's finances is expected.The euro stood at USD1.1319 at the European equities close, slightly lower against USD1.1383 the prior day.Stocks in New York were mixed at the London equities close. The DJIA was down 0.2%, the S&P 500 index up 0.1% and the Nasdaq Composite 0.2% higher.In the FTSE 100, housebuilders struggled, despite a rise in UK house prices in November, due to a bleak outlook. Taylor Wimpey lost 3.3%. Barratt Developments was down 2.2%, Berkeley Group lost 2.4% and Persimmon was down 3.3%.Cityindex's Fiona Cincotta said: "News that the housing market was struggling to gain momentum and pick itself meaningfully off a five year low, sent house builder stocks lower. Nationwide reported that house price index increased 0.3% month-on-month in November. On an annual basis house prices picked up 1.9%, an increase from October's 1.6% increase - the slowest rate in 5 years."She continued: "Whilst the house price index showed an increase, this was minimal, and the signs are pointing to an extended slowdown. The subdued growth and bleak outlook for the economy means that the housing market is going to struggle to pick up any momentum. With Brexit uncertainty lingering the housing market is going to remain subdued. A disorderly no deal Brexit could see houses fall by as much as 30%."Blue chip miners suffered losses Friday, too. Antofagasta closed down 4.3%, Fresnillo ended 3.1% back, Anglo American closed down 2.8%, Rio Tinto down 1.7% and Randgold Resources ended 2.8% down.Madden said: "Overnight, China released the manufacturing PMI report for November, and the reading was 50.0, while economists were expecting 50.2, and the reading in October was 50.2. The update was the lowest reading in over two years, and it represents zero growth on the month. The second-largest economy in the world is a major importer of minerals, and that is why we have seen a large drop in mining stocks today."Brent oil was quoted lower at USD58.57 a barrel at the equities close from USD59.75 at the same time the prior day. Madden added: "Oil is in the red again as fear of oversupply persist. During yesterday's session the energy received a boost from Russia, who indicated they are considering a production cut. Since the upward move didn't last long, it highlights the weak sentiment."Gold was quoted at USD1,1218.50 an ounce at the London equities close against USD1,227.20 on Thursday.Sage Group lost 3.8% as US investment bank Goldman Sachs downgraded the accounting software provider to Neutral from Buy.At the bottom of London's midcap index, Kier Group shares crashed, ending down 33%, as the infrastructure services firm proposed to raise GBP264 million by the way of rights issue to accelerate its net debt reduction programme.Following the rights issue, Kier is targeting dividend cover of 5.0 times underlying earnings per share in financial 2019 and, thereafter, dividend cover of 2.5 times. The firm has previously been targeting a dividend cover of 2.0 times earnings.Kier intends to issue 64.5 million shares at a price of 409 pence each, representing a 34% discount on the closing middle-market price of 752.5p on Thursday.At the end of June, the company announced a debt reduction programme, which targets average month-end net debt of GBP250 million and a year-end net cash position for the year to the end of June 2021.As at June 30, Kier's net debt stood at GBP185.7 million. It also reported an average month-end net debt for financial 2018 of GBP375 million. Thomas Cook ended down 11% as Berenberg downgraded the travel agent to Sell from Hold.Berenberg described Thomas Cook's operational performance as weak and its business model as structurally challenged. "With Thomas Cook's bond yields now over 10%, operational performance weak and cash generation anaemic, the risk that the company will need fresh equity is, in our view, back on the agenda. Given this heady cocktail, we think that the shares are currently uninvestable," analysts at the German bank said.The economic calendar for next week has UK, Eurozone, French, German and US Markit manufacturing PMI on Monday at 0930 BST, 0900 BST, 0850 BST, 0855 BST and 1445 BST, respectively. On Tuesday, the French budget is at 0745 BST, UK construction PMI at 0930 BST and US Redbook index at 1355 BST.On Wednesday, there is UK and Eurozone Markit Services PMI at 0930 BST and 0900 BST, Eurzone retail sales will released at 1000 BST and US nonfarm productivity at 1445 BST. The focus on Thursday will be the OPEC meeting and US jobless claims at 1330 BST. Friday has UK Halifax house prices and Eurozone GDP. The UK corporate next week has a trading statement from Gocompare.com and full-year results from Patisserie Holdings. On Tuesday, Ferguson will issue first-quarter result, Greene King half-year results and IG Group a trading statement. Wednesday has full-year results from Numis Corp and Stagecoach Group.Thursday has half-year results from DS Smith and a trading statement from Ted Baker. Friday sees Berkeley Group releasing half-year results and James Halstead putting out a trading statement.