London stocks ended just in the green on Friday, recovering from earlier losses but still languishing around their lowest level in more than two years amid worries about a global growth slowdown, souring relations between the US and China and the prospect of US government shutdown.
The FTSE 100 closed up 0.1% at 6,721.17, while the pound was flat against the dollar at 1.2654 and 0.4% firmer versus the euro at 1.1102.
Sino-US relations weighed on sentiment after the US Justice Department filed charges overnight accusing two members of a Chinese cyber-espionage group of hacking into dozens of US tech and industry giants. It has been alleged that the two individuals were operating in conjunction with the Chinese government, although this has been denied by Beijing.
Meanwhile, rising odds of a US government shutdown also dented the mood, as President Trump and congressional Democrats remained at odds over $5bn funding for his border wall with Mexico.
In a series of tweets, Trump threatened a “very long” government shutdown if Democrats don’t go ahead and fund his border wall. “Shutdown today if Democrats do not vote for Border Security!” he tweeted.
David Cheetham, chief market analyst at XTB, said: “December has traditionally been a good month for the benchmark in recent years, with gains seen in eight of the past 10 years, but it would take something pretty spectacular to see a monthly rise now. The size of the selling is not as dramatic as the drop seen across the Atlantic where US markets have swooned of late, but price is still down by around 4% on the month, meaning somewhere in the region of £60bn has been wiped of the value of the UK’s leading companies.
“You have to go back to 2002 to find a worse drop for the UK index in the month of December, while there’s very few who will remember the last time the Wall Street fell this hard in the final month of the year, with the current drop the largest since 1931 – when the Great Depression was taking a major toll.”
Brexit was still very much in focus as the UK government instructed UK firms to begin planning for a no-deal scenario, as the expected rejection of Theresa May’s Brexit proposal meant a messy divorce from the EU looked increasingly likely.
On the data front, lacklustre UK economic growth was confirmed, though last year’s figure was upgraded.
UK gross domestic product growth for the third quarter of the year was confirmed at 0.6%compared to the preceding quarter and 1.5% compared to the third quarter last year. This final update from the Office for National Statistics was unchanged from the previous reading.
The ONS did revise up the real GDP growth reading for 2017 to 1.8% from 1.7%.
Meanwhile, the latest GfK survey showed that UK consumer confidence fell to a five-year low in December.
GfK’s long-running consumer confidence index slipped to -14 this month from -13 in November, in line with expectations, with three of the five measures used to calculate the overall scored down, and two up.
Client strategy director Joe Staton said: “In the face of ever-rising costs, and the threat of higher inflation combined with uncertainty around the outcome of the Brexit negotiations, it’s no surprise that consumers are in a chilly mood of despondency and putting on a glum face when they look at the prospects for 2019.”
Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said: “Looking ahead, consumers likely will remain despondent until a no-deal Brexit is averted, but the outlook for rising real wage growth, as inflation falls further, and further marginal declines in unemployment suggests that consumers should be more upbeat in six months’ time.”
Miners were on the front foot, with Anglo American, Antofagasta and BHP Group all up as copper prices rose.
Anglo American was also in focus after saying it has resumed operations at its Minas-Rio iron ore operation in Brazil.
Just Eat was among the risers as Dutch online food delivery company Takeaway.com agreed to buy the German business of Delivery Hero for around €930m in cash and shares.
JD Sports rallied on positive read-across after Nike released better-than-expected second-quarter earnings overnight and upped its guidance.
Peel Hunt said: “It is very clear to us that JD is seen as a key driver of Nike profitability, but on a slightly separate note it was interesting to hear that Nike considers that apparel is an ‘extraordinary opportunity for growth’, and that merchandising ‘head to toe’ looks is key.
“We have a very strong view that JD will make a success of selling apparel in the US. So Nike goes from strength to strength, and so does JD, we think.”
On the downside, Vodafone fell after saying it was looking for new auditors to replace Price Waterhouse, who are taking the company to court as part of a legal dispute over the collapse of Phones4U a few years ago.
Plastic packaging specialist RPC Group slipped after pushing back the deadline once again for private equity firm Apollo Global Management to make a takeover offer.