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  • FTSE 100 index down 77 points
  • Private new car registrations rose 0.1% from a year earlier in December.
  • UK services PMI for December clocks in at 50.0

10.30am: New car registrations rise in December

Private new car registrations rose 0.1% from a year earlier in December.

This represented a decent end to a year in which the average year-on-decline each month was 3.2%.

Total registrations, including fleet and business sales, rose 3.4% in December.

Shares in car dealers Pendragon PLC (LON:PDG) and Lookers PLC (LON:LOOK) were up 1.4% and 0.4% respectively.

“Car sales were pummelled last year by subdued consumer confidence, a near-4% increase in new car prices and uncertainty about the future regulation of diesel cars. The downward trend also was amplified after new testing procedures—the Real Driving Emissions tests—were introduced in September,” observed Samuel Tombs, the chief UK economist at Pantheon Macroeconomics.

“After seasonal adjustment, we estimate that car sales fell 6.4% quarter-on-quarter in Q4, subtracting 0.16pp [percentage points] from growth in households spending and 0.10pp from growth in GDP. Car sales, however, should stabilise this year,” Tombs predicted.

“Admittedly, any recovery in demand will be constrained by a declining flow of people coming to the end of PCP finance deals, which typically last three years; registrations were 10% lower in 2017 than in 2016. But consumer confidence should recover, now that the immediate threat of a no-deal Brexit has been lifted; indeed, the -11 level of GfKs composite index of consumer confidence in early December exceeded its prior 12-month average, -13. In addition, the recovery in sterling to €1.17 should help to bear down on future price increases, while the recent fall in unsecured borrowing rates will help to lower total costs too,” he continued.

“Meanwhile, clarity regarding the future taxation of diesel vehicles could emerge in the Budget in February, following the Conservatives landslide win,” Tombs predicted.

Tombs also weighed in on the latest UK Markit/CIPS Services Survey, where the purchasing managers index (PMI) reading came in at 50, which marks the crossover point between expansion and contraction.

“Business optimism recovered to its highest level since September, and firms returned to increasing their staffing levels, with the employment index rising to 51.1, from 50.1. Crucially, the vast majority—about 85%—of responses to Markits survey were received before the general election on December 12, implying that firms that submitted results too late for the flash reading were much more upbeat than the rest,” Tombs opined.

“Admittedly, its unclear whether the recovery in the PMI simply reflects an improvement in sentiment, or a genuine pick-up in activity. The PMI was misleadingly downbeat throughout 2019, with output in the services sector rising despite the business activity index repeatedly pointing to a downturn, so its recovery might just reflect this gap narrowing. For now, though, the survey data are starting to move in the right direction, significantly weakening the case for the MPC to cut Bank Rate over the coming months,” he concluded.

The FTSE 100 was down 77 points (1.0%) at 7,545.

9.45am: UK services sector stabilises in December

The IHS Markit/CIPS UK services purchasing managers index (PMI) for December stabilised in December, helped by a rebound in new work.

The seasonally adjusted PMI business activity Index registered 50.0 in December, up from 49.3 during November, and the previous 'flash' estimate for December of 49.0.

A value of 50 represents a balance between those survey respondents seeing an increase in activity and those seeing a decline.

"Service companies widely commented on delayed spending decisions and a headwind to sales from domestic political uncertainty in the run-up to the general election. With manufacturing and construction output also subdued in December, the latest PMI surveys collectively signal an overall stagnation of the UK economy at the end of 2019,” said Tim Moore at IHS Markit.

"However, the latest UK service sector figures are an improvement on those seen in November and strike a slightly more positive tone than the earlier 'flash' PMI for December.

“The final IHS Markit/CIPS UK Services data includes survey responses from after the election, unlike the earlier flash estimate.

"It is notable that the forward-looking business expectations index is now the highest since September 2018 and comfortably above its 'flash' reading for December. The modest rebound in new work provides another signal that business conditions should begin to improve in the coming months, helped by a boost to business sentiment from greater Brexit clarity and a more predictable political landscape," he added.

Duncan Brock, the group director at the Chartered Institute of Procurement & Supply (CIPS), said a marginally less volatile picture emerged in December.

“The sector was rescued by a small uplift in new orders for the first time since August, elevating it out of its doldrums, but only just. European customers were less convinced, experiencing ongoing Brexit nerves, and were unwilling to take out their wallets,” Brock said.

The FTSE 100 was down 77 points (1.0%) at 7,545, weighed down by a resurgent sterling on foreign exchange markets.

8.45am: Weak start to the week

The FTSE 100 saw red as it opened the week sharply lower amid worries the powder keg ignited by Americas assassination of Irans military leader Qasem Soleimani could explode into a far more serious international conflagration.

The index of blue-chips opened 47 points lower at 7,575.61

However, oil majors BP (LON:BP) and Royal Dutch Shell (LON:RDSA) led the risers as the crude price jumped 2.5% overnight amid supply fears in the wake of the drone attack.

“The big uncertainties right now for crude [oil] centre on the Iranian response to the killing and on that front we should expect some kind of response. Will Tehran target US bases?” asked Neil Wilson, analyst at Markets.com.

“It could focus more on shipping in the Strait of Hormuz, but we have already seen attacks on a US base in Kenya killing three and rockets fired into the Green Zone in Baghdad. Iran does not need to use conventional military forces to respond and indeed so far it has not delivered a conventional military response despite all the chest-thumping. It does not want to give the US further excuses to bomb it to the ground with an overt reply.”

Among the blue-chip fallers, British Airways owner IAG (LON:IAG) and easyJet (LON:EZJ) were grounded amid worries over soaring fuel bills, a large part of both companies overheads. Share prices of the respective companies were down 2.4% and 2.3% respectively.

Meanwhile, grocer Morrisons (LON:MRW) fell 2.8% as it suffered a bout of the jitters on the eve of its post-Christmas update, hit too by reports of a downgrade in rating from BofA Merrill Lynch.

Proactive news headlines:

Avation PLC (LON:AVAP) has begun a strategic review which may include the possibility of the company selling itself. The aircraft leasing firm said the strategic review will consider multiple options to “maximise value for shareholders” including merger and acquisition activity, sales within the firms aircraft portfolio, as well as the sale of the entire company.

Open Orphan PLC (LON:ORPH) has landed a three-year contract with a tier-one German pharmaceuticals company, building on an existing relationship. No financial details were given, though the group said the new deal guaranteed “significant annual revenue” with work expected to get underway this month. Open Orphan unit Venn Life Sciences will provide the new customer pharmacokinetic services that allow the researchers to decide dosing and assess for drug side-effects.

Echo Energy PLC (LON:ECHO) told investors that it has carried out perforation and started stimulation operations for the Campo La Mata x-1 well, at the Tapi Aike project. The mechanical stimulation of the Campo La Mata x-1 wells deeper secondary target, in the Anita formation, will now begin shortly, the company said. It noted that it will subsequently move on to the shallower primary target, the Magalllanes 20, which will be perforated and undergo mechanical stimulation. This work is expected to take two weeks.

Tremor International Ltd (LON:TRMR), the video advertising technology company, is to acquire Unruly, News Corp's programmatic video marketplace. In return for transferring ownership of Unruly to Tremor, News Corp (NASDAQ:NWS) will receive a 6.91% stake in the AIM-listed firm. Tremor has also entered into a global partnership with News Corp that will equip Tremor with the exclusive right to sell out-stream video on more than 50 News Corp titles in the UK, US and Australia.

Seeing Machines Ltd (LON:SEE) says it has optimised its FOVIO driver monitoring system (DMS) to specially address new European requirements on driver drowsiness and distraction detection due to come into force in 2022. The AIM-listed firm said the new FOVIO variant will be optimised for basic systems that are compliant with the Euro new car assessment program (NCAP), a performance review to evaluate the safety of new vehicles, with the capacity to support more advanced DMS requirements if needed. In a separate announcement, the firm also unveiled plans to showcase its FOVIO DMS technology at the CES 2020 consumer technology show in Las Vegas between 7-10 January.

Bahamas Petroleum Company PLC (LON:BPC) has opened its new Bahamian mutual fund to investors. The company set up the fund last month in order to give qualifying Bahamian investors a route to invest in the company and its upcoming hydrocarbon exploration activities in the waters off the islands. The fund is open to qualifying investors between 6 January until 7 February 2020.

NQ Minerals PLC (LON:NQMI) (OTCMKTS:NQMLF) has delivered another record-breaking set of production results from its Hellyer mine in Tasmania, Australia. During 2019 the company returned steadily increasing production of lead concentrate, such that, in the first quarter, production was running at 4,712 tonnes, while by the end of the year production had hit 8,160 tonnes. Total lead concentrate production for the year rang in at 24,980 tonnes.

Shefa Gems Ltd (LON:SEFA) said its chief financial officer, David Ben David is investing US$50,000 (£38,290) in the company via a convertible loan made out on the same terms as a previous loan of US$200,000 announced in November 2019. This loan is in addition to another previous loan made by David in March.

Genel Energy PLC (LON:GENL) has announced that the TT-34 well at the Taq field will commence production “around the middle of January”. In a statement, the oiler said the well is nearing completion, with a maximum combined flow rate of over 3,900 barrels of oil per day (bopd), while it will have an initial output of between 1,500 and 2,000 bopd once it comes on stream.

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