Soros weighs in on China’s woes
BILLIONAIRE financier George Soros should really put a sock in it – hard-pressed City dealers needed his warning that the current environment reminded him of the ‘crisis we had in 2008’ like a hole in the head.
His doom and gloom statement on China’s fallout rubbed salt into the markets’ gaping wounds and served to just increase overall uncertainty and exert further downward pressures on global share prices.
Dealers in London had arrived at their desks to hear about some amazing events overnight on Chinese markets, with trading halted for the second time in a week after just 870 seconds. That despite another currency devaluation by the People’s Bank of China and its injection of a further $20bn into the system.
Share trading was suspended after the socalled circuit breaker system, which was only introduced on Monday, cut in again. When it was removed, prices had continued to plummet, shredding investors’ fragile confidence even further. And then, Soros adds his pennyworth, why?
China’s economic woes continue to hit commodity prices and left the price of Brent crude languishing at a 12-year low of just above $32 a barrel.
There was again no hiding place for the Footsie which is crammed with heavyweight miners and oils. It crashed through the 6,000 barrier to touch 5,887.97 before rallying on the mid-afternoon announcement that China had decided to suspend the stock market circuit breaker rule. It closed 119.3 points down at 5954.08 and is now 16.4pc below April 2015’s all-time high. The FTSE 250 plummeted 266.76 points to 16,792.22.
Wall Street provided no solace whatsoever, following Wednesday’s 252 points decline fall with a further collapse. Sentiment not helped by reports that the Federal Reserve may have to raise US interest rates more than four times this year if oil prices stabilise, the dollar stops appreciating and inflation surges.
The safe-haven appeal of gold in times of geopolitical and financial uncertainty shone through as the metal’s price jumped 9.8pc to $1,104.06 a troy ounce. It fell 10pc last year on fears that higher US interest rates would lower demand for the non-interest paying asset, while boosting the dollar. Randgold Resources rose 75p to 4403p and former African Barrick Gold Group Acacia Mining improved 6.9p to 188.2p.
Anglo American , on the other hand, reflected continuing fears about the health of the Chinese economy, a huge consumer of commodities, and slumped 29.75p more to 240.65p. Glencore lost 7.14p further to 78.71p, BHP Billiton 35.7p to 673.7p and Vedanta Resources 20.6p to 239.6p.
Housebuilders were not helped by Chancellor George Osborne warning that Britain had to be ready for an interest rate increase to help deal with ‘asset price bubbles’. UK rates have been at an historic low of 0.5pc since 2009. Barratt Developments cheapened 13.5p to 591.5p and Berkeley Group 54p to 3457p.
Initially sold down to 6750p on further consideration of its disappointing Christmas trading performance, Lord Wolfson’s Next rallied to finish 75p better at 6940p. Wolfson has wasted no time in buying back £66m worth of shares at an average price of 6871p after they fell below the 6962p buyback price limit level on Tuesday. The early 9p against the trend gain in the
Marks & Spencer share price following news of chief executive Marc Bolland’s decision to at last throw in the towel after a truly awful set of Christmas clothing figures, said it all. The close was 0.5p dearer at 439.2p.
Downton Abbey broadcaster ITV eased 0.8p to 268p. It has strengthened its board with the appointment of Diageo’s Anna Manz as non-executive director.
Despite reassuring comments from RBC Capital Markets, Premier Oil succumbed to renewed selling and closed 2.75p lower at 32.75p. The broker says that Premier has the funding to ride out the current low oil price with access to over £680m of undrawn debt and cash. Its 12-month target price is 90p.
Cluff Natural Resources eased 0.38p to 2.88p following a pre-close trading update. Broker Allenby Capital says the company is a play on its North Sea assets which it values at £22m gross against a market capitalisation of £6m.
Cleantech industrial oil re-refining group Hydrodec jumped 0.88p or 32pc to 3.62p after saying the transformer oil produced from its recently rebuilt Canton re-refinery in Ohio has achieved ‘500hr’ oil status, certifying the oil to be sufficiently high quality to access the larger power transformer market.
Somero Enterprise , the manufacturer of patented and l aser- guided equipment, gained 18.5p to 137p. Buyers climbed aboard on hearing the company expects to report revenue and earnings ahead of current market expectations. ÷ AIM-listed Hornby last month reported trading had recovered strongly since September, and yesterday it wheeled out a number of new toys and products which it hopes will keep up the momentum. They included 3D printers for children and wider Airfix and Scalextric ranges. New batteryoperated model trains are also being developed and planned for launch later this year. Shares puffed 2.38p higher to 89.62p.