HSBC Holdings Share News (HSBA)

LONDON (Alliance News) - London's major equity indices ended the last full trading day of 2015 markedly lower, snapping a run of four consecutive positive sessions before and after the Christmas break, with China-exposed stocks leading declines Wednesday as the yuan set a four-and-a-half-year low against the dollar.

FTSE 100-listed luxury goods company Burberry Group and emerging market-focused bank Standard Chartered, both heavily exposed to the Chinese and Hong Kong markets, were among the heaviest losers in the blue-chip index amid concerns that China's central bank is guiding the yuan lower through fixings. Burberry closed down 1.9%, while Standard Chartered closed down 2.5%.

The yuan fell to its lowest level against the US dollar since the end of April 2011 on Wednesday dropping to an intra-day low of USD0.15346. At the close of the UK equity market, however, the currency had edged higher and traded at USD1.15410.

Elsewhere in the forex market, at the European equities close, the pound stood at USD1.4834 and the euro at USD1.0916, having traded at USD1.4792 and USD1.0914, respectively, at the same time on Tuesday.

There were further concerns for Standard Chartered and fellow Asia-focused bank HSBC Holdings, which ended the day down 1.3%. Reuters reported that China's central bank has suspended at least three foreign banks from conducting some foreign exchange business until the end of March.

The report, which cited three sources who have seen the suspension notices, said included among the suspended services are liquidation of spot positions for clients and some other services related to cross-border, onshore and offshore businesses. The sources, who were speaking on condition that the banks were not named, told Reuters the notices sent to the affected foreign banks by the People's Bank of China gave no reason for the suspension.

The blue-chip FTSE 100 index, which had closed higher for four straight sessions, ended the day down 0.6% at 6,274.05 points, while the FTSE 250, which also had been on a run of four consecutive daily gains, closed down 0.3% at 17,519.67. The AIM All-Share index, however, rose 0.4% at 735.37.

In Europe, the CAC 40 in Paris and the DAX 30 in Frankfurt closed down 0.5% and 1.1%, respectively.

On Wall Street, at the UK equity market close, the Dow Industrials, S&P 500 index and NASDAQ Composite were all down by between 0.2% and 0.4%.

In another quiet day in the macroeconomic data calendar Wednesday, a report from the Nationwide Building Society showed that UK house prices increased by the most in eight months in December as a strong labour market underpinned buyer demand amid shortage of properties.

UK house prices grew 0.8% in December, faster than the 0.1% gain seen in November, the report revealed. This was the fastest growth since April, when prices climbed 1.0% and also exceeded an expected growth of 0.4%. House prices advanced 4.5% from a year ago in December, the fastest since May. Economists had forecast house price growth to accelerate only marginally to 3.8% from 3.7%.

"As we look ahead to 2016, the risks are skewed towards a modest acceleration in house price growth, at least at the national level, despite the likelihood of interest rate increases from the middle of next year," Robert Gardner, Nationwide's chief economist, said.

Gardner forecast prices to rise by 3% to 6% over the next twelve months. The economist said that while healthy gains in employment and rising wages are likely to bolster buyer sentiment, the main concern is that construction activity will lag behind strengthening demand.

IHS Global Insight economist Howard Archer said the data reinforces the assessment that UK house prices are likely to see solid increases over the coming months. Nonetheless, those price rises are expected to be constrained by more stretched house price to earnings ratios, tighter checking of prospective mortgage borrowers by lenders, and the probability that interest rates will start rising gradually during 2016, Archer noted.

In the US, the National Association of Realtors' pending home sales index declined unexpectedly in November, indicating the third decline in the last four months. The index fell 0.9% in November from the month before, having risen 0.2% in October, missing economists' expectations for a 0.5% increase.

The US Energy Information Administration, meanwhile, released its crude oil stocks figures for the week ended December 25. US commercial crude inventories increased by 2.63 million barrels in the week, having fallen by 5.88 million in the week before. Economists' forecasts had been for stocks to have fallen by 2.50 million barrels.

In the commodities market, after the data and at the UK stock market close, Brent oil traded at USD36.60 a barrel, having stood at USD37.65 at the same time on Tuesday. Gold traded at USD1,061.60 an ounce at the UK stock market close, moderately lower than USD1,069.25 the day before.

At the individual UK equity level, it was a familiar story in London, with oil companies and miners amongst the worst performers in the FTSE 100, dragging the entire index down. Glencore closed down 3.5%, BHP Billiton 1.8%, BP 1.6%, BG Group 1.4%, Randgold Resources 0.7% and Anglo American 1.8%.

Supermarket shares also fell sharply Wednesday.

The Guardian newspaper reported that online retailer Amazon is posing a challenge to UK supermarkets by expanding its food and groceries service in the new year. Amazon Pantry was launched in November and delivers household goods and groceries to customers in the UK. It currently offers 4,000 branded products and charges GBP2.99 for next-day delivery per large box.

Now, the online retail giant is planning to add thousands more products in 2016, UK chief Christopher North told the Guardian.

Amazon Pantry does not sell fresh food, but the venture's success has led to speculation that Amazon Fresh could be launched in the UK, the newspaper reported. Amazon Fresh is a fresh grocery delivery service currently operating in the US.

FTSE 100-listed J Sainsbury and Tesco closed down 1.3% and 0.4%, respectively, while FTSE 250-constituent WM Morrison Supermarkets ended the day down 1.1%. Mid-cap grocery delivery specialist Ocado Group lost 3.3%.

In the AIM All-Share index, Webis Holdings' share price more than tripled Wednesday.

The gaming company and racetrack operator said it is unaware of any reason for the movement in its share price, but said that its subsidiary company is in negotiations to extend one of its contracts. It said that WatchandWager.com is in "advanced negotiations" with the Hong Kong Jockey Club to extend the contract to provide access to the latter's pari-mutuel pools.

In another quiet day in the data calendar Thursday, European Central Bank monetary policy meeting accounts are scheduled to be released at 1230 GMT. The accounts contain an overview of financial market, economic and monetary developments and are followed by a summary of the discussion on the economic and monetary analyses and on the monetary policy stance.

In the US, weekly initial and continuing jobs data are published at 1330 GMT, ahead of the Chicago purchasing managers' index reading for December at 1445 GMT.

No UK earnings releases are scheduled Thursday, but UK blue-chips Experian and Dixons Carphone are joined by mid-caps Halma, AVEVA Group, Micro Focus International and Scottish Investment Trust, among others, in going ex-dividend, meaning new buyers no longer qualify for the latest dividend payout.

Stock market trading hours around the world will be truncated for New Year's Eve.

In Asia, the Nikkei 225 index in Tokyo is closed for a bank holiday, with the Hang Seng in Hong Kong only open for half the day. In Europe, the French CAC 40 and German DAX 30 are both closed, while the London market will be open for a half-day to 1230 GMT. In the US, the New York Stock Exchange will be open as normal.

By James Kemp; jameskemp@alliancenews.com; @jamespkemp

Copyright 2015 Alliance News Limited. All Rights Reserved.