Market report: Traders retreat as Santa rally is delayed

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The bulls were left twiddling their thumbs today, waiting in vain for the fabled Santa rally to whisk shares higher as risk-taking traders retreated to the sidelines.

The FTSE 100 drifted 61.45 points lower to 6691.48, with no sign of the traditional December rally as the fireworks from earlier in the week made way for thin trading volumes ahead of the US jobs report.

Opec’s deal to cut production, apparently agreed after a 2am phone call on the eve of the meeting between the Saudi energy minister Khalid Al-Falih and his Russian peer, was the highlight of the week and propelled producers’ shares higher on Wednesday and Thursday.

Today, they lost some of their ground as investors banked profits, with Royal Dutch Shell down 39p, or 1.8%, to 2139p and BP off 6.6p, or 1.4%, to 463.45p.

“There’s also a concern that Wednesday’s Opec deal to cut production will prove to be a disappointment, with compliance being a major issue,” said Spread Co strategist David Morrison.

The Italian referendum on Sunday also kept buyers at bay, with fears that a vote against the reforms could spell disaster for its banks and send shockwaves throughout Europe.

Among the fallers were easyJet, down 22.5p at 974p, as RBC Capital predicted that the airline’s dismal stock market run — down 44% this year — is set to continue.

The investment bank downgraded the shares to underperform, warning: “If pricing stays weak for longer, we estimate that, over five years, the shares could see total return downside by 2020.”

Acacia Mining rose 4.3p to 396.3p, recovering some of the ground lost at the hands of the falling gold price after Canaccord analysts urged clients to pile into the African gold miner, although it remains concerned by Donald Trump’s election and Brexit.

Elsewhere, commercial flooring group James Halstead fell 19.62p to 463.62p. The business warned that an explosion at one of BASF’s chemicals factories in Germany had driven up prices of plasticiser, one of its key raw materials.

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December 3, 2016 |
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