FTSE 250 hits 15-month high; woes at UK banknote maker De La Rue – as it happened

Rolling coverage of the latest economic and financial news, as De La Rue warns of 'material uncertainty' about whether it can continue as a going concern

• De La Rue hits City with another warning
• Loss of Brexit passport lingers
• 'Material uncertainty' over its future as dividend scrapped

Earlier:

• Introduction: Alibaba floated in Hong Kong today
• Shares leap 6.5% in vote of confidence

6.41pm GMT

Finally... the blue-chip FTSE 100 ended the day little changed, up just 6 points at 7,403. That's a two-week high.

But the smaller FTSE 250 stole the limelight for once, ending at a 16-month high of 20,864, up 161 points or 0.8%.

Though quiet, the Dow Jones still managed to add 40 or so points - enough to lift it back above 28100 and to an effective all-time high. Elsewhere the CAC added 0.2% to nudge towards its own fresh 12-year peak, while the DAX was broadly unchanged at 13250, a level it has found it pretty hard to escape for any great stretch of time in the last 3-weeks.

As for the FTSE, a 0.1% increase took it to 7400, less than a week after striking an intraday low of 7200.

3.31pm GMT

US consumer confidence, a metric closely followed by the White House, has fallen this month - a weaker result than expected.

Conference Board Consumer Confidence Nov: 125.5, exp 127.0, Oct 126.1. Present Situation 166.9, Oct 173.5, Expectations 97.9, Oct 94.5 "Consumer confidence declined for a fourth consecutive month, driven by a softening in consumers' assessment of current business and employment"

3.17pm GMT

US house prices have picked up, rising by over 2% in the 20 largest cities.

That ends a long run of falling prices, suggesting recent US interest rate cuts are feeding through.

Home prices in the 20 US biggest metro areas increased 2.1% YoY in September. This was the first uptick in house prices since March 2018. pic.twitter.com/qYixP3Yw1s

2.03pm GMT

A quick recap

Related: FCA to ban promotion of mini-bonds to small investors

1.51pm GMT

Just in: America's trade deficit with the rest of the world has narrowed.

But rather than a surge in exports, the move is due to a drop in imports. That may be due to the tariffs imposed on goods from China and Europe by the Trump administration.

1.34pm GMT

Britain's FTSE 250 index has hit its highest level in 15 months today.

"The market seems to be growing more confident that the Conservative Party will win the general election in December, thus bringing some clarity to what might happen with Brexit and - importantly - removing an element of uncertainty which has hung over UK equities for some time.

12.43pm GMT

Just in: German carmaker Audi is announcing a new restructuring plan that will save a6bn by 2029, but also cut over 9,000 jobs over the next six years.

#BREAKING Audi to slash 9,500 jobs in Germany by 2025: statement pic.twitter.com/Dcaeib9jIi

12.13pm GMT

There are fresh signs today that Beijing and Washington are making small steps towards a Phase One trade deal.

Top Chinese and U.S. trade negotiators have agreed to talks on a preliminary deal for resolving the tariff war between the worlds two largest economies, the Chinese Commerce Ministry said Tuesday.

In a brief notice, the ministry said that Vice Premier Liu He and other senior officials spoke by phone with U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin.

11.44am GMT

Ouch! Wall Street bank Citi has been fine 44m by the Bank of England for serious errors in reporting its capital and liquidity positions.

"Citi failed to deliver accurate returns and failed to meet the standards of governance and oversight of regulatory reporting which we expect of a systemically important bank."

While Citi remained in surplus to its liquidity and capital requirements at all times, the failings persisted over a significant length of time and were serious and widespread in nature.

11.03am GMT

Sterling continues to be knocked around by the latest political developments, as the general election race heats up.

The pound has shed half a cent this morning, to $1.285, after an opinion poll showed Boris Johnson's lead over Jeremy Corbyn has narrowed.

New Kantar election poll:

Conservatives: 43% (-2)
Labour 32% (+5)
Liberal Democrats 14% (-2)
SNP 4% (nc)
Green 4% (+1)
Brexit Party 3% (+1)
Other <0.5% (-2)

(21 - 25 November 2019):

10.47am GMT

De La Rue's management team have a fight on their hands, warns David Madden of CMC Markets.

Here's his take on today's weak financial results from the banknote printer:

De La Rue shares have plunged after the group swung to a first-half loss, plus, it scrapped its dividend.

The company registered a loss of 9.2 million, which compared with a profit of over 10 million in the same period last year. Management will be conducting a review of the entire business, and in light of the fact the dividend was shelved, it suggests the group is facing serious problems. To make matters worse, net debt jumped by 58% to 170.7 million. The financial health of the group is poor, so Clive Vacher, the turnaround specialist who was drafted in last month as CEO has a tough task ahead of him.

10.43am GMT

Despite Compass (-5.8%) acting as a drag, the wider FTSE 100 index has hit a two-week high this morning.

The index is up another 9 points at 7,405, with exporters benefitting from a weaker pound this morning.

9.57am GMT

Food producer Compass has also alarmed the City this morning, sending its shares down 5% to the bottom of the FTSE 100.

Compass warned that business and consumer confidence in Europe had deteriorated, hurting its profit margins and sales growth.

"Consumer confidence (in Europe) continues to decline and a number of key clients, notably in manufacturing, automotive and financial services, have reduced their headcount in recent months.

9.40am GMT

Losing that Brexit passport contract in 2018 was the biggest blow to De La Rue's future, says Neil Wilson of Markets.com.

There has been trouble in Venezuela and the SFO investigation remains ongoing - but by far the biggest blow and the source of the company's collapse in market capitalization was losing the contract to make UK passports.

I don't buy the argument that printing banknotes in a cashless world makes them structurally irrelevant - cash in circulation is growing all the time. The need for more secure notes that De La Rue makes is becoming more important, not less. Bad management and decisions seems to be the main reason for the malaise.

9.40am GMT

De La Rue's share price is on track to close at their lowest level since 1998!

Today's "wave of bad news" shows that the bank note printer has "fallen flat on its face", says Russ Mould of stockbrokers AJ Bell.

Just when you thought it couldn't get any worse for De La Rue along comes another wave of bad news....a warning that it may not be able to stay running as a business if trading conditions keep getting worse, it incurs extra costs linked with various contingent liabilities and growth areas don't achieve forecast margins.

"It is drowning in debt and has this year seen most of the executive team leave or resign, causing further instability in the business.

"But would a potential suitor act now or sit on the side lines in hope that the price could get a lot cheaper? After all, De La Rue still has many negative factors to stomach including a fraud investigation into suspected corruption in South Sudan.

"The business seems to have fallen flat on its face as a result of poor management decisions at a time when it needed superior leadership to navigate difficult market challenges. Sadly shareholders are now suffering the consequences."

9.28am GMT

De La Rue's problems really began 20 months ago, in March 2018, when it failed to win the 490m contract to print Britain's new blue passports.

That contract went to Franco-Dutch printer Gemalto instead, leading De La Rue to demand an explanation as to why a "British icon" would be made offshore.

9.11am GMT

Today's gloomy announcement (including a 9.2m loss for the last six months) is De La Rue's third profits warning of 2019.

"Between now and the end of calendar Q1 2020, we will complete a full review of the business and design a comprehensive turnaround plan for the Company. In the meantime, we have already identified and started to implement the urgent actions needed to stabilise the business and allow us to complete the review.

With strong emphasis on cost control and cash management, coupled with a focus on innovation and reversing the revenue decline, we will become a leaner, more efficient Company and drive shareholder value."

9.00am GMT

De La Rue also warned shareholders that its debts have risen, putting more pressure on its ability to keep within its banking covenants.

It says:

As at the 28 September 2019 the Group's net debt was 170.7m [up from 107.5m in March] and the net debt/EBITDA ratio adjusted for the basis of the banking covenant was 2.72 times, both of which are significantly higher than previously forecast.

8.52am GMT

While Alibaba romps away, UK bank note maker De La Rue is having a torrid morning.

Shares in De La Rue have plunged by 20% this morning, after it reported an 87% plunge in operating profits for the last six months.

The business has experienced an unprecedented period of change with the Chairman, CEO, senior independent director and most of the executive team leaving or resigning in the period. This has led to inconsistency in both quality and speed of execution.

The new Board is working to stabilise the management team, which we believe will take some time.

8.38am GMT

After a strong session, Alibaba's shares have closed at HK$187.6, sharply higher than their HK$176 float price today.

That's a 6.5% gain on the day.

Alibaba's listing in Hong Kong was a success on the opening day of trading, with shares rising more than 6%. The largest listing of the year comes at a worrying time for Hong Kong but everything appears to have gone very smoothly.

This was an opportunity to show that, despite the protests that have brought Hong Kong to a standstill and wreaked havoc on the economy, it's business as usual for the stock exchange.

8.31am GMT

Alibaba's stock market float was quite a performance, as this video shows:

The scene at the Alibaba HK trading debut today was Wall Street meets Willy Wonka meets Justin Bieber concert meets Care Bears. It was EVERYTHING pic.twitter.com/UoUcYNrtO2

Up 7%, 63 million shares traded with an hour left in trade. Not a bad first day at school (sorta) for Alibabahttps://t.co/5h8t2zqgqH pic.twitter.com/B8t2EXV3oW

8.25am GMT

Alibaba's Hong Kong listing is an early Christmas present for the investment bankers who worked on the deal.

Credit Suisse, Citigroup, and JP Morgan will all pocket decent fees for their work on the biggest share sale of 2019, as we reported last week:

Related: Alibaba on track to raise 10bn in Hong Kong listing

8.20am GMT

There's a knack to selling shares -- you want to price them high enough to raise plenty of funds, but low enough to ensure a 'pop' as hungry investors pile in.

Alibaba Group Holding Ltd. rose 7.7% in its Hong Kong debut, capping a landmark share sale that unfolded during violent anti-government protests.

Chairman Daniel Zhang, lieutenants wearing Alibaba lapel pins and Hong Kong dignitaries were on hand to strike the opening gong Tuesday at a celebration of the city's biggest stock listing this year. The company presented a Chinese-style painting to the exchange -- a souvenir to go with the showy coming-out party. The Chinese e-commerce giant's shares rose to as much as HK$189.50, versus a HK$176 issuance price.

Dickie Wong, head of research at broker Kingston Securities, said Alibaba's Hong Kong debut was "slightly better than expected" and that the shares were a shoe-in for quick inclusion in stock connect programmes that would allow investors in mainland China to trade them.

"This is definitely a must-have stock for the portfolio of a local investor," he said.

If sustained, the gain will rank among the best first-day performances involving the biggest IPOs in the city since 2005, after AIA Group (17.1 per cent), Bank of China (15.3 per cent), Industrial and Commercial Bank of China (14.7 per cent) and China Unicom (8.9 per cent).

The Alibaba listing comes as a shot in the arm for Hong Kong at a time when the city is seeking to rebound from its worst political crisis in history, with the economy in a technical recession.

7.44am GMT

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

After five years of travelling afar, [Alibaba has] decided to come home.

Despite the difficulties and challenges in Hong Kong."

Perhaps some fears a Democrat in the White House might take a harder line on deal making. Clearly Trump is laxer on deals - companies want to act now while the going is good.