Above page content

    Site map  Cookie policy


Last Week in the City: Oil slumps by a fifth in November

Garry White, Chief Investment Commentator, looks at the market-moving events that have shaped UK equity markets this week (November 26 to 30, 2018).

Garry white employee

Garry White

in Features


The FTSE 100 rose 0.6% over the week by mid-session on Friday, in a volatile week for the pound. The FTSE 250 traded flat. Theresa May finally agreed a withdrawal deal with the European Union and spent the week trying to sell the agreement to sceptics. The oil price had its worst month in November since the financial crisis as concerns about an oversupply mounted.  

Global dividends are at a record high, but investors must pay attention to dividend sustainability. Garry White takes as look at issues for income seekers here.


The UK government and the European Union finally agreed a withdrawal deal which will be voted on by parliament on December 11. The deal covers the transition period from 2019 to 2020, essentially outlining how the UK will leave the bloc. A new customs set-up will be introduced where the UK would collect tariffs on the EU's behalf. There would be an end of European Court of Justice oversight of UK affairs and annual payments to the EU. Prime Minister Theresa May says the country will be able to cut trade deals with other countries. However, there is a good chance the deal will not be voted through parliament, as there are a number of issues MPs do not like, particularly the Irish backdrop part of the agreement, which is an insurance plan that kicks in if future trade talks fail to avoid a hard border on the island of Ireland. The backstop means the whole of the UK will remain in the EU customs union, while Northern Ireland will have to follow single market rules. Brexit supporters loathe the backstop, fearing it will leave the UK “shackled” to EU rules. However, Brexit supporters aren’t the only ones opposed to the backstop. The DUP, have repeatedly expressed their discontent with the backstop arrangement because while Northern Ireland would have a frictionless border with the Republic of Ireland, it would be treated differently to the rest of the UK, a compromise it is unwilling to accept.  

The Bank of England said that in Brexit’s worst-case scenario the UK's economy could shrink by 8%, leading some to describe his comments as “Project Hysteria”. Unemployment would rise to 7.5%, house price fall by 30% and commercial property prices collapse by 48%, Mark Carney, the Bank’s governor, said.

President Trump suggested Theresa May's Brexit agreement could threaten a US-UK trade deal. He told reporters the withdrawal agreement "sounds like a great deal for the EU" and meant the UK might not be able to trade with the US.

Labour’s shadow Chancellor John McDonnell said that he thought a second Brexit referendum was “almost inevitable”.

Net migration from the EU to the UK has fallen to its lowest level in six years, according to figures from the Office for National Statistics.

The Bank of England conducted a stress test which it said was two and half times more severe than its Brexit scenarios on the UK’s seven major lenders to assess the financial stability of the UK banking system under different economic conditions. All seven lenders – Royal Bank of Scotland, HSBC, Barclays, Lloyds Banking Group, Standard Chartered, Santander and Nationwide Building Society – passed the test.

Topps Tiles said it will stock up its important products ahead of Brexit to protect against supply chain disruptions.

Ford, the biggest maker of car engines in the UK, has warned that a no-deal Brexit would be a "catastrophe" and that the agreement between London and Brussels should be approved.


Federal Reserve Chair Jerome Powell has signalled that the Federal Reserve may not raise interest rates much more. In a speech in New York, Mr Powell said interest rates are "just below the broad range of estimates of the level that would be neutral for the economy – that is, neither speeding up nor slowing down growth." Last month, Mr Powell said the bank was a "long way" from neutral although then he was referring to the mid-point of the range and not the start of the range itself. John Redwood, Charles Stanley’s Chief Global Economist, looks at this week’s comments by Federal Reserve Chair Jay Powell here.

US GDP growth grew at 3.5% in the third quarter, according to the Commerce Department's Bureau of Economic Analysis, representing no change to its initial estimate.

UK consumer confidence in November has fallen to its lowest level in a year. The latest Consumer Confidence Index from YouGov and the Centre for Economics and Business Research indicates that the headline figure fell by 1.4 points in November, declining from 108.1 in October to 106.7.

European Central Bank president Mario Draghi confirmed that its quantitative easing programme would end in December.

German business confidence weakened for a third month in November, results of the survey by the Ifo Institute showed. The Ifo business confidence indicator fell to 102 from 102.9 in October.

China's manufacturing activity continued to slow in November. The manufacturing purchasing managers’ index came in at 50, compared to 50.2 in October, its worst result in more than two years. A figure above 50 indicates growth and one below 50 indicates contraction.


Leaders of the G20 meet in Buenos Aires this weekend, with talks over trade keenly watched by markets. Chinese President Xi Jinping and US president Donald Trump are meeting for dinner on Saturday night to discuss the matter. Garry White takes a look at what the potential outcome is here.

President Trump renewed threats to impose tariffs on imported cars after General Motors announced job cuts and plant closures. The US president tweeted that tariffs were "being studied" and that duties could have stopped the GM closures. There was speculation that a 25% tariff could be applied on cars imported from the EU.

President Donald Trump's ex-lawyer Michael Cohen pleaded guilty to lying to Congress about a Trump real estate project in Russia, and the extent of the president's involvement in and knowledge of that deal. Prosecutors said Cohen lied in order to minimize links between Trump and his Moscow building project, and to give the false impression that the project had died before the Iowa caucuses in February 2016, the first contest on the path toward a presidential nomination.

Italy's government says it will stick to its high-spending budget plans, setting up a potential stand-off with the European Union over its deficit. Prime Minister Giuseppe Conte, who held talks with deputies Matteo Salvini and Luigi Di Maio on Monday, said the objectives for 2019 had already been fixed. However, Mr Di Maio hinted earlier that the government might be willing to cut the deficit target a little. The European Commission has threatened fines unless Italy revises its plans.

Tension between Russia and Ukraine increased once more. On Sunday Russian border guards fired on three Ukrainian ships and seized their crews off the Crimean Peninsula. Ukrainian President Petro Poroshenko has urged Nato to send ships to the area. He has implemented martial law across Ukraine's border regions for 30 days in response to the crisis. German Chancellor Angela Merkel blamed the crisis "entirely" on Russia.


Digital coins had a torrid start to the week, with bitcoin dipping below $3,500 for the first time in a year before rallying from lows. However, Nasdaq is moving ahead with plans to launch bitcoin futures as early as next year. The stock exchange is partnering with VanEck to launch cryptocurrency products, including derivatives, according to a representative from the investment management group.


UK Facebook chief Lord Allan faced questions on data breaches and fake news in front of an "international grand committee" of parliamentarians in London, including representatives from Brazil, Singapore, Latvia, Australia, Argentina, Canada, Ireland and the UK. Facebook founder and chief executive Mark Zuckerberg repeatedly declined invitations to appear. As a consequence the select committee for digital, culture, media and sport left an empty seat at the hearing.

Shares in the streaming giant Netflix rose after management said the company will create a Roald Dahl story universe following a deal with the late author's estate.

Microsoft overtook Apple as the world’s largest company by market value on Monday, with the two companies vying all week to be the globes number one listed business. On Friday, Apple had regained the crown and was valued at $852bn compared with Microsoft’s $845.8bn.

The US filed criminal charges against Mike Lynch over the $11bn sale of the British software company Autonomy to Hewlett-Packard seven years ago. Lawyers for Lynch called the developments a “travesty of justice”.


Oil looked set to turn in its worst monthly performance in ten years during November, as concerns over a global supply glut hit prices, despite rising this week. Brent crude futures were up 1.6% over the week by mid-session on Friday, but down 21.3% over the month.  

Saudi Arabia said it will not cut oil output on its own ahead of Opec’s next meeting on December 6.

Tullow Oil said it would restart paying a dividend next year for the first time since 2014. “Having reached our target of being a balanced self-funding exploration and production business and having embedded cost discipline across the group, this is the right time to reinstate a dividend and focus on our plans for growth,” chief executive Paul McDade said.


Deutsche Bank’s headquarters in Frankfurt were r aided by prosecutors in a money laundering investigation. The police action related to the Panama Papers, a giant leak of 11 million financial and legal documents that revealed hidden offshore accounts.


Black Friday was a huge hit for UK online retailers, but did little for traditional bricks-and-mortar shops, according to retail analysts Springboard. The number of shoppers visiting stores fell 5.4% compared to last year's Black Friday. In contrast, online transactions rose by 46%.

Shares in Intu, the owner of shopping centres including Lakeside and the Trafford Centre, plunged by around a third after a £2.8bn takeover bid was abandoned. The consortium blamed "uncertainty around current macroeconomic conditions and the potential near-term volatility across markets" for walking away. It was led by the Peel Group and included Saudi Arabian group Olayan and Canada's Brookfield Property.


The warm UK summer tempted Britons to stay at home and tour operator Thomas Cook issued its second profit warning in two months. The full year dividend was scrapped and its shares fell by almost a quarter. Shares in peer Tui were also hit by the news.

Shares in baking group Greggs jumped after management upgraded its full-year outlook.

Shares in Dignity, the UK’s only listed funeral director, plunged after UK regulators announced an investigation into prices in the industry. The Competition and Markets Authority said it had "serious concerns" about above-inflation price rises for funeral director and crematoria services in the £2bn sector.

Restaurant Group's £550m takeover of Wagamama didn't get the fulsome support from investors, with just 60% of the votes cast in favour of the tie-up. The deal's valuation makes it the highest price per-restaurant ever paid in the UK and there are concerns that current owners have squeezed out costs already.

Consumer products giant Unilever said that chief executive Paul Polman will retire as chief executive on 31 December. Following a handover with his successor Alan Jope, he will leave the company in early July. The move came less than two months after his plan to change Unilever's structure was scrapped in the wake of shareholder criticism.


Daily Mail & General Trust, the owner of the Daily Mail and Metro newspapers, reported a 16% fall in full year profits sending its shares sharply lower. The shares hit a five-year low.  

Nothing on this website should be construed as personal advice based on your circumstances. No news or research item is a personal recommendation to deal.

Get in touch

Find out more

Our focus on clients has endured since the foundation of Charles Stanley in 1792 and has helped make us one of the UK's leading wealth management firms. Your interests give shape to everything we do.

Please call us to talk about your circumstances or complete the enquiry form.

020 3797 1783

Make an enquiry


We store your data in accordance with data protection legislation and our privacy notice. You can unsubscribe at any time by clicking the link in our emails or emailing us

Local Office

Your local office

Your local Charles Stanley office can help advise you on a wide range of investment management services.

Select an office


Newsletter banner signup