- FTSE 100 closes higher
- Oil prices tank
- US indices mixed
5.10pm: FTSE closes higher
FTSE 100 index made a late dash to make a positive close as the collapse in the US crude price failed to deter investors too much this side of the pond.
Britain’s index of blue-chip shares finished up nearly 26 points at 5,812.
US crude (West Texas Intermediate) reached a 20-year low today to around US$10 a barrel due to oversupply as demand for oil has been erased due to the pandemic.
Conversely, traders appear to be slowly coming back to shares as hopes rise that the financial cogs will start turning again as lockdown restrictions ease.
“While there is still a long way to go on the reopening of economies across the globe, the signs of a return to a modicum of normality have provided further good news for investors,” said Chris Beauchamp, Chief Market Analyst at online trader IG.
He noted there was strength developing in pockets of the market, such as banks and financial stocks, while in the US, earnings season is in full flow.
“….there is plenty of opportunity for some gloomy forecasts from US corporates, but for now the volatility looks to be concentrated on the upside,” he suggested.
On Wall Street, tech stocks were in favour and the Nasdaq gained nearly 26 points. The Dow Jones and the S&P 500 though fell 178 and nine points respectively.
3.45pm: All eyes on the price of US crude
The Footsie has taken the advice not to stray too far from home to heart today, with all the focus on US crude oil prices.
The FTSE 100 was down 9 points (0.2%) at 5,778.
“Crude oil continues to trade lower this Monday with the headline grabber being the near 20% collapse overnight in the soon-to-expire May contract (CLK0). Most active traders have by now moved on to focus on the June contract (CLM0) which is the most active now, both in terms of traded volume and open interest,” noted Ole Hansen, the head of commodity strategy at Saxo Bank.
“The expiring contract is now mostly in the hands of physical oil traders and the behaviour of the contract confirms what we already feared: That the US is running out of storage at Cushing, Oklahoma, the delivery hub for WTI [West Texas Intermediate] crude oil futures traded in New York,” Hansen added.
The near US$9 spread between the price of the May contract and the June one “is a clear sign that physical oil traders have no space available”, Hansen said.
— Holger Zschaepitz (@Schuldensuehner) April 20, 2020
2.50pm:Back to square one
As with European markets, the collapse in oil prices has rattled US markets.
The Dow Jones industrial average was down 398 points (1.6%) at 23,844 and the S&P 500 was 32 points (1.1%) weaker at 2,842.
Having said that, early losses are being pared and that seems to have encouraged the Footsie to recover to par (5,787).
The company said it has successfully concluded negotiations with its six relationship banks regarding the request for £100mln additional funding under its existing revolving credit facility.
— EGR Intel (@EGRIntel) April 20, 2020
1.30pm: US indices to open sharply lower
US indices are set to take a bath at the start of the week and that#s dragging down London equities.
Spread betting quotes indicate the Dow Jones industrial average will open at around 23,766, down 476 points on Friday’s close. The S&P 500, which closed at 2,875 on Friday, is tipped to open 53 points lower at 2,822.
In London, the rot set in during the second half of the morning but there are signs that the Footsie has got itself up off the floor and has whittled away the decline to 45 points (0.8%) at 5,742.
“Tanking oil prices, anxiety over what is almost certain to be a tough data gauntlet – especially Thursday’s US jobless claims/flash PMIs pairing – and the deranged behaviour of Donald Trump are all contributing to the toxic tone of Monday’s trading,” according to Connor Campbell at Spreadex.
11.50am: Housebuilders and miners drag the Footsie into the red
The IHS Markit UK Household Finance Index (HFI) has confirmed what most of us already knew, which is that we feel a lot skinter.
The index measures overall perceptions of financial well-being in the working-age population and in April it fell to 34.9, which is its lowest level since November 2011, and down from 42.5 in March – the largest month-to-month drop in the index since the survey’s inception in 2009.
UK Household Finance Index deteriorated drastically in April (⬇️ to 34.9) as workers reported the first fall in employment income since Oct 2017 and much weaker job security. More here: https://t.co/pWWius828J pic.twitter.com/hPPUN1tvNT
— IHS Markit PMI™ (@IHSMarkitPMI) April 20, 2020
A reading below 50 indicates a deterioration in survey respondents’ feeling of well-being.
“Around one in three UK households reported a decline in income from employment during April, which was by far the largest number since the survey began in 2009,” according to Joe Hayes, an economist at IHS Markit.
On the plus side, there were no signs of immediate stress on household balance sheets in April, with debt levels little changed from March, while unsecured lending requirements rose at a rate that was below its long-run average as households dipped into savings.
“Limiting the adverse impact on UK household balance sheets will be crucial in the coming months so that when economic activity does recover, consumers are not stuck repaying debts and instead are able to boost discretionary spending to aid a strong recovery,” Hayes suggested.
— Danny Blanchflower (@D_Blanchflower) November 22, 2016
The FTSE 100 was down 41 points (0.7%) at 5,746, with housebuilders and miners prominent among the blue-chip losers.
10.45am: Assault on 5,800 level peters out
Like a lot of us on a Monday morning, the London equity market is having trouble getting started.
The FTSE 100 is making a desultory assault on the 5,800 level, akin to a blindfolded person wielding a feather duster. The index was up 3 points (0.1%) at 5,790.
“The index is starting to look pretty range-bound after rallying hard off the lows. Direction will start to come as we get a clearer estimate of the economic damage, how quick the recover is and whether the stimulus efforts have prevented a 1930s-like depression,” said Neil Wilson of markets.com.
To be fair, there has not been a lot of corporate news flow to get the equity bulls roused.
Groceries delivery technology firm Ocado Group PLC (LON:OCDO) edged up 1.7% to 1,596p after its AGM statement but before you get too excited, all the statement contained was a warning to shareholders not to attend the annual general meeting (AGM).
Polymetal International PLC (LON:POLY), like Ocado one of the few Footsie stocks to be up on the year so far dipped 1.1% to 1,504p after its quarterly production update, which contained a commitment to paying the dividend in respect of 2019 that is due to be paid on 29 May.
10.00am: Oil trading like its 1999
The oil price is making an effort to elbow coronavirus away from centre stage, as the Footsie marks time in early deals.
The FTSE 100 index was up 9 points (0.2%) at 5,796.
On the futures markets, Brent crude for June delivery was trading at US$27.03 a barrel, down US$1.05 a barrel. West Texas Intermediate (WTI) crude is trading a gobsmacking 21% lower (US$3.88) at US$14.39 a barrel, trading like it’s 1999 – the last time WTI was this cheap.
“Oil prices have been sinking lower and in the US they have outright collapsed since the OPEC production deal was announced. To start with, the headline cut of 9.7mln bl/day versus a lofty benchmark was not enough to stem the surplus in May and June 2020, and with increasing doubts over compliance this is becoming even more obvious,” said Bjarne Schieldrop, the chief commodities analyst at the Nordic investment bank, SEB.
“The oil price is now ordering producers to halt production, and it is happening at high speed and in an unorderly fashion. This is creating damage to production and some of it will never come back online again,” Schieldrop said, as he suggested the oil market has “a lot of pain and trouble ahead” for several months to come.
“Investors are jumping into oil ETFs [exchange traded funds], which typically hold front-end WTI contracts, the ones which are falling the most. They are likely to burn their fingers over the coming months with a further collapse in spot prices, as well as a very negative roll-yield, which will drain money out of their pockets,” he added.
WTI is in a state of ‘super contango’, according to Russ Mould, the investment director at AJ Bell, who explains that this refers to the gap between the price paid for oil today and contracts for delivery in future months; the contango is at its highest level in more than a decade.
“That is encouraging traders to store oil and hold out for higher prices. Today’s barrels of oil are being sold at distressed prices as they struggle to find buyers and amid fears there may not be capacity left to house them.
With more headline numbers, oil contango is now 9$ between ‘in notice period’ first future vs first regular future. ‘If’ you have storage space, you can make 60% returns in 1m. So buy commodity physical arb funds or container charter co. Stay away from oil etfs
— Bala Vamsi Tatavarthy (@VamsiTatavarthy) April 20, 2020
“The situation is more acute in the US given the reliance on the key infrastructure hub in Cushing, Oklahoma. This helps explain the widening spread between WTI and Brent, the price used outside North America.
“One concern for the market will be the knock-on effect on US banks which lend to a domestic oil industry which will be straining under the pressure of rock-bottom prices,” he added.
Meanwhile, on foreign exchange markets, sterling is down four-tenths of a cent against the US dollar, providing a bit of a tailwind to big dollar earners, such as tool hire firm Ashtead Group PLC (LON:AHT) – up 3.0% at 1,820.5p – and consumer goods giant Unilever PLC (LON:ULVR), which is up 2.9% at 4,234p.
8.45am: Dull Monday progress
The FTSE 100 made a muted start to proceedings on Monday, defying early expectations for the index of blue-chips to make further strong gains.
The UK benchmark started proceedings down 18 points at 5,769.17.
A depressant came in the form of US crude prices, which crashed almost 20% lower at one point to below US$15 a barrel – a level last seen in the late 1990s.
Pressure was applied to WTI by the latest, frankly woeful trade numbers from Japan, seen as potentially foreshadowing a sharp slowdown in world commerce.
Against this backdrop, OPEC’s decision to cut production last week has been seen as too little too late by experts. Indeed, supertankers are now reportedly on standby to store excess supply.
Tentative hopes the global coronavirus pandemic lockdown may be coming to an end prompted the buying of travel stocks, with easyJet (LON:EZJ) leading the Footsie risers with a 2.25% gain.
On retreat was Taylor Wimpey (LON:TW.), which fell 3.2% ahead of its market update later this week. Barratt Developments (LON:BDEV) and Persimmon (LON:PSN) were down 2.9% and 2.5% respectively, following a report that the coronavirus halt to the housing market may stymie the sale of more than half a million home.
Proactive news headlines:
Genedrive PLC (LON:GDR) and Cytiva have agreed on a deal to develop the Genedrive 96 SARS-CoV-2 assay for use on lab-based polymerase chain reaction (PCR) instruments which will be used to provide a test for coronavirus (COVID-19). The AIM-listed molecular diagnostics specialist said the project with Cytiva, the company formerly known as GE Healthcare Life Sciences, is one of two assay programmes it is developing as per its coronavirus test announcement late last month.
Feedback PLC (LON:FDBK) told investors that its Bleepa system has been rolled out across the Pennine Acute Hospitals (PAH) NHS Trust to help its coronavirus (COVID-19) response. The key patient management tool, which includes secure medical image communication, is being used by clinical staff on the front-line, the company said. It means that chest X-rays and CT scans are more easily accessible, both remotely and for those on the frontline.
Power Metal Resources PLC (LON:POW) has said that four drill targets have been selected for drilling at the Molopo Farms Complex project, which it owns jointly with Kalahari Key Minerals. The decision to drill follows helicopter-borne electromagnetic survey, ground geophysics and a subsequent desktop review. Initial drilling is expected to focus on the Chipo target group in the northern area of the Molopo Farms project.
Gfinity PLC (LON:GFIN) has been appointed to operate the inaugural ePremier League Invitational tournament. The knockout tournament, due to take place this week, will see Premier League footballers representing their clubs by playing the FIFA 20 video game, with a live final to be aired on Sky Sports on April 25. ‘The eCricket Challenge’ TV series Players in the tournament will include Trent Alexander-Arnold from Liverpool, Todd Cantwell from Norwich City, West Ham United’s Ryan Fredericks, Raheem Sterling from Manchester City and Wilfried Zaha from Crystal Palace.
Tissue Regenix Group PLC (LON:TRX) said it now has a “cash runway” into August after receiving a further US$417,000 loan from the US government as part of the coronavirus support scheme. The medical devices group, which has a significant American operation with base in San Antonio, Texas, has now been awarded over US$1mln as part of the business bail-out programme.
Tekcapital PLC (LON:TEK) has highlighted a new report by Grand View Research estimating global medical sales of portable oxygen concentrators and cylinders has been published, noting that the anticipated growth may have a positive impact on its portfolio company Belluscura. The UK intellectual property investment group, focused on creating marketplace value from university technology, pointed out that Belluscura’s first product, the X-PLO2RTM portable oxygen concentrator is currently awaiting US Food & Drug Administration (FDA) clearance, which is anticipated in the first half of 2020.
SigmaRoc PLC (LON:SRC) saw its financial results for 2019 highlight strong growth and, whilst acknowledging challenges presented by the coronavirus pandemic, the ‘buy-n-build’ construction materials firm said it looks forward with optimism. In its 2019 results statement, the group reported that its underlying revenue increased by 70% to £70.4mln in the twelve months ended December 31, up from £41.2mln in 2018. Meanwhile, the group’s underlying earnings (EBITDA) improved to £14.5mln from £9.8mln and underlying pre-tax profit came in at £8.4mln versus £5.5mln in the preceding year. Net profit was reported at £7.9mln, versus a £6.1mln loss in 2018.
Xpediator PLC (LON:XPD) said activity in its transport services and solutions business has continued through the coronavirus (COVID-19) crisis with high demand in most sectors, though there has been a slowdown in some areas. In a statement, the freight forwarding group said trading in the quarter to end-March was broadly in line with management expectations, with like-for-like revenues slightly up on the previous year though it has taken actions to protect the business during the pandemic.
[email protected] Capital PLC (LON:SYME) says it has signed an agreement with financial advisory firm StormHarbour Securities for the issue, distribution and placing of a series of asset-backed securities guaranteed against inventories purchased directly by the company’s special purpose vehicles. The inventory monetisation firm said it was currently finalising the details of a securitisation programme which, within the next 12 months, is expected to cover the whole of its current portfolio of originated inventory contracts.
IXICO PLC (LON:IXI) has said it is in a “robust position” to manage the “short-term headwinds” of the coronavirus (COVID-19) pandemic as it weighed in with a strong first-half update, which showed momentum carrying on into the second six months of the financial year. The company has developed an AI-led software that interprets medical images from clinical trials and, as chief executive, Giulio Cerroni pointed out in the statement, this “remote-access business model has enabled us to minimise disruption to our service levels and continue to deliver image analysis services to our existing portfolio of clinical trial projects”. Revenues for the six months ended March 31 grew by a third to £4.6mln, IXICO said in the pre-close trading update, while the order book was £15.3mln at the period-end.
Futura Medical PLC (LON:FUM) said it has received the clinical study report (CSR) for its phase 3 study (FM57) into erectile dysfunction. As a result, the company added, it has now filed for a further pre-submission meeting with the US Food and Drug Administration (FDA) to follow up the initial presentation of existing clinical evidence from the FM57 study at an FDA pre-submission meeting on February 24, 2020.
Crossword Cybersecurity PLC (LON:CCS) said it has raised £1mln through a share placing and subscription backed by its chief executive, Tom Ilube. The AIM-listed company said it has completed a placing of 363,617 shares at a price of 230p each, a 34% discount to its closing price last Friday, raising £836,319. Meanwhile, it said, Ilube intends to subscribe for 73,914 shares on the same terms, reaching the £1mln total.
Shanta Gold Ltd (LON:SHG) said it produced 20,167 ounces of gold from its Tanzanian operations during the first quarter of 2020, up from the 19,550 ounces produced in the fourth quarter of 2019. In its first-quarter production update, Shanta also said its earnings rang in at US$15mln, and cash and available liquidity were boosted to US$15.7mln. The company mined its gold at an all-in sustaining cost of US$833 per ounce, against a gold price that neared multi-year highs during the period. It expects to produce between 80,000 and 85,000 ounces of gold at all-in costs of between US$830 and US$880 per ounce during 2020.
Bacanora Lithium PLC (LON:BCN), a lithium exploration and development company, has announced the appointment of Graeme Purdy, chief executive officer of Ilika PLC (LON:IKA) as an independent non-executive director of the company with immediate effect. In a statement, Bacanora noted that Purdy is a hands-on manager with over 25 years of global experience in the resources and battery industries. Under Purdy’s leadership, Ilika has grown to be one of the few independent global companies specialising in the design and manufacture of solid-state lithium-ion batteries, it added.
Bluebird Merchant Ventures Ltd (LON:BMV) has said it is reviewing the economic model for production scenarios at its Gubong and Kochang in South Korea. In a statement, the company said the project financials were originally determined based on a gold price of US$1,200 per ounce, but with the current gold price in the high US$1,600s, the initial models will be significantly enhanced. Although they will be not be included in cash flow projections, it added, there are many subsidies available to the company which will have a significant impact on capital costs.
88 Energy Ltd (LON:88E) gave investors more details on the Charlie-1 well project in Alaska, which previously failed in its primary target but encountered multiple secondary hydrocarbon targets. The latest findings, from preliminary petrophysical interpretation, indicates hydrocarbon pay in Torok and Seabee formations, with more than 280 feet of net pay is interpreted in the Seabee Torok and Kuparuk formations, which compares favourably to pre-drill expectations, the company said.
Midatech Pharma PLC (LON:MTPH) said it has appointed Noble Capital Markets to advise the group on the strategic review it is currently undertaking. Noble, an investment bank, will advise Midatech in the search for partners, including parties that are interested in acquiring the company. Midatech said it is not currently in any discussions with potential suitors and has yet to be approached by any parties interested in acquiring some or all of the clinical assets of the company.
CentralNic Group PLC (LON:CNIC), a global internet platform company that derives revenue from the subscription sales of internet domain names and internet services, announced that the publication of the group’s audited results for the year ended December 31, 2019, and its Q1 2020 trading update will be on Monday, April 27, 2020. It said there will be a webinar/conference call for equity analysts at 09:30am UK on the day of results, hosted by CEO Ben Crawford and CFO Michael Riedl.
6.30am: Footsie called higher
The FTSE 100 looks set to ignore the rather mixed picture in Asia to open the trading week firmly on the front foot.
Betting the UK is now past peak pandemic and looking to a phased end to the lockdown, traders are expected to push the index of UK blue-chips 60 points higher to 5,846.96.
“A number of European countries eased some of their lockdown restrictions,” said David Madden of CMC Markets “Italy, Spain and Austria saw the re-opening of some businesses.
“In the grand scheme of things, the level of progress is tiny, but the message it sends out is very positive.”
A potential depressant, however, could come in the form of the oil companies after US crude hit levels seen in the last century as it crashed through the US$15 a barrel level Hitting a 21-year low, WTI crumbled 20% to US$14.64 amid worries of an increased glut of the black stuff.
The catalyst for the latest fall was some woeful export data from Japan, which showed the enormous economic impact of the coronavirus pandemic on the world’s third-largest economy.
Price setters quickly extrapolated out the 12% decline in trade to provide a grim assessment for international commerce following the global shutdown.
In the US this week, analysts are expecting another series of grim warnings from corporate America as earnings season continues.
Closer to home, we’ll get an update from Primark owner Associated British Foods (LON:ABF) this week along with progress reports from the London Stock Exchange (LON:LSE) and builder Taylor Wimpey (LON:TW.).
Significant announcements expected on Monday:
Around the markets:
- Pound worth US$1.2743 (-0.21%)
- Gold off US$1.40 an ounce at US$1,697.40
- Brent crude off 48 cents a barrel at US$27.60
- Government launches £1.25bn plans to help struggling UK start-ups
- Uber to revive goods-delivery service in hunt for new revenue sources
- US governors clash with Trump over virus testing
- City chiefs demand fair shares in equity fundraisings
- Exporters ‘locked out’ of government’s emergency loans
- Jaguar at a standstill as sales crash
- Fears over job cuts ahead as UK’s furlough scheme opens
- Government’s rescue package is proving too difficult to open
- Matalan and Poundstretcher under pressure from their landlords
- Nearly seven million jobs at risk if lockdown lasts for months
- Supertankers drafted in to store glut of crude oil