- FTSE 100 index closes 55 points up
- US inflation rate falls for two months in succession for the first time since 1982
- US benchmarks mixed
5,10pm: FTSE 100 closes ahead
FTSE 100 index closed ahead on Tuesday but US stocks were mixed as the weaker sterling boosted the benchmark’s dollar earning constituents but fears over further waves of the deadly coronavirus persisted.
Britain’s blue chip benchmark finished over 55 points higher at 5,994.
FTSE 250 though, the more UK- company focused index, finished off over 98 points at 16,173.
The FTSE 100 index was assisted by Vodafone (LON:VOD) after positive results and a maintained dividend. The shares added 8.74% on the day to 122.88p.
“Similar to yesterday, higher moves in international companies like Diageo, British American Tobacco and Reckitt Benckiser are playing a role in the benchmarks bullish move,” noted David Madden, analyst at CMC Markets.
The group has seen an 8.8% write-down in its property portfolio highlighting the problems in the sector due to the pandemic. Its loss widened to £837 million for the full year to end March, up from a loss of £123 million pounds last fiscal year.
The pound lost 0.36% against the US dollar.
2.55pm: US markets open mixed after inflation data
US markets opened mixed, with the broad-based S&P 500 opening lower and the more narrowly-based Dow sticking to the script to open higher.
The Dow Jones 30-share industrial average was up 27 points (0.1%) 24,250 but the S&P 500 was off 9 points (0.3%) at 2,920, after the first back-to-back monthly falls in the core inflation rate in the US in 38 years.
“The US consumer price inflation report showed prices fell 0.8% month on month in April, dragging the annual rate of inflation down to just 0.3% as gasoline prices plunged more than 10%; however, the bigger news is that core inflation (excluding food and energy) has recorded consecutive MoM [month-on-month] declines for only the second time in the series’ 63-year history – the last time was 1982,” observed James Knightley, the chief international economist at ING.
“This reinforces our view that the scale of demand destruction in the economy means inflation is not going to be an issue for a long time,” Knightley said.
In the UK, the Footsie has ebbed back below the 6,000 mark again but is still showing a healthy gain of 41 points (0.7%) at 5,978.
1.55pm: Sunak’s statement lifts equities further
US benchmarks are expected to open higher after latest consumer price index data showed a dramatic fall in the US inflation rate.
The US annual inflation rate fell to 0.3% in April from 1.5% in March, which was even lower than the 0.4% economists had predicted.
The core inflation rate eased to 1.4% from 2.1% in March, versus expectations of 1.7%.
– US CPI on the downside. Unsurprisingly though that energy, transport and apparel were main negative contributors.
– The lowest core inflation MoM read in the history of CPI data since they started measuring it in 1957. pic.twitter.com/BavM23ilDX
— @Aliaelgebaly (@AliaElgebaly) May 12, 2020
If spread betting quotes are to be relied upon, the Dow Jones industrial average is expected to open 94 points firmer at 24,316 and the S&P 500 is predicted to open 10 points heavier at 2,940.
In the UK, traders have been assimilating the details of the latest announcement from Rishi Sunak, the chancellor of the exchequer.
“The decisions to extend the furlough scheme through to the end of October and, at least for the moment, to continue support at the existing level, are welcome in order to help both employers and employees as we move through this next stage of allowing different businesses to return to work,” opined Jo Keddie, the head of employment at Winckworth Sherwood.
“Many will also be glad of flexibility for part-time working as the Job Retention Scheme enters its next phase, beginning in August, although employers may still face some difficult practical choices as to how to put that into practice and how best to balance furlough arrangements with part-time working for employees where possible. The wider guidance issued this month surrounding health and safety requirements for businesses in different sectors will still be of crucial importance to enable a safe and protected environment for those being required to return to the workplace,” Keddie added.
“Overall, the chancellor’s comments stressed the balance of responsibility between the government and employers. We now await the detailed guidance of the chancellor’s plans, but this will surely be one of the key themes as the scheme evolves in the coming weeks as the government seeks to increase economic activity across the UK,” Keddie concluded.
Sunak’s announcement gave a boost to the FTSE 100, which legged it above 6,000 to 6,008, up 68 points (1.2%).
12.40pm: Job retention scheme extended by four months but employers will start to share the load
The UK’s job retention scheme will be extended by four months to the end of October, the chancellor of the exchequer, Rishi Sunak, announced.
1/ The job retention scheme will be extended, for four months, until the end of October.
By that point, we will have provided eight months of support to British people and businesses. Until the end of July, there will be no changes to the scheme whatsoever. pic.twitter.com/gQznY4c2Ir
— Rishi Sunak (@RishiSunak) May 12, 2020
From August to October the scheme will continue, for all sectors and regions of the UK, but with greater flexibility to support the transition back to work.
Employers currently using the scheme will be able to bring furloughed employees back on a part-time basis, Sunak revealed, adding that the government will ask employers to start sharing the costs of paying people’s salaries.“Further detail will follow by the end of May but I want to assure people one thing won’t change: workers will, through the combined efforts of government and employers, continue to receive the same level of support as they do now, at 80% of their salary, up to £2,500,” Sunak said.
The FTSE 100 was up 53 points (0.9%) at 5,992.
12.10pm: Footsie briefly tops 6,000
It was a profitable morning for equity bulls, with the FTSE 100 climbing 53 points (0.9%) to 5,993.
The index briefly topped 6,000 but climbed down again after getting a nosebleed.
“Kingfisher has released an encouraging Q1 trading update which provides comfort on liquidity and improving sales trends as the network opens up and pent up demand starts to be released. Currently 288 B+Q stores are now open while it continues to offer a click and collect service at Screwfix,” said Robert Eason, head of research at Irish stockbroker, Goodbody.
“At its worst point sales in the UK were down 70% in the week to April 4th but have gradually improved since to +18.9% in the week ending May 9th. Note, these figures are despite the 13 B+Q stores in Ireland being still closed,” he added.
11.30am: Vodafone leads the advance
The Footsie has extended its earlier gains, despite caution over the possibility of a second wave of coronavirus victims as lockdown restrictions are eased.
The FTSE 100 was up 53 points (0.9%) at 5,992.
“Sentiment remains cautious as investors watch the situation in China, where the number of new cases continues to rise. Western economies currently taking small steps towards re-opening and ending lockdowns will be examining the performance of China, just as they monitored its virus containment efforts, in the uncomfortable knowledge that they face the same challenges in bringing their economies back to some semblance of normality,” said Chris Beauchamp of IG, although he offered no opinion on whether governments who watch the performance of China will then choose to ignore the lessons learnt.
“For Europe, the test case is Germany, and with infections there on the rise investors fret that there is more economic pain to come as restrictions return. European indices have yet to retest the highs of April, with a renewed gap between them and US stock markets opening up over the last four weeks, despite one of the worst earnings seasons for US companies in a number of years,” he noted.
Mobile phone networks operator Vodafone PLC (LON:VOD) sits atop the Footsie leader-board with an 8.7% gain at 122.88p.
Richard Hunter, the head of markets at interactive investor, said results this morning from Vodafone showed signs that the overall picture is improving after some difficult times.
“An improvement in revenues and a return to pre-tax profit of 795 million euros compared to a previous loss of 2.6 billion euros are a case in point,” Hunter said.
“The company remains a prodigious cash generator, and the fact that it has maintained the dividend will be a pleasant relief to increasingly starved income-seekers,” he added.
10.00am: Supermarkets in demand
London’s index of leading shares is modestly higher, helped by grocery stocks getting a bit of love from traders.
The FTSE 100 was up 19 points (0.3%) at 5,959.
The shares rose 3.0% to 194.45p as like-for-like (LFL) sales excluding fuel rose by 5.7% year-on-year, with LFL sales up 10.8% in the final two weeks of the quarter.
“The recovery in sales in the final weeks of the period is positive for investors, as is the rapid expansion of its service with Amazon and other delivery services,” said Ian Forrest, an investment research analyst at The Share Centre.
“The company benefits from having a smaller exposure to non-food and banking than others in the sector and while the deferment of the special dividend is disappointing it is prudent in the current circumstances,” he added.
“Commercial property companies are currently struggling as tenants have stopped paying rent, particularly in the retail space,” observed Rachel Winter, an associate investment director at wealth management firm, Killik.
“Land Securities has paused construction on a number of developments, particularly office space in London as it considers what the long-term impact of Covid-19 will be. This ties in with recent news that office provider WeWork has defaulted on some of its own rental payments. At the moment the future of the office looks uncertain,” she added.
— ???????????? ???????????????????????????? (@ianlanesgroup) May 12, 2020
8.40am: Cautious optimism
The FTSE 100 got off to a positive start on Tuesday ahead of an update from Rishi Sunak on the UK job retention scheme and the associated economic support being provided by the government during the coronavirus lockdown.
London’s blue-chip index opened 36 points higher at 5,975.94.
It is expected that the chancellor of the exchequer will extend the furlough initiative, which is currently supporting six million workers, until September, though the Treasury will only provide 60% of benched workers’ wages.
Later the US will provide the world with its latest inflation figures, the importance of which is expected to be drowned out by the recent deluge of dire economic indicators.
“Any news flow that reports fears of reinforcing lockdown is likely to be met with severe negativity on global markets. Stocks and other assets have been rallying on anything that points to a return to normal output levels for many economies,” said James Hughes of Scope Markets.
“The rush to reopen businesses is understandable but doing so too quickly risks a longer period of economic inactivity.”
On the market, Vodafone (LON:VOD) surged almost 4% higher as it became something of a novelty investment in these times of austerity by maintaining the dividend payment.
An update by Land Securities (LON:LAND), the owner of the giant Bluewater retail complex in Kent, was greeted by a 6% markdown of the already bombed-out share price. As expected, the property giant pulled the payout as it warned of tenant failures.
It was a down day for the travel stocks, which appear to swing day-to-day driven by nothing more than sentiment. Down 4% early on was British Airways owner IAG (LON:IAG), with cruise operator Carnival (LON:CCL) following closely in its wake.
Proactive news headlines:
Oncimmune Holdings PLC (LON:ONC) said it has signed an agreement with an unnamed “leading US biopharmaceutical company” helping the latter develop new immunotherapies. The UK group will support its new partner with antigen targeting using its biomarker discovery engine, SeroTag. The technology will be deployed to identify antigen targets from human immunoglobulin antibodies, This agreement allows the firm, or a commercial partner, to develop a companion diagnostic for each candidate that is validated. In a statement, Oncimmune‘s chief executive Adam Hill said the latest deal was part of a growing pipeline of commercial projects flagged in the company’s February results statement.
Galantas Gold Corporation (LON:GAL) (CVE:GAL) shares rose on Tuesday as it said it has reached an agreement with the Police Service of Northern Ireland (PSNI) regarding blasting at its 100% owned gold mine near Omagh, Northern Ireland and plans to restart milling at the mine within ten days In April, Galantas announced that confirmation has been received from PSNI in regard to satisfaction of certain secure storage and handling protocols required for an increase in blasting to a commercial level. Some other issues, regarding financial matters, were being progressed. The company said it now understands that financial matters have now been mutually agreed.
Vast Resources PLC (LON:VAST) has described itself as “extremely pleased” with initial indications from metallurgical test work being conducted on ore samples taken from the Baita Plai mine in Romania. The company, in a statement, told investors that initial floatation test results showed concentrate grades of 20%-28% copper with recoveries seen at between 84% and 94%. Test concentrates also included molybdenum, zinc and lead. It said the results come from ‘batch 2’ samples sent to the lab in the UK. Samples were taken from underground working areas within the existing Baita Plai mine. Vast pointed out that the work on Batch 2 confirms historical metallurgical results.
Angling Direct PLC (LON:ANG) has said its online sales in April were up 24% year-on-year, while sales in May have picked up by even more. Cash at the end of April was around £6.0mln, with the company also having access to a £2.5mln undrawn credit facility until September 2020. The fishing tackle and equipment retailer was naturally pleased that the UK government decided that fishing should be one of the sporting activities where coronavirus lockdown restrictions will be relaxed from tomorrow.
ANGLE PLC (LON:AGL) (OTCQX:ANPCY) has said its liquid biopsy has shown potential in a “new and promising area” of cancer therapy. The Med-tech specialist’s Parsortix device was used by researchers in Santiago, Spain, to screen people with head and neck and non-small cell lung cancers. They were looking for tell-tale differences, known as biomarkers, identifying suitability to be treated with a new class of drugs called MET inhibitors, specifically MET alterations in circulating tumour cells (CTCs) captured by the ANGLE technology. These changes, mostly found in metastatic patients, have a fundamental bearing on the rate of growth and spread of the disease. ANGLE said the research suggested the Parsortix system could be used as part of a biomarker approach in cancer drug trials of MET inhibitors.
Diversified Gas & Oil PLC (LON:DGOC) confirmed that it has conditionally raised gross proceeds of US$85.8mln to support an acquisition spree in the United States. DGOC, in an after-hours statement on Monday, announced its latest acquisition building on a deal unveiled in April. Together the transactions represent around 18,000 barrels oil equivalent per day (boepd), equating to 20% of DGOC’s output in 2019, and come with a combined price tag of US$235mln. Part of the funding comes from the share placing. The remainder is covered by long-term loan notes. DGOC this morning reported it will sell some 64.28mln new shares each priced at 108p, just a 1.6% discount to yesterday’s average mid-market price.
Condor Gold PLC (LON:CNR) (TSE:COG) has said it ended the quarter to March 31, 2020, with £1.73mln in the bank. “During the first quarter 2020, Condor continued to de-risk La India Project and demonstrate a clear route to production,” Condor Gold chief executive Mark Child said in a statement. “The company has been working on the engineering and other technical studies required ahead of a construction decision and acquiring land for the mine site infrastructure. A high-grade mining dilution scenario study was completed, which supports a smaller, 1,000 tonnes per day processing plant capable of producing approximately 50,000 ounces of gold per year.”
Gore Street Energy Storage Fund PLC (LON:GSF) told investors that construction has now resumed at its two 50 megawatt assets in Northern Ireland. The company, in a statement, said operations are adhering to strict social distancing measures stipulated by the UK government. It added that, due to conservative prior assumptions, the project remains on-track to become fully operational in time to secure the valuable DS3 uncapped contracts in April 2021.
genedrive PLC (LON:GDR) said it has now closed the “oversubscribed” broker option to its recent placing which saw the issue of 1.25mln shares, raising £1mln before expenses. The company added that due to the placing being oversubscribed, allocations of broker option shares had been scaled back, therefore being an existing investor will not guarantee a full pro-rata entitlement or any allocation of broker option shares. The broker option was initially announced last week alongside a share placing through which the company raised £7mln by issuing 8.75mln new ordinary shares.
Caledonia Mining Corporation PLC (LON:CMCL) (TSE:CAL) said it produced 14,233 ounces of gold from its Blanket mine in Zimbabwe during the first quarter ended March 31, 2020, up from the 11,948 produced in the corresponding period a year ago. Gross revenues were US$23.6mln, a 48% increase on the $15.9mln achieved in the first quarter of 2019. All-in sustaining costs rang in at US$879 per ounce, down significantly from the 2019 number of US$1,039 per ounce. The company said the coronavirus (COVID-19) pandemic has had a negligible effect on production and capital projects in the quarter.
Newmark Security PLC (LON:NWT), a leading provider of electronic and physical security systems, has announced the appointment of experienced Asian sector heavyweight, Terence Yap as an independent non-executive director, with immediate effect. In a statement, Newmark noted that Yap is currently the chairman of Guardforce AI Co. Ltd, a group focusing on delivering technologically innovative security solutions within the Asia Pacific region which was established in 2018 and in the same year acquired Guardforce Cash Solutions (Thailand), a cash-in-transit business established in 1982 and which was formerly a wholly-owned subsidiary of G4S PLC (LON:GFS). Marie-Claire Dwek, CEO of Newmark said: “The addition of Terence to the Board with his depth of knowledge is a wonderful endorsement of our strategy and ambition.”
Ncondezi Energy Limited (LON:NCCL) has said its lenders have reconfirmed in principle their support for the company’s restructuring that will extend the debt repayment schedule period. The shareholder loan period has been extended by 12 months from the future restructuring approval date. The company is waiting on a key lender, Africa Finance Corporation (AFC), to approve the restructuring process but this is taking longer to process because of the impact of the coronavirus pandemic. AFC owns 50% of the loan, which currently stands at US$4.5mln, while Ncondezi’s board and management own 43%.
Horizonte Minerals PLC (LON:HZM)(TSE:HZM) said it closed out the quarter ending March 31, 2020, with £17mln in the bank, with the money in part to be used to make the Aragauia nickel project in Brazil construction ready. The group said the project financing process for the project is currently running to schedule and has not been hindered by the coronavirus pandemic. The company added that it remains focused on the safety of all employees and stakeholders and has implemented strict health and safety policies specifically tailored to the coronavirus.
88 Energy Ltd (LON:88E) has confirmed that it has now issued a ‘bidders statement’ circular to the shareholders of XCD Energy as it moves to complete its recommended takeover of the Alaska exploration peer. Via an improved paper deal – 2.4 88E shares for every 1 XCD share held – it is consolidating an exploration portfolio and opening up new opportunities for future farm-outs and new wells.
Personal Group PLC (LON:PGH), a leading provider of employee services in the UK, announced that its second dividend for 2020 of 1.5p per share will be paid on June 26, 2020, to members on the register as at May 22 and its shares will be marked ex-dividend on May 21. As announced in the company’s preliminary results, the board has taken the decision following the outbreak of coronavirus (COVID-19) to continue the payment of this Q2 dividend albeit at a reduced amount to that paid for Q1. This measure of prudence was taken amidst the uncertain trading environment resulting from the pandemic and this shortfall, together with the remaining 2020 dividends will be revisited later in the year once the impact of the COVID-19 situation on the business is clearer. The company said it maintains a strong balance sheet with no debt.
Personal Group also announced that its annual general meeting will be a closed meeting held at 2.00pm on Thursday, June 4, 2020, at John Ormond House, 899 Silbury Boulevard, Milton Keynes, MK9 3XL. The Notice of Annual General Meeting and Form of Proxy were posted to shareholders on Monday 11 May and these documents are also available to view on the company’s investor relations website at https://www.personalgroup.com/why-invest/results-centre.
AdEPT Technology Group PLC (LON:ADT), one of the UK’s leading independent providers of managed services for IT, unified communications, connectivity and voice solutions, has announced the appointment of N+1 Singer as its nominated adviser (NOMAD) and broker with immediate effect.
Advanced Oncotherapy PLC (LON:AVO), the developer of next-generation proton therapy systems for cancer treatment, announced that at its general meeting held on Monday, all resolutions were duly passed on a poll. Accordingly, the 61,221,586 new ordinary shares in respect of its share subscription and fee arrangements, as announced on April 9, 2020, will be issued and are expected to be admitted to trading on AIM on May 13.
Arix Bioscience PLC (LON:ARIX), a global venture capital company focused on investing in and building breakthrough biotech companies, has announced that it’s annual general meeting (AGM) will be held at the company’s offices at 20 Berkeley Square, London, W1J 6EQ from 2.00pm on Thursday, June 4, 2020. In accordance with UK Government instructions relating to the coronavirus pandemic, it is regretted that shareholders must not attend the AGM in person but are encouraged to submit their vote by proxy by 2.00pm BST on Tuesday, June 2. Details of the procedure for doing so are set out in the Notice of Meeting which has been posted to shareholders and is available on the company’s website.
IXICO PLC (LON:IXI), the data analytics company delivering insights in neuroscience, has announced that it will release its interim results for the six months ended March 31, 2020, on Wednesday, May 20, 2020.
6.45am: Modest uptick expected
The FTSE 100 is being called tentatively higher on Tuesday as traders continue to weigh the importance of new coronavirus cases in those economies around the world that are reopening from coronavirus lockdowns.
London’s blue-chip index was in line for a 6 point rise, according to the IG spread betting platform, a day after finishing up 3 points at 5,939.
Overnight, US stocks were mixed, with the Dow Jones Industrials Average falling 109 points or 0.45% to 24,221.99, while the broader S&P 500 was flat and the tech-heavy Nasdaq Composite added 0.8%.
Equity markets in Asia this morning were mostly in the red, with the exception of Tokyo’s Nikkei 225. The Shanghai Composite lost 0.4% and the Hang Seng fell 1.5%, despite China reporting no new domestic coronavirus infections after two consecutive days of increased cases had fuelled fears of a second wave.
“Markets have been torn between optimism on the tentative re-opening of some economies and caution on the still grim economic data,” analysts at Singapre-based OCBC Investment Research said in a note.
“Any recovery in equity markets is likely to be fragile for now, as markets will watch for cracks in the financial system and elsewhere in the economy as virus infections climb.”
In the UK, the market will be watching chancellor of the exchequer Rishi Sunak later as he is expected to make an announcement about the government’s coronavirus furlough scheme.
Investors in London will also be focusing on a spate of corporate news, including updates from Vodafone Group plc (LON:VOD), WM Morrison Supermarkets PLC (LON:MRW) and Land Securities Group PLC (LON:LAND).
Vodafone’s full-year results come against a backdrop of an increasingly competitive market after mobile operator O2 and broadband giant Virgin Media agreed a merger last week.
Morgan Stanley analysts forecast underlying profit of €14.93bn for the year as service revenue growth is expected to have improved to 1.1% in the fourth quarter from 0.8% in the third, which “is a bullish lead indicator”.
After Vodafone cut its dividend 40% a year ago, the analysts do not expect a cut this year, indeed are anticipating a 1% increase as the payout ratio “remains comfortable in our view” and balance sheet leverage is predicted to have fallen to 2.9x from 3.4x a year ago.
Grocer Morrisons is set to deliver a trading update on an unprecedented period for the grocery industry, with recent updates from larger rival Tesco showing sales rose as much as 30% in the first few weeks of the outbreak, while Sainsbury’s saw its own sales jump 12%.
There will be attention on how the group plans to keep costs down, plus its online efforts, including a new partnership with Deliveroo and ongoing work with Ocado, which recently revealed that Morrisons had increased the use of the platform for store-pick fulfilment for online during the lockdown.
Land Securities will announce results for the financial year ended March 31, having last month said it was seeing a “huge shift in the use of our buildings”.
The property developer said it was agreeing on rent deferrals with many retail and leisure occupiers after receiving only 65% of the rent due on 25 March by end of the month compared with 96% in the same period last year.
It has recently been suggested by figures outside the property industry that the future dynamics of big office buildings are going to be different in future, after the big change in working from home during the coronavirus lockdown.
Around the markets:
- Pound flat at US$1.2337
- Oil higher, with Brent crude up 0.8% to US$29.88
- Gold flat at US$1688.65
- Bitcoin up 0.4% at US$8,740 after initial volatility after four-year halving event
Significant announcements expected on Tuesday:
Interims: Treatt PLC (LON:TET)
Economic data: US inflation
- BP chief sees risk of oil demand passing peak – sustained consumption crunch beyond pandemic cannot be ruled out, says Bernard Looney
- Mass coronavirus testing plans unrealistic, says Italian biotech boss – costs are high and there is not enough production capacity, according to CEO of DiaSorin
- Mystery deaths in Nigeria provoke fear of unrecorded coronavirus surge – Africa’s most populous country has confirmed only 4,400 cases but tested few of its 200m people
- See friends and family in ‘flexible’ lockdown – restrictions could vary by region, says Johnson
- Hotels to bin buffets and pull plug on spas as Covid-19 lockdown eases – lavish breakfasts and other comforts will be things of the past
- Homeowners struggling with their finances because of the pandemic may be given a break from mortgage payments for a year to ease pressure
- Extend furlough scheme or face spiralling job losses, Rishi Sunak told – thinktank says support needed until September as industry groups warn PM exit plan lacks details
- Burger King and Starbucks branches to reopen for takeaways – UK cafes and restaurants begin cautious emergence from coronavirus lockdown
- Confusion and concern over UK coronavirus back-to-work advice – manual workers report being called in at short notice, while others say lockdown has been business as usual
- Britons are splashing the cash on home comforts – TV, gaming, food and alcohol are the big spending winners in Covid-19 lockdown, according to new report
- Power demand across the UK fell close to its lowest level ever over the weekend, as the National Grid battles to adapt to a radically different kind of economy during the coronavirus pandemic
- Furloughed workers set to be allowed back part-time – but as many as 1.2m could lose their jobs anyway as struggling businesses close or shrink in the coronavirus recession