- FTSE 100 tumbles 40 points
- Gold at a seven-year high
- Hyve dives as it mulls fund-raising
5.00pm: FTSE closes in the red as the index underperforms against mainland European and US counterparts
The FTSE 100 closed at 5,791 on Tuesday, a 51-point loss on the day to finish 0.9% below its opening levels.
"UK bulls are clearly still in holiday mode today, with the FTSE 100 and FTSE 250 both underperforming their mainland European and US counterparts," IG's senior market analyst Joshua Mahony wrote.
Chief amongst the losers have been the housebuilders, with the prospect of an economic collapse alongside a widespread halting of property transactions dragging the sector lower, according to Mahoney.
"The recent pullback in house prices in the face of Brexit uncertainty has shifted many housebuilders onto a build-to-rent strategy, which is now coming under pressure as the long-term rental market is swamped by holiday lets and Airbnb rentals. The collapse in rental yields across the country highlights just how tough the housebuilders currently have it, with many landlords having to accept rents that are 30% lower than previously expected. With the Centres for Economics and Business Research highlighting a potential 13% decline in house prices this year, market bulls are shifting their attention elsewhere for the time being."
4.00pm: Attempted rally founders
A late afternoon rally ran out of fizz just as it looked like the Footsie would reach par.
With just under half an hours trading left, the FTSE 100 was down 40 points (0.7%) at 5,802.
The mid-cap FTSE 250 fared less well, tumbling 231 points (1.4%) to 16,177, thanks in part to an 11% fall to 26p for the events organiser, Hyve Group PLC (LON:HYVE), which confirmed media speculation that it is mulling raising some cash.
3.00pm: US indices open sharply higher
As what could be an interesting earnings season kicks off in the USA, Wall Streets indices have opened sharply higher.
The Dow Jones industrial average was up 567 points (2.4%) at 23,958 while the S&P 500 was up 65 points (2.4%) at 2,827.
“The turnaround among Wall Street strategists is also a sight to behold, as year-end targets for the S&P 500 are revised higher, having been dramatically slashed just weeks ago. This is a perfect demonstration of the idea that price is sentiment, as rising prices cause an outbreak of optimism just as the plunge in stocks caused widespread bearishness. Such flip-flopping is hardly helpful for long-term investors, but is perhaps a warning to short-term traders that too much good (or not as bad) news is now being priced in to equities,2 said Chris Beauchamp, the chief market analyst at IG.
In London, the FTSE 100 was down 46 points (0.8%) at 5,796, with housebuilders among the hardest hit; Taylor Wimpey PLC (LON:TW.) was down 8.1% at 130.4p while Barratt Developments PLC (LON:BDEV) shed 6.1% at 481.3p.
Breaking: IMF says world facing biggest slump this year since Great Depression.
– Cuts global growth forecast to -3%
– US faces weakest year since 1938
– UK weakest yr since 1921
– IMF warns much of the lost economic output in advanced economies will NOT return
— Ed Conway (@EdConwaySky) April 14, 2020
1.45pm: Gold hits a seven-year high
Gold good, oil bad, is the mantra in markets today.
The price of the yellow metal is up US$5.90 (0.3%) on futures markets at US$1,767.30 an ounce – the highest it has been in seven years.
Brent crude for June delivery, meanwhile, is down 35 cents at US$31.39 a barrel.
“Whilst the gold safety net is all about the decline in real yields, the idea that central bank printing will lead to inflation seems a step too far given the profoundly deflationary shock from Covid-19. Nevertheless, despite inflation and inflation expectations tumbling the impact of Fed and other central bank easing could see real yields drop further into negative territory,” suggested Neil Wilson of markets.com.
“Crude oil futures (Front-month WTI) were weaker still with $22 cracking. The massive contango still leaves the Jun contract at above $29. The spread means Spot Oil on the platform is trading with a huge premium to the normal futures contract,” explained Neil Wilson, a man who obviously knows when hes been contagoed.
“Whilst OPEC has cut output and US production is coming off sharply, the massive build in inventories will surely take time to unwind and we do not see a sudden rebound in demand as economies take time to come out of lockdown,” Wilson said.
“Additional cuts from a series of non-OPEC countries, including the US, magnified the headline number, although those cuts are not mandatory,” explained the broker, SP Angel.
“Instead, the market is going to force shut-ins, a trend for which the Trump administration is taking credit as the US has since billed the deal as a cut of nearly 20MMbopd; however, in reality, the figure will be more in the range of 15MMbopd at most.
“In any event, the drop in global demand exceeds the cuts by so much that oil prices were flat yesterday and today. Thats not to say the deal will have no effect at all – instead, it could prevent a more catastrophic meltdown, even if it doesnt rally prices anytime soon,” SP Angels Sam Wahab said.
The London market is close to its lowest point for the day, despite expectations that the Dow Jones will open around 300 points higher and an hour or sos time.
The FTSE 100 was down 49 points (0.8%) at 5,794 as economists and traders pick the bones out of the Office for Budget Responsibilitys three-month shutdown scenario thoughts.
12.15pm: OBR envisages 35% hit to GDP if UK is shut down for three months
The “illustrative scenario” published by the Office for Budget Responsibility on the economic disruption caused by the spread of the coronavirus has not frightened the horses much.
The “what if?” scenario envisages UK gross domestic product falling by 35% in the second quarter of the year and unemployment rising by two million if UK PLC is shut down for three months.
Breaking: @OBR_UK publishes a scenario showing UK GDP falling by 35% in the second quarter of the year. Unemployment up by 2 million.
Extraordinary. More on this soon.
— Ed Conway (@EdConwaySky) April 14, 2020
The FTSE 100 was down 38 points (0.7%) of 5,804.
11.20am: Market awaits news on lockdown scenarios
The second half of the morning saw the Footsie slowly pare its losses as the market waits for news on the UK shutdown.
The FTSE 100 index was down 20 points (0.3%) at 5,822.
At midday today well publish results of a coronavirus scenario illustrating the possible effects on the economy and public finances of a 3-month shutdown and the Governments policy responses. This is *not* a forecast, just 1 scenario of many that could unfold. #OBRcovidscenario pic.twitter.com/znxkoDXBOW
— Office for Budget Responsibility (@OBR_UK) April 14, 2020
“The FTSE 100 is underperforming against its eurozone equivalents as Royal Dutch Shell and BP have been dragged into the red by the fall in the underlying oil market. Mining stocks like BHP and Rio Tinto are higher on the back of the better-than-expected import data from China. Imports fell by 0.9% in March, but economists were expecting a 9.5% plunge, so the stocks reacted well to the update,” said CMCs David Madden.
9.35am: Reassuringly dull
The FTSE 100 has made a reassuringly drab start to the shortened week, with the halo effect from buoyant Asian markets quickly fading.
Londons index of leading shares was down 28 points (0.5%) at 5,815, which was not the performance equity bulls hoped for but at least they can take comfort that the size of the movment is nothing like the swings we saw at the end of March.
Some familiar names were at the head of the retreating troupe; cruise ships operator Carnival PLC (LON:CCL) was the biggest faller, down 7.3% at 895.6p, while another travel-related stock, hotelier InterContinental Hotels Group PLC (LON:IHG) was down 5.2% at 3,517p.
“Lockdowns are being extended,” reported Neil Wilson, which explains why the travel-related stocks are getting the barge-pole treatment.
“The bitterer the pill, the stronger the medicine. At least that is what many governments are hoping for as they extend lockdowns and seek a path out of the mess. France will only gradually begin reopening the country from May 11th, while Indias lockdown is being extended through to May 3rd. The UK seems set to extend the lockdown by another 3 weeks to May 7th. The hope is that the more pain now, the quicker you can reopen the economy. Well need it – France's finance minister Le Maire says GDP will decline 8% in 2020,” Wilson noted.
— RAJESH RAJESH (@RAJESHR98803206) April 14, 2020
On the plus side, fashion retailer Next PLC (LON:NXT) is reopening its online operations “in a very limited way” from today after responding to feedback from workers in its warehousing and distribution operations.
“Nexts decision to gradually ramp up capacity in its online arm looks prudent and suggests it is taking its responsibilities as an employer seriously,” said Russ Mould, AJ Bells investment director.
“By consulting with unions, only selling limited items such as childrenswear and using staff who wont need to crowd on to public transport, it should avoid the kind of negative headlines which could damage the brand in the longer term.
“The move will also mean the company at least brings in a little bit of revenue while the current containment measures remain in place, stemming the bleeding by reducing the level at which it drains through its cash.
“While some rivals have kept their online operations open through the lockdown, subdued demand means it is unlikely they will have stolen much of a march on Next,” Mould opined.
8.40am: Subdued post-Easter progress
The FTSE 100 saw the new trading week begin with a whimper rather than the expected roar as the index of UK blue-chips defied the early bullish predictions to open almost unchanged.
London's benchmark index just managed a 4 point gain to 5,846.18
It was thought that better than expected trade figures from China, which helped lift bourses in Asia, would have a similar impact on activity in London.
Instead, the mood was cautious with Square Miles price setters keeping their powder dry. They probably have half an eye on Wall Street, where the Dow Jones Industrial Average ended Monday down almost 400 points as it braced for what is expected to be a bloody first-quarter earnings season.
“We are likely to see a number of dividends cancelled, earnings predictions missed, and forward guidance almost completely wiped out,” said James Hughes, analyst at Scope Markets.
“With the outbreak causing chaos around the world investors seems to have been flying blind when it comes to individual stocks,” he added.
Oil prices havent exactly begun to soar in the wake of the agreed cut to production by the OPEC cartel with analysts saying the latest curbs simply arent enough to support the market, which has been deluged by millions of excess barrels of crude per day.
A powerful rally in the gold price to above US$1,700 an ounce had a knock-on impact on silver miner Fresnillo (LON:FRES) and Russias Polymetal (LON:POLY), which rose 5% and 6% respectively. Shares in Centamin (LON:CEY), which digs for the yellow metal in Egypt, and Petropavlovsk (LON:POG), were also in demand.
After the sugar spike created by the recent Saudi investment, cruise firm Carnival (LON:CCL) was in diabetic territory, losing 6.6%. Reality hit home with a potential second wave of coronavirus outbreaks reported over the weekend and lockdowns in the west expected to continue well into next month.
Proactive news headlines:
Silence Therapeutics PLC (LON:SLN) chairman Iain Ross said the gene silencing specialist has “clearly come of age” after delivering two significant commercial deals in less than a year. His comments accompanied the drug developers results for the year ended December 31. During the period it inked a research and collaboration agreement with Mallinckrodt Pharmaceuticals, which resulted in a £16mln upfront payment. The groups biggest transaction, with AstraZeneca, was unveiled on March 25.
Nu-Oil and Gas PLC (LON:NUOG) has revealed its new direction, announcing a reverse transaction into a “well established” plastics recycling and reprocessing business. The company, which launched the process a number of months ago amid comprehensive management changes, said the intention is that the new vehicle will act as a consolidator in the sector. It has so far entered into a non-binding heads of terms agreement for the transaction, which will see up to £60,000 of fees to paid to the counterparty.
IXICO PLC (LON:IXI) has signed a “substantial new contract” for a late-phase open label study into Huntingtons disease (HD) carrying a value of £10.5mln. The neuroscience data analytics firm said the four-year contract will run to 2024, with the majority of revenues expected to be generated in 2022 and 2023, bringing the total value of new deals signed in its current financial year-to-date to £15mln. Meanwhile, the company said it expects to report revenue growth of “at least 25%” year-on-year in the six months ended 31 March.
Iofina PLC (LON:IOF) has said its IO#8 iodine plant located in western Oklahoma is now in production. In a statement, the group said the plant was delivered on time and within budget and is expected to crank up production levels to hit full pelt over the next six weeks. The company said crystalline iodine production in the first quarter of 2020 was 129.7 tonnes, more or less in line with the 134.4 tonnes produced in the same quarter of 2019.
VR Education Holdings PLC (LON:VRE) has signed a partnership deal with US firm VictoryXR for use of the companys ENGAGE platform. The virtual reality (VR) group said VictoryXR, which specialises in developing science curriculum content and virtual animal dissections both in VR and augmented reality (AR), will import its content library onto ENGAGE and provide its services remotely to school children across the US as part of a revenue share agreement. In a separate announcement, VR Education also said it has appointed Shard Capital Partners as joint broker with immediate effect.
Circle Property PLC (LON:CRC), the regional office property specialist, said it has seen a substantial uplift in the value of its property portfolio. In a statement, the company said its investment and development portfolio was independently valued at the end of March at £139.5mln, up from £124.6mln a year earlier. The net asset value (NAV) per share rose 4.7% to an estimated 290p from 277p at the end of March 2019; the companys shares currently trade at 170p.
Bluejay Mining PLC (LON:JAY) said it has signed a memorandum of understanding with a multinational commodity trading company and major ilmenite market participant, with a target of 200,000 tonnes per year of ilmenite production as part of ongoing commercial discussions. Meanwhile, the group added, the first bulk sample of heavy minerals concentrate batch has been produced at Bluejay's pilot plant in Contrecoeur for Rio Tinto Iron and Titanium. The pilot plant commenced operation in February 2020 and had been running at full capacity for several weeks until the coronavirus (COVID-19) outbreak.
Directa Plus (LON:DCTA) has said it is to supply a special grade of its G+ graphene product, known as ITC1, to its partner, Iterchimica. The G+ product is the differentiating component of Gipave, an asphalt super-modifier developed by Directa Plus and Iterchimica and follows successful trials in Italy and the UK. The agreement signed by the companies provides for the exclusive supply of the G+ graphene product to Iterchimica in the asphalt and bitumen sector worldwide and is for an initial duration of three years.
Horizonte Minerals PLC (LON:HZM)(TSE:HZM), the nickel company focused in Brazil, has committed to donating 300 food parcels to the municipalities of Conceição do Araguaia, Floresta do Araguaia and Xinguara, in light of the socio-economic impact caused by the coronavirus (COVID-19) pandemic. The parcels are being delivered throughout April and May, with the first going out to families this week. The donations will benefit families in the vicinity of Horizonte's Araguaia nickel project municipalities that have been identified as vulnerable during this unprecedented time.
SIMEC Atlantis Energy Limited (LON:SAE) said there has been little disruption to its tidal power business due to the coronavirus pandemic. In a statement, the group noted that electricity is continuing to be supplied from the MeyGen project in Scotland to the grid and SIMEC Atlantis expects to maintain services there and in Japan over the remainder of the year.
FastForward Innovations Limited (LON:FFWD) has delivered an update on the companies across its portfolio, as well as its own cash position during the coronavirus pandemic. "We continue to focus on providing investors with exposure to disruptive growth opportunities that have near-term re-rating potential and would otherwise be inaccessible. To this end, we currently have eight investee companies of varying size and spanning several sectors, some of which have had recent notable successes whilst others have not performed as we'd hoped”, said FastForward chairman Lorne Aborny in the statement. He pointed out that the company was currently working with its investee companies to “monitor their positions and assess any potential impact” from the coronavirus pandemic.
Alien Metals Ltd (LON:UFO) has revealed the results of its induced polarisation survey at the Donovan 2 copper-gold project in Mexico. The company said it has identified two robust drill targets associated with previously outlined geological corridors. A drill program incorporating the survey results is currently being planned, it added.US Oil & Gas PLC (USOP) has told investors it hopes to drill a new well during the second quarter of 2020 at its project in Nevada. Permitting process has been ongoing, and, in a statement released on Friday, the company said that despite coronavirus impacts the indications at present are that US federal and state regulatory processes may not be slowed to a significant degree. Coronavirus restrictions may, however, impact operational timelines that cannot be anticipated at this point, it added.