- FTSE 100 index closes down
- Gold price gains
- US indices open lower
5.15pm: FTSE 100 lower
FTSE 100 index closed little changed but lower on Tuesday, as Wall Street shares also lagged as risk appetite was still tempered but fears of a military clash between the US and Iran eased.
The UK’s premier share index closed down 1.49 points at 7,673.85.
FTSE 250 gained ground though, adding around 72 points at 31,832.68.
“While there is no love lost between the US and Iran, markets are beginning to see some element of clarity over this situation,” noted Joshua Mahony, senior market analyst at online trader IG Index.
“With the Iranian economy already suffering under the weight of US sanctions, a war would certainly not make sense at this point in time. Thus, while relations between the two sides are unlikely to improve over the coming weeks, we are seeing the extreme rhetoric from both sides ease to the benefit of markets.
“That easing in tensions is taking some of the heat off havens such as gold and the yen, while stock markets have arrested their declines to find some stability.”
Gold was still up however 0.24% at US$1,572.70 a troy ounce. US benchmark crude fell 1.13% to US$62.54 a barrel.
On the markets across the Pond, which were still near record highs, the Dow Jones fell 107 points, while the S&P 500 index lost around 7.5 points.
3.15pm: FTSE slips back
The Footsie has now slipped back into deficit despite US indices opening less weakly than feared.
London’s index of blue-chip stocks was 5 points (0.1%) lower at 7,571.
In the US, the Dow Jones was down 76 points (0.3%) at 28,628 and the S&P 500 was 9.5 points (0.3%) weaker at 3,237.
2.10pm: Ennui rules
US indices are set to give back the bulk of yesterday’s gains when trading starts this afternoon.
The Dow Jones, which yesterday rose 69 points to close at 28,703, is expected to open around 48 points lower at 28,655. The S&P 500 is tipped to start 5 points lower at 3,246.
Back in the UK, the Footsie has got stuck in a rut just below the 7,600 level, at 7,587 – up 12 points (0.2%).
The heavily-shorted stock NMC Health PLC (LON:NMC) brought a smile to the short-sellers’ faces by sliding 5.9% to 1,573p as investors wait for the company’s independent review of its accounting practices to get underway.
The same bank also cranked up its price target for M&S’s sector peer, Next PLC (LON:NXT), to 6,140p from 5,600p; Next’s shares responded by remaining stubbornly on last night’s closing level of 6,944p, possibly because HSBC downgraded the stock to ‘hold’ from ‘buy’.
12.15pm: Simmering US-Iran tensions engender caution
The Footsie today is like a yo-yo with a very short string.
London’s index of heavyweight shares was up 12 points (0.2%) at 7,587, with supermarkets and tobacco stocks to the fore.
“Even though tensions between the US and Iran remain high, sentiment in equity markets has turned positive, as European indices are showing modest gains this morning. The fact US markets ended yesterday’s session higher paved the way for buying in Asia overnight as well as in Europe this morning. The gains might be limited seeing as the political situation is far resolved but it would appear that some of the fear has evaporated for now,” said CMC’s David Madden.
Although the blue-chips were largely becalmed there was some volatility among the small caps.
— Ruth Gemmell (@ruth_proactive) January 7, 2020
Shareholders reacted phlegmatically to the news that a man with two brains (allegedly) had joined the board of Tekcapital.
Lord David “Two brains” Willetts, the former Conservative minister and male equivalent of a “girlie swot” has joined the board of the UK intellectual property company.
9.55am: Aston Martin – shaken (not stirred) by another profit warning
The Footsie’s half-hearted rally soon fizzled out, with the benchmark index dragged into the red mainly by the heavily-weighted oil giants.
Brent crude for March delivery is trading at US$68.48 a barrel, down 43 cents.
Even gold, the traditional port of refuge for risk-averse investors, has lost its lustre this morning, with the February futures contract shedding 90 cents at US$1,567.90 an ounce.
The FTSE 250 index is making a better fist of things, rising 101 points (0.5%) to 21,862, despite mid-cap Aston Martin Lagonda Global Holdings PLC (LON:ASM) once again performing as if it only has one gear – reverse – after a profit warning.
The luxury car maker’s shares were down 9.5% at 471.6p.
“Profits warnings never come alone – they usually come along like buses in batches. True to form, following a warning last summer and sailing pretty close to one in November, Aston Martin is warning profits will be between £130mln and £140mln, about half the £247mln last year,” observed Neil Wilson at markets.com.
“Year-end cash balance was £107mln, giving expected net debt and leverage ranges of £875mln-£885mln and 6.2-6.8x respectively.
“That net debt figure is a major concern. The only good news is the DBX order book has risen to 1,800 which means Aston can unlock an additional $100mln in 2022 notes. This is a drop in the ocean though and for sure Aston needs to raise cash in some way,” Wilson suggested, adding that “the bond market looks unpalatable but even an equity raise could prove tricky”.
The Xmas quiet in business news is over. Old reliable Aston Martin pops up with a post-Christmas cracker https://t.co/OJR1quYLMA
— Jon Yeomans (@JonLYeomans) January 7, 2020
8.35am: Buying on the dips
The FTSE 100 made a slightly slower start than predicted but nevertheless nudged into positive territory as it managed to shrug off Monday’s Iran-induced bout of the collywobbles.
The index of blue-chips advanced 23 points to 7,598.17
Jasper Lawler, analyst at London Capital Group, said the rebound was prompted by a phenomenon called “dip buying”.
This is where bargain hunters use a temporary market setback to buy stocks on the cheap.
“Once the geopolitical tensions had started to run their course, appetite picked up for shares and diminished for havens like gold,” said Lawler.
“Tehran’s apparent decision to pull out of the 2015 Nuclear Treaty rather than respond militarily to the flare up in tensions with the US was the basis for some relief.
But, he added: “There is still considerable uncertainty about what happens next between the US and Iran and we are monitoring the risk of escalation.”
In days of yore it would have been an unpardonable faux pas for a grocer to rock up with underlying Christmas sales below those of the year earlier. There would have been much wailing and gnashing of teeth.
In the era of internet shopping, German discount retailers and an industry that’s gone into managed decline, the faux pas is not only pardonable but acceptable.
For evidence see Morrisons trading statement (LON:MRW). ‘Like-for-likes’ were off 1.7% over the festive season, yet the shares rallied amid relief the decline had not been much worse. The stock rose 3% early on, dragging Sainsbury (LON:SBRY) up with it ahead of the latter’s own update later in the week.
Proactive news headlines:
Drug developer Silence Therapeutics PLC (LON:SLN) has unveiled a deal with Takeda worth “single digit million dollars” in research funding. The Japanese pharma giant will use the UK group’s platform to generate siRNA molecules targeting “undisclosed” illnesses. siRNA, which stands for small interfering ribonucleic acid, is a class of molecule that helps silence production of certain proteins, including but not limited to those associated with cancer. At the same time, the company announced plans to create a US subsidiary.
Itaconix PLC (LON:ITX) has announced the delivery of the first order of an odour control polymer to Croda International Plc (LON:CRDA) under a global supply agreement. The polymers specialist said in a statement it has delivered the first order of ZINADOR 35L, which is a more concentrated version of its proprietary polymeric complex, to the FTSE 100 listed chemicals company.
Biopesticide products developer Eden Research plc (LON:EDEN) said its three EU-registered active ingredients have been approved for use in organic farming in the European Union (EU). The ingredients, geraniol, eugenol and thymol, got the all-clear to be used in organic farming after being included in the European Union’s Organic Production Regulation.
Woodbois Ltd (LON:WBI) said revenues increased by around 48% last year to around US$20mln after four successive record quarters from its forestry and trading businesses. The sustainable hardwood producer, which manages and operates around 1mln acres of natural forest concessions and associated manufacturing facilities in Gabon and Mozambique, said the increased revenues were achieved without increasing administration expenses.
SDX Energy PLC (LON:SDX) has announced a significant 35% increase in reserves at the South Disouq gas project in Egypt. The company owns 55% of South Disouq, which came online last year with ‘first gas’ achieved in November. A new assessment of the field’s reserves by consultant Gaffney, Cline & Associates (GCA) shows gross proved plus probable (2P) reserves increasing to 86bn cubic feet of gas, up from a prior figure of 66bn cubic feet.
The chairman of Red Rock Resources PLC (LON:RRR) has responded positively to proposed production expansion plans at the Tshipi manganese mine in South Africa. Tshipi is 49%-owned by Jupiter Mines Ltd (ASX:JMS), a company in which Red Rock holds just over 17mln shares, or 0,87%. The potential 50% increase represents, said Bell, “one of a number of encouraging developments at Jupiter, which continues its drive to improved efficiencies and stringent cost control.”
Verona Pharma PLC (LON:VRP, NASDAQ:VRNA), the respiratory diseases treatment developer, has created a new position: vice-president of Capital Markets Strategy & Investor Relations. David Moskowitz, who held similar positions at Trovagene and Biocept, has been appointed to the newly created role.
BATM Advanced Communications Ltd, (LON:BVC) announced that Ador Diagnostics, the firm’s subsidiary focused on the development and marketing of unique in-vitro molecular diagnostics solutions, has received its first commercial order from a leading Italian distributor of molecular biology and genomics products. In a statement, BATM – a leading provider of real-time technologies for networking solutions and medical laboratory systems – said that, under the agreement, Ador will deliver its new NATlab reader and cartridges for the identification of meningitis in the second half of 2020.
OptiBiotix Health PLC (AIM: OPTI) has announced a significant deal with one of the leading retailers of health supplements. Holland & Barrett, with over 1,300 stores in 16 countries, will stock the company’s weight management product SlimBiome. OptiBiotix said the international chain was an “ideal partner” because of its “knowledge and experience in marketing functional food supplements”.
Drug discovery company C4X Discovery Holdings PLC (LON:C4XD) expects to see further commercial traction and the advancement of its existing portfolio in 2020. In the company’s results statement covering the year to the end of July 2019, Clive Dix, the chief executive officer of C4X, said it was a year of building the drug discovery portfolio and advancing the drug discovery programmes to create a sustainable pipeline of potential revenue-generating assets.
Oil and gas contractor ADES International Holding PLC (LON:ADES) has announced a notable new contract renewal, securing the ADMARINE 262 rig with an important client in the Middle East. ADES, in a statement, noted that the new deal is set with a higher daily rate and the renewal would be for five years starting after April following on from the expiry of the current contract.
Landore Resources Ltd (LON:LND) has boosted the NI 43-101 resource at the BAM Gold project to just over 31mln tonnes of ore grading 1.02 grams per tonne gold. That gives a total of 1.015mln ounces of gold in the ground. 747,000 ounces is in the indicated category.
Mineral & Financial Investments Ltd (LON:MAFL) has told investors that its 75% owned associate Redcorp Empreedimentos Mineiros expects to publish a preliminary economic assessment (PEA) of the Lagoa Salgada polymetallic project, in Portugal, later this month. In a statement ahead of its AGM, on 27 January, MAFL noted that the PEA had initially been anticipated by October 2019.
NQ Minerals PLC (NEX:NQMI) (OTCQB: NQMLF) has signed a deal with Bass Metals Ltd (ASX:BSM) to secure 100% of all the mining and exploration rights at the main 1,695 hectare Hellyer mining lease. Bass will surrender its long standing Sublease Agreement over Hellyer’s underground base metals rights. NQ has also acquired 100% rights to the 46 square kilometre Mt Block permit, which surrounds the Hellyer Mining Lease.
Crossword Cybersecurity PLC (LON:CCS) has appointed a new group sales director and a chair for its consulting subsidiary as part of plans to drive growth in 2020. The AIM-listed firm said the new sales director, Sean Arrowsmith, will be responsible for both products and consulting sales activity, inheriting a sales pipeline for the company’s Rizikon Assurance risk product worth over £3mln across 100 companies. Meanwhile, Robert Coles will be taking on the role of non-executive chair of Crossword’s consulting subsidiary and is currently serving as chair of the company’s advisory board.
Mkango Resources Ltd. (LON:MKA)(CVE:MKA) has appointed Tim Slater as interim chief financial officer. Slater is currently managing director of Harmer Slater which provides CFO, accounting and regulatory compliance to Aim and Toronto Stock Exchange-listed companies. He has previously served as interim CFO for several Aim and Venture Exchange-listed companies.
Tekcapital PLC (LON:TEK) has appointed former UK Minister for Universities and Science Lord Willetts to the board. He was a minister from 2010 to 2014 and became a member of the House of Lords in 2015.
Horizonte Minerals PLC (LON:HZM) shares declined Tuesday as a major holdings notification revealed that investor Richard Griffiths, and his controlled undertakings has reduced his holding in the company to less than 3%, down from 3.97% previously.
6.45 am: Rebound predicted
The FTSE 100 is anticipated to bounce back on Tuesday morning as markets quickly moved to shrug off US-Iran tensions.
London’s blue-chip stock index will rise around 42 points to 7,606, according to spread-betters, almost completely reversing the 47-point loss at the start of the week.
Some impetus will be provided by a stronger dollar, a higher finish for Wall Street overnight and Asian markets mostly moving higher.
Moreover, markets were helped by the US Secretary of Defense saying that US troops are not planning on pulling out of Iraq and that the US would not target Iranian cultural sites if further hostilities break out, despite threats from President Donald Trump.
US stocks indices started in the red but finished in the green, with the Dow Jones adding 0.2% to close on 28,703.38, while the S&P 500 climbed 0.35% and the Nasdaq Composite rose 0.6%.
“The lack of any haven buying in US treasuries suggested that while investors were a little spooked by the rising tensions in the Middle East, as seen by the sharp rise in the gold price, the inability of both oil prices and gold prices to consolidate their new peaks encouraged investors to start buying back into stocks,” said Michael Hewson of CMC Markets.
Indeed, gold prices, having hit a seven-year high on Monday, have now retreated slightly to US$1,568.50.
Likewise, crude oil futures have dropped off, with Brent down 1.1% to US$68.18 per barrel.
UK company news on Tuesday may not provide much of a driver to the Footsie, with a trading update due from WM Morrison Supermarkets PLC (LON:MRW) expected to show the crucial Christmas period was not a particularly bountiful one for the sector.
Excluding Morrisons’ wholesale business, like-for-like sales will have fallen by 2.5% over the festive period, analysts at Barclays predicted, following a “worrying” 1.7% decline in the period leading up to early November.
Industry data in November showed Morrisons was the weakest of the Big Four and the trend continued in December, with sales down 2.9% and its market share slipping to 10.1% from 10.5% a year earlier.
There will also be results from Safestore Holdings PLC (LON:SAFE), though these will be a fairly safe bet as the self-storage company recent flagged the top-line numbers, helping its shares reach an all-time high of around 820p just after Christmas.
The FTSE 250-listed group reported a 5.6% increase in revenue for the year to £151.8mln, with earnings per share said to be in line with the board’s expectations.
Significant events expected on Tuesday January 7:
Trading updates: Wm Morrison Supermarkets PLC (LON:MRW)
Economic data: US balance of trade, US ISM non-manufacturing
Around the markets:
Sterling down 0.1% to US$1.3158
Brent crude down 1.1% to US$68.18 per barrel
Gold flat at US$1,568.50
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