- FTSE 100 index closes up 63 points
- Fed makes emergency rate cut
- Wall Street seeing red
5.05pm: FTSE 100 closes in positive territory
FTSE 100 closed Tuesday in positive territory, but US stocks saw red, as the coronavirus threat continues and the Federal Reserve pulled out a shock decision to cut interest rates.
The Fed has cut the range of its benchmark rate by half a percentage point in a bid to counter the effect of the virus on the economy.
“Keep in mind the Reserve Bank of Australia lowered rates overnight to 0.5% – a record low,” noted David Madden, market analyst at CMC Markets after the move.
“Equity markets in Europe we jolted higher by the shock move from the US central bank, but a large portion, if not all those gains, have already been handed back,” he added.
Madden also suggested that the Fed cut could be viewed as a sign of weakness, suggesting the US central bank was desperate to “pander to global equity markets”.
FTSE 100 finished around 63 points ahead at 6,718. The FTSE 250 bounced back over 402 points at 19,703.
Over on Wall Street, the Dow Jones fell 240 points at 26,459. The S&P 500 dropped over 17 points at 3,072. Safe haven gold added 2.9%, while the US dollar fell across the board.
3.25pm: Fed performs shock rate cut to defend against coronavirus threat
The US Federal Reserve has cut interest rates by 50 basis points in an emergency measure to defend the health of the SU economy from the effects of the coronavirus outbreak.
The cut, which was not scheduled, has lowered the Fed’s benchmark rate to 1-1.25%, down from its previous level of 1.5-1.75%.
You got to ask given Fed policymaker comments last week which gave no indication of an imminent cut, to today where we’ve seen a unanimous vote for 50bps.
What’s changed in a week? #FOMC
— Michael Hewson ???????? (@mhewson_CMC) March 3, 2020
“The fundamentals of the US economy remain strong. However, the coronavirus poses evolving risks to economic activity”, the Fed said in a statement, adding that the cut had been made in light of these risks and to achieve its “maximum employment and price stability goals”.
The unexpected move caused turbulence in markets on both sides of the Atlantic, with both the US indexes and the FTSE 100 seeing brief surges before dropping back to around their pre-cut levels.
Traders may instead be awaiting an explanation from Fed chair Jerome Powell, who is due to hold a press conference at around 4pm GMT.
The FTSE 100 was up 126 points at 6,781 at around 3.20pm.
2.40pm: US markets start lower
Wall Street has kicked off Tuesday’s session on the back foot as traders risk appetite ebbed away amid a lacklustre response to the coronavirus pandemic from the G7.
Shortly after the opening bell, the Dow Jones Industrial Average was down 0.53% at 26,562 while the S&P 500 fell 0.55% to 3,073 and the Nasdaq sank 0.46% to 8,911.
With the G7’s finance ministers having failed to deliver a response the market considered appropriate, investors will now be looking to comments from US treasury secretary Steven Mnuchin when he speaks to the Ways and Means Committee of the US House of Representatives later today.
In London, the FTSE 100 was up 112 points at 6,766 at around 2.40pm.
2.05pm: G7 response to coronavirus disappoints
The FTSE 100 was trading sideways in mid-afternoon as a statement from finance ministers and central bankers from the G7 group of countries regarding their response to the coronavirus fell flat with investors.
The group, which includes the US, the UK, France, Canada, Italy, Japan, Germany and the EU as an invitee, said it was “closely monitoring the spread of the coronavirus…and its impact on global markets and economic conditions”.
“Given the potential impacts of [coronavirus] on global growth, we reaffirm our commitment to use all appropriate policy tools to achieve strong, sustainable growth and safeguard against downside risks. Alongside strengthening efforts to expand health services, G7 finance ministers are ready to take actions, including fiscal measures where appropriate, to aid in the response to the virus and support the economy during this phase. G7 central banks will continue to fulfill their mandates, thus supporting price stability and economic growth while maintaining the resilience of the financial system”, a statement said.
Traders had been hoping for the G7 to take more robust action to reduce any economic damage caused by the outbreak.
“The door was wide open for the G7 to be a let-down as the market was longing for too much, and so it’s transpired…The market has been buoyed by hopes of coordinated action from the leading nations, but we have no real coordination and no real action”, said Markets.com’s Neil Wilson.
“The statement reaffirmed a commitment to use all appropriate policy tools and hinted at a fiscal response to the situation being preferred. The good thing to come out of it is that it seems there is agreement to do this more as a fiscal response than only relying on central banks to do the bailing out”, he added.
The lacklustre response from the G7 also seems to be pushing US markets into negative territory, with Wall Street expected to open in the red on Tuesday.
Back in London, the FTSE 100 was 121 points higher at 6,778.
1.15pm: Morrisons left behind as its sales slide
Wm Morrison Supermarkets PLC (LON:MRW) is one of the few blue-chips to lose ground today in the wake of the latest grocery chains market share data.
The shares were down 1.1% at 178.15p after market research group Kantar revealed its sales decline by 2.0% year-on-year in the 12 weeks to 23 February.
Shares in Sainsbury were up 2.0% after it emerged as the only one of the big four to post year-on-year sales growth; its sales edged up 0.3%.
No news release is complete these days without a nod to the coronavirus and here the story was one of the sales of hand sanitiser shooting up by 255%.
Other kinds of liquid soaps saw sales increase by 7% while sales of household cleaning products rose 10%.
Fears of catching the lurgy “didn’t stop the British public getting close to their loved ones at the most romantic time of year, as some 45% of consumers celebrated Valentine’s Day on 14 February,” according to Kantar’s Fraser McKevitt.
“Chocolates were the most popular gift, given by almost a third of those taking part, while 22% of participants chose to give flowers to their valentine and 12% gifted alcohol,” McKevitt reported.
The FTSE 100 was up 122 points (1.8%) at 6,777.
12.05pm: Stonking morning for Footsie; tonking for Sirius’s management
Taking its lead from US markets overnight and Asian markets this morning, London had a stonking morning, clawing back some of the heavy losses seen recently.
The FTSE 100 was up 120 points (1.8%) at 6,775.
Quality control specialist Intertek PLC (LON:ITRK) posted a rise bang in line with the Footsie’s after a solid set of results for 2019.
The shares rose despite the company warning it is not immune to the impact of the coronavirus, which will hit the supply chains of many of its customers who source their kit from China.
“It is too early to quantify the impact of the Novel Coronavirus,” Intertek said.
Meanwhile, across the road from one of the better pubs on the outskirts of the City, it is kicking off a bit in the Sirius Minerals PLC (LON:SXX) shareholders meeting, where shareholders are meeting to vote on the proposed takeover of Anglo American Plc (LON:AAL).
Shareholder now accusing the board of being a “disgrace” and asking why the CEO and CFO haven’t been fired for incompetence.
Already getting quite heated.
— Ed Clowes (@EdClowes) March 3, 2020
Shares in Sirius, down earlier on this morning, are now up 4% at 4.51p, suggesting that those petitioning for Anglo American to up its offer may be making headway with their arguments.
11.00am: Construction sector has the wind in its sails
Duncan Brock, the group director at the Chartered Institute of Procurement & Supply (CIPS) admitted to being surprised at the results of the construction activity survey, released today.
“After a sustained period of contraction in construction last year, the resurgence in levels of new work at the fastest rate since December 2015 was a surprising but much-needed development for a sector that was on its knees. As the blocks of December’s election and Brexit uncertainty were largely removed, it was the residential sector that was the main winner with the fastest escalation in housebuilding since July 2018,” Brock noted.
The headline seasonally adjusted IHS Markit/CIPS UK Construction Total Activity Index registered above the 50.0 no-change value for the first time since April 2019, clocking in at 52.6 in February.
“Purchasing levels rose at their fastest rate for over a year across the construction sector meaning unprepared suppliers bore the brunt of the upsurge. Their performance deteriorated again this month as delivery times and stocks of raw materials came under pressure,” Brock said.
“Should there be another sudden rise in purchasing activity in March, we are likely to see more challenges in supply chains, until suppliers have a chance to catch up. Given the slowdown in the global economy and potential coronavirus impacts, the sector could struggle to maintain February’s strong performance and may experience slower progress as we head into spring,” he added.
Samuel Tombs, the chief UK economist at Pantheon Macroeconomics, said the pick-up activity marked another milestone in the economy’s post-election recovery.
“The improvement was driven chiefly by a surge in new housing activity index to 54.3 in February, from 48.8 in January. Renewed momentum in the housing market, triggered by lower mortgage rates and the general election result, has fed through swiftly to housing starts. Similarly, the commercial activity index rose to 52.8, from 48.5, while the civil engineering activity index leapt to 49.6, from 43.5. Civil engineering activity should start to grow soon if, as we expect, plans for public sector investment are ramped up in the Budget next week,” Tombs said.
“The current level of the PMI is consistent with construction output rising at a 0.5% quarter-on-quarter rate. Growth, however, might be even stronger than this in Q2, given that the new orders index jumped to 55.3—its highest level since December 2015—from 49.5 in January. Further ahead, we remain concerned that the hard Brexit envisaged by the Government will damage goods and services exports, thereby reducing occupancy of existing industrial and office space, and lead to lower levels of immigration, hitting demand for new homes but for now, the construction sector has the winds in its sails,” he concluded.
9.50am: Construction activity bounces back
The IHS Markit/CIPS construction purchasing managers’ index rose to 52.6 in February, from 48.4 in January, indicating an expansion in activity.
The February reading was above the consensus forecast of 49.0 and above the 50.0 “no change” level for the first time since April 2091.
The latest survey also pointed to the sharpest rise in new orders since December 2015. Anecdotal evidence mainly linked the recovery to a post-election improvement in business confidence and pent-up demand for new projects, IHS Markit said.
The latest reading also signalled that the overall rate of construction output growth was the fastest for 14 months.
IHS Markit said that housing and commercial work underpinned the rebound in activity.
“February’s survey data adds to signs that the UK construction sector has started to rebound after a downturn through the second half of last year,” said Tim Moore, the economics director at IHS Markit.
“Growth of business activity was stronger than at any time since the end of 2018, supported by the fastest rise in new orders for just over four years. Some construction firms suggested that the recovery in output would have been even stronger had there not been disruptions on site from severe weather conditions in February,” he added.
“While construction order books have begun to recover in the opening part of 2020, the fly in the ointment is the uncertain impact of the coronavirus outbreak on UK economic growth prospects. A renewed slowdown could see domestic investment spending put back on hold and dampen the outlook for the UK construction sector,” he cautioned.
The FTSE 100 was up 155 points at 6,810.
9.40am: Ashtead the only Footsie stock in the red
The Footsie is still sporting a triple-digit gain although it has just come off the top a little.
“Tough UK trading was expected for this release following the group’s December update and therefore it’s not too much of a surprise this has dragged results,” said Joe Healey, an investment research analyst at the Share Centre.
“Profits in its UK segment have reduced roughly 30% compared to the first nine months in FY 2019 highlighting clear difficulties; however, investors shouldn’t be too concerned as this profit accounts for around 3.5% of total profits in comparison to its core US market which accounts for roughly 94% and saw 13.6% profit growth for the first nine months.
“Structural drivers for Ashtead remain relatively supportive with its US and Canadian markets continuing to post solid top-line rental growth and new stores continuing to grow. Margins in its core markets remain healthy and the group continues to capitalise on acquisition opportunities, therefore we feel the outlook for the group remains positive,” Healey said.
Ashtead’s shares were down 1.1%.
8.35am: Patient recovery
The FTSE 100 got off to a strong start, taking its cue from the Dow Jones, which posted a record points gain after hours on hopes the US Federal Reserve will intervene decisively to mitigate the financial impact of coronavirus.
The index of UK blue-chip shares opened 129 points higher at 6,783.70
Eagerly anticipated will be the feedback from a call of finance ministers of the world’s seven largest economies (G7) later that should open the dialogue for a global coordinated response to the outbreak.
Still, there is enough uncertainty to maintain the recent volatility on the markets, according to Neil Wilson, the senior analyst at Markets.com.
“On Friday I said there are three key questions for the market that remain unknown: how does the outbreak spread, what’s the real economic damage and what is the policy response? Whilst we have a partial answer to the third question – and may find out a lot more today – we are still fumbling in the dark in terms of the first two.”
Travel stocks clawed back some of the ground lost in the recent sell-off rounds, with FTSE 100 relegation candidate TUI (LON:TUI) leading the charge, with a 5% advance.
Proactive news headlines:
Live Company Group PLC (LON:LVCG) has highlighted “strong growth” in the first two months of 2020 as well as two new contracts for its BRICKLIVE events. In a trading update for the year since mid-January, the media firm said it has secured £3.2mln in contracted revenues for the year as well as £1.1mln for 2021.
EQTEC PLC (LON:EQT) has inked an agreement that envisages the development of the first advanced gasification plant in Greece. A memorandum of understanding covered key terms of a proposed co-operation with regional companies – Eco Hellas and Agrigas Energy.
Location Sciences Group PLC (LON:LSAI) has signed a global master service agreement with one of the largest global advertising holding companies for its anti-fraud platform. The agreement follows multiple tests carried out at the end of 2019 using the Verify platform. Location Sciences has also signed a partnership agreement with Horizon Media, one of the world’s leading independent media agencies.
88 Energy Ltd (LON:88E) confirmed it has kicked off drilling at the Charlie-1 appraisal well on Alaska’s North Slope. The well programme is partnered with Premier Oil PLC (LON:PMO) which is largely funding the venture that aims to test a potentially significant discovery previously unearthed by BP back in the 1990s.
Haydale Graphene Industries PLC (LON:HAYD) has won a gig with the English Institute for Sport (EIS) to produce high-performance kit coated with graphene. The company first announced a hook-up with the EIS back in September 2018, and after the completion of the initial prototype testing, Haydale will collaborate with the Welsh Centre for Printing and Coating (WCPC) to deliver a range of advanced wearable technology sportswear for elite athletes.
ANGLE PLC (LON:AGL) said researchers have developed a further potential use for its liquid biopsy – this time in the early detection of the spread of lung cancer to the brain. Parsortix, which harvests tiny circulating tumour cells, has been used to assess better treatment options in a range of cancers including breast and prostate.
SkinBioTherapeutics PLC (LON:SBTX) said the first half of its financial year saw the skin health life sciences company begin to commercialise its technology. The management team is targeting further commercial progress in the areas of MediBiotix, where it is focusing on medical device applications, and CleanBiotix during the course of the year.
Braveheart Investment Group PLC (LON:BRH), the fund management and strategic investment group has launched its new-look website. The website, www.braveheartgroup.co.uk, now includes comprehensive information about its strategic investments.
APQ Global Limited (LON:APQ) has agreed its second deal of the year – the acquisition of Delphos International, the Washington DC-based financial advisor that shares APQ’s emerging markets focus. The Investment group is paying an upfront US$1.5mln along with up to four further earn-out payments between now and June 2022 – three capped at a maximum US$750,000 and the other at a US$500,000 maximum.
Iconic Labs PLC (LON:ICON) said it is now generating revenues and expects growth to continue “significantly” across 2020. In a trading update, the media and technology firm said its business was continuing to show “early signs of growth” with two contracts announced and other opportunities currently under discussions.
Norman Broadbent PLC (LON:NBB) has expanded its operations in Northern England with the opening of a new office in Cheshire county. The recruitment firm said the new office, opened in response to “increasing client demand”, will provide a local team to serve clients across the North as well as in Scotland.
Regency Mines PLC (LON:RGM) has submitted an application for grid connection for its first flexible grid solutions project in Southport. “Application for the grid connection is a critical step forward towards financial close at our first project in Southport,” said Regency chief executive Scott Kaintz in a statement. “With this key objective now completed, the company remains on target for maiden revenues by end of 2020,” he added.
Arkle Resources PLC (LON:ARK), the Irish gold and zinc exploration and development company, said it will be presenting at the Ireland forum at PDAC on 3 March 2020 at the Metro Convention Centre, Toronto, Canada. Patrick Cullen, Arkle’s chief executive officer commented, “PDAC brings together some of the leading mining companies and investors, providing an excellent forum to present and meet. We are here in response to interest from third parties that have reviewed our gold and zinc portfolio. Some of these discussions continue in response to the Stonepark Zinc strategic review announced at the end of 2019. He added: “We are also very pleased to have been invited by Geoscience Ireland, Geological Survey Ireland and Enterprise Ireland to present at the Ireland Day ‘Ireland: open for business’. There has been a strong Irish presence at PDAC for many years and senior Irish government officials are in attendance this year again.”
Scancell Holdings PLC (LON:SCLP), the developer of novel immunotherapies for the treatment of cancer, said its Chief Scientific Officer and Professor of Cancer Immunotherapy at the University of Nottingham, Professor Lindy Durrant will be presenting at the following three conferences in March 2020: The Cambridge Healthcare Institute’s (CHI) Immuno-Oncology Summit Europe 2020 in London (9-12 March 2020); The 4th Annual MarketsandMarkets Next Gen Immuno-Oncology Congress in London (12-13 March 2020; and The 5th Skin Vaccination Summit 2020 in Edinburgh (17-19 March 2020). The group said the presentations by Professor Durrant will highlight the recent progress made across the company’s technology platforms including Moditope and AvidiMab. The poster presentations are available on the company’s website.
Woodbois Limited (LON:WBI), the African-focused forestry and timber trading company, announced the release of its latest corporate presentation which is available from the investor centre of the company’s website.
6.20am: Subdued start predicted
Given the fireworks on Wall Street, the FTSE 100 looks set to make a comparatively subdued start.
The Dow Jones Industrials Average posted its biggest-ever daily points gain, surging almost 1,300 or 5% after US officials laid out plans to tackle the coronavirus.
Hopes the Federal Reserve will step in to dampen the economic blow from its spread also helped buoy sentiment.
In Asia, the momentum was largely positive after the Chinese reported the lowest number of new cases of the illness in over a month.
In South Korea, however, there is no sign of slowdown with more than 5,000 people infected with COVID-19. In Italy, meanwhile, the death toll was 52.
Here in the UK, the government began ramping up its response stating it expected to have to deal with a major coronavirus outbreak.
Away from the growing threat from the flu-like illness, it is expected to be a busy day for corporate news with the takeover vote at Sirius Minerals (LON:SXX) likely to be of great interest to 85,000 private investors who backed the business.
Around the markets:
- Pound worth US$1.2781 (up 0.2%,
- Gold up US$4.90 an ounce at US$1,599.40
- Brent crude ahead 71 cents a barrel at US$52.61
Significant events expected on Tuesday:
Finals: Greggs PLC (LON:GRG), Direct Line Insurance Group PLC (LON:DLG), 4Imprint Group PLC (LON:FOUR), Apax Global Alpha Limited (LON:APAX), Cairn Homes plc (LON:CRN), Getbusy PLC (LON:GETB), Hutchinson China Meditech Ltd (LON:HCM), Ibstock Plc (LON:IBST), Intertek Group PLC (LON:ITRK), Rotork PLC (LON:ROR), Signature Aviation PLC (LON:SIG)
Interims: Craneware PLC (LON:CRW)
Economic data: PMI construction index
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