• FTSE 100 finishes 127 points higher
  • US benchmarks make decent gains
  • Carnival’s rally continues

5.30pm: FTSE closes ahead

FTSE 100 index closed higher Thursday as the markets were buoyed by the US’s giant rescue package amid the pandemic despite dismal unemployment data from across the pond.

Britain’s blue-chip benchmark closed up over 127 points, or 2.24%, at 5,815, while FTSE 250 added over 560 at 15,380.

On Wall Street, the Dow Jones Industrial Average  surged over 903 points, while the broader S&P 500 gained over 101.

The US government is poised to agree a $2 trillion rescue package soon, with lawmakers due to vote on it tomorrow (Friday).

Traders are also pleased that the G20 issued an optimistic message over the disease crisis, confirming it will take required steps in terms of healthcare as well as financing to tackle the emergency.

“The united front from the world leaders helped market confidence, because as far as the west is concerned, the battle is in its infancy,” noted David Madden, analyst at CMC Markets.

New data showed in the US that for the week to March 21, 3.283 million people filed for unemployment (the week before was 281,000). Even at the height of the financial crisis in 2008 the figure peaked at 665,000.

3.15pm: FTSE 100 backs off again after briefly entering positive territory

For a brief period, the Footsie moved into positive territory before having a bit of a dither.

Currently, London’s index of leading shares is down 13 points (0.2%) at 5,675, thanks to a fightback led by asset manager Standard Life Aberdeen PLC (LON:SL.), up 18% at 254.4p, and insurance group Legal & General Group PLC (LON:LGEN), up 15% at 208.7p.

Cruises operator Carnival PLC (LON:CCL) is also getting some love from optimistic bargain hunters. The stock has lost 58% of its value since 20 February but is up 12% at 1,258.5p today, having started the week at 885p.

Markets on both sides of the Atlantic seem to have taken the massive increase in the number of US people out of work in their strides.

“The massive spike in US weekly jobless claims to 3.2mln was the clearest evidence yet of the economic damage being done by the coronavirus,” said Richard Carter, the head of fixed interest research at Quilter Cheviot.

“Unbelievably, this number is five times worse than at the peak of the global financial crisis in 2008 and we can only hope it is that it is going to be short-lived. Central banks and governments have put the economy onto life support for the next few weeks but markets will be anxious to see virus numbers peak soon in order to avoid significant longer-term damage,” he added.

John Forsythe, the chief global strategist at BrightSphere Investment Group, said: “Over the last decade, America’s strong labour market helped to underpin the economy despite many challenges ranging from a global trade war to the slowing of China’s economy as unemployment plunged to its lowest levels in 50 years.

“Today that all changed as weekly initial jobless claims for the week ended Mar 21 increased by more than three million, more than quadrupling the previous record set nearly 28 years ago near the start of the 1981-82 recession,” Forsythe continued.

“Investors are bracing for the fall-out of this week’s growing wave of stay-at-home orders by state and local leaders across the US and their knock-on effect upon the broader economy. They’re worried that the US is at the start of an unprecedented wave of sharply rising unemployment,” he added.

More parochially, economists have been poring over the minutes from this week’s meeting of the Bank of England’s Monetary Policy Committee (MPC).

“The minutes of the 19 March MPC meeting highlighted the recent dislocations in global financial markets and the tightening in financial conditions. It observed that conditions in the UK gilt market had deteriorated substantially as investors had sought shorter-dated instruments that were closer substitutes for highly liquid central bank reserves. Corporate bond spreads had also widened materially. Volatility in stock markets had risen to historically elevated levels and equity prices had fallen significantly further. Sterling had depreciated sharply,” summarised Howard Archer, the chief economic advisor to the EY ITEM Club.

“The minutes also observed that while there was little evidence to assess the economic shock from coronavirus, the MPC judged that activity had fallen markedly in the domestic economy in recent weeks, as well as globally,” he added.

“The minutes of the 25 March MPC meeting made it clear that the committee are ready and willing to take further supportive measures should circumstances warrant,” Archer declared.

1.50pm: US stocks open strongly

US stocks rose sharply at the open, with investors choosing to focus on the government’s stimulus package rather than the frightening jobs numbers.

The Dow Jones was up 413 points (1.9%) at 21,614 while the broader-based S&P 500 was up 47 points (1.9%) at 2,522.

In London, the realisation that US markets would open on the front foot has lured buyers back into the market; the index is still lower at 5,652 but it has pared its loss to 36 points (0.6%).

Earlier, the Bank of England published the minutes from the recent meeting of its policy-makers (the MPC) and revealed that the decision to keep the bank rate at 0.1% was unanimous. No new measures were announced.

“Investors appear to be slightly disappointed that the MPC chose not to copy the US Fed today by committing to open-ended purchases of government bonds. 10-year gilt yields rose by about 2bp [basis points – 100 bps equals a full percentage point] to 0.41% immediately after the minutes were published, though they remain well below their 1.0% intra-day peak on March 19, when the Committee met on an unscheduled basis to announce £200B of asset purchases,” said Samuel Tombs, the chief UK economist at Pantheon Macroeconomics.

“Nonetheless, the MPC has committed to complete its purchases ‘as soon as operationally possible, consistent with improved market functioning’ and it has said that it stands ready to ‘respond further as necessary to guard against an unwarranted tightening in financial conditions’,” he added,

“The Committee seems to expect a V-shaped recovery from the virus—‘the shock to activity, while highly uncertain, will be large and sharp but should ultimately prove temporary’—and it expects that sterling’s depreciation will lift CPI inflation above the 2% target next year,” Tombs reported.

“For now, the Committee remains focussed on the crisis immediately before it; its expectations for rebounds in GDP and inflation won’t cause it to hold back in the near-term. QE [quantitative easing] will be escalated, should financial conditions deteriorate again, and the MPC likely won’t wait until its next meeting on May 7, if swifter action is required,” Tombs said.

1.00pm: US weekly jobless claims rise to record level

First time US jobless claims shot up to 3.3mln last week from 282,000 claims the week before.

The record number of weekly initial jobless claims came after businesses started to close down in response to the spread of the coronavirus (COVD-19). The previous record number of first time jobless claims was 695,000, way back in 1982.

“Even in the knowledge that tens of thousands of businesses shuttered in response to Covid-19 containment measures, the 3.3 million spike in initial claims is still shocking. Soberingly, given jammed phone lines and crashed government websites this figure understates the economic cost of the crisis so far,” said ING Economics.

US gross domestic product (GDP) in the fourth quarter of 2019 was left unrevised at an annualised 2.1%.

Growth in consumer spending was revised to 1.8% (annualised) from 1.7% in the initial estimate but was still lower than the third quarter’s 3.2% increase.

US indices are expected to open little changed despite the jobless figures after US law-makers approved a US$2,000bn economic stimulus package last night.

The Dow Jones was expected to open at around 21,210, up 10 points or so while the S&P 500, which closed at 2,476 yesterday, is tipped to kick-off a point or so higher at 2,477.

In London, the FTSE 100 was down 99 points (1.7%) at 5,589 after the publication of the minutes from the most recent meeting of the Bank of England’s Monetary Policy Committee.

“It’s always incredibly difficult to make predictions about the economy – and doing so through the kind of crisis none of us have ever seen before becomes nigh-on impossible; however, the Bank of England has given it a shot,” said Sarah Coles, a personal finance specialist at Hargreaves Lansdown.

“It isn’t going out too much on a limb in suggesting that global GDP will fall sharply and unemployment rise quickly in the first half of 2020. It’s also fairly safe to predict that inflation is on its way down as oil prices collapse – the Bank says it will fall below 1%.

“In future, however, it suggests inflation could start to rise again – as the falling pound makes imports more expensive. Of course when this happens, and if it does, how far and how fast it rises is anyone’s guess.

“Things may not get a whole lot clearer at the time either, because the virus is going to make it much more difficult for the ONS to gather information about prices in person,” Coles noted.

11.25am: Intu’s debt problems exacerbated by non-payment of rents

Nervousness still abounds ahead of the US first-time jobless claims this afternoon but the Footsie is nevertheless attempting to rally after a weak opening.

The FTSE 100 was down 86 points (1.5%) at 5,602.

“Last week, the reading jumped to 281,000, and according to the Reuters poll, today’s figure is tipped to be 1 million. Keep in mind the services data from the US, Europe and China recently, all greatly undershot the very low estimates, so there is a fear the reading could be miles worse than predicted,” cautioned David Madden at CMC Markets.

“It is worth noting that manufacturing in Europe and the US is holding up ok – all things considered. Some traders are taking their recent gains off the table ahead of the report. The Bank of England meeting today at 12pm (UK time) is likely to be a muted affair in light of the two emergency rate cuts seen this month,” he added.

Commodity stocks are out of favour this morning due to weaker oil and copper prices.

Retailers are holding up reasonably well considering the release of retail sales figures this morning that were the weakest, in terms of year-on-year change, since March 2013.

Excluding fuel sales, retail sales volumes fell 0.5% month-on-month in February and were up 0.5% year-on-year.

“Retail sales had previously risen 1.0% month-on-month in January (1.6% excluding fuel sales – the best performance since May 2018) after a very poor fourth quarter of 2019 when they fell 0.9% quarter-on-quarter,” reported Howard Archer, the chief economic advisor to the EY ITEM Club.

“The underlying softness in retail sales was evident in them being down 0.6% in the three months to February compared to the three months to November.

“Sales in non-food stores edged up 0.1% month-on-month in February but were down 0.6% year-on-year. Sales of household goods were the strongest, rising 0.8% month-on-month, although they were only up 0.2% year-on-year. Textiles and clothing sales edged up 0.2% month-on-month and were up 1.1% year-on-year.

“Sales at department stores fell 1.0% month-on-month and 3.6% year-on-year in February,” he continued.

“Non-store retailing fell 2.8% month-on-month but was up 4.2% year-on-year. This was partly attributed to very wet weather affecting sales at markets and stalls.

Perhaps part of the reason retailers are holding up is because so few of them appear to be paying rent to their landlords.

Shopping centres owner Intu Properties PLC (LON:INTU) was down 7.3% at 3.75p after it said that only 29% of the rental payments that were due yesterday were delivered.

9.50am: Normal service (for March) is resumed after two days of rises

Traders’ screens were back to a familiar shade of red following two days of back-to-back gains after a relapse by Asian markets this morning.

“With fears out an imminent spike in fresh cases in Japan and Hong Kong – two of the countries caught up in the first wave of the virus – prompting a near 900 points slide for the Nikkei and a 175 point drop for the Hang Seng, sentiment took a downward turn during the Asian session,” reported Connor Campbell at Spreadex.

“That fed into the European open, investors unmoved by news that US had finally passed the US$2 trillion stimulus package having used up their relief in regards to that issue following the initial agreement announcement,” he added.

The FTSE 100 was down 139 points (2.4%) at 5,548.

Retail sales volumes in February fell 0.3% month-on-month; economists had expected a 0.2% increase. The index was unchanged year-on-year, Year-on-year growth was unchanged, having been up 0.9% in January. The consensus forecast had been for growth of 0.7%.

“The monthly growth rate shows that the overall decline of 0.3% was because of falls in food stores, department stores and non-store retailing. There was a large decline of 2.8% in non-store retailing, with feedback from retailers suggesting that extreme rainfall affected markets and stalls in this sector, while a limited number of online retailers commented on a reduction of sales shipped from China because of the impact of COVID-19,” the Office for National Statistics (ONS) reported.

Anecdotal evidence collected by the ONS indicated that the weather was more of a factor on sales than the coronavirus (COVID-19).

“February’s data show that retail sales were struggling before the virus hit, even though consumers’ confidence was above its long-run average and real wages were rising briskly,” commented Samuel Tombs, the chief UK economist at Pantheon Macroeconomics.

“Volumes in February were 1.2% below their July 2019 peak. The 0.3% month-to-month decline in February was driven largely by a 2.8% drop in non-store sales, reportedly partly due to longer waits for certain goods for China. This highlights the inability of online sales during the current lockdown to offset fully the impact of the decline in store sales. Otherwise, the February data are untouched by Covid-19; consumers only started to panic buy food and steer clear of the high street in early March. Indeed, food store sales dropped by 0.4% month-to-month in February, while non-food store sales rose by 0.1%,” he continued.

“Shifting to the present day, we’re provisionally assuming that retail sales will be about 15% below normal levels in weeks while the current lockdown is ongoing. This points to a 4% month-to-month fall in retail sales volumes in March, followed by a 12% drop in April, assuming the lockdown is extended beyond its initial three-week period. The collapse in non-food store sales, due to enforced closures of all non-essential shops, and petrol sales, due to reduced movement, will not be offset by the boost from food stockpiling or a pick-up in online spending. With some retailers’ business evaporating overnight and margins in the sector already wafer-thin, an extended lockdown will trigger a wave of insolvencies in the sector,” Tombs predicted.

The retail sales data did not stop Next PLC (LON:NXT), up 0.6%; defying the trend and other retailers were not faring especially worse than other sectors.

Similarly, housebuilders did not seem overly harshly treated after Hometrack reported that buyer demand in the housing market has fallen 40% over the last week.

8.30am: Worry returns

Fear was once again stalking the markets with the FTSE 100 down sharply in early deals on Thursday ahead of US weekly jobs data that should provide an early indication of the economic havoc wrought by the coronavirus (COVID-19) pandemic on the world’s biggest economy.

The index of UK blue-chips opened down 166.47 at 5,521.73.

WATCH: FTSE 100 to open lower as US coronavirus deaths pass 1,000

Consensus is that the world’s largest economy has shed 1.6mln jobs; however, some estimates put the figure at closer to 4mln. To put that in context, the usual weekly print is around 200,000.

“This is will be the first real measure of just how far and how fast the world’s largest economy has contracted because of the coronavirus,” said Neil Wilson, senior analyst at Markets.com.

The mood of unease was further enhanced by a second wave of COVID-19 cases in Asia, suggesting the battle against the outbreak is far from won.

Turning to the market, financial services and mining stocks took an early buffeting; however, there were still buyers in the market.

Bombed out British Airways owner IAG (LON:IAG) found some support as it rose 3.5% to head the Footsie.

Another recent casualty, ITV (LON:ITV) was the focus of bargain hunters, who bid up the price of the broadcaster by 1.6%.

Proactive news headlines:

Zoetic International PLC (LON:ZOE) has raised around £1.2mln through a share subscription from Ox Distributing, its primary distribution partner in the US. The maker of cannabidiol (CBD) products said Ox has subscribed for around 23.7mln new shares at a price of 5p each, the same as Wednesday’s closing price.

Sareum Holdings PLC (LON:SAR) said it has inked a licensing deal with an unnamed Chinese specialty pharmaceutical company that will develop the UK firm’s FLT3+Aurora kinases portfolio, including SAR-20293, a preclinical drug candidate for acute myeloid leukaemia and other blood-borne cancers. The AIM-listed group will receive £50,000 upfront and a further £900,000 milestone payment related to oral bioavailability – the ability of the drug to reach the therapeutic area after being taken by mouth.

Bluebird Merchant Ventures Ltd (LON:BMV) said it has teed up US$5mln of debt finance for its gold mine projects in South Korea. Talks are underway with the lender over borrowings that will be repaid by production from the Gobang and Kochang mines.   As an interim funding measure, Bluebird has borrowed £200,000 from investors until funding for the projects is received.

Block Energy PLC (LON:BOE) has acquired new acreage in Georgia, picking up two areas held by Schlumberger for no upfront cash consideration. Schlumberger will instead be given options over Block Energy stock – 120mln shares, or 23.3% of the company, ascribing a base deal value of around US$6mln.

Ariana Resources PLC (LON:AAU) has received maiden dividends from its wholly-owned Turkish operation subsidiary Galata Madencilik after the company’s Kiziltepe gold mine began generating cash and profits. A total of £1.6mln has been transferred to Ariana.

Frontier IP Group PLC (LON:FIPP) is to take a 29% stake in AqualnSilico, a software firm developing tools to optimise wastewater treatment across multiple industries. The IP investor said AquaInSilico, a spin-out from NOVA University in Portugal, has developed sophisticated algorithms to help detect possible problems with treatment processes before they can be diagnosed by humans.

Tekcapital PLC’s (LON:TEK) portfolio company Lucyd, a developer of “smartglasses”, has filed a new patent and a trademark on its forthcoming Vyrb app. The Vyrb app will enable users to activate “a world of smartphone actions” with their voice in just moments, including social media posting. By using the app along with Lucyd Bluetooth glasses, the user can spend less time looking at their phone and keep more of their focus on the real world. Lucyd is looking to release the app in December 2020.

Crossword Cybersecurity PLC (LON:CCS) has issued a helpful step-by-step guide that will help mitigate the security risks for companies whose employees are working from home during the COVID-19 lockdown. It is based on the advice it is providing FTSE-100-listed clients.

Anglo Asian Mining PLC (LON:AAZ has said it is monitoring the coronavirus situation as it evolves and is implementing precautionary measures to maintain the safety of its employees and ensure the sustainability of its business. In a statement, Anglo Asian noted that it is continuing to produce gold from its operations in Azerbaijan for the time being.

Touchstone Exploration Inc (LON:TXP) has told investors it plans to press ahead with the drilling of the Chinook prospect, in Trinidad, unless it becomes “absolutely necessary” to suspend operations due to the coronavirus (Covid-19). Operationally, the company’s focus is on delivering the Coho and Cascadura discovery wells – which will significantly boost production volumes – and drill Chinook which follows on as the third well on the Ortoire block.

Falcon Oil & Gas Ltd (LON:FOG) has told investors that its new Beetaloo shale well, in Australia, will be suspended before fracking as the operator responds to the coronavirus (Covid-19) pandemic. The AIM-quoted explorer, in a statement, said that partner Origin Energy has been adhering to advice from the Northern Territory and Federal Government on health and safety and social distancing.

Sunrise Resources PLC (LON:SRES) has said it continues to make good progress in the permitting process for its CS Pozzolan-Perlite project in Nevada, USA. Currently, all Sunrise staff are working from home, and this is not having and is not expected to have any negative effect on the company’s business.

Caledonia Mining Corporation PLC (NYSEAMERICAN:CMCL) (LON:CMCL) (TSE:CAL) has said it is confident it can manage the likely knock-on effects to its Blanket gold mine in Zimbabwe of the 21-day shut-down in South Africa due to the coronavirus pandemic. The supply chain for the procurement of a significant portion of mining consumables and capital equipment for the Blanket mine comes from South Africa. However, the company expects no interruption to its gold production.

BigDish PLC (LON:DISH) has said its business has been immediately affected by the government’s decision to order all UK restaurants to close temporarily. The technology firm, which helps restaurants fill tables in less busy times, said its Manchester team has been furloughed to preserve cash and so the company can qualify for government assistance. BigDish’s technology and business support teams in the Philippines are working from home. Technology development continues and no material effect to this aspect of this business is currently envisaged. The team have all accepted voluntary salary reductions during this period.

Impax Environmental Markets PLC (LON:IEM) said that, as a consequence of the emergency measures being implemented in response to the COVID-19 pandemic, which include restrictions on gatherings of more than two people and the expected delay to the company’s Annual General Meeting, its board has determined to pay this year’s dividend as an interim dividend, rather than as a final dividend requiring shareholder approval at the Annual General Meeting. Accordingly, the firm will pay an interim dividend for the 2019 financial year of 3.0p per ordinary share on 24 April 2020 to shareholders who appear on the register on 3 April 2020, with an ex-dividend date of 2 April 2020.  This dividend is as at the same level as that paid in respect of the previous financial year.

Metal Tiger PLC (LON:MTR), the AIM-listed investor in natural resource opportunities, announced that on 25 March 2020, its chief executive officer, Michael McNeilly, purchased 1,250,000 ordinary shares in the company on market, at a price of 0.99p each, for a total consideration of £12,375. Following this purchase, the group noted, McNeilly is interested in a total of 5,247,733 Ordinary Shares, representing 0.34% of the Company’s issued share capital.

Location Sciences PLC (LON:LSAI), the leading location data verification company, said it has agreed to issue warrants to subscribe for up to, in aggregate, 74,286,667 new ordinary shares at an exercise price of 0.1p each. It said the warrants, will be issued to all those participating in the placing an issue price of 0.875p per share to raise approximately £0.975mln announced by the company on 6 March 2020. If all of the warrants are exercised, the gross proceeds receivable by the company would be £74,287, bringing the aggregate value of the fundraising, including the proceeds of the placing, to approximately £1.0mln, the group said. Mark Slade, chief executive officer of Location Sciences, commented:  “The impact of COVID-19 on the financial markets has been profound, which has resulted in our share price falling well below the Issue Price and, as a consequence, we have had to try to balance the interests of Placees with what is best for the Company.”

6.40am: Market called sharply lower 

The FTSE 100 is set to drop over 100 points as the markets brace for the first wave of US unemployment data in the wake of the coronavirus (COVID-19) pandemic, with weekly numbers due out of the United States later today.

CFD and spread betting firm IG Markets called the London benchmark down 103 points, making the price 5,522 to 5,524.

“This afternoon we will get to see the publication of the latest US weekly jobless claims numbers. These could well be extremely ugly and look likely to come in well above the 1mln mark,” said Michael Hewson, senior analyst at CMC Markets.

“Yesterday Canadian Prime Minister Trudeau told the Ottawa parliament that 1mln Canadians applied for jobless benefits last week. If that is extrapolated out into the US economy the numbers could well be eye-watering, with some estimates of up to 4mln, up from last week’s 281,000. Consensus expectations are for a number of about 1.6mln, which might well be on the conservative side.”

It comes after US markets rallied strongly overnight. On Wednesday, the Dow Jones Industrials Average closed 495 points, or 2.39%, higher at 21,200 whilst the S&P 500 added 1.15% to finish at 2,475. The Nasdaq Composite, meanwhile, marked a negative finish losing 0.45% to 7,384.

In Asia, Japan’s Nikkei 225 gave up 880 points or 4.51% to 18,664 and Hong Kong’s Hang Seng dipped 124 points or 0.5% to 23,409. In mainland China, the Shanghai Composite was 0.38% lower at 2,770.

Around the markets:

  • The pound: US$1.1832, down 0.39%
  • Gold: US$1,600 per ounce, down 1.93%
  • Brent crude: US$27 per barrel, down 1.33%
  • Bitcoin: US$6,671, down 0.29%

Significant events which were scheduled for Thursday 26 March:

Bank of England interest rate decision

Finals: Ebiquity PLC (LON:EBQ), Lamprell PLC (LON:LAM), Digitalbox PLC (LON:DBOX), Arbuthnot Banking Group PLC (LON:ARBB), Impact Healthcare REIT plc (LON:IHR), Integrated Diagnostics Holdings PLC (LON:IDHC), Regional REIT Limited (LON:RGL)

FTSE 100 ex-dividends to knock 9.3 points off the index: British Land Company PLC (LON:BLND), Royal Bank of Scotland Group PLC (LON:RBS), Pearson PLC (LON:PSON), British American Tobacco PLC (LON:BATS), Schroders PLC (LON:SDR), Prudential PLC (LON:PRU)

Economic data: UK retail sales, US GDP, US jobless claims

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