• FTSE 100 index closes up 82 points
  • Oil prices ahead
  • US indices surge

5.15pm: FTSE finishes firmly higher

FTSE 100 index closed higher on Thursday on investor optimism ahead of the VE Day bank holiday as US benchmarks also surged

Britain’s index of top shares closed over 82 points ahead, or 1.4%, at 5,935.

“Lately there has been a lot of optimism that governments are keen to loosen their lockdown restrictions, so that has fuelled the bullish move in equities,” said David Madden, analyst at CMC Markets.

“Dealers have the impression that we are over the worst of it in terms of the lockdowns, so that should the pave the way less stringent restrictions.”

Crude prices are also heading north as Saudi Arabia has lifted selling prices for oil, while US producers have curtailed output. In addition, US gas stockpiles have been falling.

Brent crude gained 4.61% to US$31.09 a barrel, while WTI added 8.30% to US$25.98.

On Wall Street, the Dow Jones added over 401 points at 24,066, while the S&P 500 gained over 50 points and the Nasdaq surged 140 points.

3.15pm: US indices open higher

US indices, as expected, flashed out of the traps on Thursday.

The Dow Jones average was up 283 points (1.2%) at 23,948 and the S&P 500 rose 35 points (1.2%) at 2,884, despite the weekly first-time jobless claims number coming in a bit higher than expected.

“US initial jobless claims declined to 3.2mln during the week ending May 2 from 3.8mln in the prior week (consensus: 3.0mln), bringing the total over the last seven weeks to 33.5mln,” observed Mickey levy at Berenberg Capital Markets.

“Based on the 26m total initial jobless claims between March 15 and April 18, we expect the Bureau of Labor Statistics (BLS) to report that U.S. non-farm payrolls declined by 21m in April and that the unemployment rate increased to 16.2% from 4.4% in its Official Monthly Employment Report, scheduled for release tomorrow,2 he added.

In London, the FTSE 100 was up 75 points (1.3%) at 5,930, with little sign of traders closing out positions ahead of the long weekend.

Oil stocks are doing their bit to bolster the index as the price of Brent crude heads US$1.05 higher (3.6%) to US30.78 a barrel; oil prices are firming up despite Saudi Arabia reducing its official selling prices to Asian customers.

“Saudi Arabia today (07 May) reduced its official selling prices (OSPs) to Asia in June 2020 and crude oil prices are bouncing 6-9% on the back of that news. It signals that Saudi Arabia sees the June 2020 crude oil market as less of a crowded place and that it will be easier for the producer to place its desired volumes into the market. In a slight parallel to this, we think that it is unlikely to be a wall of surplus oil banging on the door of Cushing Oklahoma in June 2020 comparable to the magnitude of the May 2020 contract,” said Bjarne Schieldrop, the chief commodities analyst at SEB, the Nordic investment bank.

“The market is concerned that we might get the same kind of end-of-contract disturbances for the June 2020 contract as we got for the May 2020 contract. If so, it is highly unlikely that we would see -$40/bl again since the market now is prepared. It is still possible that the WTI June 2020 contract could come under intense selling pressure over the coming nine trading days as long positions move to exit. The special thing about the WTI contract is of course that it is based and priced inland in Cushing Oklahoma in the US. It is land-locked with flows in and out of the storage hub going by pipelines. If inventories in Cushing are full and pipes out of Cushing are full then prices can crash,” he explained.

BP PLC (LON:BP.) was 0.7% higher at 315.8p while Royal Dutch Shell PLC (LON:RDSB) advanced 2.7% to 1,264p.

2.00pm: US jobless claims top forecasts

US indices are tipped to open on the front foot this afternoon despite some slightly iffy jobs numbers.

The Dow Jones average is seen opening its account at around 23,915, up 250 points from last night’s close and the S&P 500 is tipped to toddle 35 points higher to 2,883.

First-time weekly jobless claims last week fell to 3.16mln from 3.85mln the week before but were above the consensus forecast of 3mln.

“The consensus looked a bit optimistic in light of hard data from Pennsylvania, Wisconsin and Arizona, and Google searches for ‘file for unemployment’, but the trend is falling,” said Ian Shepherdson, the chief economist at Pantheon Macroeconomics.

“Claims continue to decay by about 15-to-18% per week and are now at less than half the 6.9mln peak in the week of March 28. If the current rate of decline continues, claims will dip below 1mln in the second or—more likely—third week of June, though they would remain well above the 665K worst single week after the crash of 2008,” Shepherdson noted.

In London, the FTSE 100 was up 56 points (1.0%) at 5,910.

11.50am: Another rough morning for travel-related stocks

As the morning drew to a close, the FTSE 100 moved into gains consolidation mode.

London’s index of leading shares was up 41 points (0.7%) at 5,894.

It has been another bad morning for travel-related stocks, however, with British Airways owner International Consolidated Airlines (LON:IAG) sharply lower after its first-quarter results and cruise lines owner Carnival PLC (LON:CCL) slightly lower after it extended the pause period for some of its brands.

IAG shed 4.3% at 188.3p after it warned the second quarter would be “significantly” worse than the first quarter. The company is considering making a “meaningful return” to service in July.

“Unfortunately the numbers are going to get worse before they start to smooth out, because the sharp drop off in capacity happened when the quarter had already started; however the same can also be said for a number of the group’s cost-saving plans, where we’re yet to see the benefits in the results. The net effect of these delays is yet to be determined, but one thing we do know is that we will be looking at a very different business on the other side of this storm,” said Sophie Lund-Yates, an equity analyst at Hargreaves Lansdown. Carnival was 0.9% lower at 901p after its Princess Cruises cancelled selected cruises through to the end of the summer season.

Meanwhile, its Holland America Line has decided to extend its pause of global cruise operations and cancel all Alaska, Europe and Canada/New England cruises for 2020.

 

11.00am: The Footsie kicks on again, albeit at a leisurely pace

After a mid-morning dip, the Footsie has kicked on again, despite being weighed down by BT Group PLC (LON:BT.A).

The index of leading shares up 48 points (0.8%) at 5,902, even with telecoms giant 9.1% lower at 103.8p as it bowed to the inevitable with its overly generous dividend.

“The decision to cancel the final dividend for the year to March 2020, pay nothing at all in the period to March 2021 and then halve the annual payment to 7.7p a share in fiscal 2022 saves BT some £3.3 billion and leaves income-hungry shareholders merely with the hope that there will be some long-term gain after this considerable short-term pain,” said AJ Bell’s investment director, AJ Bell.

Confirmation that Liberty Global’s Virgin Media and Telefonica’s O2 are to merge will not have helped sentiment towards BT, either.

Housebuilders are doing fine, though, despite a predictably downbeat Halifax house price index reading for April.

According to the mortgage lender, house prices fell 0.6% in March but were still 2.7% higher than in April 2019.

“The impact of measures taken to curtail the spread of coronavirus started to filter through to the housing market in April,” said the Halifax’s managing director, Russell Galley.

“With market activity currently almost at a complete standstill, the limited number of transactions available means that calculating average house prices has inevitably become more challenging. This will lead to a great deal of volatility until more data becomes available,” he explained.

Lucy Pendleton of estate agent James Pendleton – not exactly a disinterested observer – chose to put a positive spin on numbers that she conceded were not statistically significant.

“If this data is worth anything at all, it actually betrays a story of strength. The annual growth rate remains nearly 3% and this is yet more evidence of how well the market was doing before the pandemic struck,” she said.

“This fact will play a significant role in what prices look like when the market restarts. A bullish picture going into this crisis actually means we are likely to see healthy prices when we return. There will be a period in which vendors test the water but you can expect them to stand behind valuations they were confident of achieving before the lockdown began,” she opined.

Investors seemed to be on board with that analysis, and pushed the shares of Barratt Developments PLC (LON:BDEV), Berkeley Group Holdings PLC (LON:BKG), Persimmon PLC (LON:PSN) and Taylor Wimpey PLC (LON:TW.) higher.

All were posting gains that surpassed the index;s advance; Barratt was up 2.9% at 532p; Berkeley was 1.6% higher at 4,265p; Persimmon was 2.0% heavier at 2,295p; and Taylor Wimpey was also up 2.0%, at 152.65p.

9.45am: Chinese data lifts sentiment

Ahead of the long weekend, London’s blue-chips are firmer on balance after trade data from China was not as terrible as feared.

The FTSE 100 was up 20 points (0.3%) at 5,873.

“This morning’s latest China trade numbers for April showed little evidence of a recovery in economic activity despite the lifting of lockdown back at the beginning of March,” grumbled Michael Hewson at CMC Markets.

“Exports were better than expected, rising 3.5%, probably helped by the shipping of medical products like PPE as the rest of the world wrestled with the virus while in various states of lockdown. In worrying signs that internal demand remains weak imports slid much more than expected, falling sharply, by 14.2%, suggesting that while the economy was reopening activity was far from normal, with consumers behaving more cautiously.

“The lack of any signs of a significant rebound in China along with yesterday’s ghastly ADP employment report which saw over 20mln people lose their jobs in April is slowly bringing it home to markets the terrible economic toll the coronavirus pandemic is set to inflict on the US economy, as well as the global economy more broadly,” Hewson opined, although if markets are getting the message, they are not getting it today.

The Bank of England’s policy makers have estimated that the UK economy will be 30% smaller by the end of the economy, which was a bigger fall than most pointy-headed members of the economic forecasting community were predicting.

Despite that, the Bank has opted not to any major policy changes today in the wake of a conflab between its policy makers.

“Of course there is plenty of uncertainty about what will happen later this year and beyond, but we suspect the true path of the recovery will be more gradual. We don’t expect the economy to recover its lost ground until at least 2022, and perhaps later,” said Kalum Pickering at ING.

Pickering thinks an additional round of quantitative easing will arrive eventually and noted that “interestingly two committee members voted for a £100bn extension at this meeting”.

8.25am: Final session of the week begins

The FTSE 100 made a positive start on Thursday in the face of a grim update from the Bank of England, which has warned that UK GDP could contract by 30% in the second quarter.

The index of UK blue-chips rose 30 points higher to 5,883.54. The London market will be closed tomorrow for the VE Day 75th anniversary bank holiday.

Perhaps a crumb of comfort from the update was the Bank’s prediction of a rapid recovery from its current dire position.

New BoE governor Andrew Bailey reckoned thus far “there is only limited scarring to the economy” thanks to financial support such as the Treasury’s furlough scheme.

“The Bank seems to be in the V-shaped recovery camp,” said Neil Wilson of Markets.com.

Of course, the fear is the global economy could be driven into a prolonged and hugely damaging U-shaped recession as a result of the coronavirus pandemic.

More monetary support is inevitable after the BoE also opted not to increase its asset purchase scheme and left interest rates on hold, reckons Wilson.

“Two things stand out: Firstly, more QE [quantitative easing] is coming, even if it’s not today,” he explained. “Two members of the MPC [the Bank of England Monetary Policy Committee] voted to increase the stock of asset purchases by £100bn at this meeting.” 

Turning to the market and corporate news, BT (LON:BT.A) has opted to forego the dividend for the first time in two decades in order to continue investing in its fibre broadband network. While the news was widely reported over the weekend, the stock still came under pressure early on as it slid 5.8%.

Rolls Royce (LON:RR.) fell a further 4.4% after a union official was reported as saying the pandemic would be worse for the aero-engines giant than 9/11, adding it would be difficult to save jobs.

Proactive news headlines:

88 Energy Ltd (LON:88E) (ASX:88E) said it has reached an agreement with XCD Energy Ltd’s (LON:ASX:XCD) board for a unanimously recommended merger. The prior unsolicited takeover bid had achieved backing of about 18.5% of XCD’s shareholders, and the recommended merger comes with improved terms. In the all-paper deal, 88 Energy will issue 2.4 new 88 Energy shares and 0.7 for every listed share option held – up from 1.67 per share and 0.5 per option. XCD’s board now recommend that its shareholders accept the offer, in the absence of any superior proposals. They will hold around 20% of the enlarged company as a result of the transaction.

C4X Discovery Holdings PLC (LON:C4XD), the AIM-listed drug discovery company, has announced plans to raise at least £1mln by placing shares at 15p a throw. C4X shares closed at 15.25p yesterday. The net proceeds from the placing will be used to further strengthen the company’s balance sheet as its partnering and strategic collaborations progress and will boost working capital during the progression of its pipeline portfolio.

MaxCyte Inc (LON:MXCT) has signed a clinical and commercial agreement with a US life sciences group for its cutting edge gene-editing technology. Caribou Biosciences will use MaxCyte’s flow electroporation systems and the company’s ExPERT platform in its allogeneic t-cell therapy programmes. MaxCyte will receive undisclosed development and approval milestones as well as sales-based payments and “other licensing fees”. “This important agreement represents another key expansion for MaxCyte, emphasising the value of our technology platform to companies developing pioneering gene-editing and cell therapies,” MaxCyte’s chief executive, Doug Doerfler said in a statement.

Panther Metals PLC (LON:PALM) has announced the commencement of a three-week field exploration programme from this weekend on the gold-focused Big Bear property in Ontario, Canada. The main market-listed company, which is focused on mineral exploration in Canada and Australia, said the three-week work sampling and mapping programme, which will build its understanding of possible drill and trench targets is commencing on May 10. It noted that the work will target both orogenic gold and volcanogenic massive sulphide (VMS) style mineralisation.

ReNeuron Group PLC (LON:RENE) said new positive data relating to its CTX cell therapy candidate have been published in the peer-reviewed scientific journal Stem Cells. The developer of cell-based therapeutics said the data was included in a paper entitled “Implantation of the clinical-grade human neural stem cell line, CTX0E03, rescues the behavioural and pathological deficits in the quinolinic acid-lesioned rodent model of Huntington’s disease”. It said the new data show for the first time that ReNeuron’s CTX human neural stem cell line can rescue deficits associated with an accepted animal model of Huntington’s disease, a progressive genetic brain disorder.

NQ Minerals PLC (LON:NQMI) has unveiled a new resource statement for the Beaconsfield gold mine in Tasmania. Total resources rise to 1.454mln tonnes at a grade of 10.3 grams per tonnes (g/t), for 483,000 ounces gold. There are 354,000 ounces in measured and inferred resources, 485,000 tonnes at 11.4 g/t in measured for 177,000 ounces and 492,000 tonnes at 11.2 g/t in indicated for 177,000 ounces. A further 477,000 tonnes at 8.4 g/t remains in the inferred resource category, and, the company told investors that significant additional gold potential is still to be assessed.

Next Fifteen Communications Group PLC (LON:NFC) has announced that Penny will become the new chair of its board with effect from February 1, 2021, replacing Richard Eyre who will complete nine years as its chairman on May 11, 2020. Ladkin-Brand, who has chaired the Next 15 Audit Committee since 2017, also becomes the company’s Senior Independent Director with immediate effect. The group said its board has asked Eyre to continue in the post to the end of the current financial year, and, consequently, he will seek re-election at the AGM and be available to support a smooth transition. Ladkin-Brand is currently chief financial officer at Future PLC (LON:FUTR), the FTSE 250 global multi-platform media company, and she will be moving into a new role of chief strategy officer on June 1, 2020, and will step down from the group’s board.

Frontier IP Group PLC (LON:FIPP) said its portfolio firm Exscientia has entered into a collaboration with US research centre SRI International to expedite the discovery of molecules for a high value oncology target. The IP investor said the agreement will see the two firms implement a new approach to drug discovery using SRI’s automated synthetic-chemistry system with Exscientia’s Centaur Chemist system. Frontier IP owns a 2.3% stake in Exscientia.

Eden Research PLC (LON:EDEN) said it is “poised to capitalise on new product and market opportunities in 2020” as it predicted more sales for its Cedroz product. Posting its results for the year ended December 31, 2019, the biopesticide specialist said it expected to “build on the sales achieved in the territories where it received approvals during 2019 and early 2020”, including sales for Cedroz in Spain, Italy, France, Belgium, the Netherlands and the United Kingdom where the applications for registrations have now been outstanding from the early part of 2019. The firm also said it expected US regulators to approve Cedroz and its Mevalone product during 2020, although the pace of approvals has been slowed by the coronavirus (COVID-19) pandemic.

Premier African Minerals Ltd (LON:PREM) has agreed to acquire a further 7% interest in the Otjozondu manganese mining project in Namibia. The transaction sees Premier buy a 7% interest in MN Holdings Limited, the project’s owner, for US$700,000 paid in new shares. It will increase Premier African’s stake in MN to 19%. “This further proposed increase in our holding in MNH is based on the same valuation formula applied to our initial acquisition,” George Roach, Premier African’s chief executive said in a statement released after the market close on Wednesday.

Amryt Pharma PLC (LON:AMYT) has taken another important step towards the global launch of its phase III treatment for the rare skin condition epidermolysis bullosa (EB) by announcing its brand name. AP101 will be launched commercially as FILSUVEZ. “This, alongside our recent completion of recruitment into the EASE study, represents further progress as we endeavour to develop a therapy for patients with EB, a rare and distressing genetic skin disorder affecting young children and adults for which there is currently no approved treatment,” Amryt chief executive, Dr Joe Wiley said in a statement.

Anglo African Oil & Gas PLC (LON:AAOG) said it has noted the recent rise in its share price and confirms that it knows of no reason for this movement. As announced on May 1, 2020, the company has completed the sale of Anglo African Oil & Gas Congo S.A.U to Zenith Energy Limited on the terms set out in the announcement of April 17, 2020.

Silence Therapeutics PLC (LON:SLN), a leader in the discovery, development and delivery of novel RNA therapeutics for the treatment of serious diseases, said its annual general meeting will be held on June 9, 2020, at 10.00am at Herons Ghyll, Tilford Road, Tilford, Surrey GU10 2DD. It added that in order to comply with the UK Government’s Stay at Home measures, shareholders will not be allowed to attend the meeting in person and are strongly encouraged to, therefore, submit their votes, in respect of all matters of business, via proxy as early as possible. If the situation changes then shareholders will be notified via the company’s website at https://www.silence-therapeutics.com and via RNS announcement.

Woodbois Limited (LON:WBI_, the African focused forestry and timber trading company, has announced that following the release of the audited results for the year ended December 31, 2019 on April 30, the company has made their latest corporate presentation available from the investor centre of the company’s website.

Base Resources Limited (LON:BSE) (ASX:BSE), the African mineral sands producer, has announced that the latest investor update presentation is now available from the company’s website – www.baseresources.com.au – and a pre-recorded webcast of that presentation can be viewed at https://edge.media-server.com/mmc/p/6av8h2ew

6.40am: Flat start predicted 

After a volatile Wednesday, the London market looks set to start flat for the last session of the short week.

CFD firm IG Markets calls the FTSE 100 up only 4 points, making the price 5,848 to 5851 with just over an hour to go until the start of trading.

With the Friday bank holiday looming and anticipation of the next government decisions on lockdown sentiments are tempered and trading activity may be somewhat muted without other external stimuli.

Thursday’s diary will have some important update, not least BT’s pending dividend decision, meanwhile, the Bank of England policy decision is also due later today along with an inflation report.

Michael Hewson, analyst at CMC Markets, suggested that the central bank’s bond-buying campaign is “far from done”.

“Today’s inflation report and virtual press conference at 10am, is likely to paint a dark outlook for the UK economy, not only for this year, but also for the next few years as rising unemployment triggers a tsunami of defaults and bankruptcies.

“The growth forecasts are likely to be moved into line with assessments from the likes of the OECD and the IMF, which suggests we could see a figure in the region of -7.5%. It was notable that Andrew Bailey didn’t demur too much when a figure of -12% was put to him recently, however this was put to him within a range of -5% to -12%.”

He added: “With Brexit also a clear and present threat to both the UK and other European economies, the road ahead looks an extremely bumpy and potholed one, and as any driver will tell you, a road full of potholes will prevent you from picking up any sort of acceleration to a steady cruising speed.”

Last night saw a mixed close for US equities as the Dow Jones Industrial Average gave up more than 200 points, or 0.91%, to finish at 23,664 and the S&P 500 dipped 0.7% to 2,848 whilst the Nasdaq Composite gained 0.5% to 8,854.

In Asia, Japan’s Nikkei 225 was a sliver higher at 19,624 and Hong Kong’s Hang Seng was 0.76% lower at 23,954. The Shanghai Composite, meanwhile, dipped 0.32% to 2,858.

Around the markets:

  • The pound: US$1.2327, down 0.19%
  • Gold: US$1,691, up 0.16%
  • Brent crude: US$29.78 per barrel, down 3.8%
  • WTI crude: US$24.05, down 2%
  • Bitcoin: US$9,312, up 3%

Significant events expected on Thursday:

Bank of England interest rate decision

Trading updates: International Consolidated Airlines Group (LON:IAG), Superdry PLC (LON:SDRY), National Express Group PLC (LON:NEX), Intercontinental Hotels Group PLC (LON:IHG), Coca-Cola HBC AG (LON:CCH), Mondi PLC (LON:MNDI), TheWorks.co.uk PLC (LON:WRKS), RSA Insurance Group PLC (LON:RSA), Equiniti Group PLC (LON:EQN)

Finals: BT Group PLC (LON:BT.A), Trainline PLC (LON:TRN)

FTSE 100 ex-dividends to knock 0.79 points off the index: Polymetal International PLC (LON:POLY), Admiral Group PLC (LON:ADM)

AGMs: Barclays PLC (LON:BARC),

Economic data: US jobless claims

City Headlines: