• FTSE 100 closes up 66 points on the day
  • US indices higher
  • Sterling loses ground

5.05pm: FTSE 100 closes ahead

FTSE 100 index closed the last day of the trading week higher after making steady gains this week.

Britain’s blue-chip benchmark finished 68 points higher, or 1.10% at 6,292 with the weaker pound also giving a leg-up to the index’s dollar earning constituents.

Over the week as a whole, the premier UK index added around 3%.

Chris Beauchamp, chief market analyst at spreadbetting group IG, said some better data, central bank action and sense of an earnings recovery later in the year had accounted for market gains this week.

“Sentiment remains sceptical that the market can keep moving higher, which provides one of the best reasons to expect further gains over the longer term; one thing is for certain, for now the market appears it can handle the prospect of the long-term existence of coronavirus, provided there are enough government and central bank stimulus measures in place to offset the economic impact of lockdowns,” he said.

On Wall Street, stocks also headed north. The Dow Jones Industrial Average added over 77 points at 26,157, while the  S&P 500 added over nine at 3,125.

2.50pm: Who’s afraid of quadruple witching?

As expected, US indices opened higher on what is known as “quadruple witching” day when lots of expiring derivative positions are rolled over.

“It is quadruple witching for US stocks today as large options and futures positions will be expiring along with rebalancing of major indices such as S&P. Therefore, there are expectations of large volumes and increased volatility and potentially a pull-back in US equities, but we do not think the support for equities will suddenly drop away as there are still huge amounts of cash in the system waiting to buy dips,” said Rony Nehme, the chief market analyst at Squared Financial.

The Dow Jones industrial average was up 269 points (1.0%) at 26,349 and the S&P 500 was 35 points better at 3,150.

In London, the FTSE 100 was 86 points (1.4%) to the good at 6,310.

The mid-cap FTSE 250, which gets less of a lift from a weak exchange rate (as is the case today), was trailing in its big brother’s wake but was still up 144 points (0.8%) at 17,662p, led by Hyve Group PLC (LON:HYVE), the events organisor, which is up 6.8% at 125p.

Traders bought into the trade show specialist after it revealed it had received its first insurance pay-out relating to a cancelled event.

Oilfield services outfir John Wood Group PLC (LON:WG.) was down 0.2% at 226.4p despite it being a good day for oil stocks generally, thanks to the recovery in the oil price.

The group said its first-half revenues and profits have fallen due to the coronavirus (COVID-19)pandemic and a drop in oil prices but added that it continues to win new contracts.

1.40pm: US indices to open higher

US indices are expected to shake off yesterday’s lethargy and open firmer this afternoon.

Spread betting quotes point to the S&P 500 kicking off some 30 points higher at 3,145. The Dow is expected to rise 295 points to 26,375 or thereabouts.

To nobody’s great surprise, the chief executive of Wirecard has resigned after a black hole was uncovered in its accounts. Around €1.8bn has gone missing, which is a hell of a black hole.

“Of course Wirecard is at fault if there is fraud but the environment helped. A decade of rising stock prices fuelled by easy money have a habit of covering up corporate misbehaviour. We suspect Wirecard won’t be the last corporate perp to be found out in the post-coronavirus economy,” said Jasper Lawler of LCG.

“We will be paying extra attention to short-seller reports- and suspect they will have more influence now. Financial companies, unlike other industries, rest on trust to handle money. Without a very concise explanation in short order, we fear Wirecard is headed to zero,” Lawler said.

In London, a strong oil price and a weak sterling exchange rate is proving a happy combination for equity bulls.

Sterling has slipped by just a sixth of a cent to US$1.2405 while the price of Brent crude for August delivery has risen US$1.07 to US$42.58 a barrel.

The FTSE 100 was up 87 points (1.4%) at 6,311.

12.50pm: European fiscal stimulus hopes lift sentiment

London’s index of leading shares continues to hover around 6,300, buoyed by oilers, which are wanted on the back of stronger oil prices.

The FTSE 100 was up 84 points (1.3%) at 6,308.

“Crude prices are rising on optimism EU leaders are nearing a much need fiscal stimulus plan and on optimism that the US and China will likely play nice throughout their coronavirus pandemic battered economic recoveries. The EU 750-billion-euro recovery fund will support the economic recovery in Europe and help the prospects for stronger crude demand later this summer. Globalisation is also important for crude demand and if the US and China can continue a healthy trade relationship that should also be positive for oil prices,” suggested OANDA’s Edward Moya.

Despite buoyant European markets today, there are still reasons to be cautious after the number of confirmed new coronavirus (COVID-19) cases in the US rose by 27,800 yesterday, up from 22,900 a week earlier – a 21.3% increase.

“The trend is clearly rising, and new cases likely will jump by more than 30K today, for the first time since May 1. Almost all the increase is in the South, though cases are rising in California, Oregon, and Utah too,” commented Ian Shepherdson, the chief economist at Pantheon Macroeconomics.

“The proportion of positive tests jumped to 5.8% yesterday, the highest since May 27, and the trend appears to be rising. Test numbers continue to increase slowly,” he noted.

“The flat trend in U.K. cases continues. Deaths and hospitalisations are falling, though the rate of decline of the latter has slowed,” he added.

11.15am: Oil price rally lifts the Footsie

The Footsie is back knocking on the door of 6,300 as investors shrug off a wishy-washy US session yesterday.

The FTSE 100 was up 70 points (1.1%) at 6,294 having briefly risen as high as 6,313, thanks to a major leg-up from oil giants BP PLC (LON:BP.) and Royal Dutch Shell (LON:RDSB).

BP is up 3.0% at 323p and Royal Dutch Shell is 1.9% better at 1,328p as the price of oil heads north.

The Brent crude continuous contract is trading at US$42.63 a barrel on futures markets, up USS$1.21 (2.7%). It’s the first time the oil price has moved above US$42 since June 8.

“With every $1 increase in Brent crude providing a 0.3% boost to FTSE 100 earnings, this week’s $4 rise helps lift earnings sentiment for the UK index. With OPEC+ pushing any non-conforming states to lay out a plan for how they will catch up on missed output cuts, we are seeing market sentiment improve around the potential the full 9.7m bpd [barrels per day] target to be met,” said IG’s Joshua Mahony.

10.00am: Footsie makes steady progress

London’s leading shares made steady progress throughout the first half of the morning trading session.

The FTSE 100 was up 42 points (0.7%) at 6,267.

“The better than expected bounce back in UK retail spending in May provided some reasons for positivity; however, the month-on-month increase is worth keeping in perspective given April represented the height of the lockdown and spend remains well down on pre-pandemic levels,” said Russ Mould, the investment director at AJ Bell.

“More sobering is the news that UK public debt exceeded GDP [gross domestic product] for the first time since the early 1960s.

“Although it is very cheap for the Government to borrow right now, the news highlights the challenge it will face in maintaining spending to support businesses and the public at a time of acute need while also making some attempt at balancing the books,” he added.

The UK’s public sector net borrowing excluding banks (PSNBex) rose to a record level of £55.2bn in May from £5.7bn a year earlier, although April’s shortfall was revised significantly to £48.5bn from the first guess of £62.1bn.

“The downward revision to April’s deficit highlights that the public finances are going to be subject to major revisions over the coming months,” observed Howard Archer, the chief economic advisor to the EY ITEM Club.

“The budget deficit (PSNBex) amounted to £103.7 billion over the first two months of fiscal year 2020/21, up from £16.7 billion in April-May 2019. To put this into perspective, it is already up £48.9 billion on the total PSNBex of £54.8 billion that the Office for Budget Responsibility (OBR) had forecast in the March Budget,” Archer said.

Meanwhile, Kalum Pickering at German bank Berenberg has weighed in on the UK retail sales figures for May, which were not as bad as feared.

“Household spending makes up 70% of GDP. The jump in retail sales bodes well for the near-term economic outlook. The UK economy contracted by c25% between February and April. The strong uptick in retail even before the opening up on non-essential stores on 15 June suggests the economic recovery started in earnest in May already,” Pickering speculated.


8.30am: Good start to Friday

The FTSE 100 made a positive start to the last day of the trading week as fears over a coronavirus (COVID-19) second wave appeared to recede.

The index of UK blue-chips advanced 27 points higher to 6,250.76.

A fairly buoyant set of UK retail sales figures for May also seemed to calm the nerves a little.

However, Samuel Tombs, of Pantheon Macroeconomics, struck this cautionary note: “May’s recovery in retail sales should not be interpreted as a sign that the economy is embarking on a healthy V-shaped recovery from COVID-19. For a start, volumes still were 13.1% below February’s pre-COVID level. In addition, retail sales account for only a third of households’ overall spending.”

He also noted that unofficial indicators of households’ overall spending remained very weak. Barclaycard, for instance, reported that spending fell 26.7% year-over-year in May, not vastly better than April’s 36.5% decline.

On the stock market, it was a down day for the miners, whose fortunes are very much hitched to China, which is currently struggling to contain a coronavirus outbreak in Beijing.

Evraz (LON:EVR) was off 1% as were Rio Tinto (LON:RIO) and BHP (LON:BHP).

Buyers came out for Taylor Wimpey (LON:TW.) after its £500mln cash call on Thursday. Its shares were marked 2.3% higher.

On the FTSE 250, the retail sales figures gave Pets at Home (LON:PETS) a 4.5% boost.

Proactive news headlines:

Learning Technologies Group PLC (LON:LTG), the provider of services and technologies for digital learning and talent management, has said it continues to see demand in line with expectations. At the company’s virtual annual general meeting held on Friday, chairman Andrew Brode will tell shareholders that the company is in “a strong and resilient position”, ready to further consolidate the digital learning and talent sector. In a review of 2019, Brode described it as an excellent year for the company, and that it was “particularly pleasing to see our Content & Services business return to organic constant currency growth, as expected”.

Catenae Innovation PLC (LON:CTEA) said its partner Newcastle Premier Health has successfully completed a proof-of-concept pilot trial of the Cov-ID app. Cov-ID is GDPR compliant identity documentation exchange system to record an individual’s coronavirus (COVID-19) test status through a mobile application. The project is a joint initiative by a consortium of companies led by the Z/Yen Group, and it is expected the fully validated product will be rolled out to businesses.

Directa Plus PLC (LON:DCTA) has said its G+ graphene-enhanced facemasks, Co-mask, are now available for retail sale at a new, dedicated website. The Co-mask range of G+ masks has been designed to be suitable for use by commuters, in the workplace, and during sport and exercise. The company pointed out that G+-enhanced fabric is naturally bacteriostatic, which means that it stops bacteria reproducing on the mask while the fabric itself is dermatologically tested and hypoallergenic.

Gore Street Energy Storage Fund PLC (LON:GSF) is to receive an investment worth £2.83mln from JXTG Nippon Oil & Energy Corporation, Japan’s largest oil company.  Also, the UK listed trust will raise funds from a separate placing and retail offer via PrimaryBid. The price of the subscription, placing and retail offer has been set at 96.1p, in line with the trust’s net asset value and a small discount to last night’s closing price. Alex O’Cinneide, chief executive of the company’s investment adviser Gore Street Capital, said the subscription from JXTG provides the basis for a long-term collaboration.

Tiziana Life Sciences PLC (LON:TILS) (NASDAQ:TLSA) has received a US patent for a breakthrough oral formulation of a monoclonal antibody that has been hailed as offering a “transformational avenue for immunotherapies”. The patent protects the “lyophilised and stabilised free-flowing powder” of Foralumab contained in enteric-coated capsules for oral treatment of disease. This first-in-class formulation allows Tiziana to work on drugs for Crohn’s, multiple sclerosis and Alzheimer’s disease that can be administered by mouth rather than requiring a painful intravenous line or injection.

In a separate statement released after the market close on Thursday, Tiziana Life Sciences also announced that Gregor MacRae is standing down as a director of the company with immediate effect. Gabriele Cerrone, chairman of Tiziana commented: “I thank Gregor for his contribution to the Board and the Company and wish him well in his other interests. We are currently in the process of recruiting a new, seasoned non-executive director with extensive NASDAQ audit committee experience and hope to make a formal announcement shortly”.

IQ-AI Limited (LON:IQAI) said its subsidiary, Imaging Biometrics (IB), has had its MRI DSC perfusion technology, first made available through the company’s IB Neuro product, recognised as the national standard in the US for use in high-grade brain tumours. DSC, which stands for dynamic susceptibility contrast, is the most common perfusion MRI technology used for the evaluation of brain tumours. The company said the recognition was the outcome of the DSC-MRI Standardisation Sub-committee of the Jumpstarting Brain Tumor Drug Development Coalition, which provides evidence-based best practices for routine clinical use from both an MR acquisition and post-processing perspective. Additionally, IQ-AI chief executive Trevor Brown said the company has recommenced the process to find a buyer for its Stonechecker software, with discussions now underway with two parties.

Woodbois Limited (LON:WBI), the timber and veneer group, said it has negotiated a debt restructuring in principle with the majority of its convertible bondholders. Owners of 75% of US$30mln of outstanding bonds have agreed to convert into voting and non-voting shares and a zero-coupon convertible bond subject to equity funding also being carried out. Discussions are underway as well with the holders of its internal trade finance facility (ITF), including Lombard Odier, which is also a substantial shareholder, the group added. Woodbois said the aim is to retire the ITF as part of the planned restructuring and fundraise. Operationally, Woodbois said it wants to increase capacity at its veneer plant in Gabon to increase margins. Sawmill operations have restarted in Gabon while the group’s operations in Mozambique recommenced last month on a 50:50 profit share basis.

Regency Mines PLC (LON:RGM) has struck a deal to acquire a 50% interest in Weirs Drove Development Ltd (WDD), a developer of energy storage and solar projects in the United Kingdom. The venture starts with an initial site in Cambridgeshire. This flagship project, in Burwell, will be for 30 megawatts and benefits from an offtake with a subsidiary of Shell New Energies, Litejump Ltd. Regency is acquiring the stake via its Flexible Grid Solutions division and it is paying £25,000 in cash for the acquisition and commits to lend £100,000 once the first project becomes ‘shovel ready’ which is expected soon. To support this new activity, Regency is raising £200,000 with a share placing arranged by the company at a placing price of 1p per share, a 5.3% premium to Thursday’s closing price. The principles of Weirs Drove Development participated in the share placing, taking £30,000 of the shares.

Avation PLC (LON:AVAP) said it has entered commercial agreements to lease five aircraft that were formerly used by Virgin Australia, which went into administration in April. The company said it has agreed to lease two former Virgin Australia ATR 72-500s to another commercial airline in Australia until the end of 2021 at current market leasing rates. Avation also said it had signed a conditional letter of intent for another former Virgin Australia ATR 72-500 with an airline customer for an operating lease period of five years at current market rates. Meanwhile, the firm has entered finance leases for the sale of its last two Fokker 100 aircraft over September at a price 6% above book value.

Ncondezi Energy Limited (LON:NCCL) has provided a general update on the progress of its coal-fired power project and coal mine in Tete, Mozambique. The AIM-listed company said it has agreed to additional work requirements and updated its development programme which has been submitted for approval to the state-owned Electricidade de Moçambique (EDM). Ncondezi also said it has commissioned studies on both updated transmission integration and the Mozambican power market outlook, which are targeted for completion in the third quarter of 2020.

TomCo Energy PLC (LON:TOM) said it has now terminated the placing it announced earlier this week and confirmed changes to its joint venture agreement with Valkor. The Greenfield Energy joint venture has still been established, with TomCo taking a 50% stake, and Valkor has agreed that it will assign to Greenfield the benefit of a licence to use MSAR Technology developed by Quadrise International Fuels PLC (LON:QFI). TomCo will no longer be required to provide funding to Greenfield of up to US$1.5mln, as was previously envisaged, until TomCo has such funds available. 

Genel Energy PLC (LON:GENL) had announced that payments have been received from the Kurdistan Regional Government for oil sales during May 2020. The group said Taq Taq partners have received a gross payment of $3.4mln, with Genel’s net share of the payment being $1.9mln. The Tawke partners have received a gross payment of $26.8mln, with Genel’s net share of the payment being $6.6mln, it added.

Galileo Resources PLC (LON:GLR), the exploration and development mining company, said it was notified on Thursday that Colin Bird, its CEO & chairman had bought 2,600,000 Galileo ordinary shares at a price of 0.7346p each. Following the transaction, the group noted, Bird is interested in 63,035,000 Galileo ordinary shares, representing approximately 8.90% of the issued share capital of the company.

APQ Global Limited (LON:APQ) has announced that, as at the close of business on May 30, 2020, its unaudited book value per ordinary share was 17.49 US cents, equivalent to 14.15p.

Kodal Minerals PLC (LON:KOD), the mineral exploration and development company said it has posted to shareholders a circular containing a notice of a general meeting to be held at 12.30pm on July 6, 2020, to propose resolutions to renew the directors’ authority to issue and allot new ordinary shares, including on a non-pre-emptive basis. As a result of the current measures implemented by the UK government, shareholders will not be permitted to attend the meeting but are strongly encouraged to submit their votes by proxy as soon as possible. Relevant questions related to the meeting from shareholders can be raised in advance via the “Contact” section of the company’s website, and in so far as is relevant to the business of the meeting, will be responded to by email and taken into account as appropriate at the meeting itself.

Chesnara PLC (LON:CSN), the life assurance group, said it will report its results for the half-year ending June 30, 2020, on Monday, September 28, 2020.

7.40am: May retail sales up 12%

UK retail sales volumes, including petrol, rose by 12.0% month-to-month in May. Economists had pencilled in a rebound of 6.3%.

Volumes were down 13.1% from a year earlier, which represented an improvement on April’s 22.7% slump and also above the consensus forecast, which was for a fall of 16.4%.

Spread betting quotes indicated that the FTSE 100 will now open at around 6,245, up 21 points. Before the retail sales data, the market had been expecting the index to open marginally lower.

6.40am: Subdued start expected

Traders are bracing themselves – if that’s the right word – for a dull start in London after an indecisive session in the US yesterday.

Spread betting quotes indicate that the FTSE 100 will open 8 points lower at 6,216.

US equities were mixed on Thursday with the Dow Jones industrials Average off 40 points at 26,080 and the S&P 500 up a couple of points at 3,115.

Asian markets were similarly mixed on Friday, with Japan’s Nikkei 225 up 139 points at 23,495 and Hong Kong’s Hang Seng index down 17 points at 24,448.

On the home front, there will be a couple of economic releases to digest at 7.00am – UK retail sales report and public sector borrowing figures for May.

“The month-on-month (retail sales) report is expected to show 5.7% growth, and that would be a massive rebound from the -18.1% registered in April. The report that removes fuel is tipped to show 4.5% growth, and keep in mind the previous reading was -15.2%,” said CMC Markets’ analysts David Madden.

“The public sector net borrowing update will be announced at the same time, and economists are expecting £47.3 billion, which would be a drop off from the £61.4 billion announced in April,” he added.

Friday will bring a trading update from oil services firm John Wood Group PLC (LON:WG.), with investors likely to focus on how the falling price of oil has affected the company’s business.

The FTSE 250 company is likely to be focused on its cash flow and costs as well as revisiting and possibly accelerating its debt reduction plans. Shareholders are also likely to keep an eye on any declines in the company’s order book, which at the last update stood at about US$8bn, although there could be some silver linings from areas outside of the traditional oil services business such as renewable.

Significant announcements expected on Friday:

Trading updates: John Wood Group PLC (LON:WG.)

Finals: Record PLC (LON:REC)

Economic data: UK retail sales, Public sector net borrowing

Around the markets:

  • Sterling: US$1.2432, up 0.11 cents
  • 10-year gilt: 0.227%, up 3.55 basis points
  • Gold: US$1,735.70 an ounce, up US$4.60
  • Brent crude: US$41.83 a barrel, up 32 cents
  • Bitcoin: US$9,301, down US$48

City headlines:

  • Financial Times

  • Shares of the payments group Wirecard crash more than 60% after auditors warn that €1.9 billion has gone missing from its accounts
  • Fashion house Chanel has warned that COVID-19 will hit the luxury goods sector for the next two years
  • The Times

  • The Bank of England will pump another £100 billion into the economy over fears of huge jobs losses as the furlough scheme ends this year
  • The City regulator made permanent a ban on the mass-marketing of the securities to retail investors, warning more than 63,000 savers have invested £1.4 billion in high-risk minibonds and other speculative investments
  • Superdry is the latest British retailer to retreat from China after calling time on a joint venture partnership
  • The Financial Conduct Authority has given a strong hint that it is trying to take enforcement action against Aviva over the preference shares affair of two years ago and that Aviva is resisting.
  • The Daily Telegraph

  • BlackRock has voted to kick out bosses at Volvo and London-listed miner Evraz, firing a warning shot at boardrooms failing to tackle climate change
  • Fashion brand All Saints is seeking to shake up the way it pays its rent after warning that “a small number” of branches will shut for good
  • Amazon’s UK chief, Doug Gurr, will be leaving the online tech giant after nearly a decade to join the Natural History Museum as its director
  • Andrew Tyrie, the former Conservative MP who led the Treasury Select Committee, has resigned in frustration as chairman of the Competition and Markets Authority
  • The Guardian

  • Another 1.5 million people in the US filed for unemployment benefits last week as the massive wave of layoffs in the wake of the coronavirus pandemic continued
  • National Grid is braced for a £400 million hit to its profits in the current financial year due to lower energy use and unpaid bills in the wake of the coronavirus pandemic
  • Bicycle sales could be set to fall by 10% this year despite a surge in demand during the coronavirus lockdown
  • Carnival suffered losses of $4.4 billion in three months, as the cruise company’s business was all but sunk by the COVID-19 pandemic
  • Daily Mail

  • Taylor Wimpey has become the latest big employer to vow to hand back taxpayer’s cash for furloughed staff, increasing pressure on firms that rake in huge profits to return the money