• FTSE 100 finishes 87 points lower on Friday
  • US & Chinese tensions weigh heavy on sentiment
  • US markets down

5.05pm: FTSE 100 closes lower

FTSE 100 index closed the last day of the trading week in the red as markets reacted to tensions between the US and China.

The UK’s index of the biggest shares closed over 87 points lower, or 1.41% at 6,123, while FTSE 250 was also down, dropping over 224 points at 17,264.  Over the week as a whole, FTSE 100 also fell, dropping around 2.6%.

Gold, however, continued to shine, adding 0.21% or around US$4 to US$1,894 an ounce on the day and adding around 4% on the week.

“The situation between the US and China has been brewing recently. Tensions have been on the rise in relation to Hong Kong – as the Chinese government is tightening its control over the region. This week, the US government closed a Chinese consulate in Houston, and as a response, the Chinese government ordered the US consulate in Chengdu to close,” noted analyst David Madden, at CMC Markets.

On Wall Street, stocks lagged on Friday with giants like Apple (NASDAQ:AAPL) and Facebook (NASDAQ:FB) being big casualties as traders appear to have fallen out of love with the tech sector. 

US and Canada 4pm/11 EST

Wall Street was in the red in early deals. The Dow Jones Industrial Average fell over 74 at 26,577. The broader based S&P 500 shed over 13 at 3,222. The tech heavy Nasdaq index  fell around 69 points at 10,391. Meanwhile, in Canada, the S&P/TSX Composite index lost nearly 44 points at 15,974.

Proactive North America headlines:

Ximen Mining (CVE:XIM) (OTCQB:XXMMF) further expands footprint at famous Greenwood camp; raises C$2M in placing

American Manganese Inc (CVE:AMY) (OTCPINK:AMYZF) plans spinout of its British Columbia mining assets amid bull run in precious and base metals

Empower Clinics (CSE:CBDT) (OTCMKTS:EPWCF) says audited fiscal 2019 revenue more than doubled on the back of record patient growth

NetCents Technology (CSE:NC) (OTCQB:NTTCF) continues to grow international merchant base while making inroads to B2B industries

GR Silver Mining (CVE:GRSL) (OTCQB:GRSLF) reveals new high-grade drill intercepts from San Juan area of Plomosas project

American Resources (NASDAQ:AREC) posts strong net income in 2Q as it transforms into an infrastructure company

Weekend Unlimited (CSE:POT) (OTCQB:WKULF) taps experienced investment banker Michael Young as new board director

Namaste Technologies (CVE:N) (OTCMKTS:NXTTF) reports record 2Q revenue as CannMart flexes sales strength

Phunware Inc (NASDAQ:PHUN)  wins US patent to further protect its proprietary Multiscreen-as-a-Service platform

American Battery Metals (OTCQB:ABML) partners with investment firm Just Business as it aims to become force in clean energy sector

2.50pm: US indices open lower as Intel is whacked

US indices opened lower although already there are signs of a rebound for the Dow.

The Dow Jones index was down 112 points (0.4%) at 26,540, with computer chip giant Intel responsible for a large chunk of that after it announced a delay to its next generation of chips.

The broader-based S&P 500 was down 26 points (0.8%) at 3,209.

US investors have plenty to worry about in the form of rising tensions between the US and China but there was a bit of good news on the coronavirus front, with the number of new cases in the US falling to 68,700 yesterday, which was down 11.1% on the number for the previous Thursday.

“This is the biggest week-to-week drop since June 9, but it overstates the rate of improvement because the number of tests yesterday fell by 6.1% compared to a week ago. The proportion of positive tests rose to 9.2% from 8.6% a week ago; the trend is stubbornly high,” said Ian Shepherdson at Pantheon Macroeconomics.

Meanwhile, in the UK, new cases are trending up steadily but slowly.

“Face masks are now required by law in all shops, takeaway food outlets, and stations— from today—and on public transport,” Shepherdson noted.

In London, the Footsie has drifted gently lower through the afternoon session and is now down 83 points (1.3%) at 6,128.

1.40pm: US opens to stay in reverse gear

Having rediscovered reverse gear, US markets are sticking with the backwards driving schtick as tensions between China and the US ratchet up.

Spread betting quotes point to the Dow Jones opening around 82 points lower at 26,570 while the S&P 500 is seen starting at around 3,225, down 11 points.

“Risk appetite is running out of steam as virus worries persist, it seems impossible to be constructive on China or the US, and as Congress might struggle to wrap up the coronavirus relief bill before benefits expire this month,” said OANDA’s Edward Moya.

In London, the FTSE 100 was down 72 points (1.2%) at 6,139 while the mid-cap FTSE 250 was off 186 points (1.1%) despite Centrica PLC (LON:CNA) shooting up 16% to 46.81p after it revealed it is selling its US energy supply business Direct Energy to NRG Energy for £2.85bn.

“These weren’t a pretty set of results by any stretch, business energy demand was through the floor and low commodity prices hit the group’s Upstream division but the market reacted strongly to the news that Centrica has received a generous offer to buy its US business for £2.85bn – at least a billion more than analysts think it’s worth,” said Emilie Stevens, an equity analyst at Hargreaves Lansdown.

“Restructuring and reorganisation has been the story at Centrica for some time now, with agility and simplicity promised, so the sale of the US business is a significant, albeit unexpected, step in the right direction. It also takes the immediate pressure off the drawn-out sale of the group’s E&P [exploration and production] and nuclear businesses,” she added.

 

 

12.25pm: The Footsie pares its losses

London’s blue chips have regained some of their poise, with the FTSE 100 regaining 46 points from its intra-day low.

London’s index of blue-chip shares was still down 67 points (1.1%) at 6,145 but that’s a decent recovery; at one point, the index fell below 6,100.

“Stock markets are showing large losses today as tensions between the US and China have risen. It was confirmed the Beijing administration ordered the US consulate in Chengdu to close. The move is a retaliation for the US’s decision to close the Chinese consulate in Houston during the week,” said CC’s David Madden.

“On the domestic front, the UK and the EU didn’t reach a trade deal for when the transition period ends, but there is some hope an agreement will be reached by September,” he added.

Sticking with the domestic front, Dutch finance ING reckons the latest purchasing managers’ indices (PMIs), released this morning, do not add a great deal of information to the market’s understanding of how the UK economy is rebounding.

“If you’re looking to gauge the strength of the UK recovery, the latest PMIs are probably not the best place to look,” suggest ING’s developed markets economist, James Smith.

“At 56.6, the service-sector index (which accounts for around 80% of UK output) is a bit better than expected, as more importantly, it is back above the all-important 50-level for the first time since the pandemic began.

“But while this is undoubtedly a positive step, it only really tells us that the sector is no longer contracting, something that we already know from various other data sources, including the official GDP data for May.,” he continued.

“The general point is that, while PMIs are usually the gold-standard when it comes to nowcasting growth in normal times, they aren’t all-that-helpful at economic turning points.

Like other survey-based data, they are calculated by netting out the number of businesses saying conditions are improving against those that say they are worsening. So what these latest PMI numbers tell us is that on balance, a higher proportion of firms are seeing things getting better – but it doesn’t tell us much about the magnitude of that improvement,” he suggested.

Morning update from Andrew Scott

 

10.15am: PMIs bounce back (but the Footsie doesn’t)

The FTSE 100 index is now wearing a triple-digit fall, with poorly received updates from Vodafone Group PLC (LON:VOD) and Pearson PLC (LON:PSON) not helping.

London’s index of heavyweight shares was down 102 points (1.6%) at 6,110.

Pearson, down 4.0% at 528.2p, hit the skids despite maintaining its dividend even as it slipped into the red.

READ Pearson perseveres with dividend despite slide into losses

The IHS Markit/CIPS Flash UK Composite Purchasing Managers Index (PMI) for July rose to a 61-month high of 57.1 from June’s 47.7.

The Flash UK Services Business Activity Index rose to a 60-month high of 56.6 in July from 47.1 in June.

The Flash UK Manufacturing Output Index let the side down a bit – its level was the only highest for 32 months – at 59.8, up from 50.7 in June.

Finally, the Flash Manufacturing PMI rose to a 16-month high of 53.6 from June’s 50.1.

A level above 50 indicates an increase in activity.

“The UK economy started the third quarter on a strong footing as business continued to reopen doors after the COVID-19 lockdown. The surge in business activity in July will fuel expectations that the economy will return to growth in the third quarter after having suffered the sharpest contraction in modern history during the second quarter.,” suggested Chris Williamson, the chief business economist at IHS Markit, which conducts the survey.

“However, while the recession looks to have been brief, the scars are likely to be deep. Even with the July rebound there’s a long way to go before the output lost to the pandemic is regained and, while businesses grew more optimistic about the year ahead, a V-shaped recovery is by no means assured,2 he cautioned.

Duncan Brock, the group director at the Chartered Institute of Procurement & Supply, said the momentum was fuelled by the release of pent up demand.

“Manufacturing led the way by putting in its best output growth performance since November 2017. With business unfettered by lockdown, optimism rose to its highest levels since September 2014 amongst manufacturers, with an injection of hope that the worst impact from the pandemic was over. The services sector painted a similar picture with the best performance in five years and a sudden improvement from last month,” Brock noted.

8.35am: Retail sales data provides some encouragement for retailers

London’s blue-chips have opened on the back foot despite some encouraging UK retail sales data.

The FTSE 100 index was down 77 points (1.2%) at 6,134, with just eight constituents in positive territory.

Two of those – Tesco PLC (LON:TSCO) and Wm Morrison Supermarkets PLC (LON:MRW) – were retail stocks, drawing a smidgen of comfort from a 13.9% month-on-month increase in retail sales volumes in June, following on from May’s 12.9% increase.

Sales volumes were still down 1.6% from June 2019 but that represents a big improvement from the 13.0% year-on-year fall in May and April’s record 22.8% slump.

“The retail sector should benefit from a further significant easing of lockdown restrictions in July with pubs, restaurants, hotels and hairdressers allowed to open conditionally in England, along with a number of other leisure facilities and venues such as theme parks, cinemas, museums and galleries. The social distancing rule was also relaxed from two metres to ‘one metre plus’,” said Howard Archer, the chief economic adviser to the EY ITEM Club.

“However, there is uncertainty as to just how willing consumers will be to spend over the coming months. Indeed, persistent consumer caution is seen as a significant risk that could limit the UK recovery,” he added.

Telecoms networks operator Vodafone Group PLC (LON:VOD) tumbled 2.9% to 125.1p after its fiscal first-quarter update. “The previous themes from the full-year results have carried over into the new trading year, with the pandemic having material impacts on the day to day business,” commented Richard Hunter, the head of markets at interactive investor.

Investors were much more receptive to the trading update from Ferguson PLC (LON:FERG), which sent the shares to the top of the Footsie leader-board with a 1.8% gain at 6,998p. The plumbing and heating products distributor said trading since the beginning of May has improved steadily.

Proactive news headlines:

Sareum Holdings PLC (LON:SAR), the specialist drug development company, has described results from studies of two of its small molecule inhibitors to combat lupus as “encouraging”. The company, which is focused on delivering targeted small molecule therapeutics to improve the treatment of cancer and autoimmune diseases, said that results have been published for its small molecule dual tyrosine kinase 2 (TYK2) and Janus kinase 1 (JAK1) inhibitors in disease model studies of systemic lupus erythematosus (SLE) by its collaborator, SRI International. Sareum entered into a co-development agreement with SRI International in April 2013 to develop TYK2 inhibitors in autoimmune diseases. Sareum retains commercialisation rights for these and other TYK2 inhibitors.

Thor Mining PLC (LON:THR) (ASX:THR) has revealed additional positive results from the initial hydrogeological drilling program at the Kapunda ISR (Insitu Recovery) copper project carried out by EnviroCopper Limited. The group said the hydrogeological testing program was successful, with the tracer test showing fluid movement from well to well in a relatively short time period, providing the potential for cost-saving through reducing the number of wells for optimum production. Thor Mining holds a 25% interest in EnviroCopper Limited with rights to increase that interest to 30%.

Bahamas Petroleum PLC (LON:BPC), the oil and gas exploration company has announced the appointment to its board, with immediate effect, of Peter Cannell, as an alternate director to its non-executive chairman, Bill Schrader. The appointment is solely for the purpose of matters relating to the company’s Annual General Meeting (AGM), taking place at 10.00am BST on Friday, at the company’s registered office at IOMA House, Hope Street, Douglas, Isle of Man, IM1 1AP . As such, Cannell’s appointment will terminate following the closing of the AGM. The other existing members of the Board are unable to attend the AGM as a result of restrictions and advice relating to the coronavirus (COVID-19) pandemic. Cannell is an Advocate and Chartered Governance Professional at Quinn Legal, which has acted as BPC’s Legal Counsel in the Isle of Man for 2 years.

Integumen PLC (LON:SKIN) said its subsidiary, Labskin has launched the world’s first remote clinical skin trials platform. The AIM-listed group said the platform will harvest a human volunteer’s skin and transport it to the Labskin laboratory to be transplanted onto laboratory-grown skin, creating an exact replica of the human volunteer’s skin microflora without them leaving their home. Integumen also said another subsidiary, software and artificial intelligence (AI) group Rinocloud, has built a remote clinical skin trial platform which allows trials to happen ethically, efficiently with all protocols being followed and distantly controlled, with data stored according to GDPR guidelines.

Sativa Group PLC (LON:SATI) said it has launched a new cannabidiol (CBD) and Vitamin D product range under its Goodbody Wellness brand. The CBD group said the products will be the only range in the UK to offer two flavours and three CBD strengths of 5%, 10% and 20% CBD and Vitamin D bottled within olive oil. Sativa said its brand positioning has been strengthened by the new products and the additional benefits associated with combining CBD and Vitamin D.

Tissue Regenix Group PLC (LON:TRX) has started the first phase of its planned manufacturing capacity expansion programme in San Antonio, Texas. The regenerative medical devices company said the capacity expansion represents a key element of its commercial development plan. The first part of the multi-phase expansion programme is expected to take about six months to complete and will include the development of operational capabilities in the new 21,000 square feet building to house freezers and distribution functions that will free up space for additional sterile packaging clean rooms to be built in the existing facility.

Vast Resources PLC (LON:VAST) has updated investors on its operations at the Baita Plai polymetallic mine, in Romania, where it has now received to site all awaited containers of equipment required for the continued development of the mine. Vast said it now intends to start underground production next week and it expects first concentrate production will take place in August. Additionally, the company gave details of its metallurgical testing programme which has provided encouraging results for copper and zinc, while lead and molybdenum tests are ongoing.

AFC Energy PLC (LON:AFC) has told investors that 2020 continues to be a transformational year for the international hydrogen economy. The company, in its interim results statement, highlighted its own progress which included the successful launch of its electric vehicle (EV) charging solution, the start of product development for the HydroX-Cell(L)160 system and – in the current period – a £31.6mln cash raise to fund further development. “With unprecedented investment into the sector from both private and public institutions, AFC Energy remains focussed on the consolidation of its position as a leading developer of alkaline, zero-emission fuel cell systems,” Adam Bond, AFC chief executive said in the results statement.

Landore Resources Ltd (LON:LND) has highlighted continuing progress at the BAM gold deposit as it posted its full-year results, and separately revealed plans for a share consolidation. A recent funding move has set the explorer up for new drilling. In June 2020, Landore raised £2.8mln, issuing 414mln shares at a price of 0.675p, to pay for 14,000 metres of drilling in total. In terms of financial results, the pre-revenue company reported a £2.14mln loss for the year ended December 31, 2019, with £107,688 of cash. Landore also announced plans to consolidate its share capital by reducing the number of shares in issue by a multiple of 20. Every twenty shares held by investors will be transferred into one new share under the plan, which requires shareholder approval.

Caledonia Mining Corporation PLC (LON:CAL) announced that it has entered into an ‘At the Market’ (ATM) sales agreement with Cantor Fitzgerald under which the company may, at its discretion from time to time, sell up to US$13mln worth of shares. Any sales of shares would occur by means of ordinary brokers’ transactions or block trades, with sales only being made on the NYSE American at market prices. Caledonia expects to use the amount of any net proceeds from the sales for investment in the construction of a solar power plant to supply electricity to Blanket Mine in Zimbabwe. The ATM Sales Agreement is not a formal placing and any potential sales of new shares are not underwritten by the sales agent.

Tiziana Life Sciences PLC (LON:TILS) (NASDAQ:TLSA), a biotechnology company focused on innovative therapeutics for oncology, inflammation and infectious diseases, said it has allotted and issued 88,580 ordinary shares of 3 pence each credited as fully paid in respect of an exercise of 88,580 warrants at a price of 93p per share, yielding 82,379 in cash proceeds for the company.

APQ Global Ltd. (LON:APQ) has said the company’s auditor, BDO, has advised that, due to personnel restrictions during the coronavirus (COVID-19) pandemic, it requires further time to complete its audit of the group’s 2019 results. The company said it now expects to publish its 2019 results by August 31, 2020. It continues to expect to report its interim accounts for the first half of 2020 around the same time. APQ Global also announced, separately, that as at the close of business on June 30, 2020, its unaudited book value per ordinary share was 31.70 US cents, equivalent to 25.65p.

Immotion Group PLC (LON:IIMO) said it has been advised that, following the acquisition of the investment activities of Cavendish Asset Management by Stonehage Fleming, that Cavendish Asset Management no longer has a notifiable interest in Immotion Group and that Stonehage Fleming now holds 33,035,010 shares in the company, representing 8.7% of the issued share capital, as a result of that transaction.

Silence Therapeutics PLC (LON:SLN)) a leader in the discovery, delivery, and development of novel RNA therapeutics for the treatment of serious diseases with unmet medical need announced that at its general meeting held on Thursday, July 23, 2020, all resolutions set out in the notice of meeting were duly passed on a poll.

Live Company Group PLC (LON:LVCG) announced that at the group’s annual general meeting held on Thursday all resolutions were duly passed.

6.50am: Friday retreat on the cards

It is on with the face-mask for investors – and UK shoppers on Friday – as they take fright at global developments, not least the rising tensions between the US and China.

US markets tumbled yesterday and London is set to follow suit today with the FTSE 100 tipped to shed 63 points at open to 6,148.

Yesterday, US Secretary of State Mike Pompeo gave a speech in which he accused China of being “increasingly authoritarian at home, and more aggressive in its hostility to freedom everywhere else”.

On the US economic front, initial weekly jobless claims, released yesterday, rose week on week for the first time since late March, prompting a sell-off in the US, where the Dow Jones Industrials Average slumped 354 points to 26,652 and the S&P 500 fell 40 points to 3,236.

Back in the UK, we have the latest retail sales numbers for June and the “flash” estimates for manufacturing and services purchasing managers’ indices (PMIs).

“We start off with the latest retail sales numbers for June where hopes are high that we can see another big gain after the 12% gain seen in May. Expectations are for a rise of 8.3%, in light of a similar strong recovery in the recent British retail consortium sales numbers, which showed the best recovery in over two years with a like for like gain of 10.9%, largely driven by a rise in supermarket sales as well as a big increase in online spending,” said CMC Markets (UK) senior analyst Michael Hewson.

“Today’s latest UK flash PMIs need to see a sustained improvement on the June numbers, given that a much bigger proportion of the UK economy reopened on 15th June, along with hairdressers and other shops and services on the 4th July,” he added.

“Services activity, in particular, needs to improve a lot more than it has done thus far, with June’s reading of 47.1, expected to see an improvement to 51.5.

“Manufacturing in June was slightly better at 50.1, but nonetheless for all the optimism about a V-shaped recovery the PMI numbers need to reflect that and so far, they haven’t, though it is to be hoped that in July we will see further strength, with expectations of an improvement to 52.0.”

As for corporate news, Vodafone Group PLC (LON:VOD) and British gas-owner Centrica PLC (LON:CNA), an unlikely double-act, will take centre stage.

Mobile telecoms group Vodafone is under continuing pressure due to its debt pile, as well as concerns over whether the €18.4bn purchase of Liberty Global’s European cable assets was the right thing to do, and the possible costs of acquiring 5G spectrum and equipment in the face of Huwaei’s forced exit from the UK by 2027.

“Nagging doubts over group structure, and whether the firm is basically an investment trust of telecom licences and operations also won’t quite go away, after a period of disappointing profit and cash flow which culminated in 2018’s dividend cut,” analysts at AJ Bell pointed out in a preview.

Centrica, the former stalwart of the FTSE 100 that is now languishing alongside the mid-caps, has seen the coronavirus pandemic hit energy usage from industrial customers.

Investors will want to hear more news on that and perhaps some more detail on the company’s cost-cutting plans.

Around the markets:

  • Sterling: US$1.2730, up 0.11 cents
  • 10-year gilt: yielding 0.125%
  • Gold: US$1,884.60 an ounce, down US$5.40
  • Brent crude: US$43.45 a barrel, up 14 cents
  • Bitcoin: US$9,562, down US$31

6.45am: Early Markets – Asia/Australia

Chinese stocks fell sharply on Friday and other Asia Pacific markets moved lower as US-China tensions deepened.

The Shanghai composite was down 2.25% and in Hong Kong the Hang Seng index declined 2%.

Over in South Korea, the Kospi slipped 0.52%. Markets in Japan are closed for a holiday today.

In Australia, S&P/ASX 200 fell 1.18% after Victoria announced 300 new COVID-19 cases and six deaths, the state’s highest number of pandemic deaths in a 24-hour period.

READ OUR ASX REPORT FOR MORE INFORMATION

Proactive Australia news:

Artemis Resources Ltd (ASX:ARV) has completed a $5.6 million capital raise at 7 cents per share via the issue of 79,992,856 shares to institutions and professional investors.

Horizon Minerals Ltd (ASX:HRZ) has poured first gold from the first stage of the Boorara Gold Mine, 10 kilometres east of Kalgoorlie-Boulder in the Western Australian Goldfields.

Pan Asia Metals Ltd (PAM) has launched its initial public offering (IPO) to raise A$6 million ahead of its listing on the Australian Securities Exchange (ASX).

Talisman Mining Ltd (ASX:TLM) has started its maiden diamond drilling program at the high-grade Lucknow Gold Project in NSW with a second hole underway.

Lithium Australia NL’s (ASX:LIT) Soluna Australia Pty Ltd joint venture with DLG Energy Co Ltd has achieved first sales and installations for its battery systems.

Kin Mining NL (ASX:KIN) has received new assay results that further extend the Cardinia Hill discovery within the Cardinia Gold Project (CGP) near Leonora in Western Australia and pave the way for resource drilling.

Anson Resources Ltd (ASX:ASN) has accepted oversubscriptions in excess of the originally planned $1 million top-up placement and has firm commitments for an additional $260,000, bringing the total to be raised to $1.16 million before costs.

PolarX Ltd (ASX:PXX) has started a 3,000-metre drilling program at the high-priority Zackly East gold-copper target of its Alaska Range Project in Alaska.