- FTSE 100 finishes 19 points lower on Monday
- UK recovery to take longer than expected
- Wall Street in the green
5.05pm: FTSE 100 closes lower
FTSE 100 index closed the first day of the trading week in the red as the country’s travel sector took a hit.
The UK’s index of the biggest shares trimmed its Friday losses but still finished 19 points lower than Monday’s opening at 6,105.
On Wall Street, stocks were in the green at the midday point as gold rushed to a new high on growing US-China tensions and virus concerns.
“Ignoring the geopolitical reasons that has driven some investors towards gold – which spent Monday hitting all-time highs – the Dow Jones jumped after the bell,” said Connor Campbell, financial analyst at Spreadex.
“The Dow’s 135 point increase – sending it back across 26,600 – and gold’s rise do have a shared origin. The market’s fears over escalating tensions between the US and China, as well as the ongoing domestic disaster that is Trump’s handling of the covid-19 pandemic, has seen investors dump the dollar en masse.”
US and Canada 5pm/12 EST
The Dow Jones Industrial Average was sitting pretty at 26,519. The broader based S&P 500 was up 6 points at 3,222. The tech heavy Nasdaq index gained 53 points at 10,416. Meanwhile, in Canada, the S&P/TSX Composite index gained 69 points at 16,065.
Proactive North America headlines:
CanaFarma Hemp Products Corp (CSE:CFNA) enters into JV agreement to market and sell hemp oil-infused products under FeelGood brand
Hillcrest Petroleum Ltd (CVE:HRV)(OTCMKTS:HLRTF) launches $1 million private placement to fund expansion of West Hazel oil asset in Saskatchewan
ImagineAR Inc (CSE:IP) (OTCMKTS:IPNFF) teases upcoming deal with major North American sports/entertainment company
BevCanna Enterprises Inc (CSE:BEV) (OTCMKTS:BVNFF) appoints premium beverage pioneer Douglas Mason to its independent advisory board
3.45pm: UK forecast to return to pre-pandemic levels in 2024
The Footsie trimmed some losses ahead of close but was still a little far away from the green, down only 9 points to 6,114.
Hopes for a V-shaped recovery were squashed earlier today by an EY Item Club report forecasting a return to pre-pandemic levels in 2024.
The UK economy is expected to return to growth in the quarter to September this year, though there will be pressure from consumer caution, unemployment and reduced business investment.
“Even though lockdown restrictions are easing, consumer caution has been much more pronounced than expected,” commented Howard Archer, chief economic advisor to the forecasting body.
“We believe that consumer confidence is one of three key factors likely to weigh on the UK economy over the rest of the year, alongside the impact of rising unemployment and low levels of business investment.”
“The UK economy may be past its low point but it is looking increasingly likely that the climb back is going to be a lot longer than expected.”
2.35pm: US indices in lacklustre opening
The Footsie was firmly in the red as Wall Street rang the opening bell, down 20 points to 6,103.
New York indices hovered around the flatline, with the Dow Jones down 8 points to 26,461 and the S&P500 up 2 points to 3,217.
“US stocks are rebounding as investors shrug off virus worries and remain focused with the prospect of at least a US$1 trillion fiscal stimulus deal this week, high hopes the Fed will show they will provide longer-run accommodation, and ahead of the busiest week for earnings seasons which includes reports from Amazon, Alphabet, and Apple,” noted Edward Moya at OANDA.
However, the virus picture continues to be mixed as there are no signs of the infection rate slowing.
“Florida the current epicentre, saw their largest number of deaths over the past day, while several counties in California struggle to contain the virus,” Moya continued.
“US case numbers through Sunday posted the first seven-day decline since early June and provide some hope the second wave is cresting.”
12.45pm: Moderna starts final phase of trials for coronavirus vaccine
FTSE 100 was 11 points lower at 6,113 at lunchtime, while Wall Street is expected to open just above the flatline despite turmoil in European markets.
“The Dow may want to enjoy the peace while it lasts,” noted Connor Campbell at Spreadex.
“The US is facing an incredibly busy week, aside from Covid-19 and US-China tensions, with the latest Federal Reserve meeting on Wednesday, the first Q2 GDP reading – which is going to be UGLY – on Thursday, and a stacked earnings calendar including appearances from the golden trio of Apple, Alphabet and Amazon.”
Remaining in the US, Moderna Inc (NASDAQ:MRNA) surged 10% to US$80.31 in pre-market trading as it began the final phase of clinical trials for its coronavirus vaccine candidate.
The trial, conducted in collaboration with the National Institute of Allergy and Infectious Diseases, is expected to involve up to 30,000 people to see whether the jab can prevent the virus.
On Sunday, the biotech was granted fresh funding of up to US$472mln from the Biomedical Advanced Research and Development Authority to enrol more participants.
11.45am: Boohoo vows to set up Leicester ‘model factory’
The Footsie lost 10 points to 6,113 ahead of lunchtime, little changed from earlier in the morning.
In the junior market, Boohoo Group PLC (LON:BOO) shed 2% to 251.15p after its boss John Lyttle announced plans to build a ‘model factory’ in Leicester where the online retailer will make sure staff work in fair conditions.
The fast-fashion giant recently came under fire after allegations that a supplier in the English city was paying workers well below minimum wage, while a coronavirus outbreak was linked to lack of proper protections in garment factories.
Boohoo said it found no evidence of such low salaries but its code of conduct had been breached. Results from other investigations are also expected for later this summer.
“It is clear there are some very important failings made by Boohoo and while they refute some of the allegations, it may be too early to rule anything out at this stage,” analysts at Liberum commented.
“However, these scandals can be a force for change and Boohoo, seemingly rather slowly and begrudgingly in the early part of the crisis, started to appreciate the sheer scale of this scandal, when nearly £2bn of its equity value was wiped out in two days.”
10.45am: Treasury mulls over online sales tax to help high street
The Footsie trimmed some losses in late morning, dipping only 9 points to 6,114.
Chancellor Rishi Sunak is reportedly mulling over a new tax on items sold online to make the high street more competitive as it grapples with the coronavirus crisis.
According to the Times, the Treasury said that business rates may be penalising brick-and-mortar stores as online rivals do not have to pay rent.
The online sales tax could be either 2% of the prices of goods or a mandatory charge on consumer deliveries.
This is not the answer.
Why should online shoppers (including the housebound and the disabled) pay a premium tax on their shopping?
There are fairer ways to support the high street, such as slashing business rates which kill small shops. https://t.co/324ffssDZJ
— Chris Daw QC (@crimlawuk) July 27, 2020
An official statement said the current crisis “has had a significant impact on how business is done” and Westminster needs to ensure “the tax system raises sufficient revenue”.
I suspect an online sales tax to help the high street would be about as successful as if we’d imposed extra taxes on cars in order to protect the horse and cart industry. When a better way of doing something enters people’s lives, the trend is irreversible. https://t.co/mqQvV2bhPI
— Luke Springthorpe (@L_Springthorpe) July 27, 2020
The Treasury is also evaluating whether to replace business rates with a tax based on the value of the land and buildings on it, to be paid by the owner rather than the companies on lease.
9.40am: Renewed woes for travel sector
The Footsie was wallowing in the red in mid-morning, dipping 13 points to 6,110, while sterling edged 0.3% higher to US$1.2833.
Airlines were under further pressure after the government imposed a mandatory two-week quarantine for travellers coming from Spain after a resurgence in cases in the European country.
“The market is now pricing in the risk of restrictions on more countries and thus raising the potential for earnings estimates to be downgraded once again for travel-related industries,” said Russ Mould, investment director at AJ Bell.
“Many people don’t want to risk having to go through 14 days of quarantine after their holiday, particularly those who cannot work from home, and so it seems likely the Spain-related news will prompt more people to cancel their overseas trip this summer. It may also cause more people to think twice about booking a last-minute holiday.”
8.45am: Cautious start to the week
The FTSE 100 started in negative territory on Monday as fears over America’s economic fate and growing worries over a coronavirus (COVID-19) second wave in Europe hit sentiment.
The index of UK blue-chip shares shed 17 points to 6,106.89 early on.
The jitters were more vividly expressed by the headlong rush into gold, a haven asset in times of turmoil. The price of the yellow metal hit an all-time high of US$1,958.40, up US$33.20, and is now only a couple of sessions away from breaking the US$2,000, based on its current trajectory.
A further sign of malaise could be found in the dollar, which has been trading at basement levels last seen in 2018.
Thursday’s US jobless number, which unexpectedly rose for the first time since March, led to a nervy assessment of the global economic outlook, not helped by Spain’s upsurge in COVID-19 cases.
Perhaps a tonic may come in the form of another round of American fiscal stimulus, which so far has only been hinted at by the Federal Reserve, which meets this week.
In the meantime, fear will continue to prevail, although the equity markets appear insulated against the latest upsurge in nervousness by the volume of cheap money sloshing around the system, analysts said.
Follow-through buying after last week’s stellar trading figures saw B&Q owner Kingfisher (LON:KGF) advance 1.7%.
The travel stocks were hard hit by the upsurge in coronavirus cases in Spain, which has forced the Foreign Office to pull up the air bridge with the country and sparked fears that Europe may be headed for a second wave.
British Airways owner IAG (LON:IAG), which on Friday said it was mulling a cash call, was down 8.7% early on, with aero engineers Rolls Royce (LON:RR.) and Melrose Industries (LON:MLRO) descending in its vapour trails with losses of 3.5% and 3.8% respectively.
Proactive news headlines:
Supply@ME Capital PLC (LON:SYME) said discussions are progressing with a large financial institution over an inventory monetisation pilot programme in the UK. The target is to start a pilot programme by the end of 2020 with up to 10 UK client companies. A positive outcome may lead to a first self-funding agreement in the UK, said the AIM-listed company. In a trading update, Supply@Me added that it is also developing a dual-funding approach to its stock monetising platform.
Oncimmune Holdings PLC (LON:ONC) said there has been a “substantial expansion” of its collaboration with Swiss giant Roche – one which will see the value of its contract increase. The immunodiagnostics specialist’s biomarker discovery platform SeroTag is being used to “explore the baseline and on-treatment autoantibody profiles as biomarkers in patients that received cancer immunotherapy”. The timeline for the project has not changed, with initial results to be provided to Roche within three months of completion in November.
Location Sciences Group PLC (LON:LSAI) has reported higher revenues in the first six months of the year and lower losses as it works to offset the impact of the coronavirus (COVID-19) pandemic on some of its business lines. In a trading update covering the six months to June 30, 2020, the location data verification specialist said it expects to report revenues of around £650,000, 43% higher than the prior year, alongside an adjusted cash EBITDA loss of £680,000 compared to an £820,000 loss in 2019.
Panther Metals PLC (LON:PALM) has acquired 135 mining claim cells, increasing the total area of the Dotted Lake gold project by 346%. The Dotted Lake property is situated in Canada, approximately 16 kilometres north of Barrick Gold Corporation’s renowned Hemlo gold mine. The new claim acquisition constitutes a strategic expansion in an area renowned for gold discoveries and gold production over the last 40 years.
ImmuPharma PLC (LON:IMM, FRA: 25I) has said its licensing partner has submitted a special protocol assessment (SPA) request to the US regulators ahead of a phase III clinical trial of its lupus drug. The SPA is a process by which the US Food & Drug Administration and Avion Pharmaceuticals will decide on the design and size of the study that will both meet the scientific and regulatory requirements and supports marketing approval for Lupuzor. The review period for an SPA request is up to 45 days, said ImmuPharma, which has been working with Avion to finalise a new optimised international protocol.
City Pub Group Plc (LON:CPC) said it has traded profitably since early July as pubs began to reopen their doors following the easing of lockdown restrictions in the UK. In a trading update for the three weeks since July 4, 2020, the company said it reopened 24 of its 48 pubs on that day, with another eight reopening over the last two weeks taking the total to 32. The firm said its pubs have delivered “an encouraging performance to date” since opening their doors again, with its remaining branches expected to reopen within the next two months or earlier if social distancing measures are relaxed further. Total sales for the three week period were £1.8mln, around 63% of previous levels on a like-for-like basis, while City Pub said “significant reductions” in costs and operational efficiencies had allowed it to trade profitably and generate cash.
IQ-AI Limited (LON:IQAI) said its subsidiary, Imaging Biometrics (IB), has reported that the development of IB Stroke, a product designed to use algorithms to generate information commonly used to diagnose strokes in patients, is currently on track. The company also said a subcommittee of the USA Jumpstarting Brain Tumour Drug Development Coalition has recently recommended that the quantitative perfusion capability, exclusive to IB, provides a singular foundation upon which to build IB Stroke and is now the consensus recommended standard for the National Clinical Trials Network.
Supermarket Income REIT PLC (LON:SUPR), the grocery chain property specialist, has acquired the Tesco Extra store in Newmarket, Suffolk for £61mln. The site comprises a 68,000 square foot net sales area with a 12-pump petrol filling station, 654 parking spaces and purpose-built online fulfilment distribution docks that support Tesco’s online grocery business across the region. The Tesco store is being acquired from the Standard Life Pooled Property Fund on a yield of 4.6% with an unexpired lease term of 16 years with annual, upward-only rent reviews. The company also said it has arranged a new revolving credit facility of £60mln with Wells Fargo. This secured, interest-only, RCF has an initial five-year term and two further one-year extension options.
Savannah Resources PLC (LON:SAV) said a report has found that its Mina do Barroso lithium project could contribute nearly €1.2bn to the gross output of Portugal, including €168mln during its construction phase and €90mln per year during the operating phase. The report was written by a team of economists from the prestigious University of Minho, based in the city of Braga, approximately 80 kilometres away from Mina do Barroso. The economic analysis drew on the results of a 2018 scoping study on the project. The report also said that Mina do Barroso would boost Portugal’s annual export revenue from metal ores by 20% with its projected €110mln per year of lithium sales.
Echo Energy PLC (LON:ECHO, the Latin American-focused upstream oil and gas company, has announced the conditional placing of new ordinary shares in the company to raise gross proceeds of £475,000. The comp[any said it has conditionally issued 95,000,000 new ordinary shares at a placing price of 0.5p each, with warrants attached on a 1-for-1 basis to subscribe for new ordinary shares at a price of 1.0p each. In addition to the placing warrants, the company has also conditionally issued 5,700,000 warrants to subscribe for new ordinary shares at any time until the second anniversary of issue and with an exercise price of 0.8p each in respect of fees incurred in connection with the placing. The group said the net proceeds of the placing will strengthen the company’s cash position, will enable the acceleration of prioritised activities in respect of the previously announced initial portfolio of workover and intervention operations at Santa Cruz Sur in Argentina and be applied towards the group’s general working capital requirements.
Base Resources Ltd (LON:BSE) (ASX:BSE) has updated the resource at its Kwale South Dune project in Kenya to reflect a 5% reduction in material bulk density, following routine reconciliations undertaken between the resource model estimates and run-of-mine operating data gained since mining commenced on the South Dune in July 2019. The resource has also been updated to reflect a reduction in the size of the prospecting licence and depletion due to mining. On the basis of current ore reserves, mining is scheduled on the Kwale South Dune until October 2022.
SIMEC Atlantis Energy PLC (LON:SAE), the global developer, owner and operator of sustainable energy projects, has announced that Ian Wakelin has resigned as a non-executive director of the company and chair of its Audit Committee, having accepted the role of chairman of waste company Viridor Group, a British waste company. Wakelin will leave the company’s Board in October and will in the interim assist the transition of the Audit Committee to a new chair. Atlantis has begun the search for a suitable replacement and a further announcement will be made in due course. John Neill, chairman of Simec Atlantis, commented: “I am delighted for Ian on his appointment as Chairman for the Viridor Group and on behalf of the Atlantis Board, wish him well. I would like to thank him for his service, contributions and leadership over the past two years. He has been invaluable in providing guidance to management and fellow board members and has put Atlantis in a very strong position to successfully complete the conversion of its flagship project, Uskmouth and to continue to pioneer and deliver sustainable energy projects across the globe.”
Powerhouse Energy Group PLC (LON:PHE), the UK technology company commercialising hydrogen production from waste plastic, has announced the appointment of Allan Vlah as a non-executive director of the company with immediate effect. With twenty years’ experience in the investment industry, Vlah is a director in Aviva Investors’ infrastructure group where he started and continues to lead Aviva Investors’ Energy from Waste equity strategy. Cameron Davies, Powerhouse commented: “On behalf of the Board, I would like to express how pleased we are to have Allan join as a non-executive director. His wide experience and specialist knowledge of the energy sector and infrastructure financing will be of immense benefit to the Company in terms of developing a strong and solid presence for our DMG waste to energy conversion technology across the UK and its roll out in selected international markets.”
Woodbois Limited (LON:WBI) has updated investors on its proposal to purchase further convertible bonds, saying it has extended the capitalisation by agreeing terms with Rhino Ventures Limited – a company affiliated with Miles Pelham and Pelham Limited) – to repurchase all remaining convertible bonds held by it and by agreeing with certain other bondholders – including Paul Dolan, chairman and CEO of the company – to repurchase the convertible bonds held by them, in each case at the placing price. The aggregate additional principal amount of convertible bonds being purchased is $6,448,800, and the total additional number of capitalisation chares to be issued in exchange for the convertible bonds (plus the accrued interest liability) is 266,178,196.
Premier African Minerals Limited LON:PREM) has announced that investors D-Beta One EQ, Ltd, YA II PN, Ltd and Riverfort Global Opportunities PCC Limited elected on July 24, 2020, to convert US$50,000 of the investment plus accrued interest of US$6,276.71, amounting to US$56,276.71 (£44,115.31) in aggregate, in accordance with the terms of the Investment agreement as announced on May 7, 2020, into new ordinary shares in the company. The company said it has therefore issued today 70,426,740 new ordinary shares to the investors at an issue price of 0.062640p per investors share, the issue price being 90% of the lowest daily volume-weighted average price during the five days trading days immediately prior to the repayment.
MTI Wireless Edge Ltd. (LON:MWE), the technology group focused on comprehensive communication and radio frequency solutions across multiple sectors has announced that it will continue the programme to conduct market purchases of its ordinary shares which was commenced on January 24, 2019, was originally in place until no later than July 26, 2019, and subsequently extended until July 26, 2020. At a recent meeting, the company said its board of directors decided to extend the share repurchase programme until January 26, 2021, and that the share repurchase programme shall continue under the same terms and conditions as originally announced. Commenting on the share repurchase programme, MTI Wireless CEO Moni Borovitz said: “We believe that this programme has contributed to a significant increase in liquidity in MTI’s shares and it is logical therefore to extend it again.”
Faron Pharmaceuticals Oy (LON:FARN) (NASDAQFIRSTNORTH:FARON), the clinical-stage biopharmaceutical company has announced that Cairn Financial Advisers has been appointed as Nominated Adviser (Nomad) to the Company with immediate effect. Panmure Gordon (UK) Limited continues to act as the company’s broker, it added.
ECR Minerals PLC (LON:ECR), the gold exploration and development company focused on Australia, announced that it has received notice to exercise warrants over 5,500,000 new ordinary shares in the company. It said that 3,500,000 new ordinary shares are at an exercise price of 1.125p per share and 2,000,000 new ordinary shares are at an exercise price of 1p per share. Subscription monies of £59,375 have been received by ECR in respect of the exercise of these warrants, the group added.
Aminex PLC (LON:AEX) has announced that John Bell, its chairman and Linda Beal, senior non-executive director, have stepped down as non-executive directors of the company with immediate effect. It added that Robert Ambrose has taken on the role of interim executive chairman and the board will commence the process for the recruitment of replacement directors. The company said it has continued to monitor UK government restrictions on gatherings indoors and confirms that this year’s annual general meeting (AGM), to be held at 2 pm on Wednesday 29 July 2020, will be a closed meeting. Accordingly, shareholders will not be admitted to the AGM however they will be able to listen to the proceedings of the meeting remotely by teleconference using the following dial-in details: United Kingdom (local) 020 8322 2500; Ireland (local) 01 4360958; All other locations +44 (0) 20 8322 2500; Listen-Only Access Code 475052.
Baker Steel Resources Trust Ltd (LON:BST) has announced that its annual general meeting will be held on Friday, August 14, 2020, at 10.00am. Further details are available on the company’s website: www.bakersteelresourcestrust.com
6.50am: Modest gain for Footsie
Gold hit a record high and the dollar slumped to a low against a basket of currencies amid worries over the deteriorating economic outlook for the world’s largest economy.
At 6.20am, the yellow metal was changing hands for US$1,956.20, up US$31 in a fairly busy opening session in Asia on Monday. On the current trajectory, the price should quickly pierce the US$2,000 mark predicted by Citi earlier this month.
Gold, a go-to in times of uncertainty, continued to react to US jobless claims, which rose unexpectedly and for the first time since March, while the American currency dropped to levels not seen for two years.
Striking an upbeat note amid a chorus of worries, CMC Markets analyst David Madden pointed to the experience of Europe in recent weeks as it has tackled the worst the coronavirus pandemic.
“One thing we did learn last week was that the rebound in economic activity in France, Germany and the UK has continued apace through June and July, with improvements in both manufacturing and services sector activity, which offers hope that these economies could well outperform the US economy, in the weeks and months ahead, second virus spikes notwithstanding,” he pointed out.
However, he dampened the mood a little by acknowledging that eyes are all now trained firmly on Spain, where worries are growing over a potential second wave.
Against this backdrop, the FTSE 100 looks set for a benign start to the trading week with traders calling the UK blue-chip index to open 6 points higher at 6,129.89 having dropped 87 points on Friday.
Looking ahead, seven of the UK’s 10 biggest blue-chip companies report in the coming week, plus four of the five big banks and, across the Atlantic, tech titans including Apple and Alphabet will provide quarterly updates.
The Footsie giants spread across the global pharma, commodities and consumer goods industries, so their updates are is likely to provide a crucial litmus test for the health of the global economy and the direction for equity markets for the coming weeks.
And with Wall Street watchers worrying about a bubble as earnings season rolls round to include two of the world’s largest companies and a Federal Reserve policy statement, it’s undoubtedly a compelling week for finance fans.
Around the markets
- Pound worth US$1.2833 (+0.3%)
- Gold US$1,956.20, up US$31 an ounce
- Brent crude flat at US$43.34 a barrel
6.45am: Early Markets – Asia/Australia
Asian markets mostly traded higher today with Taiwan leading the gains among the region’s major markets with the Taiex surging 2.42%.
South Korea’s Kospi also saw robust gains of 1.04% and in China the Shanghai composite was marginally higher after the country’s industrial profits for June soared 11.5% year-on-year.
In Australia, the S&P/ASX 200 was up 0.20% helped by a rally in gold mining stocks following the price of the precious metal reaching an all-time high of US$1943.93 per ounce.
Proactive Australia news:
MGC Pharmaceuticals Ltd (ASX:MXC) is encouraged by results from a safety and toxicity study completed on mice for AtemiC, showing no clinical signs or adverse reactions from the full panel of hematology and chemistry blood tests.
Great Western Exploration Limited (ASX:GTE) has consolidated 60 kilometres of strike within its highly prospective Golden Corridor Project in WA and is planning an exploration program to include drilling.
Pure Minerals Ltd (ASX:PM1) (FRA:4EA) subsidiary Queensland Pacific Metals Pty Ltd (QPM) has entered an MOU with Sun Metals Corporation Pty Ltd to investigate the potential to produce a joint iron oxide product in Townsville, Queensland.
Cardinal Resources Ltd’s (ASX:CDV) (TSE:CDV) (OTCMKTS:CRDNF) board of directors has unanimously recommended that shareholders accept the revised A$0.70 off-market takeover offer from Shandong Gold Mining (Hong Kong) Co Limited.
Wiluna Mining Corporation Ltd (ASX:WMX) has received more high-grade gold results from resource development and infill drilling at the Wiluna, Regent and Lake Way mining centres of its Wiluna Mining Operation in Western Australia.