- FTSE 100 index closes 1.72% higher
- US stocks up
- Market correction for gold
5.30pm: FTSE closes up
FTSE 100 index closed ahead on Tuesday as markets cheered Wall Street gains and a potential coronavirus (COVID-19) vaccine breakthrough.
The UK index of leading shares finished over 103 points higher, or 1.72%, at 6,154. The midcap FTSE 250 gained over 272 points at 17,997.
On Wall Street, the S&P 500 index added around 15 at 3,376, while the Dow Jones Industrial Average added 264 points at 28,055.
“US stocks have closed in on record highs today, as the bullish sentiment seen throughout the past fortnight continued apace,” said Joshua Mahony, senior market analyst at online spreadbetter IG.
“While the outperformance for the tech-focused Nasdaq had been justifiable, the ability to push back within touching distance of record highs on the S&P 500 highlights an overwhelmingly optimistic outlook for investors.
“Russian declarations that they have approved a working vaccine may have been treated with scepticism, yet there is a feeling that we are approaching a period where such breakthroughs will soon make a tangible difference for the outlook of heavily-hit ‘value’ stocks.”
Proactive North America headlines:
FansUnite Entertainment (CSE:FANS) (OTCPINK:FUNFF) completes acquisition of leading Canadian gamer Askott Entertainment
District Metals (CVE:DMX) (OTCMKTS:MKVNF) posts more historic drill assays from Tomtebo project, which underscore site’s potential
Q BioMed Inc (OTCQB:QBIO) launches program to bring metastatic bone pain drug Strontium89 to the EU and elsewhere
Empower Clinics Inc (CSE:CBDT) (OTCQB:EPWCF) sees record patient visits and revenue per patient during July, boosted by coronavirus testing capabilities
US and Canada 4pm/11am EST
Wall Street shares were mixed in early deals. The Dow Jones Industrial Average added 311 points to stand at 28,192. The S&P 500 gained over 14 points at 3,374. The tech heavy Nasdaq index lost around 24 points at 10,943. In Canada, the S&P/TSX index shed over ten points at 16,594.
3.25pm: FTSE 100 gives back some gains into late afternoon
Heading into the endgame of Tuesday’s session, the FTSE 100 had given back some of its gains from earlier in the day but was still solidly in the green, rising 77 points to 6,128 shortly before 3.30pm.
Sitting at the top of the blue-chip gainers in late afternoon was Ladbrokes owner GVC Holdings PLC (LON:GVC), which was up 8.9% to 779.6p, followed by British Airways owner International Consolidated Airlines Group SA (LON:IAG) which climbed 7.6% to 217.1p.
At the other end of the index in the fallers was precious metals miner Fresnillo Plc (LON:FRES), which sank 8% to 1,188p while fellow digger Polymetal International PLC (LON:POLY) fell 4.4% to 1,925p amid a sharp decline in prices of gold and silver on the commodities markets.
2.40pm: US markets open mixed
The US markets have opened on a mixed note on Tuesday morning, with the Nasdaq proving the weaker player among the main three indices.
Shortly after the opening bell, the Dow Jones Industrial Average was up 1.14% at 28,107 and the S&P 500 was up 0.51% at 3,377. Meanwhile, the Nasdaq shed 0.6% to 10,900.
US investors seem to have been lifted by comments that president Trump is considering a capital gains tax cut (although he has made similar overtures in the past), while vaccine hopes out of Russia may also have lifted some spirits.
American traders also seemed to have shrugged off the latest PPI data, which showed that prices of factory goods have risen 0.6% in July, faster than expected and possibly a sign that inflationary pressures are building quicker than initially thought.
Back in London, the market had pumped the brakes slightly, with the FTSE 100 up 102 points at 6,152 shortly after 2.30pm.
1.20pm: US indices to open higher
US indices are set to open higher, picking up the baton from European markets.
If spread betting quotes are to be trusted, the Dow Jones is set to advance 269 points to 28,060, the S&P 500 16 points to 3,377 and the NASDAQ Composite 36 points to 11,094.
“Wall Street is eyeing new record highs again this week, with futures up around 1% as President Trump ponders a capital gains tax cut. I’m not entirely sure that’s what the economy needs right now, or the public purse for that matter, but with Trump going into the election on the back foot as a result of the pandemic, rising record stock markets are one thing he has going for him,” commented Craig Erlam, the senior market analyst at OANDA Europe.
With global markets rising virtually across the board it has not been a good day to be holding gold. The yellow metal is trading US$53.40 (2.6%) lower at US$1,986.30 an ounce, which might explain why in London, precious metals miner Fresnillo Plc (LON:FRES) is one of the few blue-chips to lose ground – down 3.3% at 1,250.5p.
The number of its fellow Footsie constituents in arrears is still in single-figures however, and although the top-shares index is off its best levels it remains 122 points (2.0%) to the good at 6,173.
Gold is taking a much needed correction. Now trading at $1,980. pic.twitter.com/vMLvZ0i0fQ
— Jan Nieuwenhuijs (@JanGold_) August 11, 2020
12.45pm: Footsie above 6,200
Traders have been humming “Ain’t No Stopping Us Now” all day, with the FTSE 100 crashing through the 6,200 barrier.
British Airways owner International Consolidated Airlines Group SA (LON:IAG) is having its second good day in succession, up 7.9% at 217.6p, and it is leading the FTSE 100 152 points (2.5%) higher to 6,203.
Away from the big caps, Versarien PLC (LON:VRS), the advanced engineering materials group, has been on a decent run recently after it jumped into the graphene-enhanced facemask market last month, and it added to recent gains today following the release of its full-year results.
The shares climbed 8.4% to 45p despite the loss before tax expanding to £4.7mln from £2.8mln the year before, thanks largely to exceptional costs of £1,6mln, which arose mainly through impairment of goodwill in AAC Cyroma Limited and Total Carbide Limited totalling £900,000.
Share Price 41.4p (pre-open)
Always light relief to read about #VERS bright future. The ever increasing no. of prospects near fruition. Need to ignore cash burn and continuing adj FY large losses of £4.7m + 0.7m.
The game continues but is for amusement only! pic.twitter.com/3BPd39SQM0
— Dearg Doom (@MyDeargDoom) August 11, 2020
11.15am: Momentum maintained
Unusually, the Footsie did not take its foot off the pedal after the first hour of trading although the last hour has since progress slow.
The FTSE 100 was up 139 points (2.3%) at 6,190, just eight points below its intra-day high.
“Lockdowns have hit hoteliers hard, but as IHG only owns 26 of its portfolio of nearly 6,000 hotels, it’s fared better [than] many. Despite the group’s global occupancy dropping to 25% in the second quarter and revenue per room falling by half in the first half, the group remained profitable. While it’s offered support to franchisees over the crisis, not being on the hook for hotel running costs has gone a long way,” said Emilie Stevens at Hargreaves Lansdown.
The shares were up 6.0% at 4,240p.
Among mid-caps, housebuilder Bellway PLC (LON:BWY) was a rare faller, shedding 1.2% to 2,535p after it flagged up incremental costs due to coronavirus (COVID-19) restrictions on construction activities.
“This is a softer than expected update from Bellway. Completions since lockdown are behind expectations and peers’ performance and while build rates are improving slowly, Bellway is the lower end of build rates for peers. The slow ramp up to full production levels will have an impact on gross margins over the next few years,” said David O’Brien, the building analyst at Irish broker, Goodbody.
“Further, there are several suspended land deals due to COVID which are still being assessed as to whether they are viable or not. Given Bellway’s relatively shorter land bank compared to peers this is a concern.
“While Bellway has demonstrated some positives including the order book strength and better than expected balance sheet position, overall the update is weaker than anticipated,” he concluded.
Sarcastic email of the year goes to Bellway. They never fail.
Question: Please can I have information as to what is below the concrete in my garage. Kitchen. Living room please. I need to have an understanding around the insulation below concrete level.
There reply ….. pic.twitter.com/cwSFApBeJ1
— Kay Ashton MBE (@Kirstysstory) August 10, 2020
10.00am: Market shrugs off jobs numbers
Just five Footsie constituents were in the red as shares got off to a flying start on hopes a US fiscal stimulus package will be agreed.
London’s index of leading shares was up 111 points (1.8%) at 6,161, with investors refusing to let the latest jobs data spoil the mood.
According to the Office for National Statistics (ONS), early indicators for July 2020 suggest that the number of employees in the UK on payrolls is down around 730,000 compared with March 2020.
The UK claimant count – the number of people who signed up for unemployment benefits – rose by 94,400, which was well ahead of the 10,000 increase economists had predicted.
The headline, three-month average, unemployment rate was unchanged at 3.9% in June, below the consensus forecast of 4.2%.
“Suddenly we are starting to see some of those who had been in the no man’s land of furlough, start to appear in the statistics. This is a trend which is set to continue over the coming months as the government tapers its support from the job retention scheme,” said City Index’s Fiona Cincotta.
“As the government withdraws its support, these numbers will get worse. The BoE expects unemployment to reach 7.5%. So far this month we have heard big names across principally the hospitality sector and retail sector announce job losses. This will become more common as the 9 million furloughed either find themselves back in their place of work or in the dole queue,” she added.
Employee pay growth declined further in June following falls in April and May, the ONS reported. Growth has been affected by lower pay for furloughed employees since March and reduced bonuses.
Overnight, there was some welcome news for hard-hit retailers as the British Retail Consortium’s survey indicated retail sales continued to recover in July.
Sales were up 4.3% year on year, rising for the second month in a row.
The news for retailers was less good from another survey, conducted by market intelligence firm Springboard, which indicated footfall in July was 40% lower than in July 2019, although this was an improvement on the previous month.
8.55am: Bigger gains than predicted
The FTSE 100 opened strongly on Tuesday amid hopes the US will bolster its coronavirus stimulus programme after a period of stalemate in Washington.
The index of UK blue-chips advanced 90 points to 6,141.01 at the start.
Traders remained positive even in the face of some pretty grim employment news in the UK, which showed the number out of work has risen by almost three-quarters of a million since lockdown.
Providing a worrying early indication of the jobs tsunami to come in the autumn, the Office for National Statistics said a further 7.5mln are still temporarily away from offices and factories, presumably as a result of the government furlough scheme.
“A number of redundancies have been announced in July and August so far across a number of sectors, particularly in the retail sector,” said Howard Archer, of the respected economic think-tank, the EY Item Club.
“It is also notable that the July purchasing managers’ surveys reported sharper overall falls in employment across the services, manufacturing and construction sectors.”
On the market, bottom fishers came in for a raft of bombed-out stocks, including bookmaker GVC Holdings (LON:GVC), jet engine maker Rolls Royce (LON:RR.) and Intercontinental Hotels Group (LON:IHG), which were up respectively 6.5%, 5% and 3.5%, the latter after its latest results.
HSBC (LON:HSBA) rose 1.7% after Morgan Stanley upgraded its call on the banking stock to ‘equal-weight’. JP Morgan, meanwhile, moved its recommendation on Ferrexpo (LON:FXPO) to ‘neutral’. The shares advanced 3.7%.
Among the mid-caps, Elementis (LON:ELM) rose 9% after Jefferies went to ‘buy’ from ‘hold’.
Proactive news headlines:
Deltic Energy PLC (LON:DELT) has announced a material upgrade to gas estimates for the Selene prospect, part of its North Sea exploration portfolio alongside Royal Dutch Shell PLC (LON:RDSB). Notably, the estimated chance of success has also been lifted significantly (improving by 79%) to now stand at 44% in the ‘P50’ case. The new resource estimate sees some 629bn cubic feet of in-place P50 gas resources, with a range set at 286bn in the P90 (the highest confidence) estimate and 1.02 trillion cubic feet in the P10 (most prospective) estimate.
Europa Metals Ltd (LON:EUZ) has signed an agreement with concentrate marketing agent Conrad Partners, concerning product from the Toral lead, zinc and silver project in Castilla y León, north-west Spain. Conrad Partners has agreed to work with the company to source commercial terms for the potential future supply and sale of concentrate products from Toral. The firm is a leading Hong Kong-based concentrate agent within the industrial metals space, with a track record of structuring agreements and managing concentrate sales for a series of pre-production and producing companies worldwide.
H&T GROUP PLC (LON:HAT) has announced an interim dividend of 2.5p per share despite the challenges and impacts of the coronavirus (COVID-19) pandemic. The group’s financial results for the six months ended June 30, 2020, revealed a 26.5% reduction in pre-tax profit to £5mln while operating profit was 32.9% lower at £5.5mln, and diluted earnings per share dropped to 5p, down from 15p. The pawnbroking firm noted that its net pledge book increased by 4.6% to $5.6mln, while its personal loan book reduced 43% to £10mln.
S & U PLC (LON:SUS) said it has been encouraged by recent trading trends although the British consumer remains “skittish and cautious” as the coronavirus (COVID-10) pandemic continues to impact. The motor finance and property bridging specialist said although the coronavirus pandemic would undoubtedly have an impact on the group’s full-year results, it remains profitable and continues to pay dividends. In the Advantage Finance car loan business, sales have recovered from around 40% of normal to nearly 80%.
Inspiration Healthcare Group PLC (LON:IHC) said it is confident it will achieve market expectations for the full year after a strong first half. Underlying revenues in the six months to the end of July 2020, were up by around 30% on the corresponding period of last year. The medtech company said it has a healthy order book that has been boosted by several unexpected opportunities as a result of the coronavirus (COVID-19) pandemic, such as the award of contracts to supply ventilators and ancillary services to the National Health Service (NHS).
Power Metal Resources PLC (LON:POW) said that final preparations for drilling on the Molopo Farms Complex project, which is partially controlled by the company, are now underway. Power Metal holds an 18.26% stake in Kalahari Key, which operates Molopo Farms, and has elected to earn-in to a 40% direct interest in the project by spending US$500,000 on exploration, notably target drilling, in 2020. On completion of the earn-in Power Metal will have an effective economic interest of 50.96% in the MFC Project.
Conroy Gold and Natural Resources PLC (LON:CGNR) is raising £800,000 through a placing and subscription of shares at 25p each. The net proceeds of the financing will be used to support activities concerning the company’s proposed joint venture with Anglo Asian Mining PLC (LON:AAZ), to advance the company’s gold exploration activities in Finland, and for general working capital purposes. Each new share carries a warrant to subscribe for one additional share at 35p.
i3 Energy PLC (LON:I3E) confirmed it has raised at least £29mln, with a further £1mln subject to regulatory approval, as it advances its proposed acquisition of assets owned by Gain Energy in Canada. It comes after the oil and gas company last week struck a deal to concurrently sell a package of the Gain assets to a third party, Harvard Energy, for C$45mln (US$33mln) which meant the net acquisition cost was reduced to C$35mln (US$26mln). In the share placing, some 568.4mln new shares are being issued at a price of 5p. The additional placing will see the issue of 12.65mln if approved.
NQ Minerals PLC (AQSE:NQMI) (OTCQB: NQMLF) (OTCQB:NQMIY), the base and precious metals producer from its Hellyer Gold Mine in Tasmania Australia, announced that it has raised £695,389 (gross) at 7p per share from a UK based institutional investor and a group of private investors for general working capital purposes and the company will issue 9,934,126 new ordinary shares under the equity issue.
Sareum Holdings PLC (LON:SAR) has said it is advancing initial discussions with potential licensees for its pre-clinical tyrosine kinase 2 (TYK2) / Janus kinase 1 (JAK1) inhibitor immunotherapies for autoimmune diseases and cancer. The progress report was provided in the company’s latest trading statement, which also provided updates on the two treatments that have commercial backing. Investors were told that investigational new drug-enabling work would be completed for at least one of its TYK2/JAK1 candidates by the end of the calendar year.
Blue Star Capital PLC (LON:BLU) noted that its portfolio firm, Dynasty eSports Pte Ltd, has raised around £1.73mln, at a valuation of £10mln, to further develop its eSports portal management platform. The investment firm said it has participated in the fundraiser, investing a further £225,000 to maintain its 13% holding in Dynasty, taking its total investment in the company to £428,000 and valuing its stake in the group at around £1.3mln.
Panther Metals PLC (LON:PALM) has identified 253 geophysical anomalies at its Big Bear project on the Schreiber-Hemlo greenstone belt in Ontario, Canada, following a recently conducted airborne geophysical survey, with 39 designated for priority investigation. Meanwhile, ongoing sampling, geological mapping and prospecting has identified new hitherto unknown gold in soil anomalies coincident with favourable structural settings interpreted from the magnetic data.
Salt Lake Potash Ltd (ASX:SO4) (LON:SO4) has completed the $A71 million institutional component of its fully underwritten A$98.5 million equity raising at A$0.50 per new ordinary share. The underwritten equity raising comprises the institutional component of the accelerated pro-rata non-renounceable entitlement offer and the institutional placement.
Oriole Resources PLC (LON:ORR) said it is considering its options over an agreement to sell the Hasançelebi and Doğala mining royalties in Turkey. The agreement required partner Bati Toroslar to pay US$30,000 within seven days, with the balance contingent upon the commencement of mine construction at either Hasançelebi or Doğala.
Caledonia Mining Corporation PLC (LON:CAL) has said it will be releasing its operating and financial results for the quarter and the six months ended June 30, 2020, on Thursday, August 13, 2020. The company will be hosting a conference call and Q&A session open to all investors on the same day at 4pm BST UK time. Dial-in details: New York +1 212 999 6659; South Africa Toll Free 0800 980 512; Standard International Access +44 (0) 20 3003 2666; UK Toll Free 0808 109 0700; USA Toll Free +1 866 966 5335; Call Password – Caledonia Mining Results.
Savannah Resources PLC (LON:SAV), the resource development company, announced that its joint broker finnCap has written a comprehensive research report about the company and in particular its Mina do Barroso Lithium Project based in Portugal. finnCap’s research note can be accessed here: http://www.savannahresources.com/investor-relations/research/
Tiziana Life Sciences PLC (LON:TILS) (NASDAQ:TLSA), a clinical-stage biotechnology company developing targeted drugs for cancer, inflammatory diseases and COVID-19, announced that members of its management team will participate virtually in the BTIG Biotechnology Conference on Tuesday, August 11, 2020, at 2.30pm EDT. A live webcast of the fireside chat can be accessed by registering for the BTIG Biotechnology Conference, using this link: https://btig.meetmax.com/sched/event_64849/conference_home.html?bank_access=0&event_id=64849 . The investor presentation can be found on the Tiziana website: http://www.tizianalifesciences.com/cms/resources/tlsa-investor-presentation-august-2020.pdf. A replay of the webcast will be archived on Tiziana’s website for approximately 45 days following the presentation.
6.50am: Bullish start predicted
The FTSE 100 index is expected to open higher on Tuesday, extending the previous session’s gains after strong performances overnight from US and Asian markets as heightened hopes for progress on a US coronavirus (COVID-19) stimulus package provided support.
Spread betting firm CMC Markets expects the blue-chip index to open around 47 points higher at 6,097, having added 18.41 points on Monday to end at 6,050.59.
Overnight in New York, the Dow Jones Industrials Average jumped by nearly 358 points, or 1.3% to close at 27,791.44, while the broader S&P 500 index added 0.3%, but the tech-laden Nasdaq Composite shed 0.4% on some profit-taking.
Michael Hewson, chief market analyst at CMC Markets UK noted that “the hope that the executive orders signed by the US President late on Friday could well be a starting point for further stimulus measures, as opposed to an endpoint.”
He added: ”US Treasury Secretary Steven Mnuchin indicated that he was prepared to engage with Democrat lawmakers with a view to coming to some form of agreement, and while some Democrats have indicated that they may present a legal challenge to the President’s executive order, it’s not likely to be something that would play well politically less than 100 days before an election.”
Asian stock markets were also stronger on Tuesday, with Japan’s Nikkei 225 up 1.8% and Hong Kong’s Hang Seng index ahead 2.3%, helped too by relief that another round of Sino-US sparring appears not to have spilt over into trade.
Investors are awaiting a meeting between top US and Chinese trade officials on Saturday to review the first six months of the Phase 1 trade deal.
UK unemployment eyed as retail sales resilient
The first big event in the macro calendar this week comes on Tuesday with the latest UK unemployment figures for the three months to June, covering the worst period of the coronavirus pandemic lockdown.
While the government’s furlough scheme has helped to prevent a massive wave of immediate job losses – with unemployment only at 3.9% in May and near to the modern-day low of 3.4% in 1973 – a swathe of large firms have recently announced thousands of job cuts which could push the figure higher as they begin to take effect.
There are also concerns that unemployment may simply be a ticking time bomb as the furlough scheme begins to wind down before its planned end in October, meaning the 9mln workers on the scheme may simply find themselves moved off into the dole queue.
Overnight the monthly British Retail Consortium report showed year-over-year growth in total retail sales values declined only marginally to 3.2% in July, from 3.4% in June.
Samuel Tombs, chief UK economist at Pantheon Macroeconomics commented: “July appears to have been another solid month for retailers, with year-over-year growth in total sales values exceeding its 2019 average, zero, for a second consecutive month. New rules necessitating the compulsory wearing of face masks from July 24 do not appear to have had a detrimental impact.”
“Nonetheless, retail sales have benefited both from the release of pent-up demand for goods that were unobtainable during the lockdown, which probably now has been sated, as well as a rotation by households away from consuming services,” he added.
Hotels and insurance a corporate focus
Aside from the economic data, a batch of UK corporate results will also be eyed on Tuesday, with blue chips Intercontinental Hotels Group PLC (LON:IHG), Prudential PLC (LON:PRU) likely to be the main focus.
Holiday Inn owner InterContinental’s interim results will provide investors with their first look at the company’s finances during the coronavirus pandemic lockdown.
Revenues per available room (RevPAR) is expected to drop by more than half for the period as the lockdown battered the group’s second-quarter numbers, which saw RevPAR plunge 75%.
For Prudential, analysts at UBS estimating an 11% drop in operating profit to US$2.3bn due to a lower performance in the US, partially offset by growth in Asia.
Investors are going to focus on the US business and a potential minority spin-off in the second half, alongside Asian sales trends given the coronavirus (COVID-19) lockdown disruption and political volatility in Hong Kong.
Around the markets:
- Sterling: US$1.3083, down 0.1%
- Gold: US$2,011.20 an ounce, down 0.7%
- Brent crude: US$45.18 a barrel, up 0.5%
6.45am: Early Markets – Asia/Australia
Asia Pacific markets mostly rose on Tuesday following overnight gains in the US as investors remain unfazed by growing coronavirus (COVID-19) cases worldwide.
The Nikkei 225 advanced 1.84% and South Korea’s Kospi index gained 1.69%. The Hang Seng index in Hong Kong added 2.4% and China’s Shanghai Composite was up 0.33%.
Australia’s benchmark ASX 200 advanced 0.86% while its heavily-weighted financials sub-index surged 1.76%.
Proactive Australia news:
TNT Mines Ltd (ASX:TIN) has received further high-grade uranium and vanadium results from sampling at the Bonanza workings of the 100%-owned East Canyon Uranium-Vanadium Project, in southeast Utah, USA.
Mako Gold Ltd (ASX:MKG) has received further high-grade results of up to 13 metres averaging 20.82 g/t gold that demonstrate thick and high-grade mineralisation within 50 vertical metres of surface at Tchaga prospect within the Napié Gold Project in Côte d’Ivoire.
Calima Energy Ltd (ASX:CE1) (FRA:R1Y) is encouraged by strong and continuing interest by large oil & gas companies in the Montney Formation in northeast British Columbia, Canada, in which it holds a highly prospective position.
Andromeda Metals Ltd (ASX:ADN) has increased its kaolin inventory in South Australia with an upgraded resource estimate for its Mount Hope Kaolin Project, which represents a 47% increase on the previous non-JORC resource.
Paradigm Biopharmaceuticals Ltd (ASX:PAR) has achieved a number of key approvals required to progress investigation into the use of its core drug Pentosan Polysulfate Sodium (PPS) in the treatment of the rare disease mucopolysaccharidosis (MPS).