- FTSE 100 index sheds 122 points
- London assigns £60mln to Greater Manchester
- US traders struggling to make sense of stimulus developments, or lack thereof
5pm: Footsie continues to drop into the the close
The FTSE 100 dropped 112 points, 1.9%, to 5,776.5, and the FTSE 250 tumbled 141 points, 0.8%, to 17,787.8.
“The FTSE 100 is deep in the red thanks largely to the rally in the pound,” CMC Markets UK analyst David madden wrote Wednesday. “Optimism is circulating with respect to the possibility of the UK and the EU achieving a trade deal, hence the upward move in sterling. “
Companies with more business overseas are more vulnerable to gains in the pound’s relative value, he noted.
“Stocks like Diageo, AstraZeneca, Unilever and GlaxoSmithKline and British American Tobacco are weighing on the British index because of the rally in the pound,” Madden wrote. “The companies all earn a relatively high portion of their total revenue from overseas, so sterling’s positive run has pushed them into the red. The major European indices are showing losses too as traders on this side of the Atlantic are worried about the tougher restrictions brought on by the pandemic. The fact that US lawmakers have yet to strike a deal over the proposed Covid-19 relief package is playing a role in the bearish move too.”
In the US, Wall Street gave back its early gains. The DJIA went from up nearly 150 in the opening hours of trading to down 37, 0.1%, to 28,271.2. The Nasdaq lost 13 points, 0.1%, to 11,503.2, and the S&P 500 slipped less than a point to 3,442.4.
As ever, traders are watching for a coronavirus stimulus deal between House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin.
White House Chief of Staff Mark Meadows told CNBC that the two sides made “good progress” in talks Tuesday but “still have a ways to go” to strike an agreement.
3.40pm: Greater Manchester to receive £60mln of financial support for local lockdown
FTSE 100 dropped 82 points to 5,807 ahead of close, keeping the descending trend seen all day.
Boris Johnson allocated £60mln of funding to support businesses and the 2.8mln people living in Greater Manchester, set to enter tier 3 of local lockdown on Friday.
It was the first UK region to be forced into it without local leaders agreeing to a financial package.
Mayor Andy Burnham initially asked for £90mln then lowered it to a “bare minimum” of £65mln.
Sir Keir Starmer criticised the Prime Minister for failing to “find” £5mln.
Meanwhile, fellow tier-3 Liverpool City announced gyms can reopen after pressuring the government to allow it.
“The government have agreed with the case I put forward on behalf of city region leaders and that they would now bring us in line with other tier three areas,” Liverpool Metro Mayor Steve Rotheram told the BBC.
3.30pm: Proactive North America headlines:
BioLargo Inc (OTCQB:BLGO) says BLEST subsidiary awarded contract to assist in the reconfiguration of Regenerative Thermal Oxidizer (RTO) systems at a large chemicals plant
ImagineAR Inc (CSE:IP) (OTCQB:IPNFF) is launching its first-ever mobile WebAR retail project in North America
2.45pm; Wall Street starts mostly higher
Wall Street shares started mixed in early deals mid-week as traders aren’t sure which way to leap as they keep an eye on the latest on stimulus talks in Washington and digest more corporate earnings.
The Dow Jones Industrial Average shed around 18 at 28,290, while the S&P 500 added over two points at 3,445. The tech-laden Nasdaq exchange added over 31 at 11,548.
Futures trade had pointed to a generally higher start.
Negotiations on the coronavirus fiscal package are set to continue today between Democratic negotiators and the White House, despiute the self-imposed deadline of end of Tuesday that had been proposed by House Speaker Nancy Pelosi.
Market analyst at JFD Group Charalambos Pissouros was quoted as saying that although an agreed package would likely boost trader sentiment, investors should take each day as it comes currently.
“….the continued rapid spread of COVID-19 could threaten the global economy if it forces further lockdowns of business activity. Investors might also be wary of increasing long positions in equities as the Nov. 3 U.S. presidential election draws near,” the analyst said.
In company news, streaming giant Netflix Inc (NASDAQ:NFLX) saw its stock plunge 4.5% to US$501.38 after releasing results on Tuesday after the bell, which showed a slowdown in new subscribers and a miss on revenue. The company added 2.2 million new subscribers in the three months to end September, which was lower than the 3.4 million forecast by analysts.
1.20pm: PayPal launches service to buy, hold, sell cryptocurrency
FTSE 100 dipped further in the early afternoon, down 78 points to 5,810.
It will initially feature Bitcoin, Ethereum, Bitcoin Cash and Litecoin, to US account holders in the coming weeks then expanding to select international markets in the first half of 2021.
Cryptocurrency will also be available as a funding source for purchases at its 26mln merchants worldwide.
“The shift to digital forms of currencies is inevitable, bringing with it clear advantages in terms of financial inclusion and access; efficiency, speed and resilience of the payments system; and the ability for governments to disburse funds to citizens quickly,” said president and chief executive Dan Schulman in a statement.
“Our global reach, digital payments expertise, two-sided network, and rigorous security and compliance controls provide us with the opportunity, and the responsibility, to help facilitate the understanding, redemption and interoperability of these new instruments of exchange.”
“We are eager to work with central banks and regulators around the world to offer our support, and to meaningfully contribute to shaping the role that digital currencies will play in the future of global finance and commerce.”
12.30pm: Wall Street expected to start on the back foot
FTSE 100 was wallowing in the red at midday while US futures are also pointing at a lower open.
London’s index of big caps tumbled 61 points to 5,827.
The morale is low as several European countries implement further lockdowns, though Wall Street is focusing on a stimulus package and the upcoming election.
Conservatives and Democrats are not expected to reach a deal before November 3, with Senate Majority Leader Mitch McConnell warning against it in fears it could hinder efforts to confirm Judge Amy Coney Barrett to the Supreme Court next week.
“Of course, the White House may be confident it can get the votes in the Senate to get a deal over the line and Trump may be willing to ignore the warnings of McConnell if he thinks it could get him a second term,” said OANDA’s Craig Erlam.
“The real fight may not be between the White House and House Democrats after all, rather the President and Senate Republican’s as the election looms.”
Trials were halted in early September after a UK volunteer reported serious side effects; they later resumed in all countries but the US, where there are stricter rules on this type of incidents.
According to Reuters, it may resume as early as this week after a review by the US Food and Drug Administration.
11.30am: South Yorkshire to be moved into tier 3 of local lockdown system
FTSE 100 cut its losses in late morning, dropping 64 points to 5,824.
South Yorkshire is entering the highest risk level of local lockdown as of Saturday, covering all the four local authority areas of Barnsley, Doncaster, Rotherham and Sheffield.
Local leaders agreed for a £41mln support package with the government, including £30mln to support businesses and £11mln for public health measures such as Test and Trace.
Wet-led pubs, leisure centres, betting shops, adult gaming centres and casinos are required to close, while individuals are asked not to travel in and out of those areas unless necessary.
People must not socialise with anybody outside of their household in any indoor setting, but can meet outdoors in groups of a maximum of six.
Gym classes will not be allowed and social distancing guidelines should be followed between people from different households, but gyms will remain open.
The decision comes a day after Westminster announced Greater Manchester will also be placed in tier 3 from Friday despite not agreeing a financial package with local leaders.
Mayor Andy Burnham had asked for a “bare minimum” of £65mln to protect the 2.8mln people living in the area.
London allocated £22mln of funding but said it would be open for further discussions.
10.15am: Royal Mail launches parcel pick-up service
FTSE 100 doubled its losses in mid-morning, sliding 90 points to 5,978.
It wasn’t helped by sterling rallying 0.75% to US$1.3046 following a 0.5% increase in UK inflation in September.
“The strength of that rise is perhaps surprisingly, given the lack of Brexit deal progress – or, rather, the active pursuit of a no deal exit – in the last few days,” noted Connor Campbell at Spreadex.
Pick-up parcels will cost 72p on top of the normal postage cost, for up to five parcels per address.
The courier is trying to grab market share from competitors DPD, Hermes and DHL as well as paring its losses, despite parcel revenue has been growing recently.
“The move has potential in our view, allowing the group to put more volumes through its existing network particularly in more rural areas where the universal service is more costly to deliver,” said Nicholas Hyett, analyst at Hargreaves Lansdown.
“However, there will be challenges too – not least in additional infrastructure expenditure and initial operational complexity.”
“Whether the initiative is enough to turn Royal Mail’s flagging fortunes around remains to be seen. A lot will depend on uptake, which if significant could make the group competitive on larger B2B contracts as well, but pricing in parcels remains tough and Royal Mail’s so far struggled to adjust to the rapidly changing landscape.”
9.15am: Weakness returns
The FTSE 100 ignored the script to open lower on Wednesday. While Wall Street and Asia’s main markets were boosted by renewed US stimulus hopes, the UK blue-chip index coughed and spluttered its way lower.
After an hour and a quarter of trading, the Footsie was 48 points lower at 5,840.
Driving sentiment was the incremental coronavirus lockdown of the north of England, which looks set to give way to a full-blown circuit-breaker that will no doubt heap further pressure on an already flagging British economy.
Data out earlier was of the ‘meh’ variety with UK consumer price inflation rising to 0.5% in September, up from 0.2% in August as the Eat Out to Help Out Scheme ended.
“As the UK starts to experience a second wave, the employment outlook is weak and wage growth limited. Inflationary pressures are few and far between,” said Robert Alster, chief investment officer at Close Brothers Asser Management.
“While the Bank of England has made it clear that negative interest rates remain a part of its monetary toolkit, we’re not likely to see such measures called upon this year. The focus is still very much on ensuring that fiscal measures are given every opportunity to gain traction. But as the current crisis forces the treasury to step up again and again, the Bank of England may feel growing pressure to take action.”
The price action was fairly muted in the top-flight. Not so in the second-tier, where gold digger Centamin (LON:CEY) revealed the full extent of its production troubles. The shares were off almost 16% early on, and are down more than a quid at 132p since August.
7.35am: Inflation touch below forecasts
The Office for National Statistics said UK consumer price inflation rose to 0.5% year-on-year in September, up from 0.2% in August, when it had been reduced by a temporary scheme to promote dining in restaurants. Economists had predicted a rise in September inflation to 0.6%.
Howard Archer, chief economic advisor to the EY ITEM Club, commented: “At 0.5% in September, consumer price inflation was more than one percentage point below the Bank of England’s 2.0% target rate.
“Inflation was significantly lifted in September by the ending of the Government’s ‘Eat Out to Help Out’ discount scheme which ran throughout August and had been a major factor in the fall in inflation compared to July. There was also an appreciable upward impact from transport prices (the first positive contribution since March), as they were lifted by higher prices for second-hand cars. Average petrol prices stood at 113.3 pence per litre in September 2020, up from 113.1 pence in August but below 127.3 pence recorded in September 2019.”
Archer added: “Inflation continued to be held down in September by the temporary VAT cut (from 20% to 5%) that was introduced in mid-July and which will last through to end-March 2021 for the hospitality sector, hotel and holiday accommodation and admission to certain attractions. There were also downward impacts on inflation in September from furniture, household equipment and maintenance; games, toys and hobbies; and food and non-alcoholic beverages.”
Meanwhile, separately, the ONS said Britain’s government borrowed £36.101bn last month, above the £33.55bn consensus forecast, taking borrowing in the first half of the financial year to a record £208.5bn, official data showed on Wednesday.
After the data, spread betting firms called the blue-chip index to open around 26 points higher at 5,915, having been seen up 17 points earlier.
Proactive news headlines:
Thor Mining PLC (LON:THR) (ASX:THR) said that there was visible gold in stream sediment sample panning from the third phase of gold geochemical sampling carried out earlier this month at the 100%-owned Pilbara Goldfield tenements in Western Australia. In a statement, Mick Billing, executive chairman of Thor Mining, commented: “Another step closer in the process of narrowing down Ragged Range drill target selection, with visible gold again found in the stream sediment samples consistently along the 13 kilometre corridor of anomalous gold.”
Europa Oil & Gas Holdings PLC (LON:EOG) has been granted a one-year extension to the initial phase of the Inezgane exploration permit, offshore Morocco. The extension makes up for the time lost on the project due to the coronavirus (COVID-19) pandemic and allows sufficient time for the company to complete its technical work programme. This work sees the company derisking 30 prospects and leads, estimated to host some 10bn barrels of unrisked oil resources. Europa owns a 75% stake in the project which spans some 11,228 square kilometres.
W Resources PLC (LON:WRES) has told investors it is “extremely encouraged” by the La Parilla mine’s performance in the month of September, as the Spanish operation began showing improved performance following a phase of upgrade work. The producing week was truncated to three days during the third quarter, allowing teams to access plant facilities so that they could be optimised. La Parilla produced a total of 171,454 tonnes of run-of-mine ore feed to the plant, representing a pro-rata improvement of 58% – in actual like-for-like terms volumes were down 32%.
Seeing Machines Limited (LON:SEE) revealed it has signed a non-binding Memorandum of Understanding (MOU) with global aerospace and defence technology company, L3Harris Technologies (NYSE:LHX) to collaborate to enhance pilot training technology. The technology company, that designs advanced computer vision AI-powered operator monitoring systems to improve transport safety, said the MOU frames the intent to enter into a global non-exclusive license agreement to collaborate on the firm’s dedicated precision eye-tracking system for flight crew training in the full flight simulator (FFS) environment.
Guild Esports PLC (LON:GILD) has unveiled its latest signing – a top-tier squad competing in Valorant, a shooter game launched by Riot Games in June. Yacine Laghmari ‘Yacine’, Malkolm Rench ‘Bonkar’, Leo Janneson ‘Leo’, William Sundin ‘Draken’, and Filip Gauffin ‘Goffe’ have moved from Sweden’s successful ‘Team Bonk’. They will join Guild’s existing outfits competing in Rocket League and FIFA.
LoopUp Group PLC (LON: LOOP) has launched a new affordable HD videoconferencing service to enable businesses to organise their own virtual meetings. Known as LoopUp Rooms, the company said it will combine its existing remote meeting solution with off-the-shelf hardware to create competitively-priced, plug-and-play video conferencing suites accessible to all users.
Mineral & Financial Investment Limited (LON:MAFL) has noted the start of work on Ascendant Resources Inc‘s autumn exploration program at the Lagoa Salgada VMS project in Portugal. Ascendant’s programme is part of a phased earn-in to the project through its joint venture agreement with Redcorp Empreedimentos Mineiros (75% owned by MAFL). This programme follows the robust findings of a preliminary economic assessment, announced in January 2020, and, comprises 2,700 metres of drilling and downhole induced polarity (IP) surveying.
Oncimmune Holdings PLC (LON:ONC) has welcomed the publication of abstracts from two clinical studies that provide “independent validation” of the company’s EarlyCDT Lung blood test. The data were presented in detail at the recent American College of Chest Physicians (CHEST) annual meeting. The first paper assessed the performance of the EarlyCDT Lung blood test in PANOPTIC clinical trial samples to identify potentially malignant indeterminate pulmonary nodules (growths in the lung). The second paper looked at the use of two blood-based biomarker tests in tandem to reclassify the risk of indeterminate pulmonary nodules.
AEX Gold Inc. (LON:AEX) (CVE:AEX), an independent gold company with a portfolio of gold licences in Greenland, has updated investors on the 2020 exploration drilling campaign at its Nalunaq property in South Greenland. The company said that infill drilling at Nalunaq successfully intercepted the Main Vein with true thicknesses of up to 1.36 meters and visible gold, among the thickest intersections ever drilled at Nalunaq.
C4X Discovery Holdings PLC (LON:C4XD) is to raise £15mln to strengthen its balance sheet while it is in partnership discussions and provide working capital for its drug development programmes. The money raised would be sufficient for at least twelve months said C4X and will be raised via a bookbuild placing undertaken by broker Panmure Gordon today at a price of 14p per share. The funding comprises an EIS/VCT offer and units including a warrant for those not entitled to the tax breaks with the issue price a discount of around 11% to yesterday’s closing price.
Premier African Minerals Limited (LON:PREM) has raised a gross £1.1mln through a placing at 0.04p per share. States Bridge Capital, which has just been appointed the company’s financial adviser, helped arranged the financing and will now assist Premier find high-value exploration and/or cash generative assets.
Falcon Oil & Gas Ltd. (LON:FOG) (CVE:FO) said it has been informed that the Bankruptcy Estate of Petrohunter Energy Corporation is the beneficial owner of 48,101,000 common shares of the company representing 4.90% of Falcon’s issued and outstanding Shares. Sweetpea Petroleum Pty Ltd. is no longer a beneficial owner of Falcon Shares, it added.
RM Secured Direct Lending PLC (LON:RMDL), an investment trust specialising in secured debt investments, announced that on Tuesday, October 20, 2020, its investment manager, RM Capital Markets Limited acquired 12,500 ordinary shares of 1.00p each in the company at 79.00p per share. Following the purchase, the investment manager’s total holding of RM Secured Direct Lending ordinary shares is 1,237,325, the firm added.
Remote Monitored Systems PLC (LON:RMS) said it has received notification to exercise a further 10,000,000 warrants at an exercise price of 0.5p each. The consideration received by the company will be £50,000.00.
Itaconix PLC (LON:ITX) (OTCQB:ITXXF), a leading innovator in sustainable specialty polymers, has announced that the company will release interim results for the six months ended June 30, 2020, at 7.00am on October 28, 2020, and provide a live presentation of the results at 1.00 pm via the Investor Meet Company platform. Investors who are not registered with Investor Meet Company can sign up for free and add the meeting with Itaconix via: https://www.investormeetcompany.com/itaconix-plc/register-investor
Salt Lake Potash Limited (LON:SO4) (ASX:SO4) has said its annual general meeting will be held at the Conference Room, Ground Floor, BGC Centre, 28 The Esplanade, Perth, Western Australia on Friday, November 20, 2020 at 11.00am WST.
6.50am: Early gains predicted
The FTSE 100 index is expected to open higher in early trade on Wednesday, extending Tuesday’s modest gains following positive performances overnight on Wall Street and in Asia, with investors awaiting the latest UK inflation data.
Spread betting firm CMC Markets expects the blue-chip index to open around 17 points higher at 5,906, having added 4.57 points on Tuesday to close at 5,889.22.
Overnight in New York, the Dow Jones Industrials Average rebounded 113 points, or 0.4% higher to end at 28,308, while the broader S&P 500 index gained 0.4%,
The tech-laden Nasdaq Composite rose 0.3% with all eyes on a batch of key sector results over the next few weeks. After-hours, streaming giant Netflix saw its numbers disappoint, with earnings missing expectations as subscriber numbers slowed dramatically – albeit having risen strongly at the height of the coronavirus pandemic – sending its shares 5% lower,
Asian markets shook this disappointment off and also saw gains on Wednesday, with Japan’s Nikkei 225 index up 0.4% and Hong Kong’s Hang Seng index ahead 0.7%.
Michael Hewson, chief market analyst at CMC Markets UK commented: “US markets had a slightly more positive finish buoyed by a faint hope that House Speaker Nancy Pelosi and Treasury Secretary Steve Mnuchin would be able to cobble together the bare bones of some form of stimulus package.
“There was some encouragement to this view given that Pelosi had expressed optimism that a deal was possible, as well drawing back from her insistence that her Tuesday deadline had been a hard date for a deal to be done.”
He added: “So much for a Tuesday deadline, however, Nancy Pelosi did say she’s now hopeful of a deal this week. It seems that the deadline for a deal remains very much a moving target, and for now that appears to be supporting risk, with Asia markets broadly positive.”
UK inflation to rise
On currency markets, sterling was slightly higher ahead of the latest UK consumer price inflation release.
Pantheon Economics expects September UK CPI to rise to 0.6% from 0.2% in August, in line with the consensus estimates but above the 0.3% rate forecast by the Bank of England in August’s Monetary Policy Report.
Food and energy prices were probably little changed in September, and core goods inflation likely fell, but the end of restaurant discounts and a recovery in air transport inflation likely boosted services inflation, the firm’s economists said.
Public sector borrowing numbers for September are also due and expected to rise by another £32.4bn, a slight improvement on the £35.2bn seen in August, albeit bringing the total borrowed since the start of the coronavirus pandemic lockdown in March to the eye-watering sum of £217bn.
William Hill odds on for an update
On the corporate front, a trading update from bookmaker William Hill PLC (LON:WMH) will likely be all about the outlook, particularly in the short-term as the UK government’s new lockdown restrictions threaten to force the bookmaker to shutter some of its stores in affected areas as Britain tries to flatten out the infection rate of a second coronavirus wave.
However, the UK situation will only be part of the story, with the US likely to be the subject of the longer-term focus as the company is seemingly on the cusp of being snapped up by Las Vegas casino operator Caesars Entertainment, which made a £2.9bn offer for the group last month.
Around the Markets:
- Sterling: US$1.2978, up 0.2%
- Gold: US$1,913.60 an ounce, up 0.15%
- Brent crude: US$42.92 a barrel, down 0.5%
6.45am: Early Markets – Asia/Australia
Stocks in the Asia-Pacific region were mixed on Wednesday as investors continue to watch for developments on US stimulus talks.
Chinese stocks were lower with the Shanghai Composite down 0.60% while Hong Kong’s Hang Seng index gained 0.76%.
In Japan, the Nikkei 225 added 0.37% and South Korea’s Kospi rose 0.30%.
Shares in Australia were marginally higher, with the S&P/ASX 200 up 0.12%.
Proactive Australia news:
Perseus Mining Limited’s (ASX:PRU) (TSE:PRU) (OTCMKTS:PMNXF) Edikan and Sissingué operations in West Africa continued to perform strongly in the September 2020 quarter relative to the prior quarter, with gold production up 6% to 68,772 ounces.
YPB Group Limited’s (ASX:YPB) proprietary Connect Platform has been enabled, with its QR Codes now ready for deployment in venue-based COVID-19 contact tracing anywhere in the world.
Brookside Energy Ltd‘s (ASX:BRK) STACK Play non-operated Working Interest wells in the Anadarko Basin of Oklahoma are performing well, with the payout profile validating the company’s acreage selection and acquisition process
Legend Mining Ltd (ASX:LEG) has identified two new DHTEM conductors on top of further positive diamond drilling results from the Mawson discovery within the wider Rockford Nickel-Copper Project in Western Australia’s Fraser Range.
Ironbark Zinc Limited (ASX:IBG) has commissioned a report by Canadian ice shipping specialist Fednav Ice Services to inspect shipping conditions at its 100%-owned Citronen Zinc-Lead Project in Greenland.
St George Mining Ltd (ASX:SGQ) (FRA:S0G) is moving quickly to drill-test two very strong off-hole electromagnetic (EM) conductors identified in an unexplored area of the Mt Alexander Nickel-Copper Sulphide Project in WA.
Talisman Mining Ltd (ASX:TLM) has come out of FY20 in a strong financial position as a cash-backed exploration company with a strong potential royalty portfolio after divesting its Sinclair Nickel Project in Western Australia to Saracen Nickel Pty Ltd, a subsidiary of Saracen Mineral Holdings Limited (ASX:SAR).
Kin Mining NL (ASX:KIN) has received new high-grade assay results from recent diamond (DD) and reverse circulation (RC) drilling at Cardinia Hill prospect as part of an ongoing Phase 3 drill program at the Cardinia Gold Project (CGP) in Western Australia.