- FTSE 100 index added 50 points
- US indices well higher
- GameStop bubble may be popped
5pm: Strong week continues Tuesday
London’s leading index closed 50 points higher, a 0.8% gain, at 6,517, while the FTSE 250 jumped nearly 300 points, 1.5%, to 20,690.
Weakness in the mining sector prevented the FTSE from keeping up with its foreign counterparts, Madden noted.
“Disappointing results from BP, plus a pullback in miners like BHP Group, Rio Tinto and Glencore are the reasons why the British index is showing roughly half the percentage gains of the continental benchmarks.”
Stocks on both sides of the pond are back on their feet, though, and institutional traders may be looking beyond the GameStop Corp (NYSE:GME) rally that transfixed investors for some time.
The video game retailer’s stock sank another 44% to $125.13.
“The bulls are back in control as the fears of the retail-Reddit mob have dwindled,” CMC Markets UK analyst David Madden wrote Tuesday. “One could argue that normal service has resumed as the established players are buying back into stocks. President Biden’s stimulus plans are in focus as US lawmakers are debating the scale of the relief package. A group of Republican senators back a $618 billion scheme, which is only a fraction of the $1.9 trillion that Mr Biden announced last month but the funds might be dished out in tranches.”
In the US, the Dow surged more than 600 points, 2%, to 30,812 at midday. The Nasdaq Composite was 211 points, 1.6%, higher, at 13,614, and the S&P 500 gained 67 points, 1.8%, to 3,841.
3.50pm: February going well so far …
Blue Monday is followed by Hard Tuesday, according to Fats Domino but just as yesterday was not particularly blue, so today has not been especially hard.
Leading shares are firmer on balance, driving the FTSE 100 46 points (0.7%) higher to 6,512, helped by sterling shedding around a third of a cent against the US dollar, although it is holding steady against the euro.
“Stock markets are making decent gains again on Tuesday, continuing to pick themselves up after a tough start to the year,” said Craig Erlam at OANDA.
“Some may be encouraged by what we’re seeing this week, with less focus on the Reddit rebellion as Silver continues to give back some of its gains, but I’m just not convinced. For starters, I don’t think the Reddit crowd will disappear that easily, although it may have to rethink its strategy after its recent foray into precious metals.
“Investors have also not been in a particularly upbeat mood since the turn of the year and I don’t think we’ve seen enough of a correction to draw them back in. Whether it was the ‘taper tantrum’ talk, lack of interest in earnings or being spooked by the retail community, it’s not the behaviour of the buy the dip crowd we’ve seen so much of over the years,” Erlam vouched.
There has been some droll musing on when the UK is going to get is equivalent of GameStop, with some people – perhaps getting the terms “boomer” and “millennial” confused – suggesting that model train set and Airfix kits maker Hornby PLC (LON:HRN) might be a suitable candidate for the GameStop treatment.
London’s top riser is loss-making investment firm Worldsec Limited (LON:WSL), which is up 50% at 3p, also on zero news flow.
The company invests primarily in unlisted companies based mainly in Greater China and the South-East Asian region so its business is opaque at the best of times, giving us little chance of discerning why its shares are suddenly rising; more buyers than sellers, probably.
There’s been no news today either for GETECH Group PLC (LON:GTC), winch is up 30% at 43p but the shares have been on a good run since it announced some boardroom changes last week and also some strategic partnerships that will “position Getech at the forefront of work to establish a national network of hydrogen generation, storage and retail hubs”.
A week ago, GETECH shares were trading below 30p.
It has been another rough day for Bidstack Group PLC (LON:BIDS), the company with technology that enables advertising to be displayed within computer games.
The shares plunged from 11p to 7.3p yesterday following a trading update and have fallen another 14% to 6.3p today.
The company made of a loss before tax of around £7.2mln in 2020, compared to a loss of £5.4mln the year before.
3.10pm: Proactive North America headlines
Mirasol Resources Ltd (CVE:MRZ) (OTCPINK:MRZLF) (FRA:M8R) commences new 2,700 metre drill program at Virginia silver project in Argentina
Mind Medicine (MindMed) Inc (NEO:MMED) (OTCQB:MMEDF) (FRA:MMQ) unveils changes at the top as it advances its psychedelic medicine strategy
African Gold Group Inc (CVE:AGG) (OTCMKTS:AGGFF) (FRA:3A61) says latest drilling at flagship Kobada gold project augurs well for expanding resources
2.47pm: Wall Street bullish in early deals
The main Wall Street indices were all higher at the opening bell on Tuesday as hopes for stimulus and the fading retail trading frenzy lifted sentiment.
In the early minutes of trading, the Dow Jones Industrial Average was up 1.02% at 30,519, while the S&P 500 climbed 0.98% to 3,810 and the Nasdaq rose 1.11% to 13,551.
Investors also seem optimistic ahead of earnings later from tech giants Amazon Inc (NASDAQ:AMZN) and Google parent Alphabet Inc (NASDAQ:GOOGL), with shares in the former up 2.2% at US$3,416 while the latter rose 2.1% to US$1,931.
Meanwhile, fellow big tech stalwart Tesla Inc (NASDAQ:TSLA) managed to rise 1.6% to US$835 despite the electric car maker announcing a recall of around 135,000 of its vehicles over failures in its touch screen technology.
Back in London, the FTSE 100 had added to its earlier gains and was up 45 points at 6,511 at around 2.45pm.
12.30pm: Pfizer lower after underwhelming fourth-quarter numbers
On another busy results day, the early indications are that US equities will open predominantly firmer.
The Dow Jones industrial average is set to rises 232 points – almost emulating yesterday’s advance – to 30,444 while the broader-based S&P 500, which yesterday jumped 60 points, is tipped to climb 30 points to 3,804.
The Nasdaq Composite, which comfortably outperformed the Dow and the S&P yesterday, is set to open more circumspectly, down 49 points at 13,354.
Some big names have already released results, including drugs company Pfizer, which is lower in pre-market trading after earnings came in below expectations.
Pfizer sees about $15 billion in 2021 sales from COVID-19 vaccine Pfizer Inc on Tuesday forecast sales of about $15 billion from the coronavirus vaccine that it is making along with German partner BioNTech.
— Purdy Mouth Capital (@MouthPurdy) February 2, 2021
Oil giant Conoco Philips, on the other hand, declared a loss that was not as severe as feared.
On the macroeconomic front, sales data from chain stores is likely to show a slowdown in growth.
“Same-store chain-store sales growth rose to 3.9% last week, above the top of the recent range, so we expect a correction to perhaps 2% this week. Last week’s increase might have been due to increased spending after the $600 stimulus payments were made, but the Redbook data are very noisy,” said Ian Shepherdson at Pantheon Macroeconomics.
Auto sales – that’s sales of motor vehicles – figures for January are also scheduled for release.
Daiwa America chief economist Mike Moran expects the numbers will point to sales running just a touch below the 16.3mln pace set in December.
In London, the FTSE 100 has ebbed to 6,495 but is still 29 points (0.4%) higher on the day.
Eurozone gross domestic product (GDP) numbers for the fourth quarter have been released and caused barely a ripple in the London stock market.
GDP fell by 0.7% in the Eurozone and by 0.5% in the European Union.
Most economists seem to agree that another recession – defined as two consecutive quarters of GDP shrinkage – is on its way.
“GDP fell by just -0.7% in 4Q 2020 despite significant lockdown measures in place but with lockdowns extended well into 1Q, another technical recession is in the making,” said Bert Colijn at ING.
“While quite a few service sectors have seen output plummet over the course of the quarter, a strong manufacturing contribution has limited the overall GDP decline. As lockdowns have been extended into 1Q, it is likely that another quarter of falling GDP will follow,” Colijn opined.
11.15am: FTSE 250 led higher by Virgin Money
The FTSE 100 has marked time after a bright opening and is up 39 points (0.6%) at 6,505.
The company returned to profit in the first quarter of its financial year although it maintained its cautious economic outlook.
“It was notable, though perhaps not surprising, that lending demand was slightly softer with mortgages down by 0.2% and personal lending down by 2%. Net interest margin [NIM] was stable at 1.52%, with the focus on maintaining that over gaining new business,” said CMC’s Michael Hewson.
“Expectations are for NIM to improve over the rest of the year as the economy improves and restrictions get eased,” he added.
9.45am: Hotel stocks back in favour
Now that we’ve all boned up on Reddit, GameStop, short squeezes and silver, the market’s attention has moved on to more traditional drivers of sentiment.
The FTSE 100 was up 43 points (0.7%) at 6,509 and the fact that its top two performers are both hotel groups tells you that optimism over the roll-out of the various vaccines is back in fashion again.
Premier Inns owner Whitbread PLC (LON:WTB) was the Footsie’s king of the castle, up 3.7% at 2,956p but Holiday Inn owner InterContinental Hotels Group PLC (LON:IHG), up 3.4% at 4,764p, was not far behind.
There was even some love for British Airways owner International Consolidated Airlines (LON:IAG), which was up 2.9% at 146.9p.
Resource stocks are putting a crimp on the Footsie’s style, however, most notably silver miner Fresnillo PLC (LON:FRES), down 4.1% at 1,032p, and oil behemoth BP PLC (LON:BP.), down 3.2% at 258.6p after its underwhelming fourth-quarter update.
“BP was able to drive enough costs out of the business to earn an underlying profit in both upstream and downstream segments, and net debt also ended 2020 lower; however, this all came at a cost – oil and gas production slumped to its lowest level in four years despite delivering three major projects in the final quarter of the year and the organic reserve replacement was just 78%,” said Peter McNally at Third Bridge, the investment research bureau.
“2021 does not appear off to a great start with January retail volumes down 20% versus the prior year, an acceleration from the 11% decline seen in Q4. One bright spot cited in the company’s outlook was the US natural gas market; however, with only one rig running and costs on the rise, it is hard to see this having a material impact on results as we move into 2021,” he added.
As for Fresnillo, it is coming down to earth after all the excitement over silver prices getting ramped up, allegedly by message board warriors.
“While the retail hoards may be enjoying the momentum-driven day in the sun at the moment, they will also discover that the silver exit door is tiny when a large proportion of that US$11.0bn per day [the typical daily volume for silver futures trade] runs for it at the same time. The fact that silver retreated quickly from above US$30.00 an ounce is a warning sign. Another is the Relative Strength Index (RSI), which edged into overbought territory overnight. RSI’s work pretty well on precious metals and oil when it comes to predicting corrections,” said OANDA’s Jeffrey Halley.
“I also note that copper and iron ore are struggling at present levels, iron ore notably, gapping lower last week. Gold also remains locked between its converging 100 and 200-day moving averages, receiving an infinitesimal silver afterglow,” he added.
In the UK, Joe Public is more likely to speculate in the housing market than the stock market, with the tacit assistance of the government.
House price growth is cooling, however, as time is running out for sales to be completed ahead of the restoration of previous stamp duty levels.
Nationwide’s seasonally adjusted measure of house prices fell by 0.3% month-on-month in January while the annual increased slowed to 6.4%, from 7.3% in December, which was below the consensus forecast of 6.9%.
“The first month-to-month fall in Nationwide’s index since June and adds to evidence that house prices are topping out. Nationwide’s figures are based on its mortgage offers, so January’s number reflects the last few transactions that likely will go through before the threshold for stamp duty land tax returns to £125K, from £500K, at the end of March,” said Samuel Tombs, the chief UK economist at Pantheon Macroeconomics.
“Nationwide’s data are starting to mirror Rightmove’s, which showed that year-over-year growth in online asking prices declined to 3.3% in January, from 6.6% in December. Google Trends data also suggest that the number of people visiting property websites is down about 10% so far this year on its late 2020 levels,” he added.
Nevertheless, housebuilding stocks were modestly firmer, adding to yesterday’s gains.
UK Nationwide HPI MoM (June): -1.4% vs -0.7% expected, prior -1.7%
UK Nationwide HPI YoY (June): -0.1% vs 1% expected, prior 1.8%
— David Madden (@dmadden_CMC) July 1, 2020
8.35am: Recovery mode continues
The FTSE 100 opened in positive territory on Tuesday as the market impact of the Reddit day traders all but dissipated.
Okay, they were still targeting short positions in stocks such as BioCryst Pharmaceuticals (NASDAQ:BCRX), which was chased almost 40% higher overnight. But the de-grossing impact where profitable positions are liquidated by hedge funds to meet margin calls has been limited.
London’s blue-chip stocks opened 28 points higher at 6,494.10.
The general market trend in the US, which closed Monday in positive territory, has been to buy technology and energy stocks ‘on the dip’. It is a trend which continued in Asia on Tuesday.
Here at home, the mood appears to have been lifted by reports the government is ramping up preparations for a return to school – perhaps a pre-cursor to the wider easing of coronavirus (COVID-19)lockdown restrictions.
Elsewhere, house prices dipped for the first time since the introduction of the stamp duty holiday in July ahead of the scheme’s end. The Nationwide index fell 0.3% in January. The builders were little changed on the back of the news, having largely anticipated the slowdown.
The big mover down was BP (LON:BP.), which fell 3% after being hit by a COVID-19 induced slowdown in demand for oil. Fourth-quarter profits tanked by 96%.
“The company’s outlook in the immediate future is understandably cautious and somewhat out of its hands, with supply controlled by OPEC and demand currently depressed by the effects of the pandemic,” said Richard Hunter, head of markets at Interactive Investor. “The year has been blighted by these factors, with some significant write-downs leaving their mark.”
On the upside, there was demand for travel stocks with Carnival (LON:CCL), the cruises operator, the pick of the crop. It sailed 6.4% higher.
Proactive news headlines:
Innovaderma PLC (LON:IDP) shares rose after Creightons PLC (LON:CRL) revealed that it made a preliminary approach on January 26. 2021 to the group’s board regarding a possible offer for the Skinny Tan maker. The manufacturers of personal care, beauty, and fragrance products said this bid approach was “unequivocally rejected by the Innovaderma Board on 29 January 2021 without affording Creightons the benefit of any further discussion.”
Tiziana Life Sciences PLC (NASDAQ:TLSA, LON:TILS) has delivered positive data from a clinical trial of its nasally-delivered monoclonal antibody in people severely affected by coronavirus (COVID-19). It said that in the groups receiving the spray, there was a significant improvement in lung function as well as major reductions in Interleukin-6 and c-reactive protein, which are both indicative of inflammation. Tiziana’s Foralumab was administered on its own and with dexamethasone, a corticosteroid, and the results were compared with a control group.
Sureserve Group Plc (LON:SUR), the compliance and energy services group, has said its performance in the year to the end of September 2020 was ahead of expectations. In its preliminary results statement, the group added that it has started the current year strongly. The board has proposed a doubling of the dividend to 1p. Profit before tax from continuing operations in the 12 months to September 30, 2020, leapt 45.9% to £7.8mln from £5.3mln a year earlier, while stripping out exceptional items and the amortisation of acquisition intangibles saw it rise to £9.4mln from £8.3mln the previous year.
Gfinity PLC (LON:GFIN) said it delivered a “strong performance” in December, which has built upon previous profitability reported in October and November. In a trading update for the first half of its current financial year, the esports media group said as a result of its performance in December it was profitable for the final quarter of 2020 on an adjusted earnings (EBITDA) basis, while its cash position as of December 31, 20320, was £1.7mln, slightly ahead of the £1.6mln accrued by the end of June last year.
Oracle Power PLC (AIM:ORCP) said it has commenced a field-based exploration programme at the Jundee East gold project in the Eastern Goldfields region of Western Australia. The company will conduct three soil geochemical lines totalling approximately 240 samples in an east-west orientation, and undertake mobile metal ion sampling. Results from the field-based exploration programme will be interpreted alongside existing detailed 3D modelling of gravity-based response which demonstrated a strong degree of correlation of gravity response between that of the world-class Jundee gold mine and the project.
Custodian REIT PLC (LON:CREI) has raised its latest quarterly dividend by 19% as rental collections including deferrals totalled 96% in the three months to end-December 2020. The property investor said the higher dividend payout is fully covered by net cash receipts and reflected continuing levels of rent collection seen since the onset of the coronavirus (COVID-19) pandemic. The value of Custodian’s portfolio rose to £545.8mln (£532.2mln end-September 2020) during the three month period, while NAV per share was 96.4p per share (95.2p).
Gaming Realms PLC (LON:GMR) said it has entered the Italian gaming markets through a collaboration with a number of top tier Italian gaming operators. The mobile gaming content specialist said its platform and portfolio have been certified for entry into the market by the L’Amministrazione Autonoma dei Monopoli di Stato (AAMS), Italy’s gambling regulator. Through SG Digital’s Open Gaming System (OGS) platform, Gaming Realms said its Slingo portfolio is now live in Italy with iGaming operators Goldbet and Sisal Group and will also be going live on the Lottomatica platform later in February.
Alien Metals Ltd (LON:UFO) said it has completed the final legal registration work related to the acquisition of the Nueva Andromeda permit, strategically contiguous to the company’s San Celso silver project in Zacatecas, Mexico. Detailed mapping and sampling will be carried out on Nueva Andromeda by the company’s newly appointed senior geologist in Mexico in coming days. A review of new projects presented to Alien for earn in or acquisition in copper and silver in the same region will also be undertaken.
Destiny Pharma PLC (LON:DEST) said it has appointed of Professor Mark Wilcox to its Scientific Advisory Board. The drug developer noted that Wilcox is a consultant microbiologist and Head of R&D in Microbiology at the Leeds Teaching Hospitals, he is also the lead on Clostridium difficile (C. difficile) infection for Public Health England.
In addition, Wilcox has advisory roles to UK SAGE (COVID-19), NHS England’s Infection Prevention & Control national team and Public Health England’s Rapid Review and is a member of the NHS Antimicrobial Resistance Programme Board. In a separate announcement, Destiny said its chief executive, Neil Clark, will be taking part in a panel discussion at the 7th Annual LSX World Congress to be held virtually at 3.00pm on Tuesday, February 2, 2020. The title is: Investing in Infectious Disease – How Will the Covid Pandemic Transform the Development, Commercialisation, And Partnering Landscape?
Cadogan Petroleum PLC (LON:CAD) has highlighted a 1.5% increase in annual output, with 2020 net production totalling 106,400 barrels. Moreover, this annual gain came despite the disruption caused by the coronavirus (COVID-19) pandemic and a five and a half month shutdown for the Blazhiv-3 and Blazhiv-Monastyrets-3 wells – which had licences expire, and subsequently renew in June.
Bacanora Lithium PLC (LON:BCN) said it has signed a new joint venture agreement with its cornerstone investor and offtake partner, Ganfeng Lithium Co Ltd. Ganfeng recently exercised its option to take its stake in the holding company which owns Bacanora’s Sonoara lithium project in Mexico from 22.5% to 50%. Completion of the joint venture remains conditional upon certain approvals and consents from authorities in the People’s Republic of China.
BlueRock Diamonds PLC (LON:BRD), which owns and operates the Kareevlei diamond mine in the Kimberley region of South Africa, has said it is to release a resource upgrade report on Friday, February 5, 2021. The statement is expected to include an upgrade of a material percentage of the resource from the inferred to the indicated category, as per the SAMREC code, and an increase in the size of the resource, the group added.
Next Fifteen Communications Group PLC (LON:NFC) has said that, further to the announcements of May 7, 2020, and November 11, 2020, it confirms that Penny Ladkin-Brand succeeds Richard Eyre as chair of its board and Robyn Perriss succeeds Ladkin-Brand as chair of the Audit Committee from February 1, 2021. Ladkin-Brand commented: “Next 15 is a fantastic business with exciting growth prospects. I am delighted to be moving into this new role and am looking forward to working more closely with the Next 15 businesses.” Richard Eyre added: “It is with confidence that I hand over to Penny after a thrilling time as Chairman of Next 15. The Company is in a good place and in very safe hands.”
Jersey Oil & Gas (AIM: JOG), an independent upstream oil and gas company focused on the UK Continental Shelf region of the North Sea, has announced the availability of an updated corporate animation video, which illustrates its vision for resuming future production from the 100%-owned and operated Buchan oil field in addition to the wider Greater Buchan Area. The Buchan Oil Field – A New Beginning Corporate video is available to view on the company’s website at: www.jerseyoilandgas.com/media/videos/. This is accompanied by a corporate presentation which is also available to download on the company’s website at: www.jerseyoilandgas.com/investors/presentations/.
First Berlin Equity Research has published a research update on Diversified Gas & Oil PLC (LON:DGOC)). Analyst Simon Scholes reiterated his buy rating on the stock but decreased the price target from to 150p from 160p. The full report can be downloaded via the following link: http://www.more-ir.de/d/22051.pdf
Edison Investment Research has issued a report on Shield Therapeutics PLC (LON:STX) entitled ‘Beefing up for the US opportunity’. The report can viewed via the following link: https://www.edisongroup.com/publication/beefing-up-for-the-us-opportunity/28749/
BB Healthcare Trust PLC (LON:BBH) said its monthly factsheet for January 2021 is now available to view via the following link: http://www.rns-pdf.londonstockexchange.com/rns/6151N_1-2021-2-1.pdf
6.50am: Footsie in rebound mode
The FTSE 100 is predicted to continue its February rebound on Tuesday after a positive Wall Street session overnight.
London’s blue-chip equity index was being called 44 points higher by spread-betters on the IG platform, a day after the Footsie rose nearly 59 points or 0.9% to close at 6,466.42.
US stocks mostly moved higher at the start of the week too, with the Dow Jones Industrials Average rising 229 points or 0.8% to 30,211.9. The broader S&P 500 index beat that with a 1.6% rise and the tech-fuelled Nasdaq Composite was best of all with a 2.55% leap.
“The buy-the-dip hoards returned to the fray on Wall Street overnight, with technology and energy sectors notable outperformers led by Tesla, of course,” reported market analyst Jeffrey Halley at Oanda. “There was a clear tech/cyclical divide overnight and repeated in Asia today, which saw similar price action yesterday.”
He added: “Equity markets have ignored a much stronger US Dollar overnight, suggesting that for now, the equity correction lower has run its course. Only some serious wobbles in the US fiscal stimulus outlook, or a very poor non-farm payrolls on Friday, is likely to knock equities of track for now, with the dip buyers firmly in control.”
More big tech earnings are on the cards later today, with quarterly earnings from Alphabet, Amazon.com and Alibaba, not that fundamental elements like earnings numbers seem to matter all that much to some retail investors.
Around the markets:
- Sterling is up 0.1% at US$1.3676
- Brent crude is up 0.9% at US$56.87 per barrel
- Gold down 0.25% to US$1,854.87 per oz
- Bitcoin down 0.05% at US$$34,173.56
6.45am: Early Markets – Asia / Australia
Stocks in the Asia-Pacific region rose on Tuesday following an overnight jump on Wall Street.
In China, the Shanghai Composite gained 0.59% while South Korea’s Kospi jumped 1.43% in afternoon trade.
India’s Nifty 50 has jumped more than 7% in two days after the country’s finance minister on Monday presented the country’s budget for the fiscal year that begins April 1 and ends March 31, 2022.
In Japan, the Nikkei 225 gained 0.97% and Australia’s S&P/ASX 200 closed 1.49% higher.
Proactive Australia news:
PolarX Ltd (ASX:PXX) has verified the presence of high gold and silver grades up to 37 g/t gold and 1590 g/t silver at several sites following having received assay results from its due-diligence sampling program at the Humboldt Range Gold-Silver Project in Nevada, USA.
Great Southern Mining Ltd (ASX:GSN) has secured an exclusive, irrevocable option over three large exploration license applications around its Cox’s Find Gold Project in the Laverton region of Western Australia.
Anson Resources Ltd (ASX:ASN) (FRA:9MY) has accelerated its work on the Paradox Brine Project in Utah, US, following the recent policy developments from the Biden Administration, which are expected to directly benefit Anson and provide multiple opportunities for its extensive suite of battery metals projects.
European Lithium Ltd (ASX:EUR) (FRA:PF8) (VIE:ELI) is progressing towards its goal of becoming one of the first battery-grade lithium producers in Europe and is poised to begin the last stage of exploration required in conjunction with its definitive feasibility study (DFS) at the Wolfsberg Lithium Project in Austria.
Moho Resources Ltd (ASX:MOH) has reported encouraging results for the first nine holes of the Phase 2 reverse circulation (RC) drilling program as part of its resource definition studies, to infill and extend gold mineralisation, at the East Sampson Dam (ESD) prospect.
Australian Potash Ltd (ASX:APC) has received a Ministerial Statement from the Minister for Environment, the Honourable Stephen Dawson, which has conveyed that a proposal may be implemented for the Lake Wells Sulphate of Potash (SOP) Project.
Alto Metals Ltd’s (ASX:AME) 3D IP survey has identified many significant anomalies in the Lords Corridor, up to 400 metres below the surface and reverse circulation (RC) drilling has confirmed an alteration halo of gold mineralisation up to 32 metres thick from 200 metres vertical depth.