FTSE 100 ends just below the flatline; Wall Street, including GameStop, having more success

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  • FTSE 100 index down 14 points
  • US stocks mostly higher, including GameStop
  • Big tech stocks in the red
  • US jobs data undershoots estimates

5pm: FTSE 100 slips back into the red

London’s leading index ended Friday down 14 points, 0.2%, at 6,489. The FTSE 250, meanwhile, gained 257 points, 1.2%, to 21,067.

“Some negative sentiment has returned to the equity markets after it was announced that Robinhood, the trading app, removed limits on trading Gamestop – the stock at the centre of the recent Reddit-retail investor frenzy,” CMC Markets UK analyst David Madden wrote Friday.

In the US, the Dow was up 96 points, 0.3%, to 31,152 at midday. The Nasdaq Composite gained 61 points, 0.5%, 13,839, and the S&P 500 improved 15 points, 0.4%, to 3,887.

“The no-so-hot jobs report has not stopped the Dow Jones as well as the S&P 500 from gaining ground, although the indices are off the highs of the session,” Madden wrote. “Earlier today it was announced the Senate has adopted a measure to fast-track President Biden’s $1.9 trillion stimulus plan so optimism is still in reasonably healthy supply. The jobs update made for interesting reading but the stimulus story is still the big issue of the week.”

4.10pm: Domestic stocks lift FTSE 250 above 100

The FTSE 100 has fought its way back above the flatline at 6,508.71, having been down 0.7% around the time of the US jobs report as the dollar dipped to give sterling a lift.

Wall Street also stumbled after its initial higher start, with the Nasdaq Composite even dropping into the red.

I’m sure you’d like to know: GameStop (NYSE:GME) stock is up 35% to US$72.05 as the number of shares being shorted by hedge funds continued to decline, according to the latest data from S3 Partner.

GameStop shorts were down US$8.7bn in realized and unrealized losses so far in 2021, according to S3

Big Tech is having a bit of a wobble, with the trillion-dollar trio of Apple (NASDAQ:AAPL), Microsoft (NASDAQ:MSFT) and Amazon.com (NASDAQ:AMZN) all slipping lower in early trading.

Tesla (NASDAQ:TSLA), Paypal (NASDAQ:PYPL) and Netflix (NASDAQ:NFLX) are also in the digital doghouse with investors too.

Yesterday, Democrat Senator Amy Klobuchar, the new head of the Senate’s antitrust subcommittee, unveiled a new antitrust bill described around the media as “sweeping” and “comprehensive”.

Klobuchar said the US economy “faces a massive competition problem. We can no longer sweep this issue under the rug and hope our existing laws are adequate.”

Back in London, the Footsie is continuing to be outdone by its mid-cap sibling, with the FTSE 250 up over 288 points or 1.4% to 21,097.79.

This is being driven by some chunky rises, led by Aggreko (LON:AGK) after it confirmed talks over a £2.2bn takeover approach, sending the shares soaring 37%.

Beazley, the Lloyd’s of London insurer, was up 18% after revealing losses that were not as bad as had been feared.

Also helping fuel the mid-cap rally were reports that Boris Johnson is planning an announcement later this month to reveal what restrictions will be lifted on pubs and bars, which sent Mitchells & Butlers (LON:MAB) bubbling up almost 12%, while JD Wetherspoon (LON:JDW) and Marston’s (LON:MARS) rose nearer 4%.

Hopes that the vaccine roll-out can continue on its impressive path and enable a return to normality, with newspapers splashing stories with Westminster sources saying Britain should see “a quick return to normal in April and May”, helped domestic travel groups FirstGroup (LON:FGP), National Express (LON:NEX) and Trainline (LON:TRN), up between 7% and 8%, and embattled leisure groups Rank (LON:RNK) and Cineworld (LON:CINE).

“The stronger pound continues to hobble the FTSE 100, which has lagged behind other indices this week in the rebound from last week’s lows,” said market analyst Chris Beauchamp at IG. 

“While the dollar has eased off a touch today the strength in the greenback continues to hurt commodity prices, putting pressure on the index’s heavyweight mining sector. While this has been offset to a degree by strength in Shell thanks to the ongoing rally in oil, once again the lack of big tech names in the index appears to have been its undoing. However if today’s dollar weakness has further to go, the outlook may well improve, helping the FTSE to recover more of its recent lost ground.”

3.15pm: Proactive North America headlines:

Silvercorp Metals Inc (NYSEAMERICAN:SVM) (TSE:SVM) (FRA:S9Y) reports upswing in income and revenue in fiscal third quarter

The Valens Company (TSE:VLNS) (OTCQX:VLNCF) (FRA:7LV) lays out operational priorities at its two Cannabis 2.0 manufacturing facilities; updates on LYF acquisition

American Resources Corporation (NASDAQ:AREC) -invested special purpose acquisition company seeks acquisition target for IPO

Canada Silver Cobalt Works Inc (CVE:CCW) (OTCMKTS:CCWOF) (FRA:4T9B) reports high-grade silver assays from sonic drilling at Beaver mine property

Victory Resources Corporation (CSE:VR) (FRA:VR61) (OTCPINK:VRCFF) receives BLM acknowledgement letter as it seeks permit on Loner Property in Nevada

Real Luck Group Ltd (CVE:LUCK) welcomes news of Google Play Store gambling apps in 15 new countries

2.44pm: Wall Street opens in the green

The main indices on Wall Street were in the green in early trading on Friday despite January’s jobs report coming in weaker than expected.

Shortly after the opening bell, the Dow Jones Industrial Average was up 0.56% at 31,229 while the S&P 500 climbed 0.45% to 3,889 and the Nasdaq rose 0.27% to 13,818.

The higher start came as the US jobs market rebounded back to growth last month, with the non-farm payrolls data showing the economy added 49,000 jobs, up from a 140,000 loss in December but just undershooting market estimates of 50,000. 

Analysts at ING said they hoped the January reading will “mark the low point for 2021 job creation” and that low hospitalisation rates for coronavirus (COVID-19) in the SU and the partial reopening of some states would boost the economic recovery.

“Today’s report is disappointing, but we are optimistic on the outlook for jobs. February’s report should be better given the California re-opening is underway, which means restaurants are operating again (for dine outside) along with hair salons and nail bars in America’s most populous state. We also know that New York restaurants are allowed to re-open for dine-in eating from February 14th (at 25% capacity) so that will show up in the March report”, ING said

“That said, we aren’t going to get meaningful improvements in the labour market until Covid containment measures are lifted on heavily impacted sectors such as travel, leisure and hospitality. That is likely to be several months away so vaccine performance and vaccination rates are critical for the outlook”, they added.

Back in London, the FTSE 100 had fallen into the red into late-afternoon, down 7 points at 6,496 at around 2.45pm.

1.36pm: US jobs almost in line

The US economy added 49,000 jobs last month, returning to growth according to non-farm payrolls data, after a 140,000 loss in December.

This was just short of market estimates of 50,000.

The unemployment rate, meanwhile, fell to 6.3% from 6.7%.

In London, the FTSE has dipped into the red, at 6,496.5 as the pound regains more ground against the greenback, up 0.4% at just over $1.372. 

12.44pm: Wall Street set to leap

As London’s blue-chip shares continue to trundle largely sideways, they are again about to be put in the shade by their Wall Street cousins ahead of the US jobs report.

New York stocks are set to finish off what has been a bumper start to February with yet more gains predicted after the opening bell.

The Dow Jones and S&P 500 indices are both set to rise 0.5%, according to pre-market trading, with the tech-powered Nasdaq Composite called 0.4% higher. The Footsie meanwhile is in modestly positive territory, up almost 0.2% at 6,514.53

GameStop (NYSE:GME), the hot stock of recent weeks, is trading slightly higher in pre-market trades, after collapsing another 42% to US$53.5 overnight.

Ford Motor Co (NYSE:F) is also seen clicking up a gear after a bullish earnings report overnight, where it also took the fight to Tesla (NASDAQ:TSLA) with aggressive investment plans for electric and autonomous vehicles.

READ: Ford to invest US$29bn into electric and autonomous vehicles

Traders eyes will soon be turned to the non-farm payrolls report as the big data point of the day, if not the month.

Roughly 50,000 jobs are forecast to have been created last month, compared with a decline of 140,000 in December, with the unemployment rate remaining at 6.7%.

Investors will also have one eye on what’s happening in Washington, said market analyst Craig Erlam at Oanda, with the Democrats appearing to be making good progress on a US$1.9trn stimulus package.

“This week has been just what the doctor ordered after weeks of unease and growing anxiety in the markets,” said Erlam.

“Whether driven by the Reddit rebellion, a lack of trust in the Fed to not intervene too soon in the recovery or just a normal corrective move following a powerful run in uncertain times. Whatever the cause, investors will be going into the weekend somewhat relieved.”

However, he added: “We’re not out of the woods yet. There’s every chance we could see stocks turn south again next week but it’s always good to get a week like this under your belt after a difficult period. And there is reason to be a little more optimistic.

“After weeks of lockdown, numerous countries have turned a corner and every passing week of the vaccine rollout is one closer to being able to leave the house for something more than a jog. I’ve even found myself looking forward to getting the tube again; I can only imagine what the summer is going to be like as everyone breaks free.”

10.43am: Housebuilders unconcerned by house price retreat

Housebuilders and estate agents shares are in positive territory despite news that UK house prices saw their biggest monthly fall in 10 months.

House prices fell 0.3% in January, the biggest fall since last April, according to data from mortgage lender Halifax.

The average price dropped to £251,968, though this is still 5.4% higher than in January 2020, but easing from the 6% difference in December and 7.6% in November.

House prices and the wider housing market were boosted last year with the release of pent-up demand following the easing of restrictions after the first coronavirus lockdown and the temporary raising of the stamp duty threshold.

Economist Howard Archer at the EY ITEM Club said he continues to believe that “the current robustness of housing market activity and the strength of prices will prove unsustainable sooner rather than later”, particularly as the removal of support from the stamp duty threshold increase looms at the end of next month and as the economy continues to be affected by COVID-19 restrictions.

Other pressures are also expected to emerge with a potentially significant rise in unemployment as the furlough scheme tails off in coming months.  

Sarah Coles, personal finance analyst, at Hargreaves Lansdown, said the price retreat last month “was always going to happen as we neared the cliff edge when the stamp duty holiday ends. While those who have already committed to a purchase may decide to power on regardless, it’s clearly putting people off getting started.”

But she said there could be some respite if Chancellor Rishi Sunak decides to tinker with stamp duty at his coming budget.

“However, it’s not just the stamp duty people are concerned about,” Coles said. “This lockdown, with no end in sight, and whole sectors of the economy closed, is raising questions for the future. People are starting to worry about how they’ll afford their existing mortgage: Bank of England data shows high street banks expect more people to start defaulting on their mortgage payments over the next couple of months. In this environment, fewer people are going to consider the expense and commitment of a house move.”

Meanwhile, with Barratt Developments (LON:BDEV) and Persimmon among the top 20 risers, the FTSE 100 was up 10 points or 0.2% at 6,514.20. 

9.40am: Blue chips slumber, but AIM’s higher

London’s blue chips are remaining lethargic as the morning progresses, continuing a sideway trend that has persisted since the start of the week, missing out on the strong gains being made in the US and Europe.

Lloyds Banking Group PLC (LON:LLOY), NatWest Group PLC (LON:NWG) and other domestically focused shares such as housebuilders and property developers are leading the gains this morning.

With the pound extending gains and standing at close to two-and-a-half-year highs above $1.37, heavy overseas earners are providing the counterweight, with the fallers led by Johnson Matthey PLC (LON:JMAT) and Pearson PLC (LON:PSON), followed by the likes of Unilever (LON:ULVR), Vodafone (LON:VOD) and BAE Systems plc (LON:BA.).

Life insurers and utilities are also well represented among the fallers.

The more domestically focused FTSE 250 is outdoing its superior sibling, up 0.6% to the Footsie’s 0.1% to 6,509.2.

Similarly, small caps are also doing better, with the AIM index up 0.4% to above 1,208, its highest level since before the global financial crisis, in late 2007.

Small cap stocks also led the way higher on Wall Street overnight too, noted Neil Wilson at Market.com.

“The yield curve is steepening – reflation-rotation is well and truly back on – with the 10-year and 30-year Treasury yields at their highest in a year and the 5s30s spread has steepened to almost 150bps, the widest since 2015.”

He noted that gilt yields and bank shares rising, along with sterling’s rally, come in the wake of the Bank of England’s decision yesterday, where policymakers “sought so hard to push back on negative rates that it actually delivered a rather hawkish message”.

He added: “not only did the BoE say that it does not intend to signal that negative rates are coming, but it also – from my reading of the Monetary Policy Report – suggest that the next move on rates will be to hike.”

8.40am: Slow start to Friday

The FTSE 100 made a flat start to Friday with traders unmoved by the headway made overnight on Wall Street after the London close.

Having ended Thursday barely changed, the UK blue-chip index stared just 5 points higher at 6,508.51.

Traders appeared to be keeping their powder dry ahead of US employment numbers.

Around 50,000 jobs are forecast to have been created in January, compared with a decline of 140,000 in December, with the unemployment rate remaining at 6.7%.

Back here at home, there was little market positivity around reports the government could start easing lockdown restrictions in March.

Meanwhile, the Bank of England’s almost bullish assessment of the UK’s economic prospects appears to have been largely forgotten a day after the utterances from Threadneedle Street.

On the market, there wasn’t a great deal to write home about.

Platinum specialist Johnson Matthey (LON:JMAT) fell 3.3% after a Barclays Capital downgrade to ‘underweight’, while Burberry (LON:BRBY) was unmoved by Goldman Sachs’ decision to move from ‘sell’ to ‘neutral’ on the stock in the fashion group.

On the FTSE 250, the insurer Beazley (LON:BEZ) shot up 11% on what on the face of it looked like a poor set of prelims. The trawl through a tough year was sweetened by a pledge to return to the dividend list in 2021.

Proactive news headlines:

Iconic Labs PLC (LON:ICON), a multidivisional new media and technology business, announced that it has appointed Sarah Dees as its chief executive officer and an executive director with immediate effect.  The group noted that Dees has a wealth of management and fundraising experience across a variety of sectors including financial technology, banking, live events and natural resources. She commented: “I am delighted to have the opportunity to lead Iconic Labs through the next phase of its development following the recent Board changes.  I will be prioritising early dialogue with OTT Holdings, alongside existing shareholders and lenders.”

Silence Therapeutics PLC (LON:SLN) (NASDAQ:SLN) has said it is set to receive US$45mln from an oversubscribed private placement of stock with US investors that will fund the development of its drug pipeline. In total, 2.02mln American depositary shares were sold for US$22.50 each. “This financing marks an important step in our journey to increase awareness of Silence and position our company as a global RNAi leader,” said Silence chief executive Mark Rothera in a statement.

Chaarat Gold Holdings Ltd (LON:CGH) has launched a US$25mln funding and at the same time a US$22mln loan is set to be converted to shares. To raise US$25mln the company will issue 65.9mln new shares, priced at 26p each, to new institutional investors and family offices as well as existing shareholders. Labro Investments Ltd, Chaarat’s largest shareholder, has indicated its willingness to convert the entirety of a US$22mln loan plus accrued interest into shares, at the same price as the equity raise. It would see Labro receive a further 62.4mln shares, meanwhile, Chaarat’s debt position will reduce by 33% to US$46.5mln.

Tiziana Life Sciences PLC (LON:TILS) (NASDAQ:TLSA) announced that it has appointed Thomas Adams as head of drug development and as an executive director with immediate effect. The biotechnology firm said Adams’ role will be to manage and oversee all matters relating to its pre-clinical and clinical drug development programs and associated intellectual property. Adams holds a PhD in Biochemistry from the University of California, Riverside, and previously served as chief executive and executive chairman of cancer therapy firm Cardiff Oncology (NASDAQ:CRDF).

Sensyne Health PLC (LON:SENS) said it has made two key senior hires. Hina Zaman has been appointed managing director of the healthcare division, while Martin Gouldstone will fill the role of chief business officer of the life sciences division. Zaman joins from Babylon Health and will focus on the commercialisation of Sensyne’s clinical AI software for remote patient monitoring and decision-making support. Gouldstone is moving from Syneos and will be responsible for expanding the company’s pharmaceutical industry partnerships as well as looking at potential growth areas, including M&A opportunities.

Digitalbox PLC (LON:DBOX), the mobile-first digital media business, which owns Entertainment Daily, The Daily Mash and The Tab, has announced that Nigel Burton has resigned as a non-executive director of the company, with immediate effect in order to pursue other opportunities. The company said it would like to thank him for his contribution and to wish him the best for the future.

Proactive Research has issued a report on Custodian REIT PLC (LON:CREI) following its recent quarterly valuation update and dividend announcement for the period ended December 31. Analyst Ed Stacey noted: “The latest two quarters have exhibited strong rent collection and increases in the dividend. We argue that the current level of dividend is secure and offers potential for further increases going forward.”

6.50am: That Friday feeling

The FTSE 100 index is set to do its old car on a frosty morning thing at the start on Friday, refusing to move, despite a strong showing overnight by US stocks.

Spread betting quotes indicate the Footsie, which ended Thursday barely moved, will carry on that theme and open little changed at 6,504.

US non-farm payrolls for January are scheduled for release at 1.30pm GMT, which may have something to do with traders’ reticence to do something or get off the pot.

“Today’s January payroll numbers are a tough call, in large part because our usual guide during the pandemic—the daily Homebase small business employment numbers—appears unable to capture the huge seasonal drop in employment when the holidays end,” said Ian Shepherdson at Pantheon Macroeconomics.

“For January, the data appear to point to little change in the official measure but the seasonal factor for January services employment is huge and positive; last year, it added exactly 1,500K to the unadjusted number. If that were to repeat in January this year, the seasonally adjusted headline payroll print likely would be north of 1.6M, allowing for further gains in manufacturing, construction and elsewhere. The headline consensus is only 100K.”

“Unfortunately, we can’t bring ourselves to take this approach very seriously, not least because ADP’s estimate for private payrolls was only 174K,” he added.

“We look for 200K, but brace for upside,” is Shepherdson’s advice.

US markets had a thunderously good day on Thursday amid hopes that President Biden’s stimulus package would pass through the US Senate relatively little changed.

“The prospect of a juicy wave of government spending and borrowing sent longer yields higher, boosting the US Dollar, but also lifted US equities, with Wall Street’s rally resuming,” noted OANDA’s Jeffrey Halley.

The Dow Jones Industrials Average jumped 332 points to 31,056, while the S&P 500 surged 42 points to 3,872.

In Asia, the mood was equally upbeat on Friday with Japan’s Nikkei 225 421 points to the good at 28,763 and Hong Kong’s Hang Seng index 266 points firmer at 29,380.

As for UK corporate announcements, FTSE 250 insurer Beazley PLC (LON:BEZ) is about as exciting as it gets if the schedule is to be believed.

Around the markets:

  • Sterling: US$1.3679, up 0.08 cents
  • 10-year gilt: 0.443%, up 7.17 basis points
  • Gold: US$1,797.50 an ounce, up US$6.30
  • Brent crude: US$59.25 a barrel, up 41 cents
  • Bitcoin: US$37,219, down US$468

6.45am: Early Markets – Asia / Australia

Stocks in the Asia-Pacific region were mostly higher on Friday following an overnight jump in US indices.

The Nikkei 225 in Japan gained 1.54% and Australia’s S&P/ASX 200 closed 1.11% higher.

In China, the Shanghai Composite dipped 0.20% while South Korea’s Kospi gained 1.07% in afternoon trade.

READ OUR ASX REPORT HERE

Proactive Australia news:

Jindalee Resources Ltd (ASX:JRL) is aiming to upgrade the current inferred resource to indicated at the McDermitt Lithium Project in the southeast of Oregon, USA following having completed 15 drill-holes to date with remaining assays expected in mid-February.

Lotus Resources Ltd (ASX:LOT) has completed a restart scoping study in December quarter that confirms the potential for the Kayelekera Project in Malawi to support a viable long-term uranium operation and also identified multiple near-mine exploration targets.

Emyria Ltd’s (ASX:EMD) advanced remote monitoring digital health platform and service – Openly – will play a central role in a recently awarded grant from Western Australia’s Future Health Research and Innovation Fund.

Orthocell Ltd’s (ASX:OCC) CelGro® Dental, which was recently renamed Striate+, has been recommended, ahead of expectations, for inclusion on the Australian Prosthesis List (PL), which paves the way for reimbursement by private insurers.

AVZ Minerals Ltd (ASX:AVZ) (OTCMKTS:AZZVF) (FRA:3A2) has received further high-grade lithium and tin mineralisation from its mineral resource drilling at Roche Dure, the Manono Lithium and Tin Project in the Democratic Republic of Congo.

Alto Metals Ltd’s (ASX:AME) step-out reverse circulation (RC) drilling at the Vanguard Camp, about 8 kilometres north-west of the Lords Corridor, has intersected gold in every drill hole.

Blackstone Minerals Ltd (ASX:BSX) (OTCMKTS:BLSTF) (FRA:B9S) has ended the December quarter with key initiatives to restart production at Ta Khoa Nickel-Copper-PGE project in Vietnam along with strong cash position, which could boost growth in the year ahead.

Creso Pharma Ltd (ASX:CPH) (FRA:1X8), which saw rapid growth in its December quarter with a number of major milestones in the international markets, is set to benefit from the changing global attitudes to cannabis.

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