FTSE 100 enjoys stonking start to new week as commodities rally
- FTSE 100 index posts 166 point leap
- Oil majors in vanguard as crude prices jump
- US markets closed for President’s Day
4.50pm: Mighty Monday gains
The FTSE 100 index put in a strong performance at the start of a new week, notching up a triple-digit jump thanks to gains by commodity issues even in the absence of Wall Street, closed for the US President’s Day holiday.
At the close, the UK blue-chip index was a mighty 166.32 points, or 2.5% higher at 6,756.21, just below the session peak of 6,775.37.
Chris Beauchamp, chief market analyst at IG, a global leader in online trading commented: “It has been a spectacular start to the week for the FTSE 100. In the space of just two sessions the index has added around 200 points and gone a long way to recovering the lost ground from its January sell-off. Investors used to seeing the index lag far behind US and European peers will be cheering on as almost the entire index moves higher.
“Commodity and oil names are at the forefront of the surge, bolstered by another move higher in oil prices, a rally that shows no sign of slowing down, while mining stocks have been lifted by the gains in raw materials. This is a sign that the global ‘reopening’ trade has no desire to slow down, emboldened by news that the UK has succeeded in giving 15 million people a first dose of the COVID-19 vaccine. It certainly makes up for a dull day otherwise, with markets enduring the usual kind of drift seen on US holidays.”
Beauchamp added: “One of today’s big FTSE winners lies outside the sectors mentioned above, and that is Compass Group. Any firm connected with catering and outsourcing services around the globe will be a prime beneficiary of a general return to normality, and today’s 6% rally shows that many investors are determined to get on board before the chance is lost. So long as the duration of the crisis was unknown, Compass would struggle to look like an encouraging investment, but with things heading in the right direction its qualities are becoming clear once again.”
3.50pm: Oil giants lend weight to Footsie’s big push
London’s leading shares did just fine without US markets to give them a lead today, as a wave of coronavirus optimism lifted shares.
The FTSE 100 was 159 points (2.4%) higher at 6,748, with the heavily weighted oil giants BP PLC (LON:BP.) and Royal Dutch Shell PLC (LON:RDSB) giving the index an extra boost in the afternoon session, as the oil price continued to head north.
Brent crude for April delivery was up 85 cents at US$63.28 a barrel. BP and Shell both rose 5.7% in sympathy.
Among the small caps, MGC Pharmaceuticals Limited (LON:MXC) was 13% higher at 4.40p after it announced an expansion of its Glioblastoma brain cancer research programme.
Another cancer specialist, Scancell Holdings PLC (LON:SCLP) soared 55% to 21.25p although in its case the interest was sparked by its COVID-19 vaccine research rather than its cancer treatment candidates.
Press reports highlighted Scancell’s collaboration with researchers at the University of Nottingham to formulate a universal coronavirus vaccine.
2.15pm: No US market to distract London traders
Without having to keep an eye on US markets this afternoon – it’s Presidents Day across the pond – the FTSE 100 has added to the morning’s gains.
London’s index of leading shares is up 134 points (2.0%) at 6,724.
Aerospace engineer Rolls-Royce PLC (LON:RR.) is 2.4% higher at 95.04p after announcing the successor to Stephen Daintith as the chief financial officer.
The new man, Panos Kakoulis, is no doubt a splendid chap but the positive move by the share price is probably as much to do with a general demand for travel-related stocks, as the vaccine roll-outs across the world give holidaymakers reason to start contemplating booking a summer holiday.
Vodafone Group PLC (LON:VOD) was up 0.8% at 134.96p and therefore underperforming the market after it revealed its Vantage Towers portfolio has increased to around 82,000 macro sites, expanding its presence in 10 European markets – with leading positions in nine of them.
After closing the financial quarter, there was much to be excited about at Vantage Towers:
— Vantage Towers (@VantageTowers) February 15, 2021
The mobile phone towers specialist is set to be floated in Frankfurt at some point but there was no news today in Vodafone’s announcement about when that might be.
12.40pm: Hospitality stocks back on the menu
The FTSE 100 has now notched up a triple-digit gain, as investors stock up on hospitality and travel-related stocks.
The FTSE 100 was 119 points (1.8%) higher at 6,709, with the likes of hotels group Whitbread PLC (LON:WTB), contract caterer Compass Group PLC (LON:CPG) and airline IAG (LON:IAG) all rising by more than 4%.
“The rapid roll-out of vaccines in the UK has brought a wave of relief to airlines and tour operators, companies which [had] been among the worst hit by the pandemic,” said Susannah Street, the senior investment and markets analyst at Hargreaves Lansdown.
“The lift comes as the UK government said it had met its target to offer a jab to all aged 70 and above and moved to its next target group of the over 65s, offering hope that travel restrictions will be eased sooner rather than later. Shares in British Airways owner IAG, EasyJet and travel operator TUI soared on expectations that 2021 may not be a cancelled summer after all. That’s despite the reluctance of ministers to give any hints as to when travel bans could be lifted,” she said.
Banks are also in demand ahead of the results reporting season for the sector, with Barclays PLC (LON:BARC) 5.1% firmer at 153.3p ahead of its results on Thursday. Lloyds Banking Group PLC (LON:LLOY) 4.5% to the good at 38.76p.
11.15am: All Bar One group M&B higher as consortium tightens grip
Sterling’s advance on foreign exchange markets has not stopped investors from piling into London’s blue-chips.
The pound was up by half a cent against the US dollar but the FTSE 100, which usually regards a strong pound in the way a cat regards the prospect of a cold bath, is 91 points (1.4%) firmer at 6,681.
Sterling has risen above US$1.39 for the first time in nearly three years.
“CFTC data ending 9 February show speculators materially increasing their bullish positions on GBP [British pound] as the UK’s vaccination advantage and fading prospects of negative rates supported the currency,” observed ING.
“GBP is the second-best performing (after NOK) currency in the G10 in 2021, having risen 1.7% against the dollar and 2.3% against the EUR. In the week ending 9 February, GBP positioning jumped, reaching 11-month highs against the dollar,” the Dutch finance house added.
“We expect the encouraging vaccination figures in the UK to keep providing help to GBP in the coming months, and therefore see GBP experience further increases in net long positions. Despite GBP net longs appearing overstretched when compared to the past two years, remember that GBP no longer has to discount Brexit-related uncertainty, which had generally put a cap on GBP bullish sentiment,” ING said.
Pubs group Mitchells & Butlers PLC (LON:MAB) has been over-geared for as long as most market pundits can remember and the succession of lockdowns in the UK since March won’t have helped its debt position, so the company has announced plans to raise GBP350mln through an open offer.
The company had indicated last month that it would tap the market and it has done so at 210p a share, despite which the shares have risen 6.9% to 351p.
“Major shareholders Elpida, Piedmont and Smoothfield ‘have informed Mitchells & Butlers that they have come together as a concert party and consolidated their holdings under a newly incorporated holding company, Odyzean Limited…in order to help address the significant capital needs of Mitchells & Butlers and provide a clear and consistent framework for their future relationship with the company’,” reported Langton Capital’s Mark Brumby.
Odyzean has indicated that, in order to streamline decision-making, it intends to review the composition of the board of directors, which may result in a reduced level of independent Non-Executive representation in the future.
Mark Lynch, a partner at corporate finance house, Oghma Partners, said the cash call fundraise “highlights the continued need to provide liquidity in the hospitality sector until trading can re-open and companies can start generating cash again”.
“There will be some hope that a government roadmap will set out the best and worst case scenario for re-opening in the coming weeks. At that point we would not be surprised to see more M&B type funding activity. It will be the smaller companies, with less access to liquidity, that are likely to struggle the most to survive and this will lead to further consolidation across the sector,” Lynch warned.
<blockquote class=”twitter-tweet”><p lang=”en” dir=”ltr”>First JD Wetherspoons, now Mitchell’s & Butler; this morning MAB announces a GBP350mln open offer which is effectively being underwritten by a new consortium of shareholders calling themselves ‘Odyzean’; They’re taking out a 3yr revolving UNSECURED credit facility for GBP150mln.</p>— EverydayTrader (@trader_everyday) <a href=”https://twitter.com/trader_everyday/status/1361252668606406656?ref_src=twsrc%5Etfw”>February 15, 2021</a></blockquote> <script async src=”https://platform.twitter.com/widgets.js” charset=”utf-8″></script>
10.00am: Fast start for UK equities
Often on days when US markets are shut (as is the case today), things can drift in London but not today.
The FTSE 100 has flown out of the traps to register a 94 point (1.4%) gain at 6,684.
“The new week has started how the last one ended with investors continuing to push up prices of risky assets. European stocks extended their recovery, with the FTSE also joining the rally even as the pound has hit the $1.39 handle. Mining stocks led the gains as copper rallied,” said Fawad Razaqzada at ThinkMarkets.
“Sentiment remains positive towards risk thanks to the ongoing COVID vaccine rollout and slowing virus outbreaks, boosting expectations about a sharp global recovery later this year – especially as bets are also rising for more US stimulus. This is also helping to fuel a rally in crude oil, with WTI nearly hitting $61 a barrel,” he added.
British Airways owner International Consolidated Airlines (LON:IAG), up 4.9% at 156.8p, leads the advance reflecting Razaqzada’s comments about hopes of a global recovery.
Ironically, given the apparent success of the coronavirus vaccine roll-out, the two worst performing blue-chips are the drugs giants, AstraZeneca PLC (LON:AZN) and GlaxoSmithKline PLC (LON:GSK), down 1.2% and 0.9% respectively.
8.35am: Vaccine optimism puts London on front foot
The FTSE 100 made a better-than-expected start to the new trading week as it advanced almost 70 points or 1% in early exchanges.
The blue-chip index took its cue from Asia, which enjoyed a buoyant opening session.
Japan provided the ‘eye candy’ as the Nikkei breached the 30,000-point level for the first time since 1990.
Stimulus and vaccine roll-out optimism provided international markets with the early shot in the arm.
“Anticipation is slowly growing as the fight against the pandemic progresses, underpinned by financial support from governments and central banks in repairing scarred economies,” said Richard Hunter, head of markets at Interactive Investor.
“The glass is certainly half-full in the US at the moment, with the S&P500 and NASDAQ again hitting record highs.
“Tailwinds are in abundance, with a significant stimulus package looking increasingly likely, a strong earnings reporting season and an accelerated vaccine rollout programme each stoking generally positive sentiment.”
Among the risers was Royal Dutch Shell (LON:RDSA), which advanced 3.4% after a sharp spike in the crude oil price over the weekend amid heightened tensions on the Arabian peninsula. BP (LON:BP.) was up 2.4%.
Vaccine bounce-back stocks TUI (LON:TUI), the travel group, and picture house chain Cineworld (LON:CINE) rose 4.2% and 3.4% as bargain-hunters used the benign market conditions to top up on the two potential post-lockdown winners.
Proactive news headlines
Learning Technologies Group PLC (LON:LTG) announced it has agreed to acquire learning and talent development software provider Bridge for US$50mln (GBP36mln) using existing cash resources.
Mode Global Holdings PLC (LON:MODE) said it will launch its novel payments and loyalty solution powered by Open Banking in the second quarter of 2021, which it said will provide merchants with “an alternative to rising card interchange fees” and boost loyalty amongst consumers.
DeepVerge PLC (LON:DVRG) has signed non-binding heads of terms with mass spectrometer maker Microsaic Systems to enter a multi-year framework services agreement through which DeepVerge which be appointed as a non-exclusive agent to promote the latter’s technologies.
Sativa Wellness Group Inc (LON:SWEL) said it has submitted its novel food application for validation to the UK’s Food Standards Agency (FSA) ahead of the March 31 deadline as part of what it said is a “commitment to continually deliver the highest level of regulatory compliance and product quality”.
Zoetic International PLC (LON:ZOE) told investors that it is confident its careful approach to distribution would ultimately lead to better sell-through rates as it provided an update on the progress of its rollout of CBD products on both sides of the Atlantic.
AfriTin Mining Ltd (LON:ATM) has agreed a new offtake agreement for tin concentrate from the Uis mine in Namibia with its existing trading partner, Thailand Smelting and Refining Corporation (Thaisarco), as well as signing an inaugural offtake agreement with AfriMet Resources AG for its future tantalum production.
Strategic Minerals PLC‘s (LON:SML)(USOTC: SMCDY) 100%-owned subsidiary Cornwall Resources Limited has been notified that the ‘Deep Digital Cornwall’ project led by the University of Exeter’s Camborne School of Mines, in which Cornwall Resources and Cornish Lithium are delivery partners, has been awarded funding by the European Regional Development Fund. Strategic Minerals’ Redmoor exploration licence area will be used as a field laboratory for collection of geochemical and geophysical data, which will also provide information relevant to a number of new prospects.
Oracle Power PLC (LON:ORCP) has completed an initial soil sampling programme on its Jundee East gold project in the Eastern Goldfields region of Western Australia, and has now commenced ground-based gravity surveying over key target areas.
Oncimmune Holdings PLC (LON:ONC) achieved a sixfold increase in revenue in the six months to the end of November as it continued to establish partnerships with leading pharmaceutical and biotech companies in the key areas of oncology, autoimmune diseases and infectious diseases.
APQ Global Limited (LON:APQ) noted that, as at the close of business on January 31, 2021, its unaudited book value was 36.69 US cents (26.72p) per share.
Mosman Oil and Gas Ltd (LON:MSMN) announced that it has received notification to exercise warrants over a total of 10,000,000 new ordinary shares at a price of 0.15 pence per share. The exercise of the warrants of will add A$27,000 of funds to Mosman’s existing cash reserves.
CentralNic Group PLC (LON:CNIC) notified that its preliminary unaudited results for the 2020 calendar year will be on March 1, with the audited annual report and accounts published towards the end of April.
6.50 am: Footsie set to start new trading week on front foot
The FTSE 100 look set to open firmly in positive territory, buoyed by the showing of Asia’s main markets, which in turn were supported by vaccine and stimulus optimism.
Japan’s Nikkei stood out as it pushed through 30,000 for the first time in 31 years; however, it was reflective of a region where bourses are bubbling along near peak levels.
With the sideshow of Donald Trump’s impeachment now over, newly elected President Biden is expected to turn his full attention to the economic bail-out package for the world’s largest economy.
Anything less than the well-trailed US$1.9 trillion injection is likely at this stage to be seen as disappointing.
Elsewhere, the UK appears to be at the vanguard of something other than Covid infections having inoculated 15mln people, or just over a fifth of the population.
The national press this morning was cautiously optimistic about a staged return to normality in the spring.
The Daily Mail said: “There could be light at the end of the tunnel as ministers discuss plans to allow for shops to re-open, families to be reunited and self-catering staycations to be given the go-ahead if COVID-19 infection rates continue to plummet amid the vaccine rollout.”
Expect the oil stocks to be marked up with crude prices up around 2% in early Monday trading amid heightened tensions on the Arabian peninsula.
Reuters said the Saudi-led coalition fighting in Yemen intercepted and destroyed an explosive-laden drone that was believed to be fired by the Iran-aligned Houthi group toward the kingdom, state TV reported, raising fears of fresh Middle East tensions.
Looking ahead, the week appears to be a fairly busy one for corporate news with updates mainly from banks and miners.
- Pound US$1.3897 (+0.35%)
- Bitcoin US$47,070.37 (-4.38%)
- Gold US$1,824.30 (+0.1%)
- Brent crude US$63.65 (+1.95%)
6.50am: Early Markets – Asia / Australia
Major stock markets in the Asia-Pacific region were higher on Monday as Japan’s Nikkei 225 surged past the 30,000 level for the first time in more than 30 years.
South Korea’s Kospi jumped 1.5% while the S&P/ASX 200 in Australia closed 0.91% higher.
In Japan, the Nikkei 225 surged 1.91% to 30,084 points.
Markets in China, Hong Kong, Taiwan as well as the U.S. are closed on Monday for holidays.
Proactive Australia news:
Maximus Resources Limited’s (ASX:MXR) (FRA:M5F) ongoing diamond drilling has returned up to 48.4 g/t gold and extended mineralisation at Redback Gold Deposit within its Spargoville tenements, around 24 kilometres from Kambalda in Western Australia’s premier gold and nickel mining district.
Creso Pharma Ltd (ASX:CPH) (FRA:1X8) (OTCMKTS:COPHF) has secured a comprehensive distribution agreement with leading nutritional supplements company, Route2 Pharm Pvt Ltd for its hemp-derived therapeutic products exclusively into Pakistan and Philippines, and non-exclusively into other potential target markets.
MGC Pharmaceuticals Ltd‘s (ASX:MXC) (LON:MXC) (OTCMKTS:MGCLF) ongoing pre-clinical research program into the use of cannabinoids in the treatment of aggressive glioblastoma brain cancer has been expanded to explore the use of nanotechnology in relation to the most effective treatment delivery systems.
Queensland Pacific Metals Ltd‘s (ASX:QPM) (FRA:4EA) pilot plant test-work has confirmed the flowsheet, providing confidence to proceed towards a definitive feasibility study for the Townsville Energy Chemicals Hub (TECH) Project in North Queensland.
Ora Banda Mining Ora Ltd (ASX:OBM) (FRA:M6N) has signed a A$15 million credit approved offer with the Commonwealth Bank of Australia (ASX:CBA) (OTCMKTS:CBAUF) (FRA:CWW) for hedging and working capital purposes to support prudent risk and capital management during the ramp-up phase, subsequent to the first gold pour at Davyhurst on February 7, 2021.
Orthocell Ltd (ASX:OCC) has received a new US divisional patent for CelGro(R) that covers the method of manufacture of collagen medical devices and as an aid in the surgical repair of soft tissue injuries.