FTSE 100 eases off highs as investors wait US restart for fresh direction

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  • FTSE 100 ahead 70 points
  • US stocks seen recovering by around 1%
  • Housebuilders gain on Budget hopes
  • Manufacturing output disappoints

12.15pm: US advance expected

The FTSE 100 index eased further off session highs as lunchtime approached, with investors now seeking fresh direction from Wall Street’s restart.

Just after midday, the UK blue-chip index was up 70.81points  at 6,554.24, having reached a morning peak at 6,612.74.

US markets are expected to begin March in positive fashion recovering from last week’s slump as government bonds climbed higher and investors awaited data on the manufacturing sector plus a batch of Federal Reserve speakers amid revived optimism over a swift economic recovery from the coronavirus (COVID-19) pandemic.

Futures for the Dow Jones Industrials Average were up more than 1% boosted by vaccine hopes and after the US House of Representatives passed President Biden’s $1.9 trillion COVID-19 relief package. S&P 500 futures were 1.2% higher, while Nasdaq-100 futures added 1.5% after a bruising period last week for technology stocks.

The advances also came as the yield on 10-year Treasury notes, the benchmark borrowing cost in global debt markets, slipped to 1.416% from 1.459%. Stocks were impacted last week by volatile moves in bond markets which reflected uncertainty over the prospect of a long period of low-interest rates as the country weathers the pandemic.

Investors will look to a speech from Fed governor Lael Brainard on Monday for clues as to whether the central bank will push back against higher bond yields. Brainard is due to address a conference of the Institute of International Bankers on financial stability. The New York Fed’s John Williams, Cleveland Fed’s Loretta Mester and Minneapolis Fed’s Neel Kashkari are also scheduled to make public appearances Monday.

On the data front, February’s ISM manufacturing index is due out at 10.00am and is expected to show another month of robust growth in activity at US factories. The US corporate earnings season is winding down, with only Zoom Video Communications and Novavax scheduled to report quarterly results on Monday but after the markets close.

11.15am: Leading shares remain upbeat

Leading shares have just failed to hold on to their triple-digit gains but are still well in positive territory, with the housebuilding sector continuing to provide support.

Apart from hopes that the Chancellor will help boost the housing market in this week’s Budget, there are some better than expected UK mortgage figures.

Lenders approved 98,994 mortgages in January, and while this was down from 102,809 the previous month, it was higher than forecasts. 

Iain McKenzie, chief executive of The Guild of Property Professionals, said: “Despite January traditionally being a slower month for purchasing a home, these figures show the stampede to buy property before the stamp duty holiday ends [at the end of March]. It is good news for the wider economy that there is still interest in moving up the property ladder and consumer confidence in mortgages is still robust.”

So housebuilders are dominating the day’s risers, with Persimmon (LON.PSN) top of the league with a 167p or 6.45% increase to 2757p. Taylor Wimpey PLC (LON.TW) is up 8.5p or 5.39% to 166.1p while Barratt Developments (LON.BDEV) has built up a 35.4p or 5.33% rise to 699.8p.

Overall the FTSE 100 is up 94.99 points or 1.47% at 6578.42.

10.05am: FTSE shrugs off mixed economic report

Leading share are holding on to most of their gains despite a rather mixed UK manufacturing report.

The IHS Markit/CIPS Purchasing Managers’ Index rose to 55.1 in February, up from 54.1 in January and above the flash estimate of 54.9. The index has grown for nine months in a row but output rose at the weakest pace during this sequence. New orders expanded following a slight decrease in January, IHS said, as domestic demand improved and new export business inched higher. Companies reported improved demand from several markets – including the US, Asia, Scandinavia and (in a few cases) mainland Europe – but said the continuing impact of COVID-19, Brexit complications and shipping difficulties also constrained export order growth.

Rob Dobson, director at IHS Markit, said: “Look past the headline PMI and the survey reveals near stagnant production, widespread shipping and port delays and confusion following the end of the Brexit transition period

“In fact the biggest contributor to the headline PMI reading was a near-record lengthening of supplier delivery times. However, while normally a positive sign of an increasingly busy economy, the recent lengthening was far from welcome, more often than not linked to problems resulting from Brexit and COVID related. The resultant shortages for a vast array of components and raw materials, as rising demand chased restricted supply, led to a further acceleration in input cost inflation to a four-year high.”

The comment about inflation may well ring some alarm bells. After all it was concerns about higher prices leading to higher interest rates which have rattled stock markets in recent days.

Even so, at the moment the FTSE 100 is taking things in its upbeat stride, showing a 113,09 point or 1.74% rise to 6596.52.

9.20am: Market recovery continues

Leading shares continue to make headway, recovering more than half of Friday’s losses which saw the blue chip index record its biggest percentage fall (2.5%) since October.

After last week’s worries about rising bond yields and the prospect of higher inflation leading to higher interest rates, things have calmed down a little.

It being the first day of the month we have various manufacturing purchasing managers indices for February to cope with. China led the way with a lower than expected outcome. Jim Reid at Deutsche Bank said: “China’s Caixin PMI printed at 50.9 (vs. 51.4 expected), the lowest since May 2020. Over the weekend, China’s official manufacturing PMI fell to a 9 month low of 50.6 (51.3 in January and 51 expected) largely due to new export orders falling. The week long Lunar New Yearholiday will have played a part here though.”

In the UK the February manufacturing snapshot is expected to show the PMI remaining fairly stable at around 54.9.

The big event of the week for the UK of course is the Budget, and the housebuilders continue to support the market on the hope that Rishi Sunak will unveil measures to help first time buyers and perhaps extend the stamp duty holiday.

One non-housebuilding share on the way up is Scottish Mortgage Investment Trust (LON.SMT) which, despite the name, is a big investor in technology stocks. The recent volatility in the sector has hit the trust, but with the US Nasdaq market expected to open around 1.6% higher, its shares have recovered 4.41% or 50p to 1185p.

So the FTSE 100 is currently up 123.99 points or 1.91% at 6607.42.

8.42am: FTSE makes strong start after Friday’s falls

The FTSE 100 got off to a rip-snorting start, recouping some of its recent losses as the bond and equity markets got back onto an even keel after their inflation wobble.

The vaccine roll-out, meanwhile, is said by the Treasury to be delivering a ‘material change’ to the UK’s economic prospects, according to a report in the Financial Times.

“There has been a pause for breath after the bond market sell-off stabilised, although inflation concerns remain near the surface,” said Richard Hunter, head of markets at Interactive Investor.

“Those fears of inflation have certainly not gone away but attention has shifted back, perhaps temporarily, to the immediate positive drivers which could propel a strong economic rebound.

“More generally, the success so far of the vaccine rollouts and the pent-up consumer demand which has partly been due to enforced savings are preparing the ground for a spending spree later in the year.”

British Airway owner IAG (LON:IAG) topped the Footsie high flyers early doors amid hopes international travel may become a little easier over the next few months. The stock was up 5.3%.

The builders were well-bid ahead of the Budget, which, according to weekend reports, could contain measures to help people with small deposits to get on the property ladder.

The market may also be betting the Chancellor is ready to extend the stamp duty holiday put in place at the height of the pandemic.

Persimmon (LON:PSN), which also has results this week, was up 4.7%, while Barratt (LON:BDEV) advanced 4.6%.

The top-flight’s big faller was the packaging group Bunzl (LON:BNZL), which was down 1.7% after full-year results.

Proactive news headlines

Sensyne Health PLC (LON:SENS) said its SYNE-COVTM machine learning algorithm for Covid risk prediction has received regulatory approval for use in the UK.

CentralNic Group PLC (LON:CNIC) said revenues and underlying profits soared in 2020 helped by organic growth combined with  acquisitions.

AFC Energy PLC (LON:AFC) said the level of global investment in hydrogen is at unprecedented levels with an increasing awareness of the benefits of its technology. AFC reported a cash balance of £31.6nmln at the end of October.

Parity Group PLC (LON:PTY) highlighted a strong start to the year as it reported a number of new contract wins.

Plant Health Care chief executive Chris Richards said its soybean seed treatment has the potential to be ‘truly disruptive’ following the preliminary results from trials of its technology in Brazil.

NextEnergy Solar Fund Limited (LON:NESF) has acquired a UK based solar photovoltaic (PV) portfolio for £64.3mln that once fully up and running will increase its installed capacity by around 13%.

Instem PLC (LON:INS), the life sciences data specialist, agreed to acquire software group The Edge for up to £8.5mln as part of a growth strategy where it is aiming to become a consolidator of software and technology businesses in the pharmaceutical and life sciences market.

Minexia has announce the completion of a partnership agreement with Ragnar Capital Partners LLP, a successful London-based finance house with a strong focus on corporate finance advisory and capital raising in the technology and Fintech sectors. The Minexia and Ragnar team have been working together for some period and have decided to formalise an exclusive arrangement for access to the www.NRPrivateMarket.com platform for the purposes of ‘fintech’ deals.

Union Jack Oil PLC (LON:UJO) confirmed the acquisition of an additional 15% interest in the Biscathorpe project, in the Humber Basin onshore UK, taking its stake in the project up to 45%.

FastForward Innovations Ltd (LON:FFWD) said it has invested £17,215 in the £13mln IPO share placing by the David Beckham-backed Cellular Goods PLC (LON:CBX).

Braveheart Investment Group PLC (LON:BRH) said the clinical sample pipeline for the COVID-19 test developed by its investee Paraytec is now fully operational.

BATM Advanced Communications Limited (LON:BVC) announced it has exercised the option to sell its subsidiary NGSoft, a software provider, for US$33mln (£23mln).

Kromek Group PLC (LON:KMK) received two new orders worth a total of US$750,000.

Sativa Wellness Group Inc (LON:SWEL, CNSX:SWEL) said its CBD therapeutics division has achieved the highest food safety standards.

Anglo Asian Mining PLC (LON:AAZ) has provided an operational update on exploration activities in the second half of calendar 2020. The exploration programme resulted in a new discovery at Zafer, announced in January 2021. 

Alien Metals Ltd (LON:UFO) confirmed the start of its maiden drill programme at the Donovan 2 project in Mexico. Drilling began ahead of schedule on Thursday, February 25.

Learning Technologies Group PLC (LON:LTG) has announced the acquisition of getBridge LLC and related assets (Bridge) has now completed.

Curzon Energy PLC (LON:CZN) told investors it has extended the exclusivity period for its letter of intent with Poseidon Enhanced Technologies, until April 1. If concluded the agreement will see a reverse takeover.

Red Rock Resources PLC (LON:RRR) has begun the Canadian listing process for its joint venture with Power Metal Resources (LON:POW), Red Rock Australasia Pty Ltd. Red Rock Australasia has gold exploration interests near the historic mining centre of Ballarat in the Gold Fields of Victoria. 

Power Metal Resources PLC (LON:POW) has released an operational update for shareholders. “Through the past two years, as evidenced by our market updates, we have built a global resource exploration and development company, with precious, base, and strategic metal interests in North America, Africa, and Australia,” said chief executive Paul Johnson.

Karelian Diamond Resources PLC (LON:KDR) posted a loss after taxation for the half year ended 30 November 2020 of €193,243.

Strategic Minerals PLC (LON:SML)(USOTC:SMCDY) has confirmed the rollover of access to the magnetite stockpile in New Mexico. Meanwhile, at the Leigh Creek copper mine in Australia, the impact of higher copper prices is being assessed. 

Bacanora Lithium PLC (LON:BCN) said it has received £21.8mln from Sonora Lithium Ltd (SLL) after Ganfeng Lithium Co Ltd exercised a share option.

4d Pharma PLC (LON:DDDD) has further prepared for its New York listing by appointing a chief financial officer and a non-executive director with extensive US corporate experience.

E-Therapeutics PLC (LON:ETX) said Professor Trevor Jones will be its new non-executive chairman, with Ali Mortazavi to continue in his role of chief executive and dropping the title of executive chairman that he has held since October. 

Bango (LON:BGO) appointed Matt Garner as its new chief financial officer after Carolyn Rand announced her intention to step down after almost two and half years in the role.

Horizonte Minerals PLC (LON:HZM, TSE:HZM) has appointed Michael Drake as the company’s head of projects, to oversee the development of the flagship Araguaia and Vermelho nickel projects.

Coinsilium Group Limited (LON:COIN, OTCQB:CINGF) has appointed Federica Velardo as a non-executive director of the company with immediate effect. She is a qualified solicitor in England and Wales and, having applied for dual qualification in Italy, also practices Italian law.

IXICO PLC (LON:IXI) will present at the upcoming AD/PD 2021 conference taking place online on 9-14 March 2021, one of the most presigeous conferences on Alzheimer’s and Parkinson’s diseases in the year. IXICO will make one presentation and two poster presentations. 

Genedrive PLC (LON:GDR) will provide a live presentation to accompany the interim results, presented by CEO, David Budd and CFO, Matthew Fowler, on Friday 26 March at 10.00am. The presentation will be hosted through the Investor Meet Company platform.

Cadogan Petroleum PLC (LON:CAD) told investors that a loan, of €14.85mln, to Proger Managers & Partners srl reached maturity on February 25 and payment must now be made within the next five business days.

Shield Therapeutics PLC (LON:STX) said it is posting a circular to shareholders convening a general meeting to be held at 11am on 18 March 2021, to approve the £25mln placing and subscription agreed last Friday.  

Diversified Gas & Oil PLC (LON:DGOC) reported the vesting of restricted stock units to the executive management team, under the company’s incentive plan. Chief executive Rusty Hutson sees his equity holding in the company increase to 20.92mln shares (2.96%) and chief operating officer Brad Gray now has 2.36mln shares (0.33%).

6.50 am: Rebond predicted 

The FTSE 100 looks set to make a strong start to the trading week with both bond and equity markets returning to some sort of normality after the recent sell-off.

While inflation fears continued to bubble in the background, it seems the resetting of expectations is largely complete – for the time being.

Asia’s main markets were in recovery mode Monday, while stock futures suggested the positivity will extend to Wall Street when the US markets open.

“The slightly more positive tone appears to be as a result of a pause in the move higher in yields, as bond markets stabilise after the choppiness seen at the end of last month,” said Michael Hewson, analyst at CMC Markets.

“Despite the big falls at the end of last week, we still managed to finish the month higher, albeit by a fairly small margin, as did other markets in Europe.”

The week’s centrepiece is likely to be Wednesday’s Budget, which, according to weekend reports, is set to see Rishi Sunak attempt to claw back some of the billions spent supporting the economy during the lockdown.

The Chancellor is said to be looking to grab back around £6bn via additional taxation to shore up the nation’s rather threadbare finances.

In a busy week, the US will on Friday provide a further update on the state of the world’s largest economy in the form of monthly non-farm payroll data.

Much of the UK corporate news, meanwhile, comes from the bookmakers with Flutter Entertainment (LON:FLTR), Entain (LON:ENT) an William Hill (LON:WMH) updating investors this week.

Report cards are also scheduled from Taylor Wimpey (LON:TW.) and Persimmon (LON:PSON).

Around the markets

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6.50am: Early Markets – Asia / Australia

Stocks in the Asia-Pacific region were higher on Monday even as China’s official manufacturing Purchasing Managers’ Index (PMI) for February came in at 50.6, lower than January’s reading of 51.3.

The reading is still above the 50 level that separates expansion from contraction.

The Hang Seng index in Hong Kong rose 1.39% while the Shanghai Composite in China gained 1.06%.

In Japan, the Nikkei 225 surged 2.47% and Australia’s S&P/ASX 200 closed 1.74% higher.

READ OUR ASX REPORT HERE

Proactive Australia news:

Venture Minerals Ltd (ASX:VMS) (OTCMKTS:VTMLF) has entered into an at-the-market subscription agreement (ATM) with Acuity Capital, providing the company with up to A$10 million of standby equity capital over the coming 28-month period.

Red River Resources Ltd (ASX:RVR) (FRA:R1R) has poured first gold at its Hillgrove Gold Mine in northern New South Wales, with the first bar poured weighing 0.97 kilograms and grading 83% gold and 13% silver.

Latin Resources Ltd (ASX:LRS) (FRA:XL5) will start extensive exploration on Salinas Lithium Project held by 100%-owned Brazilian subsidiary, Mineracao Ferro Nordeste, in the Jequitinhonha Valley region of Minas Gerais, a lithium-rich but underexplored region.

Tempest Minerals Ltd (ASX:TEM) (FRA:LIF) shares are trading about 13% higher intra-day after commencing drilling at the Messenger Project, part of the company’s extensive landholding within the Yalgoo greenstone belt in WA.

Andromeda Metals Ltd (ASX:ADN) has achieved a key milestone with applications lodged for a Mining Lease and two Miscellaneous Purposes Licences for the proposed development of the Great White Kaolin Joint Venture Project with Minotaur Exploration Limited (ASX:MEP) on South Australia’s Eyre Peninsula.

Kazia Therapeutics Ltd (ASX:KZA) (NASDAQ:KZIA) (FRA:NV9) has entered an exclusive worldwide licensing agreement with Oasmia Pharmaceutical AB (STO:OASM) (OTCMKTS:OASMY) for Cantrixil (TRX-E-002-1), a clinical-stage, first-in-class drug candidate under development for the treatment of ovarian cancer.

Creso Pharma Ltd (ASX:CPH) (OTCMKTS:COPHF) (FRA:1X8) has executed a non-binding letter of intent (LOI) with CBD and plant-based remedies provider CERES Natural Remedies to distribute and sell Creso’s anibidiol® range of CBD and hemp animal health products in the USA.

St George Mining Limited (ASX:SGQ) (FRA:S0G) has escalated drilling at its flagship high-grade Mt Alexander Nickel-Copper Sulphide Project, in WA’s north-eastern Goldfields, with a second diamond drill rig now in operation.

Andromeda Metals Ltd (ASX:ADN) has achieved a key milestone with applications lodged for a Mining Lease and two Miscellaneous Purposes Licences for the proposed development of the Great White Kaolin Joint Venture Project with Minotaur Exploration Limited (ASX:MEP) on South Australia’s Eyre Peninsula.

Rimfire Pacific Mining NL (ASX:RIM) is encouraged by initial assays from a three-hole reverse circulation (RC) program which has intersected high-grade gold at Transit Prospect in the Sorpresa Earn-in Area at Fifield within the prolific Lachlan Transverse Zone of NSW.

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