- FTSE 100 closes at 6,613
- Intertek rises after full-year results
- Renishaw tops the FTSE 250 as it puts itself up for sale
5pm: FTSE closes ahead
FTSE 100 closed Tuesday ahead but Wall Street lagged as tech stocks weighed on US markets.
Britain’s blue-chip benchmark closed the session up around 25 points at 6,613 with financial stocks and miners doing well.
FTSE 250, on the other hand, headed south, with the index falling around 43 points at 21,177.
“Even though stocks had a soft start to the session, the mood improved throughout the day and they are now showing respectable gains,” said CMC Markets analyst David Madden in a note shortly before the UK close.
“The relativity subdued moves in government bond yields have emboldened traders to buy into stocks – so it is a similar situation to yesterday. Last week, dealers were a little fearful on account of the upward moves in bond yields the US-10 year yield, as it hit a one year high, but as the stability has returned to the bond market, that prompted the buying of equities.”
3.25pm: Proactive North America headlines:
Q BioMed Inc (OTCQB:QBIO) announces five year contract with the US Department of Defense and Veterans Affairs for its cancer bone pain drug
PlantX Life Inc’s (CSE:VEGA) (FRA:WNT1) (OTCQB:PLTXF) interim unaudited 3Q results show a triple-digit increase in gross revenue
Numinus Wellness Inc (CVE:NUMI) says making good progress in its compassionate access study of psilocybin-assisted motivational enhancement therapy
US equities got off to a mixed start on Tuesday following yesterday’s bumper gains.
The 30-share Dow Jones average was up 66 points (0.2%) at 31,601 while the S&P 500 was little changed. The Nasdaq 100 was 67 points (0.5%) weaker at 13,216.
In London, the FTSE 100 was up 50 points (0.8%) to the good at 6,641.
Neither New York or London were showing much concern about Guo Shuqing, the head of the China Banking and Insurance Regulatory Commission, revealing his worries about “the bubble problem in foreign financial markets”.
“China’s market is now highly linked to foreign markets and foreign capital continues to flow in,” the regulator said, as he worried that the “bubble” will “go pop”.
Supermarket giant Tesco PLC (LON:TSCO) was off-message, shedding 0.1% at 222.3p despite the latest supermarket share data from mkarket research firm Kantar indicating it had increased its market share in the UK for the first time since 2016.
“Nearly a quarter of households bought groceries online during the past month, making the most of home deliveries especially to get hold of bulkier goods like canned foods, breakfast cereals and soft drinks. It’s been an extraordinary 12 months for online,” said Fraser McKevitt, the head of retail at Kantar.
UK Grocery Sales Rose 15.1% Y/Y In 4 Weeks To Feb. 21, Fastest Rate Since June 2020 – Kantar
Grocery Sales Rose 12.5% Year-On-Year In 12 Weeks To Feb. 21
— LiveSquawk (@LiveSquawk) March 2, 2021
It’s interesting to see how the supermarkets’ market share has changed during the pandemic
(figures from Kantar for 12 weeks to 21 February compared to the same period a year earlier) pic.twitter.com/07wuPukVST
— simon read (@simonnread) March 2, 2021
2.05pm: The Footsie sees morning’s gains pared
The FTSE 100 index has pulled back from its heights a little as the countdown to the Budget continues.
London’s index of heavyweight shares was up 31 points (0.5%) at 6,619.
Sir David McMurtry, the executive chairman of Renishaw, and John Deer, his deputy, are both in their 80s and have decided to bale out.
“Neither of us is getting any younger,” declared McMurtry. On that basis, all companies should put themselves up for sale.
Russ Mould, the investment director at AJ Bell, suspects this might another British thoroughbred that is about to fall into foreign hands.
“News that precision engineer Renishaw has put itself up for sale is a further blow to the UK market if it results in a sale to a third party that subsequently delists the business.
“Its shares have often been too expensive for many investors to show interest, but should it agree a sale then one can imagine the same reaction as when Arm Holdings was taken over in 2016, namely the sad loss of a superb business on the market,” Mould said.
“Takeovers may net investors a small premium to the market price, but they can also deny them substantial future gains if the shares were retained.
“The issue with Renishaw is that its shares already command a high valuation so any potential suitor would have to pay top dollar to buy the company.
“There is also the factor that the two founders, holding sway over 53% of the business including stakes owned by connected parties, only want to sell to someone who would respect the heritage and culture, and commitment to local communities where it operates.
“One could imagine an Asian company would be interested in owning Renishaw, but such a buyer may have different views on whose culture should prevail,” Mould said.
On the other hand, it is entirely possible that an Asian company’s philosophy would be more in keeping with the founders’ beliefs than a private equity group.
Precision engineer Renishaw has put itself up for sale as chair David McMurtry and dep chair John Deer want to sell their combined 53% stake (inc connected parties) in the biz
Would be a shame to see it leave the stock market as it’s a great example of a high quality UK business
— Dan Coatsworth (@Dan_Coatsworth) March 2, 2021
12.45pm: US markets to pause for breath
After yesterday’s scintillating gains, US markets are set to pause for breath today.
Spread-betting quotes suggest the Dow Jones industrial average will open 28 points lower at 31,506 while the S&P 500 is tipped to start 8 points weaker at 3,894.
The Nasdaq 100, the best performer of the three main indices yesterday, is expected to give back 38 points at 13,255.
Warnings over asset bubbles from Chinese officials have hit sentiment, as has a report from the World Health Organization that indicated the number of new daily infections rose last week for the first time in seven weeks.
None of the above has stopped the Zoom steamroller, with shares of the video-conferencing firm surging by almost 10% in pre-market trade after its earnings announcement after the bell yesterday.
In London, the FTSE 100 continues to make slow and steady progress, advancing to 6,635, up 46 points.
Aside from Taylor Wimpey Plc (LON:TW.), which was up 2.1% after its results statement, housebuilders are out of favour following the release overnight of the Nationwide House Price Index (HPI), even though the figures were better than expected.
— fitchandfitch (@fitchandfitch) March 2, 2021
The HPI rose 0.7% in February. Year-on-year growth increased to 6.9%, from 6.4% in January, which was above the consensus forecast of 5.5%.
“House prices recovered from January’s 0.2% month-to-month dip to reach a new high in February, according to Nationwide. The data are based on intended purchases for which Nationwide has made mortgage offers. While it is doubtful that these transactions will complete before the end of this month, due to conveyancing and legal delays, the Chancellor looks set to announce that any buyers that already have instructed a solicitor still will be able to take advantage of the temporary rise in the threshold for stamp duty to £500K, from £125K, later this year,” said Samuel Tombs, the chief UK economist at Pantheon Macroeconomics.
“Sunak also will announce a new mortgage guarantee scheme, designed to shore up demand from first-time buyers with small deposits. This won’t solve the current affordability problem faced by many FTBs [first-time buyers], which is that most lenders will only calculate mortgage offers based on their current wages, which for many people have fallen by 20% because they have been furloughed. The impact of the guarantee scheme on mortgage rates also will rely heavily on the fee the Treasury charges lenders for using the scheme. Nonetheless, our forecast for house prices to drop by about 2% this year now looks too downbeat, though we’ll wait for details of the guarantee scheme to be released before providing new numbers,” Tombs said.
Howard Archer, the chief economic adviser to the EY ITEM Club, picked up on Nationwide’s observation that that behavioural shifts may also be pushing activity up, with people reassessing their housing needs as a result of lockdown.
“It appears that an increasing number of people want a garden and also space to work at home. This is leading to some polarisation in demand for residential properties,” Archer said.
“The EY ITEM Club has frequently expressed belief that the current elevated housing market activity and robust prices will prove unsustainable sooner rather than later.
“The support to the housing market coming from the rise in the Stamp Duty threshold through to 31 March has recently started to wane; however, there are reports that the Chancellor will extend the raising of the Stamp Duty threshold to the end of June in the Budget. There have also been suggestions of a mortgage guarantee scheme to help people with small deposits get on to the property ladder,” Archer noted.
“While an extension of the Stamp Duty threshold to the end of June would likely provide near-term support to housing market activity and prices, the EY ITEM Club still believes that the housing market is likely to come under mounting over the coming months. The EY ITEM Club believes that the recent marked strengthening in the housing market has been disproportionate given the economy’s contraction over 2020 and rising unemployment,” he added.
Remember how, when @rishisunak announced the stamp duty holiday, a lot of troublesome economists warned that far from making homes more affordable, it would push up house prices, mostly benefiting those who already own?
House prices now increasing at fastest rate in 6 yrs. pic.twitter.com/QjcrX4D15S
— Ed Conway (@EdConwaySky) March 2, 2021
11.50am: Footsie’s progress slowed by weak oil stocks
London’s index of leading shares was up 40 points (0.6%) at 6,629.
“Revenues overall rose by 110% for the year and adjusted earnings by a similar amount, with customer growth of 32% in the fourth quarter. The immediate outlook is also bright, with the momentum continuing, as evidenced by a 36% hike in group revenues for the first seven weeks of the new financial year,” said Richard Hunter at interactive investor.
“Such activity has, of course, come at a cost which saw net debt soar to £2.8 billion from a previous £270 million. The leverage ratio, however, is manageable at 2.3 times, with a target of between 1 -2 times, and the group will prudently only consider the payment of a dividend when that level has been achieved,” he added.
— Gaming Intelligence (@GamingIntell) March 2, 2021
10.15am: Taylor Wimpey among the early winners
After a subdued start, investors have learnt to stop worrying about tomorrow’s Budget and hit the ‘buy’ button.
The tool hire firm’s shares shed 1.5% at 3,957p after it found the market hard to please with its third-quarter results underwhelmed. Underlying earnings (EBITDA) in the third quarter were down 5% year-on-year while profit before tax dropped by 10%.
“Ashtead shares are at the bottom of the FTSE100 despite beating expectations on Q3 pre-tax profits and raising its full-year revenue guidance for 2021. With the shares hitting record highs last week, there is probably more than an element of profit-taking going on here,” suggested CMC’s Michael Hewson.
9.15am: Flat as a flat-iron
The FTSE 100 was the definition of flat after its triple-digit advance on Monday.
Traders were in a reflective mood after some big gains on Wall Street too as the Dow and NASDAQ clawed back ground lost to a surprise bout of inflation wobbles.
“After Monday put the markets back to roughly where they were before the bond tantrum last week – or at the very least on the road to a full recovery – Tuesday has seen European investors start with uncertainty in their step,” said Connor Campbell, an analyst at Spreadex.
A dip in commodity prices and a rise in the dollar acted as a drag on Asia’s main markets, which was felt in London early on too.
Comments from Guo Shuqing, the head of the China Banking and Insurance Regulatory Commission, also provided pause for thought as he warned western financial markets were a bubble ready to pop.
Proactive news headlines
Next Fifteen Communications PLC (LON:NFC) said it will repay £1.4mln of cash received from the government furlough scheme – reflecting its strong trading performance and robust balance sheet.
MGC Pharmaceuticals Ltd (LON:MXC, ASX:MXC, OTCMKTS:MGCLF) said distributor Swiss PharmaCan has increased by 85% its initial order volume for ArtemiC Rescue, an anti-inflammatory product targeting COVID-19.
Mkango Resources Ltd (LON:MKA)(CVE:MKA) has completed its flotation pilot plant programme for the Songwe Hill rare earths project in Malawi. The programme was completed at ALS Metallurgy in Perth, Australia, and was effective in scaling up a new, optimised flotation regime for the project.
Shanta Gold Ltd (LON:SHG) generated revenue of US$147.4mln from its gold production operations in Tanzania during the year to 31 December 2020, up significantly from the US$112.8mln generated in 2019.
Coinsilium Group Limited (LON:COIN) is planning to launch a non-fungible token (NFT) technology development studio in Gibraltar. In partnership with Indorse, a Singaporean company, it plans to develop smart contract systems for NFT applications including a bridge for NFTs on Bitcoin using Rootstock (RSK) blockchain technology.
Sirius Real Estate Limited (LON:SRE) announced it has completed the acquisition of a mixed-use business park in Fellbach, near Stuttgart, for €9.2mln.
Chariot Oil & Gas Limited (LON:CHAR) signed a Memorandum of Understanding with the Moroccan authorities committing to support the development of the Anchois Gas Development project.
Deepverge PLC (LON:DVRG) said the Ecological Water Operating System, known as EcowaterOS, will begin its launch in China with an introduction via an industry webinar on March 17 and 18.
Emmerson PLC (LON:EML) is planning to list on Aim, a market to which the company’s board believes it is more suited. Emmerson is about to enter into a pivotal period, with the commencement of mine construction at the Khemisset potash project in Morocco expected by the end of 2021.
Bahamas Petroleum Company PLC (LON:BP.) updated on its court case in the Bahamas reporting that, yesterday, the Honourable Justice Petra Hanna-Weekes allowed the company’s application and ordered the applicants to post $200,000 security for costs within 30 days, pending which the proceedings will be stayed.
IQGeo Group Plc (LON:IQG) notified investors that chief executive Richard Petti and chief financial officer Haywood Chapman will provide a live presentation relating to the company’s preliminary results via the Investor Meet Company platform on 25 March at 4.30pm GMT. The presentation is open to all existing and potential shareholders.
ADM Energy PLC (LON:ADME) will host a webcast of an investor presentation on 12 March at 11am GMT. The call will be led by chief executive Osamede Okhomina and will include a Q&A session at the end. The Company will provide an update on the business and its views on the drivers behind the current market.
Faron Pharmaceuticals Ltd (LON:FARN) announced that chief executive Dr Markku Jalkanen will present in a pre-recorded presentation at the virtual HC Wainwright Global Life Sciences Conference that will be available on-demand starting Tuesday, March 9, at midday London time. An audio webcast of the presentation will be available in the investors’ section on Faron’s website.
6.50 am: Softer start predicted
The FTSE 100 has been predicted to retreat slightly at Tuesday’s open, even though US markets joined in the positive moves at the start of the week.
London’s blue-chip benchmark was called 24 points lower by spread-betters at CMC Markets, having put on almost 85 points or 1.3% to finish at 6,568.20 the day before.
Overnight, the Dow Jones rallied 1.95% to 31,535.5, while the broader S&P 500 benchmark climbed 2.4% in its biggest one-day rally in nine months and the Nasdaq leapt 3%.
A return to calmer bond markets and vaccine optimism was felt to be the key to equities regaining their mojo at the start of the new month.
But while sovereign bond yields were softer, gold plunged to the lowest levels since June on the back of a strong US dollar and approached the US$1,700 level.
Given rising inflation expectations and lingering uncertainty regarding the late February sovereign bond market carnage, some buying is likely to return to gold as a safe-haven asset, said Ipek Ozkardeskaya, senior analyst at Swissquote.
But Ozkardeskaya remained cautious about what the coming days may bring, saying last week’s action in sovereign bonds seemed more like a panicked sell-off than an optimistic portfolio rotation.
“The yields spiked as a sign of stress as investors were left unconvinced regarding Jerome Powell’s testimony before the Senate. Moving forward we will, of course, see the yields rising as the economic picture improved, yet a move backed by optimism is supposed to be soft and sweet, not like carnage,” she said.
“Nonetheless, for now, the market volatility eases and equities gain. This is a sign of optimism, but we have important data on the economic calendar this week, especially the US jobs data that could shake the sentiment yet again. A strong read could well spur the ‘yield optimism’ and wreak havoc in the market.”
Asian markets are mixed this morning, with market analyst Jeffrey Halley at Oanda noting that the biggest falls are in markets with the largest retail exuberance quota, which to him suggests “a temporary lull in momentum, not a structural turn in sentiment.
“European markets are likely to ease in sympathy as we all wait and see what mood Wall Street is in today when it arrives,” he reckoned.
Around the market
- Pound – down 0.24% to US$1.3894
- Gold – down 0.35% to US$1,719.10
- Oil – Brent crude down 0.24% to US$63.15
- Bitcoin – up 6.52% to US$48,827.78
6.50am: Early Markets – Asia / Australia
Stocks in the Asia-Pacific region were mostly lower on Tuesday as the Reserve Bank of Australia (RBA) announced its decision to maintain its current policy, including leaving its cash rate at 0.1%.
The Hang Seng index in Hong Kong dipped 0.89% while the Shanghai Composite in China fell 1.02%.
In Japan, the Nikkei 225 slipped 0.89% but South Korea’s Kospi was an exception, rising 1.06%.
Shares in Australia fell, with the S&P/ASX 200 closing 0.40% higher.
Proactive Australia news:
Yandal Resources Ltd (ASX:YRL) has been as much as 55 per cent higher after receiving high-grade results of up to 8 metres at 24.30 g/t gold that confirm a shallow gold discovery at Sims Find prospect within the Barwidgee Gold Project in Western Australia.
American Rare Earths Ltd’s (ASX:ARR) (FRA:1BHA) new samples from the La Paz Project in Arizona, USA, have returned grades 47% higher than the average JORC-compliant resource estimate of total rare earth elements (TREE).
Australian Strategic Materials Ltd (ASX:ASM) (OTCMKTS:ASMMF) will begin detailed design engineering work on a metals processing plant in Korea, following a scoping study that confirmed its economic potential.
Emyria Ltd (ASX:EMD) has expanded its clinical service subsidiary – Emerald Clinics – with the addition of a second consulting suite in Perth, which provides the potential to double the capacity of Perth and builds on the recent expansion in Melbourne.
archTIS Ltd (ASX:AR9) has launched a Federal Sales and Channel Practice in the United States to meet increased government demand for advanced information protection solutions.
Australian Potash Ltd (ASX:APC) has secured its first major financing for the development of Lake Wells Sulphate of Potash (SOP) Project in Western Australia, with a $140 million debt financing facility from the Northern Australia Infrastructure Facility (NAIF).
Lake Resources NL (ASX:LKE) (OTCMTS:LLKKF) has hit a new record high on confirming positive results from initial testing by Novonix Ltd (ASX:NVX) (OTCQX:NVNXF), which show that its lithium carbonate performs better than commercially available battery-grade lithium carbonate in lithium-ion battery cells.
Firefinch Ltd (ASX:FFX) (OTCMKTS:EEYMF) (FRA:N9F) has appointed renowned Australian investment bank and financial services provider Macquarie Capital (Australia) Limited to advise on realising value as the company seeks to spin out Mali-based lithium project, Goulamina.
Alta Zinc Ltd‘s (ASX:AZI) (FRA:8EE) drilling in the new Pian Bracca South area of Gorno Zinc Project in Italy has returned high-grade zinc and lead with silver – extending known mineralisation in the east and west of this new target zone.