FTSE 100 closes higher on sterling weakness but miners lag

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  • FTSE 100 closes ahead
  • Virgin Active risks collapse
  • MPs call for new watchdog for fashion industry supply chain

5.05pm: FTSE 100 closes in the green

FTSE 100 closed higher on Friday as the US dollar firmed against sterling, boosting the UK benchmark’s constituents.

Footsie closed the day over 24 points higher, or 0.36%, at 6,761. Over the week as a whole, the FTSE 100 gained 1.9%.

Midcap FTSE 250, on the other hand, finished down over 26 points, or 0.12%, at 21,506.

The pound was down 0.44% against the US dollar.

Chris Beauchamp, chief market analyst at trading firm IG Index, noted that while banks have made headway on the Footsie the vitally-important mining sector remained “AWOL”.

“Despite the robust outlook for global demand for raw materials the stronger dollar continues to act as a drag on prices, and thereby on the sector itself,” he said.

Copper giant Antofagasta’s (LON:ANTO) numbers next week are a chance for this narrative to change, added the analyst.

3.45pm: Around 2,500 jobs at risk if creditors block Virgin Active restructuring plans

FTSE 100 trimmed its gains before close and rose 17 points to 6,754, while sterling extended its losses and plunged 0.9% to US$1.3871.

Virgin Active may collapse if its creditors block restructuring plans, putting 2,500 jobs at risk.

The gym is considering appointing administrators by early June if lenders and landlords don’t support the new measures, Sky News reported.

However, the administration wouldn’t be aimed at rescuing the struggling firm but it would involve a sale and wind-down of assets and operations.

The company, partly owned by billionaire Richard Branson, was hoping to finalise a rescue deal for its 40 sites by late next month.

Shares in The Gym Group PLC (LON:GYM) dipped 1% to 238.5p on Friday.

3.30pm: Proactive North America headlines:

Todos Medical Ltd (OTCQB:TOMDF) reveals $7.15 million in sales for the month of February 2021, representing a 38.1% month over month increase

Australis Capital Inc (CSE:AUSA) (OTCMKTS:AUSAF) (FRA:AC4) finalizes definitive agreement to acquire cannabis company Green Therapeutics

Thoughtful Brands Inc (CSE:TBI) (FRA:1WZ1) (OTCQB:PEMTF) strengthens sales and operation networks in North America and Europe

The Valens Company Inc (TSE:VLNS) (OTCQX:VLNCF) (FRA:7LV) enters into pre-roll manufacturing and distribution services deal with Experion Biotechnologies

American Manganese Inc (CVE:AMY) (OTCQB:AMYZF) awards C$2.7M contract to build two battery recycling plants to partner Kemetco

Namaste Technologies Inc (CVE:N) (OTCMKTS:NXTTF) (FRA:M5BQ) subsidiary CannMart receives its medical cannabis license renewal

2.42pm: Wall Street mostly lower at the opening bell

The main indices on Wall Street began Friday’s session on a mixed footing, although the overall trend of the market appeared to be pointing lower in early deals.

Shortly after the opening bell, the Dow Jones Industrial Average was up 0.11% at 32,521, however the S&P 500 was down 0.39% at 3,923 while the Nasdaq dropped 1.35% to 13,217.

Traders seem to be struggling to maintain momentum following yesterday’s strong session, with optimism following the approval of new US stimulus showing signs of petering out towards the end of the week.

The latest US producer prices for February, which was in line with forecasts of 0.5% growth, also failed to provide much excitement.

Back in London, the FTSE 100 was continuing to push higher in late afternoon, rising 26 points to 6,762 just before 2.45pm.

1.40pm: MPs call for garment trade watchdog to police labour abuse

FTSE 100 swung to the green in the early afternoon but was up only 6 points to 6,743.

MPs have called for a watchdog to police labour abuse in the domestic and international supply chains supplying UK fashion retailers.

In a letter to the Secretary of State for Business, Energy and Industrial Strategy, the Environmental Audit Committee said the government should explore the introduction of a Garment Trade Adjudicator.

READ: boohoo asked to link management bonuses to ESG goals by MPs

“The Committee has been shocked by revelations over the last three years of labour market exploitation, under our very noses, in certain quarters of the UK’s garment industry,” said in a release the committee’s chairman, Philip Dunne MP.

“It is abundantly clear that voluntary corporate social responsibility initiatives are not leading to sufficient progress being made.”

“Brands and retailers often wield considerable economic power in comparison to the suppliers they source clothes from. A Garment Trade Adjudicator could help to ensure undue economic pressure is not placed on suppliers to cut corners on pay and conditions.”

“We suspect this would have more effect, more rapidly, than introducing a licensing system on garment suppliers who tend to be smaller entities with less bargaining power than their customers.”

Online fast-fashion retailer boohoo Group PLC (LON:BOO), which has been under fire since poor labour practices were uncovered at a Leicester supplier last summer, shed 3% to 318.78p.

The AIM-listed firm has been addressing governance issues, but earlier this month it was revealed it could face a potential investigation and import ban in the US after campaign group Liberty Shared raised concerns to the US Customs and Border Protection.

12.45pm: Wall Street to pull back gains after touching record highs

FTSE 100 trimmed its losses at lunchtime and was down only 2 points to 6,734.

On the other side of the pond, futures are pointing at a soft open after the Dow Jones closed Thursday’s session 1.5% higher at 32,297.02.

It was a record number for the index, which was lifted by the House Democrats passing Joe Biden’s US$1.9 trillion Covid relief package.

The approval also pushed government bond yields up, with the US 10-year surpassing the 1.6% level again, because of prospects of stronger recovery and inflation.

“This should be – and so far has been – good for the US dollar and bad news for gold and technology shares,” commented Fawad Razaqzada, analyst at ThinkMarkets.

“Rising bond yields points to higher inflation, requiring tighter monetary policy from the Fed and other central banks. Investors worry that yields would rise further. If correct, this should be particularly bad for stocks of high-flying growth and technology stocks, as it makes their future cash flows less worthy.”

In fact, tech-heavy Nasdaq is called 1.4% lower, with the Dow Jones forecast to open flat and the S&P 500 down 0.4%.

11.45am: AstraZeneca dips despite vaccine receives backing from Canada and Australia, EU approves J&J jab

FTSE 100 continued holding its losses and was down 15 points to 6,721 before lunch.

AstraZeneca plc (LON:AZN) dipped 1% to 6,962 amid widespread concerns on the COVID-19 vaccine developed with Oxford University.

Thailand has delayed the rollout of the jab while six EU countries put it on hold.

However, the European Medicines Agency (EMA) said there was no indication that vaccination has caused these conditions, which are not listed as side effects with this vaccine, but it was investigating the case.

The view was echoed by the Canadian health authority, which said “the benefits of the vaccine continue to outweigh its risks”.

Australian Prime Minister Scott Morrison also reassured the jab was safe.

Meanwhile, the EMA has approved the one-shot vaccine developed by Johnson & Johnson (NYSE:JNJ), which should help speeding up the bloc’s slow rollout.

In further positive COVID-19 vaccine news, Novavax Inc (NASDAQ:NVAX) announced its formulation was 86% effective against the UK variant of the virus.

10.40am: Volatile housing market weighs on Berkeley 

FTSE 100 stayed put in the late morning, losing 20 points to 6,716.

Berkeley Group Holdings PLC (LON:BKG) was topping the fallers, as it slipped 7% to 4,267p pressured by a volatile housing market.

The housebuilder forecast flat profits in the financial years to February 2021 and 2022, after posting a £504mln profit in the year to February 2020.

Sales reservations have been robust where it has had stock, but new developments and phases have been juggled until the economy opens up post-lockdown and the value of reservations for the current financial year will be around 20% lower than last year as a result.

“Not only do strong full-year results offer a nod to efficiency at Berkeley, but they suggest the higher-end of the housing market hasn’t seen quite the same stress as its low-cost counterpart,” analysts at Hargreaves Lansdown commented.

“The pandemic has disproportionately impacted younger and lower-income populations, making it more difficult to buy home after a year of lost wages. But those with high-paying jobs that are able to work from home may actually come out the other side with more savings after foregoing dining out and travelling. Still, a smooth economic recovery is essential to Berkeley’s success.”

9.40am: Burberry leads risers after upgrading forecasts

The Footsie extended its losses in mid-morning and was down 19 points to 6,717, while sterling dipped 0.4% to US$1.3940.

Burberry Group PLC (LON:BRBY) was the lead riser among the big caps, jumping 8% to 2,151p.

The luxury fashion powerhouse said full-year revenue and adjusted operating profit will come in ahead of consensus after a strong rebound in trading since December.

READ: Burberry upgrades full-year forecasts as trading rebounds

“There were concerns the fashion icon’s products would fail to resonate, with the pandemic stopping customers from splurging on big-ticket clothing. The sales gap isn’t as severe as feared though, and is a textbook case of the value of a strong brand,” analysts at Hargreaves Lansdown commented.

“Burberry isn’t out of the woods yet. A disruption to tourism spending especially could see the group’s normal revenue patterns disrupted for some time. Disruption isn’t the same as destroying though, so this should be more of a blip than an existential crisis.”

8.40am: FTSE 100 starts slightly lower

FTSE 100 started the final day of the week slightly lower, shedding 7 points to 6,729.

Traders were cautious after the latest GDP reading beat forecasts but was still in the red.

The UK economy slipped 2.9% month-on-month in January, a much better performance than the 4.9% drop expected by analysts.

According to economists at Capital Economics, the January figures “will probably prove to be the low point for the year as vaccinations and the reopening of the economy will combine to trigger a rapid rebound in activity before long”.

“By early next year, we think the economy will be peaking its head out of the top as GDP returns to the pre-pandemic level,” they added.

7.20am: GDP down 2.9% in January

UK gross domestic product (GDP) is estimated to have fallen by 2.9% in January 2021, as government restrictions reduced economic activity.

The Office for National Statistics (ONS) said falls in consumer-facing services industries and education drove a contraction of 3.5% in the services sector in January 2021.

Output in the production sector fell by 1.5% in January 2021, after manufacturing contracted for the first time (by 2.3%) since the initial pandemic-driven fall in output in April 2020.

The construction sector grew by 0.9% in January 2021, driven by growth in new work.

January’s GDP was 9.0% below the levels seen in February 2020 (i.e. pre-pandemic), compared with 4.0% below October 2020 (the initial recovery peak), the ONS said.

The ONS also released trade figures and these showed exports of goods, excluding non-monetary gold and other precious metals, fell by £5.3 billion (19.3%) in January 2021, because of a £5.6 billion (40.7%) fall in exports to the EU.

Imports of goods, excluding non-monetary gold and other precious metals, fell by £8.9 billion (21.6%) in January 2021,

In both current price and chained volume measures, the January 2021 monthly fall in goods imports and exports are the largest monthly falls since records began in January 1997, the ONS said.

Spread betting quotes of the FTSE 100 have softened since the release of this morning’s economic data, sliding to 6,708, down 29 points.

6.35am: Soft start expected

Ahead of the release this morning of the UK gross domestic product (GDP) and trade data, the FTSE 100 is expected to give back yesterday’s paltry gains.

Spread betting quotes suggest London’s index of heavyweight shares will open 18 points lower at 6,719, despite a strong showing last night by US indices.

“The UK GDP data at 7am (UK time) will be given a lot of attention. Economists are predicting -4.9% growth for January, on a monthly basis, which would be a sharp fall from the 1.2% seen in December. We know the British economy took a hit in January because the services PMI reading slumped to 39.5, an eight-month low, also, the retail sales reading fell off a cliff as the level was -8.2%, a nine-month low. In the final quarter of 2020, the UK economy grew by 1%, ahead of the 0.5% consensus estimate,” said CMC’s David Madden.

“Today’s growth update will have traders wondering whether the first-quarter GDP report will be positive or negative. Even if the reading is very disappointing, it might not hurt sterling too much as the UK’s vaccination distribution scheme is one of the best in the world. Hopes for the economy re-opening in the months ahead takes precedence over January’s GDP numbers.

“At the same time, the UK’s services, industrial output, manufacturing output, construction output and trade balance will be published, economists are predicting -5.4%, -0.6%, -0.8%, -1% and -£12.5 billion respectively,” Madden noted.

US indices had a good day yesterday, with the Dow Jones climbing 189 points to 32,486 and the S&P 500 rising 41 points to 3,939 but the picture has been more mixed this morning in Asia, where Japan’s Nikkei 225 is 467 points heavier at 29,679 while Hong Kong’s Hang Seng is 166 points in the hole at 29,220.

Friday’s headline acts in the UK corporate calendar, Berkeley Group Holdings PLC (LON:BKG) and Hammerson PLC (LON:HMSO), are both in the property business but in two different parts that are faring very differently.

London and South-East focused housebuilder Berkeley usually updates its guidance for profit for its full-year to end-April in its trading update at this stage.

Analysts at UBS said they expect profit before tax of £538mln, versus December’s guidance of around £500mln, and net cash to be around £900mln by year-end.

“We expect trading to be broadly stable to positive in Q3, reflecting somewhat more subdued trends in London vs the rest of the country. We do not expect a change to multi-year guidance at this stage.”

As for Hammerson, the financials should highlight the severe headwinds in the retail sector, as well as the impact of the dilutive rights issue in the summer.

Broker Peel Hunt forecast a year-end loan-to-value (LTV) of 46%, and with ongoing valuation declines expected over the coming years, sees LTV rising further without disposals.

“This will be crucial to the future prospects of the company in our view, and we look for an update on the new management team’s intentions.”

Significant announcements expected

Trading statements: Berkeley Group Holdings PLC (LON:BKG)

Finals: Hammerson (LON:HMSO), Ocean Wilsons Holdings PLC (LON:OCN)

AGMs/EGMs: Autins Group (LON:AUTG), Petroneft (LON:PTR)

Economic announcements: UK GDP, UK industrial, manufacturing and construction output, UK trade data, US PPI

6.50am: Early Markets – Asia / Australia

Stocks in the Asia-Pacific region were mostly higher on Friday, taking cues from Wall Street where the S&P 500 climbed to a record high overnight.

In Japan, the Nikkei 225 surged 1.73% and South Korea’s Kospi gained 1.35%.

The Hang Seng index in Hong Kong fell 0.83% while the Shanghai Composite in China rose 0.30%.

Shares in Australia gained, with the S&P/ASX 200 closing 0.79% higher.

READ OUR ASX REPORT HERE

Proactive Australia news:

Proactive will host a CEO Investor Session next Tuesday, March 16, featuring three ASX-listed growth companies – RPM Automotive Group Ltd (ASX:RPM), CV Check Ltd (ASX:CV1) and K2fly Ltd (ASX:K2F).

Each presentation will extend for around 12 minutes followed by a 5-minute Q&A session and to register for the session, please follow this link.

Jindalee Resources Ltd‘s (ASX:JRL) remaining assay results from the last four drill holes completed in 2020 at McDermitt Lithium Project in Nevada, USA, continue to confirm extensions to mineralisation and further demonstrate the project’s strategic scale.

Argonaut Resources NL (ASX:ARE) will start drilling next week at the Murdie project in South Australia targeting iron oxide copper-gold (IOCG) mineralisation defined by large gravity anomalies

YPB Group Ltd (ASX:YPB) has completed enhancements to its MotifMicro™ (MM1) App ahead of schedule, placing it in the final development leg before widespread commercialisation takes place.

Firefinch Ltd (ASX:FFX) (OTCMKTS:EEYMF) (FRA:N9F) continues to make strong progress at Morila Gold Project in Mali, West Africa and is on track to meet production guidance this quarter while advancing plans to begin mining satellite pits in mid-2021.

Antipa Minerals Ltd (ASX:AZY) is on the path towards developing its assets in the Paterson Province of Western Australia and has a two-pronged approach – with its joint venture partners and independently on its 100%-owned ground.

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