- FTSE 100 closes down 84 points
- US stocks slide
- Big cap miners biggest FTSE laggards
5.10pm: FTSE closes sharply lower
FTSE 100 closed 1.20% down midweek with miners the biggest casualties as commodities fell and a crash in cryptocurrencies rippled through markets.
The UK’s index of leading shares closed down 84 points at 6,950. FTSE 250 slid 98 points, to 22,234.
Bitcoin dropped nearly 15% at the time of writing but was earlier down by 25% to below US$32,000 on Wednesday, and has dropped 40% since its April peak.
In commodities, US crude (West Texas Intermediate) fell 3.62%, while Brent crude fell 3.35%.
“The collapse across the entire realm of Cryptocurrencies has many fearful of the economic implications of such capital destruction,” said Joshua Mahony, senior market analyst at IG.
“With institutions having taken a more keen role over this latest bull-run, the repercussions of another extended crypto-capitulation could be more widespread compared with 2018. For some the institutional involvement in Bitcoin has helped bolster the case for its future inclusion as a mature asset class. However, that institutional involvement could ultimately result in greater regulation if its collapse sparks a wider fallout for financial markets.”
4.04pm: Inflation worries continue to unnerve investors
No sign of a recovery for stock markets.
The FTSE 100 remains well down on the day, currently 111.69 points or 1.59% lower at 6922.55 as inflation fears continue to grip investors.
In the UK the Dow Jones Industrial Average has slumped 510 points or 1.5% while the S&P 500 is 1.35% lower and the tech heavy Nasaq Composite is off 09%.
The Federal Reserve minutes – which come well after the UK market closes – will really need to be something to halt the US decline. But given the key economic data that has come out since the central bank’s last meeting -not to mention the number of Fed speakers since then – they may well not contain anything earth shattering.
Michael Hewson at CMC Markets UK said: “While stock market investors appear to be concerned about increasing inflation risk, given that appears to be today’s narrative, bond markets appear less so if US 10-year yields are any guide to today’s price action. They are slightly lower.
“That said, weakness in commodity prices isn’t exactly helping sentiment either, after Chinese authorities suggested curbs on aggressive increases in prices, which has clobbered the mining sector.”
Indeed commodity companies dominate the fallers in the FTSE 100. Anglo American PLC (LON:AAL) has fallen 5.8%, Antofagasta PLC (LON:ANTO) is down 5.2%, while BHP Group PLC (LON:BHP) has dropped 4.8% .
3.21pm: Cryptocurrencies drop by a quarter
It is not just stock markets heading lower, so too are cryptocurrencies.
But the falls there are of a different order.
Bitcoin dropped by around 25% to below US$32,000 at one point today, and has now fallen more than 50% since its record highs.
It means the digital currency has also lost all the gains it made since Tesla’s billionaire boss Elon Musk revealed in February that the company had purchased around US$1.5bn worth of Bitcoin.
Musk has since changed his tune and warned of the environmental impact of bitcoin mining.
But the catalyst for this latest fall seems to have been news that China’s central bank warned that cryptocurrencies should not be used as payment for goods or services.
Edward Moya at Oanda said: “Today’s broad weakness across cryptocurrencies came from the next step in Beijing’s regulatory crackdown. China’s restrictions on cryptocurrencies are expanding and that has many investors nervous that panic-selling will continue.
“Bitcoin’s crash approached the $30,000 level and that has a lot of the new institutional money see all their profit go up in smoke. This looks like your typical flash crash, but there seems to be some hesitancy in getting back in.”
The global cryptocurrency market is also down around 25%, while the recently floated crypto exchange Coinbase has seen its shares fall around 10%.
Laith Khalaf, financial analyst at AJ Bell, said: “The tide has turned on Bitcoin because environmental concerns and regulatory risks have materialised, which have raised doubt over the long term adoption of cryptocurrency by businesses and consumers. Tesla’s decision to suspend accepting Bitcoin on environmental grounds will give other companies the jitters about facilitating crypto payments.”
2.45pm: Proactive North America headlines:
Canada Silver Cobalt Works Inc (CVE:CCW) (OTCMKTS:CCWOF) updates on strategic developments at its Cobalt Camp assets in Ontario
Atlas Engineered Products (CVE:AEP) (OTCMTS:APEUF) records 1Q net profit on double-digit revenue increase
Klondike Gold Corp (CVE:KG) (OTCPINK:KDKGF) (FRA:LBDP) begins first phase of 6,500 metres drill program at Klondike District gold project, Yukon
Victory Resources Corporation (CSE:VR) (FRA:VR61) (OTCPINK:VRCFF) says assays pending after it sinks ten holes for 496 metres at Loner
Talon Metals Corp (TSE:TLO) (OTCMKTS:TLOFF) (FRA:TAO) finds thick pool of massive nickel-copper mineralization at CGO West area on the Tamarack project
2.42pm: Wall Street opens in the red
The main indices on Wall Street started Wednesday’s session in the red as a general slump in stock markets continued.
In the early minutes of trading, the Dow Jones Industrial Average was down 1.19% at 33,649, while the S&P 500 dropped 1.26% to 4,075 and the Nasdaq fell 1.47% to 13,108.
The one thing that may be able to change the market’s direction are the latest minutes from the Federal Reserve which are due to be released later today.
Back in London, the FTSE 100 was also in the doldrums in late afternoon, down 104 points at 6,930 at around 2.40pm.
2.19pm: Markets come under further pressure
Ahead of the Wall Street open, the UK market continues to decline.
The FTSE 100 is now down 109.78 points or 1.56% with inflationary concerns the over-riding factor for the fall.
The plumbing and heating business – which now operates mainly in the US after the disposal of Wolseley UK – raised its full-year guidance after its third quarter figures came in ahead of expectations, with revenues up 24.5% and trading profit up 65.4%.
The company is leading the FTSE 100 risers, up 360p or 3.88% at 9630p.
In a buy note UBS analysts said the forecasts for fourth quarter earnings appeared to come in a range of US$546mln to US$646mln.
They said: “The fourth quarter will suffer from one fewer trading day ( around US$15m impact) and a tougher comparison basis on costs, with last year benefiting from cost savings that may not be sustained. However, given the strength during the third quarter, we think the upper end is more likely than the lower end of this range.”
As for Wall Street, the futures are now pointing to a 376 point or 1.1% decline on the Dow Jones Industrial Average, with the S&P 500 down 1.2% and the Nasdaq Composite 1.6% lower.
12.39pm: Investors waiting to read the runes from the US central bank
US markets are set for another decline when Wall Street opens, ahead of the minutes of the last Federal Reserve meeting.
The Dow Jones Industrial Average futures are suggesting a 258 point or 0.77% drop as inflation fears continue to grip investors.
The S&P 500 is forecast to fall 0.92% at the open, while the tech heavy Nasdaq Composite is set for a 1.3% drop.
The minutes of the Federal Open Market Committee meeting in April are due to be released at 7m BST and will be scrutinised for the central bank’s view on pricing pressures, and for suggestions as to when its market-supporting bond buying programme might start to be eased up.
However the minutes will have a rather historic feel to them, given the meeting came before a surge in inflation and poor US jobless figures.
And since then, Fed officials have been – mostly – keen to present a dovish view, suggesting the current rise in inflation is transitory and will ease once last year’s comparative weakness caused by the pandemic has worked its way through the system.
Sophie Griffiths, market analyst at Oanda, said: “Inflation fears and concerns surrounding the timing of the Fed’s next move have been stalking the markets for weeks. While Fed speakers have been out in droves reiterating its dovish stance, the market looks undecided. Some days, the markets are prepared to take the Fed at their word. Today is not one of those days. The markets are clearly nervous about what the FOMC could reveal…
“However, it is worth pointing out that the meeting was held before last week’s shock inflation read and the weak non-farm payroll and retail sales data. This really makes them quite out of date. Even so, the markets are not focused on that, and the minutes will be scrutinised for clues as to when the central bank might start tapering its bond purchases.”
Michael Hewson at CMC Markets said: “The Fed.. believes that the recent increase in inflationary pressures is likely to be transitory, and should fall back as the year progresses as base effects fall away.
“This would suggest that the Fed appears to be on autopilot through the summer; however the recent sharp rise in commodity prices, along with significant base effects appears to be creating some uncertainty given the recent sharp rise in inflation expectations.”
Those expectations will only be fuelled by better than expected results from two big US retailers, Target and Lowe’s, following similar strong performances from WalMart and Home Depot.
$TGT | Target Q1 22 Earnings
– Q1 Adj. EPS $3.69 (est $2.22)
– Q1 Revenue $24.2B (est $21.7B)
– Q1 Comp Sales 22.9% (est 10.1%)
— LiveSquawk (@LiveSquawk) May 19, 2021
$LOW | Lowe’s Q1 Earnings
– Q1 Adj. EPS $3.21 (est $2.59)
– Q1 Revenue $24.4B (est $23.9B)
– Q1 Comp Sales 25.9% (est 19.4%)
– Continues To Plan For $9.0B In Share Repurchases
— LiveSquawk (@LiveSquawk) May 19, 2021
The forecast falls on Wall Street have made the mood in London worse.
The FTSE 100 is close to the day’s lows, down 94.91 points or 1.35% at 6939.33.
11.46am: Nasdaq fall hits UK tech stocks
A fall on Wall Street overnight is another factor influencing the UK market, not least a 0.56% decline in the tech heavy Nasdaq Composite which is undermining the sector here.
Vodafone PLC (LON:VOD), which lost almost 9% on Tuesday after its disappointing results, is down another 2.12% at 126.34p despite the mobile phone operator announcing a new share buyback programme worth up to £340mln.
Meanwhile the overall decline is picking up pace again, with the FTSE 100 down 79 points or 1.12% to 6955.24.
11am: Housebuilders on the slide
The house price surge has done little for shares in the building sector, which is caught up in the general malaise.
Overall the FTSE 100 is down 68.08 points or 0.97% at 6966.16 as the market continues to get the inflation jitters.
10.21am: House prices jump by 10.2%
More signs of inflationary pressures.
UK average house prices jumped by 10.2% over the year to March 2021, up from 9.2% in February 2021, the highest annual growth rate since August 2007.
Average house prices increased over the year in England to £275,000, in Wales to £185,000, in Scotland to £167,000 and in Northern Ireland to £149,000.
Despite worries about the overall economy, the housing boom has been driven by ultra-low interest rates and of course, the stamp duty holiday, which has been extended until it finally ends in September. (Unless it is extended again.)
Jonathan Hopper, chief executive of Garrington Property Finders, said: “The boom [is] the product of a perfect storm of factors. Years of demand that had been repressed by Brexit uncertainty were unleashed just as the difficulties of lockdown living forced thousands of people to fundamentally reassess what they want from their home.
“The Stamp Duty holiday fanned the flames, spurring thousands of would-be buyers into action.
“Spring is traditionally a busy time for the property industry, but this year has been off the chart. “
The markets are still unhappy however, although the FTSE 100 has come off its worst levels and is now down 63.27 points or 0.9% at 6970.97.
9.39am: BAE dips despite positive update
With the market’s bad mood getting worse, even a positive trading statement can have little impact.
For 2021, BAE had said previously it expects sales to grow at between 3-5% with underlying profits to rise by 6-8% with good defence sales offsetting weakness in civil aircraft.
Laura Hoy, equity analyst at Hargreaves Lansdown, said: “The Covid storm clouds are starting to clear from the bulk of BAE’s businesses, leading management to confirm intentions to grow profits by more than 10% this year. Air and Platforms & Services were particularly hard-hit as demand for passenger aircraft components took a nose-dive. We expect this to remain a headwind through 2021, but BAE’s massive and diversified portfolio means the group should be able to offset that weakness.
“The US Platforms & Services division is where we expect to see the biggest shift, as it was held back due to combat vehicle delivery delays and interruptions to Ship Repair. Management says both of those areas are improving and combat vehicle production is on track to meet delivery schedules. This should drastically improve the division’s profits, which were significantly dented due to the disruption.
“Management also noted that President Biden’s proposed 2022 defence budget, which falls roughly in line with the current year’s spend, should support the group’s revenue growth ambitions. We’re inclined to agree. About half of BAE’s total revenue comes from the US, so the new President’s commitment to maintaining defence spending offers a sigh of relief.”
Overall, with the surge in UK inflation, the FTSE 100 is currently down 87.42 points or 1.42% at 6946.82.
8.55am: Inflation threat becomes reality for markets
The FTSE 100 fell almost exactly 1% in a rather ugly opening session after the inflation threat that has haunted international markets for several months become a reality here in the UK.
The latest official figures revealed consumer prices more than doubled in April to 1.5%, pushed higher by energy costs.
While a shock on the face of it, analysts said the latest data didn’t point to a sustained overshoot of the kind seen in the US last week, where the cost of living increased by 4.2%.
“Set against the falling prices of a year ago, the move [in UK inflation] is unsurprising, while the recent strength of sterling will provide some support in containing the number as it should lower import prices,” said Richard Hunter, head of markets at Interactive Investor.
“The figure remains within the Bank of England’s 2% target, but is expected to rise to perhaps 2.5% by the end of the year as comparisons harden, with a stronger oil price and the removal of some tax benefits adding to pricing pressure.
“When this has washed through, it is anticipated that inflation will settle again to the target level, which is of some solace to investors fearing overheating in developed economies.”
On the market, the miners led the retreat with copper specialist Antofagasta (LON:ANTO) top of the fallers with a 4.5% decline.
Wholesale profit-taking was blamed for the demise of stock in the Chile-focused group and the weakness of Anglo American (LON:AAL), BHP (LON:BHP) and Rio Tinto (LON:RIO). Between them, they were off 2-2.5%.
US data on the rampant inflation that has stalled the housing recovery was actually good news for a Ferguson (LON:FERG), the UK listed group that supplies many of America’s builders. The stock advanced 4%.
Shares in construction group John Laing (LON:JLG) jumped 11% after it revealed it had agreed to be taken over by private equity group KKR in a £2bn deal.
Proactive news headlines
Sunrise Resources PLC (LON:SRES) said a test grind on a 500-ton bulk sample of natural pozzolan supplied to a large cement and ready-mix concrete company (CRMC), a potential offtaker, has been successfully completed and concrete trials are now being organised.
Chamberlin PLC (LON:CMH) has updated investors on its operations as it continues its restructuring efforts, with the integration of Hill Castings into the business completed in line with expected cost savings.
Silence Therapeutics PLC (LON:SLN, NASDAQ:SLN) has reported positive safety data from a phase I trial of its lead asset. SLN124, which is being developed to treat blood such as iron-loading anaemia conditions, thalassemia and myelodysplastic syndrome (MDS), was also shown to be effective in reducing plasma iron levels and had a long duration of action.
Tirupati Graphite PLC (LON:TGR) said it has applied to the OTC Markets Group for its shares to be traded on the OTCQX Markets in a move it said will make its shares more widely available to North American investors.
Redx Pharma (LON:REDX) announced the appointment of Natalie Berner as a non-executive director with effect from 19 May 2021. Berner will be a representative for Redmile, a San Francisco based investment firm that focuses on the health care sector and is a major investor in Redx. Following the appointment, the board will be comprised of seven directors, four of whom including the chairman are independent non-executives.
MetalNRG PLC (LON:MNRG) said independent consultants SRK Exploration Services see the potential for the discovery of further, minable gold mineralisation on the Gold Ridge project in Arizona and have recommended an initial two-stage programme of follow up work. The project currently comprises of three historic mines.
Tharisa PLC (LON:THS), an integrated platinum and chrome producer, expects its earnings per share for the six months to end-March to be around six times higher than the corresponding interim period. Basic earnings per share and headline earnings per share (HEPS) are expected to be between US$0.21 and US$0.22 per share.
European Metals Holdings Ltd (LON:EMH, ASX:EMH, NASDAQ:ERPNF) said results from locked-cycle tests (LCT) further supported the Cinovec project’s ability to initially produce battery-grade lithium carbonate.
Incanthera plc (AQSE:INC) has posted its annual report and accounts for 2020 along with proxy voting forms ahead of its annual general meeting on Wednesday 23 June in Manchester. The meeting will be closed by the company will provide access online through the Investor Meet Company platform.
LoopUp Group PLC (LON:LOOP) announced the appointment of Mike Reynolds as non-executive chairman of the company, and that it has published its 2020 report and accounts ahead of its AGM on 15 June 2021.
Destiny Pharma PLC (LON:DEST) said for its AGM on 3 June it will operate an audio dial-in facility for shareholders and immediately after the event will host a live webcast presentation followed by Q&A.
6.50 am: Lower open expected
The FTSE 100 is expected to open lower on Wednesday as investors await the latest batch of UK inflation data.
Spread-betters IG expect the blue-chip index to open down around 68 points after ending Tuesday’s session 1 point higher at 7,034.
Concerns over the potential for sharp rises in inflation have been one of the key influences behind market sentiment in recent weeks, so that latest reading from the UK could determine the direction for equities going forward.
Expectations of the slower start in London followed a bleak performance for US markets overnight, with the Dow Jones Industrial Average closing down 0.78% at 34,060 while the S&P 500 dropped 0.85% to 4,127 and the Nasdaq fell 0.56% to 13,303.
It was a similar picture in Asia this morning as Japan’s Nikkei 225 fell 1.79%. Hong Kong’s market, meanwhile, is closed for a public holiday.
On currency markets, the pound was up 0.02% against the dollar at US$1.419, although the UK inflation data and Fed minutes due today could provide some catalysts for movement.
Around the markets:
Sterling: US$1.419, up 0.02%
Brent crude: US$67.96 a barrel, down 1.09%
Gold: US$1,869 an ounce, down 0.06%
Bitcoin: US$39,742, down 11.46%
6.50am: Early Markets – Asia / Australia
Stocks in the Asia-Pacific region were lower on Wednesday after US$280 billion was wiped off crypto market as bitcoin fell below US$40,000 for first time in 14 weeks.
The Shanghai Composite in China fell 0.51% while Japan’s Nikkei 225 dipped 1.69%.
Markets in Hong Kong and South Korea are closed on Wednesday for holidays.
Shares in Australia slumped, with the S&P/ASX 200 trading 2% lower.
Proactive Australia news:
Lithium Power International Ltd (ASX:LPI) (OTCMKTS:LTHHF) has executed a sales agreement with Canada-based Vertex Lithium Corporation to divest its remaining 70% interest in lithium exploration properties on the Centenario Salar in Argentina.
Paradigm Biopharmaceuticals Ltd (ASX:PAR) (OTCMKTS:PBIGF) has received first revenue through physician prescription of Zilosul® to patients via the Therapeutic Goods Administration (TGA) pay-for-use Special Access Scheme (SAS).
Lake Resources NL (ASX:LKE) (OTCMKTS:LLKKF) is expanding drilling and testing beyond what is required for the definitive feasibility study (DFS) at the flagship Kachi Lithium Brine Project in Argentina, amidst strong demand for its high purity, sustainably produced product.
Mako Gold Ltd‘s (ASX:MKG) assays have extended the Gogbala gold mineralised trend to more than 7 kilometres within the flagship Napié Project in Côte d’Ivoire with the best result of 5 metres at 3.28 g/t gold from 91 metres, including 1-metre at 10.74 g/t
Delta Drone International Ltd (ASX:DLT) has signed its first customer contract in South Africa with Kumba Iron Ore Limited, a subsidiary of Anglo-American, for its patented SafeAir drone parachute technology.
Agrimin Limited (ASX:AMN) has signed a binding offtake agreement with Sinochem Fertilizer Macao Limited for the annual supply of 150,000 tonnes of sulphate of potash (SOP) produced from the Mackay Potash Project for sale and distribution in China.