FTSE 100 moves into the green; Mixed start for US stocks

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  • FTSE 100 up 12 points
  • Miners climb on BHP strike
  • US stocks make mixed start

2.42pm: Wall Street opens mixed

The main Wall Street indices have managed to start Thursday’s session mostly on the front foot after some mostly positive US economic data.

In the first minutes of trading, the Dow Jones Industrial Average was up 0.63% at 34,540 while the S&P 500 rose 0.3% to 4,208. The one outlier was the Nasdaq, which in early deals was down 0.03% at 13,733.

Back in London, the FTSE 100 had shifted into the green in late afternoon, rising 12 points to 7,039 at around 2.40pm.

1.43pm: US economic figures beat expectations – mostly

US weekly jobless claims have come in much better than expected.

The number of Americans seeking unemployment benefits fell last week from an unrevised 444,000 to 406,000.

This is a new pandemic low, the lowest level since March 14 2020 and better than the forecast figure of 425,000.

The four week moving average fell by 46,000 to 458,750, again the lowest level since March 14 last year.

The second estimate of US GDP for the second quarter was unchanged from the first at an annualised 6.4%, down from 4.3% in the fourth quarter of last year.

 

While the overal figure was unchanged, there was some adjustment to the components.

The Bureau of Economic Analysis said: “Upward revisions to consumer spending and nonresidential fixed investment were offset by downward revisions to exports and private inventory investment. Imports, which are a subtraction in the calculation of GDP, were revised up.”

Meanwhile US capital goods figures are a bit more mixed:

 

 

All this combined though shows signs of a healthy US economy, and is bound to bring up talk about when the US Federal Reserve will need to act to curb pricing pressures as the recovery continues.

The news has given a lift to the Dow Jones Industrial Average, now expected to rise 69 points or 0.22% at the open. But the S&P 500 and Nasdaq Composite are still forecast to show slight declines.

Back in the US the FTSE 100 remains stubbornly lower, down 11.59 points or 0.16% at 7015.34.

12.32pm: Investors await US growth and jobless figures

After slight gains on Wednesday, Wall Street is expected to dip slightly at the open.

The Dow Jones Industrial Average is forecast to edge down imperceptibly by 2 points while the S&P 500 is forecast to open down 0.18% and the Nasdaq Composite to show a 0.33% decline.

Investors are waiting for a raft of US economic data which will show the strength of the world’s largest economy and provide more discussion about if and when the US Federal Reserve needs to act on inflationary pressures.

There is a second estimate of first quarter GDP, which initially showed a 6.4% annualised gain, better than the 6.1% expected.

Meanwhile the weekly jobless claims are forecast to fall from 444,000 to around 425,000.

Sophie Griffiths at Oanda said: “US futures are edging slightly lower as investors brace themselves for a slew of numbers today, including a potential upward revision to first quarter GDP data and jobless claims, which are expected to fall to a fresh pandemic low. These numbers come ahead of tomorrow’s PCE [personal consumption expenditures] inflation data..

“Inflation jitters are making a comeback ahead of tomorrow’s data, which is pulling futures lower. Expectations are for a PCE jump to 2.9% year on year in April, up from 1.8% in March.”

Meanwhile the FTSE 100 continues to flag, down 16.05 points at 7010.88.

12.12pm: Crude falls despite reopening optimism

Oil prices have slipped back as the positive talk of economies reopening and increasing demand has been offset by worries about COVID-19 in India, as well as the prospect of Iranian production returning to the market as nuclear talks with the US continue.

So with Brent crude down 0.7% at $68.37 a barrel, BP PLC (LON:BP.) is down 1.26%.

Royal Dutch Shell PLC (LON:RDSA) is an even worse performer, undermined by the company losing a landmark case brought forward by seven activist groups, including Greenpeace and Friends of the Earth Netherlands, to challenge its climate strategy.

Sophie Griffiths at Oanda said: “The landmark Dutch ruling orders Shell to cut its CO2 emissions by 45% by 2030 (compared to 2019 levels). The move comes as the oil majors navigate an uncertain transition towards cleaner fuel and could well set a precedent for similar cases against large global polluters.”

The FTSE 100 has drifted further into the red, down 11.89 points to 7015.04.

10.53am: Commodity companies climb

Mining shares have gained ground as a strike is set to go ahead today at the world’s largest copper mine, Esconida in Chile.

Workers at the mine as well as the Spence site, both run by BHP Group PLC (LON:BHP), have rejected the latest contract offer and are set to walk out.

With metal prices lifted by worries about subsequent supply shortages – copper is already hovering around record levels – BHP is up 3.15%, while Antofagasta PLC (LON:ANTO) has added 3.26%, Rio Tinto PLC (LON:RIO) has risen 3.03% and Glencore PLC (LON:GLEN) has gained 2.52%.

This however has done nothing for the FTSE 100, which is basically flat at 7026.84.

Chris Beauchamp, chief market analyst at IG said: “It’s a good thing the UK has the Cummings/Johnson/Hancock saga to distract it from financial markets, which have once again turned into something of a snooze-fest.

“The expectation (and for some, hopes) that 2021 would prove to be as volatile as its predecessor have proven to be sorely-misplaced, and instead we have a market that, even by pre-COVID-19 standards, is quite dull.

“The concerns of this year, namely modest rises in overall inflation (post-COVID-19 spikes notwithstanding) and the frenetic debate over when central banks might or might not choose to nudge interest rates up by a smidgen, seem paltry by comparison to last year.

“Instead the market has been able to adjust to rising Treasury yields and the surge in commodity prices, and the continued drift higher in earnings and earnings forecasts has meant that valuation concerns continue to be pushed on to the back burner. This doesn’t make for much excitement, but it is at least a recognition that things are returning to normal.”

10.14am: Water group’s shares spring a leak

United Utilities Group PLC (LON:UU.) has dropped 1.02% to 991.8p after it said operating profits fell from £732.1mln to £602.1mln.

It said next revenues would fall slightly and operating costs would increase, but it raised its full year dividend by 1.5%.

William Ryder, equity analyst at Hargreaves Lansdown, said: “Increased household demand over lockdowns offset lower demand in the non-household sector. But United Utilities has still reported a substantial fall in underlying operating profit – to be expected under the new regulatory regime. The regulator is demanding lower prices, and combined with lower inflation, this has dragged revenue down. Operating costs also increased thanks to higher investment.

“The new regime calls for even more investment, and while this will increase regulatory capital and thus allowable financial returns, it’s still a drain on cash. But despite the challenges, United Utilities is still a regulated monopoly, and the group has made a good start against its outcome delivery Incentives. This ought be enough to support the dividend going forward, which will be the main concern for investors.”

Severn Trent PLC (LON:SVT) is also down but this is due to the shares going ex-dividend. They have fallen 2.65% to 2459p.

Also being quoted without the right to the latest payout are Imperial Brands PLC (LON:IMB), down 2.57% at 1631p and Intertek PLC (LON:ITRK), 1.88% lower at 5544p.

With this drag on the market, the FTSE 100 has lost its earlier (minor gains) and is now virtually unchanged, down 0.67 points at 7026.26.

9.22am: Engineering groups lead the risers

On a day when the market is struggling to get going – pre-Bank Holiday lethargy perhaps – aircraft maker Airbus has given a lift to things.

The company has said a recovery in the aerospace industry is beginning, and it indicated an increase in production of its A320 passenger jets.

That is good news for the pandemic-hit sector, and helps explain the rise in shares of engineers Rolls-Royce PLC (LON:RR.), up 3.22% to 106.36p, and Melrose Industries PLC (LON:MRO), 3.05% better at 168.8p.

The two are the top risers in the leading index, which is now in positive territory. However the move is not exactly dramatic, up 6.75 points to 7033.68.

AJ Bell investment director Russ Mould said: “The FTSE 100 seems to be on a road to nowhere at the moment.

“Fears about inflation have subsided for the time being and even some volatility in Asian markets wasn’t enough to wake the index from its slumber.

“There is a relative dearth of economic data which could push markets in any particular direction in the coming days, although a second estimate of first quarter US GDP later on Thursday could renew focus on inflationary pressures, particularly if the already elevated number is revised upwards.”

And there are some concerns about pricing pressures, specifically in New Zealand where the central bank surprised markets by forecasting rate increases could begin in the second half of 2022.

Analyst Jeffrey Halley at  OANDA said: “There are many ifs and buts in that forecast, with enough Teflon to make a politician jealous. Nevertheless, New Zealand now joins Canada and Norway in a small club that is starting to talk about tapering and hiking.”

8.51am: FTSE 100 opens flat as a pancake

The FTSE 100 opened little changed with Wall Street and Asia providing little encouragement.

The inflation narrative, meanwhile, looks to be subtly altering with Federal Reserve vice chair, Richard Clarida, admitting rate-setters will have to begin talking about tapering.

Here in London, aero-engineers Rolls Royce (LON:RR.) and Melrose (LON:MRO) – up 3.8% and 3.3% respectively – were well bid.

Aviva (LON:AV.) was up 2.3% after a solid first-quarter performance, which was allied to a pledge to return a substantial slug of the £7.5bn it has garnered from selling non-core businesses.

“Progress is evident and the market consensus of the shares as a strong buy is reflective of strong confidence in Aviva’s prospects,” said Richard Hunter, head of markets at Interactive Investor.

The day’s big faller was Centamin (LON:CEY), which was marked 5.7% lower after updating on its west African portfolio. Broker Liberum reiterated its ‘sell’ advice.

6.50 am: FTSE 100 set open a sliver higher

The FTSE 100 looks set to start Thursday just a sliver higher as tepid volatility continues to grind on sentiments.

CFD and spread betting firm IG Markets sees the price only 5 points higher than yesterday, making the price 7,025 to 7,028.

After a quiet news day, the banks pulled the index lower on Wednesday for the index to end down 0.04% whilst the midcap FTSE 250 went higher, ending the midweek session up over 201 points, or 0.90%, at 22,640.

Ted Baker (LON:TED), Pets at Home Group PLC (LON:PETS), United Utilities Plc (LON:UU. and Johnson Matthey PLC (LON:JMAT) are among the notable names pencilled in what is another relatively quiet day in the City diary on Thursday.

On Wall Street, the Dow Jones closed Wednesday with a minuscule lead – up 10 points or 0.03% at 34,323.

The S&P 500 meanwhile marked a 0.19% improvement with a finish at 4,195. At the same time the Nasdaq managed a 0.59% gain to end the session at 13,738.

In Asia, Japan’s Nikkei was 0.61% lower at 28,468 whilst Hong Kong’s Hang Seng dropped 0.31% to 29,077. The Shanghai Composite meanwhile rose slightly, up 0.23% at 3,601.

Around the markets

The pound: US$1.4117, down 0.01%

Gold: US$1.899 per ounce, up 0.19%

Silver: US$27.69 per ounce, up 0.01%

Brent crude: US$68.47 per barrel, down 0.26%

WTI crude: US$65.89, down 0.27%

Bitcoin: US$37,741, down 4.25%

6.50am: Early Markets – Asia / Australia

Stocks in the Asia-Pacific region were mixed on Thursday as industrial profits in China soared 57% year-on-year in April, according to the National Bureau of Statistics.

The Shanghai Composite in China gained 0.11% but Hong Kong’s Hang Seng index declined 0.36%

In Japan, the Nikkei 225 fell 0.54% while South Korea’s Kospi slipped 0.16%.

Shares in Australia rose, with the S&P/ASX 200 trading 0.23% higher.

Proactive Australia news:

Nexus Minerals Ltd’s (ASX:NXM) diamond drilling at the Crusader prospect, part of the wider Wallbrook Project in Western Australia has intersected broad, porphyry mineralisation with results confirming a down-dip +5 g/t gold mineralised zone.

St George Mining Limited (ASX:SGQ) (FRA:S0G) has announced further significant exploration results at its flagship Mt Alexander Project, with high-grade nickel-copper sulphides intersected 125 metres down plunge in the first step-out hole for the MAD199 discovery.

Aeris Resources Ltd’s (ASX:AIS) diamond drill hole TAKD019 has intersected a 60-metre thick zone containing variable quantities of sulphides (pyrite with lesser chalcopyrite) from 140 metres downhole at the Constellation deposit, within the Tritton tenement package in New South Wales.

Meteoric Resources NL’s (ASX:MEI) (FRA:RNF) first deep drill hole (JUDD042) designed to test the deep high-chargeability IP anomaly at the Juruena Project in Brazil has confirmed the potential for a major copper-gold porphyry environment, closely related to the shallow epithermal deposits (Dona Maria, Crentes and Querosene, among others).

Bardoc Gold Ltd (ASX:BDC) has intersected broad zones of shallow, high-grade mineralisation within the Omega Lode at the 1.7-million-ounce Aphrodite gold deposit, which forms part of its flagship 3.07-million-ounce Bardoc Gold Project in Western Australia.

PolarX Ltd (ASX:PXX) (FRA:PX0) has received very high-grade silver assays accompanied by gold grades which verify and extend high-grade historical rock chip samples from the southern-most veins at Fourth of July in the Humboldt Range Project, Nevada, USA.

Ora Banda Mining Ltd (ASX:OBM) (FRA:M6N) continues to make progress with the ramp-up of activities at Davyhurst Gold Project in Western Australia, with actions taken to ensure delivery of definitive feasibility study (DFS) production levels of around 82,000 ounces recovered for FY22.

Brookside Energy Ltd (ASX:BRK) (FSE:8F3) has observed extensive oil and gas shows in the horizontal section of the high-impact Jewell 13-12-1S-3W SXH1 well being drilled in the SWISH Area of Interest (AOI) in Oklahoma’s world-class Anadarko Basin.

Danakali Ltd (ASX:DNK) (LON:DNK) (OTCMKTS:SBMSF) (FRA:SO3) has demonstrated economic, construction, operational and environmental optimisations at the Water Intake Treatment Area (WITA) using filtered seawater during extensive test-work in the pre-development process for Colluli Sulphate of Potash (SOP) Project in Eritrea.

Cobalt Blue Holdings Ltd (ASX:COB) (OTCMKTS:CBBHF) (FRA:COH) attracted plenty of local and regional attention to a Shareholder Day held in addition to a formal opening of the Broken Hill Pilot Plant.Ethereum: US$2,688, down 5.41%

 

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