FTSE 100 setting new one-year highs; Wall Street set to join upbeat session
- FTSE 100 rises 48 points
- GDP rises 2.3% in April
- Sanne Group prepared to talk to Cinven over possible 875p a share offer
London’s blue chips are continuing to push higher as the day goes on, with the FTSE 100 notching up new 52-week highs as it gains 0.7% to 7,336.5.
With all Europe’s major equity indices in the gree, it’s no surprise to look across the Atlantic and see futures also pointing upwards again.
This will be a case of “follow-through buying as the upbeat mood continues”, says market analyst Sophie Griffiths at Oanda.
“US consumer confidence is the highlight of the US economic calendar today and could boost sentiment further.”
She said the US dollar is seeing a tepid bounce after edging lower in the previous session.
“Investors felt confident that the rise in inflation was not sufficient to prompt an earlier move by the Fed. Price rises in airline tickets and used cars supported the Fed’s view that the spike in prices was transitory.”
With the euro extending mild losses after the ECB this week again indicated ultra-easy monetary policy is here to stay, Griffiths added: “What is clear from both the Fed and the ECB is that data is driving policy decisions, rather than forecasts.”
She noted that gold, as it is often considered a hedge against inflation, fell initially on surging US inflation, but has found support from falling US Treasury yields.
“Yields falling on rising inflation appears counter initiative, but as inflation is surging interest rate expectations are not, which is a sweet spot for Gold.
“What more could gold want? Rising inflation and a Federal Reserve willing to sit on its hands? Whilst Gold is edging lower on a stronger US Dollar, a move over $1900.00 an ounce is not out of the question. That opens the door for a move towards resistance at $1916.00. Failure to reclaim the $1900.00 level could see the price ease back towards the $1890.00 an ounce comfort zone.”
11.30: Miners leading the way
Stock markets around Europe are mostly in the green this morning, led by mining companies, with metals prices, particularly gold and silver, gleaming bright.
Analysts see the buoyancy as being a product of the market becoming more comfortable with rates of inflation as they come round to the US Federal Reserve’s argument that the higher price rises are “temporary” and “transitory,”
“With stocks rising, and both the dollar and yields falling, investors clearly believe that the Fed will still stick to script next week and reiterate its view that the upsurge in prices is going to be temporary,” says market analyst Fawad Razaqzada at ThinkMarkets.
“The drop in bond yields has boosted the appetite for all risk assets, especially low and zero-yielding assets such as growth stocks in the technology sector and precious metals.”
Gold touched $1900 an ounce the previous session before easing a few dollars lower, while silver nearing the $30 ‘handle’.
Precious metals miners Fresnillo (LON:FRES) and Centamin (LON:CEY) are among the FTSE 350 blue chip risers, where there is a strong representation from miners of all metals, with Glencore (LON:GLEN), Antofagasta (LON:ANTO) and Rio Tinto (LON:RIO) all hovering around the leaderboard.
The Footsie is up 44 points or 0.6% at 7,131.78, while the FTSE 250 has added 0.5% to 22,713.91.
10am: Sterling slips on GDP disappointment
London’s leading equities have extended early gains, helped by sterling losing a bit of ground after this morning’s gross domestic product (GDP) release.
The FTSE 100 was up 36 points at 7,124.
Sterling was down by around one-fifth of a cent against the US dollar at US$1.4158 after April’s GDP rise underwhelmed.
“Although UK GDP registered strong growth, the numbers are nothing to shout about considering where we’ve come from,” said Mike Owens at Saxo Markets.
“Sterling and UK equity markets have had a muted reaction to the figures and it’ll be a good result if the UK economy manages to grow to pre-pandemic size by the end of the year,” Owens said.
UK industrial production for April contracted by 1.3%; economists had expected a 1.2% increase after March’s 1.8% rise.
“The slowdown in manufacturing production wasn’t quite as severe, but even then, it came in at -0.3%, well off both the 1.5% estimate and March’s 2.1%,” noted Connor Campbell at Spreadex.
Exports to the EU grew £0.3 billion, but exports to non-EU countries fell £0.4 billion in April.
— Office for National Statistics (ONS) (@ONS) June 11, 2021
Total imports of goods to the UK, excluding precious metals, increased by £1.4 billion (3.9%) in April 2021, with increases seen with both non-EU and EU countries, the Office for National Statistics (ONS) reported.
Total exports of goods, excluding precious metals, fell slightly by £0.1 billion (0.6%) in April 2021 after two consecutive months of growth, with falls in exports to non-EU countries offsetting increases to EU countries.
“The latest trade figures pose a number of questions but the biggest is – have our trading patterns changed forever following Brexit or are we just seeing the short-term effects of stockpiling and supply chain adjustments? What’s clear from the latest figures is that in April the UK was doing more trade with non-EU countries than with EU countries,” said Danni Hewson, a finance analyst at AJ Bell.
“The pandemic has almost certainly played a huge part. Lockdowns and travel restrictions have affected supply and demand, and this is always a picture full of moving parts. The restarting of car production in the UK undoubtedly played a big part with imports in metals like palladium required for making catalytic converters up over the month.
“It will require time for reopening to work its way through and for those moving parts to settle before we can really quantify if change has come and gone or come and stayed,” she added.
— Office for National Statistics (ONS) (@ONS) June 11, 2021
8.30am: GDP revival undershoots expectations
London has got off to a solid start after the release of the gross domestic product (GDP) data, even though the numbers were a bit below the consensus forecast.
UK GDP rose by 2.3% in April, which was a shade below the consensus forecast of 2.5%. The three-month GDP turned positive at 1.5% compared to a decline of 1.5% in March but was also below the consensus forecast (of 1.6%).
GDP grew 2.3% in April 2021, but remains 3.7% below its pre-pandemic peak:
▪️ services grew 3.4% (4.1% below peak)
▪️ manufacturing fell 0.3% (2.4% below peak)
▪️ construction fell 2.0% (0.3% above peak)
— Office for National Statistics (ONS) (@ONS) June 11, 2021
“GDP recovered in April to a level just 4.0% below its pre-Covid peak, bettering the 5.2% shortfall seen in October, even though non-essential shops and consumer services business were closed for the first 11 days of the month,” noted Samuel Tombs, the chief UK economist at Pantheon Macroeconomics.
“Growth was driven by a 3.4% month-to-month increase in output in the services sector, itself largely the product of a hefty 8.9% increase in output in the distribution sector and a 44.1% jump in output in the accommodation and food services sector. The latter still was 40% below its pre-Covid level and likely jumped again in May, with the reopening of hotels and restaurants for indoor dining,” Tombs speculated.
Talking of the accommodation and food services sector, Domino’s Pizza Group PLC (LON:DOM) was the worst performer in the FTSE 250 after its chief financial officer jumped ship to take up the role of finance director at pubs group Fuller, Smith & Turner PLC (LON:FSTA).
Shares in Domino’s were off 2.1% at 382.2p after Neil Smith handed in his notice; Fuller’s shares were up 4% at 884p.
Topping the FTSE 250 with a 12% rise at 868p was Sanne Group PLC (LON:SNN) after it announced it had received a fifth unsolicited, non-binding proposal from Cinven regarding a possible all cash offer at a price of 875 pence per share.
The board of Sanne rejected the fourth proposal of a prospective 850p per share offer at the end of May but the additional 25p per share now on the table has persuaded the board of the global provider of alternative asset and corporate services to open discussions with Cinven.
Proactive news headlines
IQ-AI Limited (LON:IQAI) said its synthetic T1+C (Gad-Free) software application has been awarded a patent by the US Patent and Trademark Office.
Powerhouse Energy Group PLC (LON:PHE) said the engineering consultancy, SWECO, has been appointed to advise on the waste-to-hydrogen project in Konin, Poland. The proposed plant will use Powerhouse’s DMG technology, which produces hydrogen from the processing of waste plastics.
All five of Guild Esports PLC’s (LON:GILD) professional Fortnite gamers have qualified to compete for a US$3mln prize pool. They have qualified for the Fortnite Championship Series (FNCS) All-Star Showdown which takes place over the next week, from June 11 to June 26.
Zephyr Energy Plc (LON:ZPHR) said it filed an application with the OTC Markets Group for its ordinary shares to be publicly cross traded on the OTCQB Market (OTCQB) based in the United States.
Walls & Futures REIT PLC (LON:WAFR) noted that Virgata’s takeover offer received 9.26% acceptances at its second closing date. In a statement, the REIT said: “The Board is pleased to see that over 90% of shareholders have not accepted and continues to recommend that shareholders take no action and not accept the Offer.”
Argentex Group PLC (LON:AGFX) said Carl Jani has resigned and stepped down from his role as co-chief executive. The provider of foreign exchange services said current co-CEO Harry Adams will now assume the role of the firm’s sole CEO with immediate effect.
Vietnam Holding Limited (LON:VNH) said it will be attending Mello Trusts and Funds on June 15, 2021 where Dynam Capital chairman Craig Martin will be presenting and taking questions from participants.
AfriTin Mining Limited (LON:ATM) said it will host an investor webcast on Monday June 14 at 3pm BST where the chief executive Anthony Viljoen and other management will present an update on the company’s assets in Namibia.
6.35am: Stocks set to open modestly higher
Ahead of GDP figures later today, London equities are expected to open modestly higher.
Spread betting quotes point to the FTSE 100 adding 9 points to yesterday’s meagre gains to open at around 7,097.
“The main focus today is on the UK economy in the wake of this week’s comments from outgoing Bank of England chief economist Andrew Haldane who said that the economic rebound was going “gang-busters”, and that the Bank of England needs to start looking at turning off the stimulus tap,” reported Michael Hewson at CMC Markets.
“This morning’s latest economic data could well add extra fuel to that argument, with the UK economy enjoying a decent end to Q1, with an expansion of 2.1%, as the economy picked up steam ahead of the relaxation of restrictions at the end of March.
“During the first quarter the economy contracted -1.5%; however, with the further easing of restrictions on April 12th optimism is high that April GDP is likely to see another decent monthly expansion, as Q2 gets off to a flier, with a 2.4% expansion expected, and top of the 2.1% in March. The strong PMI numbers in April further supports this view, with May expected to be equally as strong,” he added.
In the US yesterday, the focus was on inflation, with the US consumer prices index hitting its highest levels since 2008.
The headline inflation rate rose by 0.60% versus 0.40% expected. Core inflation rose by 0.70%, also versus 0.40% expected.
“Applying some Vulcan logic to the numbers, one would have expected US yields and the greenback to rise and equities to fall. Instead, precisely the opposite happened, leaving many disappointed inflationistas scratching their heads, including those with pointy ears mumbling about how illogical humans are,” said Jeffrey Halley at OANDA.
The Dow Jones industrial average had a middling day, rising just 19 points to 34,466 but the S&P 500 added 20 points at 4,239.
In Asia this morning, all is sweetness and light. Japan’s Nikkei 225 is 21 points firmer at 28,980 while Hong Kong’s Hang Seng index is 107 points to the good at 28,846.
Around the markets
- Sterling: US$1.4181, up 0.08 cents
- 10-year gilt: 0.749%, up 1.34 cents
- Gold: US$1,902.60 an ounce, up US$6.20
- Brent crude: US$72.26 a barrel, down 26 cents
- Bitcoin: US$36,892, up US$483
6.50am: Early Markets – Asia / Australia
Stocks in the Asia-Pacific region were mixed on Friday as the S&P 500 rose nearly 0.5% overnight stateside to a record closing high of 4,239.18.
The Shanghai Composite in China fell 0.34% while Hong Kong’s Hang Seng index lifted 0.47%
In Japan, the Nikkei 225 was flat and South Korea’s Kospi rose 0.66%.
Shares in Australia gained, with the S&P/ASX 200 trading 0.18% higher.
Proactive Australia news:
Aeris Resources Ltd (ASX:AIS) (OTCMKTS:ARSRF) has secured a A$50.4 million cash injection after it executed an institutional placement to fund exploration at its operational base and precious metals assets.
Calima Energy Ltd’s (ASX:CE1) increased production for May and increased guidance for the remainder of 2021 from its Brooks drilling campaign in Canada has secured a price target of A$0.035 from Auctus Advisors LLP anaylst Stephane Foucaud.
Volt Resources Ltd (ASX:VRC) (FRA:R8L) has been granted a trading halt by the ASX with an announcement pending relating to completion of the acquisition of a 70% interest in a Ukraine graphite business.
Archer Materials Ltd (ASX:AXE) (OTCMKTS:ARRXF) (FRA:38A) has made progress in the development of its biochip by establishing essential chip testing operations in a semiconductor fabrication environment.
Golden Rim Resources Ltd (ASX:GMR) latest diamond drilling results from Kouri Gold Project in Burkina Faso, West Africa, have extended the high-grade Diabatou gold shoot from 140 metres to 190 metres below surface.
Tietto Minerals Ltd (ASX:TIE) has appointed four key managers to accelerate development of the 3.02-milllion-ounce Abujar Gold Project in Côte d’Ivoire, which is on track to be West Africa’s next gold mine.
Legend Mining Limited (ASX:LEG) has released assay results for three diamond drill holes that continue the evolution of its flagship Mawson nickel-copper-cobalt prospect within the Rockford Project, Fraser Range, Western Australia.
Celsius Resources Ltd’s (ASX:CLA) Philippine subsidiary Makilala Mining Company Inc has received high-grade copper-gold assay results from the company’s first drill hole at the MCB Copper-Gold Project on the island of Luzon in the Philippines.
Global Energy Ventures Ltd (ASX:GEV) (FRA:WS9) looks to be an early mover in large-capacity compressed hydrogen shipping that will be required to link future cheap renewable power-sourced hydrogen (H2), with emerging distant users of carbon-free energy – according to a report from Pac Partners Equity Research.