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FTSE 100 closes higher as markets bounce back despite Coronavirus crisis

Britain's blue-chip benchmark finished over 70 points higher at 7,482

Barrels of oil
FTSE 100 sprung ahead on Tuesday but for how long?
  • FTSE 100 index closes up 70 points
  • US markets higher
  • Coronavirus infection numbers climb

5.05pm FTSE 100 closes firmly higher

FTSE 100 index closed in the green on Tuesday as global markets bounced back despite the spreading Coronavirus crisis.

Britain's blue-chip index finished ahead by over 70 points at 7,482.

FTSE 250, the more UK-company focused index, also closed  ahead by 136 points at 21,440. 

"The positive move in equities is probably down to short covering plus bargain hunting as the health crisis has deepened," noted CMC Markets analyst David Madden.

"The longer the news story hangs around, traders might build up a tolerance to it. The Chinese central bank has made it clear it is willing to use monetary tools in a bid to lift economic sentiment, should they feel it is required. The message from Beijing reassured traders somewhat, but the acid test will be whether the rebound lasts or not."

The weaker pound also probably gave a leg-up to Footsie, as the US greenback moved to its highest level since late November.

Across the pond, the Dow Jones Industrial Average added over 232 points, while the broader-based S&P 500 added around 32 points.

3.40pm: FTSE 100 in late spurt as US rally gains momentum

As US markets pick up after a quiet start, so the Footsie has put on a late surge.

The FTSE 100 was up 58 points (0.8%) at 7,471, close to its high point of the day.

InterContinental Hotels Group PLC (LON:IHG), hit hard since the coronavirus outbreak started hitting the headlines, was the top blue-chip performer, clawing back 147.5p of recent losses at 4,717.5p.

In the market as a whole, Georgian Mining Corporation (LON:GEO) was far and away the best performer as it practically tripled in share price after it received confirmation of tenure for two key deposits in the Bolnisi Project licence area.

The day’s biggest faller was Motif Bio PLC (LON:MTFB), down 42%, after it came to an arrangement with its main lender and moved one step towards becoming a cash shell.

2.35pm: FTSE 100 close to intra-day high as US stocks rally

US markets have opened on the front foot albeit with a smaller stride than expected.

The Dow Jones industrial average was up 72 points at 28,608. The S&P 500 was at 3,255, up 11.8 points.

In the UK, after putting on a spurt over the lunchtime trading session, the FTSE 100 has levelled out close to its intra-day high, at 7,450, up 38 points (0.5%).

1.25pm: US markets to open higher

US indices are set to open higher, continuing the more positive trend seen towards the end of yesterday’s trading session.

Spread betting quotes indicate the Dow Jones will open some 123 points higher at 28,659 while the S&P 500 is pegged to open at around 3,261, up 17 points.

As in other global markets, concerns over the coronavirus linger in the background but following yesterday’s shake-out, bargains are to be had.

“With the death toll rising above 100, financial markets are still trying to gauge the potential reach of this deadly virus. By comparison, the SARS virus impacted 8,098 people with 774 fatalities,” reported Christ Towner, a director at financial risk advisor JCRA.

“The question now is how quickly can this virus be contained and, in the meantime, how many countries and economies will be impacted? In times of risk aversion money normally floods into the Japanese yen and the Swiss franc,” Towner said.

With the risk of the virus penetrating Japan high, due to the proximity of Japan to China, the Swiss franc is currently seen as the ultimate haven, according to Towner.

“Markets will now be focusing on the pace of the spread of the virus and whether there are signs of acceleration or deceleration,” he added.

On the subject of havens, on the futures markets gold is having an off day as risk appetite returns a bit to equity markets. The yellow metal is currently trading at around US$1,572 an ounce, down US$5 or so.

In contrast, the oil price, which has been having a torrid time of it of late, is on the rebound with Brent crude 28 cents (0.5%) higher at US$58.86.

“Brent crude lost 2.3% yesterday (27 January) with a close at $59.32/bl,” reported Bjarne Schieldrop, the chief commodities analyst at SEB.

“The coronavirus and oil demand concerns are the focus in the oil market, with the outbreak still in the accelerating phase. Speculators went into this event with an elevated net long crude oil position. This is amplifying the sell-off, and speculators probably still have more to sell. OPEC is probably getting ready to cut tactically but they are not there yet,” he suggested.

The FTSE 100 was up 37 points (0.5%) at 7,449, helped by a 1.1% increase for oil giant BP PLC (LON:BP.) and a 0.6% gain for Royal Dutch Shell (LON:RDSB).

12.10pm: CBI Distributive Trades Survey reading comes in below the consensus forecast

The balance of retailers reporting year-on-year growth in sales volumes remained at 0% in January, according to the CBI Distributive Trades Survey.

The consensus forecast had been for a balance of +5%.

“A balance of 7% of retailers said sales in January were below average for the time of year – but this was less than the 31% that had seen sales as poor in December,” reported Howard Archer, the chief economic advisor to the EY ITEM Club.

“It is still early days to see what impact December’s decisive General Election result and imminent UK exit from the EU on 31 January with a deal has on consumer behaviour.

“The initial signs are that it has lifted confidence but this – so far at least – has not translated into higher spending,” Archer observed.

Samuel Tombs, the chief UK economist at Pantheon Macroeconomics, reckons the survey will have little impact on the thinking of the Bank of England’s policy makers when they meet on Thursday to discuss interest rate policy.

“The survey is based on responses from only around 40 retailers—the sample size has gradually declined over time—and the main balances no longer are closely correlated with the official data. A further drawback to the survey is that it only relates to spending in the first half of the month. That said, January’s data are moderately encouraging,” Tombs opined.

“At zero, the reported sales balance exceeded its 2019 average, -14, while the sales-for-the-time-of-year balance recovered to -7, from -31 in December. On past form, the latter points to year-over-year growth in the official measure of retail sales volumes of about 2.5% in January. We continue to expect quarter-on-quarter growth in households’ real spending to average a solid 0.4% in the first half of 2020, buoyed by low inflation, steady job growth, a tax cut in April in the form of an increase in the threshold for national insurance contributions, and a reviving housing market,” Tombs said.

The FTSE 100 was up 18 points (0.2%) at 7,431.

11.50am: Burberry's January slump continues

Since about 9.00am London’s index of leading shares has bumbled along, just about keeping its head above water.

The FTSE 100 was up 7 points (0.1%) at 7,419 as traders wait on further news regarding the spread of the coronavirus.

Said virus outbreak is doing no favours to fashion firm Burberry PLC (LON:BRBY), which counts China as one of its main markets.

Burberry shares are currently down 2.9% at 1,940p, making them the worst performing blue-chip shares, just ahead – or behind, depending on your viewpoint – of drinks brands giant Diage PLC (LON:DGE), which is down 2.5% after JPMorgan Cazenove downgraded the stock to ‘underweight’ from ‘neutral’.

10.45am: Sterling's weakness shores up the Footsie

The coronavirus continues to be the main topic of concern in markets but for today, so far, a semblance of calm has returned.

The FTSE 100 was up 10 points (0.1%) at 7,422, helped by the weakness of sterling. The British currency was down four-tenths of a cent against the US dollar at US$1.3020.

“It's tough to focus on anything else right now but the next 48 hours provides plenty of distractions, with the Fed starting their two-day meeting today, ahead of tomorrow's rate decision, and the Bank of England meeting on Thursday, a meeting which became far more interesting after some dovish comments and data earlier this month,” said Oanda’s Craig Erlam.

“The data last week helped pare back expectations of a cut at Carney's final meeting this week but that just puts more emphasis on the central bank's communication in the coming months,” he added.

While the Footsie is just about keeping its head above water, the FTSE 250, which benefits less from a weak exchange rate, is now in the red, down 25 points (0.1%) at 21,279.

Mid-cap Crest Nicholson Holdings PLC (LON:CRST) is blameless for the FTSE 250’s slide; it is 4.2% higher at 458.6p after its full-year results.“The new chief executive at housebuilder Crest Nicholson, Peter Truscott, faces a pretty steep challenge as he looks to get the company back on course,” said AJ Bell’s Russ Mould.

“Crest is a high-end operator, a large proportion of its new builds are ineligible for Help to Buy support, and it has a strong bias to the south-east of England. As such it has been caught out by dwindling demand in this part of the market.

“Today’s full-year results at least put some meat on the bones of Truscott’s recovery plan which looks to increase volumes and returns.

“Notably the targeted improvement in margins would still leave the company a fair way behind the sector in terms of profitability,” he added.

9.35am: Bargain hunters emerge

It’s not exactly “glad confident morning” but after yesterday’s shake-out, investors are happy for a steady start by UK equities.

Although miners are once again out of favour the FTSE 100 is up 16 points (0.2%) at 7,428.

“With the death toll related to the coronavirus climbing to 106, including the first fatality in Beijing, it would appear that there is little reason for a green start to Tuesday; however, with the Dow Jones drastically trimming its decline by Monday’s close, and investors perhaps looking for a cheap(er) entry point after yesterday’s dramatic slide, Europe began to climb,” reported Spreadex’s Connor Campbell.

“That those gains have already weakened in the moments after the open suggests the markets may face a struggle to keep in the green as the day goes on. Much could depend, then, on the state of the Dow Jones et al. after the bell rings on Wall Street. Currently, the Dow is looking for a 0.4% jump to 28,650,” he added.

The mid-cap FTSE 250 has also got off to a subdued start, despite a 14% rise for Irn Bru fizzy drinks maker A G Barr PLC (LON:BAG) after a sparkling trading update in which the company said profit before tax is expected to be at the top end of market expectations.

AG Barr endured a pretty miserable 2019, as higher prices dented volumes; however, it looks like the improved margins and relatively healthy winter sales have added some fizz to the year-end, giving management a cautiously optimistic note in this trading update,” said Nicholas Hyett, an equity analyst at Hargreaves Lansdown.

“While 2020 will benefit from less demanding comparatives, an increasingly health-conscious consumer remains a challenge for the group and we’ll be interested to see how new low sugar alternatives to the famously sugary IRN-BRU have been faring when full-year results come out in March,” he added.

8.25am: Early rally for Footsie

The FTSE 100 clawed back some of Monday’s losses in early trade on Tuesday as nerves steadied after a severe bout of the collywobbles brought on by the coronavirus threat.

The index of UK blue-chips opened 38 points to the good at 7,450.29 

But just how long the mood of calm will last is another matter.

“There are no signs of this letting up - but at least market expectations have shifted markedly since the middle of last week to better reflect the risk of a rapid rise in confirmed cases,” said Neil Wilson, an analyst at Markets.com, assessing the recent tumble in world stock markets.

“The problem is investors have very limited visibility of the current situation in China, have virtually zero knowledge of epidemiology and virology, and have no clue how bad it will get or lasting the impact will be. Risk models are not geared for this situation.”

Among the blue chips, Sainsbury’s (LON:SBRY) pledge to become a Net Carbon Zero business in the next two decades was applauded as it topped the Footsie with a 1.3% gain.

Elsewhere with the risers, Monday’s sell-offs, InterContinental Hotels Group (LON:IHG) being a prime example, enjoyed modest recoveries.

Dropping down to the small-caps, Avacta (LON:AVCT) rose 14% early on after it said it had developed a cancer drug that can deliver a double payload that’s more effective than a current cutting-edge immune-therapy.

Proactive news headlines:

Avacta PLC (LON:AVCT) has established proof-of-concept for a potential new cancer therapy that combines two established treatments and which outperformed the best-in-class medication in the lab. The group's TMAC drug conjugate has brought together a PD-L1 checkpoint inhibitor with an I-DASH drug warhead using the company’s two technology platforms – its Affimer immunotherapies and pre|CISION chemotherapies.

Itaconix PLC (LON:ITX) (OTCMKTS:ITXXF) has unveiled a new addition to its range of high-performance detergent polymers. The new product, Itaconix TSI 322, is the result of what the firm said was ongoing engagement with current and potential customers for “dishwashing detergents to meet changing consumer buying behaviour”.

SDX Energy PLC (LON:SDX) told investors that its latest new well in Morocco, OYF-2 has successfully encountered commercial quantities of gas, in excess of pre-drill estimates. The OYF-2 well was drilled down to a depth of 1,210 metres. It encountered gas in both the upper and lower Guebbas formations. Both reservoir targets were found to be thicker and of better quality than expected, SDX revealed in a statement on Tuesday. The company noted that the new discovery confirms that its core productive area extends to the north.

Premier African Minerals Ltd (LON:PREM) has signed a cooperation agreement with MN Holding Ltd for the supply of mining and exploration machinery and for professional assistance with the optimization of the Premier's various mining and exploration operations. Separately, Premier African said that Regent Mercantile Holdings Ltd has agreed to a further extension to the repayment terms of the convertible loan note for US$350,000 entered into on the 21 June 2019.

Coinsilium Group Limited (LON:COIN) has announced a strategic investment agreement with IOV Labs, the developer of a smart contract platform secured by the Bitcoin network. The blockchain investment and advisory firm said under the terms of the deal, IOV will invest £250,001 into Coinsilium through a private placement to subscribe for around 9.4mln new shares at a price of 2.65p each, a 29% premium to its closing price on Monday.

Oncimmune Holdings PLC (LON:ONC) has shared the findings of a report that showed its EarlyCDT Lung product is more cost-effective than the current method of diagnosis - computed tomography (CT) surveillance. In fact, the study, led by Leeds University Academic Unit of Health Economics, said the test sped up the process of discovery too. The company’s technology had an incremental cost-effectiveness ratio of less than £2,500 when compared with CT surveillance, the Leeds report concluded.

OptiBiotix Health PLC (LON:OPTI) has extended the terms and territories of its original distribution agreements with CTC Holding and Cambridge Commodities. The agreement with CTC Group has been extended to include the distribution of OptiBiotix’s SlimBiome Medical and GoFigure products. Cambridge Commodities, which has the right to distribute OptiBiotix’s SlimBiome weight management technology in the UK, has now been granted exclusivity for its UK distribution rights while the distribution has been extended to include Ireland.

Condor Gold PLC (LON:CNR) (TSE:COG) has been granted an extension until July 2021 to allow it to complete the conditions of the key environmental permit it has already been granted to develop and extract ore from the proposed open pit at the La India gold project in Nicaragua. Meanwhile, the mine schedule and waste dump schedule have been completed for the La India open pit, which hosts an economic mineral reserve of 6.9mln tonnes grading 3.1 grams per tonne gold for 675,000 ounces of gold in total.

Pembridge Resources PLC (LON:PERE) has begun haulage of copper concentrate from its Minto mine in the Yukon in Canada to an ore storage facility 450 kilometres south in Skagway, Alaska. The miner said haulage will be continuous until an ice bridge across the Yukon River breaks up in the spring, after which it will recommence in June where it will be shipped across the river by barge.

Amur Minerals Corporation (LON:AMC) has released findings of a new study as part of its Russian approvals process. The study, on the Kun-Manie project’s rock mechanics, is a component part of the company’s Permanent Conditions TEO – which is a Russian equivalent of a feasibility study process – and it has now been filed with the authorities.

Next Fifteen Communications Group PLC (LON:NFC), the digital marketing and communications firm is confident of repeating strong revenue and profits growth in the coming year. In a trading update covering the year to the end of January 2020, the firm said revenues and profits should be up year-on-year by a double-digit percentage and it expects to repeat that sort of growth in the coming year. The top line has been dented a bit by the recent strength of sterling but revenues for the full year are still expected to be broadly in line with the board’s expectations.

BlueRock Diamonds PLC (LON:BRD)  is meeting with the local community around its Kareevlei diamond mine in South Africa, following a peaceful demonstration on Sunday. BlueRock holds a 74% interest in Kareevlei. Production at the mine has not been materially affected, and all operations are online.

Anglo African Oil & Gas PLC (LON:AAOG) has told investors it is “currently perfecting the security” which is being granted to Zenith Energy Ltd as part of a £250,000 loan agreement. Zenith agreed to provide the loan alongside its acquisition of an 80% interest in AAOG’s Tilapia field in the Congo, and to complete the process, AAOG must make changes to the now part-owned subsidiary in the Republic of Congo.

Bluejay Mining PLC (LON:JAY) expects to hear a response in early February to its environmental impact application for the Dundas minerals sands project in Greenland. The social impact assessment (SIA) is also in its final round following a review and amendment process with the Ministry of Mineral Resources, said the explorer.

ECSC Group PLC (LON:ECSC), the provider of cybersecurity services, said it has received an Award for Excellence at PCI (Payment Card International) London 2020, the region's best-known gathering of payment risk and security professionals.  The annual awards recognise the outstanding work across the payment card industry, reflecting demonstrable best-in-class abilities.  This will be the fourth year in a row that ECSC has received this accolade. Ian Mann, ECSC’s chief executive officer commented: "This is testament to our time within the industry and the wealth of expertise across the whole business." 

Bango PLC (LON:BGO), the mobile commerce company, announced that on 27 January 2020 its chief executive officer, Paul Larbey purchased 17,297 ordinary shares in the company at a price of 104p each. Following the purchase, the group noted, Larbey has a beneficial interest in 18,297 Bango ordinary shares representing approximately 0.03% of the group’s total issued share capital.

accesso Technology Group PLC (LON:ASCO), the premier technology solutions provider to leisure, entertainment, hospitality, attractions and cultural markets, said it was notified that its non-executive chairman, Bill Russell purchased 20,000 ordinary shares in the company on 27 January 2020, at an average price of 345p each. Following this purchase, the group noted that Russell holds an interest of 30,000 accesso ordinary shares, representing approximately 0.1% of the group’s issued share capital.

Verona Pharma PLC (LON:VRP) (NASDAQ:VRNA), a clinical-stage biopharmaceutical company focused on respiratory diseases, announced that its CFO, Piers Morgan will present a corporate overview and host one-on-one meetings at the LSX World Congress taking place in London on February 4-5, 2020.

6.45am: Footsie called higher 

The FTSE 100 is tipped to post a modest rally on Tuesday after suffering big falls at the start of the week due to global market worries over China’s coronavirus outbreak.  

Spread-betters IG were indicating London’s top equity benchmark rising 33 points to around 7,443, nibbling away at the 174 point drop from a day earlier.

Coronavirus concerns have not gone away, however, with the Chinese government confirming overnight that 106 people have now died from the pneumonia-like illness, with the number of infected individuals now topping 4,500 - up 45% from Monday. 

The fear was still evident in Asia-Pacific equity markets today, with benchmarks in Australia losing 1.6% and the Nikkei down almost 1%, while markets in China remained closed for the Lunar new year holidays.

US stocks had a hard time overnight, with the Dow Jones falling for the fifth session in a row to just below 28,536, dropping 1.6% in sync with the S&P 500, as both endured their worst daily drops in more than three months.

The tech-heavy Nasdaq Composite saw its biggest one-day fall since August, tumbling 1.9% as tech titans such as Apple Inc, Microsoft Corp and Amazon.com all slipped on China supply chain worries.

Apple Inc (NASDAQ:AAPL) will take centre stage later on Tuesday with its earnings.

UK company news maybe a little less razzle-dazzle, but investors will get two looks at the potentially rallying housebuilding market in Crest Nicholson Holdings PLC (LON:CRST) and McCarthy & Stone PLC (LON:MCS).

 

UK data on Tuesday will mainly centre around the CBI’s distributive trades survey, which will provide a view on the retail sector from 11am.

 

A December survey showed an improvement to a nine-month high showing a reported sales balance of zero from the -3 shown in November.

As this was not reflected in the official data, economists at Pantheon Economics expect it to decline to about -10 in January, while the market consensus is for +5. 

Around the market:

  • Pound: Down 0.2% to US$1.3034
  • Oil: Down 0.2% to US$59.23
  • Gold: Up 1.4% to US$1583.45

Significant announcements due on Tuesday:

FinalsCrest Nicholson Holdings PLC (LON:CRST), McCarthy & Stone PLC (LON:MCS)

InterimsPZ Cussons PLC (LON:PZC), NWF Group plc (LON:NWF)

Trading announcementsAG Barr PLC (LON:BAG), DP Eurasia NV (LON:DPEU), Euromoney PLC (LON:ERM)), Greencore (LON:GNC), Saga PLC (LON:SAGA), UDG Healthcare PLC (LON:UDG)

Economic announcements: US consumer confidence

City Headlines: 

Financial Times

  • Coronavirus death toll tops 100 as infections surge - US prepares to fly nationals out of Wuhan while UK and Japan plan similar operations
  • UK and EU set for a clash on fish and financial services - Dublin suggests City risks losing access if bloc’s boats barred from British waters
  • President Trump legal team try to steer focus from Bolton in the impeachment trial as pressure grows on senators to call witnesses

Times

  • The retirement scheme of the Financial Conduct Authority has been fined by the Pensions Regulator in a rare instance of one watchdog training its fire on another.
  • Thursday is going to be a bit of a moment, for investors and the investment industry as the estimated half a million private punters who bought into Neil Woodford’s principal investment fund will at last start to get some of their money back.
  • GlaxoSmithKline PLC (LON:GSK) has licenced its tuberculosis disease vaccine candidate to the medical research institute set up by Bill and Melinda Gates.
  • Diverging from European food standards risks knocking quality and hampering choice on supermarket shelves, ministers have been told.
  • There is an “existential skills crisis” in Britain’s financial services industry because of the rapidly changing nature of the sector and a lack of diversity and top graduates coming into roles, an independent review has claimed.

Daily Telegraph

  • A fifth of shops could vanish as high street withers, British Land boss warns
  • High-frequency traders earn nearly $5 billion on global equity markets a year, creating a “tax on market liquidity”, according to a report by the City watchdog.
  • Auditors EY accused of pushing out whistleblower, in High Court case
  • Rolls-Royce shares drop on fears of mounting trouble with Trent 1000 engine

The Guardian

  • Sainsbury’s pledges to spend £1bn to become a carbon-neutral business by 2040.
  • The coronavirus outbreak will have a “significant” impact on Chinese growth, economists have warned, with the “wildcard” of still unknown infections posing potentially serious risks for the global economy.
  • The UK must recruit more than 100,000 people to fill green energy roles within a decade if the government hopes to meet its binding climate targets, National Grid has warned.

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