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FTSE 100 inches higher at the close; Wall Street falls on stimulus talks

The index of UK blue-chips made a late rally to close at 6,129 points, a 24-point gain

Housebuilding
  • FTSE 100 closes 24 points higher at 6,129
  • Selfridges to axe 450 jobs
  • Wall Street mixed bag on stimulus talks, earnings

5.05pm: FTSE keeps head above water to close at 6,129 points

FTSE 100 index held onto the day's gains as energy stocks jumped on hopes of more US stimulus.

The UK's blue-chip index finished up 0.5% on the day at 6,129 points, a 24-point gain.

The increase came despite wave of red across its mining stocks. "The UK index’s white knight was the housing sector, which rallied on the back of news the government may extend the Help to Buy scheme beyond December," analyst Conor Campbell of Spreadex wrote in a note.

US and Canada 5pm/12 EST

Stocks fell Tuesday morning on Wall Street, with stimulus talks in Washington, updates on the coronavirus vaccine front and corporate earnings results at the forefront.

The Dow Jones Industrial Average fell 65 points at 26,517. The broader based S&P 500 stayed flat at 3,240. The tech heavy Nasdaq index fell around 31 points at 10,505. Meanwhile, in Canada, the S&P/TSX Composite index saw gains of 13 points at 16,173.

"Markets continue to display signs of nervousness ahead of the Fed tomorrow, a veritable storm of earnings and a US GDP reading later in the week," wrote IG's Chris Beauchamp.

"This avalanche of news is likely to set the tone for equities as we head into August, with the fate of the current market rally to be decided over the next four sessions. A dovish Fed, passable earnings and a GDP report that is perhaps not quite as bad as feared would do much to restore flagging bullish sentiment, but if these fail to materialise it could be a volatile August ahead."

Proactive North America headlines:

Empower Clinics Inc (CSE:CBDT) (OTCMKTS:EPWCF) sees 1Q unaudited revenue soar on the back of record patient growth

Pure Gold Mining Inc (CVE:PGM) (LON:PUR) says underground exploration drilling has intersected high-grade gold mineralization at Red Lake

Metalla Royalty & Streaming Ltd (NYSEAMERICAN:MTA) (CVE:MTA) adds new royalty on Kirkland Lake Gold's high-grade Fosterville gold mine

Internet of Things Inc (CVE:ITT) (OTC:INOTF) floats name change, reverse stock split ahead of shareholder meeting

mCloud Technologies Corp (CVE:MCLD) (OTCQB:MCLDF) adds another 2,675 assets to its portfolio fuelled by demand from oil and gas customers

CanaFarma Hemp Products Corp (CSE:CNFA) inks JV agreement with TV celebrity Jonathan Cheban to market and sell hemp oil-infused products under Foodgod brand

NexTech AR Solutions Corp (CSE:NTAR) (OTCQB: NEXCF) appoints augmented reality expert Ori Inbar to its board of directors

Lexaria Bioscience Corp (CSE:LXX) (OTC:LXRP) gets approval for CBD DehydraTECH hypertension study in Europe

TraceSafe Inc (CSE:TSF)  (OCTMKTS:UTOLF) teams up with Elite Event Management to help fans return to sports stadiums across the UK and Ireland

Phunware Inc (NASDAQ:PHUN) enables safer gatherings with new Healthy Spaces mobile app

3.30pm: Selfridges plans 450 job cuts as high street takes coronavirus toll

The Footsie was up 5 points in the afternoon, sitting at 6,110, while sterling added 0.3% to US$1.2917.

Department store chain Selfridges was the latest retailer to announce redundancies, axing 450 jobs – or 14% of its staff.

“How we work, shop and socialise is changing,” Anne Pitcher, group managing director, told employees in a letter.

“Our high streets were changing rapidly before Covid-19 arrived. However the speed and magnitude of what is happening right now, and the impact on trading means, we must make some more fundamental changes to our organisation.”

The company, which operates four sites including its flagship London store in Oxford Street, has been hit by the high street crisis and the lack of tourism.

Staff were offered to apply for voluntary redundancy, ask for reduced hours or career breaks.

Earlier this month, competitor Harrods announced 800 job cuts, while John Lewis said it would close eight department stores permanently and Debenhams put itself for sale to avoid liquidation.

2.30pm: US stock under pressure

FTSE 100 tentatively entered green territory again as Wall Street opened in the red, rising 7 points to 6,112.

In the US, the Dow Jones was down 85 points to 26,499 and the S&P500 shed 3 points to 3,235.

According to Edward Moya at OANDA, Tuesday’s trading is on the cautious side as more corporate earnings are expected this week.

Pfizer Inc (NYSE:PFE), which is developing a COVID-19 vaccine with BioNTech SE (NASDAQ:BNTX), added 3% to US$38.5 after posting strong results and raising guidance despite disruption brought by the pandemic.

“US stocks gave back some of yesterday’s gain as investors await a critical Fed policy decision tomorrow and ahead of mega-cap tech earnings on Thursday,” Moya noted.

“The other key drag for the markets today is the expected collapse in talks over next stimulus package. Republicans and Democrats will try to stick to their proposals but eventually cave in before the month ends.”

1.15pm: Wall Street to open modestly lower

The Footsie was nearly back in the green at lunchtime, shedding 2 points to 6,101.

US stocks are not expected to fare much better, with futures pointing at modest losses at open.

“Like its European peers, the Dow is waiting for a renewed sense of direction,” said Connor Campbell at Spreadex, adding all eyes will be on the results of the Federal Reserve’s July meeting expected for Wednesday.

Staying in the US, Walgreens Boots Alliance Inc (NASDAQ:WBA) chief executive Stefano Pessina announced he will step down as soon as a successor is found to become executive chairman.

The 79-year-old has been at the helm of the company since the merger five years ago.

Earlier this month, Boots UK announced it would cut 4,000 staff after sales tumbled 48% in the three months to May 31, despite stores stayed open as essential businesses throughout the lockdown.

Revenues for the wider group were flat at US$34.6bn, while it slumped to an operating loss of US$1.6bn from last year’s profit of US$1.2bn mainly due to the non-cash impairment charges of US$2bn in Boots UK.

11.40am: Washington launches US$1 trillion stimulus plan

The Footsie dipped underwater ahead of lunchtime, losing 12 points to 6,092.

Earlier modest gains were wiped out despite the US$1 trillion stimulus plan launched by Washington overnight.

The proposal, which includes billions for schools and businesses to revive the nation’s spending, will now be negotiated with the Democrats.

“US lawmakers will be in focus this week as there are hopes that a political settlement between Republicans and Democrats will be reached, and that should pave the way for the stimulus package to be approved,” commented David Madden analyst at CMC Markets.

“The political negotiations will continue, but dealers would be surprised if a compromise wasn’t reached.”

The US have been one of the hardest hit countries by the pandemic, with over 4.3mln confirmed cases and 150,000 deaths.

Investors remain concerned on rising numbers of cases worldwide, with Prime Minister Johnson advising businesses to be ready for a second wave of coronavirus infections.

10.55am: Eurozone banks told to skip dividends until January

FTSE 100 trimmed its gains in the late morning, rising 15 points to 6,120, while sterling was flat at US$1.2881.

Moving south, the European Central Bank (ECB) told eurozone banks to pass on dividends until January 2021 and to exercise “extreme moderation” with bonuses.

Banks will also be allowed to breach their liquidity buffer for the whole of 2021 and total capital requirement until December 2022.

“The update from the ECB is hardly a surprise seeing as many banks in the euro area already had fragile balance sheets before the pandemic, and bad debts are likely to surge in the quarters ahead,” noted David Madden at CMC Markets.

“The UK’s Prudential Regulation Authority is in a similar boat as it is assessing whether to extend the ban on dividends and share buybacks for British banks.”

9.55am: Footsie underperforming mid-caps

London’s mid-caps are outdoing their larger FTSE 100 sibling this morning, with Games Workshop (LON:GAW) and Greencore (LON:GNC) and leading the way.

Like many forms of entertainment, the Warhammer tabletop hobby’s orcs, wizards and warriors have been selling like topsy during the pandemic and Games Workshop today declared a dividend of 30p per share to distribute some of its surplus cash.

“The past seven months have felt like a different place, with the pandemic turning the world upside down,” said Russ Mould at AJ Bell. 

“In order to cope with the troubles of life, many people have turned to the land of fantasy to find a different world to the one they are experiencing day to day.

“Games Workshop’s soaring sales are proof that its imaginary worlds have been much more appealing than present day Earth.”

Mould added: “Increased engagement also bodes well for the company’s strategic growth plan which focuses on exploiting its intellectual property through the creation of TV shows and other media projects.”

Greencore, meanwhile, was boosted after it struck a deal to sell its molasses trading businesses for £15.6mln and while also reporting a 34% drop in revenue in the past quarter, said it sees “encouraging” improvement of demand in food-to-go categories for the rest of the year.

The Footsie is up 29 points or 0.5% to 6,133.69.

8.50am: Positive start for Footsie

The FTSE 100 opened in positive territory on Tuesday, taking its cue from Wall Street rather than Asia’s markets, which were mixed, while gold paused for breath after its recent sprint towards US$2,000 an ounce.

The index of UK blue-chips was up 22 points at 6,127.31.

In focus early on were the housebuilders amid reports the UK government is preparing to extend the Help to Buy scheme to aid those taking their first steps onto the property ladder.

The Financial Times provided this nugget: “Three government figures confirmed that Whitehall discussions were taking place to resolve the issue, with an announcement expected as early as Friday. However, they insisted that the precise details were yet to be finalised.”

Barratt Developments (LON:BDEV), up 2.8%, led the pack, closely followed by Berkeley Group (LON:BKG) and Persimmon (LON:PSN).

Topping the Footsie early on with a 5% gain was Pearson (LON:PSN), though the only news out was a rather mouldy Goldman Sachs reiterated 'buy' recommendation from Monday following Friday's results.

One wonders if the price move reflects some behind-the-scenes manoeuvring by activist investor Cevian, which at the last tally had a 7% stake in the educational publisher.

Sticking with the risers, Royal Dutch Shell (LON:RDSA), up 1.8%, and BP (LON:BP.), ahead 1.1%, were apparently buoyed by reports the Trump administration may be ready to administer another round of fiscal stimulus to the world’s largest economy.

Fresnillo (LON:FRES), down 5% after an update, and Polymetal (LON:POLY), off 2.5%, gave up some of their gold-driven gains.

Rolls-Royce (LON:RR.), rocked Monday by a debt downgrade, fell a further 2.4%.

Proactive news headlines:

European Metals Holdings Ltd (ASX:EMH) (LON:EMH) has announced that a "Value Added Services Agreement" with KIC InnoEnergy SE, the principal facilitator and organiser of the European Battery Alliance, has been entered into today by Geomet s.r.o. in respect of the Cinovec lithium project in the Czech Republic. The aim is to sourcing construction finance, source grant funding, and assist in off-take introductions and negotiations. EIT InnoEnergy leads the European Battery Alliance which was initiated by the European Commission in 2017 to create a competitive and sustainable battery cell manufacturing value chain in Europe.

Tower Resources PLC (LON:TRP) has noted the announcement by Global Petroleum Ltd of updated prospective resource estimates in respect of its license PEL 94, covering block 2011A, which is immediately to the south of Tower's block 1911. Global Petroleum estimates that its Welwitschia Deep Albian carbonate prospect has best estimate unrisked gross prospective resources of 671mln barrels of oil, with a geological chance of success of 17%. In a statement, Tower observed that this figure corresponds to the portion of the prospect on block 2011A, and noted that approximately 25% of the Welwitschia structure lies in block 1911, which is covered by Tower's license PEL 96.

EQTEC PLC (LON:EQT) said it has issued a letter to Aries Clean Energy inviting it to withdraw all of its claims of patent infringement made on July 9 as it reiterated its “absolute rejection” to Aries’ claims and its “anti-competitive application of legal threat to achieve undue commercial ends”. The waste gasification to energy group said it has been advised that Aries has yet to legally serve its complaint against EQTEC, and as a result it has yet to formally respond to the lawsuit. However, EQTEC said its letter has been sent to correct misinformation in Aries' complaint and to put Aries on notice of its potential liability and legal obligations if it does not withdraw the complaint immediately.

Open Orphan PLC (LON:ORPH) said that US biotech Codagenix Inc has commissioned its hVIVO arm to carry out a first-in-human trial of a potentially breakthrough nasal vaccine for coronavirus (COVID-19). The phase I study of 48 healthy young adults will take place at hVIVO's state-of-the-art quarantine facility in London’s Whitechapel. Work is expected to begin in the autumn with first data assessing safety and immunogenicity (whether the drug provokes an immune response) expected by the end of the year.

Norman Broadbent (LON:NBB), the recruitment and consultancy firm, has said it will post an underlying profit for the half-year to June with coronavirus (COVID-19) disruption only slightly affecting revenue. In a statement ahead of the group’s AGM, Norman Broadbent's chief executive, Mike Brennan said that net fee income in the six months to June 30, 202, declined by less than 10% compared to a year ago while it recorded a small positive underlying profit (EBITDA). "Early and decisive action was taken to align our cost base to changed circumstances and to put in place the necessary technical solutions and working protocols enabling us to continue serving clients despite lockdown," the CEO added.

Digitalbox PLC (LON:DBOX) has said it expects to report an adjusted pre-tax profit “ahead of management expectations” for its first half and that advertising spending is showing signs of recovery in the third quarter. In a trading update for the six months to June 30, 2020, the owner of the Daily Mash and Entertainment Daily websites said trading in the period has been “encouraging” with strong operating margins and a rise in its cash balance to £1.2mln, up from £600,000 on December 31, 2019.

Incanthera PLC (AQSE:INC) said it has filed a new patent application covering its Sol sun cream used to prevent a skin condition called solar keratosis and related cancers. If granted, it will further extend the life of the patent family protecting Sol to 2041. “This new patent filing demonstrates the robust foundations of our Sol programme and strengthens the commercial protection for the product,” Incanthera chairman Tim McCarthy said in a statement. “We are looking forward to the next steps as we bring Sol forward to market-facing partners.”

Union Jack Oil PLC (LON:UJO) said its deal to acquire an extra 3% of the Biscathorpe oil project in Lincolnshire has been given the greenlight from regulator Oil & Gas UK. Once completed, the AIM-quoted company will own a 30% interest in the asset ahead of planned work programmes. "We are pleased to complete this transaction, following which the company will hold a meaningful 30% interest in what we consider to be a key, potentially high-impact project within our well balanced portfolio,” David Bramhill, executive chairman of Union Jack said in a statement.

Ariana Resources PLC (LON:AAU) returned a profit before tax of just under £7mln for the year to December 31, 2019. The profit came as the company continued to enjoy revenues from its Kiziltepe gold mine in Turkey, where operations are now well established. “This has been another outstanding year for Ariana, which has delivered production and profitability well above its plans,” Ariana chairman Michael de Villiers said in the full-year results statement.

Genel Energy PLC (LON:GENL) confirmed it has received just under US$10mln in payments from the Kurdistan Regional Government for oil sales in the month of June. The Taq Taq field partners received a gross payment of US$4.5mln, which sees Genel receive a net share of US$2.4mln. For the Tawke operation, the partners received US$30.2mln gross resulting in a net payment to Genel of US$7.4mln.

Base Resources Ltd (LON:BSE) maintained operational consistency at the Kwale mine in Kenya throughout the second quarter of the year, with production coming in at the higher end of guidance ranges. Meanwhile, demand from customers in the quarter was firm and supported further upward movement in ilmenite prices, while rutile and zircon prices remained steady. Sales of ilmenite, zircon and rutile were all up on a quarter-on-quarter basis.

Conroy Gold and Natural Resources PLC (LON:CGNR), the gold exploration and development Company focused on Ireland and Finland, has announced the appointment of Howard M. Bird as a non-executive director of the company with immediate effect. Bird is an internationally experienced Professional Geoscientist (gold, diamonds, platinum and base metals) and has over 30 years’ diverse junior and senior mining company exploration, development and mining experience, including over 15 years at senior executive management level. He was the Senior Vice President of Exploration and Geology at TSX listed Brigus Gold Corp. and has a proven track record contributing to significant company value added growth with new business development, merger and acquisition, and new deposit exploration discovery success. Bird’s exploration discovery success, development and production included the discovery of three new gold deposits at the Grey Fox Project in Canada and, as part of the corporate development team at Brigus Gold, adding the acquisitions of the Black Fox producing mine, near Timmins, Ontario and the Box mine deposit in northern Saskatchewan.

ECR Minerals PLC (LON:ECR), the gold exploration and development company focused on Australia, said it has received notice to exercise warrants over 13,142,857 new ordinary shares in the company, of this number, 7,142,857 new ordinary shares are being issued at 1.125p per share, and 6,000,000 new ordinary shares at 1p per share. Aggregate subscription monies of £140,357.15 have been received by ECR in respect of the exercise of these warrants.

TomCo Energy plc (LON:TOM), the oil shale exploration, development and technology group focused on using innovative technology to unlock unconventional hydrocarbon resources, said it has received notice of exercise of warrants to subscribe for a total of 4,500,000 new ordinary shares which are being issued at a price of 0.8p per share, for a total consideration to the company of £36,000, and relate to warrants issued as part of the company's placing, announced on July 2, 2020.

Directa Plus PLC (LON:DCTA), a leading producer and supplier of graphene nanoplatelets based products for use in consumer and industrial markets, announced that it has appointed Cenkos Securities as its Nominated Adviser and Joint Broker with immediate effect.

6.50am: Slow early progress expected

Traders expect the FTSE 100 index to regain some of the losses from recent days in early trade on Tuesday, while gold reached new multi-year highs overnight.

London’s index of blue chips was being predicted by spread-betters to rise roughly 13 points, having dropped almost 19 points to finish at 6,104.88 the day before. 

Overnight, Wall Street’s three main stock indices resumed their upward momentum after a small wobble at the end of last week.

The Dow Jones Industrials Average added 115 points or 0.4% to close at 26,584.77, while the broader S&P 500 exceeded that with a 0.7% rise and the tech-fuelled Nasdaq Composite outdid them both again, rising 1.7%.

Precious metals are again to the fore, noted Jeffrey Halley, a market analyst at Oanda: “The precious metals are merely the brightest envoys though of renewed momentum in the great US dollar rotation trade. The greenback was heavily sold on currency markets overnight as well, with the euro, in particular, running rampant, boosted by impressive German IFO data.”

He noted that the dollar sell-off is being fuelled by the Federal Reserve later meeting this week, with Fed president Jerome Powell expected to be ultra-dovish in his statements after the meeting.

“US nominal bond yields will almost certainly continue tracking lower afterwards, if not before. That will push real bond yields further into negative territory, where they are negative right out to the 30-year tenor.  That is the real reason why the US Dollar sell-off is accelerating," Halley added.

Around the markets:

  • The pound is down 0.2% against the dollar at 1.2856
  • Gold topped US$1,990 overnight but has edged down 0.1%, while silver surged to almost US$26 before wobbling back to US$24.55
  • Brent Crude Oil futures are flat at US$43.41

6.45am: Early Markets - Asia/Australia

Stocks in the Asia Pacific were mixed today as investors continued to monitor developments on the coronavirus (COVID-19) second wave front.

Shares in South Korea led gains in the region with the Kospi up 1.11%. Chinese stocks were also up with the Shanghai composite rising 0.6%.

But in Japan, stocks lagged with the Nikkei 225 dropping 0.13%.

Australia’s S&P/ASX 200 was trading flat after lifting as high as 1.1% with the gold miners particularly strong as the price of the precious metal touched another all-time record high today.

READ OUR ASX REPORT FOR MORE INFORMATION

Proactive Australia news:

Venus Metals Corporation Limited (ASX:VMC) is encouraged by the high-grade gold results returned by joint venture partner Rox Resources Limited (ASX:RXL) from drilling at the Youanmi project within the OYG joint venture area.

Anteris Technologies Ltd (ASX:AVR) released new data at the TAVR Key Opinion Leader Symposium on July 20, 2020, which demonstrates the superiority of the DurAVR™ valve over existing valves.

Australian Strategic Materials (ASM) technology partner ZironTech has produced another run of 22 kilograms of titanium metal alloy at the joint venture (JV) commercial plant in South Korea.

Cellmid Limited (ASX:CDY) has signed, via its wholly-owned US subsidiary Advangen LLC, an agreement with Tru Beauty Concepts Inc for the exclusive distribution of its évolis® Professional anti-ageing hair care products in salons in the northeast of the US.

Musgrave Minerals Ltd (ASX:MGV) has surged after returning bonanza-grade results of up to 3 metres at 884.7 g/t gold from 5 metres at the Starlight discovery of Break of Day within the flagship Cue Gold Project in Western Australia’s Murchison district.

Moho Resources Ltd (ASX:MOH) has completed its commitment of a farm-in and joint venture agreement with IGO Ltd (ASX:IGO) to earn a 70% interest in E70/4688, which is part of the company’s Burracoppin Gold Project in Western Australia.

Alice Queen Ltd (ASX:AQX) has broken ground at Boda East prospect in the prolific Lachlan Fold Belt of NSW with a maiden diamond drilling program of three holes for 2,100 metres.

Bryah Resources Ltd (ASX:BYH) has started a new program of manganese drilling at its Byrah Basin Manganese Joint Venture Project in Western Australia's Mid-West.

Legend Mining Limited (ASX:LEG) has identified a strong offhole conductor at Mawson nickel-copper sulphides discovery on WA’s Fraser Range which managing director Mark Wilson describes as another “exciting development”.

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