- FTSE 100 closes in red
- Archegos hedge-fund fall-out has little impact
- Zegona the top riser after bid is launched for an associate company
5.30pm: FTSE closes lower
FTSE 100 closed Monday a shade in the red, while US stocks were also lagging.
The UK index of leading shares finished down around four points, or 0.07%, to stand at 6,736. The midcap FTSE 250 lost around 51 points at 21,435.
“UK markets are lagging their mainland European counterparts today, with a strengthening pound doing little to help the FTSE 100,” said Joshua Mahony, senior market analyst at trading firm IG.
The analyst noted that shipping had once again begun in the key Suez canal after the huge ‘Ever Given’ vessel was dislodged after almost a week.
“Energy markets have seen a general lack of direction as traders attempt to assess whether this blockage will make any lasting impact on global crude supply. Meanwhile, rising US 10-year yields have dented confidence in precious metals, with the likes of gold, silver, and palladium all on the back foot today,” said the analyst.
3.30pm: Proactive North America headlines:
BTU Metals Corp (CVE:BTU) (OTCPINK:BTUMF) starts exploration work on newly-acquired 3,000-hectare land package in Red Lake
CytoDyn Inc (OTCQB:CYDY) says the Philippines FDA approves the use of leronlimab to treat a COVID-19 patient
KushCo Holdings Inc (OTCQX:KSHB) pays $17M to retire senior unsecured term debt
PlantX Life Inc (CSE:VEGA) (OTCQB:PLXTF) (FRA:WNT1) outlines green initiatives to reduce company’s carbon footprint
IpsidyInc (OTCQB:IDTY) tapped by On The Fly POS for passwordless login and biometric verification services
Todos Medical Ltd (OTCQB:TOMDF) completes automation equipment installation and training for its Brooklyn lab client
KULR Technology Group Inc (OTCQB:KULR) becomes official battery safety provider for electric SUV racing team Andretti United Extreme E
3.25pm: Minnows provide what little excitement there is
London’s leading shares continue to seek direction. Utilities are in favour and that probably tells you all you need to know about the excitement levels.
The FTSE 100 was down 9 points (0.1%) at 6,732.
Traders do not seem overly bothered by the collapse of a US hedge fund that has left Credit Suisse and Nomura counting their losses.
“Rather than being seen as a canary in the coal mine, and a sign of impending doom as various fund failures proved ahead of the global financial crisis, this quite rightly is being seen much more of a one-off,” suggested Rupert Thompson, the chief investment officer at Kingswood.
“Equities instead took heart from government bond yields falling back a little, following their sharp run-up over the last couple of months. While the upward trend in yields looks certain to continue longer term, the latest decline bolsters our confidence that the bulk of the sell-off should be behind us for the moment. The partial re-floating of the beached tanker in the Suez Canal also eased worries that trade flows might remain disrupted for weeks to come,” he added.
As per usual, most of the excitement today was provided by the minnows.
The company added that wireline logging will commence shortly to confirm whether mobile hydrocarbons are present.
— Randylus (@randylus) March 29, 2021
2.43pm: Wall Street opens in the red
The market in New York got off to a slower start on Monday as the fallout from last Friday’s fire sale hit US traders.
Shortly after the opening bell, the Dow Jones Industrial Average was down 0.29% at 32,977 while the S&P 500 dropped 0.35% to 3,960 and the Nasdaq fell 0.31% to 13,097.
Last week’s margin call from a hedge fund has forced a number of major banks such as Credit Suisse and Nomura to unwind their positions, pushing stocks lower.
However, there was some good news for the markets after reports emerged that the container ship that blocked the Suez Canal last week has finally been freed six after grounding itself across the key global trade artery.
Back in London, the FTSE 100 had recovered some losses into late afternoon but was still down 13 points at 6,727 at around 2.40pm.
2.00pm: FTSE 100 retreats as sterling rallies
London’s leading shares continued to languish in the red, with their performance not helped by the strength of sterling.
The FTSE 100 was off 25 points (0.4%) at 6,716, in contrast to the more UK-focused FTSE 250, which was up 15 points (0.1%) at 21,501.
Sterling is up by three-tenths of a cent against the dollar at US$1.3824, reversing an earlier fall of similar magnitude.
A strong sterling exchange rate is great news for those of us going on foreign holidays, of course, except that won’t be happening – except, maybe for Borish Johnson’s dad – for some time as the UK government is getting more antsy about the rising number of coronavirus cases on the continental mainland.
Rising COVID-19 infection rates in Europe meant there are “challenges” around reopening international travel, Culture Secretary Oliver Dowden said on Monday.
Today, further restrictions have been eased under the first part of England’s four-step roadmap plan. Six people (or two households) can now meet outdoors, organised outdoor sports can restart and travel outside the local area is now allowed.#GoSafeWithSani #RuleOfSix pic.twitter.com/SHHFsum3gq
— Sani Hands (@SaniHandsUK) March 29, 2021
Downing Street is mulling the possible introduction of a traffic lights system to categorise different countries by the length of the quarantine period necessary for travel, Dowden told Sky News.
12.25pm: Indecisive morning session
London’s leading shares are mixed on what has been, as expected, a quiet day.
The FTSE 100 is down a point at 6,740.
In the US, the tech-heavy Nasdaq 100 is expected to open little changed but the Dow Jones is tipped to fall 109 points to 32,964 and the S&P 500 is expected to ease 11 points to 3,964.
“Banks are under pressure in Europe. Credit Suisse dropped 10% after warning it could suffer a significant hit to profits as it starts to unwind positions after a hedge-backed [sic] client defaulted on a margin call. The forced unwinding of positions also hit Japanese bank Nomura, which tumbled 16%, in its biggest sell-off on record,” said OANDA’s Sophie Griffiths.
“Investors are bracing themselves for more volatility in the US when markets open after a USD20 billion fire sale on Friday, triggered by Archegos. The firm has concentrated holdings in Viacom and Baidu, whose shares have been under pressure in recent weeks. These developments certainly raise questions surrounding the rise of margin debt and over leveraging,” she added.
There is little in the way of macroeconomic data due out in the US; everything is just a warm-up act for Friday’s non-farm payrolls release.
Back in the UK, data on mortgage approavals for house purchases has been released, with the number falling for the third month in a row to a six-month low of 87,669, down from 97,350 in January.
On the plus side, as pointed out by Howard Archer, the chief economic adviser to the EY ITEM Club, February’s level was the sixth highest level since September 2007 as house buyers rush to take advantage of the stamp duty holiday.
In February 2021, there were 87,669 mortgage approvals in the UK, 9.9% lower than in January but still 19.5% higher than a year ago (pre-Covid-19). Note that February 2021’s mortgage approvals were the 3rd consecutive monthly fall… #ukhousing #housing https://t.co/HP6aoFAPEn pic.twitter.com/mDL4tiRXVr
— Noble Francis (@NobleFrancis) March 29, 2021
“February’s still-elevated level of mortgage approvals indicate that, while housing market activity had come off its late-2020 highs, it was still pretty strong before the Chancellor announced supportive measures in March’s Budget. The recent buoyancy in housing market activity was initially prompted by the release of pent-up demand following the easing of the first lockdown restrictions from May 2020. This buoyancy was then fuelled by the Chancellor raising the Stamp Duty threshold to £500,000 from mid-July 2020 initially through to 31 March 2021,” Archer said.
“Additionally, Nationwide has observed that activity may be being boosted by people reassessing their housing needs as a result of their experiences in lockdown. In particular, it appears that an increasing number of people want a garden and space to work at home. This is leading to some polarisation in demand for residential properties.
“Recent survey evidence suggests housing market activity had lost some momentum. The February RICS residential monthly survey revealed that buyer enquiries fell for a 2nd month running after rising over the previous seven months. Meanwhile, new properties coming on to the market also declined for a 2nd successive month after rising through the second half of 2020. Newly agreed sales were flat in February after falling in January,” he added.
10.40am: Deliveroo pares back
London’s leading shares are lower on balance now after a mixed start but it’s not what you’d call a volatile market.
The FTSE 100 is down 28 points at 6,713.
Did someone mention a volatile market?
As it happens, Deliveroo did as its reason for drastically lowering the top end of its proposed price range in its initial public offering (IPO).
Last week it set the range at 390-460p; this week it contracted that to 390p to 410p, effectively wiping almost a billion quid of its potential market valuation when it floats.
“It may be blaming volatile market conditions for the move, but the rejection of the IPO by a slew of institutional investors is likely to also have caused some concern at the delivery company,” said Susannah Streeter at Hargreaves Lansdown.
“Whereas Doordash and AirBnB benefited from sustained euphoria among shareholders after they went public at the end of last year, review site Trust Pilot has seen its share price slide after the initial pop. It priced its offering at the very top of the range. Doordash listed in New York has also seen its valuation slide sharply from its February high.
“Clearly Deliveroo, already facing criticism over the working conditions of its riders, doesn’t want to puncture the prospects of a successful launch,” she added.
Sentiment in London has been affected by the enforced liquidation of positions by Achegos Capital. Credit Suisse, to few people’s surprise, is among the investment banks taking a bath from this development, as are Japanese finance house Nomura and to a lesser extent Goldman Sachs, the old vampire squid itself.
“With both Credit Suisse and Nomura warning of a hit in the fallout from the saga, investors have been reminded of the interconnectedness of the global financial system and how this creates a risk of contagion when something goes wrong,” said AJ Bell investment director, Russ Mould.
8.50am: We got up one hour earlier for this?
The shortened week has got off to an indecisive start, or maybe traders just forgot to put their clocks forward on Sunday.
“The other big developing story overnight is that the Ever Given ship blocking the Suez Canal has been successfully refloated, according to Inchcape Shipping Services, with the ship currently being secured,” observed Deutsche Bank’s Jim Reid.
“The news has sent oil prices lower this morning, and WTI (-1.59%) and Brent crude (-1.27%) prices have both fallen in response, even though it isn’t yet apparent how long it’ll take before the container ship can be moved out of the way and the canal cleared for others to pass through. For reference, the ship has been obstructing the route since Tuesday and it’s longer than the Eiffel Tower in length, and a number of container ships have already taken alternative routes and gone round the Cape of Good Hope, even though that adds over a week to the journey time,” Reid explained.
“The big question will now be how long before the Canal is back to normal service, as 12% of global trade goes through this route, and the issue has only added to the existing supply chain disruption thanks to the pandemic,” Reid said.
The Suez Canal Authority released footage on Sunday showing workers fighting to free the #EverGiven by removing part of the canal’s bank.
— Bloomberg Quicktake (@Quicktake) March 28, 2021
Offsetting the weakness of the oil behemoths was telecoms titan BT Group PLC (LON:BT.A), which was up 3.1% at 151.2p after Morgan Stanley moved from an ‘equal-weight’ position to ‘overweight, although its price target remained unchanged at 200p.
“As a result of strong customer growth on the D2C platform, and elevated levels of dealing activity, the company expects revenues to be £6m ahead of consensus (given as £136m – so about 4% ahead),” commented Peel Hunt.
“We assume most of the incremental revenue would drop through to the bottom line, so the consensus profit estimate of £50mln should move higher,” the broker said.
Proactive news headlines:
RM Secured Direct Lending PLC (LON:RMDL), the investment trust that specialises in secured debt investments, said its performance was resilient in 2020, with the net asset value total return (i.e. including dividend payments) totalling 3.15%.
Amryt Pharma PLC (LON:AMYT, NASDAQ:AMYT) said its treatment for a rare genetic skin disorder will now begin a formal review process after the European Medicines Agency (EMA) validated its marketing application.
Landore Resources Ltd (LON:LND) said drilling results from its BAM gold deposit in Canada confirmed the depth and length extensions of the west pit reporting widths and grades consistent with the defined resource. “Results received to date on the Western step out drilling are highly encouraging,” it said.
Gfinity PLC (LON:GFIN) has reported sharply reduced losses in its first half as the esports media group also announced the conclusion of its strategic review. In its results for the six months to December 31, 2020, the AIM-listed firm reported an adjusted operating loss of £0.9mln, narrowed from £2.4mln in the prior year, while revenues from the period stood at £3mln compared to £3.5mln a year ago.
BlueRock Diamonds PLC (LON:BRD) has sold three recently recovered gem-quality stones of 8.4 carats, 10.6 carats and 9.7 carats. The stones were sold for US$88,000, US$73,000 and US$53,000 respectively. The stones come from the company’s Kareevlei diamond mine in the Kimberley region of South Africa.
OKYO Pharma Limited (LON:OKYO) has appointed Dr Rajkumar Patil as its chief scientific officer. OKYO said Dr Patil brings 30 years of ophthalmic and pharmaceutical research & development (R&D) experience.
Deltic Energy PLC and Shell UK Ltd have decided to drill the high impact Pensacola prospect on Licence P2252 in the UK Southern North Sea. Shell and Deltic have subsequently confirmed to The Oil and Gas Authority that the contingent well commitment is now firm. The drilling of this key well on Pensacola has the potential to be transformational for Deltic and is a vital step in evaluating the highly prospective Zechstein reef play which in turn has the potential to revitalise exploration in the Southern North Sea.
Europa Metals Ltd (LON:EUZ) closed out 2020 with A$2.9mln in cash. During the year to December 2020, the company booked a net loss after tax of A$1.6mln. The prime focus of the company during the period was continued work on its Toral zinc and base metals project in Spain. “During 2020, a clear strategy was pursued to complete all the requisite work for a revised independent preliminary economic study to be commissioned, and its findings published,” said chairman Myles Campion.
Power Metal Resources PLC (LON:POW) and Kavango Resources PLC (LON:KAV) said they plan to list an existing joint venture in London after they signed agreements to buy eight prospecting licences in the highly prospective Kalahari Copper Belt (KCB) in Botswana.
Braveheart Investment Group (LON: BRH) said that Jonathan Freeman, non-executive director, has stepped down from the board to be able to devote more time to his other business interests. The company said it has commenced the selection process for another non-executive director to be appointed and expects to be able to announce this soon.
Tiziana Life Sciences PLC (LON:TILS) (NASDAQ:TLSA) said its chairman and founder Gabriele Cerrone, will give an interview on Bloomberg Television on Monday, March 29 at 1.20 p.m. US Eastern Standard Time (6.20 p.m. London Time) as part of the Bloomberg Surveillance Show.
The board of Arix Bioscience PLC (LON: ARIX) said it has paused its timetable to appoint James Noble and Axel Wieandt as non-executive directors of the company. The company said while the board continues to believe that both appointees are highly qualified with relevant experience and expertise, it believes the appointments should be considered within the scope of the company’s recently announced strategic implementation review which includes the question of board composition.
Albion Capital Group’s Albion Technology & General VCT PLC (LON:AATG) and Albion Development VCT PLC (LON:AADV) on Friday published their financial statements for the past calendar year. The Albion Development VCT noted that it paid dividends of 4.24p per share for 2020, while the Technology & General VCT paid 12.95p per share.
DigitalBox PLC (LON:DBOX) said it is evaluating potential acquisition targets after a successful year in which it saw strong growth in website users and reported another underlying profit.
Plexus Holdings Plc (LON:POS) said as momentum towards a carbon-neutral world builds the oil and gas industry is positioning itself to be in the mainstream rather than on the fringes, as it posted interim results.
Zephyr Energy Plc (LON:ZPHR) raised £10mln of new equity and struck a deal to acquire a package of producing wells in the Bakken Formation, in North Dakota, USA.
Caerus Mineral Resources PLC (LON:CMRS) said drilling will start significantly ahead of schedule on its two licences at the N. Mathiatis copper-gold project in Cyprus.
RedX Pharma PLC (LON:REDX) announced that it will present a poster entitled ‘Mechanism of action of RXC004, a Wnt pathway inhibitor, in genetically-defined models of cancer’ at the American Association for Cancer Research (AACR) Annual Meeting, being held virtually on April 10 2021.
Oracle Power PLC (LON:ORCP) said a new presentation has been uploaded to its website which focuses on the company’s development strategy for its highly prospective gold interests both located in world-class gold mining districts of Western Australia. The presentation can be found at http://www.oraclepower.co.uk/investor-relations/presentations/
6.35am: Cautious start expected
UK equities are set to start on a dull note, with the heavily-weighted oil giants tipped to weigh down the Footsie as oil prices recede.
The Ever Given, the vessel that has been blocking the Suez Canal, has been partially refloated and that has sent oil prices lower.
The FTSE 100 is expected to open 22 points weaker at 6,719.
US markets ended last week higher, while Asian markets this morning are mostly higher.
In the US, the Dow Jones added 453 points at 33,073 on Friday while the S&P 500 hardened 65 points to 3,975.
The Nikkei 225 is 350 points to the good at 29,526 this morning in Japan while in Hong Kong the Hang Seng index is 50 points heavier at 28,386.
A relatively quiet day is expected in London today even though because of Easter, five days of results have to be crammed into four days.
Around the markets
- Sterling: US$1.3769, down 0.26 cents
- 10-year gilt: 0.758%
- Gold: US$1,725.80 an ounce, down US$6.50
- Brent crude: US$63.29 a barrel, down US$1.28
- Bitcoin: US$55,143, up US$280