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FTSE 100 ends higher but doesn’t crack 7,100; US markets mixed after Nasdaq reverses course lower

  • FTSE 100 rises 58 points
  • US indices mixed as Nasdaq slides
  • Asia-focused banks suffer

5.15pm: FTSE can’t quite reach 7,100

London’s leading index closed Tuesday up 58 points, 0.8%, at 7,080, while the FTSE 250 gained 191 points, 0.8%, to end at 22,875.

“US and UK investors have returned from their holiday in bullish form, picking up where they left off on Friday,” IG Chief Market Analyst Chris Beauchamp wrote. “Growth sectors such as health care and tech stocks continue to struggle compared to the cyclical areas such as mining and banking, while in the UK commodity prices have driven the gains for the FTSE 100, thanks to the strong showing in the US and Chinese manufacturing PMIs.”

Meanwhile, the Dow was up 106 points, 0.3%, to 34,635 at midday in the US. The Nasdaq gave up its early gains to drop 20 points, 0.1%, to 13,728, while the S&P 500 added less than a point to 4,205.

“It is a big week for US data too, thanks to the ADP and NFP reports, but while further job growth is expected some slowdown in wage appreciation is expected, putting the dollar on the back foot once again and giving more room for commodity prices to appreciate,” Beauchamp wrote.

4.01pm: FTSE 100 back below 7,100

The index of heavyweight shares was up 68 points (1.0%) at 7,090, with resource stocks – miners and oilers – very much to the fore.

The weakness of sterling – down almost half a cent against the greenback – has lifted sentiment and perhaps it is best that we move on swiftly from worrying news that a man in China has reportedly contracted what might be the world’s first human case of the H10N3 strain of bird flu.

Mind you, moving on swiftly and ignoring strange reports of contagion in China is what got us in this mess in the first place.

While resource stocks have had a good time of it today Asia-focused banks have not. HSBC PLC (LON:HSBA) was the Footsie’s worst performer with a 1.7% decline to 447.75p while Standard Chartered PLC (LON:STAN), down 1.2% at 501.6p, was the next worst.

Nothing to do with bird flu (presumably).

2.40pm: Wall Street opens in the green

The main indices on Wall Street have made a positive start to the week amid an uptick in optimism following the Memorial Day weekend.

Shortly after the opening bell, the Dow Jones Industrial Average was up 0.88% at 34,832 while the S&P 500 climbed 0.67% to 4,232 and the Nasdaq rose 0.52% to 13,819.

Investors appear to be in a good mood as they await the all-important non-farm payroll numbers on Friday, which are eyed hopefully for more evidence of an economic recovery in the US.

Back in London, the FTSE 100 had lost a little steam into late afternoon but was still up 68 points at 7,090 at around 2,40pm.

1.50pm: FTSE 100 higher

Engineer Weir Group PLC (LON:WEIR) has taken over top dog on the FTSE 100, usurping the mining companies.

And what field does this particular engineer specialise in? Mining, of course.

The FTSE 100 is up 86 points (1.2%); Weir is 4.2% firmer at 2,000p.

Squeezed in among the mining companies hot on Weir’s trail is steelmaker Evraz PLC (LON:EVR) and marketing giant WPP PLC (LON:WPP), both of which are riding the current wave of optimism over the growth prospects of the global economy.

Surprisingly, given that oil prices are hitting three-month highs, the rises for the Scylla and Charibydis (non-classical scholars, substitute King Kong and Godzilla for Scylla and Charibydis) of the oil sector, BP PLC (LON:BP.) and Royal Dutch Shell PLC (LON:RDSB) lag those of the miners; the former is up 2.4% at 313.35p and the latter is 2.0% heavier at 1,309.80.

Crude oil

“Ahead of today’s OPEC+ meeting Brent Crude Oil has reached a four-month high above $70 while WTI crude oil trades at the highest level since October 2018. This is driven by tightening market conditions as OPEC+ keeps production tight alongside a continued recovery in global demand, as vaccine rollouts support increased mobility,” according to Ole Hansen, the head of commodity strategy at Saxo Bank.

“While the recovery in global fuel demand remains far from synchronized due to concerns over tighter Covid-19 related restrictions in Asia, the market seems happy in the short-term to focus primarily on the positive demand outlook in the U.S. and parts of Europe,” he added.

12.35pm: US indices to open higher after Memorial Day holiday

US stocks are set to get June off to a flying start as the countdown begins to Friday’s May jobs numbers.

The Dow Jones industrial average is expected to fly out of the traps to rise 221 points to 34,750 while the S&P 500 is seen advancing 22 points to 4,226. The tech-heavy Nasdaq Composite is tipped to rise 54 points to 13,741.

Like the UK, US markets were closed yesterday (for Memorial Day).

Its Purchasing Managers’ Indices (PMIs) day today and the US will be joining in the fun later today.

The Markit US Manufacturing PMI for May is expected to hold steady at 61.5. Meanwhile, the ISM manufacturing PMI is expected to edge up to 60.9 from 60.7.

In London, the FTSE 100 has ebbed to 7,100 but remains up 78 points on the day.

Among the FTSE 250, home improvements retailer Wickes Group PLC (LON:WIX) is wanted after it said full-year adjusted profit before tax will be within the top half of the range of analyst expectations of £55-74mln thanks to strong revenue performance.

The shares were up 6.8% at 273.5p, kept off the top spot on the FTSE 250 by Tullow Oil PLC (LON:TLW), which is up 8.3% at 55.54p as oil prices harden ahead of today’s meeting of OPEC+.

Brent crude for August delivery is up US$1.43 at US$70.75 a barrel.

“Today (1 June) OPEC+ will convene virtually for its half-yearly meeting to decide on production strategies for the second half of 2021. Its Joint Technical Committee (JTC) yesterday (31 May) presented its outlook for the supply/demand balance for the rest of the year, and depicted continued reviving demand and a tightening balance, with an expected inventory draw of 2–2.5m bl/day from August to December 2021. It shows there is plenty of room for a further increase of supply from the group beyond the planned increase of 2.1m bl/day from May to July 2021, and it also makes it much easier for the group to accommodate the return of Iranian supplies to the market,” said Bjarne Schieldrop, chief commodities analyst at SEB, the Nordic investment bank.

“There are still very few signs of internal strife within the group so it is likely to keep on going with a steady course. The bull-recipe for the oil market is still intact: reviving demand, muted US shale oil response together with controlled and restrictive supply from OPEC+, resulting in further declines in inventories and yet higher oil prices.

“The group signalled yesterday (31 May) that the return of Iranian supplies will be gradual and managed, and won’t create any supply shock into the market. Between 1-1.5m bl/day of Iranian oil exports are probably already in the market, so a return of Iranian supplies probably adds 1–1.5m bl/day of crude and condensates,” Schieldrop added.

11.35am: Closing in on a triple-digit gain

The FTSE 100 seems fighting shy of going the full three-figures with its rise despite the best efforts of mining stocks.

London’s index of leading shares was up 92 points (1.3%) at 7,144, ostensibly on renewed confidence about a global recovery.

“As the global growth recovery story unfolds, miners, in particular, are on the front foot today, as high demand for metals in particular push prices higher. Anglo American and Rio Tinto are top of the risers board, surging by around 4% in early trade, while Glencore and BHP Billiton were up by around 3.5%,” said Susannah Streeter at Hargreaves Lansdown.

Advertising and marketing conglomerate WPP PLC (LON:WPP), up 3.6%, is rising for much the same reason, as its performance is very much attuned to the global economy.

When the chips are down, of course, you need to find some ketchup to make them more palatable so it’s good news that US food giant Kraft Heinz announced today it would spend just under US$200mln in a UK food manufacturing facility in the north-west of England to make red sauce, mayonnaise and that five days a year (i.e. a British summer) treat of salad cream.

Kraft Heinz, whose reputation in the UK could do with a bit of buffing up after it bamboozled the government into allowing it to take over much-loved confectionery company Cadbury, claimed it is the biggest investments in UK manufacturing since Brexit.

On the subject of UK manufacturing, the Markit/CIPS manufacturing PMI may have risen to a record level of 65.6 in May but it undershot the consensus and the flash estimate, 66.1.

“Manufacturing output probably surpassed its pre-Covid level in May, at least six months before the services sector likely will fully recover. Markit’s new orders index leapt to 68.1—the highest level since the survey began in 1992—from 61.9 in April. Manufacturers and their suppliers are struggling to keep up with higher demand; work backlogs also rose at an unprecedented pace and suppliers’ delivery times lengthened at the second-faster ever rate,”reported Samuel Tombs at Pantheon Macroeconomics.

“The upswing, however, likely will run out of steam soon. It is typical for manufacturing output to recover quickly immediately after a recession, as businesses rebuild stocks that they ran down during the crisis. Orders also might be particularly high now because businesses have learned of supply shortages and are panic buying in response. By the end of this year, manufacturing output likely will be falling back. Note too that Markit’s surveys continue to bring signs of Brexit damage, with the export orders balance for the UK, 59.7, undershooting the Eurozone’s, 62.0, for the fifth consecutive month, albeit less so than in previous months,” he added.

10.20am: Manufacturing PMI hits a high

London’s leading equities have built on early gains, helped by sterling losing its lustre on foreign exchange markets.

The FTSE 100 was up 79 points (1.1%) at 7,101.

On the forex markets, sterling was down by about a quarter of a cent at US$1.4187.

The IHS Markit / CIPS UK Manufacturing Purchasing Managers’ Index (PMI) for May clocked in at a record level of 65.6, up from 60.9 in April; a reading above 50 indicates an expansion in activity.

New export orders also rose at a survey-record pace in May, amid reports of stronger demand from the EU, the US and China, although IHS cautioned that there were continued signs that while large companies were seeing record gains in new export work, the rate of increase at small firms was comparatively mild.

“The UK PMI surged to an unprecedented high in May, as record growth of new orders and employment supported one of the steepest increases in production volumes in the near 30-year survey history. Growth is being boosted by the unlocking of economies from COVID restrictions and ongoing vaccination programs. This is being felt across the globe, as highlighted by a record rise in new export business during the latest survey month,” said Rob Dobson, a director at IHS Markit.

Duncan Brock, the group director at the Chartered Institute of Procurement (CIPS) said the “march of the makers has turned into a sprint as the blocks of lockdowns have been removed”.

“Supply chain managers anticipate a continuing squeeze on deliveries and are forward buying and building stocks, so we may not have seen price peak yet. This means bigger inflationary pressures for the wider economy and the country’s place in international trade as prices charged also rose at record rates,” Brock said.

9.25am: Flaming June off to flaming good start

Welcome to flaming June and just as the UK weather outlook seems to be brightening, so is the outlook for equities.

The FTSE 100 was up 30 points (0.4%) at 7,052 after the long weekend and ahead of the release of US jobs numbers for May on Friday.

Miners were doing most of the heavy lifting with the likes of Rio Tinto PLC (LON:RTZ), Glencore PLC (LON:GLEN), Anglo American PLC (LON:AAL), Antofagasta PLC (LON:ANTO) and BHP Group PLC (LON:BHP) all up by more than 2%.

Those flaming journalists were making mischief over the long weekend, prompting JD Sports Fashion PLC (LON:JD.) to put out a statement this morning.

This was not, as some might have expected, about its executive chairman Peter Cowgill trousering almost £6mln in bonuses since February 2020 despite the company accepting more than £100mln in government aid; no, it was a rebuttal of suggestions that Cowgill is preparing to don his expensive trainers and leg it.

“JD can confirm to both investors and to its international brand partners that the board is not engaged in a process to recruit a chief executive officer or chairman,” JD’s statement said.

The shares were up 1.0% at 954.8p in early deals.

Barratt Developments PLC (LON:BEV) and Persimmon PLC (LON:PSN) were the best performing housebuilder stocks, up 2.0% and 1.9% respectively, after the Nationwide building society reported that the housing market remains artificially buoyant, with house prices rising 1.8% in May after advancing 2.3% in April.

The year-on-year increase in the average house price rose to 10.9% in May from 7.1% in April and 5.7% in May as sellers rush to sell their houses to take advantage of the government’s largesse on Stamp Duty.

“Prior to the increases in May and April, house prices had been relatively soft over the first quarter of 2021. They dipped 0.3% month-on-month in March, rose 0.8% in February, and dipped 0.1% in January – this had been the first monthly fall in house prices since last June,” reported Howard Archer, the chief economic advisor to the EY ITEM Club.

“The recent strength in house prices has occurred after a strong pick-up in housing market activity through the second half of 2020. This followed the easing of the initial 23 March 2020 lockdown restrictions and the release of pent-up activity.

“This lift was then reinforced by the raising of the Stamp Duty threshold from £125,000 to £500,000 from mid-July until 31 March 2021,” Archer noted.

“Additionally, Nationwide has observed that behavioural shifts may also be boosting activity, as people reassess their housing needs and preferences as a result of lockdown. In particular, it appears that an increasing number of people want a garden and also space to work at home. This is leading to some polarisation in demand for residential properties.

“However, while still being relatively elevated, housing market activity had come off its highs before supportive measures were included in the Budget on 3 March,” Archer noted.

“Following the introduction of more supportive measures in the Budget, the EY ITEM Club expects the housing market to show vigour in the near term and a further firming of prices,” Archer said.

Samuel Tombs, the chief UK economist at Pantheon Macroeconomics, said house prices are still soaring “but the medium-term outlook remains overcast”.

“The approaching reduction of the threshold for Stamp Duty Land Tax to £250K at the end of June, from £500K, is catalysing the housing market. May’s hefty month-to-month increase in Nationwide’s measure of house prices pushed up the year-over-year growth rate to its highest level in nearly seven years. The upward pressure on prices looks set to remain strong over the coming months, given that Google Trends data indicate that visits to one of the three main property websites in May were 22% above their average for the time of the year. Similarly, the seasonally adjusted number of registered house-hunters per estate agents’ branch in April was 30% above its 2012-to-19 average, according to the National Association of Estate Agents,” Tombs reported.

“Demand was a bit stronger than in March, when house-hunter numbers were 24% above normal, albeit below the peak seen in November. Further ahead, however, we continue to expect house prices to dip in Q4, by which time the SDLT [Stamp Duty] threshold will have returned to £125K. Housing transactions already have come off the boil in the US, where, unlike the UK, the market has not been juiced by tax cuts, indicative of weak post-Covid demand. An increase in new housing supply also likely will undermine prices later this year,” Tombs said.

Proactive news headlines

Powerhouse Energy Group PLC (LON:PHE) said a second site using its waste-plastic-to-hydrogen technology is to be developed by its partner, Peel L&P, at the Rothesay Dock on the north bank of the River Clyde in Scotland.

CentralNic Group PLC (LON:CNIC) reported higher earnings for the first quarter of 2021 as it said “significant investment” in its management, staff and systems had accelerated organic growth to record levels.

Chamberlin PLC (LON:CMH) said Kevin Price and Alan Tomlinson have taken up their positions respectively as chief executive and finance director of the specialist castings and engineering group.

Gfinity PLC (LON:GFIN) said it has launched Only Mobile Gaming! (OMG!), a dedicated mobile gaming website, as the latest addition to its Gfinity Digital Media business.

Savannah Resources PLC (LON:SAV) announced growing interest for offtake deals and strategic investments in its Mina do Barroso lithium project in Portugal.  

Nuformix PLC (LON:NFX) said it is “executing on the plan” to develop its two key pre-clinical assets, while negotiations over out-licensing a third are ongoing.

Sensyne Health PLC (LON:SENS) said it has signed a production contract with the UK’s Department of Health & Social Care (DHSC) to use the company’s MagnifEye artificial intelligence (AI) technology to read coronavirus (COVID-19) lateral flow diagnostics tests as part of the country’s asymptomatic testing programme.

Redx Pharma PLC (LON:REDX), the drug discovery and development company focused on cancer and fibrosis, said non-executive chairman Iain Ross is stepping down from his role as a director.

Zaim Credit Systems PLC (LON:ZAIM) has reported further strong growth, saying the business traded profitably in the first quarter of the current financial year.

Bloomsbury Publishing PLC (LON:BMY) confirmed its acquisition of Red Globe Press from Macmillan Education Limited has completed. The consideration was £3.7mln, of which £1.8mln has been satisfied in cash on completion and up to £1.9mln will be paid when certain contracts are assigned.

IronRidge Resources Ltd (LON:IRR) said it plans to demerge its gold assets in Côte d’Ivoire and Chad into a separate gold-focused listed company and hopes that this restructuring will unlock further value in its Cape Coast lithium portfolio.

Ariana Resources PLC (LON:AAU) has announced the start of exploration activities in Eastern Europe through its interest in Western Tethyan Resources.

Scotgold Resources Ltd (LON:SGZ) said it has produced gold concentrate and gravity separated gold doré from the Cononish gold project in Scotland following the previously announced resolution of various technical issues affecting the processing plant. The first shipment of concentrate, a major milestone for the company, was made on May 11. 

Galileo Resources PLC (LON:GLR) said it plans to raise about £2.0mln, before expenses, via a placing and will use the majority of the proceeds to fund the next stage of exploration development on its copper/silver licences in the Kalahari Copper Belt of Botswana. 

TomCo Energy PLC’s (LON:TOM) Greenfield Energy joint venture has now received a draft front-end engineering and design (FEED) study for its oil sands project in Utah.

Chariot Oil & Gas Limited (LON:CHAR) said it expects to imminently complete its acquisition of Africa Energy Management Platform (AEMP).

i3 Energy Plc (LON:I3E, TSX:ITE) is doubling up in Canada with a deal to acquire a further 49.5% interest in the South Simonette oil property, taking its stake to 99%.

Ferro-Alloy Resources Ltd (LON:FAR) shares were boosted as it banked investment from Vision Blue Resources, named its next chairman and provided an update on its Balausa vanadium concentrate project in Kazakhstan.

Ncondezi Energy Ltd (LON:NCCL) updated on its progress with its first commercial and industrial battery project in Mozambique.

Afarak Group PLC (LON:AFRK) on Monday said it approved the arrangement for the disposal of subsidiary Ilitha’s plant, assets and mining rights.

6.25am: No June swoon in prospect

The FTSE 100 is predicted to begin the new month of June with more of the cautious optimism that has characterised the first five months of 2021.

Finishing with a pretty much flat week, May saw a rise of 1.4% for London’s blue-chip index, which has crept up 6.9% since the start of the year to 7,022.61.

An opening gain of around 16 points is being predicted for the Footsie on Tuesday, according to the IG spread betting platform.

That’s with the UK’s growth set to be the fastest among developed countries, according to the latest forecasts from the Organisation for Economic Co-operation and Development at the start of the week, which were upped to 7.2% for this year, raised from its previous projection of 5.1% two months ago.

UK growth is more likely to be reflected in the FTSE 250 index, which is up 10.5% since the turn of the year.

But market analyst Naeem Aslam at ThinkMarkets thinks there’s not much point getting excited for more growth any time soon: “Generally speaking, the month of June isn’t that great for the stock markets as most of the traders begin to wind down their positions for the summer holidays.”

Although he admitted June last year saw very strong trading volume amid the pandemic, while summer holiday plans are going to continue looking very different this year too.

After the long weekend, Tuesday’s City diary is fairly uncluttered, though there are results pencilled in from waste and recycling specialist Biffa PLC (LON:BIF) and optical technology maker Gooch & Housego PLC (LON:GHH).

There is some UK macro data for the market to get its teeth into in the form of a manufacturing PMI survey.  

Around the markets

  • Pound – down 0.03% at US$1.4222
  • Oil – Brent crude up 1.2% to US$70.17 a barrel 
  • Gold – up 0.2% to US$1,911.84 per oz
  • Bitcoin – up 8.3% over 24hrs to US$37,277.39

6.50am: Early Markets – Asia / Australia

Stocks in the Asia-Pacific region were mixed on Tuesday as China’s Caixin/Markit manufacturing Purchasing Managers’ Index for May came in at 52, higher than April’s reading of 51.9.

However, the Shanghai Composite in China dipped 0.04% while Hong Kong’s Hang Seng index lifted 0.58%

In Japan, the Nikkei 225 fell 0.20% and South Korea’s Kospi rose 0.49%.

Shares in Australia slipped, with the S&P/ASX 200 trading 0.15% lower.

Proactive Australia news:

archTIS Ltd (ASX:AR9) has entered a partnership with Thales Australia, Microsoft, and Australian SMEs Myriad Technologies and FortifyEdge to launch Nexium Defence Cloud Edge (NDC Edge).

Emmerson Resources (ASX:ERM) has extended its joint venture with Tennant Consolidated Mining Group (TCMG) to include the Southern Project Area (SPA) of its Tennant Creek landholding.

Alicanto Minerals Ltd (ASX:AQI) is selling its Arakaka Gold Project in Guyana to private Canadian company Virgin Gold Corp as it looks to expand drilling at its flagship Swedish projects.

Lithium Australia NL’s (ASX:LIT) (OTCMKTS:LMMFF) (FRA:3MW) recycling division Envirostream Australia has commenced its expanded field trial program for 2021, following successful trials last year using recycled alkaline battery material as a fertiliser micronutrient.

Kingwest Resources Ltd (ASX:KWR) has resumed extensional reverse circulation (RC) drilling at the Menzies Gold Project (MGP) targeting high-grade extensions to the current mineral resources.

Firefinch Ltd (ASX:FFX) (OTCMKTS:EEYMF) (FRA:N9F) has delivered more high-grade gold hits at Morila Pit 5, a mining area on the western margin of the Morila Super Pit.

European Lithium Ltd (ASX:EUR) (FRA:PF8) (VIE:ELI) has further aligned with Europe’s push towards a cleaner, greener and sustainable energy future by partnering in a research project developing closed-loop recycling for lithium-ion batteries.

Montem Resources Ltd (ASX:MR1) announced that the Alberta Energy Regulator (AER) has published the final Terms of Reference (TOR) for the Tent Mountain Mine Environmental Impact Assessment (EIA).

Australian Vanadium Ltd (ASX:AVL) (OTCMKTS:ATVVF) (FRA:JT71) has welcomed Bryah Resources Ltd’s (ASX:BYH) upgrade of the base metal mineral resource at the Australian Vanadium deposit within Bryah’s Gabanintha Project in Western Australia.

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