- FTSE 100 index sheds 67 points
- US stocks seen starting lower
- Federal Reserve chairman Jerome Powell due to speak
- Miners lose ground in London
12.20pm: Cautious US open eyed
The FTSE 100 index remained lower at lunchtime as investors eyed expectations for a weaker start on Wall Street this Thursday.
Around midday, the UK blue-chip index was down 67.56 points at 6,607.91.
US stocks are expected to extend the previous session’s retreat as investors await comments from Federal Reserve chairman Jerome Powell about the economic outlook.
Futures for the Dow Jones Industrial Average futures edged 0.3% lower, while S&P 500 index futures shed 0.4%, and Nasdaq-100 futures lost 0.6% as technology stocks bear the brunt of the market’s concerns having risen strongly.
Investors are hoping Powell will answer questions on how he views a recent jump in bond yields when he speaks at The Wall Street Journal Jobs Summit at 12.05pm ET. The yield on the 10-year US Treasury note ticked down to 1.464% having jumped to 1.469% on Wednesday, its second-highest level this year and ending three days of declines.
US central bank officials have previously said that they will keep monetary policy loose until the economy is stronger and that they view the rise in yields as a signal that investors are optimistic about the economic recovery.
Expectations have been bolstered by President Biden’s proposed $1.9 trillion coronavirus (COVID-19) relief package. Democrats in the Senate agreed on Wednesday to narrow eligibility for some of the direct payments that are part of the bill, a concession to centrists whose support is needed to pass it.
Investors will also eye the latest US jobless claims for the week ended February 27, due at 8.30am ET for signs that employment is recovering, particularly ahead of Friday’s always-key US non-farm payroll data for the full month.
Investor faith in the economic rebound was unshaken by data released overnight that showed US private payrolls rose less than expected in February.
11.45am: Engineering group returns to dividend list
There is little sign of a recovery in UK markets as they take their lead from falls elsewhere amid growing concerns about rising inflation. The FTSE 100 is currently down 68.74 points or 1.03% at 6606.73.
So Melrose Industries (LON.MRO) , the industrial group which bought GKN in 2018, must be lower after it reported a full year loss of £523m compared to a £55m profit and warned it was unlikely to see a recovery in its key aerospace business in 2021?
In fact its shares are up 3.3p or 1.87% at 180.25p. Investors have taken heart from news it generated record cash flow, allowing it to return to the dividend list with a 0.75p a share payment. It promises a progressive dividend policy in future.
Analyst Laura Hoy at Hargreaves Lansdown said: “There were some green-shoots in Melrose’s full-year results, particularly in the Automotive and Powder Metallurgy divisions where pent-up demand offered a boost at the end of the year. While that will provide momentum into 2021, those tailwinds will dissipate as we move forward.
“Unfortunately the group’s largest growth engine, Aerospace, struggled the whole year through and the hard times are set to continue through 2021. Traffic in civil aviation has slowed to a crawl and fewer planes means demand for Melrose’s products has plummeted. Robust defence spending offered some shelter, but ultimately the division will suffer until planes are back in the skies.
“Despite all that, management’s focus on cash preservation mean the group was able to pay out a modest dividend.”
10.31am: Share buyback boosts software and services group
With technology shares falling sharply in the US on Wednesday it is surprising to see a software company among the biggest risers in the UK blue chip index.
But here is Sage Group PLC (LON.SGE), up 2.55% or 14.8p to 594.2p. The reason? It has just announced a share buyback programme of up to £300m from March to September, using the proceeds from recent disposals and its own cash generation. While you could argue whether buybacks are worth it or not, Sage shareholders seem to have made up their minds on the matter.
Not that this has done anything to stop the accelerating decline in the FTSE 100, with the leading index now down 94.02 points or 1.41% at 6581.45.
Russ Mould, investment director at AJ Bell, said: “The FTSE 100 surrendered its gains from Wednesday as the sell-off in the bond market resumed with grim familiarity as inflation fears continue to stalk the markets.
“Investors can take some comfort from the fact European markets aren’t as weak as their counterparts in Asia and the US overnight.
“However, the mood was clearly cautious, with the increase in corporation tax announced by Rishi Sunak in his Budget likely contributing to the downbeat mood, albeit not coming into force for two years.”
A positive UK construction sector survey has done little to help the mood. The latest IHS Markit construction PMI has climbed to 53.3 for February, up from 49.2 the previous month. Anything over 50 shows expansion, anything below, contraction. But cost pressures rose due to problems in getting supplies, adding to concerns about rising inflation.
9.30am: Market decline accelerates
Leading shares are stuck firmly in the red, with commodity companies among the biggest fallers.
Worries about rising bond yields have returned to haunt stock markets, while a decline in metal prices after recent gains is hitting the miners. A negative note on iron ore from Bernstein is not helping.
So Rio Tinto PLC (LON.RIO) – which has seen the departure of its chairman following the destruction of aboriginal sites – is down 435p or 6.76% at 6000p, the biggest faller in the blue chip index. Its shares have also gone ex-dividend.
There is some support from oil prices, with Brent crude 0.28% better at $64.25 a barrel despite a big build up in US stocks reported on Wednesday. All eyes will be on the OPEC+ meeting later, when production increases are likely to be discussed.
Michael Hewson at CMC Markets UK said:”Crude oil prices shrugged off a huge 21.6m build in EIA stockpiles yesterday. This was due to refining capacity falling to 56% of overall capacity, the lowest on record. This meant that the oil never made it to the refinery, causing gasoline inventories to fall off a cliff as the whole Texas supply chain froze up due to the cold weather.
“With OPEC+ due to meet later today there has been some speculation that there could be an agreement to push up production so that prices have a chance to cool off, and avoid a possible demand destruction scenario. This speculation has cooled in recent days on reports that Russia is considering rolling over its cuts into April rather than raising output, with the result that oil prices have started to edge higher again.”
Heading higher are utility companies, big infrastructure spenders which could benefit from the Budget’s proposal to cut a company’s tax bill by 130% on any cost of business investment.
Overall the FTSE 100 is down 65.82 points or 0.99% at 6609.65.
8.45am: Leading shares looking a little unwell
The old saying used to go that if America sneezes, Britain catches a cold. However, the financial markets appear to have turned this adage on its head.
So, sticking with and torturing further the metaphor, the Footsie currently appears to have a bout of the sniffles, while the US, particularly the NASDAQ, looks to be headed for the Covid ward.
The tech index ended the session 2.9% lower, which was bad news for the Scottish Mortgage Trust (LON:SMT), a big investor in Silicon Valley. which dropped 4% early doors.
Rio Tinto (LON:RIO) fell 7% after it began trading without the entitlement to a dividend payment. The remainder of the sector, meanwhile, handed back some of the recent gains that had been driven by the improving economic outlook.
Aviva (LON:AV.) starred as shares in the insurance giant were bid up 3.7%. The company’s back-to-basics approach appears to be working, according to Richard Hunter, head of markets at Interactive Investor.
“Aviva is closing in on its preferred target markets and has shown some promising signs of progress despite pandemic challenges,” he said.
“With operations in France and Italy now being added to other disposals in the likes of Singapore, Hong Kong, Indonesia and Turkey, Aviva is removing the shackles piecemeal to leave it concentrating on its core markets of the UK, Ireland and Canada.”
Proactive news headlines
Supermarket Income REIT PLC (LON:SUPR), has acquired a Tesco supermarket in Prestatyn, North Wales for £26.5mln. In a separate announcement, the REIT announced plans to raise around £100mln by placing shares at 106p each (versus last night’s closing price of 109.5p.
Franchise Brands PLC’s (LON:FRAN) final results for 2020 highlighted positive trading through the current lockdowns. It said that trading started 2021 strongly in the first quarter, with business-to-business sales described as resilient.
Westminster Group PLC (LON;WSG) said it hopes to get back to double-digit revenue growth in 2021.
Savannah Resources PLC (LON:SAV) said the ongoing metallurgical test work programme at its Mina do Barroso lithium project in Portugal has highlighted the potential for lower capital and operating costs.
Westmount Energy Ltd (LON:WTE, OTCCQ:WMELF) has relayed the results of the Bulletwood exploration well, on the Canje block offshore Guyana, which encountered quality reservoirs but sub-commercial volumes of hydrocarbons.
Shares in Black Bear Energy Resources Plc (LON:), an oil and gas company with onshore assets in the USA, are now being traded on the JP Jenkins share dealing platform. Anthony Mason, founder and CEO of Black Bear said: “This will give Black Bear Energy Resources tremendous visibility and a strong presence in the London market.”
Induction Healthcare (LON:INHC) has hired N+1 Singer as Nominated Adviser and its sole broker with immediate effect.
Filta Group Holdings PLC‘s (LON:FLTA) chief executive, Jason Sayers, will be introducing the company and taking questions at the Proactive One2One Investor Forum on 25 March, with the online forum due to start at 6pm GMT. Registration details can be found at https://www.proactiveinvestors.co.uk/register/event_details/327.
BlueRock Diamonds PLC (LON:BRD) chairman Mike Houston and finance director David Facey will provide a live investor presentation via the Investor Meet Company platform on Monday 8 March at 11am GMT.
Accesso Technology Group PLC (AIM: ACSO) will announce its preliminary results for 2020 on Tuesday 23 March.
6.50 am: FTSE 100 set for lower start
The FTSE 100 is set to start on the back foot on what will be a session with a busy reporting schedule among London’s blue-chips and mid-cap stocks.
Spreadbetter IG Markets sees the London benchmark falling around 46 points, as it making the price 6,604 to 6,607 with just over an hour to go before the open.
The diary for the day include final results for insurers Aviva PLC (LON:AV.) and Admiral Group PLC (LON:ADM), bookies William Hill PLC (LON:WMH) and Entain PLC (LON:ENT), defence firm Meggitt PLC (LON:MGGT) and a gamut of other mid-tier shares.
The lower start in London follows equity markets elsewhere with US technology stocks particularly rocked by weak sentiment, despite positive vaccine commentary.
“President Biden announced the US will have such a large supply of vaccines, that every adult in the country should be inoculated by the end of May, two months ahead of schedule,” highlighted David Madden, analyst at CMC Markets.
“The health news is very encouraging but it couldn’t fend off the bearish sentiment.”
In New York, the Dow Jones closed 121 points or 0.39% lower at 31,270 whilst the S&P 500 shed 1.31% finish the day at 3,819 and the Nasdaq fell farthest, losing 2.70% to 12,997 at the end of trading.
Asian indices similarly lowered. Japan’s Nikkei dropped 628 points or 2.13% to 28,930 and Hong Kong’s Hang Seng slipped 2.4% to 29,162, whilst the Shanghai Composite marked a 2.4% decline to 3,492.
Around the markets
The pound: US$1.3950, 0.03%
Gold: US$1,716 per ounce, up 0.44%
Silver: US$26.08 per ounce, up 0.22%
Brent crude: US$64.37 per barrel, up 2.6%
WTI crude: US$61.51 per barrel, up 2.9%
Bitcoin: US$49,516. down 0.27%
6.50am: Early Markets – Asia / Australia
Stocks in the Asia-Pacific region were lower on Thursday following overnight declines on Wall Street as bond yields rose again.
The Hang Seng index in Hong Kong slipped 2.30% while the Shanghai Composite in China fell 2.10%.
In Japan, the Nikkei 225 dived 2.13% and South Korea’s Kospi slipped 1.28%.
Shares in Australia fell, with the S&P/ASX 200 closing 0.84% lower.
Proactive Australia news:
Salt Lake Potash Ltd (ASX:SO4) (LON:SO4) (OTCMKTS:WHELF) (FRA:W1D) has syndicated its US$138 million senior debt facility with Sequoia Economic Infrastructure Income Fund (LON:SEQI) and the Commonwealth Bank of Australia (ASX:CBA) joining the facility.
Montem Resources Limited’s (ASX:MR1) coal quality testing on drilling samples from Chinook Vicary area of its Chinook Project in Alberta, Canada, have confirmed the presence of Tier 1 hard coking coal (HCC).
Kinetiko Energy Ltd (ASX:KKO) is about to produce its first gas from the Amersfoort Project in South Africa, a country that is hungry for energy having experienced regular and widespread blackouts in recent years.
Kin Mining NL (ASX:KIN) (FRA:8KM) has completed the share purchase plan (SPP) announced on February 10, 2021, with existing shareholders subscribing for an additional 6.45 million of new shares at $0.13 per share, raising around $838,500.
ioneer Ltd (ASX:INR) (OTCMKTS:GSCCF) (FRA:4G1) is undertaking a fully underwritten institutional placement to sophisticated, professional and institutional investors to raise A$60 million to help accelerate construction of the Rhyolite Ridge Lithium-Boron Project in Nevada, USA.
Corazon Mining Ltd (ASX:CZN) (OTCMKTS:CRZNF) is trading higher after receiving positive initial visual results from its current phase of drilling at Lynn Lake Nickel-Copper-Cobalt Sulphide Project in Manitoba Province, Canada.
Arrow Minerals Ltd’s (ASX:AMD) reverse circulation (RC) drilling program at Dassa gold deposit on the Divole West exploration permit in Burkina Faso has expanded gold mineralisation to a strike length of more than 900 metres.
Legend Mining Limited (ASX:LEG) directors and senior management have demonstrated strong confidence in the company’s growing nickel sulphide story focused on Western Australia’s Fraser Range by exercising options.
Element 25 Ltd (ASX:E25) (FRA:QFP) has confirmed delivery of the first stage of a planned multi-stage development at its 100%-owned world-class Butcherbird Manganese Project in WA, with completion on track and in line with the original target of the first quarter of 2021.