FTSE 100 closes ahead as investors return to ‘buy the dip’ mode
- FTSE 100 index closes up 1.39%
- Tiffany, LVMH in luxury breakup
- Wall Street benchmarks in the green
5.05pm: FTSE closes higher
FTSE 100 index closed Wednesday in the green and over the 6,000 level as traders turned towards a more 'risk-on' attitude.
Britain's top share index closed over 82 points higher, or 1.39%, at 6,012.
Midcap FTSE 250, however, the more UK company focused index, shed around 30 points at 17,594 as Brexit jitters continue. On Wall Street, markets were higher
"Stock markets are back in rally mode as investors look to get back to their buy the dip ways that proved so successful over the past few months," said Chris Beauchamp, chief market analyst at online trader IG.
"While the pullback has only really lasted a few days, that is the norm for this rally since March. The drop in early June was swift and brutal, but short-lived. The early September version appears to be heading in the same direction."
US and Canada 11.30am EST/4.30pm
Wall Street benchmarks went higher in early deals in New York with the Dow Jones Industrial Average up almost 500 points at 27,988. The broader- based S&P 500 advanced over 68 points at 3,400. The Nasdaq added over 274 points at 11,123. Meanwhile, up in Toronto, the TSX zoomed up more than 225 points at 16,324.
3.40pm: Tiffany sues LVMH for scrapping US$16bn takeover deal
FTSE 100 climbed past the 6,000 mark ahead of close, adding 92 points to 6,023.
Rumours that the deal was in trouble have been circulating since March as the luxury goods sector has borne the brunt of the coronavirus pandemic.
The US jeweller accused LVMH of being deliberately tardy in getting the regulatory approval for the deal to scupper it.
The French giant said Frances Foreign Affairs Ministry requested to delay the deal until after January 6 due to a US plan to impose tariffs on French and European goods.
As a result it would not be able to complete the acquisition since it would be later than the November 24 deadline set at the time of the deal.
“We regret having to take this action but LVMH has left us no choice but to commence litigation to protect our company and our shareholders,” said Tiffanys chairman Roger Farah.
“Tiffany is confident it has complied with all of its obligations under the Merger Agreement and is committed to completing the transaction on the terms agreed to last year. Tiffany expects the same of LVMH.”
Shares in the New York-based firm lost 10% to US$109.93 on Wednesday.
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2.45pm: Wall Street turns green in early deals
The main Wall Street indices defied expectations on Wednesday by moving into positive territory shortly after the opening bell.
In the early minutes of trading, the Dow Jones Industrial Average was up 0.89% at 27,746 while the S&P 500 jumped 1.31% to 3,375 and the Nasdaq climbed 1.85% to 11,048.
Traders seem keen to kick off a rebound following the recent tech rout, while also shrugging off worries about coronavirus vaccines and trade tensions between the US and China.
The higher open may also show that investors considered the Nasdaqs correction to be a healthy one after it scaled record highs earlier this year, and could potentially be a temporary setback as opposed to a trend.
Back in London, the FTSE 100 was up 77 points at 6,007 shortly before 2.45pm.
1.45pm: Lloyds cuts 860 jobs
The Footsie nudged up 58 points to 5,989 in the early afternoon as the pound dipped further, down 0.4% to US$1.2933.
The bank was criticised by workers union Unite for creating 220 new roles but not offering alternatives to those who are being let go.
“Unite has challenged Lloyds Banking Group (LBG) senior management to ensure all those affected by these latest proposed job cuts are given the option to remain working for LBG and do not enforce any compulsory redundancies,” said Rob MacGregor, Unite national officer.
“Unite is adamant that it is totally unacceptable that LBG persists in putting undue pressure on those who remain working for the bank by making hundreds more of their fellow workers redundant on a regular basis.
“The pandemic has demonstrated the amazing resilience and flexibility of this workforce. The employer should not focus solely on cutting jobs and costs but instead the bank should invest in a workforce that has only shown loyalty, dedication and hard work through the good times, and the bad.”
12.30pm: Wall Street to open in the red
FTSE 100 was firmly in the green at lunchtime, adding 42 points to 5,972.
Wall Street is expected to open lower but not too hard hit by the setback on the Oxford vaccine, which investors worldwide have shrugged off as something that can be resolved quickly.
The UK Medicines and Healthcare products Regulatory Agency told Reuters on Wednesday it was reviewing all information with urgency to see if the trial can be restarted as soon as possible.
Experts were not surprised by the hurdle, considering how lengthy and complex vaccine trials usually are.
“This is unlikely to be the last setback on a clinical trial for a vaccine, and the market reaction seems to reflect that, however it also means that the idea we will see a positive vaccine outcome by year end is optimistic at best,” said Michael Hewson, analyst at CMC Markets.
US stocks are recovering after the beating on tech stocks on Tuesday, the first trading day of the US week.
Analysts expected a correction of the Nasdaq following a remarkable year, rocketing 83% from pandemic low in March to the peak a week ago.
“The world has changed a lot in a very short period of time and tech has undoubtedly been best placed to reap the rewards but the big problem is valuing a sector like this in the midst of the pandemic,” said Craig Erlam, analyst at OANDA.
“The world will not return to what it was in February and it won't continue as it is now. And the void in between these two realities is vast, which makes valuing these firms more difficult than ever.”
11.30am: Travel stocks dominate fallers list
FTSE 100 trimmed its gains before lunchtime, rising 47 points to 5,977.
Travel stocks dominated the fallers among the big cap following the double whammy of news about tighter restrictions in the UK and the set-back in the search for a vaccine.
“Already freshly imposed quarantine restrictions had taken a toll on airlines and now restaurants and hotels will have to cope with new rules limiting social groups to six, just as the hospitality sector was showing significant signs of recovery,” said Susannah Streeter, analyst at Hargreaves Lansdown.
“Hopes that an early vaccine rollout, seen as a solution to all of these woes, have now been dashed, but investors might take heart from AstraZenecas statement that decision to temporarily halt the trials, following an illness of a participant as it is a routine action and may be considered as just a spoke in the wheels. The speed at which vaccines for Covid-19 are being tested in human trials is unprecedented, so the safety first mantra should be welcomed.
British Airways owner International Consolidated Airlines Group SA (LON:IAG) slid 3% to 201.65p, while hoteliers Whitbread PLC (LON:WTB) and InterContinental Hotels Group PLC (LON:IHG) shed 2% to 2,386p and 4,374p respectively.
10.35am: Waiting for post-Brexit bill
FTSE 100 held its gains in late morning, rising 55 points to 5,986.
Westminster is set to reveal plans for policing trade carried out within the country as part of post-Brexit rules later on Wednesday.
The Internal Market Bill covers how powers currently held by the EU, regarding matters such as air quality and building efficiency, will be distributed when the UK exits the union, the BBC reported.
Jonathan Jones, permanent secretary to the Government Legal Department, resigned for this bill as he is understood to believe it breaches the government's obligations under international law.
Northern Ireland Secretary Brandon Lewis said on Tuesday the bill would break international law in a "very specific and limited way" if the UK overrides EU law if border negotiations break down.
Northern Ireland will remain in the European single market to avoid a hard border with the Republic of Ireland.
Talks between UK and EU continue in London today, with an increasingly likely chance to reach a no-deal outcome.
9.35am: Airlines under pressure
FTSE 100 was on the rise in mid-morning as it kept shrugging off AstraZeneca pausing COVID-19 vaccine trials and Tuesdays slide in US indices.
Londons leading index advanced 58 points to 5,988 while sterling was 0.2% lower at US$1.2949.
“The weakness in sterling appears to be helping the US dollar earners on the FTSE100 in early trading with the likes of BP and Royal Dutch Shell among the early gainers, also helped by a firmer oil price, along with the likes of Unilever, Reckitt Benckiser and Ashtead,” said Michael Hewson at CMC Markets.
“The pound has continued to come under pressure overnight, after yesterdays reports that the UK government intended to make minor changes to the EU Withdrawal Agreement that could break international law in a “specific and limited way”. With no detail on the changes the UK government intends to make it is still unclear as to whether the negative reaction that weve seen in the last few days is justified in terms of the price action.”
“I think the winter of 2020 will essentially be a write-off,” chief executive Michael OLeary told Reuters.
The stock shed 2% to €11.37, while competitor easyJet PLC (LON:EZJ) dropped 5% to 567.6p after announcing capacity cuts for the remainder of 2020 on Tuesday.
8.35am: Positive progress continues
The FTSE 100 shrugged off the early nerves to open in positive territory as traders ignored fresh overnight falls on Wall Street.
The UK index of blue-chip shares nosed up 38 points to 5,968.53 helped again by a slightly weaker pound.
In New York on Wednesday, the 500-point slump of the Nasdaq Composite came as Apple shares lost 7%, while Tesla dropped 21% having failed to make the cut for the S&P 500 index.
“There is yet to be a clear signal that the [NASDAQ] index has passed an inflexion point, although the possibility remains that the pandemic-fuelled rise of the last few months may be easing as the world returns to some sort of normality,” said Richard Hunter, market analyst at Interactive Investor.
Here in the UK, it was all about the drug sector.
The bad news came from AstraZeneca (LON:AZN), which confirmed it has halted work on a vaccine it is jointly developing with the University of Oxford after a “serious event” during the trial process. The shares dropped 2.6%.
Oxford Biomedica (LON:OXB), which had a supply agreement with the AZ team developing the new COVID-19 jab, was off 11%.
There was good news for Amryt Pharma (LON:AMYT), whose shares surged 21% after its gel proved efficacious to study participants with an excruciating chronic skin condition.
It will now apply for regulatory sign-off in the US and EU.
Not to be outdone, Redx Pharma (LON:REDX) jumped 40% in the early skirmishes after it inked a collaboration with an American firm called Jazz Pharmaceuticals worth US$20mln over two years and a further US$400mln milestone payments and royalties.
Proactive news headlines:
Redx Pharma PLC (LON:REDX) has unveiled a collaboration with a US company called Jazz Pharmaceuticals to discover and develop two targeted cancer therapies. Redx will receive US$10mln upfront, a further US$10mln in year-two, and US$400mln in milestone payments and tiered royalties. The UK group sold its pan-RAF inhibitor programme to Nasdaq-listed Jazz last July in a deal worth US$3.5mln upfront and milestones and royalties worth US$203mln.
Amryt Pharma PLC (NASDAQ:AMYT) (LON:AMYT) has hailed as a “significant milestone” the phase III success of FILSUVEZ, a gel for a rare and extremely painful skin condition called epidermolysis bullosa (EB). The study achieved its main goal, known in the scientific parlance as the primary endpoint, of accelerating the wound healing process. The next step is a rolling submission programme to the regulatory authorities, with the company applying for speedy approval in both the US and EU.
Blue Star Capital PLC (LON: BLU), the investing company with a focus on esports, payments, technology and its applications within media and gaming, noted that its investee company Guild Esports PLC has today announced its intention to seek float on the main market of the London Stock Exchange (LSE) later this year. Guild, in which Blue Star holds 11.7% of the issued share capital, expects to be the first esports franchise to join the LSE main market. It plans to create a leading global franchise by establishing its own esports teams to compete in major esports tournaments and a player training and scouting infrastructure modelled on the talent academies pioneered by Premier League football teams over many years. David Beckham, a founding shareholder, intends to use his global influence and following to support the development of the company's brand and business.
Argo Blockchain PLC (LON:ARB) has reported a surge in earnings and revenues in its first half as the number of Bitcoins mined during the period soared by over 500%. For the six months ended June 30, 2020, the cryptocurrency miner reported underlying earnings (EBITDA) of £3.2mln, 96% higher year-on-year, while revenues jumped by 280% to £11.1mln as the companys production ramped up. The figures were the result of a 545% increase in Bitcoins mined to 1,669 from 306 a year ago. The firm also said during the period its production base had expanded by 260% to 18,000 crypto mining machines, making it one of the worlds largest publicly-listed miners.
Bango (LON:BGO), the mobile payments specialist, has agreed a partnership with ODK Media, a Korean and Chinese subscription-based video streaming service. The partnership means telecoms companies globally will be able to offer access easily to the content on ODKs OnDemandKorea.com and OnDemandChina.com with payment through Bango's platform. “Millions of users who live outside of Korea and China to access content in their mother language with ODK Media's subscription bundled with their mobile plan, or as a bolt-on, using the Bango Platform to enable these offers to be delivered,” the company said in a statement.
Synairgen PLC (LON:SNG) noted that it has submitted a patent application for its inhaled interferon beta asset, SNG001. The AIM-listed respiratory drug developer said the application is to use SNG001 to treat virus-induced exacerbations in patients suffering from Chronic Obstructive Pulmonary Disease (COPD) and undergoing treatment with systemic corticosteroids. The application follows the results of interim analysis of Synairgens exploratory Phase II clinical trial of SNG001 in COPD patients, released on Tuesday, which revealed that the treatment is well tolerated in the older population studied and that lung antiviral responses were “significantly enhanced”.
IronRidge Resources Limited (LON:IRR) has kicked off its Third Phase drill programme at the Zaranou gold project in Côte d'Ivoire. The group said the programme will comprise some 50,000 metres of drilling – with 20,000 metres reverse circulation (RC), and 30,000 metres of aircore (AC) drilling. Two RC rigs will be in operation alongside one AC rig. The RC portion of the programme is slated to complete in the fourth quarter. The group has a stated goal of providing results upon which IronRidge can define a maiden mineral resource estimate.
Directa Plus (LON:DCTA) has published a two-year research study into the benefits of the use of its graphene additive G+ in advanced textiles and fashion. The study, published in the Journal of Applied Polymer Science, was carried out at the Politecnico di Milano by a team led by Professor Luigi De Nardo with the technical support of Fondazione Politecnico di Milano. Directa Plus said the findings confirmed that: G+ graphene nanoplatelets (GNPs) comply with ISO/TS 80004-13:2017 definition; there is a very high crystalline quality of the GNPs, which is crucial for applications where thermal and electrical conductivity is targeted; and G+ GNPs confer very high in-plane thermal conductivity to functional membranes, endorsing their use for thermal comfort.
Power Metal Resources PLC (LON:POW) told investors it has completed a due diligence exploration programme at the Silver Peak project in British Columbia. The company noted that a total of 11 channel samples were taken and have been submitted to a lab, in Vancouver, for expedited assay testing. Additionally, the Power Metal team is reviewing the exploration work undertaken and the initial findings. It expects to update the market again with the results and a decision over its acquisition option, in line with the agreed 30-day option period.
Echo Energy PLC (LON:ECHO) has told investors it is investing in its operations in Argentina to boost performance. The company has acquired compressors, previously on lease at a cost of US$2.2mln over 36 months, which are used to lift pressure in gas transport pipeline. The transactions enable some US$100,000 of operating expenses to be saved per month and gives security for future operations. Echo said it is better able to facilitate anticipated production growth in the future.
Newmark Security PLC (LON:NWT) has said it is “confident that there will be medium to long-term growth” in its core markets as it delivered its full-year results. In an outlook statement, the security systems provider said it is continuing to “build a greater proportion of recurring revenues” in its People and Data Management division, while its physical security solutions business is continuing to benefit from a restructuring last year and an increase in its product range. Newmark also said that its leadership team had “identified new markets and customers” amid increasing crime rates and the continued threat of terrorism which it said will “firmly position” its Safetell business for future.
Inspired Energy PLC (LON:INSE) has resumed dividend payments and is looking for more acquisitions following an uptick in corporate energy usage in recent months after the end of the coronavirus (COVID-19) pandemic lockdown. The consultant, which helps companies reducRead More – Source