UK Politics

FTSE 100 in pessimistic mood as householders’ job security fears rise

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  • FTSE 100 index drops 180 points
  • IHS Markit UK Household Finance Index for September was unchanged from August at 48.0.
  • Job security perceptions dipped further into negative territory, with the index sliding to 39.9, IHS Markit reports

10.45am: Pessimism reigns in British households

The IHS Markit UK Household Finance Index for September was unchanged from August at 48.0.

The index is intended to anticipate changing consumer behaviour accurately and it is one of those indices where a value below 50 indicates deterioration and a value above 50 indicates improvement.

"Pressure on household finances in the UK remained intense in September. The headline HFI figure was unchanged on the month and well below the 50.0 threshold, signalling another sharp deterioration in the financial situation of UK households.

"With just over a month to go until the end of the government furlough scheme, the survey measure of job security perceptions dipped further into negative territory, reflecting households unease about their jobs, whilst incomes from employment fell for the sixth month in a row,” said Lewis Cooper, an economist at IHS Markit.

"September data also signalled reductions in household spending, savings and cash availability, all of which highlight the crunch on finances at present. As a result, UK households were the most pessimistic since May with regards to their financial wellbeing in 12 months time.

"Given the latest figures and the recession the UK is facing during the pandemic, there is undoubtedly a long and uncertain road ahead for UK households to recover financially,” he added.

September IHS Markit #UK #Household Finance survey finds 18.7% of households expect next #BankofEngland move to be to cut #interest rates (20.9% in August). 53.2% expect a rate hike within a year (48.9% in Aug) while 66.8% expect a hike within 2 years (62.6% in Aug #interestrate https://t.co/aUjQ9xJpq3

— Howard Archer (@HowardArcherUK) September 21, 2020

The FTSE 100 was down 180 points (3.0%) at 5,827.

10.15am: Encouraging house price data overshadowed by lockdown fears

The latest Rightmove House Price Index indicated house prices rose 0.2% in September from August and were up 5.0% on September 2019.

“Increased competition for second-stepper homes has pushed prices to a record this month for those looking to take the next step up the ladder. Needing more space has always been the most popular reason for moving house, but now theres a new urgency for extra space to be able to work from home, which means that there are different sets of buyers competing for the same type of property,” said Tim Bannister, the director of property data at Rightmove.

“When comparing with last year, its remarkable that two regions have already caught up with and overtaken the number of sales agreed across the year so far, and if the market continues at its current pace then we could see all areas of England break even over the next month or so. We know that some people are now choosing to move out of London altogether, but these latest figures show that theres still plenty of activity in the outer areas of the capital. The market remains challenging in Zone 1, as the benefit of living within walking distance of an office in the City has dropped down buyers wishlists for now,” he added.

The FTSE 100 was down 191 points (3.2%) at 5,816.

9.40am: No nostalgia for March 23 lockdown spirit

Just four Footsie stocks are defying the trend as investors get a touch of the old March 23 lockdown revisited vibe.

Precious metals miner Fresnillo Plc (LON:FRES) is top of the pile, up 2.5% at 9,898.48p, despite gold and silver prices falling away this morning.

Also on the up are home delivery experts Just Eat Takeaway.com (LON:JET) and Ocado Group PLC (LON:OCDO), up 2.3% and 1% respectively.

The defensive allure of supermarkets means the grocers get off relatively lightly in todays big sell-off but only Tesco PLC (LON:TSCO), up 0.9%, is actually in credit.

The FTSE 100 is down 172 points (2.9%) at 5,836.

“In the UK, London's Mayor Khan is expected to request more wide-sweeping lockdown measures due to the Covid-19 curve moving in the wrong direction.

“Another worrying sign for the market is the UK's chief medical officer Chris Whitty and chief scientific officer Patrick Vallance will give a press conference at 1100 BST. The PM will not be there,” said Stephen Innes, the chief global market strategist at AxiCorp.

The scholarly PM – Prime Minister – is perhaps busy reading up on the reign of King Cnut and in particular his rebuke of fawning courtiers who overstated the extent of his executive powers.

Or perhaps not.

“The UK media widely reports that they will say that the country is heading in the wrong direction with the coronavirus. The press also notes that the government will this week consider whether and by how far to impose new national social distancing regulations,” Innes noted.

Can't wait for Chris Whitty to threaten to ground me

— Sarah Manavis (@sarahmanavis) September 21, 2020

The lockdown reprise is doing no favours to the share prices of British Airways owner International Consolidated Airlines Group SA (LON:IAG) and aeroplane engines maker Rolls-Royce Holdings PLC (LON:RR.).

IAG is down 12.1% at 2,195.83p and Rolls-Royce, which is expected to launch a big fund-raising soon, is off 9.8% at 3,478.69p.

Housebuilders are also getting the cold shoulder as a tightening of lockdown restrictions could nip the revival of the housing market in the bud.

Barratt Developments PLC (LON:BDEV), down 7.2% at 4,825.76p, and Persimmon PLC (LON:PSN), down 6.7% at 5,829.91p, are the hardest hit.

8.40am: Dire start on Monday

The FTSE 100 index saw wiped more than 100 points off in early trade on Monday amid second coronavirus (COVID-19) lockdown fear as Britain teeters on the brink of a return to national house arrest.

The index of UK blue-chips opened 103 points lower at 5,904.10.

Englands chief medical officer, Chris Whitty, via a televised briefing later Monday, is likely to say the country faces a “very challenging winter” with COVID-19 cases headed in the “wrong direction”.

The prime minister, Boris Johnson, meanwhile, is reported to be considering a two-week mini-lockdown in England in a bid to stem the spread of the virus.

“Prospects for a sharp economic recovery have all but disappeared, as global growth receives the new threat of a resurgent pandemic,” said Richard Hunter of Interactive Investor.

“In addition, with talks for a further fiscal stimulus in the US seemingly in deadlock, investors have been choosing to vote with their feet over recent trading sessions given the deteriorating outlook.”

HSBC (LON:HSBA) shares were marked 3.2% lower in early trade, following their drop to a 25-year low in Hong Kong amid money laundering allegations. Standard Chartered (LON:STAN), also named in a Consortium of Investigative Journalists report, fell by the same quantum.

Indeed, it appeared to be open season on the whole banking sector.

Leading the FTSE 100 fallers, however, was the now perennial laggard Rolls Royce (LON:RR.), whose fundraising efforts were revealed in the media over the weekend. The stock dropped 7.7% as it also caught a chill on potential further restrictions on international travel, which will hit its major customer base – the airlines.

As if to underline the point, British Airways owner IAG (LON:IAG) was off 4% in Rolls slipstream.

One of only a handful of risers, Informas (LON:INF) crash to a heavy loss possibly wasnt as dreadful as anticipated judging from the 3.2% jump in the share price of the events and exhibitions group.

In the results statement, chief executive Stephen Carter said that as well as the resilience in the specialist subscriptions, data and content, he was also encouraged by the recovery of Informas physical events business in China, whilst virtual events are “maintaining our brands, developing our digital services and enhancing our data capabilities”.

Among the second-liners, Cineworld (LON:CINE) was off 7.5% amid second lockdown worries.

Proactive news headlines:

[email protected] Capital PLC (LON:SYME) has unveiled the outline terms of a strategic inventory funding agreement for up to €8bn over five years with a new “captive bank”. The fintech group said it has entered into a strategic agreement with a leading European alternative investment firm and its shareholders, 1AF2 and The AvantGarde Group, to acquire the European bank. The objective of the deal is to support the growth of the [email protected] platform, investors were told.

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Adamas Fin Asia Ltd (LON:ADAM) has announced that further to the announcement on September 10, 2020, there has been a further delay in the receipt of the remaining subscription monies due under the placing. To date, approximately 60% of the committed subscription monies have been received by the company, with one placee's commitment remaining outstanding. The company said it is in contact with the placee and understands the delay is logistical only. Adamas is therefore expecting to receive these outstanding subscription monies shortly, and in any event by no later than September 30, 2020. The company said it will not extend the timetable past this date and should the outstanding subscription monies not be received by such date, it will take the necessary steps to close the open offer and placing forthwith. Consequently, the timing for the company's name change taking effect will occur as soon as practicable after the placing and open offer has been completed.

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