FTSE 100 weighed down by sterling’s strength; US markets abandon early momentum
- FTSE 100 index slides 34 points
- Sterling soars against the US dollar
- Gove turning his focus to preparing for a "no-deal" Brexit
5pm: FTSE 100 closes lower
London's leading index ended Monday down nearly 35 points, 0.6%, at 5,884.6. The FTSE 250, on the other hand, closed 43 points higher, a gain of 0.2%, at 17,866.1.
The struggles for the FTSE 100 were rooted in part in a strengthening pound.
"On the FTSE 100, Reckitt Benckiser, Unilever, British American Tobacco, Diageo and GlaxoSmithKline are some of the biggest fallers in terms of index points," CMC Markets UK analyst David Madden wrote. "The groups all derive a relatively large portion of their revenue from outside of the UK, so a move higher in sterling typically weights on those stocks."
In the US, the major indices tumbled into the red despite a positive start. The Dow, which gained more than 100 points early on, was down 84 points, 0.3%, just after noon ET. The Nasdaq dropped 22 points, 0.2% to 11,649, and the S&P 500 slipped 10 points, 0.3%, to 3,473.
"The S&P 500 and the NASDAQ 100 are fractionally lower as trading is lacklustre," Madden wrote. "There has been more major news with respect to the proposed stimulus package and it has been a quiet session in terms of economic announcements. Traders seem to be sitting on their hands for now."
House Speaker Nancy Pelosi's office announced this weekend that she is giving the Trump administration 48 hours to reach a deal on a coronavirus relief package after speaking with Treasury Secretary Steven Mnuchin on Saturday, according to CNBC.
“The 48 only relates to if we want to get it done before the election, which we do,” Pelosi said.
4pm: Gove briefs MP on progress (or lack thereof) in Brexit talks
Sterling’s strength hung over blue-chip equities like a black cloud all day, despite further signs that a Brexit deal is not nailed on.
Michael Gove, the Cabinet Office minister, has briefed MPs on how the negotiations on Britain’s exit from the European Union are progressing.
Surely Betty will succumb to these headlines #Brexit : UK MINISTER GOVE SAYS THERE IS NO BASIS TO FIND AN AGREEMENT
SAYS TRADE NEGS ARE IN EFFECT ENDED
SAYS THE EU REFUSED TO DISCUSS LEGAL TEXTS IN ANY AREA
EU HAS TO BE SERIOUS ABOUT TALKING INTENSIVELY
— Neil Wilson (@marketsneil) October 19, 2020
SPOILER ALERT: it’s not looking good.
According to Gove, the EU has refused to step up the pace of negotiations and noted that EU leaders excised a line from their recent communique about the need to intensify the talks.
The EU is waiting for Britain to blink and Britain is waiting for the EU to do likewise; as a precaution, Gove is focusing on preparing for a “no deal” Brexit.
There’s 10 weeks left for a deal to be finalised and Gove said the UK is still keen to get some deal done. Forex traders appear to be taking him at his word, chasing sterling up to US$1.30, up 0.85 cents on the day.
The FTSE 100, no fan of a strong exchange rate because so many of its constituents rely heavily on sales in US dollars, was down 20 points (0.4%) at 5,895.
3.25pm: Proactive North America headlines:
Matinas BioPharma's Holdings Inc (NYSEAMERICAN:MTNB) cryptococcal meningitis trial of MAT2203 gets approval from oversight board after first cohort
XPhyto Therapeutics Corp (CSE:XPHY) (OTCQB:XPHYF) German subsidiary Vektor Pharma builds oral disintegrating film formulation for big European client
Loop Insights Inc (CVE:MTRX) (OCTMKTS:RACMF) in partnership with Empower Clinics to provide an end-to-end COVID-19 mitigation solution
3.15pm: Early enthusiasm wanes across the pond
As expected, US indices opened higher but early enthusiasm did not last.
The Dow Jones industrial average even fell into the red, sliding 32 points to 28,574 while the S&P 500 was up a quarter of a point at 4,484.
Even the mighty NASDAQ Composite was struggling to stay in positive territory and was little changed.
“S&P 500 earnings in Q3 have so far been better than expected with the technology sector showing almost 10% earnings growth from a year ago. Our view remains positive on Q3 earnings, but there will likely be hiccups here and there in some of the most hyped stocks. Both Netflix and Tesla reporting earnings this week are part of the 'US technology trade' this year and expectations are extremely [high] for those two companies to deliver,” noted Peter Garnry at Saxo bank.
In London, the FTSE 100 was off 33 points (0.6%) at 5,887.
Property giants British Land Company PLC (LON:BLND) and Land Securities Group PLC (LON:LAND) were among those defying the weaker trend, with the former rising 1.7% to 363.2p and the latter advancing 1.0% to 530.6.
Land Securities held a capital markets day today in which the senior managers laid out the future strategic direction for the company.
The presentation was entitled “Positioning Landsec for growth”, which is certainly a more upbeat title than “Positioning Landsec for survival”.
2.45pm: US stocks open higher
US benchmarks started Monday higher as investor sentiment was buoyed due to an agreed stimulus package from Washington to help ease the coronavirus blow coming increasingly into view.
The Dow Jones Industrial Average added over 70 points at 28,677. The broader S&P 500 added around 17 at 3,500. The tech-laden Nasdaq exchange bounced up over 93 points at 11,763.
Over in London, the mood was less upbeat. The FTSE 100 dropped nearly 28 points at 3,891 in the middle of the afternoon session.
House Speaker Nancy Pelosi and Treasury secretary Steven Mnuchin are expected to hold more talks today after the former said on Saturday that the White House had just 48 hours to strike a deal with the Democrats that could pass before Election Day on November 3.
In election news, early voting in the key state of Wisconsin starts tomorrow, among other states. In-person voting begins today in Florida, Alaska, Arkansas, Colorado, Idaho and North Dakota.
Democrat Joe Biden’s national lead has fallen to 8.9 points, whilst in the battlegrounds Trump has reportedly narrowed his trail to 4.3 points.
2.00pm: Sterling rises by four-fifths of a cent
The strength of sterling continues to dampen enthusiasm for equities.
The pound was up nine-tenths of a cent at US$1.3001, with forex traders covering their bets in case the prime minister does the unthinkable and agrees to a Brexit deal with the EU.
Holger Schmieding at Berenberg said both sides would like a deal but both want the other side to yield first.
“We see a 30% probability that the EU and the UK may still strike a deal that will continue to [give] both sides privileged access to the markets of the other side after the end of the transition period on 31 December 2020. Despite the current stalemate, the risk to the 30% probability is tilted slightly to the upside,” Schmieding said.
“In the absence of a deal, both sides would probably take significant joint or unilateral steps to soften the immediate shock of a hard Brexit (50% probability). That leaves a 20% tail risk of a hard Brexit without such mitigating steps to soften the blow. In such a case, the disruptions to the UK economy could be significant.” the economist said.
OANDA’s Craig Erlam said it is no surprise that the negotiation are “going to the wire”.
“Both sides are of the belief that the other isn't doing enough, an expected outcome at this stage and one that will likely be resolved in the coming weeks at the last possible moment. To fail to reach an agreement because of something as small as fishing would be outrageous,” Erlam suggested.
“We have to look past all the games that are being played and that includes the Internal Market Bill, a clear attempt to put a little extra pressure on Brussels that has little chance of becoming law without changes being made. The Lords will surely debate and make changes this week, paving the way for talks to continue and a deal eventually reached. Sterling traders clearly share my optimism, although that leaves quite a horrific void below if we're all proven wrong,” he added.
If playing the forex markets is proving tooooooooooo risky, there is always gold, which is having a good day, rising US$9.30 (0.5%) to US$1,915.70 an ounce.
The FTSE 100 was down 32 (0.6%) at 5,887.
12.30pm: Sterling regains its mojo; US indices to rise on stimulus programme optimism
Hopes that the setting of a 48-hour deadline for finalisation of a fiscal stimulus package will get the job done are boosting US sentiment.
Spread betting quotes suggest the Dow Jones will race 255 points higher at the outset to 28,749 while the S&P 500 is set to open 18 points higher at 3,501.
The tech-heavy NASDAQ Composite is seen rising 218 points to 11,935.
“The proposed US coronavirus relief package remains in focus. Nancy Pelosi, of the Democrats, said that she is optimistic about a deal being struck before the US presidential election, but there was an acknowledgement that differences still exist,” said CMC’s David Madden.
“Some people are less convinced that an agreement can be reached … by tomorrow – the deadline that Pelosi set out. It would seem that traders are taking the view that where there is a will there is a way attitude as the political landscape isn’t looking too great but US index futures are higher,” he added.
Traders are also drawing encouragement from Chinese data this morning, which while mixed, had some positive aspects that they were quick to spot.
“China’s third-quarter GDP growth figures were slightly below expectations, but the broad picture shows the key importance of virus containment as the dominant driver of recovery. Compared to the developed world, China’s growth has bounced back stronger and quicker – today’s print confirms that – without the kind of kitchen sink policy support unleashed in developed market countries as lockdowns came online in March,” said Fidelity International's Salman Ahmed.
“High-frequency data shows that China’s economic recovery is still strong and the bounce back from golden week is also starting to show in the data. According to the IMF, China is likely to be the only country to register positive growth in 2020 and is projected to deliver more than 8% growth in 2021,2 he added.
On the corporate front, traders are ruminating over third-quarter figures from oilfield support services giant Halliburton.
Senate returns today at 4:30pm but no votes will take place until tomorrow on PPP bill and Senate GOP $500B COVID-19 relief bill on Wednesday. McConnell plans for the Senate to take up Supreme Court nomination of Amy Coney Barrett Friday, the day after Senate Judiciary Cmte vote.
— Craig Caplan (@CraigCaplan) October 19, 2020
The adjusted earnings per share, at 11 cents, were three cents higher than analysts had expected but revenue of US$2.98bn was down 46% year-on-year and was below the consensus forecast of US$3.09bn.
In London, the mood remained sombre, with the FTSE 100 down 9 points at 5,911, as sterling regained its virility on foreign exchange markets on weekend reports that a Brexit compromise may yet be thrashed out. Sterling was four-fifths of a cent firmer against the greenback at US$1.30.
11.35am: Little sign of recovery in householders' optimism
The IHS Markit UK Household Finance Index for October was unchanged from September at 40.8.
The index measures respondents’ perceptions of financial well-being and is one of those indices where a value below 50 indicates things are getting worse, so the October reading was another grim one.
"October survey data provide little good news, with household finances remaining under severe strain. The overall rate of deterioration did not worsen on the month, but was still sharp overall,” said Lewis Cooper, an economist at IHS Markit.
"Households reported a fall in the availability of cash, a quicker reduction in their spending, further use of savings and increased demand for unsecured credit, all of which highlight the hardship facing some UK households at present. This again resulted in pessimism with regards to financial wellbeing in 12 months’ time.
"With new COVID-19 related restrictions introduced, job security perceptions remained negative and incomes from employment fell again in October. Moreover, the measures are likely to have a severely negative impact on household finances, and as such, hopes of a recovery will be on hold until the pandemic is under control and restrictions loosened,” he added.
IHS Markit's UK Household Finance Index (HFI) for October is worth a look. It's mostly bad news, but – despite the grim headlines – people's perceptions of their #job security did at least continue to recover from April's low…https://t.co/Uzp1nSFQbj pic.twitter.com/9S4LDsbPu2
— Julian Jessop (@julianHjessop) October 19, 2020
The FTSE 100 was down 9 points at 5,910.
11.00am: An ocean of calm
Trading on Euronext exchange has halted because of a technical glitch and you might be forgiven for thinking the same things has happened in London.
The FTSE 100 is up 6 points (0.1%) at 5,925 and remains on a short leash tethered to Friday’s closing value.
There has been little news flow from the top-tier [Don’t mention tiers! – Dastardly Dom] companies. Drugs giant AstraZeneca has popped out a couple of announcements but as neither of them are about a coronavirus vaccine, the market has not shown much interest.
AstraZeneca’s Trixeo Aerosphere has been recommended for marketing authorisation in the European Union for maintenance treatment in adult patients with moderate to severe chronic obstructive pulmonary disease.
The Committee for Medicinal Products for Human Use also gave an indication extension to Forxiga of its marketing authorisation in the European Union for the treatment of symptomatic chronic heart failure with reduced ejection fraction in adults with and without type-2 diabetes.
The shares were up 0.2% at 8,236p.
VG news @CommonsEAC doing follow up inquiry. Hope they bring @boohoo back to question & call in shareholders @JupiterAM_UK @InvescoEMEA & @BaillieGifford whose response to findings of Levitt review makes mockery of their claims to champion Environmental Social & Governance #ESG https://t.co/cpL7G44Dcx
— Liz Kendall (@leicesterliz) October 6, 2020
9.40am: The starter's pistol was fired but did anyone hear it?
Most of us appreciate a gentle start to the working week and that’s what the stock market is giving traders.
The FTSE 100 was up 4 points (0.1%) at 5,923, helped by some half-decent economic data from China.
The Chinese economy grew by 4.9% in the third quarter, which was an improvement on the previous quarter’s growth of 3.2% but below the 5.5% rise that was forecast.
“Any ill-feeling was tempered by improving industrial production and unemployment rate numbers, and, crucially, a far better than expected retail sales reading. That metric – which, after the GDP gross domestic product] figure, is the most important for investors – surged from 0.5% in August to 3.3% in September, marking the second positive reading in a row,” noted Connor Campbell at Spreadex.
Across the pond, the Speaker of the House of Representatives, Nancy Pelosi, has set Tuesday evening as a deadline to reach a coronavirus stimulus deal ahead of the presidential election.
“While the odds are still slim, market participants are reacting positively to every progress made as time is running out to maintain the momentum of the economic recovery,” Milan Cutkovic at Axi.
“Investors will need strong nerves in the coming days and weeks. Fears about the consequences of a second corona wave, Brexit uncertainties and the upcoming elections in the United States will guarantee a continuation of the stock market´s roller-coaster ride,” Cutkovic said.
8.50am: Better than expected start for Footsie
The FTSE 100 got off to a slightly better than anticipated start to proceedings on Monday amid coronavirus (COVID-19) vaccine hopes and data showing a resilient economic performance from China.
The index of UK blue-chip shares opened 25 points higher at 5,944.45.
Keeping the lid on any further exuberance at the start of the trading week, however, were Brexit negotiations, which have an impending train wreck feel to them.
Any sniff of a COVID-19 inoculation, such as the one seen over the weekend as Pfizer said it was ready to file for regulatory sign-off for its coronavirus prophylactic, seems to have an immediate impact on travel-related stocks.
Flying high early on Monday was British Airways owner IAG (LON:IAG), which gained 2%.
Rolls Royce (LON:RR.), which maintains jet engines for fleets of the world’s airlines, jumped a further 4%.
That said, much of the recent Lazarus-like revival of Rolls, which has doubled in value since its low at the start of October, has been put down to short covering.
On the debit side, traders appeared to be calling the end to the recent run for Just Eat (LON:JET), up 15% in the last month, as the stock was marked down 1.3%.
On the FTSE 250, IWG (LON:IWG), the office group formerly known as Regus, was ahead 6.9% after an upgrade to ‘buy’ from Berenberg.
Proactive news headlines:
Landore Resources Ltd (LON:LND) has begun an autumn-winter drilling programme on the BAM gold deposit in Ontario, Canada. The company will drill 14,000 metres aimed at further infilling and extending the defined resource of 1,015,000 ounces of gold, and to test the depth potential of the previously delineated mineralisation.
Symphony Environmental Technologies PLC (AIM: SYM) said the largest baker in Turkey, Uno Bakery, has launched a biodegradable packaging programme using Symphony’s d2w technology. Uno is the first major bakery in Turkey to upgrade most of its packaging with d2w biodegradable technology, Symphony said. The collaboration follows a similar partnership the company has with the largest bakery in Mexico. Packaging made with d2w can be recycled if facilities are available, but if it escapes collection and ends up in the environment as litter, it will degrade and biodegrade in a continuous, irreversible and unstoppable process, in the same way as nature's wastes and much faster than regular plastic, the biodegradable plastic specialist noted.
Shield Therapeutics PLC (LON:STX) has confirmed that the generics giant Teva Pharmaceutical Industries has withdrawn its patent challenge, which had gone to the appeal stage. The company said this means European Patent No.2668175, which covers the "process for preparing an iron hydroxypyrone" has become final and that the patent will be maintained as amended on March 14 last year. Additionally, Teva's ending of its opposition to European Patent No.3160951 ("crystalline forms of ferric maltol") means the patent is maintained as granted, providing protection out to October 2035.
Ceres Power Holdings PLC (LON:CWR) has agreed an expanded collaboration with South Korean group Doosan which gains the licence to manufacture Ceres' proprietary solid oxide fuel cell stacks. Doosan plans to build a manufacturing facility with an initial 50MW capacity by 2024. It is worth £36mln to Ceres over 3 years, plus a further £7mln potentially due subject to key performance indicators (KPIs). This income precedes longer term royalties on the sale of fuel cell stacks.
IXICO PLC (LON:IXI), the artificial intelligence-driven data analytics company focused on neuroscience, has racked up its fourth consecutive year of strong top-line growth, seeing underlying earnings double. In a trading update for the year to the end of September 2020, the group said revenue rose by 26% to £9.5mln, up from £7.6mln the year before, signifying the fourth year in a row that revenue had increased by more than 25% year-on-year. Earnings before interest, tax, depreciation, and amortisation (EBITDA) more than doubled to achieve at least market expectations of £1.1mln (2019: £0.5mln), the firm said. In a separate announcement, the company revealed that Dr Robin Wolz, its senior vice president of Science & Innovation will present on the industry panel at the virtual SCA & ARCA Global Conference, taking place on October 19-21, 2020.
Amryt Pharma PLC (LON:AMYT) (NASDAQ:AMYT) said it has signed a distribution deal for Lojuxta covering 17 countries in central and eastern Europe (CEE). Swixx BioPharma, which also has the exclusive contract for Amryt’s Myalepta, will start deliveries later this month. Lojuxta, also known as lomitapide, has been developed to treat adults with a rare cholesterol disorder.
IQGeo Group Plc (LON:IQG) has secured a major contract extension with a large utility network operator in the USA. The company will continue to provide the client with software licenses and services. It has been using IQGeo's Inspection & Survey application for gas leak detection in its utility networks. The new contract also includes meter surveys and increases the number of divisions deploying IQGeo technology. The value is anticipated at US$600,000.
Advanced Oncotherapy PLC (LON:AVO), the developer of proton therapy systems for cancer treatment, is to set out its stall at an investor event on Monday. The company’s management team will discuss the broader market potential for proton therapy and outline how Advanced Oncotherapy’s LIGHT system could accelerate the adoption of proton therapy as a treatment modality for several different cancer indications. The team will also discuss how the LIGHT system can potentially be adapted for FLASH delivery of protons, an emerging mode of proton therapy treatment that uses ultra-high dose rates.
BlueRock Diamonds PLC (LON:BRD) said it has sold 2,900 carats at an average price of US$300 per carat. The aggregate consideration amounted to just over US$870,000. The production comes from the company’s Kareevlei diamond mine in the Kimberley region of South Africa.
88 Energy Ltd (LON:88E) told investors it has increased its stake in the area including and surrounding the previously Charlie-1 well in Alaska to 75% from 30%. The 'Area A' comprises around 40% of the gross Project Icewine acreage. A new independent resource estimate for this area is anticipated in the coming weeks. It is planned that a new farm-out process will follow the release of the report.
Coinsilium Group Limited (AQSE:COIN) has told investors that its shares begin cross-trading publicly on the OTCQB Venture Market (OTCQB) in the United States on Monday. The shares will trade under the ticker symbol ‘CINGF’. Previously, they were quoted on the OTC’s Pink Open Markets but the group said the upgrade to OTCQB provides greater access to new and materially larger pool of prospective US investors.
Europa Metals Ltd (LON:EUZ) has been awarded a €466,801.50 grant by the Centre for the Development of Industrial Technology, a Spanish government entity operating under the umbrella of the Ministry of Science and Innovation. The grant is for use towards research and development at the Europa’s wholly-owned Toral lead, zinc and silver project in the region of Castilla y León, north-west Spain. The grant is categorised as a partly refundable loan with a nil per cent interest rate.
Shanta Gold Ltd (LON:SHG) said it produced 19,973 ounces of gold from its New Luika mine in Tanzania during the third quarter of 2020. That, in turn, generated underlying earnings (EBITDA) of US$22.5mln, with all-in sustaining costs (AISC) at US$883 per ounce, the group added. The company closed out the period with net debt of US$5.1mln, following a US$7.8mln cash payment related to the acquisition of the new West Kenya project.
Afarak Group PLC (LON:AFRK) said that overall production of speciality alloys and ferroalloys during the third quarter of 2020 dropped by 60.1% when compared to the same quarter of the prior year. Speciality alloys production dropped by 31% to 17,411 tonnes, while ferroalloys production dropped by nearly 70% to 23,325 tonnes, it added. Reduced mining activity in the South African mines resulted in significant lower mining volumes as the company focused on the protection of staff during the coronavirus pandemic.