- FTSE 100 index adds 59 points
- US GDP data awaited
- IAG shares drop after Tuesday’s late update
- Eurozone sentiment drops at fastest pace ever
10.45am: Eurozone economic sentiment sees fastest drop ever
At around mid-morning, the FTSE 100 was slowly continuing it is ascent and was up 56 points at 6,018 shortly before 10.45am.
While things may be looking up for the market in London, across the Channel the picture was gloomier after the Eurozone recorded its fastest ever drop in economic sentiment in April.
The sentiment indicator for the bloc fell to 94.2 to 67, with analysts at ING saying the biggest concern was a “rapid decline in employment expectations for both industry and services”.
The bank also highlighted that hiring expectations were plummeting, a fact it said “does not bode well for the permanent fallout” of the pandemic.
“Prospects for the coming months are dismal despite announcements of cautious lockdown loosening”, they concluded.
The bleak forecast may make some traders nervous ahead of the US GDP data later today, which is also expected to report a sharp drop in output from the world’s largest economy.
9.50am: FTSE 100 passes 6,000 point mark
The FTSE 100 passed the 6,000 point mark at around 9.40am, adding 45 points to 6,003 as the morning session progressed.
The milestone is significant in the market recovery as it means the blue-chip index has managed to claw back all of its losses since the pandemic-inspired crash on 12 March, the worst day for the market since 1987.
AJ Bell’s Russ Mould provided some credit for the rise to Barclays PLC (LON:BARC), which rose 5.4% to 103p in early deals as the bumper performance form its investment banking arm helped overshadow some of the damage caused by a £2.1bn charge in anticipation of coronavirus loan losses.
”Although Barclays has attracted flak for its commitment to investment banking, this part of the business is actually performing well at a time when the retail bank is facing a significant increase in bad debts”, Mould said.
However, he added that the multi-billion pound provision reflected “the fragility of the UK economy amid the lockdown”.
8.45am: Surfeit of news to digest
The FTSE 100 made a quiet, but positive start to proceedings on Wednesday with traders keeping their powder dry ahead of US GDP numbers and the Fed’s monthly meeting later.
The index of UK blue-chips nudged just 21 points higher to 5,979.66.
The former is expected to be the more informative of the two events with the world’s largest economy expected to have shrunk by 4% in the first quarter. The true carnage from the coronavirus lockdown will be revealed three months from now.
While the Federal Reserve is meeting for the first time since its emergency rate, it is unlikely the central bank will deliver any telling insights or indeed additional financial help when its members gather.
British Airways owner IAG (LON:IAG) saw 7% wiped from its value after it told the market it will take “years” to recover from the coronavirus lockdown and announced plans to cut up to 12,000 jobs.
“Even without the sudden shutdown of the travel industry in the last month, the last two years have been a struggle for airlines and the wider sector, with multiple businesses failing, including Monarch Thomas Cook, and more recently FlyBe,” said Michael Hewson of CMC Markets.
“Apart from problems with overcapacity, the industry has had to contend with two high profile crashes of the Boeing 737 MAX, which caused that plane to be grounded indefinitely and increased the costs of a number of the airlines who used the plane and had to lease replacement aircraft to fill the gap
“Having grounded planes and furloughed staff in the face of the COVID-19 tsunami coming their way the industry is now set for another change and challenge.”
Proactive news headlines:
Power Metal Resources Plc (LON:POW) and Red Rock Resources PLC (LON:RRR) have begun a new joint venture partnership with the aim of building a strategic gold exploration portfolio in Australia. It sees Power taking a 49.9% interest in Red Rock Australasia, which as a joint venture vehicle will be renamed. This vehicle has now already applied for exploration license area EL007271, with Power covering the application fees (£1,125). This asset is being referred to as the ‘Blue Whale’ project. The area spans some 130 square kilometres in the south-western portion of the Victoria Goldfields.
Argo Blockchain PLC (LON:ARB) has reported an eleven-fold increase in revenues for 2019 following a 306% increase in its cryptocurrency mining capacity. For the year ended December 31, 2019, the firm said that its operating loss had been reduced by 80% to £830,000 as its revenues rose to £8.62mln from £760,000 in 2018. The company also said it had mined around 1,330 Bitcoin (BTC) over the course of the year, while it had ended the period with 7,000 pieces of mining hardware which had increased to 17,000 in the first quarter of 2020.
Condor Gold PLC (LON:CNR) (TSE:COG) has landed an environmental permit for the development and exploitation of gold in the high-grade Mestiza open pit project, in Nicaragua. The pit project is host to more than 100,000 ounces of contained gold resources and it is described as complementary to the company’s flagship La India mine, also in Nicaragua.”It is a significant development, after a 15-month process, that Condor has been granted the key environmental permit to develop and exploit gold from the high-grade Mestiza open pit,” Mark Child, Condor chief executive said in a statement.
Caledonia Mining Corporation PLC (LON:CMCL) (TSE:CAL) has declared a quarterly dividend of US$0.07 per share after having deferred the payment at the start of April. However, since then, the AIM-listed firm said, it has been “encouraged” by continued operations at its Blanket mine and the re-opening of important supply lines. The company said Blanket’s supply chain of consumables and spares parts was now “close to normal” and the mine was re-establishing full production after having operated at 93% of capacity during lockdown in Zimbabwe.
Falcon Oil & Gas Ltd (LON:FOG) highlighted its strong financial position as it released its results for the twelve months ended December 31, 2019. The exploration company noted that it had US$13.1mln of cash at the end of 2019 and it was debt-free. Its position was further strengthened recently by a new additional farm-out transaction with Beetaloo partner Origin Energy, which secured funding cover for an expanded phase of work. In the financial results, Falcon emphasised its continued focus on strict cost management. It also noted that general and administrative expenses decreased 7% year-on-year, to US$1.78mln.
Kavango Resources PLC (LON:KAV), the exploration company targeting the discovery of world-class mineral deposits in Botswana, has announced the publication of a new independent technical review on the exploration potential of its Kalahari Suture Zone (KSZ) Project. The group said the review concludes that the KSZ “is a prime setting for a magmatic Nickel-Copper-PGM deposit.” Kavango is searching for ‘Norilsk-Style’ deposits in the KSZ. The review has been completed by Dr David Holwell, of D&D Geoconsultants using a Mineral Systems Approach. Dr Holwell is a leading authority on the development of Copper-Nickel-Platinum Group Metals (PGM) sulphide deposits associated with magmatic systems.
Honye Financial Services Ltd (LON:HOYE), the standard market listed company, said it continues to review possible acquisitions and hopes to identify a sufficiently attractive one in the coming months as it released half-year results. It said: “There is light at the end of the tunnel as we see China beginning to return to normal after several months and there are tentative steps in Italy, Austria and Denmark to slowly lift restrictions allowing people to return to work.” Honye’s losses for the half-year to end January were £161,000, while the company had net cash of £1.7mln at the end of the period.
Pembridge Resources PLC (LON:PERE) has announced the first shipment to Japan of copper concentrate from the Minto mine in Yukon Canada has now left the port of Skagway. In a statement, the group said that the news is a major landmark since the re-opening of the Minto mine last year, with the copper concentrate shipment representing mine’s production since re-opening until the end of March. Gati Al-Jebouri, Pembridge’s chief executive officer and chairman said: “This is an important event for the Minto mine, both commercially and symbolically.
Braveheart Investment Group PLC (LON:BRH) has raised £275,000 via a share placing to inject more capital into its strategic investments. The company said it had raised the funds through the placing of around 1.6mln new shares at a price of 17p each, a 24% discount to its closing price on Tuesday. Braveheart said the new funds will allow it to “continue to provide additional financial investment” into its portfolio firms, namely Paraytec, Pharm 2 Farm, Kirkstall, Gyrometric Systems, Phasefocus Holdings and Sentinel Medical.
C4X Discovery Holdings PLC (LON:C4XD) hailed a productive six months as it exited the first half in a strong financial position. Posting interim result, the group said its closely-watched NRF-2 activator programme for sickle cell disease and pulmonary arterial hypertension is “progressing” and it is down to a short-list of three molecules. Discussions with potential partners have persuaded the company to enhance its supporting data, it added.
Zoetic International PLC (LON:ZOE) has appointed Trevor Taylor and Antonio Russo as its co-chief executives as the group re-affirmed its commitment to exit natural resources and focus on its cannabidiol (CBD) business. The company said Taylor and Russo, who previously served as its chief strategy officer and chief revenue officer respectively, were “instrumental” to the success of its US CBD business and that it was “an appropriate time to implement these changes to the management structure”. Meanwhile, the company’s CEO Nick Tulloch and chairman Paul Mendell have both resigned, although Tulloch will continue to partner with Zoetic by leading a new joint venture in the UK. In a trading update, Zoetic also said it had received approval for loans from the US government totalling US$290,000 and expected to receive the funds this week. The company has also received a UK government grant of £10,000.
6.40am: Positive start predicted
The FTSE 100 is expected to start higher on Wednesday as markets nervously await the latest gross domestic product (GDP) data from the US.
Spread-better IG expects the FTSE 100 to open around 38 points higher after ending Tuesday’s session up 111 points at 5,958.
While market sentiment has been stabilised somewhat thanks to trillions in stimulus from central banks around the world, economic data reflecting the true impact of the coronavirus pandemic on the economy threatens to put a dent in risk appetite.
The US GDP figure for the first quarter will provide an indication of what is to come, however, even this may underestimate a much worse figure expected for the second quarter. Forecasts are for a first quarter decline of around 4%, almost entirely due to the slowdown in March.
The data will also be taken into account as the Federal Reserve prepares to meet for the first time since its emergency interest rate cuts last month, although the scheduled meeting is not expected to provide any major announcements with the outlook likely to receive the most attention.
US markets ended their session lower overnight, with the Dow Jones Industrial Average closing down 0.13% at 24,101 while the S&P 500 was 0.52% lower at 2,863 and the Nasdaq Composite fell 1.4% to 8,607.
Market sentiment in the US may have been dampened by warnings on Tuesday from Anthony Fauci, a top White House health advisor, that reopening US states too early could lead to worse impacts without effective treatment, while other investors are likely to be keeping one eye on the continuing turmoil in the oil markets.
Asian markets were more positive today as traders awaited the news from the Fed, with Hong Kong’s Hang Seng rising 0.17%. The Japanese Nikkei 225 is closed for a holiday.
On currency markets, the pound was up 0.45% at US$1.2478 against the dollar, with the economic data due later potentially providing some catalysts for movement.
Significant announcements expected on Wednesday:
Fed interest rate decision
Trading announcements: Barclays PLC (LON:BARC), Standard Chartered PLC (LON:STAN), AstraZeneca PLC (LON:AZN), GlaxoSmithKline PLC (LON:GSK), Next PLC (LON:NXT), WPP PLC (LON:WPP), Elementis plc (LON:ELM), Fresnillo Plc (LON:FRES), Synthomer PLC (LON:SYNT)
Economic data: US GDP
Around the markets:
- Sterling: US$1.2478, up 0.45%
- Brent crude: US$21.20 a barrel, up 3.6%
- Gold: US$1,712.96 an ounce, up 0.39%
- Bitcoin: US$7,872.34, up 2.2%
- British Airways is to slash nearly 30% of its 42,000 workforce as the coronavirus crisis wreaks more damage on the battered aviation sector – Financial Times
- Senior management at John Lewis have started discussions on which department stores should not reopen once lockdown ends – Telegraph
- Lufthansa is preparing to file for bankruptcy as talks intensify over an €8 billion German government rescue – Telegraph
- The British Property Federation, Britain’s biggest lobby group for property companies, is in talks with the Treasury to secure support for landlords facing billions of pounds in lost or deferred rents – Times
- Google revealed that its internet search business stabilised in April after a sharp downturn at the end of last month and has seen the first signs of a recovery, lifting its shares by around 8 per cent in after-market trading on Tuesday – FT
- Britain’s economy is likely to lose out on £800bn of income over the next 10 years as the lockdown and a spike in unemployment leave deep scars on the private sector – Guardian
Published at Wed, 29 Apr 2020 09:46:00 +0000-FTSE 100 slowly rises; Eurozone economic sentiment sees fastest drop ever