- FTSE 100 in red
- SSE leads the retreat, down 4.81%
- Wall Street seeing green
5.25pm: Footsie closes lower
FTSE 100 index failed to make a positive finish on Tuesday despite being in the green earlier as global stock markets attempted to bounce back, with some succeeding.
On what was a volatile trading day, Britain's blue-chip benchmark closed down around five points at 5,960. Sterling was down 1.36% against the US dollar.
It comes as the UK budget, the first under new chancellor Rishi Sunak, is due tomorrow.
The midcap FTSE 250 was also higher, up nearly 60 at 17,607.
In Europe, markets fell as coronavirus fears escalate with all of Italy now on lock-down. The German DAX and French CAC 40 shed 149 points and 71 points respectively.
"A big loser from today’s session has been sterling, retreating against the US dollar and the euro too. Tomorrow’s Budget also risks disappointing investors expecting a blockbuster response to the crisis, even if the Bank of England makes a surprise move on rates at the same time," noted Chris Beauchamp, chief market analyst at IG.
"And with no apparent change to the Brexit timetable, it looks like the UK will be juggling a virus response while also trying to ramp up preparations for a possible no-deal by year-end. The clouds over UK assets which appeared to clear after the election are returning, and look darker than before."
On Wall Street, the Dow Jones added 266 points at 21,117, while the broader-based S&P 500 added around 36 at 2,783.
Yale professor and Nobel Prize winning economist Robert Shiller was quoted earlier as talking about two epidemics currently - one of coronavirus and one of a narrative of fear, which all adds up to a dangerous time for markets.
"It’s a dangerous epidemic and the epidemic of fear that accompanies it is dangerous also," he said.
3.30pm: FTSE 100 in red
Well, so much for the dead cat bounce … the FTSE 100 is now 22 points in the red at 5,944.
Across the pond, the Dow Jones has given up a 945 point gain and is now also in the red.
What the hell happened. The #DowJones was green an hour ago. Now its red..who said what????????— katherine dillingerk (@KDillingerk) March 10, 2020
“With the whiff of a springy rotting feline seeping into trading rooms, the European markets completely erased their gains on Tuesday,” said Connor Campbell at Spreadex.
“At the very start of the day investors seemed unsure whether to buy into the rebound, the European indices struggling to settle into a groove.
“That did come, however, and with hopes that Trump is preparing a major economic relief strategy – if it can get through Congress – the likes of the FTSE and DAX were soon up close to 3% apiece.
“Now the UK index finds itself nearing 5950 after slipping 0.6%, with its German counterpart shedding another 1.3%, forcing it the wrong side of 10,550,” he added.
2.00pm: Rally fading
As expected, US benchmarks opened sharply higher, although they clawed back only a fraction of yesterday's humungous losses.
The Dow Jones industrial average was up 733 points (3.1%) at 24,585 while the S&P 500 was 83 points to the good (3.0%) at 2,829.
On this side of the Atlantic, the FTSE 100 is slowly deflating like a post-party balloon; it is currently up 120 points (2.0%) at 6,085, despite sterling being down by almost a cent against the greenback at US$1.3027.
“Oil held gains despite no signs of détente between Saudi Arabia and Russia, as crude traders ignored the war drums. Aramco said it would up output in April to 12.3mln bpd [barrels per day], from 9.7mln in March. This is a huge surplus for the market, but it’s not really a surprise given the moves over the weekend with price cuts and the OPEC+ breakdown,” commented Neil Wilson at markets.com.
“Iraq has also said it is offering discounts to European and US buyers of crude. Yet Brent has firmed up above US$37 and WTI [West Texas Intermediate] is solid above US$34,” he noted.
“Russian officials have been on the wires today talking about possible OPEC+ meetings taking place in May-June, but neither Moscow nor Riyadh is really showing signs of blinking just yet. The Saudis say there is no ‘wisdom’ in an OPEC+ meeting in May or June,” Wilson said.
*U.S. SUSPENDS UPCOMING SALE OF CRUDE FROM STRATEGIC RESERVE— Catherine Traywick (@ctraywick) March 10, 2020
12.35pm: Slow retreat from day's highs
After yesterday’s massive 2,000 point fall, the Dow Jones index is expected to claw back around 900 points of those losses this afternoon.
Spread betting quotes suggest the Dow will clock in at 24,750 while the S&P 500, which yesterday crashed 226 points, will rise about 103 points to open at 2,850.
“European markets have extended gains through the session, while US futures are strong ahead of the open,” reported Neil Wilson at markets.com.
“Crude prices have rallied 9% and the wave of relief is being felt across markets. As per the earlier note, these gains appear shaky, albeit there is a clear sense that the capitulation yesterday was by its very nature rather extreme and produced strongly oversold conditions ripe for a rebound,” he continued.
“Question is do we pick this up and run with it, or does the situation on the ground with the coronavirus outbreak deteriorate further and further spook traders. The capitulation of Monday does suggest we are approaching a bottom, the hard part is picking the moment. A massive dose of stimulus is being administered by governments globally, which treats the symptoms but not the disease,” he added.
Johan Javeus, the chief strategist at Nordic investment bank SEB, is also wondering whether yesterday’s fall was an overreaction.
“It all comes down to how widespread the virus will become and how long it will take to reach peak infections in large key economies (i.e. the EU and US). Even assuming a benign scenario, this will most likely take several more weeks to clarify and during that time central banks and governments around the world will try to find all means possible to add stimulus to the economy,” Javeus said.
“In this respect it’s important to remember that this stimulus will for the most part still be around after the virus is gone and the probable ensuing swift recovery starts. This recovery to make up for lost production and consumption will get additional fuel from the added fiscal and monetary stimulus. Thus, unless we see a recession in H1 2020 we are unlikely to see it in H2 2020 when by most accounts the virus will be history. While this line of reasoning points in the direction of recession risks for 2020 (and equities declines) being exaggerated it doesn’t mean it couldn’t get worse before it gets better and all forecasts at this point are of course very uncertain,” he concluded.
The FTSE 100, meanwhile, is slowly surrendering the morning’s handsome gains but is still up 168 points (2.8%) at 6,134.
12.05pm: Smells like a dead cat
Blue-chips remain buoyant but there is a good deal of scepticism about the rebound from those whose job it is to comment on the markets (and get a name check for their companies).
The FTSE 100 was up 220 points (3.7%) at 6,186.
“Markets are surging on hopes of a huge stimulus plan from Donald Trump, but will it be enough to reverse to reverse the sell-off?” wonders Joshua Mahony at IG Group.
“Here comes the market rebound, but can it last?” asks Russ Mould, the investment director at AJ Bell.
Craig Erlam at Oanda dispenses with the rhetorical questions and goes with a healthy dose of scepticism.
“I'd like to say this morning's rebound is promising, that the proposed fiscal stimulus hinted at by Trump on Monday is the answer to all of our problems, but that's not exactly true. Payroll tax cuts are great in the longer run, but in the near-term, it'll do nothing more than exacerbate the great toilet roll shortage of 2020,” Erlam said.
“On any ordinary day, gains of a couple of per cent in indices would be a solid day but given the scale of yesterday's decline, it could well be nothing more than a dead cat bounce,” he stated.
“It smells like a dead cat,” declared Neil Wilson at markets.com.
“The stimulus is coming, but the situation on the ground gets worse. It seems comments from Donald Trump, and overnight some emollient tones from the Japanese authorities, are helping,” he added.
Over at Rabobank, the suggestion was it “looks like a dad bat bounce”, referring to the supposed Chinese origins of the virus.
Meanwhile, real gross domestic product in the Eurozone rose by 0.1% quarter-on-quarter in the final quarter of 2019, after rising 0.3% in the third quarter.
The rise was in line with the initial estimate and the consensus forecast.
The year-on-year gain fell to 1.0% from a revised 1.3% in the third quarter, marginally above the consensus forecast and initial estimate of 0.9%.
“This weak data confirms that the Eurozone’s economy was rudderless and adrift even before it hit the coronavirus iceberg,” said Ulas Akincilar, the head of trading at Infinox.
“The bloc’s economic output teetered on the edge of stagnation in the final quarter of 2019 and grew by an insipid 1.2% during the year as a whole – barely half the growth rate clocked by the US,” Akincilar added.
“Most worrying of all, the Eurozone’s three biggest economies – Germany, France and Italy – all saw either zero or negative growth in the final quarter of 2019,” he added.
10.20am: FTSE 100 enjoys a bounce but is it of the dead cat kind?
Dead cat bounce? Or an end to panic?
The FTSE 100 was up 230 points (3.9%) at 6,196, with travel-related stocks leading the way.
Both stocks have been hit hard since the coronavirus supplanted Brexit as Britain’s (least) favourite dinner party conversation topic.
British Airways owner International Consolidated Airlines (LON:IAG) was also going well, up 8.0%, after yesterday’s massive fall in the oil price.
Having said that, Brent crude is trading US$2.29 (6.6%) higher at US$36.65 a barrel this morning.
Rebecca Chesworth, the vice-president and senior equities strategist at SPDR ETFs. said the energy sector is likely to undergo “a massive adjustment and financial flows can exacerbate the current price situation significantly”.
From a sector point of view, Chesworth said banks with exposure to exploration & production companies and large oil-exporting countries could see an increase in the loan delinquency rate.
“Expect millions of dollars of provisions against oil-related exposures. Good news is no signs of financial stress at banks yet,” she said.
Chesworth believes healthcare is “looking most interesting” as a defensive sector, particularly as the candidates in the race to be the Democrat party’s US presidential nominations who were most gung-ho about reducing the cost of drugs have fallen by the wayside.
“We expect billions of extra dollars spending on healthcare services worldwide,” Chesworth said.
Meanwhile, the utilities sector has been the best performer (in the US) since the start of the “virus crisis”, she noted.
9.30am: Wet and miserable February for shops
Like-for-like sales in UK stores fell 0.4% in February, the British Retail Consortium (BRC) reported, after being flat year-on-year in January.
Economists had expected an increase of 0.4%.
Total sales were up 0.1% on a year earlier, after rising 0.4% year-on-year in January.
“The BRC’s survey refers to the four-week between February 2 and 29 and so does not tell us how the coronavirus has impacted retail sales,” observed Samuel Tombs, the chief UK economist at Pantheon Macroeconomics.
“Food and healthcare retailers reported a ‘slight rise’ in sales towards the end of the month, but panic among consumers only really took hold at the start of this month. Overall demand, however, was beginning to recover pre-virus; growth in total sales slightly exceeded its prior 12-month average, -0.2%. This was a decent result, given that retailers reported that the exceptionally high levels of rainfall and unprecedented flooding in certain parts of the country last month stopped people from going shopping and hit demand for new clothing lines,” Tombs said.
“Looking ahead, we expect retail sales to fall in March, as the virus keeps people at home, blunting the boost to sales from food stockpiling but the crash in oil prices and the likelihood of interest rate reductions will boost consumers’ real disposable incomes later this year. Spending should rebound healthily once the COVID-19 outbreak has been brought under control, though that moment seems months, not days, away,” he added.
8.40am: FTSE 100 reclaims some lost ground
The FTSE 100 opened its account in positive territory after the Black Monday sell-off, which wiped £150bn from Britain’s leading companies.
Still, worries over the spread of the coronavirus and a full-blown oil war will continue to shape the market narrative, according to analysts.
“There will be investors waking up today and wondering if it was all a bad dream. But it was all too real,” said Jasper Lawler of London Capital Group.
“Oil did fall by the most since the Gulf War and global stock markets did have their worst day since the ‘08 crisis. Today will be a like a hangover. All you can do is put a brave face on all the bad things that happened the day before.”
Overnight Italy went into lockdown in a bid to contain the coronavirus as the death toll jumped from 366 to 463 on Monday.
Here in the UK people who show "even minor" signs of a cough, cold or fever will soon be told to self-isolate in an effort to tackle the outbreak.
There was a bounce-back of sorts for the natural resources sectors, which were heavily sold down in a bloody Monday session with Rio Tinto (LON:RIO), up 5.8%, and BHP (LON:BHP), 5.1% higher, leading the way.
Shell (LON:RDSA), ahead 3.2%, founds some friends, although the response for BP (LON:BP.), the most highly indebted of the super-majors, was lukewarm. Its shares nudged up 2% after losing as much as 30% of their value at one point yesterday.
After that, the airlines found some traction as did Tesco (LON:TSCO), up 3%.
Not only should the UK’s largest grocer benefit from the coronavirus stockpiling, but its news of a £5bn special dividend yesterday was also largely drowned out by the wailing and gnashing of teeth of London’s traders.
8.16am: FTSE 100 stages recovery...of sorts
The FTSE 100 opened its account in positive territory after the Black Monday sell-off, which wiped £150bn from Britain’s leading companies.
Still, worries over the spread of the coronavirus and a full-blown oil war will continue to dictate and shape the market narrative, according to analysts.
Proactive news headlines
Learning Technologies Group PLC (LON:LTG) is to pay US$31.7mln to acquire Open LMS, a big name in the world of Moodle, an open-source learning management system.
H&T GROUP PLC (LON:HAT) reported a surge in profits for 2019 as its business was lifted by acquisitions and what its chief executive said was a “beneficial gold price”. For the year ended 31 December, the pawnbroker reported a pre-tax profit of £20.1mln, up 45.7% on the prior year, with the company’s pledge book (the value of pawned items) increased by 38.8% to £72.2mln.
Seeing Machines Ltd (LON:SEE) has reported double-digit growth in operational revenues for its first half amid accelerating demand for its driver monitoring technology. For the six months ended 31 December, the AIM-listed firm reported operational revenues of A$15.8mln, 12.8% higher year-on-year, while net losses edged up to A$24.9mln from A$24.7mln.
The board of Iofina PLC (LON:IOF) has unanimously recommended that shareholders resist attempts by Brexit-backer Arron Banks to join the board. The directors feel that Banks’s nose might have been put out of joint by the board’s decision not to proceed with a hemp project in Belize that Banks was associated with.
The results from a clinical trial of a broad-spectrum flu jab being developed by an Open Orphan PLC (LON:ORPH) joint-venture have been published in a peer-reviewed journal. The journal article concluded the vaccine is immunogenic (able to produce an immune response) and “merits phase III development to explore efficacy”.
Arix Bioscience PLC (LON:RIX) chief executive Joe Anderson said the focus going forward is on “driving realisable value in our portfolio and in turn our NAV”.
W Resources PLC (LON:WRES), the tungsten, copper and gold mining company with assets in Spain and Portugal, has raised £756,000 via placing of just under 210mln new shares to new Spanish investors. The funds raised will be used to advance development work at the Régua project, where the first blast was completed last week.
Ncondezi Energy Ltd (LON:NCCL) is making good progress towards the completion of the financial model for the development of its power project in Mozambique, according to chief executive Hanno Pengilly. “I am pleased to report that the project finance model is at an advanced stage and nearing final sign off by the company and its partners,” said Pengilly.
SDX Energy Plc (LON:SDX) has announced a successful result in the Rabul-3 well in the West Gharib Concession, Egypt, encountering two reservoirs.
Corero Network Security PLC’s (LON:CNS) chief financial officer Andrew Miller resigned and is off to work in private equity, though he will remain a non-executive. Jens Montanana, Corero’s chairman, said: "Andrew has been a valued member of our management team as CFO since 2010 and has made a significant contribution to the business.” Work has begun to find a replacement, added Montanana.
6.48am: Bounce back predicted
The FTSE 100 is expected to make a bit of a recovery on Tuesday after the week started with the index’s worst session since the 2008 financial crisis.
London’s blue chip benchmark is predicted to gain 178 points, according to spread betters, a day after losing almost 500 in its fifth-worst session ever, having finished at 5,965.77.
The collapse of the oil price as a result of a division between Saudi Arabia and Russia, combining with ongoing concerns about the coronavirus outbreak the spread to Wall Street, leading to the Dow Jones index crashing just over 2,000 points or 7.8% to close at 23,851.02 overnight.
The broader S&P 500 tanked 7.6% and the Nasdaq Composite plunged 7.3% lower.
“There will be investors waking up today and wondering if it was all a bad dream,” said market analyst Jasper Lawler at London Capital Group.
But he said news that President Trump will hold a press conference on Tuesday to discuss the US government's coronavirus response is aiding a pre-market recovery, though promised talks with Congress about a payroll tax seems unlikely in an election year.
Markets in Asia were mostly in the green on Tuesday, with Japan’s Nikkei 225 up almost 1%, Hong Kong’s Hang Seng and the Shanghai Composite both rising close to 2%.
Oil prices are rebounding somewhat, with Brent crude futures up 7% to US$36.93 per barrel, while US equity futures markets also point to a rebound for Wall Street, indicating at least 3% rises for the Dow and S&P 500 and 4% for the Nasdaq.
The global Covid-19 death toll globally has passed 4,000, with infections topping 114,000 as the WHO said the threat of a pandemic is "very real".
Back in the UK, Tuesday’s company news agenda is fairly packed, with Informa PLC’s (LON:INF) results coming with the shares already hit hard by worries about the impact of coronavirus on its events business.
In the first quarter of 2020, most China-based shows have already been pushed back and Informa has also put on hold its flagship health & nutrition show in the US and the Japan edition of the important series of CPhI pharmaceutical events.
However, that was January and things have changed dramatically since then due to the Covid-19 outbreak, as 60% of the company's finished goods are imported from mainland Europe or China.
Shares in the latter, which is delivering its first numbers since being spun out of parent Prudential last year, were recently said by JPMorgan Cazenove analysts to be trading at an “unjustifiable” discount to peers.
Around the markets
Pound, down 0.5% at $1.3042
Gold, down 0.6% at $1,661.70
Brent crude up 7% to US$36.93 per barrel
Significant announcements on Tuesday 10 March:
Finals: Biopharma Credit PLC (LON:BPCR), French Connection Group PLC (LON:FCCN), M&G PLC (LON:MNG), Standard Life Aberdeen PLC (LON:SLA), John Wood Group PLC (LON:WG.), Ultra Electronics Holdings PLC (LON:ULE), STV Group PLC (LON:STVG), Team17 Group PLC (LON:TM17), H&T GROUP PLC (LON:HAT), Forterra PLC (LON:FORT), Gresham Technologies plc (LON:GHT), Informa PLC (LON:INF), LSL Property Services PLC (LON:LSL), John Menzies PLC (LON:MNZS), The Simplybiz Group PLC (LON:SBIZ), Cairn Energy PLC (LON:CNE), TP ICAP PLC (LON:TCAP)