- FTSE 100 index closes up 39 points
- Rush into the cash - dollars, preferably - slows
- Wall Street shares lower
5.30pm: Footsie closes up
FTSE 100 index lost earlier gains but made a late dash to close Friday up over 39 points as the coronavirus crisis and the economic mayhem it's causing continues.
Britain's blue-chip benchmark closed up 39.17 points at 5,190.78, after being as high as 5,419.30 earlier in the session. The Prime Minister Boris Johnson has now ordered that cafes, restaurants and bars close doors as of tonight, putting the country on a firmer lock-down position.
Shortly after trading closed, UK chancellor Rishi Sunak also unveiled a package to help workers and businesses, which will see the government pay 80% of wages for employees not working and offering companies the ability to defer VAT payments, worth a combined £30 billion..
Footsie was earlier weighed on by the soaring pound, which gained 1.95% against the US dollar, due to the international nature of the British equity benchmark
"Risk assets have done well to hold the line over the past 48 hours, but as the weekend looms the usual concerns remain," said Chris Beauchamp, chief market analyst at IG in a note earlier.
"It has been a remarkable few day in terms of volatility and with respect to central bank action, which has been taken back to levels not seen since the height of the financial crisis.
"But the problems that have dogged equity markets for weeks have not gone away, namely the steady spread of the virus and the dire corporate updates coming out from around the globe."
Beauchamp suggested that against this backdrop, the sudden rise in stocks since Wednesday seemed odd and might not last once trading resumes next week.
In Europe, the DAX added 3.7% and the French CAC 40 added around 5%. On Wall Street, the Dow Jones shed around 0.90% while S&P 500 lost over 1%.
3.30pm: Gold back in demand
Not that it matters much in the grand scheme of things but the Footsie’s quest to rise for the second day in succession is a cliff-hanger.
With about an hour of trading to go, the FTSE 100 was up 20 points (0.4%) at 5,172, having once been at the lofty heights of 5,419 this morning.
In a sign that risk appetite might already be waning, the price of gold is back on the rise.
“Gold is on the rebound on Friday, paring some of the losses from the previous two sessions. The precious metal is down over 10% across the past fortnight,” said Fiona Cincotta at GAINCapital.
Cincotta explained that rather than rising as a result of being regarded as a haven for risk-averse investors, intensifying coronavirus fears resulted in investors either selling their gold to satisfy margin calls or to rotate into the US dollar “amid sell everything mode and ‘cash is best’,” she said.
“However, today amid a slight improvement in broad risk sentiment, thanks to a stimulus bonanza, the rush to cash has paused and investors are cautiously buying back into the market. Global action from central banks and government policy makers to cushion the economic hit from coronavirus has finally caught up with the market. Stocks are on the rise, oil and gold,” she reported.
On futures markets, the yellow metal is up US$14.70 at US$1,494.00 an ounce.
2.20pm: US markets open higher
US markets have opened higher, helped by a surge in US home sales in February.
The Dow Jones index was up 120 points (0.6%) at 20,207 while the S&P 500 was up 4 points (0.2%) at 2,414.
US existing home sales rose 6.5% to an annualised rate of 5.77mln in February.
US Existing home sales surge to 13-year high in February ... RTRS— Trading Floor Audio (@TradeFloorAudio) March 20, 2020
U.S. home sales surged to a 13-year high in February, but the housing market recovery is likely to be derailed by the coronavirus pandemichttps://t.co/aBJ2TiFNCZ
In the UK, the Footsie, after a storming start, has spent much of the day taking one step forward and then two steps back. It is still comfortably in credit, up 67 points (1.3%) at 5,219 but on a downward trend.
Some people are looking a bit beyond whether the Footsie can hold on to its gains until the end of the day, however.
“While uncertainty over near-term developments is high, we expect an economic recovery after a sharp recession (due to the shutdown of major centres) –once the spread of the virus is reversed and associated containment measures fade,” said the investment boffins at Deutsche Bank.
“Monetary and fiscal support across the globe is massive, but the ultimate cure is stopping the virus spread and/or a medical progress on a drug or vaccine.
“A disciplined and sequential (!) approach to moving back into risky assets is appropriate following sharp market declines and the potential for swift future market moves. At present, the best way to add risk is probably via equities,” they suggested.
Håkan Frisén, the head of economic forecasting at Nordic investment bank SEB, says a deep global recession is inevitable with a gradual gross domestic product (GDP) rebound in 2021.
“The Covid-19 pandemic has rapidly changed forecasting conditions. Due to lockdowns around the world, a deep economic recession is inevitable. Our main scenario is that GDP in the 36 OECD countries will fall by 2.5% in 2020 as a whole, based on the assumption that the situation will begin to normalise to some extent in a few months. The subsequent recovery will be gradual, with a rebound in GDP growth to 3.5% in 2021, and unemployment reaching levels well above those of recent years,” he said.
Meanwhile, as everyone and his brother seems to want cash in dollars these days, the Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank, the Federal Reserve, and the Swiss National Bank are planning coordinated action to further enhance the provision of liquidity via the standing US dollar liquidity swap line arrangements.
To improve the swap lines’ effectiveness in providing US dollar funding, these central banks have agreed to increase the frequency of 7-day maturity operations from weekly to daily. These daily operations will commence on Monday, March 23, 2020 and will continue at least through the end of April. The central banks also will continue to hold weekly 84-day maturity operations.
“The swap lines amongst these central banks are available standing facilities and serve as an important liquidity backstop to ease strains in global funding markets, thereby helping to mitigate the effects of such strains on the supply of credit to households and businesses, both domestically and abroad,” the Bank of England said.
1.10pm: Rightmove marked down after coronavirus update
The Footsie remains in credit but has been on a downward trend since mid-morning but is making another attempt to reclaim former glories.
London’s index of leading shares was up 96 points (1.9%) at 5,251, despite a number of stocks sustaining heavy falls.
12.01pm: US indices to open higher
London’s gains are ebbing away as the start of trading in New York get closer, despite expectations that US benchmarks will open higher.
The FTSE 100 is up 93 points (1.8%) at 5,245, 174 points below its intra-day high.
Sterling’s rebound is not helping the Footsie’s cause, much; the pound is up three cents against the greenback at US$1.1785.
In the US, the Dow Jones is tipped to open at around 20,333, which would represent a 246 point jump from last night’s close.
The S&P 500 is expected to open 18 points firmer at 2,427.
10.45am: Government borrowing fell year-on-year in February but that was before you know what ...
Borrowing (public sector net borrowing excluding public sector banks) in February 2020 was £0.3bn, which was £0.3 billion less than in February 2019.
Borrowing in the current financial year-to-date (April 2019 to February 2020) was £44.0 bn, £4.2bn more than in the same period the previous year, the Office for National Statistics said.
The current budget deficit (public sector current budget deficit excluding public sector banks) in the current financial year-to-date was £2.4bn, £0.4bn less than in the same period the previous year.
Debt (public sector net debt excluding public sector banks) at the end of February 2020 was £1,791.5bn, or 79.1% of gross domestic product (GDP). The ONS reported this is an increase of £32.1bn (or a decrease of 1.1 percentage points) on February 2019.
Central government net cash requirement excluding both UK Asset Resolution Ltd and Network Rail was £35.2 billion in the current financial year-to-date; this is £20.4 billion more than in the same period last year.
“Public finance data for 2019/20 has been overtaken by recent events, including the Government pledging substantial fiscal support to businesses and household affected by coronavirus in an attempt to protect the UK economy as much as possible,” noted Howard Archer, the chief economic advisor to the EY ITEM Club.
“Some helpful news came with January’s surplus being revised up to £11.7 billion from the previously reported £9.8 billion (similar to the surplus of £11.9 billion achieved in January 2019). January is an important month for the public finances and always sees a surplus as it is when most tax receipts come in including for self-assessed income tax. The January performance can sometimes be affected by the late arrival of tax receipts so it is often necessary to look at the January and February figures combined,” Archer cautioned.
10.00am: The Footsie reacquaints itself with positive territory
Although off the top, the Footsie is still in positive territory – looking around with a slightly bewildered expression as it takes in the unfamiliar landscape.
London’s index of heavyweight shares was up 172 points (3.3%) at 5,324, having briefly moved back above 5,400 earlier this morning.
As one might expect, some of the stocks hit hardest over the last few weeks are bouncing back highest.
With stock markets across the globe looking in slightly better health, companies with huge equity assets are back in fashion; insurer Prudential PLC (LON:PRU) is up 22% at 857.2p and asset manager Standard Life Aberdeen PLC (ON:SL.) is 12% higher at 199.26p.
8.30am: Friday rally
The FTSE 100 opened with a bang – and for a change in positive territory – after the world’s central banks weighed in to support financial markets in the face of the coronavirus pandemic.
The index of blue-chip stocks opened 264 points higher at 5,415.53
“It’s too early to say the new policies are working,” said Jasper Lawler, analyst at London Capital Group. “There is at least an appreciation in markets that central banks aren’t taking the situation lightly.
“Governments are promising big things but there are big questions about how the whole thing can work. It’s a tough ask to get workers and businesses the cash they need to stay afloat in time.”
A move into defensive investments led to a 16% surge in the value of electricity firm SSE (LON:SSE).
Buyers crept back into the market for WH Smith, which surged 18% higher. The retailer, which has a chain of outlets in airports and train stations, has lost two-thirds of its value.
Proactive news headlines:
Bloomsbury Publishing PLC (LON:BMY) has acquired certain assets of Zed Books, the London-based academic and non-fiction publisher. Bloomsbury is to pay £1.75mln for the acquisition, of which £875,000 has been paid in cash upfront. Zed will operate within Bloomsbury's Academic & Professional division and is expected to contribute around £800,000 of revenue to Bloomsbury in its first year.
Pan African Resources plc (LON:PAF) told investors that it is adapting its business in reaction to the covid-19 coronavirus. The South Africa based gold producer said it has put in place a range of awareness, risk mitigation and prevention strategies have been rolled out across its business.
Greencoat UK Wind PLC (LON:UKW) said portfolio generation to date in 2020 has been strong and is roughly 20% ahead of budget. More than 30% of the 2020 generation budget has already been produced and forward power prices for the remainder of 2020 are relatively stable. The company's target dividend of 7.1 pence per share is expected to be well covered, the company added.
Faron Pharmaceuticals Oy (LON:FARN) (FIRSTNORTH:FARON) said that negotiations with potential partners for its lead immunotherapy were continuing as it reported its full-year 2019 results. The aim is to support the development of cancer treatment Clevegen, which is expected to be used in harness with other drugs. Turning to the financials, Faron lost €13.3mln in 2019, a busy year for research and development. It closed out the period with €7.1mln of cash.
Zoetic International PLC (LON:ZOE) has updated on its business amid the ongoing coronavirus outbreak, saying that, despite the volatility, its distribution partners “remain very supportive”. In an update, the maker of cannabidiol (CBD) products said it was continuing to generate interest from prospective retail partners in the UK for its Zoetic and Chill branded products, adding that the ongoing enthusiasm provided the firm with “optimism” that when the downturn passed its business model will “remain effective”.
Tissue Regenix Group PLC (LON:TRX) has announced that its executive chairman John Samuel is stepping down after 12 years with the company. Independent director Jonathan Glenn has stepped up to chair the business on an interim basis and in a non-executive role rather than the executive capacity of his predecessor. Glenn was formerly chief executive of Consort Medical before its £505mln sale to Recipharm recently.
Pan African Resources (LON:PAF) has told investors that it is adapting its business in reaction to the covid-19 coronavirus. The South Africa based gold producer said it has put in place a range of awareness, risk mitigation and prevention strategies have been rolled out across its business. Currently all operations continue to function as normal, the company added.
Diversified Gas & Oil PLC (LON:DGOC), the US- based owner and operator of natural gas, natural gas liquids, and oil wells and midstream assets, announced that on 19 March 2020, its chairman, David Johnson, acquired 25,000 ordinary shares in the company through the market at a price of 66.2p each. Following this purchase, the group noted, Johnson is now interested in 375,000 ordinary shares representing approximately 0.06% of the company's issued share capital.
Salt Lake Potash Ltd (LON:SO4) (ASX:SO4) chief executive officer Tony Swiericzuk has purchased shares worth $128,733 in on-market transactions. Swiericzuk acquired 363,053 shares increasing the number of securities he holds to more than 2.01mln.
6.35am: Dare to hope
Equity investors can dare to hope this morning as the Footsie looks set to start on the front foot after yesterday’s central bank intervention.
Spread betting quotes suggest London’s index of leading shares will open around 134 points higher at 5,286.
“The air above the world's financial markets smelled of cordite and rang loud with the sound of artillery rounds, as fiscal and monetary bazookas kept up their barrage overnight. The Federal Reserve announced more US Dollar swap agreements with other central banks to alleviate the greenback shortage around the world. The US Senate is working on a follow-up one trillion-dollar stimulus plan and the Bank of England reiterated its do whatever it takes while trimming 15 basis points of its reference rate, dropping it to 0.10%,” reported Jeffrey Halley, markets analyst at Oanda.
“The shoulder-launched artillery barrage from the worlds' central banks and government treasuries seems to have stopped the rot sweeping the global economy for now. Markets enjoyed a relatively quiet, by recent standards, overnight session, with equities stabilising in particular. It should be noted though, we are only at the beginning, and not the end of the coronavirus recession, and the repricing of asset classes to the new reality, likely, still has a long way to run,” he cautioned.
US markets were buoyed by the Fed’s action and closed higher overnight. The Dow Jones Industrials Average put on 188 points at 20,087 and the S&P 500 advanced 11 points to 2,409.
In Asia this morning, the Hang Seng index in Hong Kong climbed 735 points higher to 22,444 but the Nikkei 225 in Tokyo was off 174 points at 16,553.
In London today, investors are preparing themselves for another day of unscheduled corporate updates about the effects of the coronavirus plus a scheduled rant from Tim Martin, the chairman and founder of JD Wetherspoon PLC (LON:JDW).
Martin will probably take time off from frothing at the mouth over Brexit to offer his advice on how the government should tackle the current crisis but might also sneak in a few numbers on current trading in the pubs group's interims.
The FTSE 250 group reported that like-for-like sales in the first six weeks ended 8 March, so the beginning of the second half of the year, were up 3.2% while total sales were up 2.9%, meaning the group is on track for the fourth successive quarter of slowing growth.
Analysts at Liberum, however, are upbeat about the long term, saying they expected pubs to be “resilient based on loyal customer behaviour and portfolio diversification”.
Significant announcements expected on Friday:
Around the markets:
- Sterling: US$1.1663, up 1.78 cents
- Gold: US$1,493.40 an ounce, up US$14.10
- Oil: US$29.20 a barrel, up 65 cents
- 10-year gilt: yielding 0.721%, down 7.49 basis points
- Bitcoin: US$6,214, down US$28
- Big pharma will work together to try to find treatments and a vaccine to combat the coronavirus pandemic.
- The US faces a mountain of unemployment claims as states see a surge in the number of people who have been laid off in recent days.
- Ocado is expected to extend product rationing when it reopens for orders on Saturday
- The Ford Motor Company has become the latest big name to suspend its dividend. It has also down $15.4 billion from two credit lines to boost its balance sheet.
- Independent US energy producers are restructuring debt to tide themselves over as cratering oil prices and rising bond yields threaten bankruptcies across the shale sector.
- The Bank of England is considering Zimbabwe-style monetary financing to pay for the government’s coronavirus fighting fund as it runs out of tools to support the economy.
- Investors have suffered a dividend hit of at least £600 million as some of Britain’s biggest businesses race to conserve cash in the coronavirus crisis.
- Direct Line said travel insurance claims are set to jump because of the coronavirus outbreak and halted its £150 million share buyback programme.
- National Express has decided to put its recently announced full-year dividend under review.
- The coronavirus outbreak is savaging demand for luxury fashion, with Burberry saying it expects sales to plunge by as much as 80%.
- Tesla will suspend production at its Californian car factory next week to comply with local orders aimed at curbing the spread of coronavirus.
The Daily Telegraph
- The government is planning to effectively pay workers weekly subsidy in an unprecedented support to help Britons hit by the coronavirus crisis.
- City analysts fear the pound could drop to an all-time low amid market chaos triggered by coronavirus.
- Donald Trump has backed the US government taking stakes in companies to rescue them from collapse as worries mount for industry heavyweights.
- Stricken airline Norwegian has been handed a bailout by its government of up to 3 billion krone (£250 million) as it grapples with the fallout from the coronavirus pandemic.
- Cineworld has begun laying off staff with immediate effect after closing all its cinemas as a result of the coronavirus pandemic.
- BP is cutting the number of its staff working in the North Sea as it fights to prevent coronavirus outbreaks on oil rigs.
- Co-op has unveiled plans to create 5,000 jobs within its stores in an attempt to provide employment for hospitality staff who have recently lost their jobs amid the coronavirus outbreak.
- Britain’s manufacturing companies prepare for massive layoffs that may come within days without immediate action to ease a cash crisis as orders collapse.
- Britain’s Atol holiday lifeboat scheme has been drained by the collapse of Thomas Cook, leaving it unable to cope with the failure of a major airline or travel agent as the coronavirus pandemic hits.
- Euro rose against the dollar and the pound after the European Central Bank announced a €750 billion asset-purchase programme on Wednesday evening in response to the coronavirus outbreak.
- Billionaire retailers Philip Green and Mike Ashley have asked landlords for rent cuts of up to 50% as they try to cut costs during the coronavirus outbreak.
- Next’s chief executive has said the British high street is facing a crisis that is “unprecedented in living memory”; Simon Wolfson said Next was planning for a sales hit of up to £1 billion in the year ahead.
- Pret a Manger is to cut staff working hours and pay by a quarter across its 550 branches as customers follow government advice to stay at home to dampen the spread of coronavirus.