FTSE 100 closes deeply in red but up on week as sterling's surge hits

Britain's index of premier shares finished down over 305 points at 5,510

London stocks tanked on Friday but made gains in the week
  • FTSE 100 index drops 305 points
  • Provident Financial and Royal Mail drag the FTSE 250 lower after shelving their dividends
  • US stocks lag

5.15pm: FTSE closes lower

FTSE 100 closed deeply in the mire on Friday after a week of gains as the surge in sterling weakened the dollar-earning benchmark.

Britain's index of premier shares finished down over 305 points at 5,510. Over the week as a whole though the index put on around 6.1%.

Footsie closed as the number of deaths in Europe from the coronavirus escalates. In the UK alone there was 181 deaths - surpassing yesterday's record of 115.

Earlier, it was revealed Prime Minister Boris Johnson had tested positive for the virus. So too health minister Matt Hancock.

"The rising number of cases in countries like the UK, Spain and Italy has chipped away at market confidence," said market analyst David Madden, at CMC Markets.

"The lack of a coordinated and robust response from the EU has left some traders worried too. Individual governments have revealed recuse plans recently, but without an overarching programme from the EU, there is a feeling there isn’t a huge amount of solidarity doing the rounds."

In the foreign exchange markets, the pound rose 1.47% against the US dollar at 1.2384.

On Wall Street, the Dow Jones Industrial Average plunged over 698 points, while the S&P 500 shed around 73.

2.15pm: US stocks walloped

As expected, US benchmarks opened sharply lower, giving up the bulk of yesterday’s gains.

The Dow Jones industrial average was down 958 points (4.3%) at 21,594 while the broader-based S&P 500 was off 93 points (3.5%) at 2,537.

US personal income in February rose 0.6%, which was above the consensus forecast of 0.4%.

Real consumption spending, however, rose by less than the consensus forecasts; economists had predicted a 0.2% increase but spending only rose 0.1%.

The core personal consumption expenditure deflator – a measure of inflation – rose 0.2%, in line with expectations.

Ian Shepherdson, the chief economist at Pantheon Macroeconomics, called it “more news from another era”.

“Q1 [first quarter] spending was on course for an anaemic 1.6% annualised increase, but the 5% month-to-month drop we expect to see in March, capturing the initial collapse in spending on discretionary goods and services, suggests spending for the quarter will plunge at a 5-1/2% rate and Q2 will be much worse,” he predicted.

In the UK, the FTSE 100 is about 20 points off its intra-day low but looking about as pristine as a carrier bag pressed into service as an impromptu cat litter.

The index was down 331 points (5.7%) at 5,486.

The mid-cap FTSE 250 was faring only slightly less worse; it was down 713 points (4.6%) at 14,666 with Provident Financial PLC (LON:PFG) and Royal Mail PLC (LON:RMG) leading the retreat with losses of 19% and 16% respectively.

Both companies shelved their dividends today and warned of currently difficult trading conditions.

1.00pm: US benchmarks to give back more than half of yesterday's gains

US markets are set to retreat when trading starts soon.

The Dow Jones index (DJIA), which yesterday stormed 1,352 points higher to close at 22,552, is expected to open at around 21,812, which would see it give back 740 points – more than half – of those gains.

The S&P 500 is tipped to open at around 2,545, down 85 points.

After both indices had surged by more than 20% in just three days, some were claiming that technically this means the US is back to being a bull market.

Richard Hunter of interactive investor adds some perspective.

“To some observers, this put the market back into bull market territory by traditional definitions, which is clearly misleading.

“It certainly proves that the market remains volatile and prone to wild market swings, a feature which is unlikely to evaporate in the near term.

Meanwhile, some market purists will no doubt point to the fact that the move to a bull market phase only begins when a new recent high is hit. By this measure, the DJIA, for example, currently languishes 7,000 points below its February 2020 peak and, indeed, even after this week’s rise remains down 21% in the year to date,” Hunter observed.

“Hardly bull market territory,” was Hunter’s pithy verdict.

In London, there is not even the pretence of it being a bull market, with the FTSE 100 down 322 points (5.6%) at 5,492, with sterling’s strength against the dollar not helping matters; the pound is up half a cent or so against the dollar at US$1.2258 despite, or maybe because of Boris Johnson testing positive for the coronavirus.

11.30am: Prime Minister tests positive for coronavirus

Passenger car output will fall by 18% to only 1.1mln in 2020, the Society of Motor Manufacturers and Traders (SMMT) has warned.

If the forecast is correct, it would be the lowest annual output since the days of the credit crunch in 2009, when jus 999,460 cars were made in the UK.

Luxury car maker Aston Martin Lagonda Global Holding (LON:AML) was relatively phlegmatic about the dire prediction, shedding 3.3% at 261p in a market that is down 3.7%.

The FTSE 100 was down 255 points (4.5%) at 5,556, having finally found a bottom at 5,576.

Outside of the FTSE 350, legal business DWF Group PLC (LON:DWF) warned on profits, saying that the impact of the fight against coronavirus had come along in the quarter that is usually the most important for the group in terms of shaping its annual performance.

Independent Oil & Gas PLC (LON:IOG) went its own way, rising 11% to 13.5p after a number of the top brass pitched in to buy an aggregate of 320,000 shares at an average price of 11.87p a share.

10.30am: Coronavirus jitters return as US sees worrying increase in cases

mics – “The US outbreak is not slowing” – does not inspire confidence.

Has anyone told US investors?

“The news that the US now has more cases than China makes for big headlines but is epidemiologically irrelevant,” declared Pantheon’s chief economist, Ian Shepherdson.

“What matters is that the rate of increase of confirmed US cases is not yet slowing. Yesterday's 33% increase would, if sustained, lead to the number of cases doubling every 2.9 days. At that pace, total U.S. cases would reach 1.3mln by April 8. Right now, global cases stand at 537K,” he said.

“We hope that the lockdowns around the country will prevent that happening—that the curve will flatten, as is happening in NY [New York] — but we remain worried about the momentum in states like New Jersey, Florida, and Louisiana, where cases are doubling every two-to-three days and show no sign of slowing,” he continued.

Has anyone told Donald Trump?

“The rate of growth of cases in western Europe has stalled at about 15% per day. Next week should be better. The UK is yet to see any slowdown; cases are rising by about 20% per day. That's to be expected given the lockdown began only on Monday; we look for a clear slowing by the end of next week,” Shepherdson said.

The FTSE 100 was down 234 points (4.0%) at 5,583, pretty much at its low point for the day.

US-focused tool-hire firm Ashtead Group PLC (LON:AHT) leads the retreat, sliding 11% to 1,651p as construction activity in the US tails off.

10.00am: Guidance withdrawn, divi deferred; rinse and repeat

The FTSE 100 is close to its low point for the day as traders quickly bank profits gained over the last three days.

London’s index of blue-chips was down 232 points (4.0%) at 5,584, with all but two if the index’s constituents in the red.

The lucky two are Polymetal International PLC (LON:POLY), which is up 0.5% at 1,314p, and Reckitt Benckiser Group PLC (LON:RB.), which is more or less unchanged.

The coronavirus-related trading updates from the big guns continue to come thick and fast and most say much the same thing: full-year guidance withdrawn (with an optional dividend deferral thrown in).

Property listings website Rightmove PLC (LON:RMV) has done both (removed guidance and ditched the divi for now) and is down .8% at 455.8p.

Aerospace engineer Meggitt PLC (LON:MGGT) has also dropped its divi and is trading 7.4% lower at 313.4p.

Fizzy pop bottler Coca-Cola HBC AG (LON:CCH) has withdrawn full-year guidance but is sticking with its plan to propose the payment of a dividend of €0.62. Its shares are down just 2.5% at 1,703.5p.

Fashion flogger Next PLC (LON:NXT) has (finally) done the decent thing and closed its online operations to let its warehouse workers self-isolate.

The shares fell 6.0% to 4,237p on news that its online operations would temporarily shut down.

“While it is clear that Next feel they should be at home in the current climate, the question for us all stuck at home is will others follow suit? The answer looks increasingly likely to be yes with other retailers such as TK Maxx and River Island ceasing online operations yesterday. For those holding shares in Next, we suggest staying with this well-respected retailer, but of course, the risks have risen with little light at the end of this tunnel,” said Graham Spooner, an investment research analyst at The Share Centre.

8.35am: Dire start Friday

The FTSE 100 wiped out all of Thursday’s gains at open on Friday after investors contracted another bout of the coronavirus jitters.

The index of UK blue-chips slumped 183 points to 5,632.38 early on.

A 40% slump in China’s industrial profits provided a dose of reality and possibly served as a warning of the scale of the recessions to come.

“Seeing a figure as bad as that, it’s understandable why other leaders, notably US President Donald Trump are reluctant to shut down the economy,” said Jasper Lawler, head of research at London Capital Group.

“Trump said has suggested reopening certain parts of the country like the farm belt of parts of the mid-west unaffected. The current calculus seems to be based on the West repeating China’s coronavirus experience.

“That is experiencing a lockdown period of similar length to China and a similar lifecycle of rising then falling virus cases. If that’s wrong and it takes longer, markets need to readjust with another leg lower,” he added.

Cruises operator Carnival (LON:CCL) sank 10% amid fears a longer global lockdown would hit the travel and holiday sector harder than currently modelled.

The closure of building sites and the suspended animation into which the builders have thrown hit Berkeley Group (LON:BKG), off 7.9%, and Persimmon (LON:PSN), down 7.3%.

Proactive news headlines:

Supermarket Income REIT plc (LON:SUPR) has joined the precious few companies maintaining their dividends through the coronavirus crisis as it also reported growing rental income. The investment company, which owns a portfolio of Tesco, Sainsbury’s and Morrisons supermarket stores, said it had received 100% of its expected rent payments for the March quarter, in stark contrast to some other more prominent property companies in recent days.

The City Pub Group PLC (LON:CPC) has unveiled plans to raise £22mln to strengthen its balance sheet after the coronavirus pandemic forced the closure of its pub estate. The AIM-listed firm said it will raise around £15mln through a share placing at 50p each, a 10.7% discount to its Thursday closing price, to certain existing shareholders and other institutional investors. It will then raise another £7mln through an open offer to qualifying shareholders and the same price.

Chaarat Gold Holdings PLC  (LON:CGH) said demand for its output has remained “relatively healthy” and production uninterrupted during the coronavirus (COVID-19) outbreak. In fact, it said weakness in the currency in Armenia, home to its Kapan mine, and a sharp fall in the price of fuel used on-site, prompted by the collapse of crude, would likely have a positive impact on the economics of the operation.

Plexus Holdings Plc (LON:POS) has told investors that it anticipates annual group revenues will be in line with market expectations, though it acknowledged the potential for disruption due to the coronavirus (COVID-19) pandemic.

 Posting interim results on Friday, the company said: “It is important to acknowledge the ongoing disruption to the general global economy and resultant uncertainty for companies and workforces caused by the COVID-19 virus and the impact this may have on Plexus. Like many companies, the full extent of the impact of the COVID-19 pandemic is not yet known, and it is difficult to evaluate all of the potential implications on the company's trade, customers, suppliers and the wider economy.”

Woodbois Limited (LON:WBI) has said it has coronavirus (COVID-19) contingency plans in place, though so far it has been unaffected by the outbreak. In a statement, the Africa-focused timber and forestry specialist acknowledged there is a possibility, however, that its sawmill and veneer factory sites in Mouila, Gabon, may need to be operated by a reduced workforce, or even halted for an “indeterminate period”.

Scotgold Resources Limited (LON:SGZ) has stopped work on the Cononish gold and silver mine in the Trossachs due to the coronavirus outbreak. Torrential rain in Scotland over the winter and early spring had already meant it would miss its target of first gold in May, but the Scottish Government has now advised that all non-essential construction sites be closed down until further guidance is issued.

Regency Mines PLC (LON:RGM) has pledged to minimise the impact of the coronavirus (COVID-19) pandemic on its operational targets this year. In its half-year report, the company acknowledged that the outbreak would slightly delay or alter the timing of some of the commercial objectives it intended to pursue during 2020. Executive chairman James Parsons said that the second half of 2019 was a period of “great positive change in the company, leaving Regency with brighter prospects than it has had in many years as it entered 2020”.

European Metals Holdings Limited (LON:EMH) has reached a final agreement for Czech state power utility CEZ to take a 51% stake in the Cinovec lithium project.  The amended terms will see CEZ pay €29.1mln for its stake compared to the original proposal of €34mln.

Arkle Resources PLC (LON: ARK) said it has undertaken a conditional placing with existing investors to raise £252,000 and plans a share capital reorganisation. The AIM-listed Irish gold and zinc exploration and development company noted that 50,400,000 new ordinary shares were issued at a placing price of 0.5p each. It’s shares closed trade on Thursday at 0.80p. The company said the funds raised are expected to provide working capital sufficient for requirements for the remainder of 2020 as well as maintaining ongoing exploration activities.

Europa Metals Ltd (LON:EUZ) said there has been a delay in completing the last metallurgical test on material extracted from its Toral project in Spain. The delay has been caused by the impact of the coronavirus (COVID-19) pandemic.

Tharisa PLC (LON:THS) told investors it remains fully supportive of South Africa’s initiatives to combat the coronavirus (COVID-19) pandemic. As South Africa last night entered a 21-day lockdown, the AIM-quoted firm confirmed that its platinum group metals (PGM) smelter is on care-and-maintenance.

Primary Health Properties PLC (LON:PHP) has confirmed that its 2020 annual general meeting is intended to proceed as planned at 10.30am on 1 April 2020 at CMS Cameron McKenna Nabarro Olswang LLP, Cannon Place, 78 Cannon Street, London EC4N 6AF, however, shareholders are strongly encouraged to vote by proxy. The company's attendance in person will be limited to two persons in order satisfy the requirements of a quorum, and as the venue is officially closed to the public, no other persons will be permitted to attend. In order to provide an opportunity for shareholders to raise questions is arranging for an audiocast with the company’s board to be held at 3.00pm on April 1.

Blue Star Capital PLC (LON:BLU), the investing company with a focus on esports, technology and its application within media and gaming, has said that, for administrative reasons the venue for its Annual General Meeting has changed and it will now take place on 31 March 2020 at 12pm at 272a Westbourne Park Road, London W11 1EJ. However, the group added, in the light of the impact of coronavirus (COVID 19) and the government announced travel and other restrictions, shareholders are strongly urged not to attend the AGM in person but rather to attend by way of the audio link, details of which are: UK Number 0330 336 0491; International Number +44 844 4 73 73 73; Access Code 220869.

Metal Tiger PLC (LON:MTR), the AIM-listed investor in natural resource opportunities, announced that, on March 26, its chief executive officer, Michael McNeilly, purchased, in aggregate, 750,000 ordinary shares in the company on market, at an average price of 1.098p per share, for a total consideration of £8,235. Following these purchases, the group added, McNeilly is interested in a total of 5,997,733 ordinary shares, representing 0.39% of the company’s issued share capital.

Panther Metals PLC (LON:PALM), the company focused on mineral exploration in Canada and Australia has announced the appointment of Keelings Limited as its auditors with immediate effect, subject to approval by the company's shareholders at the next Annual General Meeting to be held in 2020.

Alien Metals Limited (LON:UFO) has announced the resignation of its auditor RSM UK Audit and the appointment of Jeffreys Henry. The group said that, in its letter of resignation as auditor of the company, RSM confirmed that there were no circumstances connected with its resignation which they considered should be bought to the notice of the members or the creditors of the company.

Canadian Overseas Petroleum Limited (LON:COPL) (CSE:XOP), an international oil and gas exploration and development company focused on sub-Sahara Africa, has announced that following the recent relief granted by the Canadian Securities Administrators due to the challenges caused by the Coronavirus crisis, it has elected to defer the filing of its year-end 2019 and first quarter 2020 documents. The CSA has said there will temporary relief from some regulatory filings required to be made on or before June 1, 2020, as well as blanket relief which will provide a 45-day extension for periodic filings.

6.40am: FTSE 100 called lower

The US may be by some definitions in a bull market but UK blue-chips seem disinclined to play ball/bull.

Spread betting quotes suggest that despite yesterday afternoon’s late rally, the FTSE 100 will open around 82 points softer at 5,734.

“Some market participants might be getting ahead of themselves,” suggested Michael Hewson at CMC Markets.

“Markets appear to be pricing in a V-shaped recovery or some form of U-shaped one. Neither is likely, and it was a fear articulated by the Bank of England yesterday, who warned of the risk of lasting damage to the UK economy, as a result of widespread business failures, and a sharp rise in unemployment,” he added.

So, about that bull market … the Dow Jones Industrials Average rose 1,352 points to 22,552 yesterday and is up 21% over three days, hence the assertion that this is now a bull market. It’s more of a bull in a china shop market, with wreckage everywhere.

Nevertheless, the S&P 500 index closed 155 points firmer yesterday at 2,630, while Asian markets this morning made good progress, with Japan’s Nikkei 225 index up 453 points (2.4%) at 19,117 and Hong Kong’s Hang Seng index up 191 points (0.8%) at 23,544.

In theory, the corporate schedule in London on Friday is set to be quiet; in practice, it is likely to be a day of rescinded dividends and withdrawn profit guidance statements.

Renewable energy supplier SSE PLC (LON:SSE) is one of those stocks fund managers rely on for its dividends so the City’s stock-shepherds will be keeping a close watch on its pre-close trading statement.

In January, the FTSE 100 group reiterated its commitment to its dividend plan for the next five years, with a dividend of 80p per share expected for the current year, down from 97.5p a year earlier.

Earlier this week, analysts at Goldman Sachs upgraded SSE to ‘buy’ in a note on the European utilities sector. “We would use the recent sell-off to gain exposure to quality, secular growers, as we expect ‘net zero policies’ to make a comeback as a tool to stimulate the economy, once the most acute part of the crisis is over,” the investment bank said.

In the US, the House of Representatives is set to vote on the US$2,000bn fiscal package to support the country’s people and companies.

Although economists at Danske Bank said it “may hit some obstacles”, it is widely expected to be rubber-stamped without any major hassle.

After the shockingly large US unemployment claims number a day earlier, there’s also spending data due Stateside.

Significant announcements that had been expected on Friday:

Trading statement: SSE PLC (LON:SSE)

Finals: Applegreen PLC (LON:APGN), Robinson PLC (LON:RBN), Uniphar PLC (LON:UPR)

Interims: Bowleven PLC (LON:BLVN), CVS Group PLC (LON:CVSG)

Economic data: US personal spending

Around the markets:

  • Sterling: US$1.2265, up 0.61 cents
  • 10-year gilt: yielding 0.399%, down 4.24 basis points
  • Gold: US$1,643.50 an ounce, down US$7.70
  • Brent crude: US$28.88 a barrel, up 23 cents
  • Bitcoin: US$6,681, down US$58

City headlines:

  • Financial Times

  • The Chancellor of the Exchequer, Rishi Sunak has unveiled a £3 billion-a-month package to support up to 3.8mln self-employed workers hit by the fallout of coronavirus.

  • Several Michelin-starred and other high-end restaurants have gone into the food delivery game in big UK cities as they battle to maintain revenues.

  • Two non-executive directors at supermarket chain Wm Morrison have resigned in an escalating disagreement over corporate governance

  • The Daily Telegraph

  • The Government halted the housing market on Thursday after financial institutions said they could no longer operate properly.

  • The Government has formally requested a consortium of UK manufacturers to speed up production of a new ventilator based on existing technology.

  • The Times

  • Nearly 3.3 million Americans lost their jobs last week, the most in US history, as businesses were ordered to shut to combat the rapid spread of coronavirus.

  • Companies in every industry in Britain have been hit hard and expect the coronavirus crisis to be worse than the great recession, according to a Bank of England survey of businesses.

  • Former chairman of Independent Commission on Banking, John Vickers, has urged the Bank of England to block more than £7.5 billion of dividends to be paid out by banks.

  • Lloyd’s of London is likely to take a substantial hit from coronavirus claims but is robust enough to cope, according to its chairman.

  • British Land has suspended future dividend payments and halted construction work on London developments.

  • Weir Group has cancelled its dividend and slashed jobs and spending to preserve cash.

  • Shop closures will cost Dixons Carphone about £400 million in sales this year, the electricals retailer has said in its third profit warning in 12 months.

  • The Norwegian state-owned pension fund told members that it had lost just over 16% of its worth since the beginning of the year.

  • A single client that got into difficulties during the market turmoil of recent weeks will cost the Dutch lender ABN Amro $200 million.

  • The Guardian

  • British car production will slump to its lowest level since the financial crisis this year, the industry has warned.

  • Intu Properties has said it will breach the terms on its debt commitments following a collapse in the rents received from its retail tenants unless it can secure debt waivers from its lenders.

  • Next said it had taken the “difficult decision” to close its website as the coronavirus shutdown threatens to wipe more than £11 billion off fashion sales this year.

  • Daily Mail

  • Tiles and wood flooring retailer Topps Tiles says it should be able to maintain its financial strength even if its stores remain shut for twelve weeks.

  • AIM-listed fashion retailer Quiz has warned that sales and margins will be 'materially' below expectations this month.

  • Sky and BT could lose nearly £1 billion in revenues if top-flight sports remain off-air until August, a report warns.

  • Chiquito was on the brink of collapse last night as the Mexican brand, owned by The Restaurant Group, filed a notice of intention to appoint administrators, putting around 1,500 jobs at risk.

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