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FTSE 100 regains ground at the close

The FTSE 100 index closed at 5,628 points on Thursday, up nearly 31 points for a gain of 0.6% on the day

Rentokil Initial - FTSE 100 on the fence ahead of Thursday’s open, Trump claims US coronavirus spread is “past the peak”
  • FTSE 100 index rises 9 points
  • US indices open mixed
  • First-time weekly jobless claims in the US last week clocked in at 5.245mln

5.05pm: FTSE 100 finishes above opening levels

The FTSE 100 index closed at 5,628 points on Thursday, up nearly 31 points for a gain of 0.6% on the day.

The UK's blue chip index remained insulated from ugly job figures coming out of the US, where 22 million people lost their jobs in the last four weeks.

"Trading was subdued on Thursday afternoon, as investors digested yet another multi-million jobless claims reading out of the US," Spreadex analyst Connor Campbell wrote.

"Yet once again the Dow Jones didn’t freak out at these figures. Instead it sank around 100 points – a manageable decrease for an increase that’s got use to 500-plus point swings.

"Nevertheless, it did put a further dampener on a session that had already lost steam. The DAX clung onto a 0.4% increase, while the CAC actually slipped into the red by a handful of points. Interesting the FTSE got a bit of a lift once the bell rang on Wall Street, climbing half a percent despite losses for BP and Shell."

2.50pm: Boeing drags down the Dow but S&P remembers its lines

The Dow Jones pulled off a surprise, opening lower, largely thanks to Boeing, but the S&P 500 behaved as expected and rose in early trading.

The Dow Jones was down 97 points (0.4%) at 23,407. The S&P 500 was up 7 points (0.2%) at 2,790 after US jobless claims were not as bad as feared.

US initial jobless claims declined to 5.25mln during the week ending April 11 from 6.62mln the week before.

Initial claims have totalled 22mln between March 14 and April 11, “suggesting that the unemployment rate is approaching 20%”, according to Berenberg Capital Markets.

“This deterioration in labour market conditions has been rapid and dramatic, but the improvement will be sluggish,” Berenberg predicted.

“Continuing claims for unemployment insurance, which are reported with a two-week lag, increased to 12mln during the week ending April 4 from 7.4mln in the prior week, almost doubling its high from the Great Recession of 2008-2009 when the unemployment rate peaked at 10%,” it added.

“Some businesses will permanently close and others that reopen may reduce payrolls because of weak demand. Labour market dislocations will take a while to sort out. By year-end 2021, we expect the unemployment rate to fall to 9.1%, which would be more than double its pre-crisis rate of 3.5%. These job losses will weigh heavily on confidence. Household spending on non-necessities and services will be cautious,” Berenberg predicted.

Ian Shepherdson, the chief economist at Pantheon Macroeconomics, said the numbers were “grotesque” but predicted that the peak is now past.

“Payrolls rarely drop as much as claims rise, because claims tell us nothing about gross hirings, and often people who lose a job and make a claim then quickly find a new position. This time, though, we expect most of the people who have made claims to hit the payroll number, because even the regular pace of gross hiring – which isn’t happening right now - would be trivial compared the scale of the losses,” Shepherdson said.

Shepherdson puts great stock in search engine enquiries for “file for unemployment” and believes these “strongly suggest that claims will fall again next week, to perhaps 3.5mln”.

“The initial lockdown impact is now fading in the consumer-facing economy, but supply chains and business-to-business services presumably are being pounded now.

“It took nearly years from the Crash of October 1929 for unemployment to peak, at 24.9%. The COVID-19 lockdown is on course to wreak as much havoc in two months,” he noted.

James Knightley, the chief international economist at ING, reckons “some of those who have lost jobs, which we assume primarily impacts people in retail, entertainment and at bars and restaurants, have subsequently found work at grocery stores, logistics and delivery, but the overwhelming majority will not”.

“Moreover, the numbers will understate the true picture given they won’t include undocumented migrant labour, which will be very vulnerable to firings in the current environment,” he added.

In London, the FTSE 100 was keeping its head above water but not by much; the index was up 9 points (0.2%) at 5,606.

2.15pm: US benchmarks to open higher

US markets are set to open higher after first-time weekly jobs claims released earlier today were in acceptable bounds.

Spread betting quotes suggest the Dow Jones index will open around 138 points higher at 23,642 and the S&P 500 20 points firmer at 2,803.

The jobs data also gave a bit of a fillip to equities in London, where the FTSE 100 is up 28 points (0.5%) at 5,625.

1.35pm: US first-time jobless claims top 5mln again

First-time weekly jobless claims in the US last week clocked in at 5.245mln, pretty much in line with market forecasts.

The filings for the week just ended were lower than the week before but still scarily large, and bring the total number of people turfed on the dole since the coronavirus crisis really took hold to around 22mln.

In London, the FTSE 100 perked up a tad on the release of the numbers, rising to 5,625, up 28 points (0.5%), having been loitering around 5,605 when the jobs news broke.

1.00pm: Marking time with eyes wide shut ahead of US jobless claims

UK equities are marking time, awaiting the release of the weekly US jobless claims.

The FTSE 100 was up 18 points (0.3%) at 5,616.

“The Dow Jones, which was at one point eyeing a 180 point increase, is now looking to start the session flat. Where it does end up opening will likely be dictated by the day’s jobless claims figure. Analysts are expecting another 5.35 million unemployed Americans – concerning since the actual reading as significantly outstripped estimates for the last three weeks,” reported Connor Campbell at Spreadex.

Will investors finally take the jobs data seriously? Or will another distraction – like the Fed’s $2.3 trillion loans package, which arrived 30 minutes after last Thursday’s reading – soften the blow of the numbers?” he wondered.

Away from the big caps, video game services provider Keywords Studios PLC (LON:KWD) has nudged 1,5% higher to 1,540p after some decent full-year results.

“Gaming is a rare ray of light in the current stock market gloom - spending looks set to spike as the world is increasingly confined to the sofa. As the leading provider of outsourced gaming services, contributing to the development of hundreds of games every year, Keywords should see a slice of the action,” suggested Nicholas Hyett, an equity analyst at Hargreaves Lansdown.

“A decentralised model, with dozens of studios scattered around the globe, is naturally resilient to the current disruption. Teams are used to working with each other remotely and the company has quickly moved 75% of the workforce to work from home. The transition in some of the more commercially sensitive units is less straight forward though, and with demand for many services increasing already, the biggest question in the near term is whether Keywords will be able to service the extra business that’s coming its way,” he added.
 

11.30am: Back to square one for equities as gold remains in demand

It’s been a grand old Duke of York day today – if the duke’s men had been confined to the yard outside their barracks.

Which is to say, the Footsie is wandering above and below last night’s close but not moving far in either direction. Currently, the FTSE 100 is up 11 points (0.2%) at 5,609, helped a little by sterling shedding just over a third of a cent against the US dollar on foreign exchange markets.

The suspicion that this morning’s brightish start was unlikely to be built upon was strengthened by the continued demand for gold, which has increased in price by US$16.20 (0.9%) to US$1,756.40 an ounce.

Elsewhere on the futures markets, the price of oil is also on the up. Brent crude for June delivery is up 86 cents at US$28.55 a barrel.

“Because the OPEC+ deal falls far short of the decimation in demand, more supply cuts are coming, whether or not governments mandate them,” opined Sam Wahab at SP Angel.

Despite the oil price rally, BP PLC (LON:BP.) is down 1.1% at 296.3p and Royal Dutch Shell (LON:RDSB) is down 1.3% at 1,298.4p.

10.45am: Footsie dips into the red

London’s index of heavyweight shares has turned negative although reassuringly, not by much.

The FTSE 100 was down 8 points (0.1%) at 5,590.

Pest control and laundry services provider Rentokil Initial PLC (LON:RTO) defied the trend after it said it had trained 7,000 staff for deep clean services in response to increased demand during the coronavirus (COVD-19) pandemic.

“Rentokil appears to be one of those few companies that has been able to continue to operate through the coronavirus disruption, with pest control and hygiene designated an essential service by the government, though there has still been an element of disruption, in the last two weeks of March, due to lack of access to some of its contracts. Q1 revenues saw a rise of 7.2% to £630.5mln,” noted CMC’s Michael Hewson.

The shares were up 4.3% at 408.7p.

Talking of COVID-19, there are signs that the world is getting to grips with slowing the spread of the virus.

“US case growth was unchanged at 4.7% yesterday, a much smaller increase than the 8.3% leap recorded on the same day last week but the number was pushed up by a big jump in both the number of people tested in NY [New York] state and the share of positive tests; NY state accounted for 40% of the new cases across the country.” noted Ian Shepherdson, the chief economist at Pantheon Macroeconomics.

“UK case growth probably has peaked too, along with deaths. The next week or so should bring a clear downturn in both, but the UK is a least a couple of weeks behind the best performing continental European countries,” he noted.

Adam Barker at Shore Capital noted that Situation Report 86 from the World Health Organisation (WHO) reported a fourth consecutive day of new cases declining, meaning the growth in cumulative cases continues on a steady downward trajectory.

“Europe continues to show very clear evidence of progress, but we remain concerned by India, with the capital Delhi and financial centre Mumbai recently designated as “red zones” of infection,” he added.

“Cumulative cases in the UK reached 93,877 in this most recent Situation Report (new cases increasing by 21% following an 18% decline yesterday) and are forecast to reach 99,489 on the Johns Hopkins live tracker (meaning growth of 7%). Care homes remain firmly in focus as the UK government announced plans to increase testing in these environments to provide a better view on infection levels,” Barker noted.

 

9.20am: Gains for travel stocks more than offset ex-div effects on the Footsie

Travel-related stocks are leading the Footsie’s advance early doors as traders punt on lockdowns in Europe being lifted sooner than previously expected.

The FTSE 100 was up 27 points (0.5%) at 5,624, with low-cost airline easyJet PLC (LON:EZJ), up 7.6% at 649.2p, top of the tree after its trading update.

“Investors have been given some much-needed reassurance by easyJet this morning,” said Helal Miah at The Share Centre.

“However, the key issue of when flights can resume remains. While out of its control, measures that management has taken should see the company be able to endure prolonged grounding of flights – the most extreme being a situation where flights are grounded for nine months and it could burn through £3bn in cash.

“The carrier is demonstrating its survivability to investors in these extreme circumstances and we’re somewhat assured that it’s a more viable airline than most others; however, despite this morning’s rally in the shares, it’s still a long way off for the pre-lockdown levels,” Miah noted.

“While it should come out relatively well on the other side, the question is how the economy shapes up afterwards and whether spending on travel resumes to pre-lockdown levels or not. Given that we are about to have the sharpest reduction in activity since the great depression with unemployment set to soar, we’d be very hesitant to buy the shares given the heightened risk. Of course, they remain an option for the very brave,” he added.

Ex-dividend status – yes, some companies are still paying ‘em – has taken a chunk out of the share price of asset management firms M&G PLC (LON:MNG) and St James’s Place PLC (LON:STJ), which are down 10% and 3.9% respectively, and a smaller nibble out of household goods maker Reckitt Benckiser Group PLC (LON:RB.), which is 2.5% lower at 6,162p.

8.50am: Positive progress

The FTSE 100 bucked the global trend as it shrugged off coronavirus pandemic worries and ignored the worsening economic outlook in the US to open in positive territory.

The index of UK blue-chips opened 23 points higher at 5,620.41.

However, later today we’ll see whether the now-closely-eyed US weekly jobless numbers temper sentiment on this side of the pond.

On Wall Street, a near 450-point drop by the DowJones Industrials Average overnight was prompted by March retail sales figures, which were every bit as bad as expected, and a slew of quarterly earnings statements from the major American banks, which made for grim reading.

Here in the UK, the conversation has turned to the potential alleviation of the lockdown restrictions after the government's chief medical officer Chris Whitty suggested we may have hit the peak of the outbreak.

“There is a huge importance that should be based on when lockdown will end for a number of countries, as this will point to exactly when normal economic circumstances could well return,” said James Hughes of Scope Markets.

“Spending is absolutely key for these economies to recover from the position they will find themselves in. However, spending can only occur if the employment picture remains manageable.”

That discussion around the end to lockdown had easyJet (LON:EZJ) flying 7.8% higher after an update showing it has secured more funding, while cruise giant Carnival (LON:CCL) sailed ahead 6.6%.

There was also some respite for cinema group Cineworld (LON:CINE), which jumped 15% higher as investors anticipated a gradual return to normal activities in the UK.

But pensions and savings group M&G (LON:MNG), which is heavily invested in global markets, saw its shares subside 9.5%.

Proactive news headlines:

Collagen Solutions PLC (LON:COS) has revealed it is in discussions with a “number of parties” as it confirmed it will conduct a “formal review of its strategic options”. “These options include, but are not limited to, the potential sale of the company or the sale of one or more of the company's assets,” the group added in a statement. The company said it has appointed Goodbody Stockbroker as a joint financial adviser alongside England and Company and is inviting would-be buyers to lodge indicative offers by 5pm on May 15.

Clinigen Group PLC (LON:CLIN) said there had been only “marginal disruption” to its business against the backdrop of the coronavirus lockdown as it unveiled a new licensing a distribution deal. The pharma and services group has signed a global agreement with Porton Biopharma for the drug Erwinase/Erwinaze. The treatment has been developed for people with acute lymphoblastic leukaemia who have developed hypersensitivity to E. coli-derived asparaginase.

Europa Metals Ltd (LON:EUZ), the lead-zinc and silver projects developer, has hailed high-grade recovery results from the second phase metallurgical testing at its Toral project. The key findings of an updated independent metallurgical report on the project, situated in the Castilla y León region in north-west Spain, included 83.7% lead (Pb) recovery to a 60.0% Pb concentrate; 87.1% silver (Ag) recovery to 1,350 parts per million (ppm) Ag within Pb concentrate; and 77% zinc (Zn) recovery to a 59.1% Zn concentrate. The results demonstrate the potential for high-grade saleable and marketable Pb and Zn concentrates, Europa said, and were at the higher end of management’s expectations.

Base Resources Limited (LON:BSE) has told investors that operations at the Kwale project in Kenya continue uninterrupted, with procedures in place to minimise the coronavirus (COVID-19) risks to its personnel and communities. In a quarterly update, the company highlighted production increases from the prior quarter across all products. It also noted ongoing demand from customers, with ilmenite and rutile prices continuing to strengthen in the quarter. Base said it is maintaining its production guidance for 2020.

Keywords Studios PLC (LON:KWS) has said a surge in video game playing as a result of the coronavirus pandemic is driving “increased demand” for its development services. In an outlook statement accompanying its final results, the AIM-listed firm also said trading in 2020 had started “in line with market expectation” and that it had only suffered a “limited impact” on its business from the outbreak.

Learning Technologies Group PLC (LON:LTG), the digital learning specialist, said it has yet to see a material impact on its trading performance from the coronavirus (COVID-19) pandemic. In its results statement covering 2019, the company said the current financial year has started well and it expects 2020 revenues to be largely unaffected by the global economic upheaval, although new business wins may be delayed and payment periods may be extended.

Woodbois Limited (LON:WBI) has reported a 10% year-on-year rise in revenues to US$4.9mln in its first quarter, highlighting “no discernible slowdown in demand” for its timber and forestry services. In an update on Thursday, the AIM-listed group said the first full quarter of production at the newly re-tooled sawmill in Gabon saw production increase by more than 100% over the previous quarter, with recovery levels of 40%, higher than the 34% average for 2019.

Kodal Minerals PLC (LON:KOD) has told investors that its exploration permits have been renewed for the Dabakala and Korhogo gold properties in Côte d'Ivoire. Each has been extended for an extra three years, expiring in April 2023, the group said.

Haydale Graphene Industries PLC (LON:HAYD) said it has sufficient reserves to adequately manage the anticipated impact of the coronavirus (COVID-19) outbreak. In a statement, Haydale said its directors are taking prudent steps to preserve the company’s cash position as it is seeing a slowdown in a number of its markets, particularly in the US where demand for Haydale’s Silicon Carbide blanks has been indirectly affected by the huge reduction in air travel, which has compounded the ongoing impact of the slowdown at one of the major US manufacturers in the aviation industry.

Tlou Energy Ltd (LON:TLOU) told investors it can constructively advance project finance efforts whilst ‘on-the-ground’ access in Botswana is restricted amidst the coronavirus (COVID-19) pandemic. In a quarterly update, the company said that “discussions with potential project finance partners progressed during the quarter with the company evaluating debt or equity funding or a mix of both." It added: “Tlou's objective is to source the lowest cost of capital with the least risk going forward.”

Gore Street Energy Storage Fund PLC (LON:GSF), London's first listed energy storage fund, has announced that pending completion of certain bank administration requirements, Sanne Limited has been appointed to provide administration and accounting services to the company. It added that JTC (U.K.) Limited continues to provide company secretarial services to Gore Street under its existing contract, as amended on April 14, 2020.

Kavango Resources PLC (LON:KAV), the exploration group targeting the discovery of world-class mineral deposits in Botswana, announced it has reached an agreement with certain directors and managers for the settlement of arrears of remuneration by the issue of convertible unsecured loan notes. The group noted that to preserve the company's cash resources, directors and senior managers have been deferring their remuneration for some time and a balance of £91,855 was due in this respect. It said it has now agreed with directors and senior managers to issue £109,987 nominal of the convertible notes for cash of £18,132 and in payment of the balance of arrears of remuneration, repayable, if not previously converted, on March 31, 2021, which bear a coupon at the rate of 10% per annum and a conversion price the same as the group’s recent placing price in the recent financing, namely 0.8p per ordinary share.

Gaming Realms PLC (LON:GMR) has said it will be deferring the publication of its full-year results for the year ending December 31, 2019, until April 28. The company had previously indicated its intention to publish during the week commencing 13 April 2020. The group said its audit is substantially complete, however, the disruption of the coronavirus (COVID-19) pandemic has delayed finalisation, as has been the case with many other companies. Alongside the reporting of its FY19 results, the group said it will also be updating on its current trading.

Silence Therapeutics, PLC (LON:SLN), a leader in the discovery, development and delivery of novel RNA therapeutics for the treatment of serious diseases, has said that its annual report and financial statements for the year ended December 31, 2019, are available for download on the company's website: www.silence-therapeutics.com.

Chaarat Gold Limited (LON:CGH), the AIM-quoted gold mining company with assets in the Kyrgyz Republic and Armenia said it will be hosting an investor and analyst webcast on Friday, April 16, 2020, at 10am BST to provide an update on current operational and financial developments and set out the terms of its proposed equity capital raise. The webcast will be presented via Zoom and panellists will be Artem Volynets, the group’s CEO, Chris Eger it’s CFO, and Darin Cooper it’s COO. Participants can access the presentation via video conference or dial in by registering in advance at: https://us02web.zoom.us/webinar/register/WN_dLeIYTm2Qt-RY7D4F6GhFQ

6.40am: Spread betters on the fence 

The FTSE 100 is set to start Thursday on the fence, following what was another challenging day for equities on Wednesday

CFD and spreadbetting firm IG Markets is calling the London benchmark down only 2 points ahead of the open, making the price 5,592 to 5,595 with just over an hour to go until the start of trading.

On Wednesday, the UK benchmark gave up 194 points while other global indices struggled as macroeconomic data and analysis weighed on investor sentiment, with ‘risk-off’ trading pushing most stocks and commodities into the red.

Overnight on Wall Street, the Dow Jones Industrials Average shed another 445 points, or 1.86%, to finish Wednesday at 23,504. The S&P 500, meanwhile, marked a 2.2% fall closing at 2,783 and the Nasdaq Composite was off 1.44% ending the session at 8,393.

“As depressing as the economic indicators are, it feels like this is only the beginning of a painful few months ahead of us,” said David Madden, an analyst at CMC Markets.

“The Beige book painted the US economy in an extremely negative light. Employment fell in all districts. The leisure, hospitality and non-essential retail sectors were the hardest hit. All districts reported very uncertain outlooks."

Madden, at the same time, also noted: “Late last night, President Trump said the data suggests the US is past the peak of new cases. The US leader is expected to make an announcement regarding the lockdown tomorrow.”

In Asia, Japan’s Nikkei 225 index traded 276 points or 1.4% lower at 19,274 while Hong Kong’s Hang Seng was 0.8% lower at 23,956. But the Shanghai Composite actually traded in positive territory, up very slightly at 2,813.

Around the markets:

  • The pound: US$1.2483, down 0.28%
  • Gold: US$1,715 per ounce, down 0.66%
  • Brent crude: US$27.88 per barrel, down 6.1%
  • WTI crude: US$19.87 per barrel, down 1.2%
  • Bitcoin: US$6,647, down 3.48%

Significant events expected on Thursday:

Trading announcements: Rentokil Initial PLC (LON:RTO), Hays PLC (LON:HAS), Norcros PLC (LON:NXR), Ashmore Group PLC (LON:ASHM), PZ Cussons PLC (LON:PZC)

Finals: Learning Technologies Group PLC (LON:LTG). Keywords Studios PLC (LON:KWS)

FTSE 100 ex-dividends to knock 5.8 points off the index: Smurfit Kappa Group plc (LON:SKG), Croda International PLC (LON:CRDA), Reckitt Benckiser Group PLC (LON:RB.), St. James’s Place PLC (LON:STJ), M&G PLC (LON:MNG)

Economic data: UK retail sales, US jobless claims

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