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FTSE 100 closes in the red as coronavirus crisis continues to dampen sentiment

The UK index of leading shares closed down over 74 points at 5,752. Over the week, the benchmark was lower, off 0.58%

Pearson PLC -
London stocks were under pressure on Friday, while the US market was also muted
  • FTSE 100 index closes down 74 points
  • US indices muted
  • FirstGroup advances after topping up its coffers

5.20pm: FTSE 100 closes in the red

FTSE 100 closed Friday in the red as US benchmarks were muted, while the pandemic crisis continues to dampen sentiment.

The UK index of leading shares closed down over 74 points at 5,752. Over the week, the benchmark was lower, off 0.58%.

The FTSE 250 shed 106 points to close at 15,687.

"Hopes for a potential Covid-19 treatment were running high this time last week as Gilead Sciences' antiviral drug Remdesivir was reported to have helped patients with fever and respiratory problems, noted David Madden, analyst at CMC Markets.

"Those hopes were dashed when a medical trial in China said the drug was unsuccessful," he added.

Sentiment was also a little weak on Wall Street. but the US indices are in better shape than their European equivalents, he noted.

The Dow Jones Industrial Average is flat at 23,514. The S&P 500 is up around four points.

2.50pm: US markets continue to defy gravity

US indices declined to take their lead from European markets and opened higher.

The Dow Jones industrial average was 93 points (0.4%) higher at 23,608 and the S&P 500 was 11 points firmer (0.4%) at 2,809.

Whatever US investors are injecting into their bloodstream – Cillit Bang, Domestos or Ajax cleaning fluid, perhaps – London traders are eschewing as the FTSE 100 index remains tethered to the 5,800 level, down 27 points (0.5%).

In contrast, the mid-cap FTSE 250 is marginally higher – up 2 points at 15,796, led by luxury car maker Aston Martin Global Holding PLC (LON:AML), which is up 14% at 61.5p following yesterday’s strategy update.

Elsewhere among mid-caps, bus and trains operator FirstGroup PLC (LON:FGP) was 5.7% better at 62.55p after a business and liquidity update.

READ FirstGroup strengthens cash buffer to £800mln with government loans

Dwelling in the deepest recesses of the FTSE 250 cellar were cinemas owner Cineworld PLC (LON:CINE), down 8.1% at 53.68p, and pubs and brewing group Marston’s PLC (LON:MARS), down 7.9% at 30.02p.

Both have been hit by suggestions that the UK lockdown could run until the end of the year in one form or other with leisure venues among the last to be given the all-clear to reopen for business.

1.45pm: US indices expected to open higher

US markets are expected to open higher, with sentiment seemingly unaffected by the apparent failure of a prospective coronavirus treatment.

Spread betting quotes suggest the Dow Jones industrial average will advance 142 points to 23,657 at the outset while the S&P 500 is expected to open at around 2,817, up 19 points.

That’s despite orders for US durable goods tumbling in March by 14.4% after rising 1.1% in February. Economists had pencilled in a figure of -12% for the change.

In London, the FTSE 100 continued its slow recovery back towards last night’s close. The index was down 19 points (0.3%) at 5,807.

12.30pm: Slow recovery continues

The Footsie was whittling away losses on a day when European Union leaders agreed on a massive recovery package for a coronavirus-blighted economy.

The FTSE 100 was down 25 points (0.4%) at 5,802, back above 5,800 having fallen as low as 5,729 at one point today.

“Stock are paring gains on Friday, with the mood soured by reports that Gilead's remdesivir flopped in its first randomised clinical trial,” reported Craig Erlam at OANDA.

“This time last week, investors were full of hope after some very promising results were reported, prompting a 12% jump in Gilead's share price. What a difference a week makes. These gains have been all-but wiped out,” he added.

“Gilead has since stressed that the results are inconclusive and the study was terminated early due to low enrollment but the damage has been done. This is a market - and global population for the matter - that's craving good news and this just feels like another big setback,” he added.

Earlier today, the tone was set by some worrying retail sales figures. Sales volumes fell 5.1% in March, which was the largest single-month decline since records began.

“If we’re seeing this kind of collapse in sales in March – when only eight days were spent in lockdown – April is doing to be really messy. March is unlikely to hold the record for monthly sales falls for long,” predicted (with some certainty) Sarah Coles, a personal finance analyst at Hargreaves Lansdown.

“This is enormously difficult for retail businesses. Many are likely to have taken advantage of government schemes, loans and grants, but many more will still face impossible rent bills and incredibly difficult questions about whether they can keep going. It begs the question of just how many will still be on their feet when we eventually emerge from this crisis,” she added.

 

Meanwhile, Cillit Bang maker Reckitt Benckiser Group PLC (LON:RB.) is the second best performer on the Footsie with a 1.8% rise at 6,518p. Furthermore, Cillit Bang is trending on Twitter after President Trump reportedly advocated irradiating people's bodies with ultra-violet light or injecting them with bleach or alcohol to combat the coronavirus.

11.15am: Losses pared as sterling ebbs

Eary losses have been pared with the appeal of Footsie stocks burnished by sterling’s weakening against the US dollar.

Sterling was down by around a sixth of a cent against the greenback.

The FTSE 100 was down 46 points (0.8%) at 5,780, with around a quarter of the index’s constituents in positive territory.

Among those defying the trend are housebuilders such as Barratt Developments PLC (LON:BDEV), up 1.3% at 522.6p, and Taylor Wimpey PLC (LON:TW.), up 0.9% at 149.1p, after the latter said yesterday it would start reopening some building sites.

Vistry Group PLC (LON:VTY), the company formerly known as Bovis, also said yesterday it would recommence work on many of its sites.

Faring worse than the trend, however, was fashion firm Burberry Group PLC (LON:BRBU), which was down 3.0% at 1,300p after it said it would not rely on government support for jobs in the UK where more than a third of its employees are based.

9.50am: Blue-chips stabilise after weak start

Aerospace stocks are prominent among the losers this morning as traders come to terms with the prospect of the lockdown lasting longer than hoped.

The FTSE 100 was down 89 points (1.5%) at 5,737, with Melrose Industries PLC (LON:MRO), owner of automotive and aerospace engineer GKN, leading the retreat with a 7.2% fall to 85.1p.

Also weighing on the index were the heavily-weighted oil giants, Royal Dutch Shell (LON:RDSB), down 4% at 1,344.2p, and BP PLC (LON:BP.), down 3.5% at 306.65p, as the oil price recovery stalls.

Drugs giant AstraZeneca PLC (LON:AZN) was lower but outperforming the Footsie after it announced further positive results from the Phase III PROfound trial of Lynparza (olaparib) in men with metastatic castration-resistant prostate cancer.

The shares were down 0.6% at 8,135p.

Academic publisher Pearson PLC (LON:PSON) fell 2.7% to 439.3p after its trading statement proved to be a mixed bag.

The company said it would pay its final dividend for last year, as a rise in online learning in the first quarter during the coronavirus pandemic has been offset by the closure of its test centres.

8.40am: Friday jitters

The FTSE 100 index fell back in early trade on Friday following a record drop in UK sales and after hopes for a coronavirus treatment were dashed.

The index of UK blue-chips opened 86 points lower at 5,740.75.

UK retail sales dropped by a record 5.1% in March – though analysts expect worse to come in the wake of the coronavirus (COVID-19) lockdown.

“Shops were already suffering before the coronavirus as a result of changing consumer behaviour. Increasing numbers of people are turning away from the high street and shopping online, which offers greater convenience and ease,” said Dr Kerstin Braun of Stenn Group, a trade finance provider.

“The COVID-19 pandemic has only escalated the decline of the high street and is likely to speed up these inevitable shifts, with high street footfall seeing its steepest decreases ever,” he added.

The retail sector was largely unfazed, however, with share prices of the industry’s big hitters little changed in early exchanges.

Bombed out Marks & Spencer (LON:MKS) actually found some support from bargain hunters and nudged 2.3% higher.

The FTSE 100 opened sharply lower after the hopes a drug giant had found a coronavirus treatment were dashed. Gilead Science’s remdesivir was reported to have been successful in a small-scale trial; however, according to leaked papers, it failed in a larger Chinese deployment.

Topping the fallers were the aero-engineers Meggitt (LON:MGGT) and Melrose (LON:MRO), which were off 4.8% and 4.6% respectively amid liquidity fears.

Not far behind were struggling airlines IAG (LON:IAG) and easyJet (LON:EZJ), down 4% and 3.6%, respectively, as hopes to an early end to the coronavirus lockdown receded. The farce around potentially having to leave the middle seat vacant when planes return to the air also added to the mix.

Proactive news headlines:

Scancell Holdings PLC (LON:SCLP) said it has begun a research programme to develop a vaccine for the coronavirus. The project, to be led by the company’s chief scientific officer Lindy Durrant, will aim to utilise the company’s clinical expertise in cancer to produce a cost-effective and scalable vaccine to induce both durable T-cell responses and virus neutralising antibodies against coronavirus. Initial research is now underway, with the company anticipating a phase 1 clinical trial in the first quarter of 2021.

SDX Energy PLC (LON:SDX) has confirmed successful well testing results at the recently drilled SD-12X (Sobhi) well, at the South Disouq project in Egypt. Sobhi flowed at a maximum rate of 25mln cubic feet of gas per day (on a 54/64" choke), in an initial one hour test, followed by stable rate of 15mln cubic feet per day over three hours (on a 28/64" choke) and 10mln over four hours (on 16/64"). The company said that following a review of data it anticipates the well will produce at an optimum stabilised rate of 10-12mln cubic feet per day.

Tekcapital PLC (LON:TEK) said its portfolio firm, Lucyd is to launch its range of Bluetooth-enabled glasses on the website of US superstore chain Walmart Inc (NYSE:WMT). The investment firm said the expansion offered a “new opportunity” to reach Walmart’s customer base, which is estimated to make up about 6% of the entire US eCommerce sector. In a statement, Tekcapital said Lucyd is “aggressively expanding” its online direct-to-consumer presence, adding that the firm has also listed its flagship Loud 2020 glasses range on both the eBay marketplace and the Mercari selling app.

Genedrive PLC (LON:GDR) and Inspiration Healthcare Group PLC (LON:IHC) are collaborating to distribute Genedrive’s antibiotic-induced hearing loss (AIHL) test in the UK & Ireland. The companies also expect to expand the scope of the contract over time to engage Inspiration Healthcare's network of more than 50 neonatal-focused sub-distributors around the world. The Genedrive MT-RNR1 AIHL test is the world's first point-of-care genetic test designed for use in a neonatal intensive care setting. The test screens newborns for a genetic mutation called mt-RNR1 that can cause lifelong and irreversible deafness to a child upon administration of certain antibiotics.

i3 Energy PLC (LON:I3E) has told investors that it is in talks with its loan note holders to get consent to waive a condition which would require new funding to be in place by the end of this month. In a statement, the company noted that a November 2019 extension demanded that i3E Energy, by April 30, entered a reserves-based lending facility or alternative financing to take the Liberator field. However, the group said: “As the company will not be in a position to enter into such a facility by April 30, the company is in discussions with all noteholders to waive this condition and expects to provide an update to the market prior to April 30.”

Tiziana Life Sciences PLC (NASDAQ:TLSA) (LON:TILS) has carried out a little corporate housekeeping by issuing shares to retire a chunk of debt. It has wiped out £1.595mln of convertible loan notes, including accrued interest. At the same time, warrants were exercised bringing in just under £600,000 to the business. In the same announcement investors, were told AIM-listed Tiziana’s plans to redomicile to Bermuda, cancel its American Depositary Receipt (ADR) programme and have its Bermuda common shares listed on NASDAQ have been delayed. It cited the coronavirus lockdown and “other factors” for the hold-up.

Landore Resources Ltd (LON:LND) said it has raised gross proceeds of £260,000 in an equity issue to support the funding of exploration activities and working capital. Some 38.5mln subscription securities – comprising one share and one share warrant – are being sold to new investors and existing shareholders at a price of 0.675p each. The 1p warrants are exercisable at any time over a 24 month period.

Pembridge Resources PLC (LON:PERE) has had to revise the share subscription announced on April 20 to ensure it is compliant with prospectus regulation rules and said certain directors have also agreed to surrender their options to maximise the amount of capital that can be raised in the placing. The group had been looking to issue 19,183,179 new ordinary shares to raise £633,000 under the original subscription but that exceeds the maximum amount permitted of 20% of its current issued share capital. It now intends to issue 11,175,499 new ordinary shares resulting in a revised subscription of £368,000 at the same price of 3.3p. 

Galantas Gold Corporation (LON:GAL) (CVE:GAL), the gold producer and explorer with a 100% interest in Northern Ireland's Omagh gold mine, has said that it intends to rely on the Canadian Securities Administrators blanket relief as a result of the coronavirus (COVID-19) outbreak for its filings for the year ended December 31, 2019, which it now anticipates on or before June 12, 2020. The company added that it expects to be filing, before May 29, a short technical report in respect to a recent probe drilling campaign carried out underground at the Omagh mine. As disclosed on January 16, 2020, the group said the results of the campaign, combined with detailed mapping of the exposed mineralisation underground suggest zones of higher width of mineralisation within the vein, linking adjacent levels. Galantas said this supports a model that such zonal mineralisation may continue at depth, with enhanced exploration potential for targeting gold resources on-site and within the company's license area.

accesso Technology Group PLC (LON:ACSO), the premier technology solutions provider to leisure, entertainment and cultural markets, said its annual general meeting (AGM) will be held on Tuesday, May 19, 2020. It added that, given the need to observe the UK government's current guidance on social distancing as well as prohibiting all non-essential travel and public gatherings of more than two people, the AGM will be held at its company secretary's home office. The group said its board will ensure a quorum is present and no additional shareholders will be able to attend the meeting and it strongly encourages all shareholders to complete and return a proxy form to ensure all votes are included.

C4X Discovery Holdings PLC (LON:C4XD), a pioneering drug discovery company, said it will be announcing its half-year results for the six months ended January 31, 2020, on Wednesday, April 29.

6.30am: Footsie set to open lower 

Equities are to open lower in London as one of the hopes for a vaccine to treat the coronavirus (COVID-19) blew out in a trial.

Spread betting quotes indicate the FTSE 100 will open 108 points lower at 5,719.

Draft documents accidentally published by the World Health Organization claimed that remdesivir, a drug being developed by Gilead Sciences, had been unsuccessful in a Chinese trial in improving the condition of patients infected with COVID-19.

"We believe the post included inappropriate characterisations of the study," a spokesman for Gilead said. The spokesman said that the trial was terminated early due to low enrolment and was therefore not statistically meaningful.

US markets were mixed yesterday, with the Dow Jones Industrials Average advancing 39 points to 23,515 while the S&P 500 dipped a couple of points to 2,798.

Asian markets were soft this morning. In Tokyo, the Nikkei 225 was off 155 points at 19,275, while in Hong Kong the Hang Seng was down 66 points at 23,911.

Switching back to the UK, Friday will see the release of official UK retail sales data from the start of March to April 4 at 7.00am. With most shops having been forced to close on March 24 as the country went into coronavirus lockdown, the numbers are likely to be bleak.

“The headline reading is tipped to be -4%, which would be a big drop from the -0.3% posted in February. The reading that strips out fuel is expected to be -3.5%,” said CMC’s David Madden.

Scheduled updates from blue-chips are thin on the ground but there will be a quarterly update from Pearson PLC (LON:PSON), which last month said it was pausing its share buyback scheme to better manage cash through the coronavirus pandemic.

The educational publisher and testing centre operator, which is still awaiting the appointment of a new chief executive to replace outgoing boss John Fallon, said it has seen a “significant uplift” in the use of its digital products and online learning services.

Significant announcements expected on Friday:

Trading announcements: Pearson PLC (LON:PSON), Rotork PLC (LON:ROR), Science Group PLC (LON:SAG)

AGMs: HSBC PLC (LON:HSBA), ITV PLC (LON:ITV), Pearson PLC (LON:PSON)

Economic data: US Michigan consumer sentiment

Around the markets:

  • Sterling: US$1.2345, n/c
  • 10-year gilt: yielding 0.294%, down 3.16 bps
  • Gold: US$1,745.80 an ounce, up 40 cents
  • Brent crude: US$25.74 a barrel, up 85 cents
  • Bitcoin: US$7,523, down 34 cents

City headlines:

  • Financial Times

  • Chancellor Rishi Sunak has caved in under pressure from Conservative MPs and the Bank of England to offer 100% guarantees on loans to Britain’s smallest businesses.

  • Germany has been warned by the chancellor, Angela Merkel, not to gamble away its success in containing the spread of coronavirus by moving too quickly to lift its lockdown measures

  • Rosneft, Russia’s state-controlled oil producer, is set to close its trading arm.

  • The Times

  • More than one in four staff have been temporarily laid off in the UK, according to official figures that highlight the depth of the problems facing the economy.

  • AJ Bell, one of the biggest investment platforms in Britain, has attracted record numbers of customers and a net £1.3 billion of new money despite chaos in the financial markets.

  • All companies should be given a three-month business rates holiday as part of almost £16 billion of potential new aid, according to the CBI.

  • Equinor has become the first oil major to cut its dividend as a result of the tough conditions in the industry.

  • Compass Group said that coronavirus lockdown worldwide had shut about 55% of its business.

  • Hundreds of UK aerospace jobs are being cut after engineer Meggitt said it was axing 15% of its workforce and Safran, the French group, announced redundancies at plants in England and Wales.

  • A row between Hiscox and some of its business customers over insurance payouts has intensified after angry policyholders prepared to launch legal action against the insurer.

  • Apple may start releasing Mac computers that come with its own chips again from next year, ditching Intel’s processor, according to insiders.

  • The Daily Telegraph

  • The eurozone could collapse into a fresh financial crisis after devastating falls in output this month as economic activity all but ground to a halt, experts have warned.

  • Struggling shops, restaurants and pubs hit by the coronavirus lockdown are to be shielded from “aggressive” action by landlords to recover unpaid rent under new rules.

  • German carrier Lufthansa is facing a severe cash squeeze and seeks an urgent state bail-out from different European governments.

  • The Guardian

  • The UK seeks to borrow £225 billion from bond market investors in just four months to fund the huge increase in public spending during the coronavirus pandemic.

  • Major names in British retail, construction and car manufacturing have announced plans to return to work in tentative signs that businesses are preparing to kickstart an economy paralysed by the coronavirus pandemic.

  • The coronavirus pandemic will trigger “lasting changes” in shopping behaviour, according to Unilever.

  • Daily Mail

  • Blackmore Bond, another savings firm offering so-called mini-bonds, has tumbled into administration.

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