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FTSE 100 closes in the red as markets lack direction amid continued virus fears

Britain's leading share benchmark closed down nearly 52 points at 6,015. The midcap FTSE 250 added over 18 at 16,385

FTSE 100 to start on backfoot as spike in new COVID-19 cases pours worry over lockdown exits
FTSE 100 fell on the day as markets on both side of the Pond lacked direction FTSE 250 headed north though
  • FTSE 100 index closes 51 points lower
  • FTSE 250 makes a better fist of things 
  • Pets at Home and Inchcape weigh the FTSE 250 down, however

5.05pm: FTSE closes in the red

FTSE 100 index closed in the red on Thursday as coronavirus fears linger amid the reopening of the globe's economies, with hospitality-focused Whitbread (LON:WTB) the biggest loser.

Britain's leading share benchmark closed down nearly 52 points at 6,015. The midcap FTSE 250 though was higher, adding over 18 at 16,385.

"Stock markets in Europe are lower as traders are cautious that reopening of economies might spark a second wave of the Covid-19 crisis. A number of countries that have loosened their lockdown restrictions have seen the number of new cases increase, so that is playing on traders’ minds," said analyst David Madden, at CMC Markets.

Over on Wall Street, stocks were also under pressure, with the Dow Jones off over 89 points at 24,486. The S&P 500 lost almost 20 points at 2,951.

It came as the latest US jobless claims came in at 2.44 million for last week die to the shutdown, which was the seventh consecutive weekly fall. Economists had pencilled in 2.4 million.

The top loser on the London's Footsie was Premier Inn owner Whitbread, whose shares sank 13.44% to 2,461p. As well as posting delayed preliminary full year results, the company announced a 1:2 rights issue as the company is seeking to raise £1 billion as its UK hotels have been shut now for around two months.

"The news of the rights issue hit the share price, but the cash injection should help the group in the medium term," noted Madden.

4.00pm: Grand Old Duke day (in reverse)

If it has been a Grand Old Duke of York sort of day (in reverse), the Duke has not exactly marched far.

Entering the last half-hour of trading, the Footsie was back in the red but only just, at 6,058, down 9 points (0.2%).

At its intra-day low, the index fell to 6,004 and at its height, it rose to 6,094 – so, less than a hundred points between the high and the low.

The mid-cap FTSE 250, in contrast, was in positive territory for most of the day, although it had ebbed to 16,446, down 78 points (0.5%) near the end, some 60 points below its high point for the day.

This was despite trading updares from Pets at Home PLC (LON:PETS) and Inchcape PLC (LON:INCH) frightening the horses.

Pet products seller Pets at Home tumbled 8.5% to 210.2p after it warned that an initial spoke in demand when the lockdown was first introduced had quickly faded and sales are now slumping.

Car seller Inchcape reversed 6.7% to 462.8p after it revealed a 76% plunge in revenue.

3.00pm: US indices open mixed

US indices defied expectations to end the first half-hour of trading in decent shape, despite some more dreadful weekly jobless numbers.

The Dow Jones industrial average was up 50 points (0.2%) 24,626 but the broader-based S&P 500 was down 4 points at 2,965.

Earlier it was reported that US initial jobless claims in the week ending 16 May declined to 2.4mln from 2.7mln the week before.

Initial jobless claims have totalled 38.6mln since mid-March, which was when the coronavirus pandemic started to bite but have at least declined for seven weeks in a row.

“If the Paycheck Protection Program (PPP) works as intended, continuing jobless claims should recede in coming weeks as portions of the programme’s loans used by businesses for payrolls will be forgiven if they rehire workers by June 30, 2020. Business rehiring decisions depend critically on product demand and cash flows,” said Roiana Reid at Berenberg.

“The estimate of unemployment in the Bureau of Labor Statistics (BLS) May Employment Report (scheduled for release on June 5) will reflect labour market conditions for the week of May 10-16. The 12.2mln initial jobless claims between April 19 and May 16 points to a material rise in the unemployment rate between the May and April BLS survey weeks (April 12-18),” Reid added.

In London, has emerged from its morning lockdown but is not practising physical distancing from last night’s close to any great degree; the index was up 16 points (0.3%) at 6,083.

2.25pm: The Footsie turns it around

The Footsie has turned things around, with aerospace stocks to the fore in the rally.

The FTSE 100 was up 17 points (0.3%) at 6,084.

Aerospace engines maker Rolls-Royce PLC (LON:RR.), up 5.3% at 287.65p, was the second biggest blue-chip riser after it revealed yesterday it would sack 9,000 people as part of a cost-saving plan.

Low-cost airline easyJet PLC (LON:EZJ) was lifted 1.6% to 559p by its announcement that it would resume flights in mid-June, although curiously it was lagging sector peer International Consolidated Airlines (LON:IAG); the British Airways owner was up 3.7% at 206.1p.

1.30pm: US indices are expected to open lower

US markets are expected to open lower this afternoon, giving back some of yesterday’s gains.

The Dow Jones industrial average is expected to open around 46 points lower at 24,530 while the S&P 500 is seen kicking off at around 2,967, down 5 points.

In London, the FTSE 100 has reversed course and was down by just 10 points at 6,056.

12.45pm: Another bleak month for manufacturers

The CBI Industrial Trends Survey was every bit as bad as one might expect.

The Orders element of the survey of more than 800 manufacturers plunged to -62 in April from -56 in March.

The survey has been going for 45 years and that’s the lowest reading in its history.

“Both domestic and export orders were extremely weak. The export balance deteriorated to -55% in May (the lowest since October 1998) from -49% in April and -28% in March. This kept it further below the long-term average of -17%,” reported Howard Archer, the chief economic advisor to the EY ITEM Club.

“Manufacturing volumes were reported to have fallen at a much deeper rate over the previous three months. A balance of -54% reported a rise in May, this compared to -21% in April and -8% in March and was the lowest since the series started in July 1975.

“The CBI reported that output volumes fell in 15 of 17 sub-sectors, with the headline drop in output primarily driven by the motor vehicles & transport equipment & food, drink & tobacco sub-sectors,” he added.

Noon: Whitbread leads the retreat

The Footsie was showing signs of emulating the late lamented Butch Wilkins, aka “the crab” at the end of the morning session.

The index of London’s heavyweight stocks quickly dived to around 6,020 at the start of trading and has been going sideways ever since; it is currently at 6,026, down 39 points (0.6%).

Hotels owner Whitbread PLC (LON:WTB), down 12% at 2,504p, leads the retreat after its emperor-sized £1bn rights issue.

“The company is taking a range of measures to boost its finances during the pandemic and says it plans to use the proceeds of the rights issue to grow its Premier Inn business in the UK and Germany; however, for investors there remains a lot of doubt about when its UK business will fully reopen and what impact the ongoing distancing measures might have on revenues. The severe economic slowdown could also have a longer-lasting impact on demand and dividends remain suspended,” noted Ian Forrest, an investment research analyst at The Share Centre.

At the top of the Footsie’s greasy pole was Intertek Group PLC (LON:ITRK), the product testing specialist, which said it will still pay a dividend as it reported a 4.6% reduction in sales to £882mln for the first four months of 2020.

The shares were up 7.7% at 5,298p.

11.00am: PMI readings point to another steep drop in GDP

London’s index of leading shares remains in the red after this morning’s Purchasing Managers’ Index data.

The FTSE 100 was down 53 points (0.9%) at 6,014.

“The May ‘flash’ purchasing managers’ survey for the UK manufacturing and services sectors indicated that the economy contracted at an exceptionally sharp rate; however, activity did at least come clearly off the record level low suffered in April,” reported Howard Archer, the chief economic advisor to the EY ITEM Club.

“There were reports that activity was helped in May by some re-opening of companies amid the modest easing of lockdown restrictions,” he added.

“Nevertheless, May’s reading of 28.9 was still significantly below the 50.0 level that indicates flat activity and was the second-lowest on record,” he noted.

According to ING, the “ultra-low” PMI readings add to the evidence from Google's mobility data that activity in the UK economy is still down significantly on pre-virus levels.

“That points to a steep drop in second-quarter GDP and hints at a slow recovery. A 'V-shape' rebound looks unlikely,” suggested James Smith, who covers developed markets at ING.

Smith does not expect the UK to return to its “pre-virus size” until 2022 at the very earliest.

“The bottom line is that we are going to see another steep drop in UK GDP [gross domestic product] in the second quarter. We had been pencilling in a peak-to-trough fall of around 15%, although the growing body of data suggests the damage will probably prove to be greater.

“More importantly though, the recovery is likely to be very slow. With social distancing likely to remain a feature of day-to-day life for some time, businesses will find operating more costly, and for some sectors, returning to more normal levels of demand is a fairly distant prospect. That has, in turn, raised concerns that we could see a second wave of unemployment later in the year, depending on how the UK government's job retention scheme evolves,” he added.

9.40am: The UK Composite Output Index reading for May recovers a little

The flash UK Composite Output Index reading for May rose to 28.9 from 13.8 in April, IHS Markit/CIPS reported.

A reading of 50 indicates the cross-over point between an expansion in activity and a contraction.

The Service Business Activity Index recovered to 27.8 from 13.4 in April while the Manufacturing Output index more than doubled to 34.9 from 16.3 the month before.

The Manufacturing PMI climbed to 40.6 from April’s 32.6.

“The UK economy remains firmly locked in an unprecedented downturn, with business activity and employment continuing to slump at alarming rates in May. Although the pace of decline has eased since April’s record collapse, May saw the second-largest monthly falls in output and jobs seen over the survey’s 22-year history, the rates of decline continuing to far exceed anything seen previously,” said ChrisWilliamson, the chief business economist at IHS Markit.

"Travel and tourism firms, hotels, restaurants and producers of consumer goods such as clothing were again the hardest hit, reflecting virus containment measures, but this remains a shockingly broad-based downturn with very few companies left unscathed by the COVID-19 pandemic,” he added.

Duncan Brock, the group director at the Chartered Institute of Procurement & Supply (CIPS), said the minor easing in May’s figures “only serves to highlight the depth of the fall in April’s output”.

"This month saw another steep fall in overall business activity, surpassing for the third time the rates of decline seen during the global financial crisis in 2009. No new orders, premises shut down and furloughed staff unable to return to work were at the heart of the desolation as business struggled to continue with two hands tied behind their back.

"Even some heavy discounting by companies did little to offset their losses which are likely to be just the tip of the iceberg with businesses failing in increasing numbers,” he added.

The FTSE 100 perked up a smidge on the release of the PMI data, recovering to 6,019 from 6,009 but it was still down 49 points (0.8%) on the day.

8.40am: Sombre start for Footsie

The FTSE 100 index retreated in early trade on Thursday as an uptick in coronavirus cases, which have spiked to record levels once more, raised the spectre of a second wave of infections following the easing of lockdown restrictions in some countries.

This explained the rather sombre start in London, which mirrored the mood in Asia, where shares marked time ahead of a key policy meeting in China.

The UK's blue-chip index fell 43 points to 6,024.56 early on.

Later, investors will get an insight into the economic health of the UK following manufacturing services and CBI industrial orders data.

On the market, Whitbread’s (LON:WTB) £1bn fundraiser was met with an 11.5% markdown of the shares in early deals. The cash injection will allow the Premier Inn owner to navigate coronavirus lockdown.

easyJet’s (LON:EZJ) decision to resume flights on June 15 was warmly applauded by the market, with the stock up 3.5%.

Aviva’s (LON:AV.) first-quarter figures weren’t quite as bad as anticipated, prompting a 1.8% rise in the share price.

Pets At Home (LON:PETS) fell 6.4% early after it said elevated levels of online sales were not enough to mitigate the sharp decline in revenues from its stores during the pandemic.

Proactive news headlines:

ClearStar Inc (LON:CLSU) said it has launched a coronavirus testing service to support employers with their return-to-work planning and workplace safety. The employee and medical screening specialist said the service will provide employees with a CRL Clear kit to test blood samples for coronavirus antibodies which will indicate if a person has been previously infected with the disease. If the employee tests positive, they will then receive a CRL Rapid Response kit, a saliva-based molecular diagnostic test to determine if the virus is still active. A positive test, in this case, indicates the employee is still infected with coronavirus and will automatically be contacted by a doctor to discuss the results and next steps.

Belvoir Group PLC (LON:BLVR), the property lettings specialist, said its franchise networks has proved resilient during the UK’s coronavirus (COVID-19) lock-down. Trading during the first quarter, which incorporated just one week of the lock-down period, was strong and in line with management expectations, Belvoir said in an AGM trading update. Things got a bit trickier in April but at the end of the month the group carried out a rent arrears survey and the situation was not as bad as the board had feared. Less than 5% of tenants were in arrears on their rent compared with the usual 2% experienced by Belvoir’s networks.

Stobart Group Limited (LON:STOB) has said it will propose a name change before February 28, 2021, after selling the Eddie Stobart and Stobart trademarks and brands to Eddie Stobart Logistics PLC (LON:ESL) for £10mln. The aviation and energy group said the payment will be split into a £6mln sum to be paid on completion of the transaction, £2.5mln to be paid on or before December 1, 2020, and £1.5mln paid 36 months after completion of the sale. Stobart Group said the proceeds will be used for working capital purposes, adding that a number of its divisions will continue to use the brand for up to 36 months after completion of the sale which will be licenced on a royalty fee basis from Eddie Stobart.

Galileo Resources PLC (LON:GLR) told investors it has completed the acquisition of Botswana business Crocus-Serv which holds 21 exploration licences. Some 19 licences are located in the highly prospective Kalahari Copper Belt (KCB) and the other two are in the Limpopo Mobile Belt (LMB). Altogether the licences span 14,875 square kilometres. To acquire the assets the company is issuing 38.81mln new shares priced at 0.42p each.

Oncimmune Holdings PLC (LON:ONC) revealed that it has signed a ‘foothill contract’ with one of the world’s largest pharmaceuticals companies, which will evaluate the potential of Oncimmune’s technology to screen for lung cancer in at-risk patients. This initial tie-up could be the “first step” towards a long-term partnership with the unnamed partner that would see the widespread availability of the EarlyCDT Lung test, investors were told. The latest agreement is one of a series of deals inked in the last two months that showed the “full breadth” of the firm’s commercial offering, said chief executive Adam Hill.

Shield Therapeutics PLC’s (LON:STX) chief executive Tim Watts has said that finding a US partner for its iron deficiency drug is the “top priority” for 2020. His comments were made alongside the company’s results for the 12 months to December 31, 2019, which charted a period of significant progress. Heading the list of highlights was the approval in America for Accrufer with a broad label from the US Food & Drug Administration (FDA). Shield already has commercial agreements in Europe and China for the drug, which is known as Feraccru outside the US.

Directa Plus PLC (LON:DCTA), the provider of graphene-based products, has said revenues so far in 2020 have been nearly three times higher than 2019’s levels. Year-to-date revenues clocked in at €1.8mln, the company revealed as it posted its results for the period ended December 31, 2019. Revenues for the whole of 2019 were €2.63mln, up from €2.25mln in 2018, while total income, including grants, rose to €2.81mln (2018:€2.50mln). The underlying loss (LBITDA) narrowed to €2.71mln from €3.24mln in 2019, while the group's loss before tax was cut to €3.43mln from €3.96mln.

KRM22 PLC (LON:KRM) has reported strong growth in recurring revenues in 2019 as its recent acquisitions begin to bear fruit. For the year ended December 31, 2019, the software firm reported annualised recurring revenues (ARR) growth of 21% compared to 10% a year earlier, while total revenues in the period rose to £4.1mln from £1.3mln. The firm’s adjusted (EBITDA) loss also narrowed, to £3.1mln from £3.3mln, and over the year it said it signed six new partnerships covering client onboarding, enhanced due diligence, online training, individual accountability regime and regulatory reporting.

88 Energy Ltd (LON:88E) has suggested that there is still life in the Charlie well yet as it provided a technical update on its view of the exploration disappointment following the departure of former partner Premier Oil PLC (LON:PMO). In an operations update, the AIM and ASX-listed explorer – which is in the process of rebooting via a merger with Alaska peer XCD Energy – among other details highlighted what it called “compelling” indications of oil in an up-dip location from the Charlie well location. Moreover, it commented that it had originally planned to drill the Charlie well somewhere else before Premier Oil joined the exploration campaign.

Power Metal Resources Plc (LON:POW) highlighted a period of significant change and notable success as it released its financial results statement for the twelve months ended September 30, 2019. The statement - released just before Wednesday’s close - detailed the business restructuring, operational progress and exploration success achieved during the period and since. The pre-revenue firm reported a £1.6mln loss for the year, narrowed from the £6.6mln reported for the preceding twelve months. It ended September with £171,000 of cash, before £700,000 was raised in December.

Feedback PLC (LON:FDBK) has had a contract renewed with the Royal Papworth Hospital NHS Foundation Trust. The specialist medical imaging technology company said the contract is for clinical PACS (picture archiving and communication system) services with Feedback Medical Ltd, a wholly-owned subsidiary of the company. The renewal, covering a period of 14 months, will incorporate an upgrade to service, providing the trust access to Bleepa, Feedback's flagship imaging-based communication platform. The trust is the second National Health Service (NHS) trust to adopt Bleepa as a core imaging tool.

NQ Minerals PLC (LON:NQMI) (OTCQB:NQMLF), the base and precious metals producer from its Hellyer Gold Mine in Tasmania Australia, announced that it has raised gross proceeds of £189,500 from an equity issue at 7.0p and 7.5p per share from a UK based Institutional investor and a group of private investors for general working capital purposes which will see the company issue 2,699,999 new ordinary shares.

Catenae Innovation PLC (LON:CTEA), the AIM-quoted provider of digital media and technology, announced that it has received notification for the exercise of a warrant over 6,250,000 ordinary shares in the company at a price of 0.4p per share providing it with proceeds of £25,000.It also announced an issue of 3,341,057 ordinary shares as a result of the conversion of £65,485 of existing liabilities into ordinary shares at a conversion price of 1.96p each, with the conversion shares subject to a six-month lock-in.

Midatech Pharma PLC (LON:MTPH) (NASDAQ:MTP), an R&D biotechnology company focused on delivering innovative oncology and rare disease products to patients has announced the closing of its previously announced registered direct offering of 1,818,182 of its American Depositary Shares (ADSs) - each ADS representing five of the company's ordinary shares - at a purchase price of US$1.65 per ADS (equivalent to 27p per new ordinary share). Additionally, in a concurrent private placement, the company issued to the investors unregistered warrants to purchase up to 1,818,182 ADS’s with an exercise price of US$2.05 per ADS (equivalent to 34p per new ordinary share) which will expire five years and a half years from the issuance date. The net proceeds to Midatech from the offering are expected to be approximately US$2.6mln (£2.1mln). Midatech said it intends to use the proceeds from the offering to fund the clinical development program of MTX110, its product for DIPG and potentially other pediatric brain cancers, develop an internal pipeline of Q-Sphera formulation for partnering, for working capital and for general corporate purposes. The company said it expects its previously announced placing to certain investors in the UK of 6,666,666 units - with each unit comprising one ordinary share and one warrant exercisable for one ordinary share, at an issue price of 27p per Unit - to close on or about May 22.

ImmuPharma PLC (LON:IMM) (Euronext Growth:ALIMM), the specialist drug discovery and development company has confirmed that it's annual general meeting (AGM) will be held on Thursday, June 18, 2020, at 10.30am BST at  50 Broadway, London SW1H 0RG. It added that due to the current issues surrounding coronavirus (COVID-19) and the rapidly developing public health guidance in the UK it is no longer possible to hold the AGM in the way that the board had planned, and it cannot allow shareholders to attend in person. Any shareholders attempting to gain access to the AGM will be excluded from the meeting on grounds of public safety. In the light of the above, the group said it strongly encourages shareholders to consider ensuring their vote is counted by submission of the proxy by post as detailed in the Notice of Annual General Meeting.

Digitalbox PLC (LON:DBOX) announced that at the company's annual general meeting on Wednesday, all the resolutions, as set out in the Notice of Annual General Meeting dated April 2020, were duly passed. The results of the proxy voting will be available on the company's website in due course: www.digitalbox.com

Premier African Minerals Limited (LON:PREM) has said it will host an online webinar on Saturday, May 23, 2020, at 9.00am BST (UTC+1) to discuss the resolutions being proposed at the general meeting of shareholders as announced on May 15, 2020. It added that shareholders should use the following link to register and join the webinar: https://us02web.zoom.us/webinar/register/WN_R0vUN4dTRRephSKb0hi1oQ

6.40am: Back foot start predicted 

The FTSE 100 is set to start Thursday on the back foot on reports new coronavirus cases are spiking as countries around the world take steps out of lockdown.

Spreadbetting and CFD firm IG Markets points to London’s blue-chip benchmark being down around 30 points, as it makes a price of 6,041 to 6,044 with just over an hour to go until Thursday’s open.

On one hand businesses have found some new confidence this week as many countries, and parts of countries, find routes out of coronavirus lockdown. But, somewhat inevitably, that too brings fresh challenges and uncertainty as new case numbers rise as humans everywhere start to interact with each other once again.

“The World Health Organisation said the number of new coronavirus cases hit a daily record high this week – an easing of restrictions is believed to be the reason for the spike,” said David Madden, analyst at CMC Markets.

“Stocks in Asia are a little in the red, and European markets are expected to open lower. France and Germany have public holidays today, so volatility is likely to be low in the eurozone.    

“Traders were clearly in risk-on mode yesterday as metals posted impressive gains. Copper hit a level last seen in mid-March, while platinum, palladium and silver all posted gains too. Economies are starting to come out of lockdown, so now we are seeing an increase for natural resources – oil rallied too,” Madden added.

Wall Street, last night, found itself on the side of positive sentiment. The Dow Jones Industrials Average rallied 369 points or 1.52% higher to close Wednesday’s trading at 24,575. The S&P 500 gained 1.67% to 2,971 by the final bell, and the Nasdaq Composite finished Wednesday up 2.08% at 9,375.

In Asia, Japan’s Nikkei 225 index was pretty much flat at 20,609, whilst Hong Kong’s Hang Seng was down 0.22% and the Shanghai Composite was 0.13% lower.

Around the markets:

  • The pound: US$1.2189, down 0.46%
  • Gold: US$1,741, down 0.31%
  • Brent crude: US$36.48, up 5.28%
  • WTI crude:US$34.15, up 6.8%
  • Bitcoin: US$9,512, down 2.23%

Significant announcements for Thursday:

Trading announcements: Essentra PLC (LON:ESNT), Intertek Group PLC (LON:ITRK), Regional REIT Ltd (LON:RGL), Hilton Food Group PLC (LON:HFG), Inchcape PLC (LON:INCH)

Finals: Pets at Home Group PLC (LON:PETS), Tate & Lyle PLC (LON:TATE), Assura PLC (LON:AGR), Mediclinic International Plc (LON:MDC), System1 Group PLC (LON:SYS1), Universe Group PLC (LON:UNG), Investec PLC (LON:INVP), NewRiver REIT plc (LON:NRR), QinetiQ Group PLC (LON:QQ.)

Interims: AJ Bell PLC (LON:AJB), Oxford Metrics PLC (LON:OMG), Euromoney Institutional Investor PLC (LON:ERM), Integrafin Holdings PLC (LON:IHP), Tharisa PLC (LON:THS)

FTSE 100 ex-dividends to knock 3.37 points off the index: Tesco PLC (LON:TSCO), WM Morrison Supermarkets PLC (LON:MRW), Intertek Group PLC (LON:ITRK)

Economic data: UK manufacturing PMI, UK services PMI, US weekly jobless claims, US manufacturing PMI, US services PMI

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