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FTSE 100 closes firmly higher as traders appear buoyant after holiday weekend

The Footsie finished more than 74 points, or 1.24%, ahead at 6,067 on Tuesday following the Bank Holiday weekend

Softcat -
London and US shares went higher on Tuesday as risk-on sentiment dominated
  • FTSE 100 closes 74 points up
  • Sterling up 1.3% against the US dollar
  • US benchmarks also higher

5:10pm: FTSE firmly higher

FTSE 100 index closed in positive territory as the truncated trading week in the US and UK began, and traders pushed virus worries aside to send markets higher.

The Footsie finished more than 74 points, or 1.24%, ahead at 6,067 on Tuesday following the Bank Holiday weekend. It had been as high as 6,130 earlier in the session.

Travel-related shares, which had been crushed by the pandemic and lockdowns, conversely went roaring higher on Tuesday, with British Airway's owner IAG (LON:IAG) top of the Footsie pile, flying  22.54% higher.

Cruise ship operator Carnival (LON:CCL) also gained ground, surging over 13% to 1,111p.

"To some extent it feels like we are turning things on their head, with risk-on sentiment driving those riskier and heavily sold stocks such as IAG, Carnival, and Rolls-Royce into huge double digit gains," noted Joshua Mahony, senior market analyst at IG.

"Meanwhile, the FTSE 100 losers come from those lockdown specialists, with drugs, hand sanitizer, and food deliveries seemingly out of vogue given Reckitt Benckiser, Astrazeneca, and Just Eat losses."

Whitbread (LOMN:WTB), the Premier Inn owner, topped the FTSE's loser board, down 5.66% at 2,451p.

Over in the US, stocks also surged. The Dow Jones added over 602 points at 25,067, while the S&P 500 gained over 51 at 3,006.

3.00pm: US indices burst through psychologically significant levels

Believers in the power of round numbers will be encouraged by the rise of the S&P 500 above 3,000 and the Dow above 25,000.

The S&P was up 53 points (1.8%) at 3,008 in early deals while the Dow Jones industrial average was up 578 points (2.4%) at 25,043.

For that matter, the Footsie has risen above 6,000 in London. It was up 56 points (0.9%) at 6,049 and gently subsiding from the day’s high, which was 6,124 at 8.24am.

1.45pm: US stocks to join the holiday mood

Enthusiasm for big-cap stocks has been tempered a little by sterling’s resurgence on foreign exchange markets.

Sterling was one-and-a-half cents higher against the US dollar after the announcement that many shops in the UK could reopen in mid-June, and although a strong exchange rate is normally a downer for blue-chip stocks, many of which are big-dollar-earners, the FTSE 100 is still up 61 points (1.0%) at 6,054.

“US stock markets are gearing up for a strong start to the week as further lockdown easing and some more promising vaccine news lifted sentiment after the bank holiday weekend,” commented OANDA’s Craig Erlam.

“Investors have come back to their desks in high spirits following the long sunny bank holiday weekend (here in the UK, anyway) with news of human trials of a possible COVID vaccine from Novavax. While there's no guarantee it will be a success, it's one of many companies that are making advances on the vaccine front which is really encouraging,” he added.

According to the spread betting sites, the Dow Jones industrial average is set to open at around 25,040, up 575 points, and the S&P 500 at around 3,017. up 62 points.

On the subject of shops reopening, Howard Archer, the chief economic advisor to the EY ITEM Club, said retailers felt the full impact of the lockdown in April.

Commenting on the CBI’s Distributive Sales Survey, Archer noted that retail sales volumes fell a record 18.1% month-on-month and 22.6% year-on-year in April.

“This notably included the closure of non-essential retailers,” he noted. “Unsurprisingly, a BRC/ShopperTrak survey showed shopper footfall down 84.7% year-on-year in April,” he added.

“Matters are set to improve for retailers given the planned progressive opening up of the retail sector during June. Nevertheless, while there may well be some degree of pent-up demand, it may be questionable that there will be an immediate pick-up in consumer spending,” Archer said.

“The EY ITEM Club suspects that consumer spending will contract by around 15% quarter-on-quarter in the second quarter, thereby being the major factor in expected GDP contraction of around 15% quarter-on-quarter,” Archer said.

12.20pm: Housebuilders buoyed by increased confidence in the sector

London’s equities remain buoyant after UK prime minister Boris Johnson gave the go-ahead for most shops to reopen from 15 June 15.

The FTSE 100 index was up 71 points (1.2%) at 6,064, with a number of hard-hit sectors bouncing back, including the housebuilders.

GetAgent.co.uk released the latest update of its homeowners and estate agent sentiment surveys and real-time market health dashboard, revealing that the overall market health index had increased to 4.3% in May from 3.4% in April.

GetAgent said 22% of home sellers remain extremely concerned about the impact of COVID-19 on their sale but this is down from 33% in April.

Just 16% of buyers state they would now refrain from offering on a property in current market conditions, down from 43% in April.

With the housing market now effectively back open for business, 15% of estate agents are still concerned about the impact of the pandemic on the industry as a whole, representing an improvement in sentiment from April when the figure was 28%.

96% of agents surveyed expect to be able to progress on their sales now the market is back in business to an extent, up from 75% in April.

Barratt Developments PLC (LON:BDEV), up 6.8% at 528.4p, was the pick of the sector but peers Persimmon PLC (LON:PSN) and Taylor Wimpey PLC (LON:TW.) were not far behind.

Fellow travellers Rightmove PLC (LON:RMV), the property listing website operstor, and Lloydss Banking Group PLC (LON:LLOY), the mortgage lender, were also wanted; both were up 6.6% - the former to 566.2p and the latter to 29.965p.

11.30am: Another rough month for retailers but not as bad as feared

A bit of the steam has gone out of the Footsie’s advance but the index is still sitting pretty.

A number of blue-chip stocks that were sold off massively during the early stages of the lockdown are back in favour this morning after the UK made more hesitant steps towards relaxing the lockdown, and as a result, the FTSE 100 is up 95 points (1.6%) at 6,088.

The easing of lockdown restrictions cannot come soon enough for the retail sector, judging by the latest data. The CBI’s survey of 87 retailers found that orders placed with suppliers fell at a near-record pace in May. Stock levels in relation to expected sales rose to their highest balance since October 2019, prior to the Brexit deadline that month, the CBI said.

The survey’s balance level improved slightly to -50% in May from -55% in April, with the improvement largely driven by a return to growth in the grocery sector. The consensus forecast had been for deterioration to -65%.

The reported sales balance reflects the proportion of retailers reporting that sales are higher than a year ago, less those reporting that sales are lower.

Orders placed with suppliers fell at a quicker pace than in April (-56%, from -48%) while the growth in internet sales volumes picked up (+27%, from +8%) and is expected to remain similar in June (+27%).

“The retail sector is at the sharp end of a crisis, with many businesses up against it. The government’s support packages are making a real difference, with more shops reporting that jobs have been furloughed, rather than lost. The furlough system will need to adapt as more businesses open their doors in the months ahead,” said Rain Newton-Smith, the CBI’s chief economist.

“As we gradually reopen the economy, retailers may yet need more support from the government if demand falters. Ensuring safety in the workplace remains the top priority, as more firms look to bring staff back to work. Many challenges remain in managing supply chains and costs in a tough environment,” Newton-Smith added.

Samuel Tombs, the chief UK economist at Pantheon Macroeconomics, said the slight improvement in the balance “implies that a small minority of retailers already have seen demand recover to pre-virus levels”.

“But this improvement appears to have been concentrated in the grocery sector, where the reported sales balance leapt to +16, from -27. Non-food retailers have seen no recovery in demand, despite most having an online presence. A broad-based recovery will have to wait until after June 15, when all non-essential shops will be allowed to re-open. Even then, consumers’ spending in shops likely will be well below pre-virus levels, given the lingering risk of contracting Covid-19 and the recent surge in unemployment, which has hit households’ overall income and will make those working less willing to purchase discretionary goods,” Tombs said.

“The -41 level of the expected sales balance in May, and the collapse in the quarterly investment intentions balance in Q2 to its lowest level on record, show that retailers are preparing for a very slow recovery,” he added.

9.50am: Investors enjoy a "99"

After all of the Cummings and lack of goings over the long weekend, the Footsie has driven higher on Tuesday.

On a Bank Holiday weekend, many of us enjoy a “99” ice cream but this morning investors are enjoying a different kind of 99 - a 99 point gain (1.6%) on the FTSE 100 at 6,092.

“Yesterday’s announcement by Boris Johnson regarding the re-opening of non-essential shops in the UK from 15 June has helped and clearly swayed investors towards the thought we are near the point of normality,” said Joe Healey, an investment research analyst at The Share Centre.

Airlines were the top blue-chip performers, with British Airways owner International Consolidated Airlines (LON:IAG) and easyJet PLC (LON:EZJ) up 16% at 221.9p and 14% at 636.4p respectively, as investors contemplate the prospect of sneaking away for a delayed summer holiday after all.

News that German flag-carrier Lufthansa might be about to get a €9bn bail-out from the German government has also lifted sentiment towards airlines.

Cruises operator Carnival PLC (LON:CCL), up 11% at 1,019.5p is also getting some love, as is international hotels operator Intercontinental Hotels Group PLC (LON:IHG), up 12% at 4,099p but the same cannot be said for Whitbread PLC (LON:WTB), which owns the Premier Inn brand; its shares are in the Footsie basement, down 3.9% at 2,498p.

Also getting the elbow is food delivery outfit Just Eat Takeaway.com (LON:JET), down 1.8% at 8,710p, as it looks like the gravy train might be about to hit the buffers with the prospect of restaurants reopening for sit-down meals.

8.45am: Post-bank holiday gains

The FTSE 100 posted a triple-digit gain at the start of the shortened trading week, playing catch-up to Europe following Monday's UK bank holiday amid guarded optimism over the incremental easing of coronavirus lockdown restrictions.

London’s blue-chip index advanced 113 points to 6,106.32 in early trading.

UK prime minister Boris Johnson said on Monday that all non-essential retailers will be able to reopen in England from June 15, with markets and car showrooms emerging from their hiatus from June 1.

While JD Sport (LON:JDS) and Next (LON:NXT) – up 8.2% and 6.6% respectively – were among the early gainers, the travels stocks also rose Lazarus-like early on.

On the Footsie, British Airways owner IAG (LON:IAG) was up 17%, while Intercontinental Hotels (LON:IHG) advance 14.5%.

On the second tier, tour operator TUI (LON:TUI) jumped 37% as investors spied a return to normality that might also include a return to taking foreign holidays.

Proactive news headlines

Bahamas Petroleum Company PLC (LON:BPC) said it has inked a rig contract for its hotly anticipated Perseverance-1 exploration well which is slated to start potentially as early as the fourth quarter. The contract sets a ‘firm window’ of drilling operations between December 15, 2020, and February 1, 2021, consistent with the project’s licence obligations which were extended amid force majeure. Significantly, the contract sees the estimated costs reduced by around 15% from previously estimated levels, reflecting changes in the global operating environment.

Gfinity PLC (LON:GFIN) said it has launched a new digital media group within the company as well as new eCommerce and rewards programmes to diversify its revenue streams. The esports firm said Gfinity Digital Media (GDM) will focus on three revenue streams; website takeovers and programmatic advertising delivered in partnership with advertising platforms Venatus and Bidstack Group PLC (LON:BIDS), a non-exclusive relationship with global affiliate marketing network AWIN and analytics platform Trackonomics to drive eCommerce revenue, and content creation and community build product for partners, most recently a deal with YaLLa Esports in the Middle East region.

Synairgen PLC (LON:SNG) has confirmed the launch of the clinical trial in a home setting of its inhaled interferon-beta-1a on people with coronavirus (COVID-19). An expansion of the original hospital-based SG016 study, an extra 120 people will receive Synairgen’s SNG001 medication at their homes. The idea is to treat sufferers earlier in the illness – within three days of developing symptoms.

Westminster Group PLC (LON: WSG) revealed it has been contracted to provide a range of fever screening and safety equipment to a global investment manager. The deployment covers the fund manager’s worldwide offices, the security and technology group added, and is part of a 'Return to Work' programme following the coronavirus (COVID-19) outbreak. Worth around US$665,000, the contract covers the provision of a range of fever screening systems and sanitisation stations to 85 offices in 37 countries and should be completed with the next few weeks, Westminster said in a statement.

Xpediator PLC (LON:XPD) said its operational performance in 2020 has “held up relatively well” despite disruption caused by the coronavirus (COVID-19) pandemic. In a trading update ahead of its annual general meeting on Tuesday, the freight management specialist said it had “traded resiliently” during the year to date, and while activity levels were “slightly lower” as good demand in some sectors was offset by weakness in others, the impact on the company margins had been “less affected” as a result of cost reduction measures taken at the start of the pandemic. The company said while it was too early to provide definitive guidance for the full year, it believed that business was “performing well in extraordinary circumstances”.

InnovaDerma PLC (LON:IDP) said the focus on its direct to consumer operation was bearing fruit after the coronavirus lockdown hit the bricks and mortar sales of its health and beauty lines. Online accounted for 60% of the company’s total revenues last financial year, so the group said that doubling down has enabled the business to perform “resiliently in a difficult market and significantly offset the weak in-store retail environment”. InnovaDerma said it expects full-year turnover to be at least in line with last year’s figure of £12.9mln.

Frontier IP Group PLC (LON:FIPP) noted that its portfolio company Exscientia Limited, a world leader in AI-driven drug discovery, has raised $60mln through a Series C financing round. The specialist in commercialising intellectual property said the new capital will be used to expand Exscientia's existing portfolio and pipeline and to accelerate international expansion, including in the USA.

Directa Plus PLC (LON:DCTA) revealed it has been granted an Italian patent for its Planar Thermal Circuit invention. The patent covers the use of the G+ graphene circuit applied onto fabrics of any type. The fabric once treated is able to absorb body heat and move it from the hottest to the coldest point of the circuit, providing a significantly increased sense of comfort to the wearer or user. The graphene nanoplatelets-based products developer said the patent covers the main features of the circuit that make it effective.

FastForward Innovations Ltd (LON:FFWD) has said its portfolio firm, EMMAC Life Sciences will manufacture a product for a coronavirus (COVID-19) clinical trial as part of a consortium led by the University of Valencia. EMMAC, in which FastForward holds a 2.3% stake, said the trail will use the T12 molecule to prevent the disease progressing to Adult Respiratory Distress Syndrome (ARDS), believed to be the leading cause of death in coronavirus patients. In a separate announcement, FastForward said one of its other portfolio firms, Portage Biotech Inc (CSE:PBT.U) (OTCMKTS:PTGEF) will conduct a non-brokered private placement of post-consolidation shares to raise up to US$10mln at a price of US$10 per share, a 10% discount to the 20-day weighted moving average of the common shares price on the CSE. Portage said the proceeds will be used to further development of its immune-oncology portfolio towards clinical testing, as well as forming one to two new companies and enabling the firm to pursue an additional listing of its shares on a “senior stock exchange”.

Bluebird Merchant Ventures PLC (LON:BMV), the Korea-focused gold group, said due diligence has been completed by its prospective lender and finance terms should be confirmed shortly. In March, the AIM-listed junior entered into a legally binding agreement with the South Korean lender over a US$5mln loan to be repaid from future gold production. The financing, if successful, is expected to be received by the end of July, though Bluebird added that while it is optimistic there is still no guarantee it will receive the funding. If it does, Bluebird expects initial mining to commence in six months and gold production three months later.

Vast Resources PLC (LON:VAST) has updated on the Baita Plai polymetallic mine, in Romania, where progress is being made as incoming equipment deliveries continue. The company, in a statement, noted that the second shipment of equipment arrived at the mine this weekend. It included forty-two one cubic metre underground wagons and railway cutting & bending equipment. Vast said the latest arrival means it now has all essential equipment to achieve first production from the mine.

Kavango Resources PLC (LON:KAV) is putting the emphasis on desktop research while travel restrictions apply in Botswana during the coronavirus (COVID-19) outbreak. The company, which is targeting the discovery of mineral deposits in Botswana, said the country had “dealt admirably” with COVID-19 and is already easing travel restrictions. Even so, the company’s plans to conduct exploration work in the field have been affected but its geologists will be poring over the data gathered during 2019 from drilling and surveying as well as data from third parties to identify future drilling targets at the Kalahari Suture Zone (KSZ) project.

88 Energy Ltd (LON:88E), in a brief stock market statement, told investors it has now started to dispatch its ‘bidders statement’ to XCD Energy shareholders as the takeover process for the ASX-listed Alaska peer continues to progress.

Shield Therapeutics PLC (LON:STX) has announced the appointment of Hans Peter Hasler as the company’s non-executive chairman with effect from its annual general meeting (AGM) to be held on June 18, 2020. The commercial-stage, pharmaceutical company, with a focus on addressing iron deficiency with its lead product Feraccru/Accrufer (ferric maltol) announced on May 21 that its current chairman, James Karis would not seek re-election and would be stepping down at the AGM. Haslar has prior executive experience including as chief

Symphony Environmental Technologies PLC (LON:SYM) has said it is seeing increased interest in its d2p anti-microbial technologies and products in the post-coronavirus (COVID-19) world. The biodegradable plastic specialist revealed in its full-year 2019 results statement that it received new orders in May this year for d2p-treated gloves totalling more than £500,000. As previously announced, the group saw revenues in total rise by 53% in the first quarter of 2020 to £2.45mln, up from £1.60mln the year before.

Providence Resources PLC (LON:PVR), the Irish based resource development company has provided an update on the second tranche of the proposed investment in the group by SpotOn Energy Limited. As announced on April 6, 2020, SpotOn Energy invested £0.3mln into Providence as part of a recent $3.3mln fundraising and committed to invest a further £0.2mln within six weeks of that announcement. However, the company said in a statement on Friday that SpotOn Energy has experienced some delays in closing out the necessary arrangements with its consortium because of current working and travel restrictions and has informed Providence that it will be necessary to delay the second tranche of its investment by approximately one week. The company added that it will provide an update to the market upon receipt of the funds.

Emmerson Plc (LON:EML), the Moroccan focused potash development company, announced that Align Research Limited has completed a comprehensive initiation equity research note on the company. To download the full note please visit the following link: http://www.alignresearch.co.uk/cpt-company/emmerson/

6.50am; Footsie set to play catch-up

The FTSE 100 is expected to start the curtailed week on the front foot as it plays catch-up with European equities and UK retailers are given the go-ahead to reopen. 

London’s blue-chip index was being tipped to rise 47 points by spread-betters on the IG platform, having finished last week at 5,993. 

Asian markets were showing the way with a positive start to Tuesday as UK and US stock markets will reopen after long weekend breaks for both.

In Tokyo, the Nikkei 225 is up 2.5%, while in Hong Kong, the Hang Seng gained 1.9% and over on the Chinese mainland, the Shanghai Composite is up 0.65%.

“As is the financial market's want these days though, even the slimmest of positive news on the coronavirus (COVID-19) front trigger a bullish immune response and another wave of the peak-virus trade,” said Jeffrey Halley, market analyst at Oanda. 

“That came on several fronts today. US Memorial weekend saw the US out in force enjoying their post lockdown freedoms. Japan, in addition to announcing more billions in stimulus, signalled that the final lockdowns over their largest cities are ending.”

There were further hopes on the coronavirus vaccine front, with US biotech Novavax announcing the start of human trials.

With European government stepping in to rescue airlines and carmakers, including Lufthansa and Renault, there were reports that a number of large UK companies are hoping for a rescue deal that is reportedly being called Project Birch.

In other news, UK prime minister Boris Johnson has given the go-ahead for most shops to reopen from June 15, with the hope being that a wave of consumer spending will help the economy bounce back.

Around the markets

  • Pound up 0.25% to US$1.2219
  • Oil flat at US$32.50
  • Gold flat at US$1732.80

Significant announcements expected on Tuesday:

Trading announcementsSoftcat PLC (LON:SCT)

FinalsKainos Group PLC (LON:KNOS)

AGMs: Aviva PLC (LON:AV.)

City headlines:

Financial Times

  • HSBC board rethinks overhaul and seeks even sharper cuts - more drastic action sought 3 months after unveiling plan to slash 35,000 jobs and $4.5bn of costs
  • Brussels looks to new taxes to pay off pandemic recovery debt - corporate and green levies could help raise money for EU borrowing if member states agree
  • SpaceX on the verge of sending astronauts into orbit - successful test flight by Elon Musk’s company on Wednesday will open up space to commercial sector

The Times

  • Prime minister Boris Johnson said that nearly all non-essential retailers could open if they followed social-distancing guidelines from 15 June
  • Private equity firms fear a day of reckoning - debt-laden companies are being shut out of government loans for firms hit by Covid-19
  • The City’s biggest investors have netted nearly £1 billion in profits from backing British companies that have rushed to shore up their finances because of the coronavirus outbreak

Telegraph

  • Government set to take stakes in key industries under Project Birch plans - Britain could follow the French and German route of major state investment in private businesses
  • Car firm bailouts could leave Government owning swathes of British industry - the Government could shift from offering loans to buying stakes in businesses
  • Boss of Britain’s biggest recruiter warns of ‘tsunami of job losses’ when furlough scheme ends - James Reed fears the labour market is heading towards a ‘day of reckoning’ when the support ends

Guardian

  • The World Health Organization has warned of an “immediate second peak” in cases if restrictions were lifted too soon
  • British Airways plans to fire the vast majority of its workforce and rehire them on reduced pay and worse terms, according to trade union Unite

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