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FTSE 100 closes in red after quiet session and excitement after Friday's jobs report wears off

Britain's blue chip benchmark finished down over 11 points at 6,472 having been in positive territory earlier

City of London
  • FTSE 100 index closes down nearly 12 points at 6,472
  • BP announces plans to cut 10,000 jobs
  • US indices head north

5.05pm: FTSE 100  ends lower

FTSE 100 index closed marginally lower as the buoyant mood after Friday's US jobs report fell away and the new trading week began with renewed trade fears.

Britain's blue chip benchmark finished down over 11 points at 6,472 having been in positive territory earlier.

FTSE 250 shed over 92 points at 18,136.

"The unexpected creation of 2.5 million jobs and dip in unemployment to 13.3% - although the report said there was a margin of error of roughly 3% – has left dealers hopeful that we are over the worst of the economic misery," said David Madden, analyst at CMC Markets on last week's non-farm payrolls.

Monday saw a lacklustre, quiet trading session in London, with European shares also under pressure, although US stocks di go higher.

The Dow Jones rose over 257 points, while the S&P 500 added almost 15 despite comments from US trade advisor Peter Navarro, who claimed China was trying to steal US vaccines via intellectual property theft, adding to fears of another increase in US-China tensions.

3.30pm: FTSE 100 slips into the red

Entering the final hour of Monday’s session, the FTSE 100 had slipped into negative territory, shedding 23 points to 6,461 just before 3.30pm.

An initial spurt of enthusiasm also seems to be losing some steam in the US, with the Nasdaq seemingly succumbing to profit-taking as it reversed course from a positive start and was down 0.29% at 9,787 after the first hour of trading on Wall Street.

The FTSE 100 has been weighed down by one of its biggest companies, AstraZeneca PLC (LON:AZN), which was down 3.2% at 8,155p after it played down reports it is attempting a takeover of Gilead Sciences Inc in what would be the world’s biggest pharma merger.

Market sentiment may also be cooling following the boost from last week’s US jobs figures as analysts brace for another tough test for the economy as government stimulus measures are wound down, potentially leading to a surge in unemployment.

“It is far from clear how easily the newly unemployed will find jobs again even if lockdowns continue to be relaxed”, said Rupert Thompson, chief investment officer at wealth manager Kingswood.

“The economic backdrop is clearly improving and will continue to do so if a re-tightening of lockdowns is avoided. However, the big question is whether it will continue to improve as fast as the market seems to believe… Fear of missing out – and quite a few investors have missed out as the sharpness of this rally has caught most people by surprise – could yet carry equities higher near term. But, with markets now well ahead of the economic reality, a correction remains on the cards over coming months”, he added.

2.45pm: Wall Street opens higher

The US markets have started the week on the front foot, adding to Friday’s gains from last week’s US jobs surprise.

Shortly after the opening bell, the Dow Jones Industrial Average was up 0.81% at 27,331, while the S&P 500 moved 0.32% higher to 3,204 and the Nasdaq rose 0.26% to 9,840.

The Nasdaq’s open put it into record territory, having closed at an all-time high of 9,814 last Friday.

Meanwhile, in the UK BP hit the headlines again as it announced plans to sack 10,000 staff and save US$2.5bn per year as the industry grapples with the oil price slump.

Chief executive Bernard Looney said most of them, representing 15% of its workforce, will be sacked by the end of the year, though he noted “we will likely have to go even further”.

However, investors seemed relatively unphased by the scale of the cuts, with shares in the oil giant up 2% at 369.3p at around 2.40pm.

The FTSE 100 was up 12 points at 6,496.

1.30pm: US indices expected to add to Friday's gains

US indices are expected to open higher as equity bulls continue to bathe in the afterglow of Friday’s surprisingly good US jobs numbers.

Spread betting quotes point to the Dow Jones adding another 205 points to Friday’s gain of 829 points to open at around 27,316.

The S&P 500 is tipped to open 12 points higher at 2,306.

In London, the FTSE 100 index was knocking on the door of 6,500, up 16 points (0.3%) at 6,499, helped by sterling surrendering its earlier gains against the US dollar and demand for the oil giants after the weekend’s OPEC+ meeting.

“Crude prices rose after OPEC+ had a very smooth meeting over the weekend that extended their historic production cuts by an extra month. Oil was also supported after Tropical Storm Cristobal halted about 34% of oil production in the US Gulf of Mexico. The impact of the storm was about 636,000 of daily crude output, alongside a 32% drop with natural gas production,” noted OANDA’s Edward Moya.

BP PLC (LON:BP.) was up 2.8% at 373.35p and Royal Dutch Shell (LON:RDSB) was 4.0% better at 1,484.2p.

12.15pm: Market has a sleepy but positive morning

The Footsie ended the morning with a modest gain but after the initially softer opening, most investors will happily take that.

The index of leading shares was 10 points (0.2%) firmer at 6,494.

The warm and fuzzy feeling is largely down to further loosening of lockdown restrictions across the globe. Reports indicate that it may even be possible soon to get a pint in a British boozer provided it has a beer garden.

Providing a bit of an antidote to this was the latest daily coronavirus (COVID-19) update from Pantheon Macroeconomics, which wondered whether a second wave of infections is starting in the south of the USA.

Confirmed US cases rose by 1.16% yesterday, up from a 1.13% increase on the same day last week. The number of new cases rose by 6.4%, to 22,300 from 20,000 a week ago.

“The daily percentage growth is now barely falling, and the number of confirmed new cases, therefore, is trending gently upwards but this has to be seen in the context of an 18% increase in testing in the week through Sunday, compared to the previous week,” explained Pantheon’s Ian Shepherdson.

South Carolina has reported a 70% increase in the 70-day average number of new cases in the past two weeks even though testing has only risen by 16% over the same period.

“The surge in cases in Texas is alarming, especially because the state does so little testing, ranking 48th of the states. The spike in cases in Arkansas is due largely to a big increase in testing, but the Governor yesterday hit pause on the phased reopening of the state. Alabama's sudden drop in cases is surprising, but very welcome if it can be sustained,” Shepherdson said.

New cases are falling more rapidly again in the UK, after a pause, despite fears that the holiday weekend two weeks ago would spark a renewed increase, Shepherdson noted.

10.50am: Back in positive territory

The Footsie got over its Monday morning feeling and is now in positive territory, with travel-related stocks leading the way.

The FTSE 100 was up 20 points (0.3%) at 6,504.

Cruises operator Carnival PLC (LON:CCL) was the best performing blue-chip, up 13% at 1,621.5p continued its recovery as various parts of the world emerge a bit more from lockdown.

Mind you, the stock was trading at more than 36 quid at the beginning of the year so the recovery has a long way to go.

With the airlines set to challenge the UK government’s quarantine policy for overseas travellers, there was continued support for British Airways owner International Consolidated Airlines Group (LON:IAG) and easyJet PLC (LON:EZJ). The former was up 8.1% at 353.94p and the latter 5.9% at 940p.

“The surge in travel- and airline-related names comes on the day when the UK implements a quarantine for overseas travel, perhaps the very definition of shutting stable doors after the horse has bolted. With lockdowns easing across Europe and no sign of a second infection wave, this move has been staunchly opposed by airlines, and it looks like the market expects the restriction to remain in place for only a limited time,” opined Chris Beauchamp at IG.

The reopening of house showrooms was also casting a feelgood halo over the housebuilding sector.

9.35am: You know it's a dull day when a SEGRO announcement is one of the highlights

The London stock market has done the metaphorical equivalent of hitting the “snooze” button and rolling over for another 15 minutes’ kip.

The FTSE 100 was down 9 points (0.1%) at 6,475, with sentiment dented a little by sterling adding more than a quarter of a cent against the dollar, at US$1.2694.

Following on from Friday’s startling US jobs data, China’s trade data released overnight also provided a few surprises.

The trade surplus rose to US$62.9bn in May from US$45.3bn in April; the consensus forecast was way off at US$41.4bn.

“Exports fell by 3.3% y/y [year-on-year], after rising by 3.5% in the previous month, beating the consensus for a sharper fall of 6.5%. This is a solid out-turn, considering that base effects were unfavourable. Meanwhile, imports collapsed by 16.7% last month, deeper than the 14.2% plunge in April and the -7.9% consensus,” said Miguel Chanco, the senior Asian economist at Pantheon Macroeconomics.

“The continued weakness in imports makes sense in the context of subdued global commodity prices and increasingly fragile domestic demand. Inbound shipments fell by 1.5% m/m in May, more moderate than the 5.2% pullback in April. A rebound in imports of iron, copper, coal and machine tools was not enough to cancel out gains elsewhere,” Chanco said, adding that May should mark the peak of China’s trade surplus.

China’s foreign reserves rose to US$3,102bn from US$3,091bn in April, versus the consensus forecast of US$3,096bn.

Pharma giant AstraZeneca PLC (LON:AZN), down 2.8% at 8.191.82p, was weighing down the index after reports emerged that it had made a bid approach earlier this year for US peer, Gilead Sciences.

SEGRO PLC (LON:SGRO), the property company that put Slough on the map (and then took it off again), dipped 0.7% at 886.6p after it coughed up £202.5mln for a 34 acre urban warehouse estate in Perivale, West London.

8.50am: Dull start to the week

The FTSE 100 gave back some of the gains it made last week as it resisted the positive pull of Asia’s main markets in early trade on Monday.

The index of UK blue-chips opened 41 points lower at  6,442.98. 

The morning’s big news was AstraZeneca’s (LON:AZN) response to weekend speculation of a mega-bid for US biotech Gilead Life Sciences (LON:GILD), which is worth around £72bn.

Sources from the Anglo-Swedish group quoted in most of the papers have dampened speculation, with the Times reporting that interest in the US maker of coronavirus treatment remdesivir had been dropped. AstraZeneca’s shares fell 1.9%.

Also off, this time 5.8%, was JD Sport (LON:JD.) in a continued reaction to the move by the company’s chairman and co-founder, Peter Cowgill to offload a tranche of his shares.

British Airways owner IAG (LON:IAG) rose 3.7% after it began legal action over the UK government’s airport quarantine restrictions.

Both Shell (LON:RDSA) and BP (LON:BP.) were up 2% each in the wake of OPEC Plus’ decision to maintain production cuts.

The rumoured June 22 reopening of pubs and restaurants gave publican Marstons (LON:MAR) a 15% boost, while Pitcher & Piano chain Mitchells & Butlers advanced 6.3%.

Proactive news headlines:

Union Jack Oil PLC (LON:UJO) is expanding its ownership of the Wressle oil field development project, with a deal to acquire an additional 12.5% interest from Humber Oil & Gas Limited for an initial upfront payment of £500,000. It sees the AIM-quoted firm’s stake in the Lincolnshire onshore oil project increase to 40%. Wressle is slated to achieve ‘first oil’ and begin production later this year, and when that project milestone is reached it will be transformational for Union Jack’s production and revenue profile.

Crossword Cybersecurity PLC (LON:CCS) said its consulting division has signed a three-year contract with Agria Pet Insurance to become a “trusted cybersecurity partner”. The AIM-listed firm said Agria will use its Virtual Chief Information Security Officer (vCISO) service to improve its cybersecurity posture following the completion of a project to evaluate the insurer's security controls. The deal is the fifth insurance sector client the Crossword has secured over the last eighteen months and will see Agira receive regular testing of its cybersecurity processes and technology to minimise security risks and ensure continued compliance with regulations.

Echo Energy PLC (LON:ECHO) has confirmed an average production of 2,394 barrels oil equivalent per day (boepd) in the first quarter of 2020 whilst detailing an opportunity for low-cost development work. In an update on resources and reserves in Argentina, the company told investors that it has identified an initial portfolio of sixteen low-cost workover and intervention operations within the Santa Cruz Sur asset package. These operations will be focused on taking additional volumes into production which will, in turn, migrate associated volumes into proven developed producing (PDP) reserves.

KR1 PLC (LON:KR1) said it has participated in a token distribution event, or ‘lockdrop’, for Plasm, a decentralised application to be launched on the Polkadot blockchain. The cryptocurrency and blockchain investor said it has time-locked 1,232 Ether, equivalent to around US$253,250, via a smart contract for various durations. In return, it will receive around 66.29mln Plasm tokens. KR1 said the investment was “a novel and innovative way to optimise the utilization of assets in its portfolio”. Plasm is a highly scalable platform that allows developers to build secure applications using its ‘Layer 2’ solution for fast and high capacity transactions.

Arix Bioscience PLC (LON:ARIX) has said its entrepreneur-in-residence, Christian Schetter has been appointed a managing director of the venture capital company. Schetter, who brings with him 20 years’ industry experience, said he hoped to move the company to its “next stage of growth” in his new role. He joined Arix last year and before that was chief executive of Rigontec, an immuno-oncology company he sold Merck.

Zaim Credit Systems PLC (LON:ZAIM) has said it is seeing demand for its credit offerings recover as the coronavirus (COVID-19) lockdown in Russia begins to ease off. In its results statement covering full-year 2019, the company said the underlying operations performed better than expected last year, with its loss before tax narrowed to £891,589 from £1.55mln in 2018. The group's adjusted loss before interest and tax (EBIT) in 2019 was £177,000 versus positive EBIT of £915,000 in 2018. The Russia-focused fintech group said last year saw a significant improvement in its credit scoring system, with the default rate tumbling to 8.1% from 22% in 2018. At the end of 2019, gross outstanding loans to customers amounted to £32.1mln, compared to £29.2mln a year earlier.

Advanced Oncotherapy PLC (LON:AVO) has said its board will be reduced to eight members from 12 following the resignation of four non-executive directors. Stepping down at the company’s annual meeting next month are Gabriel Urwitz, Peter Sjöstrand, Allen Han,  and Dr Yuelong Huang. Thanking them, chairman Dr Mike Sinclair said: “As valued board members, they have helped Advanced Oncotherapy to progress to a leading position as a technology disruptor in proton therapy, and we wish them all the best in their future endeavours.”

BlueRock Diamonds PLC (LON:BRD) has sold 2,400 carats from its Karevleei mine in South Africa at an average price of US$290 per carat for a total of US$700,000. The transaction was conducted privately. "This sale at a time when the traditional sales channels for diamonds remain closed and at a price which we estimate to be at current market value for that particular parcel of diamonds is an excellent result in a highly uncertain market,” said BlueRock executive chairman Mike Houston.

Europa Metals Ltd (LON:EUZ) has submitted an application to the Junta of Castilla y León for a new three year investigation permit in respect of the Toral lead, zinc and silver project in north-west Spain. The company was granted an initial investigation permit for Toral in 2017, which is due to expire in November 2020, following conclusion of the customary three year period. An investigation permit provides a company with the right to pursue exploration activities at a project.

Vast Resources PLC (LON:VAST) has received its third shipment of equipment for the Baita Plai polymetallic mine in Romania. This includes an underground rock loader and mining jackhammers. The shipment arrived on 1 June and cleared customs on 5 June, and subsequently arrived at Baita Plai over the weekend.

NQ Minerals PLC (LON:NQMI) (OTCQB:NQMLF), the Aquis Exchange-listed base and precious metals producer from its Hellyer Gold Mine in Tasmania Australia, announced that it has raised £118,743 gross from an equity issue at 7.5p per share from a UK-based Institutional investor and a group of private investors for general working capital purposes and the company will issue 1,583,241 new ordinary shares.

AFC Energy PLC (LON:AFC), a leading provider of hydrogen power generation technologies, announces that, following an exercise of options under the AFC Share Option Scheme, the company has issued 40,000 ordinary shares of 0.1p each at an exercise price of 15.4p per share.

Metal Tiger PLC (LON:MTR), the AIM-listed investor in natural resource opportunities, has confirmed that its annual general meeting will be held at 10.00am on 30 June 2020 at Higher Shalford Farm, Shalford Lane, Charlton Musgrove, Wincanton, Somerset BA9 8HF. Following the restrictions placed on public gatherings under the Coronavirus Act 2020, shareholders are urged not to attend the meeting in person but to vote by proxy. Further details are given in the notice of meeting.

i3 Energy PLC (LON:I3E), an independent oil and gas company with assets and operations in the UK, has announced that its annual general meeting (AGM) will be held at the company's London office address being 2 Riding House Street, London, W1W 7FA on 30 June 2020 at 1.00 pm BST.  Under the UK government's current prohibition on non-essential travel and public gatherings, it will not be possible for all shareholders to attend the AGM in person, and the group therefore strongly encourages shareholders to vote on all resolutions by completing an online proxy appointment form appointing the chairman of the meeting as your proxy, to register any questions in advance and not to attend the meeting in person.

6.35am: Footsie called lower 

The FTSE 100 looks set to succumb to a bout of profit-taking after a double-digit gain on Friday, which capped a positive performance from the UK blue-chip index last week.

In Asia, there was a delayed response to Friday's better than expected US non-farm payrolls report, with most of the major equity markets in the region in positive territory on Monday.

Over the weekend the OPEC-Plus nations agreed to maintain production cuts, keeping Brent crude firmly above US$40 a barrel.

“Going into the meeting, there was speculation about some sort of extension in terms of the timeline,” said David Madden of CMC Markets.

“Saudi Arabia has lifted its selling price of oil to Asia by its largest increment in at least twenty years. Their selling price to other parts of the world has been lifted too. WTI and Brent crude have been on bullish runs recently, and that is likely to continue in light of the latest news.”

Over the weekend it also emerged that AstraZeneca (LON:AZN) had made a takeover approach for Gilead Sciences Inc (NASDAQ:GILD). The latter is currently valued at around £72bn.

As for scheduled company news, it is expected to be a relatively slow week. British American Tobacco (LON:BAT) leads a line-up that includes broadband specialist TalkTalk (LON:TALK) and platinum producer Johnson Matthey (LON:JMAT).

Significant events expected on Monday: 

Trading updates: Frontier Developments PLC (LON:FDEV)

Finals: Ocean Outdoor Limited (LON:OOUT)

Around the markets:

  • Pound worth US$1.2707 (+0.3%)
  • Gold worth US$1,693.80 an ounce, up US$10.80
  • Brent crude changing hands for US$43.13 a barrel, up 83 cents   

City headlines:

Financial Times

  • Ministers target June 22 for reopening of England’s pubs and restaurants
  • New Zealand lifts restrictions after ‘eliminating’ coronavirus
  • Huawei fights back against attacks over Britain’s 5G

Times

  • BT auditor highlights new failure
  • AstraZeneca ‘drops interest’ in company behind coronavirus drug
  • Amanda Staveley faces £800mln claim for fees from Omar Hassanieh

Telegraph

  • Pub sues RBS over claims it blocked £20mln of PPE imports from China
  • New £250mln Ashford film studio to be pandemic-proof
  • Sunak debating tax incentive for SMEs to boost hiring

Guardian

  • Brexit: UK fears EU chief negotiator has lost grip on fishing talks

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