FTSE 100 tanks 4% as second wave fears spark global share sell-off

Britain’s blue-chip benchmark closed down nearly 4%, or over 252 points, at 6,076 with

Babcock International -
Carnival led FTSE lower on Thursday
  • FTSE 100 index closes down over 252 points
  • Fears of second wave of the virus
  • US stocks crash

5.05pm: FTSE closes 4% lower

FTSE 100 index plunged sharply on Thursday as the pace of the global share sell-off picked up amid fears of a second coronavirus spike.

Britain’s blue-chip benchmark closed down nearly 4%, or over 252 points, at 6,076 with banks and travel stocks bearing the brunt.

"Equity markets have come under huge pressure today as there are fears about a second wave of Covid-19 infections," said David Madden, analyst at London-based CMC Markets.

"US states like Texas, California and Arizona reported there has been an increase in new infections, which is likely to be a result of the loosening of lockdown restrictions. In recent weeks global equities have enjoyed a rally on the back of the news that economies were reopening."

Top laggard in London was cruse operator Carnival (LON:CCL), which sank 12.14% to 1,190p.

Joshua Mahony, at IG noted that again in London, travel stocks were at the forefront of the losses, on worries that countries will begin to restrict movement once again.

"Hard-hit stocks such as Carnival, Rolls-Royce, IAG, and easyJet are all on the back foot as they continue to lead the decline of value stocks," he said.

Over in Wall Street, the Dow Jones Industrial Average crashed 1,094 points to 25,891, while the S&P 500 tanked 107 points to 3,083. The Nasdaq lost 244 points at 9,776.

The oil price also slumped, with US benchmark West Texas Intermediate (WTI) falling 7.7% to US$36.55 a barrel and Brent crude slipping 6.7%, but safe haven gold gained 1.91% to US$1,753 an ounce.

3.50pm: Lloyds tumbles over mortgage failings fine

FTSE 100 was down a whopping 210 points to 6,118 while the Dow Jones plunged 976 points amid fears of a second wave of infections.

The number of coronavirus cases in the US is now over 2mln, while New Mexico, Oregon, Florida, Texas, Arizona are having large increases in new cases, although some are attributed to the increase in testing.

Back home, Lloyds Banking Group PLC (LON:LLOY) tumbled 8% to 32.28p after being slapped with £64mln fine for how it dealt with customers falling behind on mortgage payments.

Between 2011 and 2015, Lloyds, Bank of Scotland and the Mortgage Business failed to recognise customers’ circumstances and left inexperienced staff to negotiate appropriate payment arrangements for customers in arrears, the financial regulator said.

Lloyds did not dispute the FCA findings, which meant the fine was reduced by 30% from the original £91.5mln. 

The bank estimates it has will have paid £300mln in compensation to 526,000 customers once a redress scheme completes shortly.

2.40pm: US jobless claims drop but still at 1.55mln

FTSE 100 remained firmly in the red as US indices opened underwater too.

London’s big caps tumbled 180 points to 6,148, while the Dow Jones plunged 817 points to 26,172 and the S&P500 shed 80 points to 3,110.

US jobless claims came marginally below consensus, which was 1.55mln, at 1.54mln.

Down from 1.89mln last week, it is the tenth drop in a row but analysts pointed out that the previous negative record was 665,000, seen during the 2008 financial crisis.

Next week’s numbers may be flat or slightly higher according to Pantheon Macroeconomics.

“This doesn’t necessarily mean that May’s payroll increase was a one-time fluke, because claims only measure the pace of gross layoffs, and tell us nothing about the pace of re-hiring of people laid off earlier in the crisis,” said economist Ian Shepherdson.

“But markets will not like to see any increase in the claims numbers, which will magnify the uneasiness now being triggered by the second wave of Covid cases, mostly in the South.”

1.50pm: Markets have not forgotten about Brexit

The Footsie was down to 182 points to 6,146 after lunch while sterling plunged 0.8% to US$1.2648.

According to analysts at Spreadex, investors may be worried about the state of Brexit negotiations.

On Wednesday it was revealed that a leaked document allows the EU parliament to veto any trade deal lacking safeguards to ensure fair competition among other rights.

Meanwhile, EU chief negotiation Michel Barnier said last week that little progress had been made on key points, such as fishing rights in UK waters.

Carolyn Fairbairn, the outgoing boss of industry body CBI, told the BBC the resilience of British companies is “absolutely on the floor” as the pandemic has changed the face of the market.

"The firms that I speak to have not a spare moment to plan for a no trade deal Brexit at the end of the year - that is the common sense voice that needs to find its way into these negotiations,” she added.

12.25pm: Wall Street to open in the red

The Footsie dipped further at lunchtime, down 147 points to 6,182.

The general malaise is expected to drag down US indices when they open later today, as yesterday’s dire predictions by the OECD and the Fed are hard to erase.

“For the past few weeks investors have sort of forgotten that we are in the midst of a pandemic, overegging their optimism thanks to a lockdown-easing measure here, and a better than forecast nonfarm jobs report there,” said Connor Campbell, analyst at Spreadex.

“Well, the OECD and Fed appear to have shaken the markets out of their short-sightedness, forcibly reminding investors that it is going to be a long, tough journey back to growth.”

There were better news for Just Eat Takeaway.com NV (LON:JET), set to enter the US market after agreeing the takeover of US peer GrubHub Inc (NYSE:GRUB).

The food delivery service will dish out US$7.3bn if shareholders approve.

The move, coming a few months after the February merger of UK and Canada-focused Just Eat with Germany and Netherlands-based Takeaway.com, will see the giant spreading across 25 countries.

Analysts at AJ Bell warned of the dangers of “doing too much too fast” when it comes to mergers, however recognised the need to scale up in a fiercely competitive sector.

Shares rose 2% to 7,789.94p.

11.25am: Ocado falls after 'cheeky' £1bn fundraise  

The Footsie was still underwater heading to lunch, diving 123 points to 6,205.

Ocado Group PLC (LON:OCDO) was dragging the index lower with a 5% drop to 1,967.33p after raising £1bn.

The online grocer announced and completed overnight an equity placing of £657mln at a price of 1,960p, a 5.7% discount to the previous closing price of 2,079p, and topped up with a £350mln convertible loan.

The rising star said it wanted the extra cash, which will balloon the balance sheet to £2.2bn, to give it “the financial flexibility to move quickly and to capitalise on the full opportunity set over the medium term”.

Independent retail analyst Nick Bubb said his initial reaction “was that it was a real cheek for Ocado to ask investors to stump up more cash, as the company still has a ton of cash in the bank”.

“But with investor appetite for online stocks starting to wane in the short-term, after the huge rallies in recent months, the company must have been nervous that if it waited too long it might have missed the boat,” he added.

10.40am: Heathrow Airport another one to cut jobs

The Footsie was down 143 points to 6,185 in mid-morning, while sterling also slipped 0.3% to US$1.2704.

As the aviation industry continues to grapple with the crisis, Heathrow Airport announced more job cuts after passenger numbers hit an all-time low last month, crashing 97% on 2019.

The airport already sacked a third of managerial roles among the 7,000 frontline workers and launched a voluntary redundancy scheme.

“Throughout this crisis, we have tried to protect front line jobs, but this is no longer sustainable,” said chief executive John Holland-Kaye.

“While we cannot rule out further job reductions, we will continue to explore options to minimise the number of job losses.”

The firm criticised the government’s two-week quarantine policy for inbound travellers, and proposed to establish 'air bridges' to low-risk countries.

It also called for a 12-months waiver in business rates for all airports in England and Wales, matching the support given to Scottish and Northern Irish airports.

9.30am: British Gas owner Centrica to slash 5,000 jobs in management overhaul

The Footsie trimmed its losses, but at 6,175 was still 153 points below where it started the day.

British Gas owner Centrica PLC (LON:CNA), set to be demoted from the big-cap index, reflected the mood as it announced it is to slash 5,000 jobs.

Half of these redundancies will be at management layers as the energy provider looks to flatten its bureaucratic structure.

Around half of the 40 senior leadership team will leave the group by the end of August, it said.

“The changes we are proposing to make are designed to arrest our decline, allow us to focus on our customers and create a sustainable company,” said chief executive Chris O'Shea, who joined in March.

The company had been struggling long before the pandemic, with users leaving for smaller and more customer-friendly providers, while it has also been battered by the energy price cap and falling gas prices.

Shares in Centrica dropped 3% to 40.45p on the news.

8.50am: Big kick in the guts

The FTSE 100 index posted triple-digit losses at the open on Thursday, helping erode substantially all of the gains made in the month-do-date.

In early deals, the UK blue-chip index dropped 167 points to 6,161.96.

The source of the renewed nervousness was US Federal Reserve chair, Jerome Powell who warned it would be a long and arduous road to recovery from the coronavirus (COVID-19) pandemic.

In other words, forget the v-shaped recession and bounce-back mooted in some quarters.

Haven investments such as gold bounced back, while the oil price weakened following the rather gloomy prognosis for the world’s largest economy.

The outlook portrayed by Powell helped drive the airline stocks lower with British Airways owner IAG (LON:IAG) off 9% as the prospects for international travel eroded. Cruise operator Carnival (LON:CCL) posted an identical percentage loss.

Also, hit hard was Rolls Royce (LON:RR.), the jet engine maker whose fortunes rise and fall with airline industry. It was down 9.2%. Goldman Sachs’ downgrade Wednesday probably didn’t help sentiment either.

GKN owner Melrose Industries (LON:MLRO) also suffered as a result of the airlines ‘jetwash’.

On the up were the precious metals firms, pulled up by the gold price. Polymetal (LON:POLY) topped the rises with a 2.5% gain. Not far behind was Mexican silver producer Fresnillo (LON:FRES), which was up 2%.

Proactive news headlines:

Greatland Gold PLC (LON:GGP) has described some of the latest drilling results from its Havieron gold prospect in Western Australia as ‘truly spectacular’. One infill hole hit 109 metres (m) of gold at an average grade of 6.3 grammes per tonne (g/t), which Greatland described as among the best results from the project to date. Partner Newcrest’s latest update also reported an 82m intersection of gold and copper in a new area 220m north-west of the previous drilling.

ImmuPharma PLC (LON:IMM), the AIM-listed drug development group, has arranged funding of up to US$6.3mln through two specialist US healthcare investors. The money will come from an issue of unsecured convertible securities and associated options to L1 Capital Global Opportunities Master Fund and Lind Global Macro Fund. The cash will fund continued expansion of the company's R&D programmes, ImmuPharma said, and bolster its general financial position.

Ariana Resources PLC (LON:AAU) surged on Thursday as the firm reported a 50% increase in the joint ore reserves at the Tavsan project in Turkey, part of its Red Rabbit joint venture (JV) with Proccea Construction. The AIM-listed firm said the resource has increased to 4.49mln tonnes for 253,000 ounces of gold and 723,000 ounces of silver, while the estimate was also further de-risked with 77% of the resource now in the measured and indicated JORC categories. An additional JORC exploration target of up to a further 9mln tonnes at 1.0-1.3 grams per tonne of gold has also been updated to reflect the latest estimation.

Open Orphan PLC (LON:ORPH) revealed that its Venn Life Sciences division has won a “major contract” with a leading vaccine developer and one of the top pharmaceutical companies in the world. While the full details of the deal weren’t provided, in a statement Open Orphan said Venn would help “obtain and support market access of newly developed vaccines into the EU and US markets until the end of 2020”. A delighted Cathal Friel, chairman of Open Orphan, said the contract reinforced the company’s position as one of the leading service providers to the vaccine industry globally.

Europa Oil & Gas Holdings PLC (LON:EOG) has expanded its footprint offshore Ireland with the acquisition of a 100% interest in an area in the vicinity of the Corrib gas field and its own Inishkea exploration prospects. The company is acquiring Frontier Exploration Licence (FEL) 3/19 from Oslo-headquartered DNO with only a nominal upfront cash consideration – it is also giving the seller a 5% net profits interest royalty over any future gas or liquids production. FEL 3/19 is host to the 1.2 trillion cubic feet Edge prospect, and, along with Inishkea which is estimated at 1.5 tcf, represents a strategic focus for Europa as it increasingly prioritises the gas portion of its hydrocarbon exploration portfolio offshore Ireland.

Amur Minerals Corporation (LON:AMC) shares strengthened in Thursday’s early deals as its project development process in Russia continued to make progress, with indicative revenue terms confirmed by the authorities. The company, in a statement, said that it has now been provided with non-binding indicative offtake terms for both the nickel and copper concentrates due to be produced at the Kun Manie (KM) mine project. It comes after an update earlier this month which confirmed the metallurgical approach, with the generation of a copper concentrate and a nickel concentrate, using industry-standard sulphide floatation methods.

Inspiration Healthcare Group PLC (LON:IHC) has announced that ‘Project Wave’ which is developing a novel technology for a respiratory device designed to be used in neonatal intensive care has been awarded a grant towards the cost of trials expected to commence this year on 20 babies at Trevor Mann Unit, Brighton & Sussex University Hospital. The global medical technology company said the Med Tech Trials Innovation Support Grant (MTT-ISG) has been awarded by the Academic Health Science Networks (AHSN) and part-financed by the European Regional Development Fund (ERDF) will contribute up to 50% (£50,000 maximum) towards the costs of the trials.

Woodbois Limited (LON:WBI) said it is planning to recommence limited production at its Mouila sawmill and veneer factory in Gabon on June 15. In an operations update, the Africa-focused timber group said while activity in the sector had fallen dramatically in April and remained at low levels for most of May, in the last two weeks enquiries and demand levels had started to return, particularly from Asia and the Middle East. As a result, Woodbois said it had a “solid order book in place” and planned to return to full production in Gabon as soon as coronavirus pandemic restrictions were fully lifted in the country. In a separate announcement, the firm also said it has appointed Canaccord Genuity as its Nominated Adviser and Sole Broker with immediate effect.

Ceres Power Holdings PLC (LON:CWR) has announced that, in line with board succession planning, its chairman, Alan Aubrey is standing down and that Warren Finegold, currently a non-executive director of the global leader in fuel cell technology will succeed him with immediate effect. The group noted that Finegold joined the board of Ceres in March 2020 as an independent non-executive director. In his career, he has spent more than 20 years in Investment Banking and 10 years on the Vodafone Group Executive Committee. Aubrey has served as chairman of Ceres since December 2012 and will remain a non-executive director to ensure a smooth handover of responsibilities to Finegold before retiring from the Board on September 28, 2020.

Faron Pharmaceuticals Oy (LON:FARN) (NASDAQFIRSTNORTH:FARON) said it has received a €2.5mln grant that will help “support the acceleration” of an early-stage study of its cancer immunotherapy. The award has come from the European Innovation Council Accelerator pilot scheme, which exists to back small companies and scientists working on breakthrough products. Faron’s phase I/II MATINS trial is being carried out to assess the tolerability, safety and efficacy of Clevegen, a precision cancer immunotherapy targeting Clever-1 positive tumour associated macrophages.

Coinsilium Group Limited (LON:COIN) has said that together with its portfolio firm, Indorse it will be organising the ‘Post Covid Hack’, a global online blockchain hackathon, from July to October. The blockchain and cryptocurrency investor said the hackathon will bring together blockchain teams, developers and blockchain protocols to ideate, collaborate, learn, innovate and build “cutting-edge decentralized, open solutions” to overcome health, social, economic and privacy challenges in the post-coronavirus (COVID-19) era. Submissions for the hackathon will open on August 10, which will be preceded by pre-hackathon webinars in July, and is expected to attract over 200 participants.

ADES International Holding PLC (LON:ADES) saw its first-quarter financial results put in a strong performance despite a challenging operating environment for the oil and gas services contractor. Revenue for the three months ended March 31, 2020, was up 22% year-on-year at US$132.7mln supporting by previously acquired assets, though organic revenue growth was marked at 7%. ADES ended the quarter with an order backlog of US$1.34bn and noted that revenue trends continued through the month of April.

Angling Direct PLC (LON:ANG) is to raise £5.5mln through a share placing to strengthen its balance sheet to cope when stores reopen after the coronavirus lockdown. The fishing equipment specialist said it is anticipating high demand in the coming weeks as lockdown restrictions are eased and retail stores reopen from June 15. The share issue has been priced at a minimum of 50p, a 15% discount to last night’s close, and will be carried out in two tranches through a bookbuild programme by broker Nplus1 Singer.

Anglo African Oil & Gas PLC (LON:AAOG) announced it has entered into an unsecured convertible loan facility with Riverfort Global Opportunities for an amount of up to £1,500,000. The group said any funds advanced under the facility will be used to support the company's ongoing working capital as it pays down creditors and seeks to secure reverse takeover opportunities in keeping with its status as an AIM cash shell.

EQTEC PLC (LON:EQT), the technology solution company for waste gasification to energy projects, has announced the exercise of certain warrants to subscribe for 32,000,000 new ordinary shares in the company at a price of 0.25p each, with aggregate gross proceeds receivable by the company amounting to £80,000.

Capital Drilling Ltd. (LON:CAPD) confirmed it will be holding its annual general meeting (AGM) for the year ended December  31, 2019, at 10am BST on Friday, June 12, 2020, via telephone conferencing. Following the procedure of the normal course of business of the AGM, where shareholders will be provided with the voting results received by proxy for all of the resolutions set out in the Notice of AGM, a presentation, which will be available on the company's website ahead of the AGM, hosted by the firm’s chairman, Jamie Boyton, followed by a question and answer session. The dial-in details for the AGM, the chairman's presentation and the question and answer session, are as follows: UK Toll-Free: 08003589473 PIN: 59126109#; UK Toll: +44 3333000804 PIN: 59126109#; Hong Kong Toll: +852 30600225 PIN: 59126109#; Hong Kong Toll-Free: 800960242 PIN: 59126109#.

Gaming Realms PLC (LON:GMR) has announced that Resolutions 1 to 6 as contained in the Notice of Annual General Meeting (AGM), dated May 18, 2020, were duly passed at the AGM held on Wednesday, however, Resolution 7, related to the disapplication of pre-emption rights, did not achieve the 75% majority required as a special resolution. Details of the results of the resolutions can be found on the investor relations section of the company's website https://www.gamingrealms.com/investors/.

Newmark Security PLC (LON:NWT), a leading provider of products and services in the security and data sectors, has announced the launch of its new corporate and investor website. The new website presents a complete overview of the business, its vision, strategy and the markets it operates in, and its address remains as www.newmarksecurity.com  Marie-Claire Dwek, Newmark’s CEO, said: "Our new website presents our investment case clearly and succinctly, and explains the strong position Newmark has adopted within the sectors in which we operate. The release of our website is timely, as we present a number of 'new workplace' solutions that are helping organisations as they re-think the use of workspaces, following the impact of the (coronavirus) COVID-19 pandemic, as announced in our recent trading update."

The City Pub Group PLC (LON:CPC) said it will be announcing its final results for the year ended December 29, 2019, on Friday, June 12, 2020.

6.50am: Footsie set for significant early loss 

The FTSE 100 is set to start Thursday sharply lower as economic projections from the US Federal Reserve gave a reality check to rallying stocks.

In London, the blue-chip benchmark is called 118 points lower with CFD and spreadbetting firm IG Markets making the price at 6,200 to 6,203.

Last night Wall Street stocks turned negative. The Dow Jones Industrials Average shed 282 points or 1.04% to end at 26,989, while the S&P 500 dipped 0.5% to close at 3,190. At the same time, the tech-laden Nasdaq Composite was more robust, rising 0.6% to 10,020, and the small cap Russell 2000 gave up 2.6% to finish at 1,467.

It came as the Fed revealed forecasts seeing a 6.5% contraction in the US economy this year with recovery coming over a subsequent two year period, with 2021 and 2022 growth pitched at 5% and 3.5% respectively.

According to the Fed, the unemployment rate in America will be around 9.3% at the end of 2020 before reducing to 6.5% in 2021 and 5.5% in 2022 and 4.1% in 2023.

Fed chair Jerome Powell said it will be “a long road” to economic recovery following the coronavirus (COVID-19) pandemic.

“It is worth remembering the pre-pandemic unemployment rate was 3.5%, so one gets a scale of how the labour market has been impacted by the health emergency,” said David Madden, analyst at CMC Markets.

“The economic projections are based on the idea the recovery will begin in the second half of this year and it should last two years. Seeing as the Fed made it clear they will be keeping rates close to zero for a few years, US stocks were initially pushed up by the announcement, but the bullish move didn’t last," he added.

Emerging statistics, meanwhile, pointed to rising coronavirus infection numbers which stoked fears of a ‘second wave’ – new case numbers reportedly spiked in Texas and Florida among other states. The number of US cases exceeded 2mln.

The US dollar slumped to a three-month low on the Fed comments, before steadying.

In Asia on Thursday, Japan’s Nikkei 225 fell 533 points or 2.29% to 22,593 while Hong Kong’s Hang Seng was down 1.74% at 24,613 and the Shanghai Composite slipped 0.6% lower to 2,925.

Around the markets:

  • The pound: US$1.2670, down 0.6%
  • Gold: US$1,727 per ounce, down 0.54%
  • Brent crude: US$40.27 per barrel, down 2.2%
  • Bitcoin: US$9,886, up 1.22%

Significant events expected on Thursday:

Finals: Babcock International Group PLC (LON:BAB), Johnson Matthey PLC (LON:JMAT), Talktalk Telecom Group PLC (LON:TALK), CMC Markets PLC (LON:CMCX), JLEN Environmental Assets Group Ltd (LON:JLEN), Syncona Limited (LON:SYNC)

FTSE 100 ex-dividends to knock 5.43 points off the index: Vodafone Group PLC (LON:VOD), 3i Group plc (LON:III), Severn Trent PLC (LON:SVT)

Economic data: US weekly jobless claims, US PPI

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