FTSE 100 closes first day of week lower as health fears resurface

Britain's blue chip benchmark finished down almost 48 points, or 0.76%, at 6,244 on Monday

Tesco PLC -
London stocks were hit over coronavirus fears again on Monday
  • FTSE 100 closes down nearly 48 points
  • US stocks higher though
  • Carnival extends North American operational pause to the end of September

5.05pm: FTSE 100 lags at start of week

FTSE 100 index closed Monday in the red, while US stocks headed higher, as health fears once again dominated.

Britain's blue chip benchmark finished down almost 48 points, or 0.76%, at 6,244.

"Traders on this side of the Atlantic are worried about the increase in the number of new Covid-19 cases," noted David Madden, analyst at CMC Markets.

"The Americas, China, India and Germany have seen relatively sharp increases in new infections, and that has weighed on confidence for much of the session. The losses aren’t huge so traders are not that worried, but they are cautious that some of the good work that has been done in relation to suppressing the virus could be undone."

On Wall Street though, shares went north. The Dow Jones Industrial Average added almost 80 points at 25,954, while the  S&P 500 gained over 12 to 3,109.

4.00pm: Footsie gently sinks but not as much as Carnival

The Footsie losses lengthened steadily throughout the day as investors took fright at the prospect of a second wave of coronavirus cases.

Entering the last half-hour of trading the index of London’s leading shares was close to its low point for the day, at 6,237, down 57 points (0.9%).

“With regards to the virus itself, the latest news has been mixed. Infections have picked up again in Beijing in China and Westphalia in Germany and continue to increase in several US states. On the positive side, a cheap steroid drug has been found to significantly cut the death rate of those seriously ill with Covid-19,” said Rupert Thompson, the chief investment officer at asset management firm Kingswood.

“All this leaves equity markets looking set to remain choppy over coming months as sentiment fluctuates as to how quickly we can regain a semblance of normality. Indeed, with valuations back now on the high side, a market correction remains possible.,” Thompson suggested.

Cruises operator Carnival PLC (LON:CCL), down 11% at 1,133.5p, was the worst-performing blue-chip after it extended its operational pause in North America through to the end of September.

Carnival initially announced a voluntary 30-day pause in cruises on March 13; the latest extension is the third the dual-listed company has announced.

3.00pm: US stocks mixed

US indices moved lower in the first half-hour of trading but not as severely as had been anticipated.

The Dow Jones index was down 14 points at 25,857 and the S&P 500 was less than a point lower at 3,097.

Earlier, the Chicago Fed’s national activity index clocked in with a positive reading of 2.61 for May after April’s -17.89; zero marks the crossover point between expansion and contraction.

In London, the FTSE 100 was down 27 points (0.4%) at 6,265.

2.00pm: US indices tipped to open lower

In the US, investors are weighing up the same conflicting factors as in Europe and as in Europe erring on the side of caution.

The Dow Jones index is expected to open around 90 points lower at 27,780 and the S&P 9 points softer at 3,089.

Investors are a little antsy over the latest data on coronavirus cases in the US, where more states now are reporting the number of cases rising than the number that are reporting a decline in cases.

The number of confirmed new US cases rose by 24,800 on Sunday, up from 19,500 the week before.

“The trend in total cases is now rising by almost 9% per week, so they will double over the next eight weeks, assuming no further acceleration,” calculated Ian Shepherdson, the chief economist at Pantheon Macroeconomics.

“As of yesterday, cases stood at 2.27mln, so they're on course for 5mln by the third week of August, and 10mln by mid-October, in the absence of drastic changes in either public policy and/or people's behaviour in the states where cases are rising,” he added.

In London, the FTSE 100 had an undistinguished lunchtime session, moving sideways at around 6,269, down 24 points (0.4%).

The coronavirus situation in the UK appears to be a bit better than in the US if the numbers are to be believed, with the number of cases on a declining trend after a bit of a relapse in recent weeks.

12.35pm: Slight rebound in confidence in UK households

The seasonally adjusted IHS Markit UK Household Finance Index (HFI) rose to 40.7 in June from 37.8 in May.

The latest reading was the highest since March but was still consistent with a strongly pessimistic attitude among UK households towards their current financial situation, IHS Markit said.

"It is reassuring to see the UK Household Finance Index rebounding in June, as it suggests that the financial hardship endured during the height of the lockdown is easing; however, it appears that households are still faced with a number of difficulties which will hold back a broad-based economic recovery,” said Joe Hayes, an economist at IHS Markit.

"Job security perceptions are still at extreme levels of pessimism, and the data here suggest there has been little pickup. This isn't surprising given that large parts of the UK economy remain shuttered, but such negativity towards employment status is likely to generate risk aversion in consumption habits, which will undermine the recovery.

"Incomes from employment were also in deep contraction territory during June. Key to the economy returning to pre-COVID-19 levels of economic output as quick as possible will be strong demand, which will encourage robust business activity and employment growth. If households are fearful for their job security and their incomes are falling, the UK's path of recovery could be a slow one,” he added.

The FTSE 100, which had been lethargic all morning, has picked up a bit of pace in the lunchtime session; unfortunately, it is heading in the wrong direction for equity bulls, falling to 6,267, down 25 points (0.4%).

11.40am: Rebound in CBI Industrial Trends Survey less marked than expected

The Footsie remains little changed on the day in the wake of the latest CBI Industrial Trends Survey.

The total orders balance rose to -58 in June from -62 in May but the rebound was not as large as expected, as the consensus forecast had been for a reading of -50.

“The CBI’s survey almost certainly is understating the pace of the recovery in manufacturing output from its 28% fall between February and April,” opined Samuel Tombs at Pantheon Macroeconomics.

“The total orders balance is derived from firms reporting whether orders are above or below ‘normal’ levels. Firms give the same response to the survey if orders are 1% below normal or 99% below normal, so the balance tells us little about how activity has changed at manufacturers that were hit by COVID-19,” Tombs explained.

“The CBI’s survey was far too slow to register the recovery in output after the 2008-to-09 recession—the total orders balance remained negative throughout 2010, when manufacturing output rebounded—and we suspect it will give an overly downbeat steer this time too. Note too that the CBI’s survey always is conducted in the first half of the month, so it likely will understate the full-month level of output in June,” Tombs continued.

“ Daily data on weather-adjusted energy consumption and heavy goods vehicle miles remain consistent with manufacturing output making big strides back towards normal levels in June. So despite the modest recovery in the CBI’s survey, we think that manufacturing output will have recovered to be 5-to-10% below its pre-COVID level in June,” Tombs said.

The FTSE 100 was down 12 points at 6,281.

10.10am: Back to square one

With a leg-up from the supermarkets and housebuilders, the FTSE 100 has practically wiped out its early losses.

The FTSE 100 was down 2 points (0.0%) at 6,290.

J Sainsbury PLC (LON:SBRY) was the top riser, up 3.0% at 206.3p, closely followed by sector peers Wm Morrison Supermarkets PLC (LON:MRW), Tesco PLC (LON:TSCO) and Ocado Group PLC (LON:OCDO), which were up by between 1.6% and 2.2%.

The sector has been buoyed by reports that the government is considering a cut to value-added tax.

Housebuilders Barratt Developments PLC (LON:BDEV), Berekely Group Holdings PLC (LON:BKG) and Taylor Wimpey PLC (LON:TW.) were also going well with gains ranging from 1% to 3.3%.

JD Sports Fashion PLC (LON:JD.) was off 2.0% after responding to speculation that it is considering appointing administrators to Go Outdoors.

The group has filed a notice that basically gives Go Outdoors protection from its creditors for ten business days.

Controversial outsourcing group Capital PLC (LON:CPI) was up 11% at 47.68p after it revealed on Friday that it is preparing to sell ESS, a standalone provider of management information system software for the education sector.

8.45am: Cautious start

The FTSE 100 started the week in the red as London’s traders chose to focus on the potential impact of a coronavirus second wave.

Eyed were Germany’s spikes in outbreaks and the reinfection rates as it has eased its lockdown effort.

Here in the UK, the likely scrapping of the two-metre rule to aid the restaurant and pubs sector is being viewed with caution.

On the market, the Swiss attorney general’s decisions to probe Glencore’s (LON:GLEN) activities in the Democratic Republic of Congo, announced Friday, continued to create waves with stock in the miner down 5%.

The shutdown of US cruise operations hit Carnival (LON:CCL), which fell 4.5%.

Hotelier Intercontinental (LON:IHG) and British Airways owner IAG (LON:IAG) were off 2.7% and 2.6% respectively amid worries over a renewed clampdown on world travel.

In demand were the precious metals companies, which drove up Mexico-focused silver miner Fresnillo (LON:FRES) 1.5%, while platinum specialist Johnson Matthey (LON:JMAT), was up 1%.

On the FTSE 250, publican Marstons (LON:MARS) was up 5% as hopes rose the two-metre restriction would be eased this week, helping the hospitality trade.

Proactive news headlines

Integumen PLC (LON:SKIN) said it has signed a material transfer agreement (MTA) with a company called Aptamer Group that will allow the pair to develop and manufacture a kit to detect SARS-CoV-2 in wastewater.  In doing so it will use aptamers, which are synthetic molecules specifically created to bind to another, usually larger, molecule.

Tiziana Life Sciences PLC (LON:TILS NASDAQ:TLSA) has allotted and issued 1.8mln ordinary shares of 3 pence each in respect of the exercise of 1,800,000 warrants at a price of 35 pence share, yielding £630,000 in cash proceeds for the company. 

Primary Health Properties PLC (LON:PHP) has completed the first of two conditional purchases of medical centres mentioned in its May 11 announcement. The acquisition price was £3.3mln; Primary Health has previously indicated that the purchase of both centres would cost £6.9mln, before costs.

FastForward Innovations Ltd (LON:FFWD) said that its portfolio firm, mobile game developer Leap Gaming, has expanded its partnership with 888 Holdings PLC (LON:888).  The AIM-listed investment company, which holds a 43.4% stake in Leap Gaming, said the deal will see a number of Leap’s titles become available through the 888casino website including a selection of ultra-realistic 3D virtual sports games.

Cadogan Petroleum PLC (LON:CAD) has announced the restart of production in the Blazhiv-3 and Blazhiv-3 wells, in Ukraine. The wells were previously shut-in back in November and the restart comes after the signing of new lease contracts.

Nuformix PLC (LON:NFX) has announced the resignation of its chief executive, Dan Gooding.  The pharmaceutical company said Gooding will step down from the board with immediate effect but he has agreed to stay until the end of June to conduct an orderly handover. The firm’s chairman, Christopher Blackwell, will lead the company as executive chairman until a successor is found.

Genel Energy PLC (LON:GENL) has appointed Canan Ediboğlu as its new independent non-executive director with immediate effect. Ediboğlu, formerly CEO of Shell Turkey, joins the board to return the balance between independent and non-independent directors.

Ncondezi Energy PLC (LON:NCCL) booked US$769,000 in joint venture investment expenditure during the financial year to December 2019, and spent US$58,000 on power development. The spending shows a shift in pattern, as exploration at the power project in Mozambique has ceased and accounted for zero expenditure during the financial year. Ncondezi closed out 2019 with US$722,000 in the bank.

Vast Resources PLC (LON:VAST) has raised £1.49mln via a placing of shares at 0.18p. The company has received interest from certain other investors in participating for a further £109,800 on similar terms as the placing and will make a further announcement as and when such arrangements are finalised.

Gore Street Energy Storage Fund PLC (LON:GSF) has entered into an agreement to acquire a 100% interest in Ferrymuir Energy Storage Limited. The 50 megawatt (MW) energy storage project in Fife, Scotland, has been acquired from a group of investors comprising Abbey Properties, Yoogen and Intelligent Land Investments.

FastForward Innovations Ltd (LON:FFWD) said that its portfolio firm, mobile game developer Leap Gaming, has expanded its partnership with 888 Holdings PLC (LON:888).  The AIM-listed investment company, which holds a 43.4% stake in Leap Gaming, said the deal will see a number of Leap’s titles become available through the 888casino website including a selection of ultra-realistic 3D virtual sports games.

SIMEC Atlantis Energy Limited (LON:SAE) has got the regulatory nod for the transfer of a lease to develop a tidal project in Raz Blanchard, Normandy. The authorities have approved the transfer of the lease to develop the 12 megawatt (MW) tidal power project from ENGIE to Normandie Hydroliennes.

Directa Plus PLC (LON:DCTA) said it has been granted its sixth patent in the Chinese market for its G+ graphene technology. The company said the new patent covers the use of G+ technology in bicycle, motorcycle and passenger car tyres as well as truck and bus radial tyres.

6.48 am: Footsie called lower 

The FTSE 100 looks set to ignore Asia’s positive start to the trading week amid worries over a coronavirus second wave.

Apple’s decision to ‘re-close’ 11 US stores and the suspension of cruise operations there too left traders with food for thought over the weekend.

Here in the UK, the relaxation of the two-metres rule is designed to aid the recovery of the hospitality industry.

But as Germany’s emergence from lockdown has shown, it might also coincide with a sharp uptick in the infection rate.

“With Germany widely lauded for its swift coronavirus response, both from a fiscal as well as a medical standpoint, countries across Europe will now be nervously glancing in its direction as authorities there grapple with this resurgence, over concerns it could ripple out beyond its borders and threaten the re-opening plans of countries across the rest of Europe,” said Michael Hewson of CMC Markets.

Turning to the week’s scheduled news, updates from supermarket giant Tesco (LON:TSCO), publican Marstons (LON:MARS) and Royal Mail Group (LON:RMG) stand out on the corporate calendar.

On the macroeconomic front, the market is expecting Tuesday's US and UK purchasing managers’ data for June with a weary air of resignation.

“Although usually the manufacturing PMIs are the more important, nowadays it’s the service sector that’s under pressure and so everyone is waiting to see how the service sector recovers,” said analyst Marshall Gittler at BD Swiss.

Around the markets: Pound US$1.2391 (up 0.33%), gold US$1,767.50 an ounce, up US14.50;Brent crude US$42.05, down 14 cents.                      

Monday’s main news

Finals: Polar Capital Holdings PLC (LON:POLR)

Business headlines

Financial Times

  • Sunak set to follow VAT stimulus with autumn tax rises
  • Brexit: Why hopes are rising that EU and UK could find compromise
  • Wirecard’s €1.9bn never entered the Philippine financial system, bank governor says


  • British Gas hits back with low-cost rival of its own
  • UK clamps down on takeover rules for firms fighting Covid
  • JD Sports is preparing for a possible pre-pack administration of Go Outdoors after the retailer was laid low by the lockdown


  • Ofgem lets energy suppliers start chasing unpaid bills
  • Rogue business owners use coronavirus loans to buy property and supercars
  • National Grid challenges Trump over rules that favour petrol over electric cars


  • UK black professional representation 'has barely budged since 2014'
  • Former chancellor Alistair Darling calls for emergency VAT cut

Add related topics to MyProactive

Create your account: sign up and get ahead on news and events


The Company is a publisher. You understand and agree that no content published on the Site constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is...


Hochschild Mining reveals 'profitable' PEA on its heavy rare earths project...

Hochschild Mining Head of Investor Relations Charles Gordon joined Proactive New York to discuss the Peru-based gold and silver miner's recent developments within its heavy rare earths project, recently renamed Aclara. Gordon says the group recently revealed a preliminary economic assessment...

19 hours, 58 minutes ago

15 min read