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FTSE 100 closes in red after volatile session as health fears weigh

The UK's index of leading shares finished in the red to the tune of nearly 12 points, or 0.19%, to close at 6,157

J Sainsbury PLC - FTSE 100 to open slightly lower as traders weigh economic recovery against second wave fears
  • FTSE 100 index closes in red
  • Pfizer's vaccine shows early signs of efficacy
  • US private payrolls increase by 2.2mln in June

5pm: FTSE closes down

FTSE 100 index closed marginally lower on Wednesday after what was a volatile trading day.

The UK's index of leading shares finished in the red to the tune of nearly 12 points, or 0.19%, to close at 6,157.

However, the more domestic focused FTSE 250 added over 70 points to close at 17,189. 

"Stocks saw a lot of volatility today as health concerns weighed on sentiment in the morning, but the mood picked up on hopes of a Covid-19 vaccine," noted David Madden, analyst at CMC Markets.

"The tick up in tensions in Hong Kong also contributed to the negative move. Beijing have introduced a controversial law that will give it more control over the former British Overseas Territory, and that could impact China’s international relations," he added,

Shares in drugs firms Pfizer (NYSE:PFE)  and BioNTech (NASDAQ:BNTX) ticked higher in New York on potential coronavirus vaccine news. The pair reported positive early data from an ongoing Phase 1/2 study.

On Wall Street, the Dow Jones Industrial Average added around eight points at 25,820, while the S&P 500 gained over 12 at 3,112.

3.55pm: Carnival rises after securing multi-billion-dollar loans

The Footsie trimmed its gains again before close, adding just 1 point to 6,171.

Cruise operator Carnival plc (LON:CCL) was up 5% to 1,039p after entering two secured term loans worth US$1.8bn and US$800mln respectively.

The facilities, agreed with several banks including JP Morgan, expire in June 2025.

As other travel stocks, the FTSE 250-listed firm has been hit by travel restrictions and was forced to cancel or move several cruise journeys scheduled for most of 2020.

In the US, the ISM manufacturing index rose to 52.6 from 43.1, above the consensus, 49.8.

Despite the improvement, Pantheon Macroeconomics said “the appearance of normalcy is misleading” as, just because the figures are above pre-pandemic levels, it does not mean the market is in better shape.

“The ISM is a diffusion index, measuring rates of change, not levels. It doesn’t care where activity ended the previous month - in this case, very depressed - or where it ended this month; also very depressed, but a bit less so,” said economist Ian Shepherdson.

“We’re happy that manufacturing activity appears to have risen in June, but a full recovery is a long way off, and we’re worried about the risk of a temporary relapse in the face of the second Covid wave.”

2.50pm: Pfizer posts positive early data for Covid-19 vaccine

UK and US stocks turned green in the afternoon after a Covid-19 vaccine developed by Pfizer Inc. (NYSE:PFE) and BioNTech (NASDAQ:BNTX) showed positive results in the early stage of clinical trials.

The two firms are developing four candidates, with the most advanced showing safety and efficacy. 

If studies are successful and the vaccine receives regulatory approval, the pair could manufacture up to 100mln doses by the end of this year and over 1.2bn doses in 2021.

Pfizer advanced 5% to US$34.18 at the opening bell.

London’s leading index gained 17 points to 6,187, the Dow jumped 166 points to 25,980 and the S&P500 was up 16 points to 3,116.

1.45pm: US private payrolls for June miss expectations

The Footsie pared some losses after lunch, shedding 31 points to 6,137.

In the US, the latest ADP reading showed a 2.2mln increase in private payrolls in June, below the 2.9mln consensus and the revised May reading, 3mln.

Pantheon Macroeconomics said that if the June estimate missed the official number by the same margin as May, we would be looking at an 8mln increase, though it is unlikely.

“ADP hugely undershot the official May payroll number—by 5.6mln—probably because of the drag from the19.7mln plunge in April private payrolls, which fed into the ADP model with a one-month lag,” said chief economy Ian Shepherdson.

“This won’t be a problem for June, because the official May private payroll number was +3.1mln. But ADP might also have missed May’s increase in employment at very small firms, which don’t use the company’s payroll processing services but were captured by employment data released by Homebase.”

12.30pm: Upper Crust owner SSP plans job cuts as Ryanair launches biggest-ever cheap ticket sale

FTSE 100 was down 67 points to 6,103 at lunchtime, while Wall Street was expected to open in the red amid global market volatility.

In the battered travel sector, Upper Crust owner SSP Group plc (LON:SSPG) is considering plans to cut up to 5,000 jobs as it expects to open only around 20% of its units in the UK by autumn.

The FTSE 250 group, which owns food outlets in airports and train stations, saw sales crashing 90% in June, slightly better than 95% posted for April and May.

The news come a day after easyJet PLC (LON:EZJ) and Airbus announced thousands of job cuts.

Meanwhile, Ryanair PLC (LON:RYA) expects around 4.5mln passengers in July as it ramps back up towards its normal flight schedule following lockdown.

The low-cost airline has launched what it said it was its biggest ever sale of cheap tickets with 500,000 one-way seats on offer in late August and September from £19.99.

Investors were not that impressed, with shares dipping 2% to €10.41 on the announcement.

11.35am: US buys almost all Gilead Sciences' remdesivir supply

The Footsie slid underwater in late morning, dipping 32 points to 6,136.

Markets have been volatile amid the usual worries of a second wave of infections, while some people were reported to have contracted the swine flu in China.

In coronavirus news, Gilead Sciences Inc (NASDAQ:GILD) has agreed to sell almost all of its remdesivir supply to the Trump administration until September.

The investigational antiviral, which is temporarily approved in certain countries as coronavirus treatment, made the headlines on Monday after Gilead priced it at US$390 per vial, making a five-day course cost US$3,120.

But following the US deal, the UK and Europe will not be able to access the drug until October, Sky News reported.

Low-income countries can purchase a generic version after the Gilead inked licensing agreements with five manufacturers, but more developed economies have to go through the US pharma giant, which holds the patent.

Clinical trials showed that the antiviral can help patients with moderate pneumonia to recover faster compared to the standard of care over a 5-day course, while the 10-day treatment did not show statistical significance.

Last month, the cheaper and widely available steroid treatment dexamethasone was found to reduce death by up to one third in patients with severe COVID-19 symptoms.

10.40am: Gold reaches eight-year highs

The Footsie was back in the green, adding 11 points to 6,180, while sterling was flat at US$1.2395.

Gold futures rallied above US$1800 per ounce on Tuesday, a new eight-year high.

Neil Wilson, at Markets.com, noted that real US rates remain at the lowest levels in seven years, while benchmark treasury yields are at record lows.

Gold is seen as a safe haven in times of crisis, however analysts expect an inflation surge.

“Fading momentum on the Commodity Channel Index (CCI) with a bearish divergence to the price action suggests a near-term pullback may be required - perhaps at the US$1800 round number resistance - before the next significant leg higher can be made,” Wilson commented.

9.35am: UK manufacturing PMI shows signs of stabilisation

The Footsie was flat on Wednesday morning, down just 1 point to 6,168.

Fresh data on the UK manufacturing sector showed signs of stabilising in June.

The PMI rose to 50.1 last month up from 40.7 in May and unchanged from the flash estimate, which is just above the 50.0 neutral line.

Manufacturing production rose slightly for the first time in four months, as factories restarted, clients reopened with easier lockdown restrictions.

The intermediate goods sector saw the steepest growth, while consumer goods producers saw only a mild expansion, though investment goods output fell again, but at a much reduced pace.

“The planned loosening in COVID-19 restrictions on the 4th July should aid further gains in coming months. Although the trend in new export business remains weak, that should also strengthen as global lockdowns and transport constraints ease further,” commented Rob Dobson, director at IHS Markit, which compiles the survey.

“The main focus is now shifting towards the labour market. Concerns are rising about the potential for marked job losses, especially once the phase out of government support schemes begins.”

8.40am: Slow progress

The FTSE 100 made a muted start to proceedings on Wednesday as investors continued to weigh the risk of a second wave of the coronavirus (COVID-19) pandemic.

The index of UK blue-chip shares rose 8 points to 6,177.77.

Wall Street closed Tuesday in fine fettle and seemingly oblivious to an upsurge in cases there, while in Asia the mood was more circumspect. However, positive factory data from China, which showed manufacturing back in growth mode in June, helped lift the mood a little.

Here at home, the latest update on the economic health of the UK was provided by the Nationwide House Price Index, which recorded its first monthly decline in eight years.

“As ugly as they are, these numbers were unavoidable given the unprecedented economic shock delivered by Covid-19,” said David Westgate, chief executive of Andrews Property Group.

"While prices were always going to take a hit as a result of lockdown, we are not expecting them to continue to spiral downwards.

"The comprehensive support package put in place by the government to protect the economy, along with record low interest rates, will support the property market in the short- to medium-term.”

On the corporate front, first-quarter trading from Sainsbury (LON:SBRY) lifted morale and with it B&Q owner Kingfisher (LON:KGF), which probably also received a boost from the relatively benign house price data and the strong performance of Sainbury-owned general retailer Argos.

The market reacted negatively to what appeared to be a robust performance in the face of the current economic headwinds by infrastructure group John Laing (LON:JLG) as the stock subsided 8%.

Among the tiddlers, Catenae Innovation (LON:CTEA) was one of the stand outs with a 22% rise after the tech group revealed it is talks with buyers for its coronavirus passport app, Cov-ID.

Proactive news headlines:

Haydale Graphene Industries PLC (LON:HAYD) has announced a new collaboration with IRPC to develop organic conducting-based printing smart fabric for medical use, including face masks, using Haydale’s technology. The AIM-listed firm said it has been developing a functionalised graphene-coated fabric during the coronavirus (COVID-19) pandemic, and tests carried out by the Thailand Textile Institute showed antibacterial finishes over 99.3% on the textile material after ten washes.

Catenae Innovation PLC (LON:CTEA) has said its breakthrough app that records a person’s coronavirus status is now ready for launch well ahead of schedule. It also revealed it is in discussions that could lead to “local and international sales opportunities”. The announcement followed some graphic design refinements to the Cov-ID digital passport system, which has raced through the development, prototyping and pilot launch phases to get to this stage in three months.

Ariana Resources PLC (LON:AAU) said that Özaltin Holding A.S., through its subsidiary, Özaltin Insaat, Ticaret and Sanayi A.S., has formally committed to proceeding with its acquisition of 53% of both the Salinbas Project and the Zenit Madencilik San. ve Tic. A.S. joint venture which is currently owned by Ariana in a 50:50 partnership with Proccea Construction Co. The AIM-listed exploration and development company operating in Europe announced on November 25, 2019, that it intends to partially dispose various interests held in Turkey to Özaltin, including jointly with Proccea, 53% of Zenit for US$50mln - to be split equally by Ariana and Proccea -, as well as an initial 17% of the Salinbas Project for US$mln. 

IronRidge Resources Limited (LON:IRR) said it has completed the acquisition of CAPRI Metals SARL, giving it full ownership of a “highly prospective gold exploration portfolio” in Côte d'Ivoire. The Africa-focused mineral explorer said the acquisition completes its purchase of the Vavoua portfolio, which comprises three licenses and grants IronRidge exclusive rights to a tenure package adjacent to the 2.15mln ounce Abujar deposit.

Enteq Upstream PLC (LON:NTQ), an oil drill technology specialist, increased revenues by 7% in the year to March 31, 2020, despite the industry's problems in the US shale area. Sales in the twelve months year rose to US$10.9mln (2019: US$10.2mln) with underlying profits 24% higher at US$3.1mln. Growth outside of the US, especially in China and Saudi Arabia, helped offset the weak US market, said the company, with non-US revenue now accounting for 30% of the total.

Oncimmune Holdings PLC (LON:ONC) said its Brazilian distributor has received the regulatory all-clear for its lung cancer detection technology, paving the way for sales of the device in the country. Marketing authorisation for the EarlyCDT Lung blood test is effective immediately, providing partner Valentech International commercial access to one of the world’s largest healthcare markets. Brazil has a high unmet need for a diagnostic that could help cut the mortality rate for the disease. Figures for 2018 showed 34,000 people were diagnosed with lung cancer and there were 32,000 deaths that year.

OptiBiotix Health PLC (LON:OPTI) has signed a distribution deal covering Australia, New Zealand, Indonesia, and Thailand for its cholesterol and blood pressure reducing dietary supplements, CholBiome and CholBiome X3. Leading this latest leg of the international expansion will be Actial Farmaceutica, an Italian business with operations in Asia focused on probiotics and gut health. Since launching its CholBiome products containing the company’s LP LDL formulation two years ago, the company has signed around 30 agreements in 50 countries.

Eden Research PLC (LON:EDEN) announced that it has moved office and opened up a new laboratory facility at Milton Park, a science cluster in Oxfordshire. The producer of sustainable biopesticides said the new facility will allow it to do more in-house, including formulation, microbiological screening, plant and seed evaluations and analytical work. It also features high-tech plant growth chambers, to undertake relatively rapid, small scale tests on different plant species.

Zanaga Iron Ore Company Ltd’s (LON:ZIOC) chairman has hailed “a rise in global investment into large scale iron ore projects”, which he said provides a strong investment case for the company’s project in the Republic of Congo (ROC). In a statement accompanying the company’s final results, Zanaga's non-executive chairman, Clifford Elphick also said iron ire prices had been resilient and premiums for “high quality iron ore products” had been maintained, further bolstering the company’s investment case.

Benchmark Holdings PLC (LON:BMK) has secured the sale of its subsidiary FishVet, a provider of veterinary and diagnostic services, for between £14.4mln-£14.7mln in cash. The aquaculture genetics, health and nutrition firm said it has sold FishVet to Pharmaq, part of Zoetis Inc (NYSE:ZTS), the world’s largest producer of medicine and vaccinations for pets and livestock.

Curzon Energy PLC (LON:CZN) said negotiations over a potential reverse takeover by Sun Seven Stars Investment Group (SSSIG) are continuing. The oil and gas firm said a period of exclusivity between itself and SSSIG has been extended from its original end date of June 30, 2020, although formal terms covering the extension of the exclusivity period and the nature of additional financial support to be provided by SSSIG to the company have yet to be finalised. Curzon said the coronavirus pandemic and lockdowns in the UK and US had caused delays and disruptions to the overall due diligence process, however, both parties remained “positive” regarding a potential transaction.

Canadian Overseas Petroleum Limited (LON:COPL) has announced that its interim chief financial officer Ryan Gaffney, who took over the role on June 6, will become permanent on July 2. "Ryan has a background in investment banking where he spent 13 years with Canaccord in their London and Toronto offices. He will be a great addition to the company's management team as the company moves forward with its business plan”, COPL president and chief executive Arthur Millholland said in a statement. The group also said it expects around 438.5mln placing shares to be admitted to the standard segment of the LSE’s main market on Thursday following completion of a £1.2mln financing that the company said will cover its working capital costs and allow it to continue focusing on its OPL 226 project in Nigeria.

Mineral and Financial Investments Limited (LON:MAFL) said it has agreed on a resolution to the earn-in option agreement at Lagoa Salgada with Ascendant Resources.  M&FI, through a Swiss subsidiary, currently owns 75% of Redcorp Empreedimentos Mineiros, whose main asset is the 23Mt Lagoa Salgada polymetallic project in Portugal. The option currently is that Ascendant must fulfil its work obligations, totalling US$9.0mln, and pay M&FI US$2.5mln over the next 2 years to reach 50% ownership.

Aminex PLC (LON:AEX) said the longstop completion date for its Ruvuma farm-out agreement has been extended to July 14, 2020. The junior said partner ARA Petroleum and itself continue to work closely with the Tanzania authorities to obtain government approval and complete the farm-out as soon as possible. ARA has agreed not to demand repayment of a US$2mln loan that falls due on July 1, 2020, or to charge interest on a US$3mln funding arrangement, Aminex added.

Tower Resources PLC (LON:TRP), the AIM-listed oil and gas company with its focus on Africa has announced a further extension of its loan facility of US$750,000 with Pegasus Petroleum Ltd. The group said the facility will now be due for repayment on or before August 15, 2020, and the terms of the extension include the issue of 4.5mln of five-year warrants with a strike price of 0.35p, a premium of 11.1% to the closing share price on June 30, 2020. Tower noted that the reason for the extension is the delay to the completion of the farm-out to OilLR, revealed on Tuesday.

AFC Energy PLC (LON:AFC) has received a significant show of shareholder support for its hydrogen-based fuel cell technology after a funding round that raised £31.6mln was heavily oversubscribed, it said. Of the proceeds, £30mln came from a placing, £1.5mln from a retail offer through the PrimaryBid platform, and £100,000 from a subscription. All the share sales were priced at 16p a share. AFC said the money would give it the capacity and flexibility to ramp up the manufacture of its H-Power fuel cell systems to meet expected demand over the next two years.

Pembridge Resources PLC (LON:PERE) has revealed that the amendment to the shareholders agreement to restructure interests between the investors in Minto Explorations Ltd. has now been finalised and executed.  The group said the final agreement, signed on June 30, 2020, remains as described on April 6, 2020, and provides Minto with US$3mln of cash investment to support its current cash requirements. This also assists Pembridge's liquidity in the current unprecedented market conditions by relieving the company of significant future financial obligations amounting to US$6.4mln and up to US$22.1mln. As a result of the new investment into Minto by the other shareholders, Pembridge's economic interest in Minto will be reduced to 11% from 33%.

Mosman Oil and Gas Limited (LON:MSMN) the oil exploration, development and production company, advises that it has today executed an agreement with Blackstone to resolve all outstanding matters between the two parties. In accordance with the settlement agreement, Blackstone has paid Mosman an amount of USD 107,500 (AUD C 155,000) John W Barr, Chairman, said: "Mosman is pleased to resolve this matter. The business plan continues to be increasing production with a focus on operations in East Texas."

Asiamet PLC (LON:ARS) said that at its annual general meeting held on Tuesday all resolutions proposed to shareholders in the Notice of Meeting as announced on May 28, 2020, were duly passed. It noted that a presentation and Q&A recording with Asiamet's executive chairman, Tony Manini will be made available to shareholders and will be posted to the company website this week.

Bezant Resources PLC (LON:BZT), the AIM-quoted mineral exploration and development company, announced that, as a result of the impact of coronavirus (COVID-19) pandemic in the countries where the company operates, it has applied for and been granted to delay the publication of its audited accounts for the year ended December 31, 2019, by three months that is by September 30 2020. The company has agreed an audit completion timetable with its auditors which will enable it to meet this extended deadline. Bezant also said it will call a procedural annual general meeting to be held on or around Monday August 4, 2020, at which shareholders will not be permitted to attend in person, and it is currently intended that the AGM will be held with only the appointed chair of the meeting and two other nominated shareholders.

Instem PLC (LON:INS) announced that a general meeting will be held at 2 Diamond Way, Stone Business Park, Stone, Staffordshire, ST15 0SD at 11am on July 16, 2020. In light of the coronavirus (COVID-19) pandemic, shareholders and their proxies will not be allowed to attend the meeting in person, as to do so would be inconsistent with current government guidelines, and the business will be restricted to the purposes set out in the formal notice of general meeting. There will be no additional presentations or opportunities for the board of directors to answer questions, it added.

6.30am: Footsie called lower 

The FTSE 100 is expected to start Wednesday’s session slightly lower as investors continue to weigh prospects of an improving economy against fears over a second wave of coronavirus infections.

Spread-better IG expects the FTSE 100 to open around 16 points lower after closing down 56 points on Tuesday at 6,169.

Warnings that the US could see as many as 100,000 new coronavirus cases per day alongside a new lockdown in Leicester amid a fresh outbreak there may have shaken market confidence, however, US and UK June PMI manufacturing data due later today could provide some optimism over an economic recovery.

Some investors may also aim to keep their powder dry ahead of the minutes from the latest meeting of the Federal Reserve, released after the London close today.

Wall Street managed to cap off an impressive quarter overnight despite the uncertainty, with the Dow Jones Industrials Average ending Tuesday’s session up 0.85% at 25,812, while the S&P 500 rose 1.54% to 3,100 and the Nasdaq climbed 1.87% to 10,058.

The picture was less positive in Asia earlier today after a survey showing a sharp fall in Japanese manufacturing sentiment sent the Nikkei 225 down 0.8%. Hong Kong’s markets are closed for a public holiday.

On the currency markets, the pound slipped 0.27% to US$1.2362 against the dollar early on Wednesday, however, the upcoming manufacturing data could provide some movement catalysts as investors gauge the health of the economy.

Significant announcements expected for Wednesday July 1:

Trading announcements: J Sainsbury PLC (LON:SBRY), Topps Tiles PLC (LON:TPT)

Finals: Enteq Upstream PLC (LON:NTQ), HML Holdings plc (LON:HMLH)

Economic data: UK Gfk consumer confidence, UK manufacturing PMI, US ADP unemployment, US manufacturing PMI, Fed minutes

Around the markets:

  • Sterling: US$1.2362, down 0.27%
  • Brent crude: US$41.76 a barrel, up 1.19%
  • Gold: US$1,784 an ounce, up 0.16%
  • Bitcoin: US$9,145, down 0.02%

City headlines:

  • Britain is on track for a V-shaped recovery as the economy rebounds from the lockdown far faster than expected, Andy Haldane, the Bank of England’s chief economist, has said – Times
  • Shell has written off up to $22 billion after warning that the coronavirus oil crash has triggered a long-term price slump – Telegraph
  • China has passed a sweeping national security law for Hong Kong, increasing its power over the territory in a move that drew swift condemnation from the US and Europe – Financial Times
  • EasyJet is planning to make as many as one in three of its pilots redundant and close its bases at Stansted, Southend and Newcastle airports – Guardian
  • Airbus is slashing 15,000 jobs, marking the biggest single cut in its passenger jet business as the aircraft maker faces “gravest crisis this industry has ever experienced” – FT

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