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FTSE 100 loses Thursday's gains to close firmly in red as US virus fears swirl

Lacking the usual lead from US markets, which are closed today, the Footsie closed firmly lower on Friday

Fuller Smith & Turner -
London stocks joined European indices to go lower on Friday
  • FTSE 100 closes 83 points lower
  • US markets closed today
  • Fuller's delays publication of its finals

5.10pm: FTSE closes in the drink

FTSE 100 index closed in the red Friday as virus fears circulated again and ahead of the UK's so- called 'Super Saturday'.

This weekend sees lockdown measures easing further, to include the reopening of pubs and restarurants.

Britain's blue-chip benchmark finished down around 83 points, or 1,33%, at 6,157.

It was also a low volume trading day in London as Wall Street was closed due to the July 4 holiday. The decline on Footsie meant yesterday's gains on the UK's top share index were eroded as health fears swirled.

"A rise in virus deaths in a number of US states proves that, sadly, Covid-19 does not take holidays, and should remind everyone that this crisis is far from over," said Chris Beauchamp, market analyst at spreadbetter IG 

"While the reaction has been magnified because of the lack of volume today, we should not write off this move entirely, especially as we head towards the next earnings season," he added.

Over the week as a whole, Footsie was barely changed, dropping a shade at 0.003%.

3.00pm: (Some) Pubs to reopen in England from 6.00am tomorrow

Fallers outnumber risers by four-to-one among Footsie constituents on what has been a drab day for equities.

The FTSE 100 was down 74 points (1.2%) at 6,166, just 15 points above its lowest level of the day.

The government has announced that pub-goers in England will have to wait a whole six hours tomorrow to enjoy their first pint – or pub breakfast – as it has been decreed that pubs can open for business from 6.00am.

Fuller, Smith & Turner PLC (LON:FSTA), the London-focused pubs group, said today that just 27 pubs from its estate would reopen tomorrow as it intends to conduct a phased reopening programme.

The company expected more than four-fifths of its pubs will be open by the end of the month.

Fuller’s shares were down 2.1% at 742p after the company, which was due to declare its full-year results today, postponed the publication of the figures.

12.45pm: The Footsie pares its losses

After looking like it was going to continue gently subsiding all day, the Footsie bucked its ideas up just before noon.

The index of big-cap stock still remains 65 points (1.0%) in the hole at 6,176 but has at least shaken off the lassitude of the morning.

There is a bit more backbone being shown by the FTSE 250, which is only down 41 points (0.2%) at 17,326, thanks in part to a positive response to the trading update from Essentra PLC (LON:ESNT).

Things are still pretty tough for the packaging specialist but are steadily improving.

READ Essentra sees slow recovery but expects continued disruption

Essentra’s shares were up 11% at 325p, which was not even enough to put it atop the FTSE 250 leaderboard; that accolade went to Puretech PLC (LON:PRTC), which was up 11% at 293p.

Away from the FTSE 350, controversial loans company Amigo Holdings PLC (LON:AMGO) was the top riser, surging 40% to 11.86p after it agreed with the regulator on a schedule to get its house in order in terms of dealing with a mountain of complaints.

11.00am: Market's gentle roll downhill picks up pace

Like a cricketer trying to reach a score in singles, the FTSE 100 crept slowly to a “fifty” – a 50 point fall, that is – during the second half of the morning session.

London’s index of heavyweight shares was down 57 points (0.9%) at 6,183, with propulsion systems developer Rolls-Royce Holdings PLC (LON:RR.), down 4.2% at 280.1p, leading the fall.

On what has been a dull day, the UK services Purchasing Managers’ Index for June, which was practically unchanged from the “flash” estimate, did little to provide excitement.

“Few dared imagine it but on this evidence, the Great British Bounceback is on,” proclaimed Ulas Akincilar, the head of trading at the online trading platform, INFINOX.

“This is gravity-defying stuff, and while not a total surprise – earlier ‘flash’ figures gave us a clue what to expect – it is a huge, caffeinated shot in the arm for UK market sentiment,2 he added.

“Of course millions of service sector workers are still working from home, but this data suggests their output – and demand for their work – are holding up well.

“With the hardest-hit subsector of the service industry – hospitality – finally set to reopen its doors tomorrow, at this rate July could even see the industry climb back into positive territory.

“It’s far too soon to talk of green shoots, and the virus remains a clear and present threat but following its vertiginous plunge and Lazarus-like recovery, the services PMI graph is looking remarkably v-shaped after all,” Akincolar declared.

Howard Archer, the chief economic adviser to the EY ITEM Club, was a bit more restrained in his analysis, saying that the contraction in services activity was “relatively limited”,

“Markit reported that that the easing of restrictions related to COVID-19 had a favourable impact on economic activity in June, with business operations gradually resuming in a number of sectors and staff brought back from furlough.

“Nevertheless, it is evident that the UK economy suffered a record, substantial GDP contraction in the second quarter. We suspect that the economy likely contracted around 17% quarter-on-quarter in the second quarter. We expect the economy to return to clear growth in the third quarter with GDP expanding close to 10% quarter-on-quarter. This assumes a further easing of lockdown restrictions, including a relaxation of social distancing rules. We currently expect GDP to contract around 8.0% over 2020,” Archer said.

10.15am: Services sector recovers

The UK Service sector Purchasing Managers’ Index for June rose to 47.1 from 29.0 in May. The “flash” estimate for June was 47.0.

A reading below 50 indicates a contraction.

Around 33% of the survey panel reported a drop in business activity during June, while 28% signalled an expansion. The proportion of service providers experiencing a fall in business activity has eased sharply from 54% in May and 79% in April, said IHS Markit, which conducts the survey.

“June data highlights that the worst phase of the service sector downturn has passed as more businesses start to reopen and adapt their operations to meet social distancing requirements,” said Tim Moore, the economics director at IHS Markit.

"Encouragingly, more than one-in-four service providers reported an expansion of new business during June, which was commonly attributed to pent up demand and the phased restart of the UK economy; however, lockdown measures continued to hold back travel and leisure, while companies across all main categories of service activity commented on subdued underlying business and consumer spending in the wake of the COVID-19 pandemic,” he added.

Duncan Brock, the group director at the Chartered Institute of Procurement & Supply, said the services sector emerged “tentatively from the shadows last month”.

"Though the sector remained in overall contraction territory, the re-opening of businesses premises unclogged levels of dampened demand and created hope that the worst impact of the pandemic could be over; however, as consumers remain fairly cautious, tightening purse strings, the highest levels of business optimism in four months may be a little premature.

"Pipelines of new work were still severely weakened for the fourth consecutive month, and export orders were still in dire straits. With imposed travel and logistics restrictions disrupting supply chains overseas clients shied away from placing orders as the pandemic’s presence is still felt,” Brock said.

The FTSE 100 was down 36 points (0.6%) at 6,204.

9.35am: Land Securities to do the REIT thing and reinstate dividends

“Subdued” is the word to describe early activities in London on Friday. “Comatose” is another.

The FTSE 100 loitered around last night’s closing level for an hour or so but has now embarked on a sedate retreat to 6,215, down 25 points (0.4%).

With the US markets closed today ahead of the July 4 celebrations, traders may well be taking the opportunity to close positions early ahead of the weekend and the July 4 pub reopening celebrations.

“In a taste of what could be the tone for the rest of the session, things got off to an awfully slow start on a US-free Friday,” reported Connor Campbell at Spreadex.

“Investors’ reticence is understandable. For though the US markets won’t be around to set the pace later this afternoon, news from America certainly is, with the country once against seeing a fresh record number of one-day COVID-19 cases. Thursday saw a further 55,220 infections, clearing Wednesday’s high by around 2,500.

“Alarmingly for Florida, the state made up almost exactly a fifth of those cases, in a stark example of what happens when you have the laxest lockdown measures imaginable.

“The blow of this news was countered somewhat by a very strong Caixin services PMI out of China. At 58.4 the reading easily smashed expectations, suggesting a robust comeback from the superpower,” he added.

Financial stocks are among the weakest blue-chip performers, with investors showing little enthusiasm for insurers RSA Insurance Group PLC (LON:RSA), Prudential PLC (LON:PRU), Aviva PLC (LON:AV.) and Legal & General Group PLC (LON:LGEN) or banking giants Lloyds Banking Group PLC (LON:LLOY) and Standard Chartered PLC (LON:STAN), all of which are down by more than 1%.

Land Securities PLC (LON:LAND) was the top blue-chip performer, rising 2.6% to 590p after it updated the market on rent collection in June.

LandSecs said £109mln of rent was due on June 24 (after taking concessions and deferrals into account), and 60% of this was duly coughed up within five working days compared with 94% for the equivalent period of last year.

The board felt confident enough in the recovery to flag that it intends to reinstate dividend payments following the interim results statement due on November 10.

8.50am: Slow start to week's end

The FTSE 100 looks set for a quiet end to the week with the US taking a public holiday ahead of the Independence Day celebration.

In early trade on Friday, the Footsie was down 7 points at 6,233.72. 

Excitement over the early US jobs figures, released on Thursday, appears to have dissipated, likewise, there’s been a reality check to coronavirus vaccine hopes, which had also been keeping the markets buoyant.

Not even the fastest expansion in China’s services sector for eight years could entice the buyers out.

Here at home preparations are being made for a re-opening of large swathes of the UK economy on what has been dubbed Super Saturday, though there are some worried it may cause a second surge of coronavirus (COVID-19) deaths.

Rank (LON:RNK) was boosted 3% after it said it would begin to open its Mecca Bingo halls.

Aston Martin Lagonda (LON:AML) fell 4% after Deutsche Bank cut its price target for the stock.

Among the minnows, fastjet (LON:FJET), the Africa-focused budget airline, fell 17% after providing a stark update to investors.

On the up – and ahead 14% - was technology firm Catenae Innovation (LON:CTEA), which inked a deal to take its blockchain ID technology to Botswana.

Proactive news headlines:

Catenae Innovation PLC (LON:CTEA) has unveiled two significant developments – one commercial, the other technological. The former first: the blockchain specialist has agreed a deal with a newly-incorporated firm called Afrik-ID, set up by Botswana’s former US ambassador David Newman. Afrik-ID will pilot test over the next four months Catenae’s Onsite ID and Cov-ID technologies in the country “to ascertain their commercial viability”. In a separate announcement, Catenae said it had completed work on its Onsite ID product having slowed progress to develop, pilot and launch the Cov-ID coronavirus passport app.

SigmaRoc PLC (LON:SRC) said its Belgian subsidiary, Carrières du Hainaut (CDH) has signed an agreement with the Walloon government to co-fund infrastructure works in the context of its quarry extension project at the town of Soignies. The construction materials group said CDH will fund €700,000 of the estimated €3mln project, which is expected to commence later this year and consist of the displacement of two sections of public road currently separating 116 hectares of CDH's 351 hectares of permitted land and minerals from its main quarry site. SigmaRoc said once these works are finalised CDH will begin installing a new crushing and screening plant, enabling it to move forward with extracting construction aggregates and high-grade limestone at the extension area.

Power Metal Resources PLC (LON:POW) has said the pitting and mapping exploration programme at its Kisinka copper-cobalt project has confirmed copper anomalous areas. The programme on the 70%-owned project, located in the southern part of the Katangan copper belt in the Democratic Republic of the Congo, was carried out over 40 days. In all, 211 samples including 11 field duplicates were collected and after sample preparation at the Preparation Laboratory of the University of Lubumbashi one batch was subjected to x-ray fluorescence (XRF) testing by an XRF Niton analyser, where a correlation with an R2 coefficient of 0.8835 for cobalt and 0.9661 for copper was obtained, indicating good precision.

Trident Resources PLC (LON:TRR) has said that, further to its announcement of June 2, 2020, the company's change of name has been effected by Companies House and that its name is now Trident Royalties PLC. The company will start trading under its new name, with the same TIDM of TRR with effect from 08.00am on  Monday, July 6, 2020. Shareholders should note that their shareholdings remain unaffected by the change of name and existing share certificates should be retained as they remain valid for all purposes and new share certificates will not be issued.

Mosman Oil and Gas Limited (LON:MSMN) the oil exploration, development and production company, has provided an update on the sale of the Welch Project in Texas to US-based Eagle Natural Resources LLC for US$300,000 (circa A$460,000). The purchaser has previously paid a non-refundable deposit totalling US$60,000 (circa A$85,000). The purchaser has again sought and Mosman has granted an additional 14 day extension to the settlement on the basis that the non-refundable deposit is increased to US$90,000 (circa A$130,000) and this increased deposit has now been received. Full settlement of the balance of US$210,000 (circa A$300,000) is now expected to occur on July 17, 2020, Mosman said.

Impax Environmental Markets PLC (LON:IEM) has noted that the investment companies team at Kepler Trust Intelligence has produced a new piece of investment bank quality research about the trust, designed to provide a clear and comprehensive reference for long term investors. This note is free to read for UK investors. To read the note in full investors can visit: http://www.trustintelligence.co.uk/investor

6.45am: All quiet

It’s all quiet on the Western front Friday morning, with US markets closed for the day ahead of US Independence Day tomorrow.

Today would normally be the day on which the US jobs numbers for the previous month are released but because of the market holiday they were released yesterday and provided a boost for markets.

The effect seems to be fading today, however, with the FTSE 100, which rose 82 points yesterday to close at 6,240, set to drift 6 points lower to 6,234 at the outset.

US markets also lost some of their early enthusiasm yesterday though the Dow Jones Industrials Average still closed with a 92 point gain at 25,827, while the S&P 500 rose 14 points to 3,130.

This morning, Asian markets had the Chinese Caixin/Markit services Purchasing Managers’ Index to chew on and were generally in fine fettle. In Japan, the Nikkei 225 was up 54 points at 22,200 and in Hong Kong the Hang Seng was 120 points firmer at 25,244.

The Caixin/Markit services PMI rose to 58.4 in June from 55.0 in May; a value above 50 indicates an increase in activity. The rise was attributed to the easing of coronavirus-related lockdowns and was the highest reading since 2010.

“This bodes well for Chinese consumer demand. A sub-index shows that new export business also expanded for the first time since January, something we have yet to see in the manufacturing sector,” observed commentators at Danske Bank.

If tomorrow is a big day of celebration for the “septics” across the pond, many in England will be celebrating the reopening of the pubs so it is perhaps appropriate that publican and brewer Fuller, Smith & Turner PLC (LON:FSTA) is bringing out its full-year results.

With the reopening imminent, investors are likely to focus on the company’s outlook as it emerges from lockdown, as well as the full extent of the damage lockdown has inflicted on its finances.

On the macro front, there will also be June UK services PMI data for investors to chew over which will provide additional clarity as to how hard the sector has been hit by the pandemic slowdown as well as any signs of recovery as restrictions have eased.

Significant announcements expected on Friday:

Finals: Fuller, Smith & Turner PLC (LON:FSTA)

Economic data: UK services PMI

Around the markets:

  • Sterling: US$1.2461, down 0.08 cents
  • 10-year gilt: yielding 0.188%, down 2.27 basis points
  • Gold: US$1,786.70 an ounce, down US$3.30
  • Brent crude: US$42.70 a barrel, down 44 cents
  • Bitcoin: US$9,104, up US$17

City headlines:

  • Financial Times

  • The US jobless rate declined to 11.1% after 4.8mln new workers were added to payrolls in June, as the economic rebound from the initial coronavirus shock gathered pace.
  • Deutsche Bank is collaborating with German regulators on a possible rescue of Wirecard Bank, the deposit-taking unit of the crisis-torn payments group.
  • Shares in Lemonade, the insurance start-up backed by SoftBank, more than doubled on their first morning of trading, putting the company’s value at more than $3 billion.
  • Tesla shares revved higher after it revealed it had ridden out the coronavirus shutdown far better than anticipated.
  • Novartis is to pay US$642mln in settlement of a dispute with the US authorities over claims it had bribed US doctors and improperly funded drug purchases.
  • The Times

  • The restaurant group Casual Dining Group was tipped into administration with the loss of 1,900 jobs.
  • Meggitt has hailed initial signs of a recovery in the struggling aviation sector after coronavirus disruption knocked its sales by 15%.
  • McLaren has reached an agreement with its bondholders and called off a legal battle after receiving a £150 million financial lifeline from the National Bank of Bahrain.
  • The Daily Telegraph

  • Britain’s economic recovery is getting underway as shoppers flock to retail parks and businesses bring back furloughed workers.
  • Online shopping during lockdowns has given a massive boost to cardboard box manufacturer DS Smith as demand for its packaging rockets.
  • Marks & Spencer has revamped its Sparks loyalty scheme allowing seven million users to shop “for free” after the scheme was criticised for being too confusing.
  • Former Barclays boss John Varley has argued that financier Amanda Staveley's "little-known" firm overstated its role in a financial crisis-era cash call at the heart of a £1.6 billion legal battle.
  • Daily Mail

  • The US has proposed sanctions on banks that do business with Chinese officials who are cracking down on pro-democracy protesters in Hong Kong, mounting further pressure on HSBC and Standard Chartered.
  • Hungarian airline Wizz Air flew about 100,000 more passengers in June than Ryanair, though both airlines have seen customer numbers fall off a cliff since last summer due to the lockdown.
  • The Guardian

  • Coronavirus lockdowns have cost Primark £800 million, with the clothing retailer expecting profits to tumble by two-thirds this financial year.
  • Celsa Steel UK has received the first taxpayer-funded bailout under the government’s “Project Birch” scheme for firms struggling during the coronavirus crisis.

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