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FTSE 100 closes firmly ahead as traders shrug off any nerves about US earnings

Britain's index of leading shares closed up over 80 points, or 1.33%, at 6,176 on Monday

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London shares closed higher on the first day of the new trading week.
  • FTSE 100 index closes up over 80 points
  • US stocks ahead too
  • Silver giant Fresnillo top riser

5.05pm: FTSE closes ahead

FTSE 100 index closed ahead on Monday as global stocks rallied and the slightly weaker pound also gave the UK benchmark a leg up.

Britain's index of leading shares closed up over 80 points, or 1.33%, at 6,176. 

Sterling broke off slightly from its rally and was down a shade against the US dollar at US$1.2613.

"Stocks are showing little sign of nervousness ahead of earnings season tomorrow, with the Nasdaq hitting a fresh record high and the S&P 500 just a short distance away from its highest reading in five  months," noted chief market analyst Chris Beauchamp from online spreadbetting group IG.

For UK investors and the Footsie, Beauchamp said the costs of Brexit were "finally beginning to appear on the horizon for ordinary UK citizens", which may well dampen what is already an already weak outlook for consumer spending.

"There seems no stopping the current rally in sterling either, another factor holding back UK stocks, despite signs that it will be a tough summer of Brexit negotiations," he added.

US and Canada 4pm/11 EST

The Dow Jones Industrial Average added over 400 points to 26,482 in early deals as markets appeared bullish ahead of earnings season. In Canada, the S&P/TSX Composite was up around 142 points at 15,856.

Proactive North America headlines:

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  • Candelaria Mining (CVE:CAND) (OTCPINK:CDELF) installs Ramon Perez as interim CEO, retains former CEO Curtis Turner as strategic advisor
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  • Ipsidy (OTCQB:IDTY) brings facial biometric solutions to web browsers

4.00pm: The Footsie has a late flourish

The FTSE 100 is finishing the day with a mini-flourish and may yet finish at its high point for the day.

London’s index of heavyweight shares was up 77 points (1.3%) at 6,172, with cyber-security software firm Avast PLC (LON:AVST), up 5.0% at 584p, leading the charge.

“If not quite at their initial highs, the markets nevertheless remained strong all session, including, inexplicably, the Dow Jones,” said a slightly bemused Connor Campbell at Spreadex.

“The US index appears to be benefiting – alongside the overnight Chinese automobile/remdisivir news – from a pivot towards earnings season.

“It has to be something because the domestic situation is more alarming than it has been at any point in the pandemic so far. Florida just recorded 15,299 new cases IN A SINGLE DAY, while the country as a whole has crossed the 70,000 mark, moving closer and closer to the 100,000 daily infections Dr Anthony Fauci warned about a couple of weeks ago,” he added.

2.50pm: US indices on the front foot

As expected, US indices have opened on the front foot.

The Dow Jones index was up 175 points (0.7%) at 26,248 while the S&P 500 was 20 points (0.6%) better at 3,205.

In London, the FTSE 100 is flagging a little after making progress over the lunchtime session, with the index up 62 points (1.0%) at 6,157.

Sentiment should have been given a boost by comments from Andrew Bailey, the governor of the Bank of England, concerning the expected recovery of the UK economy.

Addressing an online audience of school pupils, Bailey said the turnaround in the UK economy has already started, although making a pitch for the “tell us something we don’t know” award of 2020, Bailey also told the pupils that “we are very worried about jobs”.


2.00pm: US indices to head higher

The US results season commences this week and although profitability for most companies will have taken a walloping, are US investors downcast?

They are not, judging by indications of which way the indices will move at the outset.

The Dow Jones industrial average is expected to open at 26,289, up 214 points while the S&P 500 is tipped to open 25 points firmer at 3,210.

The NASDAQ Composite, which could spend the night in a pig-sty at the moment and come up smelling sweeter than vanilla, is expected to jump 334 points to 10,951.

In London, the FTSE 100 has also been in buoyant form despite continuing worries about a second wave of coronavirus infections, rising 67 points (1.1%) to 6,163.

12.15pm: Defensives out of favour

The FTSE 100 had a strong morning session, hitting noon just 8 points or so below its intra-day high.

The Footsie was up 69 points at 6,165, with just five index constituents failing to make progress. The fact that two of those – National Grid PLC (LON:NG.) and Tesco PLC (LON:TSCO) – are in sectors traditionally regarded as defensive indicates how keen investors are to take on a bit of risk today.

“Global stocks are rising ahead of an earnings storm that will likely deliver the worst plunge in profits since the Great Recession,” declared OANDA’s Edward Moya.

“With many traders anticipating roughly a 40% drop in corporate profits, businesses could be ready to deliver a round of job cuts to shore up their balance sheets. Wall Street remains fixated with the recovery trade but that will be hard to hypothesise as the path of virus is unknown. The end result for many traders remains that the Fed is keeping rates near zero for at minimum a couple years, governments will continue to deliver fiscal stimulus, and that recovery ahead might have only got pushed back a quarter,” he added.

Although trailing its bigger Footsie brother a bit, the FTSE 250 is also on the up, rising 175 points (1.0%) to 17,355, led by security services provider G4S PLC (LON:GFS), which is up 12% at 131.5p after it raised profits guidance.

Mid-caps Big Yellow Group PLC (LON:BYG) and Wizz Air Holdings PLC (LON:WIZZ) were out of favour, however, after updates this morning.

Storage specialist Big Yellow slipped 1.1% into the red at 979p after it splurged £18.6mln on a freehold site in glamorous Wapping in east London.

Wizz Air, down 0.8% at 3,258p, chose an interesting time to announce the launch of Wizz Air Abu Dhabi on October 1. The airline will have an initial network of six new routes.
 

10.30am: Shoppers not enamoured of the new shopping experience

Shoppers are staying away from the UK’s shops in droves despite many shops reopening for business in June.

Market research data from Springboard indicates footfall across the UK retail landscape was down 56.6% year-on-year in June. That at least was an improvement on May’s 73.3% collapse.

Footfall in the week commencing June 15 was up 40% on the previous week as some shoppers rushed out to revisit shops that had reopened but footfall growth for the rest of the month slowed, possibly because shoppers were disappointed with the shopping experience in the post-coronavirus environment.

“Long queues coupled with a restricted shopping experience due to social distancing could be the contributing factors to this sudden drop off in footfall,” said Springboard’s insights director, Diane Wehrle.

Footfall on the high street was down 65.1% year-on-year while shopping centres saw numbers tumble 62.3%.

Retail town parks fared a bit better with footfall down by just 32.3%.

“The fact that much of the workforce continues to work from home, tourists and many students are absent, as well as the government urging consumers to only use public transport for essential travel, means that footfall and therefore sales, will continue to be compromised in these retail destinations,” Wehrle said.

The news was not especially surprising and retail stocks generally took the news in their stride, although JD Sports PLC (LON:JD.), down 2.4% at 632.4p, was the top faller on the Footsie, which nevertheless was up 55 points (0.9%) at 6,150.

10.00am: Miners to the fore

Mining stocks are leading the Footsie higher this morning.

London’s index of leading shares was up 52 points (0.9%) at 6,148, led by Evraz PLC (LON:EVR) – not technically a mining stock but as a steel producer deemed a fellow traveller.

“Even though the pandemic is getting worse, stocks in Asia drove higher and the feel-good factor spilt over to this part of the world. At the back end of last week, it was reported that Gilead Sciences’, Remdesivir – a potential treatment for Covid-19 - reduced the fatality rate in patients by 62%. BioNTech, who is working with Pfizer on a potential vaccine for the coronavirus, said they are hoping to get approval for the drug by Christmas,” said CMC’s David Madden.

“It seems that optimism surrounding the drug stories has overshadowed the fact that yesterday was another record day in terms of new cases, according to the WHO [World Health Organization],” he noted.

Optimism over the chances of a treatment for the coronavirus is obviously good for the global economy, hence the demand for mining stocks such as Fresnillo Plc (LON:FRES), up 3.1% at 968.8p, and Anglo American PLC (LON:AAL), up 2.4% at 1,970.6p, although softer metal prices are also helping.

The same optimism over a COVID-19 treatment is causing investors to turn to stocks connected to the hospitality industry, such as hotels group Intercontinental Hotels Group PLC (LON:IHG) and contract caterer Compass Group PLC (LON:CPG); the former is up 2.3% at 3,862p and the latter up 2.2% at 1,140p.

8.45am: Positive Monday progress

The FTSE 100 got off to a positive start with traders focused on the positives (the potential signs of economic recovery) rather than the negatives (the ballooning coronavirus epidemic in the US).

Taking its cue from Asia’s main bourses, the UK blue-chip index advanced 75 points to 6,170.63.

While the markets were buoyant ahead of the upcoming US earnings season, there were still a few reasons to be fearful.

The aforementioned coronavirus (COVID-19) US cases, up 220,000, the largest 24-hour jump so far during the pandemic, provided cause for concern.

And then there are the brewing tensions between the US and the People’s Republic of China. The perennially paranoid Trump administration has accused Chinese-owned social media apps TikTok and WeChat of engaging in “information warfare” against America.

It also plans to make an announcement this week related to Chinese military drills in the contested waters of the South China Sea.

This might explain why gold, a haven in times of turmoil, headed back above US$1,800 an ounce.

The travel stocks were in demand with Intercontinental Hotels (LON:IHG) leading the Footsie with a 3.3% gain. Also up 3% early on was British Airways owner IAG (LON:IAG).

Fashion chain Burberry (LON:BRBY), whose fortunes are linked to the recovery in Asia, was up 2.8% ahead of its trading statement on Thursday.

On the FTSE 250, guarding group G4S (LON:GFS) shone with a 9% rise after it said its results would be significantly ahead of consensus forecasts.

Proactive news headlines:

Gfinity PLC (LON:GFIN) said its Gfinity Plus rewards programme will go live on Wednesday, allowing gamers to register and be eligible for giveaways and incentives. The esports group said Gfinity Plus will also offer exclusive content, forums and gamification for its online community from August. The company will use its own technical IP for the first time on its websites to provide functions that deepen visitor engagement such as fan forums and the ability to comment on articles. Gfinity Plus will be available to gamers who visit all of the company’s digital media sites, starting with gfinityesports.com before being rolled out to realsport101.com and stealthoptional.com.

Westminster Group PLC (LON:WSG), the security and technology group, has said revenues jumped by around a quarter in its latest half-year in spite of the coronavirus (COVID-19) pandemic uncertainty. The AIM-listed group said trading started the half-year on a positive note, which continued throughout the period even with the disruption from COVID-19. Westminster noted that interim revenues rose by 24% to £7.0mln (2019: £5.6mln) with the company making both a pre- and post-tax profit.

Jubilee Metals Group PLC (LON:JLP) has delivered its sixth consecutive six-monthly period of double digit growth, posting a 54% increase in first-half earnings to £12.8mln. The growth was achieved notwithstanding the loss of the equivalent of approximately two months' of operational time due to restrictions under coronavirus legislation in South Africa, where Jubilee has its operations. The company was also able to boost revenue by 18% to £29.4mln.

Integumen PLC (LON:SKIN) has formalised its collaboration with Avacta PLC (LON:AVCT) to use the latter’s technology in a coronavirus (COVID-19) detection kit. It has signed a material transfer agreement to use recently-generated affimers that bind the SARS-COV-2 spike protein to pick up the tell-tale signs of the respiratory infection in wastewater. The affimers, small proteins that bind to target molecules, will be coated to Integumen’s wafer nano-photonic surfaces. The company will test up to six separate variations of the Avacta IP at its facility in York over the “next few weeks” before the validation of the sensors on SARS-CoV-2 at a secure lab at Aberdeen University.

Clinigen Group PLC (LON:CLIN) said the US regulatory authorities have granted its cancer drug, aldesleukin, orphan drug designation for the treatment of the degenerative disease amyotrophic lateral sclerosis, or ALS. The Food & Drug Administration (FDA) decision confers certain benefits if aldesleukin is shown to have a therapeutic effect on people with ALS. These include seven years of marketing exclusivity in the US, as well as tax credits for clinical development costs and fee waivers.

Directa Plus PLC (LON:DCTA) has revealed that its Setcar has bagged its third major contract win since the AIM-listed company bought a controlling stake in November 2019. Setcar has signed a contract to supply total waste management services to Cummins Generator Technologies Romania, a part of the Fortune 500 company, Cummins. The contract is valued at around US$3mln over three years from October 1, 2020.

Corero Network Security PLC (LON:CNS) said the first half of 2020 saw it continue the momentum built up in the second half of 2019 as the work from home boom during the coronavirus (COVID-19) pandemic has heightened awareness of its services. The network security expert said order intake in the first half of 2020 increased by 58% to US$7.9mln from US$5.0mln in the first half of the previous year. Half-year revenue is expected to be up 48% year-on-year to US$6.2mln. By July 12, 20230, annualised recurring revenues (ARR) had increased to US$8.8mln, driven by growth in DDoS (distributed denial of service) protection-as-a-service (DDPaaS) and software subscription orders.

Eco Atlantic Oil & Gas Ltd (LON:ECO) told investors that decisive early action to prioritise cost control has delivered considerable savings during the coronavirus pandemic, whilst the explorer continues to eye plans for new wells in 2021. The company, in its financial results, said it has saved around US$1mln in general and admin expenses, and public company costs. It ended the twelve-month period, March 31, 2020, with C$26.48mln of cash and equivalents.

Coinsilium Group Limited (LON:COIN) has said it is undertaking a strategic review of its business to capitalise on “substantial opportunities in the burgeoning decentralised finance (DeFi) and crypto finance sector” and realign itself to participate in its recently launched IOV joint venture in Singapore. The crypto investment and advisory group noted that the global crypto finance market is showing “strong month-on-month growth”, with active collateral on DeFi platforms now over US$2.1bn.The group said it is currently working on several DeFi models with the aim of launching commercial solutions either independently or through its partner network. Meanwhile, as part of the review, the company said its investment holding company, Seedcoin Limited, has been redomiciled from the British Virgin Islands to Gibraltar in order to realise value from the firm “in the near term by way of a transaction, liquidity event or outright sale”.

Mineral and Financial Investments Limited (LON:MAFL) has detailed its latest investment of US$100,000 in the seed-round for Ideon Technologies which is described as “a world pioneer in cosmic-ray muon tomography”. Ideon, a spin-off Canada's national particle accelerator laboratory, is focused on applying its x-ray-like technology to mineral exploration and resource development ventures. M&FL noted that the technology is capable of providing visibility of up to 1 kilometre beneath the earth’s surface and may potentially exploration and resource development.

Frontier IP Group PLC (LON:FIPP) said its portfolio group, Pulsiv Solar Limited, is continuing to make “strong commercial and technical progress” with its energy efficiency and power generation technology. The IP investment firm said Pulsiv has started design work, funded by a major multinational, to incorporate its technology in a new product line, and is also in discussions with a number of other large firms about a range of further industrial applications. The investee, in which Frontier owns an 18.9% stake, is also in discussions with investors to raise further funding which, if completed, will be at a “significant premium” to the current book value, which will, in turn, be reflected in Frontier’s results for the year ending June 30, 2020.

Regency Mines PLC (LON:RGM) has said it is initiating exploration for the 2020 season at the 50%-owned Dempster vanadium project in Canada. The programme will include a soil and geochemistry program, and the reprocessing of a suite of existing core pulps for indications of major oxides and carbon, both of which would be highly correlated with elevated vanadium results. The company anticipates being in a position to drill in 2021.

Remote Monitored Systems PLC (LON:RMS) has raised £265,000 to support the growth of its GyroMetric and Cloudveil businesses. The monitoring, intelligence and security company has placed 106mln shares at 0.25p each; the shares closed trade on Friday at 0.24p. Existing shareholder Braveheart Investment Group PLC (LON:BRH) subscribed for 80mln of the newly issued shares, thereby increasing its stake to around 25.8% of the enlarged share issue of Remote Monitored Systems.

Panther Metals PLC (LON:PALM) has placed just over 3.8mln shares at 6.5p each to raise £250,000. The company will use the money to continue work on the 100%-owned Big Bear project in Ontario, Canada and the 100% owned Marrakai and Annaburroo projects in the Northern Territory, Australia. The placing shares approximately 7.63% of Panther's share capital.

EQTEC PLC (LON:EQT) has said it will vigorously defend a claim of patent infringement filed against it in the US, adding it was opportunistic and spurious. Aries Clean Energy of Franklin, Tennessee, filed the complaint on July 9, 2020, alleging the infringement in the use of EQTEC’s advanced gasification technology in the North Fork Community Power plant in California. The complaint is specific to the US only and does not extend to the company's activities and pipeline of projects in the UK and Europe, EQTEC said in a statement.

Vast Resources PLC (LON:VAST), the AIM-listed mining company which owns the Baita Plai Polymetallic Mine in Romania has confirmed that the shipping schedules of the remaining containers of equipment, as previously announced on June 8, 2020, remain on track with the arrival of the fourth shipment of equipment at the Port of Constanta in Romania this morning. The remaining containers are expected to arrive during the course of this week. The company said it will release footage of these remaining containers being unloaded at Baita Plai on social media ahead of the commencement of production this month.

Salt Lake Potash Ltd (ASX:SO4) (LON:SO4) (OTCMKTS:WHELF) has been granted green label certification for debt issued to develop its Lake Way Sulphate of Potash (SOP) Project, which confirms the Western Australian project's positive environmental aspects. The green label is set out by the Loan Market Association (LMA) and Asia Pacific Loan Market Association (APLMA) green loan principles and will be positive for the company’s debt partners, as well as all other stakeholders including the local community, offtakers and suppliers.

Union Jack Oil PLC (LON:UJO), a UK focused onshore hydrocarbon production, development and exploration company announced that it has been notified that an executive director of the company, Joseph 0`Farrell on July 10, 2020, purchased 11,100,000 ordinary shares of 0.025p each in Union Jack, at a price of 0.225p per share. Following this purchase, the group noted, O`Farrell is the beneficial owner of 286,832,806 ordinary shares in the company representing 1.86% of the issued share capital.

Oracle Power PLC (LON:ORCP) has announced that in line with the company's investor communication programme, its CEO, Naheed Memon will be conducting a shareholder Q&A session which will be made available on the company's website by close of business on Monday, July 20. During the Q&A session, the group said, Memon will reflect on the developments and achievements of the company during Q2 2020 and post period end, specifically, she will discuss the progress made towards securing the previously announced Letter of Intent and project development milestones in respect to Oracle's Thar Block VI, in addition to the subscription and financing facility announced on July 9, 2020. It said shareholders are invited to submit questions to Memon by 5pm on July 15, 2020, via email at [email protected].

6.30am: Strong start predicted 

The FTSE 100 index looks set to open firmly in positive territory on Monday with traders taking their cue from a buoyant performance on Asia’s main markets.

The spread betting firms expected the UK blue-chip index to open 58 points higher at 6,153.41.

The start of US earnings season this week is being viewed positively, but whether it delivers the hoped-for signs of economic recovery remains to be seen.

Economists are also expected to sift through the latest batch of Chinese economic data this week for further signs of growth.

China's equity markets had their best week for five years amid hopes the world’s second-largest economy is headed for a v-shaped recovery from the pandemic.

All of the above, however, is likely to be tempered with caution as new coronavirus infections in the US continued to climb at a worrying rate.

Florida claimed an unwanted record with more than 15,000 new infections in one day, beating the 11,000 high seen in California last week.

According to the Johns Hopkins tracker, America now has 3.2mln confirmed cases with 135,066 deaths.

Second wave fears

Around the world, preparations are being made by countries that are out of lockdown for a second wave of infections, which most experts think likely.

“The pandemic will continue to dominate the headlines,” said David Madden, analyst at CMC Markets. “On Sunday, the World Health Organisation said that another record was set for the number of daily cases.

“For the fourth day in a row, the US registered over 60,000 new cases. Countries like India and Mexico are seeing a rise in the number of new cases too.”

Busy week

Back here in the UK, the week is expected to be a busy one for corporate news with updates due from online grocer Ocado (LON:OCDO), fashion giants Burberry (LON:BRBY) and ASOS (LON:ASC) and results from Ladbrokes owner GVC Holdings (LON:GVC).

Also expected is a flurry of UK economic data in the form of gross domestic product (GDP) figures on Tuesday, inflation readings on Wednesday and unemployment numbers on Thursday.

Around the markets:

  • Pound worth US$1.2658, up 0.36%
  • Gold changing hands for US$1,808.50 an ounce, up US$6.60
  • Brent crude US$ 42.92 a barrel, down 42 cents.

6.45 am: Early Markets: Asia / Australia

Stocks in Asia are higher on Monday as investors shrugged off concerns over the rising number of COVID-19 cases worldwide.

Chinese stocks were among the biggest gainers with the Shanghai composite up 1.27%.

In Japan, the Nikkei 225 rose 1.93% and Hong Kong’s Hang Seng index gained 0.92% as shares of HSBC surged 3.3%.

In Australia, the S&P/ASX 200 (INDEXASX:XJO) is holding on to its gains despite more COVID-19 reports, rising 0.81% to 5967 at 3.42 pm.

FOR MORE INFORMATION READ OUR ASX REPORT

Proactive Australia headlines:

  • Mako Gold Ltd (ASX:MKG) has completed the second $2.68 million tranche of an oversubscribed share placement for total proceeds of about $3.25 million.
  • archTIS Ltd (ASX:AR9) has renewed two software contracts with Commonwealth Government agencies for a total value exceeding $400,000.
  • Kin Mining Ltd (ASX:KIN) continues to progress an aggressive exploration program across key prospects at the Cardinia Gold Project in Western Australia with ‘outstanding’ drilling results in the past quarter confirming the potential for multiple new discoveries.
  • Alto Metals Ltd (ASX:AME) has unveiled an entitlement offer to raise up to $5.13 million allowing it to fully focus on an extensive drilling campaign at the flagship Sandstone Gold Project.
  • Australian Strategic Materials Limited’s Korean research and development partner ZironTech has produced about 1 kilogram of neodymium metal alloy in the laboratory from its patented reduction process.
  • Theta Gold Mines Ltd's (ASX:TGM) (OTCMKTS:TGMGF) OTCQB-listed shares are now eligible for electronic clearing and settlement through The Depository Trust Company (DTC) in the United States after DTC eligibility was approved.
  • Galileo Mining Ltd (ASX:GAL) has finalised priority targets in the prolific Fraser Range region of Western Australia for a combination of reverse circulation (RC) and diamond core drilling to begin later this month.
  • engage:BDR Ltd (ASX:EN1) is in a strong financial position with a cash balance of $1.7 million at the end of the June quarter, around $320,000 or a 23% improvement over the ending cash balance of the first quarter of 2020 of $1.38 million.

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