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FTSE 100 closes in positive territory but US fears keep lid on gains

There was a bit more excitement in the FTSE 250, especially for shareholders of Cineworld and Clarkson

Intercontinental Hotels -
  • FTSE 100 closes up 18 points
  • Trump uses executive fiat after Congress fails to agree on a fiscal stimulus package
  • US indices mixed

5.05pm: FTSE closes ahead

FTSE 100 index closed higher on Monday but worries over US firms and the country's relations with China kept a lid on gains. 

Britain's blue-chip benchmark closed up around 18 points, or 0.31%, at 6,050, while the midcap FTSE 250 added 102 points to close at 17,724. 

On Wall Street, the Dow Jones went higher but the S&P 500 and Nasdaq were in the red.

"The growing tensions between the US and China, plus warnings about a credit crunch for US firms from the New York Fed, have pushed equities into the red this afternoon," noted Chris Beauchamp, chief market analyst at IG.

"On a fairly light day for data, and at the tail end of earnings season, equities seem vulnerable to some near-term losses as bad news begins to mount up," he added.

The pound added 0.28% against the US dollar to stand at US$1.3088

US and Canada 4pm/11am EST

Wall Street shares started the week in mixed fashion. The Dow Jones Industrial Average added over 194 points to stand at 27,628. The S&P 500 shed nearly six points at 3,345. The tech heavy Nasdaq index lost around 125 points at 10,885. In Canada, the S&P/TSX index was up over 52 points at 16,596.

Proactive North America headlines:

Karora Resources Inc (TSX:KRR) now a 'top tier' junior producer as it posts strong 2Q operating and financial results

Zynerba Pharmaceuticals Inc (NASDAQ:ZYNE) reveals $77M on hand in 2Q results, says it can fund itself to 4Q 2021

Arcadia Biosceinces Inc (NASDAQ:RKDA) strikes partnership with Three Farm Daughters to develop and market GoodWheat branded products

Loop Insights Inc (CVE:MTRX) (OCTMKTS:VRZPF) strikes reseller partnership with global point-of-sale company Vend, used in 25,000 stores across 140 countries

Fura Gems Inc (CVE:FURA) (OTCMKTS:FUGMF) to acquire Australian mining group Great Northern Mining

MegumaGold Corp (CSE:NSAU) poised for extensive multi-phase drilling campaign in Nova Scotia once the combination with Osprey Gold finalized

XPhyto Therapeutics (CSE:XPHY) (OTCPINK:XPHYF) expedites development of 5-minute coronavirus saliva test in Germany

Nano One Materials Corp (CVE:NNO) partners with major Asian cathode manufacturer to develop technology for high-performance lithium ion batteries

Naturally Splendid Enterprises (CVE:NSP) (OTCMKTS:NSPDF) says Health Canada wants more information on its Phase 2 coronavirus trial

Globex Mining Enterprises (TSX:GMX) OTCMKTS:GLBXF) sells three northern Quebec properties to Starr Peak Exploration Ltd

2.35pm: Trump steps in after Congress fails to get it done

As expected, US indices have opened higher, with the Dow Jones setting the pace.

The Dow was up 118 points (0.4%) at 27,552; the S&P 500 was 7 points (0.2%) firmer at 3,358 and the NASDAQ Composite was 22 points (0.2%) to the good at 11,033.

The firm start came after President Trump stepped in after an impasse was reached over a fiscal deal in Congress.

“President Trump has attempted to take matters into his own hands through executive orders. First, the president instructed the US Treasury to halt collection of payroll taxes from September 1 through December 31 for workers who earn approximately US$100,000 or less per year.

“Second, emergency federal unemployment benefits were reinstated at $400 per week, down from the previous $600 that lapsed on July 31. Third, the Secretary of Health and Human Services and the Director of the CDC were directed to “consider” whether temporarily halting residential evictions is necessary to prevent the spread of COVID-19. Finally, interest on student loans held by the federal government will be waived through the end of 2020, and payments can be deferred until December 31,” reported Wells Fargo Securities’ Economics Group.

“These steps represent more financial support for the economy than would have occurred otherwise but they are not as material as initially meets the eye. The payroll tax holiday is a deferral, not an outright cut, so these taxes will still be owed at some point, although President Trump has said he will push Congress for a permanent cut at a later date. The US$400 per week in unemployment benefits utilises an emergency disaster relief unemployment programme and requires states to cover one-quarter of the cost. The executive order draws on US$44 billion appropriated to Federal Emergency Management Agency (FEMA) in the CARES Act. Even if this entire US$44 billion is utilised for unemployment benefits in the weeks ahead, we estimate that this is only enough money to last four to six weeks given the expected number of claims. Legal challenges could also create headaches for implementation,” Wells Fargo added.

In London, the FTSE 100 was evidently feeling the heat, slowing down after a fast start. The index remains 20 points higher on the day sty 6,052 but it has not strayed far from the 6,052 level for about five-and-a-half-hours now.

12.30pm: US indices expected to open higher

US results announcements have just started coming out, giving some clue as to which way US markets might jump this morning.

The early indications are that US indices will open modestly higher, with the NASDAQ Composite the pick of the three big indices as it bounces back from Friday’s fall.

The Dow Jones is expected to open around 27,500, up 67 points on Friday’s close while the S&P 500 is tipped to edge up a couple of points to 3,353.

The NASDAQ Composite is seen opening around 114 points firmer at 11,125.

None of which has been enough to rouse the FTSE 100, which has been doing its best Butch Wilkins impersonation and keeping the play moving sideways at around the 6,050 level; the index is currently up 24 points (0.4%) at 6,056.

The FTSE 250 is marginally more dynamic, up 94 points (0.5%) at 17,717, with Cineworld PLC (LON:CINE) leading the way after barriers to US film studios owning cinema chains were removed.

Cineworld’s shares were 14% higher at 39.73p.

Interims from fellow mid-cap Clarkson PLC (LON:CKN) sent the shipping services provider 11.2% higher at 2,335p.

READ Clarkson shares rise as it catches up on dividend payments after first-half profits rise

The company had previously held fire on paying a final dividend in respect of the previous fiscal year because of uncertainty caused by the coronavirus pandemic but it has paid an interim dividend instead after a robust first-half performance,

11.15am: Sterling's weakness gives Footsie a lift

The Footsie has been moving sideways for the last hour or so, holding on to gains, helped by sterling’s softness on forex markets.

London’s index of leading stocks was up 24 points (0.4%) with the advance led by British Airways owner International Consolidated Airlines SA (LON:IAG), up 4.9% at 194.7p.

Other aerospace-related stocks going well included Melrose Industries PLC (LON:MRO), up 4.7% at 105.95p, and Rolls-Royce Holdings PLC (LON:RR.), up 2.3% at 258.5p.

Banking stocks were also getting some love as were resource stocks.

“Saudi Aramco optimism over the Asian demand outlook going forward helped avoid a cut to their dividend, with deeper cuts from Iraq helping to build a more optimistic demand-supply picture,” observed Joshua Mahony at IG Group.

“Trump has helped boost sentiment after signing an executive order to provide a fresh unemployment payment for those impacted by the coronavirus. UK stocks are on the rise, despite Boris Johnson warning that a fresh bout of business closures could be coming in a bid to reopen schools,” he added.

On the foreign exchange markets, sterling was off by almost a fifth of a cent against the greenback at US$1.3032.
 

9.40am: Trump's executive fiat decision pleases the markets

Resource stocks were driving London’s equity market higher on Monday, despite what one commentator called “a laundry list” of fresh US-China clashes.

The FTSE 100 was up 37 points (0.6%) at 6,069, helped by the heavily-weighted index giants BP PLC (LON:BP.) and Royal Dutch Shell PLC (LON:RDSB) rising 2.9% and 1.7% respectively, as the price of Brent crude rose 50 cents to US$44.90 a barrel on futures markets.

Sentiment has been boosted by President Trump’s weekend move to push back payroll taxes and replace an expired jobless benefit scheme with a watered-down version.

Cruises operator Carnival PLC (LON:CCL), up 2.1% at 905.4p, was buoyed by the announcement that its AIDA Cruises operation is preparing for the resumption of cruise operations at the beginning of next month.

Former glamour stock Superdry PLC (LON:SDRY) regained some of its former lustre after it unveiled a new financing facility.

The seller of apparel for middle-aged men who refuse to acknowledge they have passed 30 years of age said trading in the first quarter of its fiscal year had been better than expected, although the coronavirus pandemic continues to hit sales.

Superdry’s shares were up 15% at 135.6p.

8.20am: Positive early progress

The FTSE 100 made a slightly slower than anticipated, but nevertheless positive, start to the trading week with investors seemingly intent on ignoring the looming international trade war between the US and China.

The UK blue-chip index opened 26 points to the good at 6,058.27.

Earlier, Chinese tech stocks fell following US President Donald Trump’s clampdown on US firms dealing with the owners of TikTok and WeChat. Added to that, sanctions were directed at 11 Beijing and Hong Kong officials after the imposition of new national security laws in Hong Kong.

That traders could look beyond this, and the continued stand-off in Washington over new coronavirus pandemic economic stimulus plans perplexed market watchers.

Quite what was driving sentiment was moot – Friday’s slightly better than expected US jobs data was cited as was some convoluted bleed across from the bond market.

Either way, it was hard to make sense of the positivity with a second coronavirus wave seemingly on the horizon.

Proactive news headlines:

Open Orphan PLC (LON:ORPH) subsidiary hVIVO has signed a £4mln contract to conduct a human challenge study for an unnamed top-three global pharma company. The respiratory syncytial virus (RSV) trial will take place at hVIVO’s London quarantine unit and is expected to be completed by the end of the first quarter next year. This latest agreement represents the continued conversion of a “substantial” new business pipeline into “significant cash flow”, the company said.

Diversified Gas & Oil PLC (LON:DGOC) chief executive Rusty Hutson told investors that the company is well-positioned to capitalise on opportunities created in the present challenging times. The producer, in its interim results statement, pointed out that it had some US$220mln of liquidity and a healthy balance sheet. DGOC confirmed production at 109,000 barrels oil equivalent per day (boepd) for June, with the first half rate averaging 95,100 boepd.

Futura Medical PLC (LON:FUM) said it has fulfilled one of two requirements needed to attain EU regulatory sign-off for its erectile dysfunction gel. It has done so by securing a positive audit opinion for the quality management systems (QMS) around its sexual health product MED3000. The next stage official requires sign-off of the technical documentation providing efficacy, safety and quality data, which was submitted to the authorities in July. Futura said it is still expecting to receive European approval next year.

CentralNic Group PLC (LON:CNIC), the internet domain name seller, said it has traded comfortably in line with market expectations in the first half of 2020. The group expects to report first-half revenues of more than US$110mln, up from US$49.7mln in the same period of 2019, and adjusted underlying earnings (EBITDA) of more than US$15mln versus US$9.2mln the year before. Cash at the end of June had risen to US$27.4mln from US$24.1mln at the end of March while net debt diminished to US$76.4mln from US$76.8mln.

Directa Plus (LON:DCTA) said it is lining up a collaboration with Poltrona Frau, a furniture manufacturer that is part of Haworth, the US office furniture manufacturer. Directa Plus and Poltrona have signed a letter of intent on a collaboration that will see them jointly work on developing a new sustainable and high tech leather enhanced by the properties of Directa Plus's proprietary graphene technology. It is anticipated that leather enhanced with Directa Plus’s G+ will provide antimicrobial and antiviral properties, improved thermal regulation, electrical conductivity, and mechanical properties such as abrasion resistance and ultra-violet resilience.

[email protected] Capital PLC (LON:SYME) said it has signed a memorandum of understanding (MOU) with a Middle East investment company for its first pilot in the region as part of a planned rollout of its inventory monetisation platform. The company said the MOU signed with Khaled Abdulla Almass and his investment firm, iMass LLC, will facilitate the company’s expansion into the Middle East market and is the first step in rolling out its platform across the region. The pilot programme will involve several Abu Dhabi-based manufacturing firms as clients as well as several regional investment funds as inventory funders by the end of the first quarter of 2021.

Supermarket Income REIT (LON:SUPR), the grocery property specialist, has acquired a Morrisons supermarket in Telford, Shropshire for £14.3mln and has boosted its loan facilities by almost £35mln. The four-acre Morrisons site was developed in 2012 and is in the centre of Lawley Village, a new 3,550-home development. There is a net initial yield of 5.0% on the site, Supermarket Income REIT added.

Arkle Resources PLC (LON:ARK) has restarted fieldwork at its Mine River and Inishowen gold projects in the Republic of Ireland. At Mine River, Wicklow, Arkle will extend the soil sampling programme east along the gold trend, with over 3,000 samples planned in a tight grid of 20 metre by 100 metre spacing. Multi-element analysis using XRF technology to identify anomalies in indicator minerals will be used. A similar soil sampling programme will be undertaken at Inishowen in Donegal, with 20 metre by 100 metre spaced sampling over the known gold veins at Meeneragh.

Frontier IP Group PLC (LON:FIPP) said its portfolio firm, Pulsiv Solar Limited, has raised £500,000 via a convertible loan including a £250,000 investment from the UK government’s Future Fund. The investment group said the money from the Future Fund, which has been set up to support innovative businesses through the coronavirus pandemic, has been matched by its own contribution of £50,000 and a £200,000 payment from the University of Plymouth’s commercial consultancy and contract research arm, University of Plymouth Enterprise Limited.

European Metals Holdings Ltd (LON:EMH)(ASX:EMH) said it has commenced drilling at the Cinovec lithium project in the Czech Republic, to establish a measured resource. A total of nineteen resource drill holes will be completed during this campaign for a total of 5,550 metres, with the first hole well advanced. A further two hydro-geological drill holes and four geotechnical drill holes are planned once resource drilling has been completed.

Eurasia Mining PLC (LON:EUA) said it has been granted a new exploration licence adjacent to and to the west of its current mining permit at West Kytlim in the Urals in Russia. The Tipil licence encompasses 24.5 square kilometres of ground and contains approximately 17 kilometres of river course and sedimentary units already proven to host platinum group metal deposits at the West Kytlim project.

Powerhouse Energy Group PLC (LON:PHE), the UK technology company commercialising hydrogen production from waste plastic, announces that Brent Fitzpatrick has stepped down from the company’s board with immediate effect. Cameron Davies, chairman of Powerhouse commented: “I would like to thank Brent personally and sincerely on behalf of the Board of Powerhouse Energy Group PLC for his friendship and his sage advice to me and to the board. His valuable contribution to our progress over almost a decade has helped to guide the Company through sometimes challenging and difficult times to the threshold of a new era as we prepare to deploy our DMG technology aimed at tackling the global problem of unrecyclable plastic waste. Our technology additionally can produce synthetic gas for power generation and for upgrade to provide a local source of high-quality hydrogen for heavy goods vehicles and rail transport. I take this opportunity to wish him well and every success for the future in his other ventures." At the current time, Powerhouse said its board does not propose to replace Fitzpatrick following the recent appointment of two non-executive directors.

Integumen PLC (LON:SKIN) said it has received notification from a holder to exercise warrants over 1,715,714 shares in the share capital of Integumen, with the consideration for the exercise amounting, in aggregate, to a cash value of £34,314.28.

Argentex Group PLC (LON:AGFX), the provider of foreign exchange services to institutions, corporates and high net worth individuals, has announced that the company's Annual General Meeting (AGM) will be held at 25 Argyll Street, London, W1F 7TU on September 11, 2020, at 9:30 am. Following current government instruction and guidance regarding coronavirus (COVID-19) and the restrictions on social contact, public gathering and non-essential travel, shareholders will not be able to attend the AGM in person. Shareholders are encouraged to vote on all of the resolutions online or by appointing the chair of the AGM as a proxy in advance of the meeting.

i3 Energy PLC (LON:I3E), an independent oil and gas company with assets and operations in the UK, said that that a new corporate presentation summarizing i3's intended purchase of certain petroleum and infrastructure assets of Gain Energy Ltd., as announced on Friday, and its intended acquisition of Toscana Energy Income Corporation, as announced on June 23, 2020, is now available to view on the company's website at https://i3.energy/investor-relations/reports-and-presentations/.

6.50am: Solid start seen Monday

The FTSE 100 index looks set to start the new trading week in positive territory despite worries over deteriorating US-China relations and America’s inability to agree on a new economic stimulus programme.

Instead, it looks like traders may want to focus on Friday’s better than expected US employment data, which hinted at a recovery in the fortunes of the world’s largest economy.

The UK blue-chip index is forecast to open 45 points higher at 6,077.10.

In Asia, the picture was mixed on Monday. China’s main markets were hit by Washington’s imposition of sanctions, both on tech companies and the country’s officials. Korea and Australia, meanwhile, were trading higher, while Japan was closed for a public holiday.

Closer to home, Wednesday sees the unveiling of UK second-quarter gross domestic product data, which will benchmark just how acutely the domestic economy has been hurt by the coronavirus pandemic.

Recently Spain recorded an 18.5% contraction in output, while the US was down 9%.

“If the UK comes in somewhere in the middle of that we’ll be doing well,” said Michael Hewson, an analyst at CMC Markets. “We’ll also be getting the latest jobs numbers, which may see an improvement given some of the economic re-openings.”

On the corporate news front, we have updates from Intercontinental Hotel Group (LON:IHG), insurers Prudential (LON:PRU) and Admiral (LON:ADM) and tour operator TUI (LON:TUI) this week, but only FTSE 250-listed power generation firm ContourGlobal PLC (LON:GLO) features on Monday's agenda.

Around the markets:

  • Pound US$1.3071 (+0.15%)
  • Gold US$2,038.70 an ounce, up US$10.70
  • Brent crude US$44.88 a barrel, up 48 cents

6.45am: Early Markets - Asia/Australia

Asia Pacific markets were mixed on Monday as investors remained cautious over heightened US-China trade tensions.

In Hong Kong, the Hang Seng index fell 1.05% while the technology-focused Hang Seng Tech Index fell 3.2%.

South Korea’s Kospi index gained 0.64% as Hyundai Motor added 11.22% and Kia Motors gained 5.44%.

In Australia, the ASX 200 was up 1.12%, with all sectors trading higher and the heavily weighted financials subindex up 1.8%.

READ OUR ASX REPORT FOR MORE INFORMATION

Proactive Australia news:

XTEK Ltd (ASX:XTE) has completed an oversubscribed share placement to institutions and sophisticated investors to raise about $9.2 million.

Pantoro Ltd (ASX:PNR) has received firm commitments from sophisticated and professional investors for a placement of fully paid ordinary shares at 24 cents per share to raise approximately $50 million before costs.

Piedmont Lithium Ltd (ASX:PLL) (NASDAQ:PLL) has completed a placement of 120 million shares to non-US institutional and sophisticated shareholders for gross proceeds of A$10.8 million.

Archer Materials Ltd (ASX:AXE) (OTCMKTS:ARRXF) (FRA:38A) has surged 33% on a technological breakthrough with the building of quantum devices required for initial qubit control measurements.

Bryah Resources Ltd (ASX:BYH) achieved 94% gold recovery in test-work undertaken at Windalah gold prospect within the Bryah Basin Project near Meekatharra, Western Australia.

Platina Resources Ltd (ASX:PGM) has confirmed the allotment of 22.36 million shares to new Canadian resource focused merchant bank Palisades Goldcorp and another major shareholder, for total proceeds of A$894,400.

Canyon Resources Ltd (ASX:CAY) maiden bauxite ore reserve of 97.3 million tonnes for the Minim Martap project in Cameroon will support a 20-year mine life with strong potential for further growth.

Corazon Mining Ltd's (ASX:CZN) pro-rata non-renounceable entitlement offer has raised almost $964,000 taking total capital raising proceeds to A$1.69 million with funds to advance the Lynn Lake Nickel Sulphide Project in Canada.

Ora Banda Mining Ltd (ASX:OBM) has received further strong high-grade results of up to 12 metres at 6.4 g/t from 56 metres in reverse circulation (RC) drilling at Riverina South deposit of the Davyhurst Project in Western Australia.

Kingwest Resources Ltd (ASX:KWR) has agreed to sale terms totalling $2.1 million for two small non-core assets outside the Menzies Gold Project in Western Australia.

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