FTSE 100 suffers drab day; US indices take a bigger hit

UK and US stocks both are in the red after troubling coronavirus data and less than stellar US trade data dented trading sentiment

Genesis -
  • FTSE 100 slides 3o points
  • US indices turn lower
  • Worldwide coronavirus deaths reach 1 million

5 pm: FTSE 100 ends a hair lower 

The UK's flagship benchmark index finished Tuesday 30 points, 0.5%, lower at 5,897.5. The FTSE 250 lost nearly 200 points, 1.1%, to 17,173.7.

Driving the losses could be mounting coronavirus concerns, as the pandemic recently reached a tragic milestone. 

"Stocks are in the red due to health concerns," CMC Markets UK David Madden wrote Tuesday. "The worldwide death toll of the pandemic has topped 1 million and that headlined has been at the forefront of traders’ minds today. When you compare the major gains achieved yesterday with the relatively small losses registered today, it indicates that traders are not overly worried about the Covid-19 crisis."

HSBC Holdings plc (LON:HSBA) (NYSE:HSBC) lost some ground, perhaps due to some profit-taking after strong gains on Monday. The financial giant dropped 3.3% to £298.50 in London and 3.9% in New York to $19.18.

"Like their European counterparts, US stocks have handed back some of yesterday’s gains," Madden noted. "It has been a quiet day in terms of corporate earnings and volatility is likely to remain low in the session as the first presidential debate between Mr. Trump and Mr. Biden will take place after the market is closed. Opinion polls have pointed favourably to Joe Biden but it is hard to dislodge an incumbent. The allegations that Mr. Trump paid almost zero taxes in the years ahead of election victory in 2016 is likely to be brought up by Mr Biden."

It’s been a largely uneventful day in London with traders reluctant to commit ahead of tonight’s US presidential debate.

The FTSE 100 spent the day in the red and in fact losses started to lengthen towards the end of the day, with the index down 31 points (0.5%) at 5,897.

US indices have traded in the red since the opening so a similar hesitancy is evident over there. The US advance goods trade deficit was a bit higher than expected in August, widening to US$82.9bn from US$80.1bn the previous month. The consensus forecast was for a deficit of US$81.8bn. “Exports rose 2.8%, but this increase was much smaller than the 12%-plus jump in June and July, and it was more than offset by a broad-based 3.1% increase in imports. The deficit would have risen further if not for a favourable $5.2bn swing in net trade in industrial supplies, which includes oil,” observed Ian Shepherdson, the chief economist at Pantheon Macroeconomics. Excluding industrial supplies, the deficit rose to a record US$84.1bn from US$76.1bn. “Before Covid, the trend was running at about US$69bn per month, and declining slowly. The Covid shock crushed both exports and imports, and both remain below their prior levels, but the rebound in imports has been bigger,” Shepherdson said.

US indices have traded in the red since the opening so a similar hesitancy is evident over there.

The US advance goods trade deficit was a bit higher than expected in August, widening to US$82.9bn from US$80.1bn the previous month. The consensus forecast was for a deficit of US$81.8bn.

“Exports rose 2.8%, but this increase was much smaller than the 12%-plus jump in June and July, and it was more than offset by a broad-based 3.1% increase in imports. The deficit would have risen further if not for a favourable $5.2bn swing in net trade in industrial supplies, which includes oil,” observed Ian Shepherdson, the chief economist at Pantheon Macroeconomics.

Excluding industrial supplies, the deficit rose to a record US$84.1bn from US$76.1bn.

“Before COVID, the trend was running at about US$69bn per month, and declining slowly. The COVID shock crushed both exports and imports, and both remain below their prior levels, but the rebound in imports has been bigger,” Shepherdson said.

3.30pm: Proactive North America headlines:

Melkior Resources Inc (CVE:MKR) unveils landmark C$110M option/joint venture deal with major Kirkland Lake Gold for Timmins project

Steppe Gold Ltd (TSE:STGO) secures initial debt funding of around US$10.5M for its expansion project at ATO mine

Benchmark Metals Inc (CVE:BNCH) (OTCQB:BNCHF) assembles heavy-weight development team as it advances Lawyers project towards PEA

Auryn Resources Inc (TSE:AUG) (NYSEAMERICAN:AUG) unveils 12 prospective drill targets at its Committee Bay gold project in Nunavut

NexTech AR Solutions Corp (OTCQB:NEXCF) (CSE:NTAR) acquires music industry AR app AirShow

Acasti Pharma Inc (NASDAQ:ACST) (CVE:ACST) initiates review process to evaluate strategic alternatives to boost shareholder value

The Valens Company Inc (CVE:VLNS) (OTCQX:VLNCF) launches high-potency THC-infused beverage Summit 10 under white label deal with A1 Cannabis Company

Lexaria Bioscience Corp (OTCQB:LXRP) (CSE:LXX) gets ethics board nod for human trial of DehydraTECH drug delivery system; launches rodent trial with COVID-19 drugs

Algernon Pharmaceuticals Inc (CSE:AGN) (OTCQB:AGNPF) enrolls 100 patients for its Phase 2b/3 human study of Ifenprodil to treat COVID-19

First Mining Gold Corp (TSE:FF) (OTCQX:FFMGF) hails partner drilling at Pickle Crow which continues to enlarge areas of known mineralization

2.50pm: Wall Street sees mixed start

Shortly after the opening bell on Tuesday, the main Wall Street indices painted a decidedly mixed picture as investor sentiment wobbled ahead of the US presidential election debate and ongoing stimulus wrangling in Washington DC.

In the first minutes of trading, the Dow Jones Industrial Average fell 0.12% to 27,548, while the S&P 500 was relatively flat at 3,351 and the Nasdaq climbed 0.11% to 11,129.

Trader’s moods seem to also have been impacted by new US trading data, which showed that the country’s trade deficit in goods widened by 3.5% in August as exports struggled to bounce back from disruptions caused by the pandemic.

 The figure is likely to be assessed in line with other key macro-economic data such as US GDP tomorrow and the non-farm payrolls report on Friday.

Back in London, the FTSE 100 was trading relatively sideways and was down 19 points at 5,908 at 2.50pm.

2.20pm: FTSE 100 continues to drift

Equity investors are still finding few reasons to dive into equities, especially as US equities now look set to open little changed.

The FTSE 100 was down 22 points (0.4%) at 5,907 while the mid-cap FTSE 250 was down 161 points (0.9%) at 17,209.

The latter is weighed down by a negative reaction to the trading update from hot baked foods purveyor Greggs PLC (LON:GRG).

Disappointing all of those journalists looking to use the “Greggs on a roll” headline for the thousandth time, the shares fell 8.0% to 1,121p after the company said it is to start consultations with unions about job losses after completing a review of the business.

Susannah Street, an analyst at Hargreaves Lansdown, eschewed the “on a roll” cliché and went with “flaky sales” instead.

‘’Greggs had very flaky sales during August as warm temperatures put customers off its hot pastries and it was unable to benefit from the Eat Out to Help out scheme as seats weren’t available in its outlets,” she noted.

“September has seen its stores bringing home the bacon again though, as more people left home and popped in or picked up products using its click and collect service, which has been rolled out nationwide. Sales had crumbled earlier in the summer but over the four weeks to 26 September, like-for-like sales had recovered to 76.1% of the level the firm saw this time last year. Customers are being rewarded with the return of its celebrated Belgian bun as the firm brings back a broader range of its products,” she added.

12.35pm: Losses pared after EC's Economic Sentiment Indicator for the UK rises

As time ticks down to tonights potentially crucial US presidential debate, US investors appear to be prepared to hope for the best.

Spread betting quotes suggest the Dow Jones index will open a modest 26 points firmer at 27,610 while the S&P 500 is expected to start 6 points to the good at 3,357.

The tech-heavy NASDAQ Composite is looking a bit more hale and hearty, with a 277 point gain to 11,395 in prospect.

The show-down between two ageing gunslingers is not the only political show in town, of course, following yesterday’s proposal by the Democratic Party of a US$2.4tn stimulus package for the US economy.

“Yesterday, we heard more positive tones from Democratic House Speaker Nancy Pelosi, who said that she has spoken with US Treasury Mnuchin on another relief package and that she expects talks to continue. With the Democrats lowering their demands, she argues that it is the White House and the Republicans’ turn to follow suit by accepting a larger stimulus package,” reported Danske bank.

“While an agreement still seems at least somewhat down the road (the White House and Pelosi are still around USD1,000bn apart), risk sentiment got a boost yesterday afternoon from Pelosi's comments. As we argued in yesterday's morning comment, if the two parties can agree on more fiscal stimulus, it may be the trigger for shifting the recent risk headwind to tailwind,” the Nordic investment bank said.

Also on the agenda today are speeches by Federal Reserve policy-makers, Messrs Williams, Harker and Quarles.

Palantir, the data analytics company, is set to float today and is expected to be valued at around US$20 billion.

“For the day ahead, I’ll be watching out for the Palantir IPO, Micron Technologies earnings and the first presidential debate between Donald Trump and Joe Biden,” revealed LCG’s Jasper Lawler.

“Really Palantir (ticker PLTR) will be a direct listing not a proper IPO. The listing is expected to value Peter Thiel’s company at over US$20 billion but as is often the case with tech companies when raising money - it is still unprofitable,” Lawler noted.

In Lonon, the FTSE 100 was down 17 points (0.3%) at 5,911 after the European Commission’s Economic Sentiment Indicator (ESI) for the UK climbed to 83.0 in September from 75.1 in August.

A value of 100 represents the average value of the index between 1990 and 2019.

“The big increase in the ESI in September is an encouraging sign that the recovery hasn’t ground to a complete halt, though the shortfall in demand relative to its pre-COVID level still seems to be bigger in the UK than in the rest of Europe. Indeed, the UK’s ESI still was substantially below the Eurozone’s, 90.2, in September,2 observed Samuel Tombs, the chief UK economist at Pantheon Macroeconomics.

EC ESI for the UK

11.45am: Asia-focused banks give back some of yesterday's losses

The Footsie remains in the doldrums, not least because some of yesterday’s big gainers – Asia-focused banks – have come back down to earth today.

The FTSE 100 was down 26 points (0.5%) at 5,901, with the retreat led by International Consolidated Airlines Group SA (LON:IAG), down 3.4% at 91.24p. The British Airways owner has taken up a semi-permanent residence in the Footsie’s cellar, as has another stock intrinsically tied up with air travel, Rolls-Royce Holdings PLC (LON:RR.), which is down 3.2% at 144.5p.

Banking titan HSBC Holdings PLC (LON:HSBA) has given up 9.9p of yesterday’s gains and is down 3.2% at 298.65p. The stock was bid up yesterday after Chinese insurance giant Ping An upped its stake.

Sector peer Standard Chartered PLC (LON:STAN) rose yesterday in sympathy with HSBC but is off 2.7% at 352.3p this morning.

The top riser in London was Canadian Overseas Petroleum Ltd (LON:COPL), up 26% at 0.295p, after its board approved the granting of 341.6mln share options effective September 14, 2020.

The options can be exercised at a price of 0.35p – so a bit of a way to go yet and some market observers have suggested other reasons may be behind today’s rise.

10.15am: Market waits for presidential debate sponsored by Saga

London’s investors are exhibiting signs of apprehension ahead of tonight’s face-off between the two septuagenarian US presidential candidates.

The FTSE 100 was down 37 points (0.6%) at 5,891.

“It’s all going to kick off later tonight, as the first US presidential debate takes place in Cleveland. The fun starts at 9pm US Eastern time and will last one and a half hours,” said Neil Wilson of markets.com.

No indication from Neil or anyone else whether there will be a break in the debate for cocoa.

“Trump won in Ohio, a typical battleground rust belt state, by eight points last time around but it is leaning towards Biden in 2020, according to the polls but we know polls only tell a portion of the story – it’s in the battlegrounds where it counts,” Wilson said.

Cut-price retailer B&M European Value Retail SA (LON:BME) defied the weaker trend after it said it had maintained strong trading momentum in the current quarter.

The shares were up 4.4% at 512p after the company said like-for-like sales were up 19.2% in the quarter.

“The group is one of the market leaders in a structurally growing discounter market, and should outperform in a recessionary environment,” suggested Amisha Chohan, an equity research analyst at Quilter Cheviot.

“The retailer is also winning market share and has attracted a new, middle class, customer base - who are beginning to shop with them regularly. We believe B&M will continue to outperform peers as consumers become much more money conscious,” the analyst added.

8.45am: Ferguson leads blue-chips, while cut-price Greggs continues to struggle  

The FTSE 100 made a quiet start ahead of key data including the Bank of England’s credit reading and monthly mortgage approvals.

Trade negotiations between the UK and EU are heading into a decisive phase, though nobody is talking about a quick resolution to the impasse over the internal markets bill.

The excitement after hours will come from the US where incumbent Donald Trump goes head to head with the early poll leader, Joe Biden, in the first of the 2020 campaign’s televised presidential election debates.

On the market, Ferguson (LON:FERG), a UK plumbing and heating specialist, was an early winner, rising 5.7% after better-than-expected full-year results.

“The actions taken at the height of the pandemic mirrored what was being done in many global boardrooms,” said Richard Hunter, head of markets at Interactive Investor.

“The interim dividend and share buyback programme were suspended, as was the M&A programme and there was tight control on capital expenditure.

“This had the effect of freeing up additional capital when it was most needed, and having come out of the other side the company is now reaping the benefit of those temporary actions.”

On the FTSE 250, Greggs (LON:GRG) delivered what one commentator referred to as a ‘flaky’ performance after the bakery chain said trading would remain below normal levels for the foreseeable future. The shares shed 4%.

A former tiddler that is now worth north of half a billion pounds, Novacyt (LON:NCYT) spiked a further 20% in early deals after it was announced the healthcare company had launched its COVID-19 antibody test.

Proactive news headlines

Synairgen PLC (LON:SNG) has inked an agreement that will make available to patients an experimental drug that has shown early promise tackling the worst symptoms of the COVID-19.

Ariana Resources PLC (LON:AAU) plans to pay a special dividend to shareholders once its mooted joint venture deal with Turkish conglomerate Özaltin goes through.

Westminster Group PLC (LON:WSG) said its technology division has been awarded a contract to replace and maintain security screening equipment at the Palace of Westminster, also known as the Houses of Parliament.

IXICO PLC (LON:IXI), the brain imaging analytics specialist, has received a £2mln extension to a contract from a 'top-20' pharma client to provide additional imaging services for a pivotal Huntington's disease (HD) study. 

CentralNic Group PLC (LON:CNIC) said the conditions of its acquisition of Zeropark and Voluum, collectively known as Codewise, have been satisfied or waived, and as such, the deal is now unconditional and shall become effective at the end of October.

Ncondezi Energy Limited (LON:NCCL) said it has submitted a historical cost audit report to China Machinery Engineering Corporation (CMEC) for its Ncondezi integrated 300 megawatt (MW) power project in Tete, Mozambique. In a separate announcement covering its results for the six months ended June 30, Ncondezi reported a loss for the period of US$1.21mln, narrowed from US$1.26mln in the previous year, while it ended the first half with cash of US$592,000.

Echo Energy PLC (LON:ECHO) has completed an assessment of the Monte Aymond gas project, part of the Santa Cruz Sur assets, which is now seen as an exciting commercial project. 

Power Metal Resources PLC (LON:POW) has initiated exploration at the Kalahari Copper Belt joint venture with Kavango Resources PLC (LON:KAV). 

Greencoat UK Wind PLC (LON:UKW) has raised gross proceeds of £400mln cash from a share issue to reduce gearing and progress projects in its pipeline.

ImmuPharma PLC (LON:IMM) has increased its stake in Incanthera PLC (AQSE:INC) as the developer of an innovative sun cream raised £350,000 in a share subscription.

Shares in Iofina PLC (LON:IOF) surged on the back of interims that revealed record revenue and underlying earnings (EBITDA) for the iodine extractor. Revenue in the six months to the end of June rose 8% to US$15.74mln from US$14.53mln in the corresponding period of 2019 while EBITDA jumped 50% to US$2.95mln from US$1.97mln.

Pelatro PLC (LON:PTRO) has unveiled an expanded contract with one of its current customers, a large telco firm, and said it has had a good start to the second half.

Zanaga Iron Ore Company Ltd (LON:ZIOC) said the recent rise in the price of iron ore has made its project in the Republic of Congo even more attractive. Work is running within the 2020 budget forecast, it added, while cash reserves at 28 September were US$0.5mln.

Jersey Oil and Gas PLC (LON:JOG) highlighted a strong cash position and significant progress towards the development of the Greater Buchan Area (GBA) project as it reported on the first half of 2020.

Chariot Oil & Gas Limited (LON:CHAR) acting chief executive Adonis Pouroulis highlighted an exciting phase in its evolution, as the company released its interim results.

Powerhouse Energy Group PLC (LON:PHE) has highlighted a “transformative” six months in the first half of its current years as it achieved first commercial revenues from engineering services on its Protos project.

Next Fifteen Communications Group PLC (LON:NFC) is confident of modestly exceeding market expectations for the year after a solid first half.

Ironridge Resources returned a loss before tax of A$6.4mln during the year to 30 June 2020. At the year end, the company had A$7.3mln in the bank, enough to carry it through significant work programmes on its gold and lithium assets in West Africa, especially since it’s also running a drill-for-equity programme with GeoDrill.

AfriTin Mining Ltd (LON:ATM) generated revenue of just over £1mln during the six months to June 2020, as operations at its Uis mine in Namibia continued to gain momentum after the recent start-up. The loss before tax was also just over £1mln.

Crop protection, animal health specialist Eden Research PLC (LON:EDEN) is confident it can capitalise on the market opportunity for biopesticides following its fundraising in March, while the first half of 2020 saw the company make progress with its new insecticide products and pursue other key opportunities in its pipeline.

Alien Metals Ltd (LON:UFO) turned in an operating loss of US$400,000 in the six months to June. As at 30 June 2020, the company had US$700,000 in the bank. 

Advanced Oncotherapy PLC (LON:AVO) is appointing a new independent director with a 35-year track record of “commercialising disruptive med-tech”.

6.37 am: Quiet start predicted 

The FTSE 100 is poised for a quiet start on Tuesday ahead of another potentially important day for Brexit talks.

London’s blue-chip benchmark has been tipped to gain two points after the opening bell, a day after adding just over 85 points or 1.5% to finish at almost 5,928.

Overnight, Wall Street got off to an early lead and kicked it about until the final whistle.

The Dow Jones closed up 410 points or 1.5% higher at 27,584.06, while the S&P 500 climbed 1.6% and the Nasdaq Composite fizzed up 1.9%. 

Later, thoughts stateside will turn towards the late evening’s presidential debate between the incumbent in the White House and his challenger in the blue corner, Joe Biden.

This could result in a potential for the market to see “four seasons in one day, ending in winter,” said market analyst Jeffrey Halley at Oanda, expecting the revelations about the state of President Trump's financial affairs to “bring an extra edge” and so we should “expect fireworks”.

The positivity in global markets again coincided with the coming end of the month and the end of the quarter, meaning a lot of institutional investment fund managers are carrying out portfolio rebalancing. 

“I would suggest that those flows, rather than a sudden ‘the world is saved’ epiphany are the genesis of the overnight equity rally,” said Halley.

“That appears to have dragged in the FOMO [fear of missing out] buy-the-dip mob on a day when nothing materially changed in the world to justify the moves. 

“US airline stocks, in particular, and banks, had an exceptional day. A session where the buy everything mob think airlines look cheap is as good a warning sign for the longevity of the overnight rally as I've ever seen. At least big tech is cashflow positive, even if they are not cheap.”

Back in the UK, there may be major Brexit headlines later as the final scheduled round of negotiations take place to try and set up a free trade deal by the October 15 deadline set by Downing Street to prepare a full treaty by the end of the year. 

Around the market

Pound up 0.15% to US$1.2853

Gold down 0.1% to US$1,878.11

Brent Crude Oil down 0.5% to US$42.23

6.45 am: Early Markets: Asia / Australia

Shares in Asia-Pacific were mixed today with Hong Kong’s Hang Seng index dipping 0.49% while Mainland China’s Shanghai Composite was up 0.32%

In South Korea, the Kospi rose 0.96% and in Japan, the Nikkei 225 advanced 0.31%.

Australia’s S&P/ASX 200 was down 0.13% even as the country’s consumer confidence rating rose by 1.2% to a 13-week high of 93.5.


Proactive Australia news:

Musgrave Minerals Ltd (ASX:MGV) is encouraged by a 33% increase in copper resources at the Hollandaire copper-gold joint venture project with Cyprium Metals Ltd (ASX:CYM) to 51,500 tonnes.

Galileo Mining Ltd (ASX:GAL) has received broad intersections in drilling at the Lantern prospect within Western Australia’s Fraser Range Nickel Belt that expand the Lantern South nickel-copper footprint.

Red River Resources Limited (ASX:RVR) has increased the mineral resource for Hillgrove Gold Project in northern NSW to 692,000 ounces of gold and 75,000 tonnes of antimony after updating the Syndicate Lode resource estimate.

Alto Metals Ltd (ASX:AME) has delivered more high-grade gold results in final assays from a recently completed 5,562-metre reverse circulation (RC) drill program at the new Orion Lode discovery of Sandstone Gold Project in WA, including up to 29 metres at 3.5 g/t from 49 metres.

Mako Gold Ltd (ASX:MKG) will begin exploration in around a month after the Ministry of Mines in Côte d'Ivoire granted a permit for the Korhogo Nord project, which is within 30 kilometres of Barrick Gold Corp’s (NYSE:GOLD) 4.9-million-ounce Tongon Gold Mine.

Paradigm Biopharmaceuticals Ltd (ASX:PAR) has extended its exclusive licence and supply agreement with bene pharmaChem, which remains the only FDA approved manufacturer and supplier of Pentosan Polysulphate Sodium (PPS).

FYI Resources Ltd (ASX:FYI) (FRA:SDL) has started a detailed high purity alumina (HPA) development trial using its pilot plant targeting flowsheet and process improvements.

Meteoric Resources Ltd (ASX:MEI) is well-positioned to benefit from a strong gold market while actively exploring its highly prospective Brazilian and Western Australian projects.

Andromeda Metals Ltd (ASX:ADN) has revealed a maiden resource of 51.5 million tonnes of Bright White kaolinised granite for the Hammerhead Deposit, 5 kilometres to the north of the Great White Deposit on the Eyre Peninsula of South Australia.

Emperor Energy Ltd (ASX:EMP) is offering 25,571,428 shares to eligible shareholders under a new share purchase plan (SPP) to raise up to $1 million.


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