- FTSE 100 loses 169 points
- Wall Street mixed at midday thanks to lagging Dow
- Treasury publishes independent review on fintech sector
5pm: Traders don't buy the dip in London
London's leading index ended Friday down 169 points, 2.5%, at 6,483. Its FTSE 250 counterpart lost 288 points, 1.4%, to 20,910.
"From the look of afternoon trading in Europe and the opening moves in the US, it is clear that very few investors are willing to step up and buy the dip, at least for the time being," IG Chief Market Analyst Chris Beauchamp wrote Friday. "It is nearly the end of the week, and indeed the month, and, human nature being what it is, mostly people will have decided that the prudent course is to keep trimming back on risk and wait to see how things pan out next week, rather than jump in and spend the weekend fretting about new positions."
Across the pond, the Dow was down 228 points, 0.7%, to 31,174 at midday. The Nasdaq fared better, gaining 174 points, 1.3%, to 13,292, and the S&P 500 added 12 points, 0.3%, to 3,841.
Apple Inc (NASDAQ:AAPL), Microsoft Corporation (NASDAQ:MSFT), Facebook Inc (NASDAQ:FB), Amazon.com Inc (NASDAQ:AMZN) and Alphabet Inc (NASDAQGOOG) all gained at least 1% to lift the Nasdaq, a day after the exchange's worst selloff since October.
3.55pm: UK to rollout COVID-19 vaccine prioritising people by age, not by profession
The Footsie plunged further before close while sterling clawed back some losses.
London’s leading index lost 154 points to 6,499 as sterling shed 0.4% to US$1.3954.
The UK government has announced it will prioritise people by age and not by profession in the next phase of the COVID-19 vaccine rollout.
The Joint Committee on Vaccination and Immunisation said centring the strategy on occupational groups would be more complex to deliver and may require new vaccine deployment structures that would slow down the process.
Teachers and police officers have been some of the workers asking to be placed in priority groups but will instead receive the jab based on their age.
The authorities will offer the inoculation to people aged 40 to 49 years, moving onto those aged 30 to 39 years and then to those aged 18 to 29 years.
3.40pm: Proactive North America headlines:
Nano One Materials Corp (CVE:NNO) (OTCPINK:NOMF) (FRA:LBMB) unveils innovative new process aimed at reducing costs and carbon emissions in battery supply chain
Naturally Splendid Enterprises Ltd (CVE:NSP) (OTCPINK:NSPDF) (FRA:50N) appeals Federal Court of Canada’s NATERA trademark decision.
2.47pm: Wall Street manages mostly positive start
Despite concerns over US Treasury yields, the main indices on Wall Street managed to start mostly higher on Friday morning.
Shortly after the opening bell, the S&P 500 was up 0.43% at 3,845 while the Nasdaq rose 1.01% to 13,251. The Dow Jones Industrial Average was the negative outlier, sliding 0.23% to 31,330 in early deals.
Sentiment may have been lifted somewhat by a rebound in US consumer spending, with data showing a 2.4% rise last month, catalysed by spending on recreational goods, vehicles, food and beverages.
Personal incomes also surged 10% in January after the round of US$600 stimulus cheques made their way into Americans’ bank accounts.
Back in London, the FTSE 100 was looking decidedly less healthy, down 115 points at 6,536 at around 2.45pm.
1.35pm: UK advised to change listing rules to attract more fintech IPOs
The Footsie continued its descent in the early afternoon, plunging 112 points to 6,539.
The Treasury has published an independent review led by Network International (LON:NETW) chairman Ron Kalifa to bolster Britain’s position in the fintech space.
The UK has more than 10% of the global market share in the sector, which contributes £11bn a year to the economy.
The review recommended a series of measures, such as introducing a new ‘fintech scale up’ visa route for specialists from around the world, improving UK listings rules with free float reduction and dual class shares and creating a £1bn fintech ‘growth fund’ to help firms grow independently.
“Fintech is one of the UK’s great success stories and will help us seize new opportunities around the world,” said Chancellor Rishi Sunak in a release.
“This review will make an important contribution to our plan to retain the UK’s fintech crown, create more skilled jobs, and deliver better financial services for people and businesses.”
12.20pm: Markets pressured by rising yields
FTSE 100 plunged dramatically at lunchtime despite holding up well all morning, likely feeling the weight of spiking yields.
London’s leading index plummeted 92 points to 6,559 as sterling also worsened, shedding 0.8% to US$1.3896.
Wall Street is not expected to do much better, with futures pointing at a negative open for the S&P 500, the Dow Jones and the Nasdaq.
World markets are under pressure by a surge in ten-year gilt yields, which have touched a one-year high of more than 0.80% this week, despite Fed Chair Jerome Powell confirming interest rates will remain low.
“I expect we'll see a lot more of this from central banks in the coming weeks if stocks go into freefall. Despite a couple of days of losses, we're very much not in that territory yet - this is not a taper tantrum - and policymakers may be perfectly comfortable with what's happening,” said Craig Erlam at OANDA.
“We are heading for a super-charged recovery, after all, thanks to the vaccine rollout and all the fiscal support measures over the last 12 months. Not to mention the desperation of people to escape their now beautifully decorated homes.”
“Investors should not need the central bank to hold their hand much longer and I expect by the end of the year, taper discussions will and should be starting. Of course, a lot can happen in that time and maybe that's too optimistic at this stage but the point is simple.”
10.55am: Pfizer/BioNTech jab found effective on hospital staff in UK study
FTSE 100 plunged further in late morning, losing 28 points to 6,620, while sterling was down 0.7% to US$1.3919.
A study conducted at Addenbrooke's hospital in Cambridge suggests a significant drop in the spread of COVID-19 among staff after receiving the Pfizer/BioNTech jab.
The study by Cambridge University Hospitals NHS Foundation Trust and the University of Cambridge analysed data from thousands of tests carried out each week on hospital staff who showed no signs of infection.
The findings show that two weeks after a single dose of the vaccine, hospital staff became four time less likely to contract the virus.
“Our findings show that the current mass vaccination strategy is protecting against asymptomatic carriage of the virus in addition to symptomatic disease,” said Dr Nick Jones, who is first author on the study and an infectious diseases/microbiology registrar at the Trust.
9.50am: IAG on the rise despite ugly results
FTSE 100 trimmed its losses after an early morning plunge, sliding 17 points to 6,634.
International Consolidated Airlines PLC (LON:IAG) was the top riser in the index, adding 4% to 194.32p despite a set of pretty ugly results.
The owner of airlines British Airways and Iberia posted losses of nearly €8bn in 2020 as COVID-19 restrictions pushed revenues down 69% to €7.8bn.
For the current quarter, IAG said it expects to be running at 20% of 2019 passenger capacity but given the current uncertainty that estimate might change.
The one bright spot was cargo where revenues during the year rose by €200mln to €1.3bn.
“There’s no getting around just how ugly IAG’s final results are,” analysts at Hargreaves Lansdown commented.
“With the coronavirus crisis clearing the skies for over a year, it’s not unexpected to see IAG operating as just a shell of its former self. Management has responded in the only possible way—by securing new funding and slashing costs—but ultimately the group is at the mercy of the government’s travel restrictions.”
8.50am: Scottish Mortgage Trust hit as US tech stocks tank
As expected, the FTSE 100 started the day on the back foot. Luckily London didn’t see the blood-letting that hit Wall Street as bond yields advanced on inflation fears.
The index fell 34 points in the early exchanges to 6,618.46 as some home-grown optimism over the vaccine roll-out and economic rebound helped mitigate the knock-on impact of America’s retrenchment.
“The tantrum in the bond market has inevitably spilled over into equities as the spectre of inflation increases,” said Richard Hunter, head of markets at Interactive Investor.
“Despite the soothing noises of the Federal Reserve, the repricing of inflation expectations is of concern.
“With excessive liquidity in the system and with the likelihood of a major release of pent-up demand as pandemic restrictions ease, inflation could soon spiral.
“In turn, this would put pressure on central banks to raise interest rates to quell the rise, affecting corporate lending and, importantly, the US mortgage market.”
On the market, the big Footsie casualty was Scottish Mortgage Trust (LON:SMT), which fell 3.4%. Don’t be fooled by the name, SMT is one of the UK’s biggest investors in Silicon Valley, so the precipitous slide in the tech-heavy NASDAQ overnight is a worry for those holding the shares.
Record losses from British Airways owner IAG (LON:IAG) didn’t prevent bargain hunters from wading in to pick up the shares, which rose 2.5% in the early exchanges.
On the FTSE 250, yet another profit upgrade from Pets At Home (LON:PETS) prompted a 2.6% jump in the share price.
Proactive news headlines
MGC Pharmaceuticals Ltd (ASX:MXC, LON:MXC) said the past half-year represented “a strategically important period”, as the medical cannabis company achieved a number of strategically important milestones. Following the London Stock Exchange listing earlier this month and £6.5mln fundraising, directors said the group “is in a strong financial position to pursue identified growth initiatives”.
Argo Blockchain PLC (LON:ARB) (OTCQX:ARBKF) said 4,500 Bitmain Antminer S19 and S19 pro cryptocurrency mining machines that the company agreed to lease from Celsius Network in November have been installed on time and are now fully operational.
Silence Therapeutics PLC (LON:SLN, NASDAQ:SLN) said it will receive US$2mln following the start of work on a third drug target as part of its research collaboration with Mallinckrodt.
FastForward Innovations Limited (LON:FFWD) is pleased with the way its investment portfolio is developing, it said in a corporate update. "I believe that FastForward has reached a tipping point and that shareholders will be substantially rewarded for their support," said CEO, Ed McDermott.
FastForward also said McDermott and finance director Lance De Jersey will provide a live investor presentation via the Investor Meet Company platform on 3rd March 2021 at 11am.
Avation PLC (LON:AVAP), the commercial passenger aircraft leasing company, said its customer base continues to recover from the unprecedented effect of the coronavirus pandemic and that its underlying business remains profitable.
Scotgold PLC’s (LON:SGZ) chief executive Richard Gray is to retire at the end of March following the group’s move from an explorer to producer. Philip Day, a 25-year mining veteran is his replacement.
Tissue Regenix Group PLC (LON:TRX) said that Jonathan Glenn has appointed to the role of non-executive chairman on a permanent basis, having held an interim role since last March. Chief executive Daniel Lee said: “Jonathan's leadership has been invaluable over the last year, as interim chairman, and we look forward to his continued contribution towards the company's future growth."
4D pharma PLC (LON:DDDD) said the US Securities and Exchange Commission has cleared the way for the company to issue American Depositary shares to Longevity Acquisition Corporation (NASDAQ:LOAC). Longevity is a special purpose acquisition company with which 4D is merging. 4D’s American stock will begin trading on NASDAQ under the ticker symbol LBPS once the merger is signed off by 4D investors. The company will remain listed in the UK too under its current ticker symbol.
Tiziana Life Sciences PLC (LON:TILS) (NASDAQ:TILS) has said an interview with its chief executive, Dr Kunwar Shailubhai, will air on The RedChip Money Report on Bloomberg Television on Saturday, February 27 at 7pm local time across the US and on the Bloomberg Network in Europe on Sunday, February 28 at 6pm local time. The company said in the interview Shailubhai will discuss top-line data from Tiziana's coronavirus (COVID-19) trial, its multiple Phase 2 trial launches expected in 2021, and the potential application of Foralumab in a wide range of autoimmune and inflammatory diseases.
Woodbois Limited (LON:WBI) said Rhino Ventures has disposed of 81.5mln shares in the company and requested the conversion on a one-to-one basis of 101,365,095 of its 851,365,095 non-voting ordinary shares into voting ordinary shares, under a previous agreement. Paul Dolan, chairman and CEO of Woodbois, said: "We welcome Mr Ng Chee Beng as a 3.27% shareholder and are pleased to continue to diversify our shareholder base and increase our voting ordinary share capital by 6.6% at this exciting time of expansion for the company."
Sunrise Resources PLC (LON:SRES) will be hosting a webinar at 11am on Wednesday 3 March where executive chairman Patrick Cheetham will deliver a presentation and answering questions about the company.
6.50 am: Footsie set for a (small) wobble
It’s been years – decades, possibly – since equity investors have had to worry about rising bond yields but they are worried about them now.
Global markets are in retreat after a sharp increase in yields on five and 10-year government bonds but it looks like UK equities are getting a milder version of the screaming ab-dabs, as the FTSE 100 is set to open just 71 points lower at 6,581.
Compare that to the 560 point fall (to 31,402) on the Dow Jones industrial average or the 96 point tumble to 3,829 by the S&P 500 and things don’t seem too bad for holders of blue-chip equities.
Sentiment towards the Footsie stocks is possibly being bolstered by the weakness of sterling against the greenback; the pound is more than half a cent lower against the dollar this morning.
Why is the US dollar so strong?
Well, it could be to do with rising bond yields …
In Asian markets, the mood is a lot more fretful. Japan’s Nikkei 225 is 1,161 points in the hole at 29,007 and Hong Kong’s Hang Seng is 892 points weaker at 29,182.
“As 10Y US Treasuries briefly touched 1.6% yesterday, Asia will be feeling the effects today,” said Robert Carnell, the regional head of research covering Asia-Pacific at ING.
“In attempting to calm markets, Fed Chair, Jerome Powell has made much of the fact that the rise in bond yields is a mark of confidence in the economy. He's not wrong, though I suspect this will come as scant consolation if your 401K [US pension plan] is limit long NASDAQ shares,” Carnell noted.
Michael Hewson, the chief market analyst at CMC Markets, reckons this week has been characterised by the question as to whether higher rates are good or bad for stock markets.
“If last night’s price action in the US is any guide then the answer to that would be a no, with the sharp declines in the US set to result in a negative start for markets here in Europe, after Asia markets slid sharply as well,” he said.
“Central bankers would have us believe that higher rates are reflective of an improving economic outlook, and that is certainly true, but there are certain areas of the market that trade on valuations that maybe a little on the frothy side, and where perhaps investor returns might be better served by allocating capital elsewhere,” Hewson suggested.
Fortunately, the G20 meeting is taking place today where central bank governors can argue the toss over what to do about interest rate policy.
In London, the corporate news schedule is a bit busier than it usually is on a Friday, with announcements expected from British Airways owner International Consolidated Airlines SA (LON:IAG), property listings web site operator Rightmove PLC (LON:RMV), marketing and advertising conglomerate WPP Group PLC (LON:WPP) and insurer RSA Insurance Group PLC (LON:RSA).
With IAG, the focus will be on how summer bookings are faring while with WPP, often seen as a good guide to how well the global economy is doing, there will be the usual commentary on global business trends.
Around the markets
- Sterling: US$1.3952
- 10-year gilt: 0.787%, +5.16 basis points
- Gold: US$1,760.30 an ounce, down US$15.10
- Brent crude: US$65.48 a barrel, down 63 cents
- Bitcoin: US$46,438, down US$1,761
6.50am: Early Markets - Asia / Australia
Stocks in the Asia-Pacific region fell sharply on Friday after the benchmark 10-year U.S. Treasury note briefly crossed the 1.6% level on Thursday, its highest level in more than a year.
The Hang Seng index in Hong Kong fell 3.18% while the Shanghai Composite in China dipped 2.01%.
In Japan, the Nikkei 225 tanked 4% and South Korea’s Kospi fell 2.80%.
Shares in Australia moved in tandem with other Asian markets, with the S&P/ASX 200 closing 2.35% lower.
Proactive Australia news:
Nanoveu Ltd (ASX:NVU) has reported a whopping six-fold increase in its revenue from ordinary activities for the financial year ended December 31, 2020, as changes in strategy helped the company overcome COVID-19 challenges.
MMJ Group Holdings Ltd (ASX:MMJ) (OTCMKTS:MMJJF) (FRA:2P9) has revealed significant events in the operations of its investee Harvest One Cannabis (HVT:CVE) (OTCMKTS: HRVOF) (FRA:2CN) during February 2021.
Red River Resources Ltd (ASX:RVR) (FRA:R1R) recorded a 107.8% rise in revenue from continuing operations in the six months to December 31, 2020, boosted by the increased sales of copper, zinc and lead concentrates and more favourable metal prices.
European Lithium Ltd’s (ASX:EUR) (FRA:PF8) (VSE:ELI) drilling contractors have mobilised drilling equipment to site and started a resource extension drilling program this week at Wolfsberg Lithium Project in Austria.
Calima Energy Ltd (ASX:CE1) (OTCMKTS:RLTOF) (FRA:R1Y) has entered into a binding agreement to acquire 100% of the issued share capital of Blackspur Oil Corp, a privately held Canadian company with producing oil and natural gas assets in two core areas within Alberta - at Brooks and Thorsby.
Arrow Minerals Ltd (ASX:AMD) has signed a binding term sheet that sets out terms for an exploration joint venture with Trevali Mining Corp (TSE:TV) (OTCMKTS:TREVF) wherein both parties receive reciprocal exploration rights to their exploration permits in a highly prospective gold belt in Burkina Faso, West Africa.
FYI Resources Ltd (ASX:FYI) (FRA:SDL) is positioning itself to be a large producer of 4N and 5N high-purity alumina (HPA) in the rapidly developing high-tech product markets and anticipates an active and progressive six months.