FTSE 100 closes in the red as Fed action on banks hits equities

London's index of big caps tumbled 60 points to 6,718

  • FTSE 100 closes in red
  • Housebuilders ordered to remove unfair leasehold contract terms
  • Reach to push for more home working

5.15pm: FTSE 100 closes firmly lower

FTSE 100 closed in the doldrums on Friday as traders were put off buying shares by a US Fed action, which will affect banks.

The UK's index of leading shares joined other European indices to head south, falling 71 points to close at 6,708. The FTSE 250 lost over 148 at 21,420.

"The downward pressure on equities picked up when the Fed announced they would not be extending the supplementary leverage ratio (SLR) – a mechanism that requires US banks to hold less capital reserves so they could free up cash to inject into the economy in the form of loans," said David Madden, analyst at London-based CMC Markets.

"Traders reacted by selling stocks as they took the view that if banks are more restricted in terms of capital requirements, that is likely to hold back the recovery somewhat."

Over the week as a whole, Footsie dropped 0.78%.

On Wall Street stocks were mixed with the Dow Jones Industrial Average off 144 points, the S&P 500 ahead by nearly eight points and the Nasdaq up over 115 points to 13,231.

3.50pm: Taylor Wimpey, Countryside Properties receive CMA order on leasehold contracts

FTSE 100 dropped another few points before close and was down by 60 to 6,718.

Sterling, instead, trimmed its losses and shed 0.5% to US$1.3853.

Taylor Wimpey PLC (LON:TW.) and Countryside Properties PLC (LON:CSP) both dipped 2% to 181.75p and 513p respectively after an order by the Competition and Markets Authority.

The two housebuilders were asked to remove unfair contract terms for leasehold agreements, outlining specific concerns about contracts that can see the cost of ground rents doubling every ten to fifteen years.

The CMA said the contracts break consumer protection law, affects owners’ property rights and can mean owners struggling to sell or mortgage properties.

The City reckons Barratt Developments (LON:BDEV) and Persimmon plc (LON:PSN) will receive similar orders given the government's position on leaseholds.

“Both businesses have already taken provisions against this, but these figures may need to be reviewed,” analysts at Peel Hunt commented.

“Overall we would see this as a small negative for these businesses and the broader sector, but these practices have been stopped for some time and the outcome of this investigation is not a surprise.”

3pm: Daily Mirror owner Reach to close London office in remote working stride

FTSE 100 cut its losses again and was down 55 points to 6,723 in the afternoon, while sterling plunged further in the red and shed 0.6% to US$1.3837.

Reach PLC (LON:RCH), the owner of Daily Mirror, Sunday Mirror and several regional publications, dipped 2% to 210.19p after its huge stride towards home working was uncovered.

The publisher is planning to close its Lower Thames Street office in central London and downsize the Canary Wharf space from two floors from one.

Most employees will work remotely as a permanent measure, City A.M. reported.

It’s not clear how much money the move, which comes after Reach deemed remote working during the pandemic successful, will save.

Editorial production staff is expected to be permanently based in the office while others will be linked to one of the 15 ‘hubs’ located in the UK they will be required to attend at times.

Earlier this month, the media company posted lower revenues and profits, while last year it cut 550 jobs to make up for losses in advertising revenue.

2.05pm: Proactive North America headlines:

Karora Resources Inc (TSE:KRR) (OTCMKTS:KRRGF) (FRA:5RN1) posts record net earnings for 2020, beats annual all-in-sustaining-cost guidance

Naturally Splendid Enterprises Ltd (CVE:NSP) (OTCMKTS:NSPDF) brings in further C$612,865 cash from warrant exercise

Bragg Gaming Group Inc (TSE:BRAG) (OTCMKTS:BRGGF) says subsidiary ORYX Gaming has entered Swiss market by going live with Grand Casino Luzern’s online brand

Victory Resources Corporation (CSE:VR) (OTCMKTS:VRCFF) (FRA:VR62) stakes the Black Diablo property in Nevada

Empower Clinics Inc (CSE:CBDT) (OTCQB:EPWCF) nets $12 million from warrant exercise, reveals expansion plans for KAI Medical Laboratory and Ontario clinics

Revive Therapeutics Ltd (CSE:RVV) (OTCMKTS:RVVTF) announces positive results in pre-clinical study of psilocybin to treat mild traumatic brain injury in mice

Cloud Nine Web3 Technologies Inc (CSE:CNI) (OTCMKTS:CLGUF) hires tech entrepreneur Sefton Fincham as its new president

Falcon Gold Corp (CVE:FG) (OTCPINK:FGLDF) reveals new drill results from Central Canada Gold Mine showing strong mineralization

1.40pm: Mixed start for US stocks

The main indices on Wall Street opened on a mostly lower footing on Friday, although the Nasdaq managed to buck the trend by pushing higher in early deals.

Shortly after the opening bell, the tech-heavy index was up 0.39% at 13,166 while the Dow Jones Industrial Average was down 0.3% at 32,770 and the S&P 500 dropped 0.03% to 3,914.

Despite expectations of a higher open, rising bond yields may still be rattling equities traders alongside the usual end of week malaise.

Back in London, the FTSE 100 had slipped further into the red in mid-afternoon, down 84 points at 6,695 at around 1.40pm.

12.55pm: Lamborghini posts record profits as Chinese customers pay more for customised models

FTSE 100 held its losses at lunchtime, down 62 points to 6,717, while sterling dipped 0.1% to US$1.3911.

Luxury carmaker Lamborghini posted record profits for 2020, even though its Italian factory was closed for two months.

Margins were driven by Chinese customers seeking customised models which were more expensive than the standard ones.

"We have already covered with customer orders nine months of the year for 2021," chief executive Stephan Winkelmann told CNBC.

"It's a bit like with the stock markets: the buyer's spirits are up. They can't wait to the moment to get out again and to enjoy life."

The historical Italian brand has become somewhat popular in the world of /wallstreetbets, where Reddit users joke about buying supercars with the gains made through the GameStop Corp (NYSE:GME) short squeeze.

???????????? WE LIKE THIS STOCK ???????????? from r/wallstreetbets

12.10pm: Wall Street set for green open despite rising bond yields

FTSE 100 dropped further at midday and lost 66 points to 6,713, while its Wall Street counterparts are expected to open in the green.

US futures are pointing at a higher start, but tech stocks are once again under pressure amid rising bond yields and increased expectations for higher interest rates.

Nonetheless, tech-rich Nasdaq is called 72 points higher, while the Dow Jones and the S&P 500 are expected to add 16 and 7 points respectively.

“After yields surged to a 14-month high yesterday, dragging the tech-heavy Nasdaq sharply lower, today’s pause in the bond-market sell-off is seeing demand for tech stocks rebound,” said Sophie Griffiths, analyst at OANDA.

“With little on the US economic calendar to distract investors, sentiment and inflation expectations will be under the spotlight. As long as 10-year treasury yields can remain depressed around the 1.70% level, we could be looking at a more upbeat end to the week.”

In company news, FedEx reaped the benefits of the shift to online shopping and posted a 23% jump in fourth-quarter revenue to US$21.5bn, much higher than the US$19.9bn forecast, though bad weather caused a US$350mln drop in operating income.

The delivery company expects international express solutions and e-commerce demand to stay strong in the short-term even as restrictions are eased.

Talking about shopping, Nike reported a 3% rise in quarterly revenues to US$10.4bn thanks to strong demand in China, where they shot up 51%, offsetting a 10% sales slide in North America.

11.10am: Goldman Sachs first-year bankers ask for 80-hour working week cap

FTSE 100 extended its losses to earlier levels and was down 40 points to 6,739 in late morning.

First-year Goldman Sachs bankers are calling for an 80-hour cap on the working week.

An internal survey of 13 staff showed that they were working around 95 hours per week, with an average of five hours of sleep per night, the BBC reported.

They warned they would leave within six months unless upper management changed their ways because of damages to their mental and physical health.

"The sleep deprivation, the treatment by senior bankers, the mental and physical stress… I've been through foster care and this is arguably worse," one employee said in the survey.

"This is beyond the level of 'hard-working', this is inhumane/abuse," said another analyst.

Last month, the bank’s boss David Solomon said working from home should not be the ‘new normal’ and instead it’s an “aberration”.

10am: Tim Martin blasts government after Wetherspoons slumps to interim loss

FTSE 100 trimmed its losses and slid 32 points to 6,748, while sterling was flat at US$1.3930.

In the FTSE 250, JD Wetherspoon PLC (LON:JDW) shed 2% to 1,299p after slumping to an interim loss due to the UK’s lockdown measures.

Revenues plunged 54% to £431mln so last year’s £58mln pre-tax profit turned into a £46mln loss.

Chairman Tim Martin didn’t fail to blast the government’s measures and said because of the “ever-changing” guidelines it’s “impossible to decipher a pattern in sales”.

“It is disappointing that so many regulations, implemented at tremendous cost to the nation, appear to have had no real basis in common sense or science - for example, curfews, ‘substantial meals’ with drinks, and masks for bathroom visits. The future of the industry, and of the UK economy, depends on a consistent set of sensible policies, based on scientific evidence, rather than on political expediency,” he said.

9am: Government borrowing hits record highs

FTSE 100 opened lower after UK borrowing hit record levels.

London’s index of big caps tumbled 44 points to 6,735 in early trading.

Public sector borrowing reached £19.1bn last month, although it missed consensus forecast of £21bn. It was the highest February borrowing figure on record since the Office for National Statistics started keeping count in 1993.

“February’s public finances figures showed that borrowing may come in a little below the OBR’s 2020/21 forecast of £355bn. But if we are right in thinking the economic recovery will be faster and fuller than the OBR expects, borrowing will undershoot the OBR’s forecasts by even more further ahead,” economists at Capital Economics commented.

“We think that the fiscal forecasts further ahead are predicated on overly pessimistic forecasts for GDP growth. If we are right, borrowing may also be lower than the OBR expects over the next few years allowing the Chancellor to cancel some of the proposed tax hikes before the 2024 general election.”

In company news, NatWest Group (LON:NWG) rose 1% to 192.80p after buying back almost 600mln of its shares from the government for £1.13bn.

Among the fallers, International Consolidated Airlines Group (LON:IAG) shed 2% to 211.55p as British Airways is thinking of selling its flagship headquarters near Heathrow Airport. The cash-strapped airline plans a mix of home and office working going forward.

Proactive news headlines

Futura Medical PLC (LON:FUM) told investors the EU is to certificate Futura’s MED3000 as a Class 2B approved medical device.  Once the certificate is issued, MED3000, a gel used to treat erectile dysfunction, may be marketed throughout the EU without the need for a doctor's prescription.  

Caerus Mineral Resources PLC (LON:CMRS) has made a good start to life as a listed company as its shares rose on its first day of trading on the standard segment of the LSE’s main market.

ReNeuron Group PLC (LON:RENE) has announced new collaborations and data findings on its exosome technology platform.

Trident Royalties PLC (LON:TRR) is to acquire a 60% stake in a royalty stream from the Thacker Pass project.

Frontier IP Group PLC (LON:FIPP) said its portfolio company Fieldwork Robotics has raised £675,000 through an equity fundraising from existing and new investors to accelerate the development of its soft fruit and vegetable harvesting robots.

Falcon Oil & Gas Ltd (LON:FOG, CVE:FO) has provided details of what’s described as an exciting work programme for the remainder of 2021 at the Beetaloo basin project.

AEX Gold Inc (LON:AEXG) told investors that “significant progress is underway” as it continues to review the Nalunaq mine project’s development plan.

Metal Tiger PLC (LON:MTR) said it has signed an investment agreement with Armada Exploration Limited, a Mauritian holding company which owns 100% of Armada Exploration.

SDX Energy PLC (LON:SDX) released financial results for the 12 months ended December 31 2020. “I am extremely pleased to announce a set of results featuring record production, a strong balance sheet and successful drilling results,” said chief executive Mark Reid.

XLMedia PLC (LON:XLM) confirmed £24mln of new funds have been raised from its share placing. In a statement after Thursday’s close, the company noted that it had sought a minimum of £20mln and the share sale was significantly oversubscribed.

Medica Group PLC (LON:MGP) said Junaid Bajwa, the chief medical scientist at Microsoft Research, will be joining the company as a non-executive director (NED) and chair of its clinical and risk committee from April 1.

PCF Group PLC (LON:PCF) has appointed Caroline Richardson as its new chief financial officer, bringing more than 25 years' experience in finance and banking, including at Deutsche Bank and Cooperative Bank.

With requisite regulatory checks completed, Iconic Labs PLC (LSE:ICON) said Brendan O'Mahony, Willem van der Meer and David Štybr will be immediately appointed to the board as non-executive directors.

BATM Advanced Communications Ltd (LON:BVC) shares rose on Friday after the company said it has completed the sale of its software subsidiary NGSoft to Aztek Technologies following approval from the Israel Competition Authority.

Supply@ME Capital PLC (LON:SYME) confirmed details about its acquisition of a leading fintech-powered commodities trade enabler, focused on SMEs. The company confirmed that heads of terms have been signed with TradeFlow Capital Management Pte Ltd for the deal.

Powerhouse Energy Group PLC (LON:PHE) said 141.9mln of its shares issued to the vendors of Waste2Tricity (W2T) have been placed to institutional and high-net worth investors.

Alien Metals Ltd (LSE AIM:UFO) will be attending the Swiss Mining Institute conference online from 22-24 March 2021. Bill Brodie Good, CEO & technical director, said: "Alien's attendance at the Swiss Mining Institute conference will be an excellent opportunity for us to engage directly with key stakeholders and investors in the country. We look forward to presenting and meeting other attendees from the mining community to   showcase our exciting projects and to discuss opportunities for Alien in line with our strategy."

Seeing Machines Ltd (LON:SEE) chief executive Paul McGlone and chief financial officer Naomi Rule will provide a live presentation relating to the company's first-half results via the Investor Meet Company platform on 31 Mar 2021 at 8am. The presentation is open to all existing and potential shareholders, with questions able to be submitted pre-event or during the presentation.

MGC Pharmaceuticals Ltd (ASX:MXC, LON:MXC) notified investors that it will be hosting the general meeting webinar on Wednesday 31 March 2021 at 4pm Australian Western Standard Time (9pm BST). 

6.40am: FTSE 100 to open lower as rising bond yields worry investors

UK stocks are set to follow the lead of US markets and open on the back foot.

As ING put it, “that didn’t take long! One day and markets are already selling tech stocks again, the dollar is rallying against the EUR, 10Y UST [10-year treasury] yields push above 1.70%, gold and bitcoin are both selling off.”

Spread betting quotes suggest the FTSE 100 will open 66 points lower at around 6,714.

Nervousness over rising bond yields it the S&P 500 in the US yesterday, with the index tumbling 59 points to 3,915 as investors dumped technology stocks.

The Dow Jones industrial average, as its quaint old-fashioned name suggests, is less exposed to glamorous tech stocks and only fell 153 points to 32,862.

Asian markets this morning are in retreat. In Japan, the Nikkei 225 is down 458 points at 29,759 while in Hong Kong the Hang Seng is 556 points weaker at 28,850.

In London, 7.00am will see the release of the public sector net borrowing requirement, which is predicted to jump from £8.75 billion in January to £21 billion in February.

“Governments around the world are borrowing eye-watering amounts to keep their respective economies afloat as the lockdowns have stifled growth and the UK is no different. Earlier this month, Rishi Sunak, Britain’s Chancellor of the Exchequer, revealed various schemes to provide much-needed assistance to the economy, so the national debt is on track to keep on increasing in the months ahead. Debt levels make interesting headlines but in reality, the sums involved are unlikely to impact the pound. Bond yields have been in focus lately and should the yield on the 10-year gilt top 1%, that could attract negative attention for sterling,” said David Madden at CMC Markets.

Currently, the yield on the 10-year gilt is 0.877%, up 4.36 basis points (there are 100 basis points to a percentage point).

Madden’s colleague at CMC, Michael Hewson, has previewed this morning’s other main event which is the release of half-year results from pubs group JD Wetherspoon PLC (LON:JDW).

“In its last trading update, the pub chain saw like for like sales fall by 27.6%. Over the past few weeks, the share price has seen an uplift on the basis that we’ll see pubs reopen sometime during the second quarter of this year; however, as far as Wetherspoons own Q2 is concerned it’s really a matter of minimising cash burn, with 99% of its employees currently on furlough, and the costs of non-furloughed employees estimated to be at £800mln per week,” Hewson said.

“With other general costs including maintenance set at around £1.4mln per week, the unlock can’t come soon enough so that the likes of Wetherspoon and other hospitality firms can make the most of the extension of the VAT tax cuts that were announced in the budget. Currently, the shares are up over 60% from their September lows,” Hewson said.

Around the markets

  • Sterling: US$1.3907, down 0.21 cents
  • 10-year gilt: 0.877%, up 4.36 bps
  • Gold: US$1,374.10 an ounce, up US$1.60
  • Brent crude: US$63.08 a barrel, down 20 cents
  • Bitcoin: US$58,076, up US$523

6.50am: Early Markets - Asia / Australia

Stocks in the Asia-Pacific region were lower on Wednesday as investor sentiment turned cautious on the back of an expected rise in inflation.

The Hang Seng index in Hong Kong fell 2.11% while the Shanghai Composite in China dipped 1.75%.

In Japan, the Nikkei 225 slipped 1.41% and South Korea’s Kospi declined 0.89%.

Shares in Australia fell, with the S&P/ASX 200 closing 0.56% lower.


Proactive Australia news:

Pharmaxis Ltd’s (ASX:PXS) (OTCMKTS:PXSLY) (FRA:UUD) exclusive US distributor, Chiesi USA Inc, has launched Bronchitol®  (mannitol), an add‐on maintenance therapy to improve pulmonary function in cystic fibrosis (CF)  patients aged 18 years and older in the US.

Venture Minerals Ltd (ASX:VMS) (OTCMKTS:VTMLF) has started installing structural, mechanical, piping and electrical aspects of the Wet Screening Plant at Riley Iron Ore Mine in northwest Tasmania with Crisp Bros & Haywards doing the first of the structural steel framework.

Musgrave Minerals Ltd (ASX:MGV) (OTCMKTS:MGVMF) (FRA:6MU) is higher after receiving further high-grade reverse circulation (RC) gold assay results from the new White Heat prospect, 300 metres south of Break of Day on its 100%-owned ground at its flagship Cue Gold Project in WA’s Murchison district.

Kin Mining NL (ASX:KIN) (FRA:8KM) has received further strong gold results from recent infill reverse circulation (RC) drilling which confirm the quality and potential of the Bruno-Lewis deposit at the company’s Cardinia Gold Project (CGP) in Western Australia.

Triangle Energy (Global) Ltd (ASX:TEG) is aggressively pursuing a three-pronged approach to exploration for 2021 and beyond across its producing Cliff Head Project, Mount Horner Project and new offshore licence WA-481-P all within the Perth Basin.

Comet Resources Limited (ASX:CRL) has entered into a Binding Option Agreement with Bath Resources Pty Ltd to acquire a portfolio of highly prospective copper-gold-zinc-silver-lead assets in the Northern Territory.

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