- FTSE 100 closes 9 points higher
- US blue-chips weak but off worst
- Energy stocks weak with crude prices
5.00pm: Small gains impress
The FTSE 100 index managed some modest gains on Monday helped by some M&A chatter, a fairly impressive achievement when weakness in oil majors was taken into account as well as early weakness by US blue-chips.
At the close, the UK blue-chip index was 9.35 points, or 0.1% higher at 7,132.30, only just below the day’s peak of 7,138.805 and well above the session low of 7,089.74
On Wall Street, around London’s close, the Dow Jones Industrials Average was down 66 points, or 0.2% at 35,132, albeit off early lows, while the broader S&P 500 slipped 0.1%, but the tech-laden Nasdaq Composite added 0.2%.
Chris Beauchamp, chief market analyst at IG, a global leader in online trading commented: “Markets are firmly into the dog days of August, as the limited range of today’s moves testifies. It is hardly surprising, with much of earnings season out of the way, and with US markets sitting on a very strong run higher over the past six months.
“Non-farm payrolls are out of the way too, and so we now find ourselves deep in the quiet period until the Jackson Hole meeting at the end of the month. While precious metals prices have rebounded today, oil remains under pressure, but while there might well be some Delta variant fears driving the move, the fact that equities have remained broadly calm points towards an odd disconnect; either equities are blithely ignoring a major worry, or oil prices are undergoing a self-contained selloff that is being driven chiefly by supply concerns.”
Beauchamp concluded: "Ultimately indices continue to lack direction, a state of affairs that may well prevail for the rest of the month, as August lives up to its reputation as a rather dull month for equities.”
3.15pm: Weak start on Wall Street
US equities have opened lower on balance.
The Dow Jones industrial average was down 84 points (0.2%) at 35,125 while the S&P 500 was 5 points (0.1%) weaker at 4,431.
In London, the FTSE 100 is just 9 points lower and back above 7.100 at 7,114.
The FTSE 250 is practically unchanged, helped by keen demand for outsourcing group Capita PLC (LSE:CPI) and shipping services provider Clarkson PLC.
Capita is up 2.6% at 42.64p on further reflection on Friday’s results while Clarkson is 5.7% firmer at 3,450p after releasing interims today.
In broker action, Lloyds Banking Group PLC (LSE:LLOY) is off the pace, down 0.4% at 46.4p after Goldman Sachs (NYSE:GS) downgraded the stock to ‘sell’ from ‘neutral’, although the target price remains unchanged at 45p.
1.45pm: Oil takes a shellacking
It has not been a good day for commodity prices, especially gold.
While gold is down by about 1% and silver 1.7%, the oil price has taken a right shellacking with Brent crude for October delivery US$2.65 lower at US$68.05 a barrel.
“Commodities more sensitive to the economy such as copper and crude oil, remained near session lows,” said Fawad Razaqzada at Thinkmarkets.com.
“These commodities have been hurt by growing concerns over the Delta variant of the coronavirus. Rising cases and more lockdowns have had a direct impact on travel and thus oil demand recovery. With the OPEC+ raising oil output gradually, the potential for slower recovery of demand, specifically fuel demand, has eased concerns about a tight market. Meanwhile, it is worth keeping a close eye on US oil inventories, with Florida and Texas being the epicentres of the outbreak. If US oil inventories start to build again, this will surely weigh on oil prices further,” he suggested.
Commodity prices over the last year...
Natural Gas: +92%
Gasoline: +84%
Corn: +72%
Heating Oil: +67%
WTI Crude: +63%
Brent Crude +58%
Soybeans: +52%
Copper: +49%
Coffee: +49%
Sugar: +44%
Wheat: +43%
Cotton: +40%
Palladium: +16%
Lumber: -4%
Silver: -14%
Gold: -15%
— Charlie Bilello (@charliebilello) August 6, 2021
SP Angel, the boutique broker focused on the resources sector, says new restrictions in China, the world's second-largest oil consumer, continue to weigh on the outlook for demand growth. The restrictions have been introduced to limit the spread of the Delata variant of the coronavirus.
“The restrictions include flight cancellations, warnings by 46 cities against travel, and limits on public transport and taxi services in 144 of the worst-hit areas,” SP Angel said.
China reported 125 new COVID-19 cases today, up from 96 on Sunday.
The weakness of the oil price seems to be having a knock-on effect on the share price of BP PLC (LSE:BP.), which is down 1.3% at 303.45p, and Royal Dutch Shell (NYSE:RDS.A) PLC, which is 1.3% lower at 1,448.6p.
Despite the heavily-weighted oil stocks toiling, the FTSE 100 has almost wiped out the morning's losses and is down 7 points (0.1%) at 7,116.
12.40pm: US stocks to open lower
US stocks are expected to open slightly lower on Monday, edging back from last week's record highs as a drop in commodity prices indicated some investor unease about the strength of the economic recovery in spite of Friday's stronger than forecast July non-farm payrolls.
Futures for the Dow Jones Industrial Average ticked 0.2% lower, while futures for the broader S&P 500 index also shed 0.2%, and Nasdaq-100 futures were relatively flat.
Benchmark Brent crude oil prices dropped nearly 4% on a UN climate change warning as China introduced new virus clampdown measures.
Meanwhile, gold and silver prices briefly fell before recovering most of the lost ground amid rising bond yields and strength in the dollar folllowing the latest jobs report which is expected to lead to a tapering by the Federal Reserve sooner rather than later.
Investors also have the ongoing earnings season to keep an eye on, with Tyson Foods (NYSE:TSN) and vaccine developer BioNTech scheduled to report ahead of the New York opening bell, while AMC Entertainment is expected to post earnings after the markets close. Household names such as Walt Disney and Airbnb (NASDAQ:ABNB) are also scheduled to report later this week.
A JOLTS report on job openings in June will also be eyed for more information on the labour market.
In London, either my screen has frozen or the FTSE 100 is stuck in concrete.
Following a quick screen refresh, it appears the Footsie has moved in the last hour; it’s a bit lower, at 7,090, down 33 points (0.5%).
11.10am: Takeover activity enlivens dull proceedings
It has been a dull start to the week in London but there has been plenty of takeover activity – real, imagined or threatened – to spice up proceedings.
As well as the previously mentioned interest in SSE and Entain (see earlier reports) we’ve had US fags maker Philip Morris International increasing its bid for Vectura Group PLC (AIM:VEC), the respiratory drugs group, and topping the offer from private equity group Carlyle Group that had been backed by the Vectura board.
It’s slightly odd to see a tobacco group make a bid for a company whose stated aim is to improve the health of humans but Philip Morris, whose best-known brand is Marlboro, has upped its offer to 165p a share from 150p, valuing Vectura at £1.02bn.
Carlyle’s rival offer was pitched at 155p a share, itself an increase on an initial offer of 130p a share that the Vectura board was happy enough to accept back in May in what now looks like a colossal misjudgement.
Another bidding war is revving up over Morrison (Wm) Supermarkets PLC, where US private equity giant Fortress increased its agreed bid to 272p from its previously agreed bid of 254p.
The Takeover Panel has given Clayton, Dubilier & Rice (CD&R) more time to decide whether it wants to make a rival offer. The “put up or shut up” deadline for CD&R was today but has now been extended to 20 August.
Halma PLC (LSE:HLMA), the safety controls engineer, was off 0.2% at 2,893p after it announced it had recently completed three acquisitions for £48.8mln and sold Texeco for £65mln.
Lastly, Deliveroo PLC (LSE:ROO), the fast-food delivery outfit whose initial public offering earlier this year flopped spectacularly, was up 8.6% this morning after rival German rival Delivery Hero (ETR:DHER, OTCQX:DLVHF) revealed it had a 5.09% stake in the company.
Prosus stake in Delivery Hero (ETR:DHER, OTCQX:DLVHF) is so meta. One HoldCo owning a stake in another emerging HoldCo in food vertical. https://t.co/ZzBzFFWcst
— Chirag Modi (@modic123) August 9, 2021
The FTSE 100 was down 20 points (0.3%) at 7,103.
9.50am: A bit of excitement in the dowdy utilities sector
The Footsie’s sluggish start to the week has continued; when the top three blue-chips risers are utilities, you know it is a “risk-off” day.
London’s index of heavyweight shares was down 21 points (0.3%) at 7,102, with investment platform operator Hargreaves Lansdown PLC (LSE:HL.), down 9.9% at 1,478p, leading the retreat after its full-year results disappointed.
The group’s chief executive officer, Chris Hill, bragged about a record 223,000 (net) new clients in the year but operating costs, which had been expected to rise in line with the growth in the client base, increased by 24%, whereas client numbers were up by 17%.
Ahead of results this week, Entain PLC (LSE:ENT), the owner of the Ladbrokes and Coral brands, is off 1.6% at 1,898.5p, giving back some of the recent gains seen following rumours that MGM is kicking the tyres again and thinking of making a bid for the company.
Going the other way were SSE PLC (LSE:SSE), Severn Trent (LSE:SVT) PLC and United Utilities PLC, all fine companies, no doubt but as dull as ditchwater.
SSE, up 3.4%, was the best performer of the three AS activist investor Elliott Group was reported to have built a large stake in the energy firm.
READ SSE eyed as possible takeover target as activist builds stake - report
Severn was up 1.2% and UU up 1.0% in sympathy.
Among the midcaps, recruitment firm PageGroup (LSE:PAGE) PLC was 4.5% lower at 2,047.29p[ after its interims failed to make the grade.
Much better H1 at PageGroup (LSE:PAGE) but still below 2019. Since shares are back above 2019 levels I can't see they are worth buying at the moment, and I'm a shareholder!
— Rodney Hobson (@RodneyHobson) August 9, 2021
“Generally recruitment companies offer decent insight into the health of the economy as companies look to hire when times are good. So the reinstatement of the first half dividend at PageGroup (LSE:PAGE) and a big recovery in revenue and profit reinforces the idea there was a material global rebound in the first six months of 2021,” said AJ Bell’s investment director, Russ Mould.
Somehow, I feel there is a “but” coming ...
“The bad news is PageGroup (LSE:PAGE) isn’t sounding quite as upbeat about the remainder of the year as the emergence of new Covid variants sees restrictions remain in place in several of its markets.
“It is also possible to note a degree of uncertainty about whether recent growth is a short-term effect driven by pent up demand or something more sustainable,” Mould said.
8.20am: Lacklustre start
As expected, the FTSE 100 opened the first trading session of the new week in negative territory, taking its cue from Asia’s main markets.
The dip into the red was marginal and sustained by thin trading volumes.
The miners were on offer early on after some fairly anaemic Chinese trade data over the weekend.
The decline in gold to levels last seen in May appeared to have little impact on the sector, while crude oil’s fall had a marginal effect on BP (LON:BP).
On the face of it results from the funds supermarket group Hargreaves Lansdown (LON:HL.) appeared robust. The market, however, was unimpressed with the shares marked down 7.1% in the opening exchanges.
6.50 am: Subdued start predicted
The FTSE 100 looks set to make a subdued start to proceedings, taking a cue from Asia’s main markets (well, those of them open).
With Japan and Singapore closed, trading volumes were a little thin in the region as traders took stock of Friday’s better than expected jobs print and some lacklustre Chinese trade data out over the weekend.
Eye-catching was the tumble in the price of gold to five-month lows.
More difficult to fathom was the reason with the most widely cited cause the breach of a technical support level for the precious metal.
“With liquidity at zero to non-existent this morning, it is clear that when gold moved through $1,750 an ounce, it set off a cascading negative feedback loop of stop-loss selling into a market with no bids,” said Jeffrey Halley, analyst at OANDA.
The decline in crude oil prices was easier to fathom – fears that that spread of the Covid delta variant may put the kibosh on travel appears to have been the trigger for the 1.9% drop.
Looking ahead, the corporate calendar for the week looks like a busy one with updates from Deliveroo (LON:ROO), a flurry of insurers, bookmakers, travel firm TUI (LON:TUI) and InterContinental Hotels (LON:IHG) scheduled for the week ahead.
Around the markets
- Pound US$1.3869 (-0.02%)
- Bitcoin US$43,637.38 (-1.66%)
- Gold US$1,740.50 (-1.22%)
- Brent crude US$69.39 (-1.85%)
6.50am: Early Markets - Asia / Australia
Stocks in the Asia-Pacific region were mostly higher on Monday as Australia reported 280 new COVID-19 cases on Sunday, with most of them in the populous state of New South Wales.
About 15 million people, or 60% of Australia’s population, are under a strict lockdown.
The Shanghai Composite in China gained 1.07% and Hong Kong’s Hang Seng index rose 0.63%
In Japan, the Nikkei 225 lifted 0.33% while South Korea’s Kospi dipped 0.15%.
Shares in Australia rose, with the S&P/ASX 200 trading 0.07% higher.