- FTSE 100 index climbs 21 points higher
- UK CPI inflation rises 1.1% in July
- Record highs for Wall Street indexes, but mixed start
- IAG is top riser
3pm: New record highs on Wall Street
US stocks ticked off new intra-day highs in early trading on Wednesday, with the news from its brash cousins even injecting some life into the sheepish London markets.
The S&P 500, led by a surge from retailer Target (NYSE:TGT) after posting strong sales figures, and Nasdaq Composite both stretched their legs in initial trades, adding very slight gains to their all-time records before the latter stumbled lower.
The Dow Jones meanwhile added 108 points or 0.4% to 27,886.
Later the focus will move to minutes from the Feds last meeting are likely to be closely scrutinised later as traders look for clues as to how monetary policy will shift in next months get-together.
Strategists at investment bank ING said the markets driving narrative of aggressive central banks easing “will be challenged” in the minutes.
“Any clues from the July minutes as to its likelihood and any insights on what it would take for the Fed to initiate yield curve control could see dollar losses extend,” they said.
Another intra-day high for the S&P 500 pic.twitter.com/jcixI2Qxer
— RANsquawk (@RANsquawk) August 19, 2020
The FTSE, meanwhile, showed off with its highest point of the session, playing kiss-and-run with 6,100 before dropping back timorously again.
1.50pm: Mid-caps moving lower
The Footsie is sleepwalking sideways at the moment, even though the pound has dropped back to provide some support.
Sterling is down 0.2% to US$1.3203 and the FTSE 100 is up 14 points at just over 6,090.
Over in the US, data shows the mortgage market contracted last week as there was a drop in the number of households refinancing loans, though mortgages for new purchases picked up.
Slightly more is going on in the mid-caps, where a 10% fall from Hochschild Mining (LON:HOC) is leading the FTSE 250 lower.
National Express (LON:NEX) is the second biggest faller after a bearish note from broker RBC, also touching on fellow travel operator Stagecoach (LON:SGC) reflecting the difficulties currently faced by bus operators (read more here).
Capita (LON:CPI) is the top riser on the back of reports that a buyers are circling for its education focused business.
12.40pm: US stocks set for further highs
Shares in London are picking up their feet slightly, perhaps enjoying some of the good vibes from across the pond as Wall Street eyes new stock market highs.
Futures markets are pointing to the S&P 500 pushing on further from its record high yesterday, with the Dow Jones and Nasdaq also expected to start on the front foot.
“With the S&P 500 reaching record highs to mark the fastest recovery in history, there is a feeling that it is wholly reliant upon a continued barrage of stimulus to keep the gravy train going,” said market analyst Joshua Mahony at IG.
“With the FOMC minutes released today, there is a feeling that the Fed are temporarily giving the stage to the government for the time being. However, markets will be watching intently as the Fed seeks to establish exactly what their next move will be.”
Sentiment has also been boosted by Democrat speaker Nancy Pelosi saying she is willing to agree a smaller corona-stimulus proposal in the short-term, leaving another chunk for after the election.
Back in Blighty, the FTSE 100 has broken free of its early shackles, though is still only up 16 points or 0.3% at 6,093.
Meanwhile, the more UK-focused mid-caps are down 43 points or 0.25% at 17,580.
11.40am: Covid testing proposals fail to lift travel stocks
The FTSE 100 is trying but failing to move higher, regularly slumping back to the flat-line despite some potentially good news for travel stocks.
With holidaymakers, airlines and tour operators having been hit by Britains imposition of a two-week coronavirus quarantine rule on people coming from countries such as Spain and France, health minister Matt Hancock said the government was continuing to work with Heathrow airport on a testing plan.
Heathrow said today that it now has one of two testing areas ready to be used if the restrictions are changed to allow arriving passengers to be tested for COVID-19 on arrival, with a second test a few days days to reduce the quarantine time.
Earlier this week, bosses from IAGs British Airways, easyJet (LON:EZJ) and Ryanair (LON:RYA) sent a letter to the transport minister calling for a UK airport testing model similar to Germanys, saying it “would stimulate significant demand whilst protecting public health”.
The FTSE is up 8 points at 6,085, with IAG the top riser and other airlines modestly higher.
10.30am: Shares creeping higher
Londons blue chips are shuffling gradually higher, joining European peers in the green.
The FTSE 100 has now gained almost seven points so far today to 6,083.
No help is being provided by the housing sector stocks, however, with the likes of Rightmove (LON:RMV), Persimmon (LON:PSN) and Taylor Wimpey (LON:TW. all in the red after an update of official house price data from the Land Registry and the Office for National Statistics.
House prices in England fell by 0.3% from March to April, according to official data, but were up 2.6% year on year, compared to 3.5% a month earlier.
The ONS noted that the data reflects sales agreements that occurred before the government measures to reduce the spread of coronavirus took hold.
The figures are the first to be published by the government after it scrapped the index during the pandemic due to a lack of transactions meaning the data wasnt reliable enough to be used, said analyst Laura Suter at AJ Bell.
As only 40% of the usual number of transactions went through in April, so the latest data should be treated with caution, added economists at Pantheon Macroeconomics.
Since April things have been very different, said Jonathan Hopper, CEO of Garrington Property Finders.
“Many estate agents have been busy ever since they were allowed to reopen after lockdown. A steady stream of buyers is showing interest, and even competing on price in the most desirable areas.”
Indeed, ,ore recent data from Rightmove showed a pick-up in yearly growth of asking prices to 4.6% in August, the highest rate since September 2016.
Suter added: “Initial evidence shows the stamp duty holiday has caused a surge in property prices in the UK since being introduced in July, with the potential £15,000 saving pushing people to move house and offer more for the place theyre buying.
“However, there can be no doubt that the tax cut will create a bubble in property prices as people rush to move house and seal the deal before the stamp duty holiday comes to an end in March next year.
“This spike in demand will cause a rise in prices before transaction numbers fall off a cliff in April next year once the tax saving is whipped away. At the same time the UK will be facing a rise in unemployment and the repercussions of one of the worst recessions on record, which paints a fairly bleak picture for house prices in 2021.”
Yesterday, analysts said the strong gains seen for the likes of Rightmove were thanks to discounts and government freebies “papering over the cracks”, with both cyclical and structural headwinds destined to “resurface sooner rather than later”.
9.30am: Footsie back to flat
The Footsie has regained its equilibrium after being knocked by unexpected inflation numbers and rallying pound.
Retailers and packaging companies are lifting the index, which is just above flat at 6,077.43.
Morrisons (LON:MRW) is high up the leaderboard on the news that the supermarkets customers can now buy their groceries via Amazon, with products picked directly from the Bradford-based groups stores.
Meanwhile, sterling this morning topped 1.3267 versus the US dollar, its highest level since the start of the year, and the currency is at a pivotal point, according to analysts.
“The move clears important technical resistance of the long-term downtrend and opens a path back to 1.35, last years peak,” said Neil Wilson at Markets.com, going on to mention a golden cross charting pattern that gives a bullish reinforcement of the rally.
The higher-than-anticipated CPI inflation reading this morning has not been able to lift the pound, although Wilson said it ought to help quell immediate speculation the Bank of England will resort to negative rates.
“Meanwhile the pound remains exposed to significant headline risks this week. Brexit talks have not gotten off to the best start as the EU rejected British proposals for truckers access to the continent,” he added.
“I would anticipate that the longer this drags the more we see pressure come back on GBP.”
8.30am: Data spooks Footsie
The FTSE 100 defied predictions for a positive start to proceedings on Wednesday with the market a little taken aback by a stronger than expected rise in UK consumer price inflation.
The UK blue-chip stocks index fell 17 points to 6,060.03 at the open.
The cost of living jumped by 1.1% in July, driven by a rise in culture and recreation costs. A poll ahead of the data release suggested the figure would be 0.7%.
“While inflation appears to be creeping higher after a fall in the early months of lockdown, price rises remain way off the Banks 2% target and likely to stay this way some time even in the face of significant government stimulus,” said Ed Monk of Fidelity International.
“With the UK now in a recession, Augusts figures may be more telling of long-term inflationary moves and the Bank of England has forecast another dip in the rate.
“Looking forward, there is the possibility of negative inflation, or record lows, as VAT cuts and Rishis eat out to help out scheme distorts actual consumer spending levels.
“On the other hand, the governments increased budget deficit could lay the foundations for increasing inflation in the coming months. A potentially worrying sign with consumer confidence still struggling and wage growth negative,” Monk added.
Topping the Footsies list of losers at the open with a 1.4% fall was BHP (LON:BHP) with pressure on the stock continuing in the wake of Tuesdays prelims. Renaissance Capital moved its recommendation on shares in the miner to hold from buy.
On the flip side, there was some respite for British Airways owner IAG (LON:IAG), which was up 2.2%. Whitbread (LON:WTB), another pandemic lockdown-affected stock, was also in demand early on as it rose 1.8%.
Primark owner Associated British Foods (LON:ABF), however, was up 2.1% benefiting from an upgrade to outperform by RBC.
Proactive news headlines:
Verona Pharma PLC (LON:VRP) said it has initiated the second part of a phase II trial designed to assess the potential of its lead drug ensifentrine used in a pressurised metered-dose inhaler (pMDI). Results from the multi-dose assessment are expected in the first half of 2021. Thirty people with moderate to severe chronic obstructive pulmonary disease who took part in the first part of the trial will participate in this second stage.
World High Life PLC (AQSE:LIFE) (OTCQB:WRHLF) told investors it has seen sales growth of 57% in the month of July, compared to June. The owner of London-based CBD brand, Love Hemp, said sales improved in all channels – online, retail, and wholesale – and it highlighted that online sales specifically are significantly higher than pre-coronavirus (COVID-19) pandemic levels. The online channel represented up some 62% of sales in July, versus around 40% in January.
IronRidge Resources Limited (LON:IRR) has highlighted more high-grade intersections in additional results received from a second phase drilling programme at its Zaranou gold project in Côte d'Ivoire. The AIM-listed firm said it has received “additional high-grade and broad low-grade” results from drilling at the Ehuasso main target, while composite results received for reverse circulation (RC) drilling at the target confirmed continuity of mineralisation within the spaced drill grid. IronRidge said the second phase drilling programme has now been completed, while assays are currently pending for the remaining RC drill holes at the Ehuasso target as well as reconnaissance air core drilling at the Ebilassokro target.
Live Company Group PLC (LON:LVCG) has signed a new contract with its partner Brick Live Lab Limited in Korea for an Animal Paradise Mini event. The owner of the BRICKLIVE event brand said the deal has been completed on a joint venture basis as part of a longer-term initiative, with models included in the contract to stay in Korea to build up the business further going forward.
OKYO Pharma Limited (LON:OKYO) said Dr Napoleone Ferrara, an award-winning scientist who helped invent two blockbuster drugs, has joined its scientific advisory board. Ferrara, currently a professor at the University of California San Diego Medical Center, made pivotal contributions to the discovery of cancer drug Avastin and Lucentis, for an eye condition called macular degeneration. Last year the two products netted sales of more than US$9bn worldwide.
Europa Metals Ltd (LON:EUZ) has raised £2mln via a share placing to fund the completion of key components of a pre-feasibility study for the Toral lead-zinc-silver project. Toral, located in the Castilla y León region of northern Spain, is the companys flagship asset and represents an opportunity to deliver a robust European mining operation. The share placing sees some 15.68mln new shares issued at a price of 12.75p each, with 15.52mln of the shares being sold to existing and new investors by broker Turner Pope Investments and 156,862 shares taken up by the companys directors.
Alpha Growth PLC (LON: ALGW), the US-focused life policy investor, is raising £500,000 to fund the development of its strategy. Shares equivalent to 17.4% of the capital prior to the issue were placed at 1.4p, a 17.6% discount to last nights close. Pello Capital handled the placing and has been appointed as Alpha Growths broker.
Adamas Finance Asia Limited (LON:ADAM), the London quoted pan-Asian diversified investment vehicle focused on providing shareholders with attractive uncorrelated, risk-adjusted long-term returns, has announced the appointment of John Batchelor as a non-executive director of the company with effect from August 14, 2020. Batchelor is Co-Lead of Asia and Head of the Corporate Finance & Restructuring segment in Asia at FTI Consulting and is based in Hong Kong. He has more than 18 years of experience in restructuring, corporate recovery and transaction advisory. ADAM's chairman, John Croft, commented: "On behalf of the Board, we are delighted to welcome John Batchelor. John is representing ADAM's largest shareholder on the board which shows a greater engagement with our shareholders. He has extensive experience across the APAC region working with premier financial services companies."
Emmerson PLC (LON:EML), the Moroccan focused potash development company, announced that it has appointed Shore Capital to act as corporate broker to the company with immediate effect. Graham Clarke, CEO of Emmerson, commented: "We are delighted with the appointment of Shore Capital during this pivotal time in the Company's development. The experience and track record of Shore Capital will assist us in taking the project forward and ultimately realise its exceptional potential. We look forward to working with the team from Shore Capital to deliver the best value for all stakeholders."
Gfinity PLC (LON:GFIN), a leading esports and gaming solutions provider, announced that it has received a warrant exercise notice in respect of 8,000,000 new ordinary shares of 0.1 pence each in the capital of the company with an exercise price of 1p each, providing the company with proceeds of £80,000.
Power Metal Resources PLC (LON:POW) the AIM-listed metals exploration and development company announced that it has received a notice to exercise warrants over 1,600,000 new ordinary shares in the company. The warrant shares are being issued at 1.0p per share and subscription monies of £16,000 have been received by Power Metal in respect of the exercise.
Premier African Minerals Limited LON:PREM) has announced that investors D-Beta One EQ, Ltd, YA II PN, Ltd and Riverfort Global Opportunities PCC Limited elected on August 17, 2020, to convert a further US$50,000 of their investment plus accrued interest of US$312.33, amounting to US$50,312.33 (£38,388.31) in aggregate, in accordance with the terms of the Investment Agreement as announced on May 7, 2020, into new ordinary shares in the company. The group has therefore issued 62,450,479 new ordinary shares to the Investors at an issue price of 0.0614p each, the issue price being 9% of the lowest daily volume-weighted average price during the five days trading days immediately prior to the repayment.