- FTSE 100 index closes 90 points down
- Wall Street stocks lower
- Miners out of favour but travel-stocks rally
5pm: Footsie closes 1.5% lower
FTSE 100 index closed lower on Thursday as the tech sell-off across the Pond spooked traders.
Britain's blue-chip benchmark closed the day down around 90 points, or 1.52%, at 5,850, while the mid-cap FTSE 250 plunged over 223 points at 17,480.
On Wall Street, all three major benchmarks fell despite better than expected jobless claims data in the US for the week to August 29, which showed 881,000 Americans filed for unemployment benefits, against estimates of 940,000.
"To an extent today's sharp slump in tech stocks appears to be a case of shifting assets, with better-than-expected jobs data and rising expectations of a Trump election win boosting the case for investment in those stocks heavily hit throughout this crisis," said Joshua Mahony, senior market analyst at online trader IG.
"With continuing claims below 14 million for the first time since April, and initial claims at a five-month low, there is plenty of optimism as we head towards tomorrows jobs report. Nonetheless, not all good news is good for markets, with some fearing how improved economic data could restrict the size of any future stimulus packages."
US and Canada 11am EST/4pm
Wall Street got off to a weak start on Thursday as tech giants led markets lower.
The Dow Jones Industrial Average shed over 343 points at 28,756. The broader-based S&P 500 index lost over 71 at 3,509. The tech heavy Nasdaq exchange lost over 435 points at 11,620.
3.30pm: Gains ebbing away
After US indices opened lower, Londons FTSE 100 is in danger of relinquishing the mornings hard-won gains.
The index of leading shares was up just 22 points (0.4%) at 5,963, with some of the backsliding attributable to sterling regaining some of its poise against the greenback; the pound, down a cent against the US currency earlier today, is now down a mere two-thirds of a cent at US$1.3289.
In contrast, travel-related stocks found favour after more than 70 airport businesses based at Heathrow brought a group action against the UK tax authorities, in the hope of securing reductions in business rates.
There definitely seems to be a concerted effort by the industry to get on the governments case with industry figures calling on the countrys leaders to pull their fingers out and get coronavirus testing sorted out at Britains airports.
Meanwhile, a trading update from Dart Group PLC (LON:DTG), the company behind the Jet2 brand, sent the shares 5.2% higher at 713p. The company said summer 2021 is expected to see a higher level of seat capacity, closer to 2019 levels.
Flying during COVID, hot takes – airlines, in particularly @easyJet dont care about social distancing. The planes are full to the brim and they only perform lip service to it when disembarking. Its a free for all when boarding. Nothing staggered about it at all. 1/
— Lucas Jones (@lucasjones) September 2, 2020
2.45pm: Negative start for Wall Street
Despite expectations of a mixed open, the main Wall Street indices slipped into negative territory in the early minutes of Thursdays session despite a better than expected jobless claims report.
Shortly after the opening bell, the Dow Jones Industrial Average was down 0.15% at 29,056 while the S&P 500 fell 0.5% to 3,562 and the Nasdaq dropped 1.48% to 11,878.
The tech-heavy Nasdaq had been predicted to open in the green earlier today, however investors seemed content to engage in profit-taking following a seemingly endless march higher form the main indices.
The Nasdaqs performance may have been affected by Facebook Inc (NASDAQ:FB), which sank 2.77% to US$294.11 in early deals after the social media giant said it will ban new political ads in the week leading up to the presidential election on November 3 in an effort to reign in misinformation on its platform.
Market sentiment also remained unmoved by jobless claims data for the week ended August 29, which showed 881,000 Americans filed for unemployment benefits during the period, down from just over 1 million in the previous week and below estimates of around 940,000.
Back in London, the FTSE 100 had lost a little steam and was 19 points higher at 5,960 at 2.45pm.
12.15pm: Footsie resumes assault on 6,000 but US stocks look set for a pause for breath
The charge towards 6,000 is back on!
The FTSE 100 bucked its ideas up in the latter part of the morning, advancing to 5,991, up 50 points (0.8%), helped by the strength of the dollar on foreign exchange markets.
Sterling is down by almost a cent against the greenback at US$1.3253, which is music to the ears of the finance directors of many FTSE 100 companies.
“The dollar doesn't know when it's beaten, with the greenback staging another recovery within days of hitting a fresh low. The dollar index is pushing 93 and has its eyes set on the late August highs around 93.50. This isn't good news for gold, which appeared to be finding its feet prior to the ISM PMI on Tuesday and its all been downhill from there,” noted OANDAs Craig Erlam.
Talking of the US, the word on the street is that leading US shares might take a pause for breath when trading starts this afternoon.
Not the NASDAQ Composite, obviously; thats like a helium balloon in a lift travelling upwards in the Empire State Building (400 yards a minute, reportedly) and is set to open at just under 12,300, up 44 points.
The dear old Dow is tipped to dip to 29,070, down 30 points from last nights close while the S&P 500 is seen opening its account 15 points lower at 3,566.
“On Wall Street, the record rally continues and appears unstoppable. It is not only tech stocks benefiting from the renewed risk appetite, but increasingly other sectors too, which is a healthy sign,” said Milan Cutkovic, a market analyst at AxiCorp.
Technically, it is impossible for an index to rally – i.e. recover from a setback – when it is at an all-time high, but we get what Cutkovic means.
“Recent economic data have raised hopes for a relatively swift recovery. While the pandemic keeps the uncertainty at a high level, investors are not overly worried about the increase in COVID-19 cases, as governments and central banks worldwide have taken decisive measures.
“Furthermore, the US Centers for Disease Control and Prevention told states to prepare for a coronavirus vaccine by November.,” Cutkovic continued.
“It is an aggressive goal but reiterates that the race to find an effective vaccine is making progress,” he concluded.
US traders have numerous macroeconomic releases to look forward to, including the non-manufacturing ISM (Institute for Supply Management) and final services purchasing managers index (PMI) for August, and Julys final trade data.
“Moreover, after yesterdays big downside surprise in the ADP employment index (428k), and ahead of tomorrows August payrolls report, this afternoon will bring Challenger job cuts figures and, in particular, weekly initial jobless claims numbers,” observed Daiwa Capital Markets.
10.30am: Jobs cull underway in the services sector as it prepares for props to be removed
The market has reacted negatively to the downward revision of the “flash” estimate of the August Services Purchasing Managers Index (PMI).
The FTSE 100 remains in positive territory, up 36 points (0.6%) at 5,977 but the assault on the 6,000 level looks off for the time being.
The August reading of the PMI was revised down to 58.8 from a “flash” estimate of 60.1 but this still represented the second month in a row that the PMI came in above the neutral level of 5.0.0.
“A further surge in service sector business activity in August adds to signs that the economy is enjoying a mini-boom as business re-opens after the lockdowns, but the concern is that the rebound will fade as quickly as it appeared,” said Chris Williamson, the chief business economist at IHS Markit, which compiles the survey.
"The current expansion is built on something of a false reality, with the economy temporarily supported by measures including the furlough and Eat Out to Help Out schemes. These props are being removed.
"The burning question is how the economy will cope as these supports are withdrawn. Worryingly, many companies are already preparing for tougher times ahead, notably via further fierce job cutting, the rate of which re-accelerated in the service sector in August to a pace exceeding that seen at the height of the global financial crisis,” he added.
Duncan Brock, the group director at the Chartered Institute of Procurement and Supply (CIPS), said businesses continued to be optimistic August even though obstacles to stronger growth lingered on.
"Export business remained subdued as overseas sales declined for the seventh month in a row, hampered by unsettled supply chains and continuing restrictions on logistics and travel. The distressing employment numbers also darkened the mood with a high number of job cuts this month. Government support was a blessing to many firms but as this comes to an end, many service providers are resorting to redundancy schemes under the weight of operating in a tough marketplace,” Brock said.
"With rising input costs for fuel and essential safety equipment and a potential downturn in business again, the ripple effect of this pandemic will be felt throughout the winter. Firms need to make some lasting headway to give this recovery some energy, so policymakers should be waiting in the wings to offer more support if needed," he concluded.
9.40am: Footsie's gains pared after Services PMI reveals jobs carnage
The IHS Markit/CIPS UK Services Purchasing Managers Index (PMI) for August rose to 58.8 from 56.5 in July.
The rate of expansion accelerated to its fastest for more than five years as more parts of the sector emerged from lockdown.
On the downside, the rate of job shedding across the service sector was the steepest since May, IHS Markit said.
While revised down from "flash" reading, purchasing managers report #UK #services activity at 64-month high in Aug building on July sharp improvement when sector benefited from opening up after restrictions. PMI at 58.8 (flash 60.1; 56.5 in July). New business best since Dec 2016
— Howard Archer (@HowardArcherUK) September 3, 2020
The owner of aerospace and automotive engineer, GKN, spoke of an improvement in the trading environment and this seems to have encouraged investors to take a flyer on sector peer Rolls-Royce Holdings PLC (LON:RR.), which is up 5.6% at 229.7p.
8.55am: Early boost for Footsie
The FTSE 100 index opened firmly in positive territory on Thursday but fell short of the 6,000-mark in the early exchanges.
London's blue-chip benchmark rose 48 points to 5,988.72.
Optimism was sparked by US stimulus hopes, while traders were also buoyed by a New York Times report that suggested a coronavirus (COVID-19) vaccine may be available in limited supply by November.
Wall Street closed on a high with the Dow Jones Industrials Average up over 450 points, but the sentiment could turn very quickly if the US unemployment number on Friday – and initial weekly jobless claims today – suddenly balloons.
And as Richard Hunter, an analyst at Interactive Investor pointed out: “The contrast between the real economy and the US market, in particular, is becoming increasingly stark, as each of the major indices are now in positive territory in the year to date.
“Despite the unquestionable economic impact which the pandemic has had and continues to have, with unemployment still an issue and signs of the job market cooling, a glance at the 2020 charts would suggest that Covid-19 had never happened.”
It seems investors were willing to look beyond the huge loss, taking heart instead from the guardedly optimistic update on current trading.
Melroses update had a knock-on impact on struggling jet engine maker Rolls Royce (LON:RR.), which fell 5% higher.
ITVs (LON:ITV) imminent expulsion from the FTSE 100 didnt deter bargain hunters who drove shares in the broadcaster 4.7% higher.
Proactive news headlines:
CMC Markets PLC (LON:CMCX) has lifted market guidance again, with current year net operating income expected to be ahead of the current market consensus. The trading platform operator issued a trading update covering the period since July 1 in which it said the consistently strong performance across the business had continued, with the net income operating income run rate running only slightly below the preceding three months – the first quarter of CMCs fiscal year – when volatility was running high as a result of uncertainty caused by the spread of the coronavirus (COVID-19). Client income has continued to exceed the corresponding period of 2019 while client income retention has remained well above the guidance of more than 80%. The stockbroking business also continues to perform strongly.
Allergy Therapeutics PLC (LON:AGY) is expanding its licensing agreement with vaccine groups Saiba and DeepVax in a move that will take it into oncology. The move builds on a collaboration in the area of virus-like particle (VLP) technology that has seen the UK group develop a peanut allergy candidate which has shown early promise. The plan is to expand the tie-up to target solid cancer tumours, atopic dermatitis, asthma, and psoriasis.
Gfinity PLC (LON:GFIN) said it has agreed to distribution deals with three leading global broadcasters, alongside its partner Abu Dhabi Motorsport Management (ADMM), for the new V10 R-League virtual racing competition, the first championship in a global racing series partnership between the two firms. Under the agreements, the V10 R-League will be available on BT Sport, ESPN and STARZPLAY Arabia, while highlights will be broadcast across team and talent channels in a distribution plan covering both broadcast and digital formats. BT Sport and STARZPLAY Arabia have signed multi-year commercial agreements for exclusive rights in the UK & Ireland and the Middle East and North Africa (MENA) regions respectively, while ESPNs agreement means season one and two of the V10 R-League will be broadcast in the US and made available in Canada, Latin America, the Netherlands, the Caribbean and Oceania.
Braveheart Investment Group PLC (LON:BRH) has highlighted progress in the development of a coronavirus test by its investee company Paraytec and the University of Sheffield. The investment group said having previously completed work packages relating to the construction of a viral mimic and the capture SYSTEM for the test, Paraytecs development of a signal generation module, which contains a synthetic coronavirus binding protein molecule bonded to fluorescent nanospheres, has now been completed. Meanwhile, Braveheart said work has been initiated and continues to progress on building an optical detection system, which is used to detect and quantify the fluorescent nanospheres that bind the CAPTURE Module in the presence of the virus.
Oncimmune Holdings PLC (LON:ONC) said an approach to managing lung cancer that uses the EarlyCDT Lung test pioneered by the group has been deemed “highly cost-effective” by healthcare economists. The study, led by academics from Leeds University, assessed the treatment of people with indeterminate pulmonary nodules (IPNs). It looked at the deployment of the £70 Oncimmune blood test in combination with computed tomography and compared it with using the CT scans on their own. Not only did the approach have a “positive impact on the outcomes of those patients observed”, but it also provided a cost-effective method of managing patients.
Curtis Banks Group PLC (LON:CBP) said its recurring fee model has protected its business against the worst of the effects of the coronavirus (COVID-19) pandemic. The self-invested personal pensions (SIPP) plan provider said revenue in the first half of 2020 was unchanged from a year earlier at £24.5mln. Adjusted profit before tax nudged up by 0.6% to £6.3mln from £6.2mln in the first half of 2019.
Shanta Gold PLC (LON:SHG) has provided investors with a pair of updates which together bolster the New Luika gold mine, where production and exploration activities are ongoing. The AIM-quoted gold firm has confirmed it has total group-wide mining reserves of 653,000 ounces plus 3.2mln ounces of total resources. Shanta noted that this marks as its highest ever reserves and resources and that the company has a proven track record of delivering low-cost programmes to replace mined ounces. Meanwhile, in a separate update, Shanta said the ongoing 2020 exploration drilling programme at New Luika has loaded some 75,000 ounces of new gold resources into the inventory.
IQGeo Group Plc (LON:IQG) said it has won an US$800,000 (£600,000) new contract for software licences and services with a large tier 1 telecoms network operator. The contract comprises a software licence subscription to be recognised over the next three years and certain implementation services to be recognised over the next two years. The customer will be using the IQGeo Platform and Workflow Management software to improve construction process efficiency and productivity to support a major investment in expanding its fibre network infrastructure.
Diversified Gas & Oil PLC (LON:DGOC) shares will be included in the FTSE 250 index following the latest reshuffle of the index which takes place later this month. Chief executive Rusty Hutson said he expects it will further increase DGOC's market exposure and it will broaden the companys investor base. The profitable, dividend-paying America-focused gas and oil producer has risen in prominence in recent years driven by a series of transactions that consolidate portfolios of established fields in the Appalachia basin, across states such as Pennsylvania, Ohio, West Virginia and Kentucky.
Deltic Energy PLCs (LON:DELT) interim results highlighted a strong balance sheet, with £12.8mln of cash at the end of June 2020, and confirmed that its North Sea venture with Shell remains on-track. The partners are committed to meeting the licence terms for the P2252 asset, which primarily includes the Pensacola prospect, and that would see a contingent well commitment become firm by December 2020. A Pensacola well could come as soon as next year.
Argo Blockchain PLC (LON:ARB) has reported higher revenues and mining margins in August, highlighting a continued strong performance in the price of Bitcoin. In a monthly update, the cryptocurrency miner reported revenues of £1.49mln in August, up from £1.25mln in July, while its average monthly mining margin rose to 44% from 34% month-on-month. The company said it had mined 166 Bitcoin and Bitcoin equivalent during the month compared to 165 in July, which it attributed to “minor fluctuations in mining difficulty throughout August”. However, Argo said it continues to mine at cost-efficient settings and was “pleased with the overall mining performance given market conditions”. The company also announced the appointment of finnCap as its corporate broker with immediate effect.
Greencoat UK Wind PLC (LON:UKW), the leading listed renewable infrastructure fund, invested in UK wind farms, has announced a new share issuance programme to be conducted over the next 12 months through several tranches, with the initial placing and initial offer for subscription launching on Thursday. Under the share issuance programme, the FTSE 250-listed company said it may issue up to a maximum of 750 million new ordinary shares over the next 12 months. It added that the net proceeds from the initial tranche are expected to be used to repay amounts drawn under the company's debt facility agreement. The net proceeds from each subsequent tranche will be used to (i) repay amounts drawn under the facility and/or (ii) apply proceeds to make further investments.