- FTSE 100 dips 22 points
- Net mortgage borrowing rises in September
- US GDP rises at annualised rate of 33.1% in the third quarter
Net mortgage borrowing was £4.8 billion in September, up from £3.0 billion in August., according to the Bank of England.
Mortgage approvals for house purchase increased further to 91,500, the highest since September 2007. Effective mortgage interest rates were broadly unchanged, the central bank added.
Net consumer credit borrowing weakened in September, with households making net repayments of £0.6bn. The rate on interest-charging overdrafts increased by an additional 3.5 percentage points to a new series high of 22.52% in September, while the rates on new consumer credit and credit card borrowing were little changed.
“September continued to be a miserable time for both borrowers and savers. Banks bumped up the rates on overdrafts once again, while savers faced fresh rate cuts,” said Hargreaves Lansdown’s senior investment analyst, Susannah Streeter.
“Anyone who has been trying to borrow their way through the crisis is likely to be paying a significant price for it,” she added.
“With the number of mortgage approvals continuing to rise sharply, there are few signs in these numbers that the mini housing boom is running out of steam – just yet. There were 91,500 approvals, 24% higher than in February. The stamp duty holiday and pent up demand from lockdown means people are rushing to complete purchases; however the fact that last month saw the highest number of approvals since September 2007, just before the housing market took the last tumble, could be a warning sign that another correction may be on the way,” she cautioned.
In the stock market, the FTSE 100 has got bored of being in positive territory and has adopted its recently more familiar recumbent posture, down 22 points (0.4%) at 5,560.
Aerospace engineer Rolls-Royce Holdings PLC (LON:RR.) is still getting it in the neck, in the wake of increased lockdown restrictions announced in France and Germany yesterday, which will do little to boost air traffic and therefore the maintenance revenues Rolls-Royce derives.
The shares were the worst blue-chip performers, down 13.2% at 73.36p.
Coronavirus: ‘Circuit-breaker’ is not the right approach, Robert Jenrick sayshttps://t.co/CdV0sv2Bap
As most of Europe adopts circuit breaker approach……
— Murmuration (@matthud59) October 29, 2020
In the US, third-quarter gross domestic product rose at an annualised rate of 33.1%, which is the strongest quarterly growth on record, albeit after a similarly massive crash in the second quarter.
It’s also a little stronger than economists had expected; the consensus forecast was for a rise of 31%.
11.25am: Something to get your FAANGs into
While the recovery in European markets on Thursday has been tentative, the rally in US markets today looks set to be more vigorous.
Then again, US markets fell harder yesterday than their European counterparts. The Dow Jones is expected to claw back 120 points of yesterday’s 943 point fall to open at around 26,640 while the broader-based S&P 500 is on course to open 22 points higher at 3,271, which would see it recoup almost one-fifth of yesterday’s losses.
The NASDAQ Composite, which plunged 426 points yesterday, is set to open 244 points heavier at 11,248.
Concerning macroeconomic events, third-quarter US gross domestic product is the big one, with economists expecting growth of 31% after the economy contracted by 31.4% (on an annualised basis) on the second quarter.
“This would be a record-breaking rebound after a record-breaking contraction; however, this does not mean by any stretch of the imagination that the economy is back to where it started. Let’s not forget that 50% of 100, is significantly larger than 50% of 50. The US is expected to see a 3% gap between Q2 & 3 which sounds small but equates to the worst of the 2007 -9 recession,” explained Fiona Cincotta at City Index.
“What this data will prove is that the US is in desperate need of additional stimulus; however, any new rescue package looks unlikely prior to the election,” she suggested.
– US 500: +0.90%
– US Tech 100: +1.29%
– Wall Street 30: +0.70%
US GDP Growth Rate (QoQ) at 8:30 a.m. ET and ECB interest rate decision at 8:45 a.m. ET.
— Nadex (@Nadex) October 29, 2020
David Arnaud, a senior fund manager at Canada Life Asset Management, reckons investors’ main concern with the US election is the possibility of a contested result.
“With the polls running close, we are running the risk of a period post-election when we don’t know who is in power e.g. in a situation where results are contested by the side who fell short,” Arnaud said.
“This creates uncertainty, which investors don’t like, but it also means there’s no Congress discussions, no fiscal stimulation, and we’re likely to see more volatility
“No matter who is superior on the day, we’ll have fiscal stimulus and debt levels will continue to increase. Yields will be artificially kept low by central banks and the bond markets will be driven by monetary and fiscal measures,” he continued.
Taking a somewhat fatalistic approach, Arnaud said: “Come January, none of it will be relevant – we’ll go back to the same trends we’ve been seeing over the last five years.”
It’s Thursday, so weekly initial jobless claims will be announced with economists guessing there will be a fall to 774,000 from 787,000 the week before. Continuing claims are tipped to be 7.7mln, down from 8.37mln claims the week before.
On the corporate front, updates are expected after the bell from tech titans Apple, Amazon, Alphabet and Facebook, so buckle up tight FAANG fans!
In London, the FTSE 100 is knocking on the door of 5,600, up 15 points (0.3%) at 5,598.
10.30am: BT leads tentative recovery
If one thinks of the Footsie as a person that suffered a traumatic event yesterday, then the patient is currently in a stable condition.
In fact, London’s benchmark of blue-chip shares was up 11 points (0.2%) at 5,594, led by telecoms titan BT Group PLC (LON:BT.), which has said it plans to reinstate its dividend from 2021/2022.
“BT’s business customers are continuing to feel the pressure. Sports revenue is pretty unpleasant as fewer of us are in the pub with pals and roaming revenue is predictably poor; however, strong cost control and robust demand has given management the confidence to upgrade guidance. So, all things considered these are some reasonable results from BT,” said Hargreaves Lansdown’s William Ryder, in his assessment of BT’s interims.
“There are still challenges ahead and 5G looks like it will cost a fortune, but the internet is now an essential service. Some of us might debate shutting off the water before losing access to Netflix, Facebook and Google and even work; however, pricing is always under pressure from competitors, especially in mobile. It won’t be easy, but demand for the core product and a newly sustainable dividend give BT its attractions, even if capex remains eye watering and competition fierce,” Ryder said.
9.20am: Market no longer Shell-shocked
“With a huge swathe of earnings numbers to digest, and the economic prospects for Europe looking bleaker by the day, after France followed Germany into introducing a one-month partial lockdown of its economy, all eyes will be on the ECB [European Central Bank] later this afternoon,” said CMC’s Michael Hewson.
“While no policy changes are expected ECB President particular Christine Lagarde will have to navigate the tricky path of keeping all its options open while at the same time not acknowledging that its monetary toolbox is pretty threadbare in the absence of further fiscal stimulus as Europe wrestles with the prospect of new economic lockdowns,” he added.
$RDS.B | Royal Dutch Shell Q320 Earnings:
Adj Profit: $955M (est $149.7M)
Cash Flow From Operations: $10.40B -15% Y/Y
Q3 Oil, Gas Output: 3.08M BOE/D (est 3.172M)
Declares Q3 Dividend Of 16.65C/Share (+4%)
— LiveSquawk (@LiveSquawk) October 29, 2020
8.45am: Some relief for Footsie
After the storm of Wednesday, the markets calmed a little on Thursday, although, that said, the trajectory for the FTSE 100 in early trade was still downwards.
The index of UK blue-chip stocks edged just 13 points lower to 5,569.81.
With France headed into full lockdown and Germany seemingly contemplating a similar move, global stock indices moved decisively on Wednesday to price in the economic impact of a second, potentially more brutal wave of coronavirus infections over the winter.
There was a bloodbath on Wall Street as the Dow Jones Industrials Average closed more than 900 points lower, while Asia’s main markets picked up on Thursday where the US left off.
In London, the mood was a little calmer, though sombre.
Perhaps the welter of economic and corporate news later might turn sentiment with updates from the European Central Bank and on US GDP. They will sit alongside quarterlies from Facebook, Alphabet, Apple, Amazon and Twitter in the evening.
On the market, there was some good news for long-suffering investors in BT Group (LON:BT.A), which raised its earnings guidance, propelling the share price 8% higher.
Lloyds (LON:LLOY), up 2%, also surprised on the upside as it weighed in with £1bn in profits from its banking exploits in the third quarter.
‘’Lloyds has galloped back into profitability, no mean feat given the hurdles the bank has had to jump through the coronavirus crisis,” said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown.
“It is now expecting the amount of money it has to set aside for bad loans this year to be at the lower end of forecasts. Lloyds wins a rosette for a surge in applications for home loans and a huge increase in mortgage lending, led by the mini-boom in the housing market.”
Proactive news headlines:
Malvern International PLC (LON:MLVN), the educational course’s partner, said current bookings are encouraging, with language student numbers starting to recover. A new cohort of University Pathway students is due to start in January with courses going ahead either face-to-face or online, depending on the prevailing coronavirus (COVID-19) guidelines while language student numbers are rebuilding, with currently a quarter of the normally expected students for this time of year.
Red Rock Resources PLC (LON:RRR) has been getting things ship-shape at its licences in Kenya after they were renewed in August. “Thanks are due to our camp manager and security and maintenance staff who have kept the site safe and secure for over five years without exploration activity, safeguarding and preserving our records and core sheds. We now have once again a fully operative site as a base for our operations and from which to ramp up exploration,” said Red Rock’s chairman, Andrew Bell in an update on the group’s operations in the African country.
Diversified Gas & Oil PLC (LON:DGOC) said the outlook for natural gas “is looking increasingly positive” after it put in a solid third-quarter performance. The third-quarter adjusted underlying earnings (EBITDA) rose to US$75mln from US$68mln in the preceding quarter and US$64mln in the same quarter of 2019. The US-based owner and operator of natural gas, natural gas liquids and oil wells and midstream assets declared a third-quarter dividend of 4.0 cents a share, up from the 3.75 cents paid in the second quarter.
Gfinity PLC (LON:GFIN) has reported sharply reduced losses in its final results as its financial performance improved following a transition to focus on higher value and higher-margin revenue streams. For the year ended June 30, 2020, the esports media group reported an adjusted operating loss of £5.5mln, narrowed from an £8.6mln in the prior year, while revenues were at £4.5mln compared to £7.9mln in 2019.
Live Company Group PLC (LON:LVCG) said it has signed new contracts for two sets of Christmas assets with shopping centres in the UK. The AIM-listed media and events group said the first set of assets consisting of its Elfie Christmas bundle will be showcased at the Fort shopping centre in Birmingham from November 20, while the second set, consisting of Santa’s Express and Santa’s sleigh will be at The Mall shopping centre in Luton from November 17. The deal marks the first partnership with the Fort shopping centre for the group.
ANGLE PLC (LON:AG) (OTCQX:ANPCY) chairman Garth Selvey said the med-tech group is now making “strong progress” towards commercialising its breakthrough liquid biopsy. ANGLE used its interim results to restate plans outlined earlier in the week as it raised £19.6mln to fund its ambitious blueprint. The cash injection will be invested to create clinical laboratories in the US and UK and to underwrite the development of a pharma service business that will tap into the huge market potential of its Parsortix cancer cell detection technology.
Amryt Pharma PLC (NASDAQ:AMYT) (LON:AMYT) has outlined plans to share additional encouraging data on its recent successful phase III study of FILSUVEZ to the medical and financial communities. FILSUVEZ, also known as Oleogel-S10, or previously AP101, was shown to lessen the healing time of wounds in people with epidermolysis bullosa (EB), where the skin is fragile to even the slightest touch. The latest, more detailed batch of data reveals the proportion of patients with first complete closure of the EB target wound within 45 days was 41.3% in those receiving FILSUVEZ compared with 28.9% in the control group.
Kromek PLC (LON:KMK) has announced the appointment of Paul Farquhar as its chief financial officer and a director of the group with effect from November 2, 2020. The company, a worldwide supplier of detection technology focusing on the medical, security screening and nuclear markets, noted that Farquhar has almost 30 years’ experience as a finance director and chief financial officer, primarily for international businesses. This includes 10 years as vice president, treasurer and chief financial officer of Sevcon Inc, which was a NASDAQ-listed designer, manufacturer and supplier of microprocessor controls for electric and hybrid vehicles through wholly-owned subsidiaries in Europe, North America and Asia and via an international dealer network.
Clear Leisure PLC (LON:CLP) said it “remains confident” in its “very promising” technology investments and legal claims as the group reiterated its commitment to improve its financial position. In an outlook statement accompanying its interim results, the investment group’s chief executive and chairman Francesco Gardin said positive outcomes are expected from its legal claims and that it will continue its investment strategy in the tech sector both directly and via an enterprise investment scheme (EIS) fund.
Greatland Gold PLC (LON:GGP) has provided an update on Newcrest’s drilling campaign at Greatland’s Havieron deposit in the Paterson region of Western Australia which includes the best intercept at the project to date. The AIM-listed precious and base metals exploration and development company noted the release of an ASX announcement titled ” Newcrest Quarterly Exploration Report” by Newcrest Mining Ltd earlier on Thursday.
Genel Energy PLC (LON:GEN) noted that DNO ASA, as operator of the Tawke PSC in Kurdistan, in which Genel 25% working interest, has issued an update on licence activity. The group said production at the Tawke licence increased to 113,700 barrels of oil per day (bopd) in the third quarter, reversing declines resulting from a reduction in activity triggered by the instability caused in the wake of the coronavirus (COVID-19) pandemic.
Vast Resources PLC (LON:VAST) has said it will publish a JORC 2012 compliant Measured and Indicated Mineral Resource for the Baita Plai Polymetallic Mine in Romania in a few days at the end of October. The resource estimate will cover the first four years of production and further drilling will be conducted, with the objective of publishing an expanded JORC 2012 Mineral Resource, the group said in its latest full-year results statement.
Trident Royalties PLC (LON:TRR) said all pre-conditions for its Lake Rebecca Gold royalty acquisition have now been satisfied and that completion will occur automatically on admission of the consideration shares. On September 24, 2020, Trident announced that it had entered into a binding agreement to acquire an existing 1.5% Net Smelter Return (NSR) gold royalty over tenement E28/1610, which hosts the entirety of the million-ounce Lake Rebecca Gold Project, currently owned and operated by ASX-listed Apollo Consolidated in Western Australia. The royalty was acquired for a total consideration of A$7,000,000 in cash (about US$5,000,000) and A$1,000,000 to be satisfied by the issue of 1,862,556 new ordinary shares of 1p each in Trident at 29.39p per ordinary share.
Supermarket Income REIT PLC (LON:SUPR) has acquired a long-standing Sainsbury’s supermarket (and adjoining commercial premises) in Heaton, Newcastle upon Tyne. The REIT, which focuses on stores occupied by the major grocery chains that have omnichannel or online fulfilment capability, said it had acquired the site from the National Farmers Union for £53.1mln reflecting a combined net initial yield of 4.1%. Sainsbury’s has been a long-term tenant on the 11-acre site which was originally developed in the 1980s and completely rebuilt in 2011.
Touchstone Exploration Inc (LON:TXP) (TSE:TXP) said it spudded its Cascadura Deep-1 ahead of schedule at the Ortoire onshore exploration block in Trinidad and Tobago on October 27, 2020. The oil and gas firm said it is currently drilling the surface hole to a planned casing depth of 900 feet with the bottom hole location anticipated to be 1,300 feet to the south-east. The well is targeting three distinct Herrera thrust sheets and is designed for a total depth of 10,600 feet.
Oracle Power PLC’s (LON:ORCP) Thar project is even more relevant for Pakistan given the country’s drive to become self-sufficient in thermal fuel and gas for fertiliser, according to the group’s chief executive Naheed Memon. Thar is being developed through a consortium of Oracle Power, China National Coal Development Company and The Private Office of His Highness Sheikh Ahmed Bin Dalmook Al Maktoum. An application for a Letter of Intent (LOI) for 1,320 MW power plant at the mine site has been submitted, said Nemon in a statement with its half-year results to end June 2020, but has been delayed by coronavirus (COVID-19) restrictions and administrative changes at the Power Ministry.
Power Metal Resources PLC (LON:POW) the AIM-listed metals exploration and development company said it has received a notice to exercise warrants over 4,797,200 new ordinary shares of 0.1 p each in the company at an exercise price of 1.0p each and subscription monies of £47,972 have been received by Power Metal in respect of these exercises.
6.50am: Flat start predicted
The FTSE 100 index looks set to start fairly flat on Thursday, licking its wounds after big falls in the previous session as the decline in Asian markets slowed and US stock futures rallied after Wall Street plunged overnight amid worries over coronavirus (COVID-19) infections and the outcome of next week’s US elections.
Investors in London also have a flood or corporate news to ingest on Thursday, including numbers from two banks, an oil major, the UK’s dominant telecoms player, and a global advertising giant.
Spread betting firm CMC Markets expects the blue-chip index to open around 5 points higher at 5,587, having dropped 146.19 points, or 2.4% on Wednesday to close at 5,582.82.
Overnight in New York, the Dow Jones Industrials Average plunged 943 points, or 3.4% – its biggest fall since June – to end at 26,519, while the broader S&P 500 index shed 3.5%, and the tech-laden Nasdaq Composite dropped 3.7% with a shedload of key US tech results due after-hours on Thursday.
The falls by Asian markets were less pronounced on Thursday, however, as the COVID-19 pandemic there is seen more under control, with Hong Kong’s Hang Seng index down 0.6%, and Japan’s Nikkei 225 index off 0.4%.
Jeffrey Halley, senior market analyst, Asia Pacific at OANDA said: “The blue wave trade became Moody Blue overnight, as buy everything turned into sell everything.
“The belated realisation that the US Senate race is the real election race next week is likely to dampen any comeback enthusiasm, with nine states too close to call and the Supreme Court waiting to adjudicate results.”
On the macro front, after both France and Germany yesterday introduced second national lockdowns, the latest European Central Bank meeting will be the main focus.
The Bank of Japan today made no changes to its monetary policy settings, as expected, though it trimmed its growth forecasts to reflect sluggish service spending during summer.
Investors expect the European Central Bank to similarly hold off on new measures, but to instead hint at action in December.
Among the data due Thursday, German unemployment and inflation data, European confidence surveys, advance US GDP figures and the latest weekly US jobless claims will also all be closely watched.
Lloyds main corporate interest
Probably the most focus on the UK corporate front Thursday will be on high street lender Lloyds Banking Group PLC (LON:LLOY) after it posted bad debt provisions of £2.4bn in the second quarter and £1.4bn in the first.
In the second quarter, the massive provision and a lower net interest margin led Lloyds to reports a statutory loss before tax of £602mln, though the UK’s number-one lender pointed to “early signs of recovery” in core markets, such as consumer spending and the housing market.
Meanwhile, after BP PLC (LON:BP) posted slightly better than expected Q3 results on Tuesday, it will be Royal Dutch Shell PLC’s (LON:RDSB) turn on Thursday, with the oil major having seen its shares lag its London-listed rival’s this year.
Although it won’t be a stellar third-quarter report, UBS analysts still anticipate a ‘competitive’ financial performance.
“Shell’s underperformance in the year to date owes much less to financial performance and more to the dividend cut at 1Q and the absence of any context or visibility on outlook for the business at either 1Q or 2Q,” the analysts said.
And BT Group PLC (LON:BT.A) reports fiscal half-year numbers on Thursday with its shares having bumped along at around an 11-year low since early summer, not even reports of possible private equity interest having made much of an impact.
COVID-19 has hurt BT in several ways, first-quarter results showed in July, as its business and residential customers were both affected and many have been offered bill credits, its Openreach arm stopping in-home engineering work from March to May, overseas roaming was reduced by travel restrictions, and the BT Sport business suffered from live sporting postponements.
For the second quarter, analysts are forecasting underlying earnings (EBITDA) of £1.8mln, similar to the first.
Investors will also be looking for progress on wholesale deals for Openreach as well as news on the pension deficit.
Around the Markets:
- Sterling: US$1.3021, up 0.1%
- Gold: US$1,879.80 an ounce, up 0.2%
- Brent crude: US$39.20 a barrel, up 0.1%
6.45am: Early Markets – Asia/Australia
Shares in the Asia-Pacific region mostly fell on Thursday following an overnight plunge on Wall Street as COVID-19 cases continue to surge in the US and Europe.
Shares in Australia were among the biggest losers regionally, as the S&P/ASX 200 200 dived 1.61%.
South Korea’s Kospi fell 0.79% after industry heavyweight Samsung Electronics predicted a fourth-quarter decline in profits.
In Hong Kong, the Hang Seng index dipped 0.37% while Chinese stocks bucked the overall trend with the Shanghai composite rising 0.46%.
Proactive Australia news:
Roots Sustainable Agricultural Technologies Limited (ASX:ROO) has launched its next-generation agricultural solution that combines plant irrigation and fertigation functions with its revolutionary heat exchange probe technology.
Platina Resources Limited (ASX:PGM) has completed the sale of Skaergaard Project in Greenland after been advised by Major Precious Metals Corp (CNSX:SIZE) that the Canadian Securities Exchange (CSE) has allowed it to close the acquisition in escrow pending their final approval.
GTI Resources Ltd’s (ASX:GTR) assay results from recently completed first pass shallow aircore drilling program at Niagara Gold Project, southwest of Kookynie in Western Australia, has confirmed gold anomalism of up to 2.78 g/t.
Matador Mining Limited (ASX: MZZ) has accelerated its Cape Ray Gold Project greenfield exploration activities in Newfoundland, Canada, and has identified 33 new gold targets.
Bryah Resources Ltd (ASX:BYH) has begun the next phase of drilling at the Bryah Basin Manganese Joint Venture in Western Australia with OM Manganese Ltd, a wholly-owned subsidiary of OM Holdings Ltd (ASX:OMH).
archTIS Ltd (ASX:AR9) has entered into a binding term sheet to buy global information protection business Nucleus Cyber Inc for a total potential consideration of up to $9.75 million in shares.
Cobalt Blue Holdings Ltd (ASX:COB) (OTCMKTS:CBBHF) (FRA:COH) continues to make strong progress with its integrated cobalt supply strategy centred on the flagship Broken Hill Cobalt Project (BHCP) with a global sample program set to produce first samples next quarter.