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FTSE 100 continues slow progress; US indices to claw back some of yesterday’s losses

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  • FTSE 100 index rises 18 points
  • P&G and Philip Morris beat expectations with earnings announcements
  • US indices to open higher as investors speculate over Netflix‘s subscriber numbers

12.20pm: Hope springs eternal but time is running out for a pre-election US stimulus package


The clock continues to count down to tonight’s deadline for a fiscal stimulus package to be agreed before the Presidential election, and hope springs eternal.


That might explain why indices are set to reverse course after yesterday’s setbacks and claw back some losses.


Spread betting quotes suggest the Dow Jones industrial average will storm 222 points higher to 28,417 while the S&P 500 is tipped to jump 30 points to 3,457.


The NASDAQ Composite is seen rising 275 points to 11,754.


Household goods giant Proctor & Gamble got pre-market proceedings off to a good start with its fiscal first-quarter earnings per share, which at US$1.63 were both higher than last year’s US$1.36 and the consensus estimate of US$1.42.


Tobacco products pedlar Philip Morris also beat consensus forecasts (of US$1.36) with its third-quarter earnings per share of US$1.42.


So much for old school companies producing 19th and 20th-century products … traders may find today’s update from video streaming titan Netflix more exciting.


“The aggregate market capitalisation of Facebook, Apple, Amazon, Netflix and Google’s parent Alphabet has grown by 63% or US$2.2 trillion over the past 12 months and the latest round of quarterly results, starting with Netflix today, will be the so-called FAANG quintet’s latest chance to show why investors love them so much,” said Russ Mould, AJ Bell’s investment director.


“It could be argued that forecast upgrades are required if the five stocks are to maintain their stunning run. That US$2.2 trillion increase in market cap over the past 12 months dwarfs the combined $8 billion increase in net profit the quintet is expected to generate in 2020,” Mould observed.


A big focus for the market will be the number of subscribers Netflix managed to add in the third quarter, according to Neil Wilson at markets.com.


“Lockdowns around the world delivered a huge boost in the first half of 2020, with paid net subscriber additions soaring to 26mln from 12mln during the same period a year before. The company has forecast 2.5mln paid net adds for Q3 versus 6.8mln in the prior-year quarter as the surge in H1 likely pulled forward some demand from the second half of the year; however, this could be a very conservative estimate and Netflix could beat this number handsomely with growth outside the US seen improving off the back of some very successful local-language releases. Netflix is getting good at ‘tamping down expectations’ so I expect guidance to be conservative and I think the market understands this,” Wilson said.




On the economic front, today will bring the latest housing starts figures for September.


“With the sales of new homes having surged to a fourteen-year high and sentiment among home builders similarly making notable gains over recent months, today’s housing starts figures are expected to have posted another solid increase, with single-family starts possibly moving above the cyclical high reached last December,” said Daiwa Capital Markets.


Back in London, the FTSE 100 remains fairly lackadaisical although the index’s gain has extended to 18 points (0.3%) at 5,903.


11.50am: After Rolls-Royce, Cineworld comes back from the brink


Share prices of leading stocks might as well have been preserved in aspic for most of the morning.


The FTSE 100 remains modestly higher, up 14 points (0.2%) at 5,898 but it is faring less well than its little brother, the FTSE 250, was is up 73 points (0.4%) at 17,939.


The mid-cap index’s surge is being led by Cineworld Group PLC (LON:CINE), which is 9.0% higher at 28.6p, and Britvic PLC (LON:BVIC), which is 6.4% heavier at 798.5p.


The former has been lifted by news that New York Governor Andrew Cuomo’s announcement on Saturday that cinemas in the state but outside of New York City will be allowed to reopen from October 23. The stock added just under a penny yesterday and has risen another 2.45p today.




Soft drinks maker Britvic, meanwhile, has cheered the market with news that has signed a new and exclusive 20-year franchise bottling agreement with fizzy drinks giant PepsiCo.


The Vesuvius Plc (LON:VSVS) share price erupted, rising 5.4% to 422.6p after the molten metal flow engineering and technology company announced a resumption of dividend payments.


10.45am: The Footsie edges into positive territory


The London stock market remains subdued but the Footsie has at least ventured into positive territory, if not by much.


London’s benchmark of blue-chip shares was up 11 points (0.2%) at 5,895, helped by enthusiasm for aerospace-related stocks.


British Airways owner IAG (LON:IAG) was the top riser, up 7.1% at 107.05p after Heathrow finally introduced a facility whereby travellers could get a coronavirus (COVID-19) test – at a cost – to wave at officials when they get to their destination.


Aeroplane engines maker and maintainer Rolls-Royce Holdings PLC (LON:RR.) continued its renaissance, rising 4.2% to 229.2p. Investors have been piling back into the shares since the company announced its much-anticipated funding plans earlier this month.


Sector peer Melrose Industries PLC (LON:MRS), which owns aerospace and automotive engineer GKN, was 4.1% higher at 134.9p.


Oil stocks were out of favour as traders fret over the prospect of more lockdowns hitting demand.


Housebuilder Bellway PLC (LON:BWY) edged 0.3% higher after what Irish stockbroker Goodbody called “a solid update”.


“Demand continues to be robust in the UK housing market,” Goodbody notes.




“Reservations are up by over 30% in the first 9 weeks of the financial year as build rates have returned back to 85-90% of normal levels. Further, it is a positive step that management is confident enough to re-instate some sort of capital returns. On the outlook, it is expected that around 9,000 completions will be delivered in the 2021 fiscal year, assuming no widespread national lockdown,” Goodbody noted.


9.10am: IAG boosted by introduction of COVID tests at Heathrow airport


UK equities have got off to a mixed start but at least blue-chips are not having to deal with a strong sterling exchange rate today.


The FTSE 100 was more or less unchanged at 5,885, with traders waiting for numerous scenarios – lockdown, US fiscal stimulus package, US presidential debate, Brexit negotiations – to play out.


Sterling, which had a bumper day yesterday on hopes that Brexit negotiators might surprise us and pull an agreement out of the fire, is little changed today.


Reckitt Benckiser PLC (LON:RB.) proved it’s an ill wind that blows nobody any good by upping its full-year revenue guidance on the back of a surge in demand for its cleaning products since the pandemic.


The shares were up 2.1% at 7,354p, making the second-best performers on the Footsie.


The top place was occupied by International Consolidated Airlines SA (LON:IAG) – yes, you read that right – after Heathrow introduced one-hour coronavirus tests to enable passengers to fly in and out of the UK without the need to quarantine.


That’s obviously a big deal for IAG, whose British Airways airline has a lot of landing slots at Heathrow. IAG shares were up 2.4% at 103.25p.




8.35am: Fall back for Footsie


The FTSE 100 made a lacklustre start to proceedings on Tuesday, dragged lower by big falls on Wall Street which was hit by continued wrangling over an economic stimulus package, which is unlikely now to be signed off before the US election next week.


The blue-chip index fell 15 points to 5,869.98 at the open.


Closer to home, the UK and Europe appear to be in deadlock over a Brexit trade deal, although some of the morning headlines have begun to suggest there may be movement behind the scenes.


Manchester, meanwhile, has been given until noon to accept the latest coronavirus lockdown ultimatum.


Just what might happen if the city’s mayor, Andy Burnham, opts to ignore the call for wider restrictions remains to be seen. Troops patrolling the Arndale? Burnham under house arrest, or the former Labour minister forming his own splinter government for the north from an unnamed address in Moss Side?


All of this is said in jest; however, the markets, disliking uncertainty, will likely head sharply lower if the current farce descends into crisis, analysts said.


The early riser was Next (LON:NXT) which benefited from a Goldman Sachs upgrade to ‘neutral’ ahead of trading news due next week. The shares were up 2%.


DIY retailer Kingfisher (LON:KGF) advanced 1.8% early on, while International Airlines Group PLC (LON:IAG) continued on the comeback trail with a 2% rise.


Proactive news headlines:


Feedback PLC (LON:FDBK) is to team up with Axial Medical Printing to add three-dimensional (3D) imaging to Feedback’s flagship Bleepa medical imaging communications platform. Axial3D uses advanced artificial intelligence (AI) technologies to automatically create 3D reconstructions of individual organs or pathologies. These images will be available to view in the Bleepa platform and can subsequently be turned into 3D printed models in a variety of materials.


Symphony Environmental Technologies PLC (LON:SYM) has announced the completion of a EUR6mln financing by its associate Eranova for its green algae project in France. The proceeds will pay for the start of construction in Port St Louis, near Marseille, slated to begin in late November and complete by the end of April. Eranova’s plant will follow-on from a successful pilot and will produce a bio-sourced resin which don’t use food resource in their creation. The resins are approved for use with food contact and therefore are suitable for use as recyclable packaging.


Solo Oil PLC (LON:SOLO), soon to be renamed Scirocco Energy, has updated on its 12% owned associate Helium One which continues to advance projects in Tanzania. Helium One has so far received renewal offers for 12 of 16 prospective licences requested of the Tanzanian authorities, and, it is awaiting decisions for the remaining four. Solo noted that Helium One has a runway to explore and de-risk its prospect inventory through a drilling programme. Helium One has some 4,512 square kilometres of licences which, according to an October 2019 estimate, host 138bn cubic feet of un-risked helium resources (best estimate) – with the range pitched at 30bn to 521bn cubic feet.


Open Orphan PLC (LON:ORPH) said its hVIVO subsidiary has won a UK government contract worth up to GBP10mln to develop a coronavirus (COVID-19) human challenge study model to help speed up the development of a working vaccine. The model development involves the manufacture of the challenge virus and what’s called a first-in-human characterisation study for this virus. The work will be conducted at London’s Royal Free Hospital by hVIVO with help from researchers at Imperial College.


ANGLE PLC said the American regulator is now moving to a “substantive review” of the company’s liquid biopsy after an initial hurdle was quickly negotiated. The US Food & Drug Administration’s (FDA) administrative review is designed to ensure the research group has submitted all the necessary “elements and information” and paves the way for the detailed assessment of ANGLE’s Parsortix system. The company is seeking Class II De Novo FDA clearance for the cancer detection system and is hoping to receive sign-off for its use in metastatic breast cancer.


Ariana Resources PLC (LON:AAU), the Turkish gold producer, has launched a not-for-profit initiative which will supply company-branded and sustainably sourced clothing in support of existing community projects. The clothing will be available at https://ariana-resources.teemill.com. “Following the surprisingly strong demand from shareholders for Ariana-branded attire, the Company recognised the opportunities that this creates for developing a not-for-profit initiative without detracting from our core operational priorities. Ariana has long been committed to the integrity of its projects and the well-being of its employees, stakeholders and the local communities in which we operate,” Ariana managing director Dr Kerim Sener said in a statement.


Collagen Solutions PLC (LON:COS) has said the offer for the company by Rosen’s Diversified has become wholly unconditional. Collagen noted that as a result, the company’s listing on AIM will be cancelled, probably with effect from November 17, and urged shareholders who have yet to accept the Rosen offer to do so as soon as possible. Rosen has received acceptances of its 6.5p per share cash offer in respect of roughly 90.91% of the issued share capital of Collagen.


ClearStar Inc (LON:CLSU) has noted the announcement on October 1, 2020, by Hanover Bidco that its recommended offer to acquire the entire issued and to be issued ordinary share capital of the company has become unconditional in all respects. Hanover Bidco has now acquired or agreed to acquire, ClearStar Shares representing in excess of 75% of the voting rights of the company. Accordingly, at the request of Hanover Bidco, the board has applied for the cancellation of admission to trading on AIM of ClearStar shares. The group confirmed that it has agreed with AIM that the delisting is expected to occur on November 17, 2020.


Bezant Resources PLC (LON:BZT), the copper-gold exploration and development company said, in a brief statement issued late afternoon on Monday, that its directors had noted the movement in the company’s share price on the day. The company confirmed that it has announced all material events as required under the AIM Rules.


Mosman Oil and Gas Limited (LON:MSMN) has raised GBP900,000 of new capital which it plans to use for new drilling at the Champion project in Texas. Proceeds are earmarked for the drilling of the Galaxie well along with the installation of production facilities for the Falcon well. It is issuing 720mln new shares priced at 0.125p each through a share placing arranged by its broker ETX Capital. Investors taking shares in the placing also receive one-for-two share warrants with a two-year term and an exercise price of 0.25p.


Polarean Imaging PLC (LON:POLX), the medical-imaging technology company, with a proprietary drug-device combination product for the magnetic resonance imaging (MRI) market, said it has received notification from a warrant holder to exercise warrants representing 64,128 ordinary shares of GBP0.00037 each in the capital of the company at an exercise price of 15p per warrant.


Tiziana Life Sciences PLC (NASDAQ:TLSA) (LON:TILS), a biotechnology company focused on innovative therapeutics for oncology, inflammation and infectious diseases, said it has allotted and issued 35,714 ordinary shares of 3 pence each credited as fully paid at a price of 70p per share in respect of the exercise of 35,714 warrants held by Optiva Securities Limited.


Power Metal Resources PLC (LON:POW) the AIM-listed metals exploration and development company announced after the market close on Monday that it has received notices to exercise warrants over 3,850,000 new ordinary shares of 0.1p each with the warrant shares being issued at an exercise price of 1.0p each. Subscription monies of GBP38,500 have been received by Power Metal in respect of the exercises.


Digitalbox PLC (LON:DBOX), the mobile-first digital media business, which owns Entertainment Daily, The Daily Mash and The Tab, announced on Monday that at its general meeting of the company held on that day, all resolutions were duly passed, including those required to approve the subscription of 24,489,795 new ordinary shares which will raise gross proceeds of GBP1.2mln for the company.


6.50am: Retreat continues


The FTSE 100 is set to fall again on Tuesday amid continued political and economic frustrations on both sides of the Atlantic.


London’s blue-chip benchmark has been called 32 points lower ahead of the open on the IG spread-betting platform, a day after falling 34.9 points or 0.6% to 5,884.65.


Overnight, Wall Street’s equity markets caught a bout of nerves as there were no signs of Washington agreeing a pre-election economic stimulus, with House leader Nancy Peolosi’s deadline coming today.


The Dow Jones Industrials Average dropped 410 points or 1.4% to 28,195.42, while the S&P 500 lost 1.6%, the Nasdaq Composite shed 1.7%.


“With rising coronavirus cases across Europe prompting fresh measures to contain the spread, there is rising concern that a lack of will to pass fresh stimulus measures was likely to temper investor willingness to push stocks higher in the short term,” said market analyst Michael Hewson at CMC Markets.


Around the markets:


  • Pound: down 0.1% at US$1.2941
  • Gold: down 0.2% to US$1,900.21
  • Oil: Brent crude down 0.8% to US$42.28

6.45am: Early Markets – Asia/Australia


Stocks in major Asia-Pacific markets were mostly lower on Tuesday after China’s one-year and five-year loan prime rates were left unchanged, in line with analyst’s expectations.


China’s Shanghai composite was down 0.11% while Hong Kong’s Hang Seng index traded 0.09% lower.


In Japan, the Nikkei 225 declined 0.55% and South Korea’s Kospi shed 0.26%.


Australian shares fell, with the S&P/ASX 200 down 0.80% with the materials sector down 1.20% despite stronger commodity and metals prices.


READ OUR ASX REPORT HERE


Proactive Australia news:


Core Lithium Ltd (ASX:CXO) has accelerated resource drilling of the Finniss Lithium Project near Darwin in the Northern Territory with a second diamond rig in operation.


MGC Pharmaceuticals Ltd (ASX:MXC) (OTCMKTS:MGCLF) (FRA:H5O) delivered consecutive record week-on-week sales and revenue growth through September and October – exceeding A$225,000 in the past four weeks alone.


Eclipse Metals Ltd (ASX:EPM) has delineated previously unknown shallow manganese mineralisation at Amamoor prospect within the Mary Valley Manganese Project in Queensland.


Predictive Discovery Ltd (ASX:PDI) has started the second phase of a drilling program at the Bankan Gold Project, with power auger drilling underway at the flagship project in Guinea.


Mali Lithium Ltd (ASX:MLL), which is soon to be renamed FireFinch (ASX:FFX), has delivered a robust definitive feasibility study (DFS) for Goulamina Lithium Project in Mali, confirming a long-life, large-scale, low-cost open pit project.


Aeris Resources Ltd (ASX:AIS) has signed a binding Heads of Agreement (HoA) to sell Straits Gold Pty Limited, which holds the Yandan Gold Project in Queensland, to GBM Resources Limited (ASX:GBZ).


Netlinkz Ltd (ASX:NET) achieved record receipts from customers for the quarter ended September 30, 2020, driven by increasing demand for the company’s VSN (virtual secure network) platform, particularly in China.


Galileo Mining Ltd (ASX:GAL) is encouraged by electromagnetic (EM) data from recent surveys that reveals new targets for drill testing at Lantern East Prospect in the Fraser Range region of Western Australia.


Talisman Mining Ltd (ASX:TLM) is embarking on a new phase of exploration designed to test several highly prospective gold and copper targets at the Lachlan Copper-Gold Project in the Cobar Basin of New South Wales.


Lake Resources N.L. (ASX:LKE) (OTCMKTS:LLKKF) continues to enhance its clean lithium credentials with tests establishing that very high purity 99.97% battery-quality lithium carbonate with low impurities can be produced from Kachi project brines.

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