- FTSE 100 closes 27 points firmer
- US blue chips rally after weak start
- Bitcoin drops below US$30,000
The FTSE 100 index recouped some more of last Friday’s sell-off on Tuesday, ending not far from session best levels as Wall Street also managed to push higher again as worries over Federal Reserve interest rate hikes were pushed aside for now.
At the finish, the UK blue-chip index was 27.72 points, or 0.4% higher at 7,090.01, below the day’s peak of 7,098.67 but above the low of 7,061.13.
Around London’s close the Dow Jones Industrial Average was up about 40 points, or 0.1% at 33,917, with the broader S&P 500 and tech-laden Nasdaq Composite both around 0.3% firmer.
Hugh Shields, financial trader at Spreadex said: ”It has been a decent day for the FTSE … off the back of record growth in UK factory output. With the Bank of England’s meeting minutes to come out later this week too, there is a chance that this strong performance could get even better.”
Shields noted that Bitcoin dropped below $30,000 for the first time since January, losing all its gains since the start of 2021.
He commented: “This horrific month for crypto continues as China cracks down further on crypto miners. Long term investors will question cryptos potential if mining restrictions continue.”
But Shields added: “One to watch for the week, Copper! Up a whopping 1.42% on the day and looking to recover from what has been, to say the least, an abysmal month. With Copper currently trading at 4.2435, investors would love to see it break through the 4.3 mark.”
4.05pm: UK market outperforms
Despite Wall Street searching for direction ahead of the forthcoming testimony by Federal Reserve chair Jerome Powell, the FTSE 100 is managing to keep in positive territory.
The leading index is up 20.96 points or 0.30% at 7083.25, albeit off its high of 7091.
Property companies continue to lead the way, recovering from recent falls and supported by positive noises from analysts at JP Morgan.
News of a £730mln special dividend has pushed engineering group Melrose PLC (LON:MRO) by 1.89%.
Michael Hewson, chief market analyst at CMC Markets UK, said: “After yesterday’s topsy turvy session markets in Europe have found upside progress slightly trickier to maintain today, with the FTSE100 outperforming on the back of gains in real estate and the energy sector…
“After the gains of yesterday US markets have held onto their gains and are trading cautiously as investors look towards tonight’s testimony from Fed chair Jay Powell, and [after] some dovish commentary from New York Fed President John Williams. His stance on tapering and rate rises stands in contrast to the more hawkish tone of his St. Louis counterpart James Bullard.
“On the data front, existing home sales declined for the fourth month in a row, however the declines have continued to slow, dropping 0.9% in May.”
3.15pm: Cryptocurrencies under pressure
The FTSE 100 is keeping its head above water but a mixed open on Wall Street has dampened some of the earlier enthusiasm.
The leading index is now up 16.29 points or 0.23% at 7078.58.
Meanwhile Bitcoin’s fall below US$30,000 means it has lost more than 50% from its mid-April high.
Its fall, and similar moves in other cryptocurrencies, is being attributed to a continuing clampdown by Chinese authorities.
At the end of last week, there were reports of a ban on Bitcoin mining projects, and there have been other moves against the sector.
Neil Wilson at Markets.com said: “China continues its clampdown with the Peoples Bank of China telling Alipay and other banks not to provide any services such as trading, clearing and settlement for crypto transactions and to do more to prevent speculation on cryptocurrencies. Whilst not a new policy as such, it underlines how China is taking a very hard line on this, particularly in the wake of the mining clampdown.”
2.45pm: Proactive North America headlines:
Great Panther Mining Limited (TSE:GPR) (NYSEAMERICAN:GPL) (FRA:G3U) publishes its 2020 sustainability report
2.41pm: Wall Street starts little changed
Wall Street has started Tuesday’s session relatively unmoved as traders seemed content to sit on their hands ahead of testimony from Federal Reserve chair Jerome Powell later today.
Shortly after the opening bell, the Dow Jones Industrial Average was down 0.1% at 33,843, while the S&P 500 dipped 0.04% to 4,223 and the Nasdaq inched up 0.02% to 14,144.
While equities were mostly flat, there was more activity on the downside in the crypto markets as Bitcoin saw its price drop below US$30,000 for the first time since January after falling 9% in the last 24 hours to US$29,704.
Back in London, the FTSE 100 had lost some ground but was still up 18 points at 7,080 at around 2.40pm.
2.16pm: Packaging group hit by higher costs
The FTSE 100 seems to have settled around its highs for the day, up 25.84 points or 0.37% at 7088.13.
But not everything is joining in with the gains.
It reported a 1% dip in full year revenues to £5.8bn but a 37% fall in profits to £231mln after it suffered higher costs of packaging, energy, transport and labour.
Laura Hoy, equity analyst at Hargreaves Lansdown, said: “The pandemic experience was a mixed bag for the box manufacturer, D S Smith. The group’s cardboard boxes were in demand across the globe as e-commerce accelerated. DS Smith also makes much of the cardboard packaging you find on supermarket shelves, so sales for this channel also held strong through the crisis.
“But DS Smith was boxed in by higher costs—from making the workplace COVID-19 secure to the rising cost of materials. Unfortunately, the group wasn’t able to recoup these expenses in the first half, and that dented overall profits significantly. While this wasn’t unexpected, it’s understandably disappointing. The market thought DS Smith would weather the storm a bit better.”
12.27pm: Investors await Fed chair’s testimony
US markets are set for a low key start as investors keep their powder dry ahead of the testimony to Congress by Federal Reserve chair Jerome Powell due later.
After Monday’s gains, the Dow Jones Industrial Average is forecast to edge up just 18 points or a miniscule 0.04%. There is little more excitement expected elsewhere, with the S&P 500 looking at a 0.1% gain and the Nasdaq Composite indicated 0.27% better.
Powell’s pre-released comments repeat the mantra that the central bank believes the current inflationary pressures are transitory. But last week’s more hawkish tone from the Fed’s regular meeting means markets are taking nothing for granted.
Sophie Griffiths, market analyst at OANDA, said: “US stocks are pointing to a subdued start on the open, after strong gains in the previous session and ahead of Fed Chair Powell’s appearance. The Dow booked its biggest one-day rally in three months on Monday. However, few are willing to add to those positions before hearing more from Powell.”
Meanwhile the FTSE 100, supported by a weaker pound, is holding on to its gains, up 27.39 points or 0.39% at 7089.68.
11.50am: Airlines lifted by hopes of travel restrictions easing
News that the UK government is planning to allow quarantine-free travel to amber list countries to people who have had both their jabs has given a lift to airline shares.
11.12am: Boom boom Britain
More signs of a strong rebound in the UK economy from the latest CBI factory survey – as well as growing pricing pressures.
UK manufacturing output volumes in the three months to June grew at the fastest pace on record (since 1975), according to the latest monthly CBI Industrial Trends Survey.
Output volumes grew from +18% in May to +37%, driven by the motor vehicles and transport equipment and food, drink and tobacco sectors.
Manufacturers expect output to continue to grow in the coming quarter, albeit slightly slower than shown in this month’s survey.
Total order books in June were at their strongest level since 1988, while export order books improved to their best in more than two years.
Meanwhile, manufacturers reported that stock adequacy in June worsened to its weakest on record (since 1977). Additionally, output prices are expected to grow rapidly in the next quarter, with this month’s outturn marking the strongest expectations since 1982.
Anna Leach, CBI Deputy Chief Economist, said: “The rebound in manufacturing activity has gathered pace in June, with output growth accelerating to its fastest pace on record and order books their strongest in over 30 years. Encouragingly, this performance is reflected in the majority of manufacturing sub-sectors and looks set to continue in the coming quarter.
“However, supply shortages continue to bite, and firms expect that to push through into prices in the months ahead.”
UK CBI Trends Total Orders Jun: 19 (est 16; prev 17)
UK CBI Trends Selling Prices Jun: 46 (est 40; prev 38)
— LiveSquawk (@LiveSquawk) June 22, 2021
The FTSE 100 is now at its high for the day, up 28.05 points or 0.4% at 7090.34.
10.40am: Reopening hopes lift landlords
Property companies continue to be among the big risers in the UK market.
Joshua Mahony, senior market analyst at IG, said: “Landlords are at the top of the pile in the UK this morning, with the likes of Land Securities, British Land, and Hammerson all gaining ground as we push towards a full economic reopening next month. Despite doubts over international travel, there is a great deal of confidence over the ability to reopen the economy next month, with landlords finally able to breathe a sigh of relief as a result.”
The sector has also been helped by a postive upgrade from JP Morgan, and news that British Land is planning its next major project in east London, building flats, offices and retail space at Aldgate.
The FTSE 100 has drifted a little higher, up 14.15 points or 0.2% to 7076.44 as the market digests the improvement in UK government finances, while the mid-cap FTSE 250 is 0.24% better at 22,511.
9.45am: Markets calm ahead of Fed testimony
The UK market seems to be treading water again, with investors perhaps playing it cautious ahead of the latest testimony by Federal Reserve chair Jerome Powell.
Which is hardly surprising given that the Fed’s slightly more hawkish view on interest rates last week, combined with subsequent comments from various members of the central bank, sent markets into a tizzy.
Powell’s initial comments have already been released and appear more dovish.
Neil Wilson at Markets.com said: “In prepared remarks ahead of his Congressional testimony today, Fed chair Jay Powell reiterated that the Fed is not unduly concerned that hot inflation readings are here to stay. “[As] transitory supply effects abate, inflation is expected to drop back toward our longer-run goal,” he says. His testimony from 7pm (BST) is likely to be market-moving – particularly if he says anything considered as hawkish.
“We will want to see whether he seeks to row back on the messaging the market took from last Wednesday.”
Ahead of all that the FTSE 100 is up 10.87 points or 0.15% at 7073.16.
9.24am: Melrose lifted by special dividend news
Engineering group Melrose Industries PLC (LON:MRO) is among the main risers in the leading index after unveiling a £730mln special dividend worth 15p per share following the £2.6bn disposal of Nortek Air Management .
The company also completed the sale of Brush last week for a net £100mln, which was the last business of the 2008 FKI acquisition.
It said trading continued to be in line with expectations, and if markets continue to recover, it hoped to announce another significant return of capital next year.
Elsewhere, after Monday’s excitement in the supermarket sector, there was a touch of profit taking.
Morrison Supermarkets PLC (LON:MRW) – which soared by 35% after news over the weekend of a private equity takeover approach worth £5.5bn – is down 1.21% while Ocado PLC (LON:OCDO) has lost 1.28%. J Sainsbury PLC (LON:SBRY) is virtually unchanged, down just 0.04%.
9.11am: UK public finances improve
Sentiment has been helped by an improvement in the UK public finances, as the economy began to reopen.
The government borrowed £24.3bn in May, pretty much in line with expectations and down £19.4bn on a year ago.
But it was still the second highest May figure on record as the country continues to deal with the finance burden of COVID-19.
Danni Hewson, AJ Bell financial analyst, said: “The pandemic has left big scars on the nation’s finances and reopening is a salve but one that needs careful application. Too much, too soon and those inflation worries that have caused so much concern will come to bear. Not enough, too slow, or if variants demand another reverse then there will be difficult conversations about spend vs taxation. But today feel like a glass half full day, more income, less spend and a gentle foot on the accelerator.”
So while the UK market is not exactly surging, the FTSE 100 remains positive, up 15.18 points or 0.31% at 7077.47.
Later this morning comes the latest CBI industrial trends survey, which should give further indications as to the current state of the UK economy.
8.45am: Off to a positive start
The FTSE 100 didn’t quite have the zip of Wall Street after hours but got off to a positive start nevertheless.
The about-turn in the US, which extended to Asia, was prompted by the Federal Reserve’s insistence that it will continue to support the economic recovery of the world’s largest economy.
The cat was placed firmly among the pigeons on Friday when senior Fed official James Bullard appeared to pave the pay for interest rate rises in late 2022.
The potential tapering of America’s generous monetary support programme also unsettled the livestock.
“John Williams of the New York Fed took a more nuanced view saying that the economy hasn’t recovered sufficiently for stimulus to be withdrawn and that the central bank remains ‘a ways off achieving substantial progress’, reiterating his view that inflation is transitory,” said Michael Hewson, an analyst at CMC Markets.
Attention now turns to Fed chair Jerome Powell’s testimony to US lawmakers later in the day.
Back here in the UK, Shell (LON:RDSA) and BP (LON:BP.) rose 1.7% and 1.6% respectively as the oil price hit levels last seen two years ago. Shell has also been helped by a note from JP Morgan forecasting US$5bn worth of share-buybacks by the end of next year (Read: Royal Dutch Shell should “show off the cash” says JP Morgan).
Proactive news headlines
OPG Power Ventures PLC (AIM: OPG) expects to meet market expectations for profit after tax and cash generation for the year to March 31, 2021.
Karelian Diamond Resources PLC (LON:KDR) said an aerial magnetic survey has been completed over the Anomaly 5 (Tervavaara) target in the Kuhmo region of Eastern Finland, an area where the company announced the discovery of a very rare pale green diamond in early 2017.
Blackbird PLC (LON:BIRD) said it has launched a report based on independent research which highlights the “hidden costs” of traditional on-premise video editing workflows adapted for the cloud, known as ‘cloud based’, when compared to the cloud-native platform provided by the company.
Cloudbreak Discovery PLC (LON:CDL) has taken an indirect stake in a borate project under a deal negotiated by Temas Resources, a company in which it holds a 15.8% stake. Temas has entered into a definitive option and joint venture agreement for the development of Erin Ventures’ Piskanja borate project in Serbia.
Kavango Resources PLC (LON:KAV) has appointed existing board member Ben Turney as chief executive. Michael Foster, the outgoing chief executive, has decided to step down from the role after 40 years in the mineral exploration industry but will remain on the board as a non-executive director.
TomCo Energy PLC (LON:TOM) used its interim results to highlight progress made in Utah despite the challenges of the pandemic with its Greenfield Energy joint venture establishing production from a pilot project.
Europa Metals Ltd (LON:EUZ) said it appointed mining consultancy Wardell Armstrong International Ltd (WAI) as the Pre-Feasibility Study (PFS) manager for its wholly owned Toral lead, zinc and silver project in northern Spain, following a competitive tender process.
NQ Minerals PLC (AQSE:NQMI, OTCQB:NQMLF, OTCQB:NQMIY) announced late on Monday that Roger Jackson has resigned as an executive director of the company with immediate effect.
Mineral and Financial Investments Ltd (LON:MAFL) has received a further US$1mln payment as part of its earn-in agreement with Ascendant Resources Inc (TSE:ASND) in regard to the Lagoa Salgada zinc-lead-copper project in Portugal.
6.50am: Footsie tipped for positive start
The FTSE 100 is being tipped for a strong start after US stocks last night enjoyed their best day in almost three months.
London’s blue-chip shares will rise over 20 points, according to spread-betters on the IG platform, following the near-44-point gain to 7,062.29 at the start of the week.
The previous day’s advances were all made at the end of the session, inspired by the thundering start made on Wall Street, which was rebounding hard after the blood-letting sparked by the Federal Reserves new hawkishness.
By the closing bell in New York, the Dow Jones had surged almost 587 points higher, leaping 1.8%, the S&P 500 had jumped 1.4% and the Nasdaq Composite had climbed 0.8%.
Having got a terrible case of the willies after Fed officials forecasted last week that that interest rates will be raised twice in 2023, from their current record low (and with Federal Reserve official James Bullard even saying on TV it might need to be in late 2022 instead of 2023), we should not have been surprised by the market reaction after a weekend spent mulling it over and some slightly dovish comments from the New York Fed’s John Williams, said market analyst Jeffrey Halley at Oanda.
“If there is one thing the last 15 months has taught us, it is the power of the buy the dip strategy as central banks continue pouring free money into the world’s financial system. Last night was a classic case in point, as the great post-FOMC/Bullard unwind of the global reflation trade abruptly halted and reversed,” he said.
“The US Dollar fell overnight, stocks, notably the unloved S&P and Dow Jones, rallied, gold picked up, and the US yield curve steepened as yields on the long-dated bonds rose once again.
“So, has the global reflation trade unwind run its course? We don’t really know. Is inflation transitory or sticky? Again, we don’t know, and I am not sure it really matters,” said a bewildered Halley.
While stocks were going up, Bitcoin was going down, with a substantial 11% tumble overnight.
However, it has clawed back some losses in the Asian session, rising 3.60% to $32,760.00 this morning in Asia.
Halley’s feeling was that Bitcoin was “nearing oversold territory”.
Around the markets
- Pound – down 0.2% at US$1.3901
- Gold – flat at US$1,783.05 per oz
- Oil – Brent crude up 0.2% at US$75.06 per barrel
- Bitcoin – down 5% over 24 hrs to US$32,555.34
6.50am: Early Markets – Asia / Australia
Stocks in the Asia-Pacific region were mostly higher on Tuesday with Japan’s Nikkei 225 surging about 3% in afternoon trade, largely recovering from a 3% tumble on Monday.
The Shanghai Composite in China gained 0.59% but Hong Kong’s Hang Seng index fell 0.23%
In Japan, the Nikkei 225 surged 2.94% while South Korea’s Kospi lifted 0.73%.
Shares in Australia jumped, with the S&P/ASX 200 trading 1.58% higher.
Proactive Australia news:
Global Lithium Resources Ltd (ASX:GL1) has completed its reverse circulation (RC) drilling program at the company’s wholly-owned Marble Bar Lithium Project, around 150 kilometres southeast of Port Hedland in the Pilbara region of Western Australia.
Havilah Resources Ltd’s (ASX:HAV) (FRA:FWL) recent drilling at its Kalkaroo copper-gold-cobalt deposit in South Australia has returned consistent widths and high grades of copper-gold sulphide mineralisation.
PolarX Ltd (ASX:PXX) (FRA:PX0) is set to kickstart a diamond core drilling program at the high-grade Caribou Dome Copper Project in Alaska targeting new high-priority targets for massive sulphide copper mineralisation.
Auteco Minerals Ltd (ASX:AUT) (OTCMKTS:MNXMF) has secured a speculative buy rating and price target of A$0.22 from a recent report by Canaccord Genuity Ltd, off the back of the Carey discovery at the Pickle Crow Project in Canada.
TNG Limited (ASX:TNG) (OTCMKTS:TNGZF) has taken another key step to progress its green energy strategy after reaching agreement with an international technology company and specialist in the green hydrogen sector to develop commercial opportunities using vanadium redox flow batteries (VRFB).