- FTSE 100 index off 11 points
- NASDAQ Composite to open higher in big week for tech company results
- Dow and S&P to open lower
11.30am: NASDAQ to open higher ahead of FAANGs results weak
The rising number of coronavirus cases plus a bump in the road on the way to a US fiscal stimulus package are discouraging US investors.
The Dow Jones is expected to open 281 points lower at 28,054 while the S&P 500 is tipped to open 34 points lower at 3,431; however, in a big week for results from technology stocks, the tech-heavy NASDAQ Composite is expected to advance 52 points to 11,600 when US trading starts at 1.30pm UK time (the clocks have yet to go back in the USA).
US futures are falling this Monday as coronavirus infections jumped and negotiations for a fiscal stimulus package before the election are came down to the wire. pic.twitter.com/IT4L8TKAf5
— Adjean Capital (@adjeancap) October 26, 2020
“There are a number of significant earnings reports out this week, but the headlines are likely to be driven by the US Election and the linked stimulus programme and the worrying increase in Covid-19 cases across Europe,” said Rony Nehme, the chief market analyst at Squared Financial.
“The ongoing ping pong of fiscal stimulus talks continued with both sides now saying that the other side is moving the goalposts. Pelosi says they have compromised a lot and shows their intent on reaching an agreement. As a result, equities have opened the week on the backfoot as the market awaits a decision.
“Corona cases in Europe are getting very serious with Spain imposing curfews and regional lockdowns as numbers in France are getting out of control with daily cases above 40k. We are now entering the last week before the elections and we could see markets turn very choppy, however, historically stocks always rally before an election so these dips could prove fruitful,” Nehme added.
On the macroeconomic front, the Chicago Fed National Activity Index (CFNAI) is due out today, as are the new home sales data.
“The CFNAI seems to have bounced back faster than the other Fed indices, but perhaps they’re not comparable due to the different units. The CFNAI uses many previously released indicators to gauge overall economic activity and related inflationary pressure on a national basis. A positive number corresponds to growth above trend and a negative number, below trend,” said Marshall Gittler of BDSwiss.
As for new home sales, they are expected to be up 1.3% month-on-month.
“Sales of new homes have already moved more than 30% above the pre-virus high in January, suggesting that a pause or cooling might be in order; however, a record reading on the index of buyer traffic published by the National Association of Home Builders suggests another step upward. Elevated readings on mortgage applications also bode well for another gain in sales,” said Daiwa Capital.
In London, equities have been subdued all morning but investors do not look exactly rattled by further evidence that a slew of second-quarter-style lockdowns is on their way soon.
The FTSE 10 was down 11 points (0.2%) at 5,849.
11.00am: Sterling in demand as Barnier extends his stay
The pound has made headway on foreign exchange markets after some positive developments in the troublesome Brexit negotiation.
The EU’s chief negotiator, Michel Barnier, said over the weekend he would stay on in London for a few more days, which has prompted some buying of sterling on forex markets.
The perishing pound has risen three-tenths of a cent to US$1.3072 and by six-tenths of a cent to €1.1057.
None of which has been enthusiastically greeted by purchasers of blue-chip UK equities, as they generally prefer a soft exchange rate. This partially explains why the FTSE 100 I down 21 points (0.4%) at 5,840.
One of the FTSE 100 companies with a fair amount of US dollar revenues is academic publications specialist Pearson PLC (LON:PSON) so it is a bit ironic that it is the best performer on the Footsie, up 4.0% at 533p.
10.10am: THG and Coca European Partners provide some much-needed excitement
It looks like traders put their clocks back too many hours yesterday, as tumbleweed blows across the Footsie landscape.
The FTSE was down 4 points (0.1%) at 5,856.
The shares rose 17% to 780p after THG said revenue growth accelerated in the third quarter, prompting the company to increase full-year revenue guidance.
“E-commerce firm The Hut Group begins life as a public company very much on the front foot as it upgrades revenue guidance in its maiden trading update,” said AJ Bell’s investment director, Russ Mould.
“Whether this is thanks to an unexpected trading boost or just canny management of investors’ expectations it should help keep sentiment towards the company in a positive place after a strong start in share price terms to life as a listed entity,” he suggested.
“The longer-term excitement around the story is based on its Ingenuity platform which has been compared in some quarters to Ocado’s online solution for global groceries firms. The Hut essentially picking up the IT and logistical requirements of the likes of PZ Cussons, Hotel Chocolat and Nestle.
“For now this part of the business makes only a modest contribution and if the business is to hold on to its premium valuation, the market will expect to see rapid growth in this area,” Mould said.
Coca-Cola European Partners PLC (LON:CCEP) also provided some fizz, rising 8.2% to 35.15p after it announced plans to acquire Coca-Cola Amatil, one of the largest bottlers and distributors of ready to drink beverages and coffee in the Asia Pacific region.
The drinks bottler also revealed that its third-quarter revenue dipped 3.0% year-on-year to €3,179mln, with the number of cases shipped down 4.0% on a year earlier.
9.05am: Weak start to the week
The FTSE 100 found itself stuck in the doldrums on Monday morning with receding prospects for a US economic bailout and spiralling coronavirus (COVID-19) infection rates exerting a drag on the index.
The UK’s blue-chip index was 19 points lower at 5,841.20 in early trading.
“Despite some positive developments from the likes of Gilead and AstraZeneca on the search for a vaccine, the immediate damage is already being felt in the real economy, with unemployment and the containment of the virus becoming election focal points,” said Richard Hunter, head of markets at Interactive Investor, of the impact of the pandemic.
“American Express customers reportedly reduced spending by a fifth in the company’s latest update, in what could prove to be a straw in the wind.”
While it is a big week here in the UK for corporate news, it is an even bigger one Stateside with Facebook, Amazon, Apple, Google owner Alphabet and Microsoft all set to update.
A Netflix-like deviation from expectations could be pivotal for the tech-focused Nasdaq Composite index, which is currently trading as if the pandemic never occurred.
In London early on, travel and travel-adjacent stocks were under the cosh.
Shares in Rolls Royce (LON:RR.), supplier and maintainer of jet engines attached to many of the world’s airliners, were down 5.3%.
IAG (LON:IAG), the owner of one of the world’s biggest airline groups, was marked 3% lower.
On the FTSE 250, tour operator TUI was off 5.9%.
Proactive news headlines:
Alien Metals Ltd (LON:UFO) has been awarded a 208 square kilometre exploration licence in northern Greenland, surrounding the world-class Citronen zinc-lead project owned by Ironbark Zinc Ltd. Citronen hosts a resource in excess of 13 billion pounds of contained zinc and lead metal and is one of the largest undeveloped zinc-lead projects globally Alien will soon commence a detailed review of historical data available over the project area. Meanwhile, IBK Capital has begun a marketing process for the company’s San Celso and Los Campos silver projects in Mexico, following the recent transaction with Capstone Mining over Donovan 2, also in Mexico.
Ferro-Alloy Resources Ltd (LON:FAR) has made its first commercial production and sale of calcium molybdate. Calcium molybdate (CaMoO4) is used in the production of ferromolybdenum, molybdenum-containing alloys, ceramics and direct alloying of steel and alloys with molybdenum in electric arc furnaces. The molybdenum content of calcium molybdate is sold on the pricing basis of molybdic oxide less a small discount. The molybdenum will be extracted as a by-product from the same raw materials that the company buys for the extraction of vanadium so there will be no additional raw-material costs. The company said it is in discussions with potential off-takers and expects to sign a long-term contract shortly.
Quadrise Fuels International PLC (LON:QFI) said it has now completed a pilot trial of its alternative diesel fuel, MSAR, at an international chemical group customer’s plant in Morocco. Coronavirus (COVID-19) restrictions in Morocco have been eased, which has allowed access to the plant, it noted. Detailed plans are now being discussed for an industrial-scale MSAR trial at another of the client’s sites that will start in early 2021 ahead of commercial-scale phase 2 trials.
Sensyne Health PLC (LON:SENS) said it has signed a non-exclusive strategic research agreement (SRA) with Milton Keynes University Hospital NHS Foundation Trust (MKUH) to enable the ethical application of clinical artificial intelligence (AI) research to improve patient care and research into new medicines. The AIM-listed firm said the five-year deal will see a dataset covering 650,000 unique patient records, with 55,000 annual hospital admissions from a patient population of approximately 350,000, added to its own anonymised dataset, increasing its size to 4.5mln patients. In return, MKUH will receive around 1.43mln shares in Sensyne as well as an investment of up to £250,000 per year from the company over the five-year term of the contract for specific investments in information technology to enable the curation and analysis of data.
Mosman Oil and Gas Limited (LON:MSMN) said it has executed contracts to acquire an additional 80.83% working interest of the Cinnabar Lease in East Texas for a cash consideration of US$62,500, increasing Mosman’s working interest to 97%. The Cinnabar Lease is a 348.83 acre lease ‘Held By Production’, which forms part of the Challenger Project in which Mosman has a 16.17% working interest. The Challenger Project is located in East Texas, between Mosman’s Stanley and the Champion Projects where drilling has just been completed at the Falcon-1 well.
Eckoh PLC (LON:ECK) said it traded in line with expectations in the first half of its financial year, with the second quarter seeing a return of momentum. The customer contact and secure payments specialist said the April-June quarter was “unsurprisingly challenging for new business” as countries went into lockdown mode to combat the coronavirus (COVID-19) pandemic but things started to pick up in the July-September quarter, particularly for US secure payments contracts delivered in the Cloud.
Directa Plus PLC (LON:DCTA) said it has signed a non-binding memorandum of understanding with NexTech Batteries, a company in the field of Lithium Sulphur batteries based in Nevada. Under the agreement, Directa will supply NexTech with its pristine graphene nanoplatelets, a key raw material for manufacturing the cathode of Lithium Sulphur batteries. The graphene specialist said it has agreed with the US firm to form a steering committee responsible for establishing an action plan together with timelines for all relevant activities under the agreement. Subject to the achievement of minimum sales orders, Directa Plus said it granted NexTech an exclusivity period of five years in the field of Lithium Sulphur batteries.
Allergy Therapeutics PLC (LON:AGY) said the screening of the first patient in an exploratory field study of its short-course grass allergy inoculation has begun. Its Grass MATA MPL treatment has been designed as an aluminium-free, allergen-specific immunotherapy to address the cause of allergic rhinoconjunctivitis due to grass pollen. The field study is a double-blind, placebo-controlled, randomised clinical assessment of 150 patients over 12 sites in Germany and the US.
H&T Group PLC (LON:HAT) has named recently appointed executive director Chris Gillespie as its chief executive from January 1, 2021. Gillespie only joined the pawnbroking firm in September having previously been managing director of the Consumer Credit Division of Provident Financial PLC (LON:PFG) since 2017. He has also held senior positions with Madison CF UK, Amigo Loans Ltd and Albemarle & Bond. Gillespie is replacing John Nichols, who is retiring on December 31, 2020, after nearly 24 years of service with the group.
Coinsilium Group Limited (LON:COIN) has highlighted a number of initiatives from its portfolio company Indorse, in which it holds a 10% interest and around 5.79mln IND tokens representing 15.37% of the circulating supply. The blockchain and crypto finance venture group said Indorse has now released its Indorse 2.0 Light-Paper which provides the specifications relating to its updated token utility model. Coinsilium said the Light-Paper reinforces the IND token as the core element powering the Indorse ecosystem through the creation of new roles and the introduction of staking rewards.
Galantas Gold Corporation (LON:GAL) (CVE:GAL) is carrying out a review of its exploration work at the Omagh gold mine in Northern Ireland, with a view to updating is technical report on the property. Part of the proposed work may involve a core drilling program, the group added. A report published in May 2020 indicated enhanced drilling opportunities, with the potential to expand and further define the resource base local to the mine development.
DeepVerge plc (LON:DVRG), the bacteria specialist formerly-known as Integumen on Friday responded to press commentary about increased testing of sewage for the presence of coronaviruses. The company noted that wastewater treatment sites in England, Wales and Scotland will start to increase their testing, with the aim of creating an early warning system to detect local outbreaks of coronavirus (COVID-19) before they spread. DeepVerge noted it has been working with multiple universities and wastewater utilities since June this year on COVID-19 related projects. The company is involved in many projects in the UK, Ireland, Italy, Michigan, US, Shanghai, China and Japan.
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 329,225 ordinary shares of 3p each credited as fully paid at a price of 35p per share in respect of the exercise of 329,225 options with an exercise price of 35p held by option holders, including 169,225 held by Gabriele Cerrone, executive chairman of the company and 5,000 held by Keeren Shah, its finance director. The aggregate interests of Cerrone in shares and voting rights accordingly increase by 169,225 shares to 66,224,893 representing approximately 34.16% of the enlarged issued share capital.
AfriTin Mining Ltd (LON:ATM is continuing the ramp-up at its Uis tin mine in Namibia. The group said tin concentrate production in September 2020 increased to 39 tonnes, which contained 27.5 tonnes of tin. The company remains on track to achieve nameplate production of 60 tonnes a month of tin concentrate, containing 36 tonnes of tin, by the end of 2020.
Advanced Oncotherapy PLC (LON:AVO) said it is raising £7.7mln to strengthen its balance sheet as it prepares to make fully operational its next-generation proton beam therapy technology. Clients of SI Capital are investing in the business via a direct subscription in shares at 30p each (a modest discount to the 30-day average price). Advanced Oncotherapy said the cash injection will help as its technicians work on “progressing the assembly, documentation, verification and validation activities” ahead of the commercial unveiling of its LIGHT system next year.
Vast Resources PLC (LON:VAST) said it continues to expect a JORC reserve & resource report for its Baita Plai project in Romania by the end of this week as it raised funds to boost its working capital balance. The AIM-listed group said it has raised around £1.75mln through the placing of 1.09mln shares at a price of 0.16p each, an 11.1% discount to its closing price last Friday. Vast said the funds will be partly used to replenish its working capital on account of cash settling the conversion notice issued by Atlas Special Opportunities earlier this month, adding that the funds will also ensure it has sufficient cash to cover the period of time until it receives payment in full from the first sale of copper concentrate to Mercuria.
Bezant Resources PLC (LON:BEZ) has announced new appointments to its board and issued a half-year report that said the period was one of consolidation and acquisition, with its focus shifting to Southern Africa. The group is not yet at the revenue stage but the group’s executive chairman, Colin Bird, said the board “feels very confident with the underlying quality of our project portfolio in copper and gold since they are in metals which have short and mid-term strong potential”. In a separate announcement, the copper-gold exploration and development company said Raju Samtani and Ed Slowey will be joining the board with immediate effect, as finance director and technical director, respectively.
Canadian Overseas Petroleum Limited (LON:COPL) has said the settlement date for the agreement between its 50%-owned joint venture Shorecan and Essar Mauritius over the OPL 226 prospect has been extended until January 29, 2021. Completion of the agreement is subject to the Nigerian National Petroleum Corporation (NNPC) granting an extension of the exploration period for the OPL 226 licence beyond September 30, 2020. Application for an extension was submitted in early June but coronavirus (COVID-19) restrictions on travel and meetings have delayed the process, COPL said in a statement.
CMC Markets PLC (LON:CMC) has announced the appointment of Peel Hunt as its joint corporate broker with immediate effect. Peel Hunt will work alongside the group’s existing corporate broker RBC Capital Markets
Shanta Gold Limited (LON:SHG) announced late afternoon Friday that its “significantly oversubscribed” was supported by both existing shareholders and new investors. The exploration group said that, as a result of the significant demand generated during the bookbuild process, the participants in the placing agreed on a pro-rata basis to take part in a secondary trade to acquire 54,650,211 ordinary shares owned by Barrick Gold Corporation at the issue price. The Barrick shares represent 6.4% of the company’s existing issued share capital. Following completion of the secondary trade Barrick Gold will no longer have any beneficial interest in Shanta’s ordinary shares, the group noted.
Power Metal Resources PLC (LON:POW) the AIM-listed metals exploration and development company announced after the close on Friday that it has received notices to exercise warrants over 5,750,000 new ordinary shares of 0.1p each. The shares are being issued for 2,000,000 warrants at an exercise price of 0.75p each and 3,750,000 warrants at an exercise price of 0.7 each. Subscription monies of £41,250 have been received by Power Metal in respect of these exercises.
Frontier IP Group PLC (LON:FIP), a specialist in commercialising intellectual property, has issued a newsletter summarising key activities and developments within the group’s portfolio companies for the year to date. It is the intention for the group to publish such a newsletter on a quarterly basis moving forward. Copies of the newsletter will be sent to shareholders shortly and will be available to download from the group’s website at www.frontierip.co.uk
6.50am: Slow start predicted
The FTSE 100 looks set to open lower amid fading hopes a US stimulus package bill will be signed this side of next week’s election and against a backdrop of a third record day for coronavirus (COVID-19) infections.
The former first: US House speaker, Nancy Pelosi, said she will pursue a pandemic relief deal after the election if the White House fails to sign off on the latest plan.
She is hoping for a response Monday, though analysts suspect it will be a ‘no’ from the Trump administration.
The United Nations, meanwhile, called the coronavirus pandemic the ‘greatest crisis of our age’ as Spain entered a state of emergency.
“On the health crisis front, things seem to be taking a turn for the worse,” said CMC Markets analyst, David Madden with a degree of understatement.
“A number of US states, and countries, like Italy, The Netherlands and Hungry have registered a jump in Covid-19 cases. Spain has declared a state of emergency, and France is believed to be preparing for tougher restrictions.”
Here in the UK, the news wasn’t much better with infection rates still sharply on the rise.
A fire-break lockdown is now in place in Wales and many of England’s major cities are subject to the highest level of restrictions. However, it has been mooted that a state of nationwide house arrest may well be re-introduced to stem the spread of the infection.
The economic impact, meanwhile, is resulting in a ‘jobs bloodbath’, according to one newspaper.
On the markets, ahead is a week packed full of corporate news, led by oilers BP (LON:BP.) and Shell (LON:RDSA). We also have updates from Lloyds (LON:LLOY), the high street bank and telco BT (LON:BT.A).
Around the markets:
- Pound worth US$1.3025 (down 0.11%)
- Bitcoin US$13,096 (up 0.71%)
- Gold US$1,897.90 (down 0.38%)
- Brent crude US$40.89 (down 0.88%)
6.45am: Early Markets – Asia/Australia
Asia-Pacific stocks were mostly lower on Monday as new COVID-19 cases continue to rise in the US and across Europe.
In China, the Shanghai composite was down 0.88% while Japan’s Nikkei 225 dipped 0.06%.
Over in South Korea, the Kospi fell 0.30% and Japan’s Nikkei 225 index was 0.06% lower.
Hong Kong shares skipped the trend with the Hang Seng index rising 0.54%.
Shares in Australia opened higher, but the S&P/ASX 200 gave back its gains to close 0.18% lower.
Proactive Australia news:
Tietto Minerals Limited (ASX:TIE) has grown the overall gold resource at its Abujar project in central west Côte D’Ivoire, West Africa, by 40% or 870,000 ounces, to 3.02 million ounces with further resource growth likely due to continued strong drilling results.
Piedmont Lithium Ltd (ASX:PLL) (NASDAQ:PLL) has closed a strongly supported US public offering to raise US$57.5 million or A$81.2 million which will support ongoing development of the company’s Piedmont Lithium Project in the US
Great Boulder Resources Ltd (ASX:GBR) will investigate the potential for nickel sulphide bodies at Whiteheads following the recent discovery of massive sulphide at T5 prospect within Estrella Resources Ltd’s (ASX:ESR) Carr Boyd project north of Kalgoorlie.
Fenix Resources Ltd (ASX:FEX) has executed a contract for the road transport component of its Iron Ridge Project in Western Australia with Fenix Newhaul Pty Ltd, an incorporated joint venture company between Fenix and Newhaul Pty Ltd.
Cogstate Limited (ASX.CGS) has expanded its partnership with Japanese pharmaceutical company Eisai Co Ltd in a global agreement to develop Cogstate’s digital cognitive assessment tools to be used by individuals and healthcare professionals.
Linius Technologies Ltd (ASX:LNU) has developed new features to ensure punters and fans on Racing.com enjoy an improved digital experience when it comes to watching race replays and other curated video content.
Strategic Energy Resources Limited (ASX:SER) has completed the drilling of three diamond holes at Saxby Gold Project in northwest Queensland on schedule with all holes hitting their respective target areas.
Boadicea Resources Ltd (ASX:BOA) has gained a new substantial holder in IGO Ltd (ASX:IGO) which holds a 10.11% interest following the recent approval of the asset sale of nine Fraser Range tenements to IGO at the company’s recent general meeting.