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FTSE 100 off worst levels but still nursing triple digit losses; THG jumps on Softbank investment

  • FTSE 100 loses 146 points
  • Renishaw tops fallers
  • British Airways owner stranded

10.56am: Leading shares still ahead for the month so far

Sell in May and go away as the old City adage has it?

Until now, with the leading index hitting 14 month highs during the month, perhaps not the best idea.

Even with the current  fall of 146.86 points or 2.06%, the index is sitting at 6976.82, just about ahead of the game since the start of May. (The FTSE 100 closed at 6969 at the end of April, up 3.8% on the month and the best performance since November 2020.)

But with inflation worries to the fore again and tech stocks slumping, could things get much worse?

Chris Beauchamp, chief market analyst at IG, said: “The volatility of the past 24 hours has once again caught investors napping. In contrast to expectations, 2021 has been a quiet year overall for major indices, with downward shocks confined to growth names and upward surges mostly concentrated in various esoteric alternative assets driven by a speculative frenzy.

“But as we move into the poorer period of the year for markets from the strong October-April period it will be harder for indices to maintain their sang-froid. Inflation worries are not going away, and are going to get louder and more insistent.”

10.17am: E-commerce group in demand

Bucking the downward trend in the overall market and indeed the technology sector is THG PLC (LON:THG).

The e-commerce group has jumped 11.31% or 67.43p to 663.43p after it increased the size of a placing to investors after strong demand.

It will now raise US$320mln, up from US$270mln, selling 38mln new shares at 596p each. In addition Japanese giant Softbank will take a $730mln stake in the company and also pay up to US$1.6bn for a stake in the its  technology subsidiary.

AJ Bell investment director Russ Mould said: “One UK technology-orientated name which is doing very nicely indeed is sports and health products online platform The Hut Group or THG for short.

“THG is raising a large amount of money, some of which is coming from Japanese investor Softbank which has also struck a deal giving it the option to invest in THG’s Ingenuity division.

“The Ingenuity platform is already used by Nestle, Nintendo and Homebase, and has been compared to Ocado’s out of the box web-based groceries solution for global supermarkets.”

Overall the FTSE 100 is now down “just” 140.47 points or 1.97% at 6983.21.

9.47am: Leading shares slump

Still no risers on the FTSE 100, although it is just about off its worst levels.

The leading index is down 161.14 points or 2.26% at 6962.54 having fallen as low as 6953.

After Friday’s US non-farm payroll report came in below expectations and eased fears of an overheating economy, the tide has turned again and investors are worried about inflation once more. The day’s data from China has fuelled these concerns.

Neil Wilson at said: “If you are looking for inflation signals, China’s factory gate prices are a pretty good leading indicator. So today’s report showing that producer price inflation rose 6.8% from a year earlier in April, the fastest pace in more than three years, could be of concern. Tomorrow’s US CPI numbers are going to be closely watched. ..Whatever the Fed tries and sticks to in terms of its employment mandate, the bond market will move if inflation takes off. The wage component of the jobs report was underappreciated. A lack of employees will drive up wages and end prices.”

No surprise that one of the fallers is Scottish Mortgage Investment Trust PLC (LON:SMT), which is heavily exposed to technology stocks. With the 2.5% drop on the Nasdaq Composite and investors deciding to move into stocks which will benefit from recovery, the trust’s shares have dropped 45.5p or 3.99% to 1094p.

Worries about rising commodity prices have hit industrial groups. Renishaw PLC (LON:RSW) is down 375p or 6.22% at 5655p while Melrose PLC (LON:MRO) is 4.69% or 7.8p lower at 158.7p.


8.48am: Triple digit losses at the open

After a couple of worry-free days, the spectre of inflation came back to haunt global financial markets.

The American jobs data miss last week appeared to have quelled concerns only for a sharp spike in commodity costs and surging factory prices in China to unsettle the livestock ahead of US CPI data later this week.

Fears of a pre-emptive rise in interest rates prompted a 2.5% drop in the Nasdaq that then sent ripples through Asia’s main bourses.

Why this should then have such a pronounced effect on the Footsie, which should be a beneficiary of the switch out of growth and into value stocks, was a bit of a head-scratcher.

Still, the market’s immediate reaction isn’t always measured or logical.

In the early action, it was another tough session for the airlines with BA owner IAG (LON:IAG) off 4.7% early on as it prepared to top up its cash pile. Wizz Air (LON:WIZZ) fell 2.5%.

You had to shift down to the FTSE 250 to find the day’s risers, with none on the Footsie at all. And even then the moves were piecemeal.

Morrisons (LON:MRW) nudged up a penny after what can best be described as a solid if unspectacular first-quarter trading statement.

“There have also been some notable early successes from the gradual easing of lockdown, with fuel sales close to pre-pandemic levels and with an increase in sales of food to go products positioning the group well for the coming months,” said Richard Hunter, head of markets at Interactive Investor.

“Alongside a sharp decrease in relative Covid direct costs, the door will be open to greater overall profits.”

Proactive news headlines

The City Pub Group PLC (LON:CPC) said trading has been encouraging since pubs were allowed to reopen for outdoor trading, with 24 of its 45 pubs open at present but unable to serve thirsty customers indoors.

Angling Direct PLC (LON:ANG) said it will meet market expectations for the current financial year after swinging to a profit during the pandemic.

Coinsilium Group Limited (LON:COIN) said its subsidiary Nifty Labs has started development work on a new non-fungible token (NFT) project to create an ‘NFT on Bitcoin’ marketplace platform powered by the RSK blockchain, a smart contract platform secured by the Bitcoin network.

Kromek Group PLC (LON:KMK) achieved significant revenue growth during the second half of the 2021 financial year, after orders and shipments of the company’s medical, nuclear and security screening detection technology resumed midway through the first half. 

Drilling has now begun on the Kitlanya East in Botswana, a project held by Kalahari Metals, which is 50.01% owned by Metal Tiger PLC (LON:MTR). 

Mobile payments specialist Bango PLC (LON:BGO) has entered into a partnership with NTT DATA to expand payments across Asia. Merchants using the Bango Platform to offer online payments can now expand their footprint to users in Indonesia, Malaysia, Thailand, Hong Kong, Philippines, and other key Asian markets.

Tirupati Graphite PLC (LON:TGR) announced that its planned investor webinar on the Investor Meet Company platform has been rescheduled to 19 May at 10:30am BST. The live presentation from executive chairman Shishir Poddar and two other directors is open to all existing and potential shareholders, with questions invited in advance or during the event.

AEX Gold Inc (LON:AEX, TSXV:AEX) notified that its annual and special general meeting will take place online on June 9 at 10am Toronto time.

Bahamas Petroleum Company PLC (LON:BPC) announced that it will extend the latest time and date its open offer from 11am on 12 May to 11am on 18 May.

6.50 am; Snapback predicted 

The FTSE 100 is likely to be yanked back from its recent 14-month highs as inflation worries send global stock markets into a tizzy.

After faltering at the start of the week, with a six-point drop, London’s benchmark of blue-chip shares has been called 87 points lower on Tuesday by spread-betters in the City.

Wall Street suffered a major nosebleed overnight after its record highs last week, with a tech sell-off leading to the Nasdaq tumbling 2.6% and the S&P 500 dropping 1%, while Dow Jones notched another record but ended with a 0.1% decline.

Asian markets are in charging lower this morning, with the Nikkei falling 3.2% and the Hang Seng retreating 1.7%.

“What is most interesting about the price action overnight is how quickly the inflation theme has remerged,” said market analyst Jeffrey Halley at Oanda.

“Precisely one day, in fact, after a very deflating US jobs number on Friday. A very dovish set of comments from Chicago Fed Evans were also ignored. Inflation nerves just won’t go away.”

He added: “The falls overnight on equity markets, notably technology, are likely to be just as much due to extended shorter-term valuations and nervous investors than to inflation prospects. Goldman Sachs may also be partially responsible, publishing a report on technology stocks highlighting that regulatory risks are the biggest threat to the big-tech story.”

Further twists and turns in the inflation story are possible this week with official inflation data to be is released tomorrow, followed by 10-year and 30-year bond auctions.

However, says Halley, if tonight’s JOLTs job openings report for April comes in much lower than the forecast 7.5mln jobs tonight, “I expect the inflationistas to breathe easier once again” – for now.

Around the markets

Pound flat at US$1.4132

Brent Crude Oil down 0.9% at US$67.69

Gold flat at US$1,836.88

Bitcoin down 6.5% (over 24 hours) at US$55,084.7

6.50am: Early Markets – Asia / Australia

Stocks in the Asia-Pacific region were mostly lower on Tuesday, with Taiwan leading declines across the region following a +4% drop for the benchmark Taiex in afternoon trade.

The Hang Seng index in Hong Kong fell 1.83% while the Shanghai Composite in China gained 0.19%.

In Japan, the Nikkei 225 tanked 3.14% and South Korea’s Kospi declined 1.36%.

Shares in Australia slipped, with the S&P/ASX 200 trading 1.07% lower.


Proactive Australia news:

St George Mining (ASX:SGQ) (FRA:S0G) has completed a $7 million private placement, issuing a total of 85,365,854 shares at a price of $0.082 per share to institutional and sophisticated investors.

Triangle Energy (Global) Ltd (ASX:TEG) and Pilot Energy Ltd (ASX:PGY) have executed joint venture agreements and access deeds formalising the WA-481-P upstream joint venture and the Cliff Head Wind and Solar joint venture.

Maximus Resources Ltd (ASX:MXR) has received strong gold intersections of up to 10.5 g/t gold within wide zones of mineralised stockwork at S5 prospect around 300 metres south of the historic high-grade Wattle Dam Gold Mine in Western Australia.

Tietto Minerals Ltd (ASX:TIE) has received bonanza grade gold results from infill drilling at Abujar‐Gludehi (AG) deposit, part of its 3.02-million-ounce Abujar Gold Project in Côte d’Ivoire, West Africa, which is on track to be West Africa’s next gold mine.

Miramar Resources Ltd (ASX:M2R) extended the Marylebone target strike length to 1.7 kilometres during recent phase-2 aircore drilling, which returned 4-metre composite assays between 0.25 g/t and 1 g/t gold at depths of 44 to 60 metres within the Gidji joint venture project in Western Australia.

Arafura Resources Ltd (ASX:ARU) (OTCMKTS:ARAFF) (FRA:REB) has completed a feasibility study update for its 100%-owned Nolans Neodymium-Praseodymium (NdPr) Project in the Northern Territory, confirming ultra-low operating costs of US$24.76 per kilogram of NdPr oxide.

Twenty Seven Co Ltd (ASX:TSC) (FRA:U9V) is set to start auger drilling at the 100%-owned Yarbu Gold Project, around 160 kilometres northeast of Southern Cross and about 90 kilometres northwest of TSC’s Mt Dimer Project in Western Australia.

Marvel Gold Ltd (ASX:MVL) (FRA:GR2) plans to unlock the value of its advanced Chilalo Graphite Project in Tanzania by spinning it out into a newly incorporated, wholly-owned subsidiary Evolution Energy Minerals Limited, which proposes to undertake an IPO to facilitate listing on the ASX.

European Lithium Ltd (ASX:EUR) (FRA:PF8) (VIE:ELI) is set to add to its strategic lithium endowment in the heart of Europe after entering a Collaboration Agreement with Jadar Resources Ltd (ASX:JDR) (FRA:R1E) on its Austrian tenements.

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