- FTSE 100 up 8 points
- Government to introduce new quarantine rules for travellers from “red list” countries
- Airline stocks friendless
5.00pm: FTSE ends just above the flatline
The FTSE 100 closed Tuesday up 8 points, 0.1%, to 6,531, while the FTSE 250 gained 26 points, 0.1%, to 21,113.
“It has been a directionless trading session as the bullish mood that has been circulating recently has faded, hence why European equity benchmarks are mixed,” CMC Markets UK analyst David Madden wrote Tuesday. “Volatility is low as there wasn’t much in the way of major macroeconomic news to trigger excitement in one direction or another.”
In the US, the Dow recovered somewhat from a rough open and was down 18 points, less than 0.1%, at midday. The S&P 500 was down just 3 points, less than 0.1%, while the Nasdaq Composite improved 35 points, 0.3%, to 14,023.
4.00pm: Lethargic afternoon continues
London’s index of leading stocks has continued to coast in the afternoon session.
The FTSE 100 index was up 11 points (0.2%) at 6,535, thanks largely to the strength of housebuilders, which have been buoyed by Bellway Homes PLC’s (LON:BWY) trading update.
“Stock markets are looking a little flat on Tuesday after a strong bounceback rally over the last week or so,” said OANDA’s Craig Erlam.
The Footsie may have kept its head above water for most of the afternoon session but British Airways owner International Consolidated Airlines (LON:IAG) has gone the other way after health secretary Matt Hancock announced new quarantine measures for travellers from so-called “red list” countries.
IAG shares retreated 2.5% to 155.15p, while on the FTSE 250 easyJet PLC (LON:EZJ), down 4.5% at 788p, was the worst performer, closely followed by package tours operator TUI AG (LON:TUI), down 3.6% at 319.3p, which published some scary numbers in its first-quarter trading update this morning.
With the announcements on #quarantine hotels, ABTA is encouraging Members & the industry to write to your MPs again about the extreme challenges we’re facing & the urgent need for tailored financial support. Download our templates at: https://t.co/8zLratGbJ7 #SaveFutureTravel pic.twitter.com/RnWr6VfF4G
— ABTA Members (@ABTAMembers) January 27, 2021
3.10pm: Proactive North America headlines:
Tocvan Ventures Corp (CSE:TOC) (FRA:TV3) says maiden drill program at Pilar project shows encouraging mineralization and potential for expansion
LiteLink Technologies Inc (CSE:LLT) (OTCMKTS:LLNKD) (FRA:C0B:FF) completes previously announced private placement for gross proceeds of C$1,005,000
Genprex Inc (NASDAQ:GNPX) announces $25 million registered direct offering priced at-the-market
Milestone Scientific Inc (NYSEAMERICAN:MLSS) signs distribution deals with Atlanta Dental and Nashville Dental for its Wand Single Tooth Anesthesia System
Esports Entertainment Group Group Inc (NASDAQ:GMBL) (FRA:40Y1) files for a gaming license in New Jersey
2.44pm: Wall Street opens low
The main Wall Street indices slipped into the negative on Tuesday morning as optimism over another round of US stimulus faded among traders.
In the early minutes of trading, the Dow Jones Industrial Average was down 0.27% at 31,301 while the S&P 500 dropped 0.21% to 3,907 and the Nasdaq fell 0.15% to 13,966.
Sentiment may also have been dented by the National Federation of Independent Business (NFIB) small business optimism index reading for January, which was down to 95.0 from December’s 95.9 and below the 97.0 the market had been expecting.
Meanwhile, shares in pharma group Eli Lilly & Co (NYSE:LLY) fell 1.3% to US$203.15 in early deals after the company announced its CFO Josh Smiley has resigned after the firm was made aware of what it said were “allegations of an inappropriate personal relationship” between Smiley and an employee.
Back in London, the FTSE 100 was back to square one into late afternoon, down just 1 point at 6,521 at around 2.45pm.
2.28pm: FTSE 100 thinks about shifting into second gear
Pancake Day is a week away and the FTSE 100 has been getting into the spirit very early.
The index has been as flat as the proverbial flour-based treat all day. Currently, it is up 10 points (0.2%) at 6,533, which by today’s standards counts as a demonstration of almost embarrassing bullishness.
The same can’t be said for the cryptocurrency markets, where Bitcoin has added another US$1,471 (3.3%) to yesterday’s gains at US$46,269.
Tesla announced yesterday that it had built up a US$1.5bn position in Bitcoin and was considering accepting Bitcoin as payment for its cars – a move that will please blackmailers and cybercriminals, no doubt.
“In our view, the move by Tesla is both risky and obfuscating the valuation of the company. With the volatility in Bitcoin, Tesla could easily experience a 50% loss on their US$1.5bn investment adding a US$750mln mark-to-market loss which would be almost the entire FY20 adjusted net income of US$812mln. In other words, Elon Musk has exposed Tesla to immense mark-to-market risk. This means that the equity valuation models will become extremely sensitive to fluctuations in the value of Bitcoin,” said Peter Garnry, the head of equity strategy at Saxo Bank.
“It would have been much less risky for Tesla to support Bitcoin by announcing that it was working towards receiving payments in Bitcoin but even that will prove risky due to volatility exposing Tesla payments to a huge risk. Secondly, Bitcoin still has an issue with money laundering and know-your-customer policies making it very cumbersome for Tesla to accept payment in Bitcoin without aggressively ramping up compliance teams and processes,” he added.
12.50pm: US indices to open lower
US indices are expected to retreat from Monday’s highs as the boost from the president’s fiscal stimulus package begins to fade.
Spread betting quotes suggest that the Dow Jones industrial average will shed 72 points at 31,314 while the S&P 500 is tipped to ease 5 points to 3,911. The NASDAQ Composite is seen opening 326 points lower at 13,682.
“Some stimulus rally fatigue could be developing ahead of China Lunar New Year,” said Axi’s chief global market strategist, Stephen Innes.
The National Federation of Independent Business (NFIB) small business optimism index reading for January is out, with the 95.0 reading down from December’s 95.9 and below the 97.0 the market had been expecting.
“The NFIB sample has a strong Republican bias, so we’re not surprised that the headline index has plunged since the election, returning it to the level prevailing immediately before the 2016 election,” said Pantheon Macroeconomics; chief economist, Ian Shepherdson.
“The surge in Covid cases over the year-end can’t have helped, either. Most of the decline in the headline index since October has been in the expectations components, with expectations for the economy swinging to -12 from +27; sales expectations have dropped from -6 to +11; and earnings expectations have fallen to -16 from -3. Movements in the other components have been much smaller, with hiring intentions down only one point and capex plans down four points. These numbers are well down from their pre-Covid levels but the recent trends suggest that the services sector is now more or less frozen in place, waiting for the recovery when the virus is beaten,” Shepherdson said.
In company news, computer games company Take-Two Interactive Software Inc was 5% lower in screen-based trading at US$202.68 after its trading update yesterday, which was released after the end of trading.
In contrast, DuPont de Nemours Inc was a shade higher – up 0.5% at US$76.30 – after its fourth-quarter numbers, which were also released after the end of the trading day yesterday.
This morning the chief financial officer (CFO) of drugs giant Eli Lilly resigned after it was revealed he had a consensual personal relationship with another company employee.
Josh Smiley will be replaced by Anat Ashkenazi, the CFO of Lilly Research Laboratories.
In London, there is not even a bit of old-fashioned prurience to liven things up and the FTSE 100 remains utterly sclerotic, up 3 points (0.1%) at 6,527.
The FTSE 100 continues to swim around in circles, with the strength of oilers offset by sterling’s advance against the US dollar.
London’s index of blue-chip stocks was down 4 points at 6,520 – a level it has hovered around most of the morning.
“Higher-than-expected volumes, higher prices and higher profit margins all mean that Bellway’s trading update reads very well and the builder seems to be feeling pretty bullish, judging by the way in which is it buying new land,” said Russ Mould, AJ Bell’s investment director.
“The FTSE 250 firm has snapped up 8,848 plots of land in the first six months of its latest financial year, with a contracted value of GBP453 million, to put it on track to easily exceed its land-bank boosting purchases of 2018 and 2019, let alone 2020.
“Better still, buying land at the right time in the cycle – when sentiment is depressed – is a key factor in the profit margin that a house builder makes, so Bellway can be feeling pretty pleased with its latest land grab, even as the company continues to rack up costs associated with fire safety improvements at previously constructed apartment sites,” he added.
It is the second time in the company’s short time as a publicly quoted company that the board has put out a statement professing mystification at the share price movement.
Our latest issue is now online, featuring a trade exclusive with @sarahwillers about new business Nightcap; a launch of an online drinks tasting club; features on essential topics; and plenty of chats with our readers. If you’re tagged, you’re featured! https://t.co/YRjlFMrEL6 pic.twitter.com/2lN7gTqpmO
— Pub & Bar Magazine (@PubandBarMag) February 4, 2021
9.45am: UK retail sales fall for the first time since May
UK retail sales fell by 1.3% in January from a year earlier, according to figures released this morning by the British Retail Consortium (BRC).
In the previous month, sales had been up by 1.8%, according to the BRC’s figures.
January’s sales levels were the lowest since May, adding to evidence that the current lockdown is much worse for retailers than November’s lockdown was, according to Samuel Tombs, the chief UK economist.
“BDO’s High Street Sales Tracker stuck an even worse note, with non-food sales values falling -10.0% year-over-year in January, the biggest fall since June, though it will have missed the lockdown-related boost to food sales. Similarly, Barclaycard has reported today that households’ overall expenditure was down 16.3% year-over-year in January, much worse than December’s 2.3% drop, though its measure tends to fall further than retail sales during lockdowns,” Tombs reported.
“Meanwhile, the BoE’s CHAPS data show that the value of transactions on credit and debit cards was 34% below its February 2020 level last month, much worse than the 4% shortfall seen in January 2020, confirming that last month’s drop isn’t merely due to usual seasonal variations. In the round, then, we judge that these surveys are broadly consistent with a 4% month-to-month drop in the official measure of retail sales volumes excluding petrol, which would leave it 6.5% below its October 2020 peak. Alas, however, these surveys have been an imperfect guide to the official data in recent months,” Tombs lamented.
“On a more positive note, both the BDO and CHAPS data show that sales edged higher over the course of the month, potentially suggesting that consumers’ confidence is recovering, now that virus numbers have fallen sharply and vaccines have been rolled out quickly. What’s more, the rapid decline in Covid-19 cases suggests that the government will lay out plans later this month for non-essential retailers to reopen in the second half of March. Accordingly, light is now visible at the end of the tunnel for high street retailers,” Tombs suggested.
Sales increased by 7.1% on a like-for-like basis in January and online sales grew at record levels.
The BRC reported that 63.8% of non-food sales happened online in January, almost exactly double the level in January 2020.
Nick Bubb, the independent retail analyst, said ‘food good/non-food bad’ was always likely to be the main theme of today’s figures from the BRC but suggested that the overall figures “were a bit weaker than might have been expected”.
“The exact Food/Non-Food split of total sales last month is buried within the 3-month moving averages (of +7.9% and -5.6% respectively), but it looks to us as if total Food sales growth was at least 8% and that total Non-Food sales were over 10.5% down. As usual, the overall weak Non-Food performance masked further good growth in Home-related sub-sectors like Computing, TV/Gaming and Electrical Appliances, but was pulled down by poor Clothing and Footwear sales, as well as by weak Health and Beauty and Furniture sales,” Bubb said.
The top two fallers both had retail connections; DIY specialist Kingfisher PLC (LON:KGF) was off 2.1% while Ocado Group PLC (LON:OCDO), the home delivery company, was down 1.5% after its full-year results failed to cut the mustard.
Neil Wilson said profits remain elusive at the stock market darling, Ocado.
“Investors will be forgiven for asking when they will get some kind of return. Amazon faced similar questions for years. Likewise, Ocado continues to invest in growth – GBP700mln this year. It also warned that it will face significantly higher legal costs this year because of a patent challenge in the US. There was no change to the July guidance,” Wilson noted.
8.40am: Bitcoin’s Musky odour becomes more pungent
The FTSE 100 was the definition of flat in the early exchanges Tuesday as it resisted Wall Street’s pull higher.
The pound’s push towards a three-year high didn’t help shares in companies whose earnings are made overseas – which is most of the Footsie.
Bitcoin’s ascent continued as it flirted with the US$50,000 mark (current price U$47,000 and rising) in the wake of entrepreneur Elon Musk’s US$1.5bn dabble in the crypto-sphere.
Back here on planet earth, twin tests at British airports put airline giant IAG (LON:IAG) under further pressure early on as the shares fell 1.2%.
Heading the list of losers was Ocado (LON:OCDO), which dropped 3.8% after it unveiled a GBP700mln investment plan.
“With its recent fundraising, the company has access to GBP2.1 billion of liquidity, so the scale of the investment is not of immediate concern,” said Richard Hunter, head of markets at Interactive Investor.
He said of greater interest was the valuation after a more than 1,000% rise in the shares in the last five years and a 126% gain in just 12 months.
Ocado’s current stock price, which gives it a GBP20bn market capitalisation, has been largely predicated on international growth aspirations, observed Hunter.
“These will need to be delivered in order to keep justifying a share price,” he added.
Bellway’s (LON:BLWY) market update lifted shares in the builder 5.5% and provided a fillip to the wider sector.
Among the small-caps, Tavistock Investments (LON:TAVI) stood out with a 22% gain after a better than expected trading update.
Proactive news headlines
Tavistock Investments PLC (LON:TAVI) said it is in “strong position to accelerate growth” and told investors it expects to report underlying earnings (EBITDA) “significantly ahead” of last year for the 12 months ended March 31.
Symphony Environmental Technologies PLC (LON:SYM) has reported revenue increases across all of its main product areas in its 2020 financial year. In a trading update for the year to December 31, the plastics specialist reported that revenues increased by 19% to GBP9.8mln, with a further GBP0.7mln not recognised during the year due to a shipment missing the company’s year-end cut-off due to shipment congestion in the Far East.
DiscoverIE Group Plc (LON:DSCV) told investors that trading for the twelve months to March 31 is expected to land at the upper end of market expectations.
Brickability Group PLC (LON:BRCK) said it has “continued its strong recovery” following its interim results to September 30 and that the market for its products “continues to improve”. In a brief trading update, the construction materials group said lockdown measures that have been in place since November have had “little material effect on trading” and it had maintained “rigorous cost control while continuing to make acquisitions and other strategic investments”.
Emmerson PLC (LON:EML) has received a mining licence for its 100% owned Khemisset potash project in Morocco. The licence provides the company with the exclusive right to develop and mine the potash deposit in the Khemisset basin, ahead of the anticipated initiation of construction by the end of 2021.
Panthera Resources PLC (LON:PAT) has returned exceptionally high-grade gold in soil anomalies from the recently completed sampling programme at its Bido project in Burkina Faso, West Africa. “The survey results are excellent and confirm that this area has the potential for high-grade mineralisation,” said managing director Mark Bolton.
ImmuPharma PLC (LON:IMM; Euronext Growth Brussels:ALIMM) said the international phase III trial of its lupus drug Lupuzor remains on track to begin in the second half.
Esken Limited (LON:ESKN) said its chief executive officer (CEO) Warwick Brady has accepted an offer to become CEO of Swissport, the aviation services business. Company chairman David Shearer will assume executive duties on an interim basis.
Iconic Labs PLC (LON:ICON) said it has appointed Stephen Birrell as an independent non-executive director (NED). Birrell currently serves as a NED of Ascent Resources PLC (LON:AST) and Ossian Energy Ltd as well as a background in geoscience. The company said Birell will also bring “broad experience of corporate governance, project management, stakeholder relations, joint venture management and business development”.
CentralNic Group PLC (LON:CNIC) completed an oversubscribed EUR15mln tap issue under its existing senior secured callable bonds listed in Oslo Bors. The tap issue was priced at 104.5% of par value and the total outstanding amount after the tap issue is EUR105mln.
Avation PLC (LSE:AVAP) has reached an agreement with bondholders for an extension to its 6.5% senior notes. The aircraft leasing firm’s notes had been due to mature in May but have now been extended for more than five years, until October 2026.
Great Western Mining (LON:GWMO) said it has received a notice of exercise of warrants over 31,250,000 new ordinary shares at a price of 0.16p per share, which were granted in conjunction with a placing in November 2019. The company will issue the warrant shares with gross proceeds amounting to GBP50,000.
Condor Gold PLC (LON:CNR TSX:COG) said its remaining warrants issued in February 2019 have now been exercised. Accordingly, it is issuing 92,083 new ordinary shares at a subscription price of 31p per share. The company has received gross proceeds of GBP28,546.
Zephyr Energy PLC’s (LON:ZPHR) chief executive officer, Colin Harrington, will be presenting at the Proactive Investors One2One virtual investor forum on Thursday, February 11 at 18:00 GMT followed by a Q&A session. To register for the event please use the following link: https://event.webinarjam.com/register/903/1nnlvtpg4
6.50 am: Lull in proceedings predicted
The FTSE 100 is set to retreat slightly on Tuesday as a strengthening pound adds pressure after a solid start to the week.
London’s blue-chip index has been called eight points lower by traders in London, having climbed 34 points or 0.5% to 6,523.53 a day earlier.
Overnight, US stock indices marked new highs, with the Dow Jones rising almost 238 points or 0.8% to 31,385.76, while the S&P 500 climbed 0.7% and the Nasdaq jumped 0.95%.
Although markets seem a bit toppy to some, investor enthusiasm means “the momentum behind this reflation trade remains a force to reckon with,” said market analysts at IG.
Bitcoin was also seeing inflation, soaring to fresh record highs above US$47,000 overnight with the catalyst being the news that Tesla bought US$1.5bn worth of the cryptocurrency and plans to start accepting it as payment.
Oil and metals prices were also inflating on the back of the hopes of a US stimulus package.
“Lately there have been creeping concerns about higher inflation being in the pipeline on account of all the money that has been injected into financial systems from central banks and governments,” said analyst David Madden at CMC Markets.
“Gold has traditionally been a popular inflation hedge. Dealers snapped up the yellow metal for fears that higher inflation is on the horizon. Industrial metals, like copper, silver and platinum rose too as economic activity should increase as a result of the $1.9trn relief programme.”
Around the markets
Pound: up 0.3% at $1.3787
Gold: up 0.5% at $1,839.21
Oil: up 0.8% at $61.16
Bitcoin: up 22% at $47,931.03
6.50am: Early Markets – Asia / Australia
Stocks in the Asia-Pacific region were mostly higher on Tuesday after Brent crude prices crossed US$60 per barrel for the first time in more than a year.
The Hang Seng index in Hong Kong gained 0.27% while the Shanghai Composite in China surged 1.94%.
In Japan, the Nikkei 225 gained 0.40% but South Korea’s Kospi dipped 0.21%.
Shares in Australia retreated, with the S&P/ASX 200 closing 0.86% lower.
Proactive Australia news:
Australian Strategic Materials Ltd‘s (ASX:ASM) (OTCMKTS:ASMMF) titanium powder has been confirmed by Korean 3D printing group HANA AMT as being of high purity, paving the way for its use in 3D printing.
TNT Mines Ltd (ASX:TIN) has extended mineralisation to the north and south of the existing pit area following a maiden reverse circulation (RC) programme testing four separate target areas at the Eureka Gold Project near Kalgoorlie in Western Australia.
Montem Resources Corp’s (ASX:MR1) scoping study on the Chinook Coking Coal Project in the Crowsnest Pass area of Alberta, Canada, indicate an economically and technically viable project with upside justifying progressing to a pre-feasibility study (PFS).
Pharmaxis Ltd (ASX:PXS) (OTCMKTS:PXSLY) (FRA:UUD) has exported the first shipment of its locally developed and manufactured drug Bronchitol(R) (mannitol) to the US after the cystic fibrosis (CF) treatment was approved by the US Food and Drug Administration (FDA) in October 2020.
Carnavale Resources Limited (ASX:CAV) (FRA:YBB) is encouraged by results from a first pass 6,539-metre air-core drilling programme at Kookynie Gold Project in the Western Australian Goldfields.
Astro Resources NL (ASX:ARO) is advancing its portfolio of diverse assets over 2021 with work underway at the Needles Gold Project in Nevada, the Governor Broome Heavy Mineral Sands Project and the Kimberley Diamonds Project in Western Australia.