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FTSE 100 unsettled as Wall Street goes into reverse on China concerns

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  • FTSE 100 index down 47 points
  • Wall Street falls after initial optimism
  • Federal Reserve chairman Jerome Powell due to speak
  • Miners lose ground in London

3.25pm: Proactive North America headlines:

Mawson Gold Limited (TSE:MAW) (OTCPINK:MWSNF) (FRA:MXR) encouraged by drill assays from South East Mount Isa project, Australia

Nextleaf Solutions Ltd (CSE:OILS) (OTCQB:OILFF) (FRA:L0MA) supplies its Rapid Emulsion Technology to cannabis-infused beverage manufacturer BevCanna Enterprises

NetCents Technology Inc (CSE:NC) (FRA:26N) (OTCQB:NTTCF) sees cryptocurrency transaction volumes top C$6.7M in February

FansUnite Entertainment Inc (CSE:FANS) (OTCQB:FUNFF) (FRA:4UY) subsidiaries apply for UK gambling licenses

Great Panther Mining Limited (TSE:GPR) (NYSEAMERICAN:GPL) (FRA:G3U) reports record mine operating earnings and cash flow for 2020 despite pandemic challenges

Jack Nathan Medical Corp (Jack Nathan Health) (CVE:JNH) (OTCQB:JNHMF) shares debut on the OTCQB Venture Market

Empower Clinics Inc (CSE:CBDT) (FRA:8EC) (OTCQB:EPWCF) receives more than $10.5M from the exercise of warrants

Loop Insights Inc (CVE:MTRX) (OTCQB:RACMF) names experienced global eCommerce and brand executive Ian Cameron as new VP of marketing

Esports Entertainment Group Inc (NASDAQ:GMBL) (FRA:40Y1) strikes deal to be official esports tournament provider sponsor of the New England Patriots and the New England Revolution

Pure Gold Mining  Inc (CVE:PGM) (LSE:PUR) (OTCMKTS:LRTNF) reveals high grade gold mineralization at three targets outside of current Red Lake resource area

3.22pm: China worries spook US markets

Well that didn’t last long.

US markets are heading south again on worries about tension between the US and China.

Newly sworn in US Commerce Secretary Gina Raimondo has said China needs to be held to account for rights abuses. 

Analyst Edward Moya at OANDA said: “Stocks gave up earlier gains after US Commerce Secretary Raimondo stated that China needs to be held accountable on human rights issues.  Relations between the world’s two largest economies have taken a backseat to vaccine and policy driven outlooks, but that won’t be the case for much longer.”

So after a bright start the Dow Jones Industrial Average is now down 77.13 points or 0.25% at 31,192.96. The S&P 500 has lost 18.76 points or 0.49% to 3800.96 while the Nasdaq Composite has fallen 16.39 points or 1.3% to 12,828.36.

The FTSE 100 is down 47.02 points or 0.7% at 6628.45.

On the appearance of Federal Reserve chair Jerome Powell at a jobs conference later Oanda’s Moya said: “It is all about the bond market and Fed Chair Powell will likely acknowledge he is watching the developments with both the short and long end of the Treasury curve.  Wall Street is unconvinced that the Fed can control the problems with both the elevated volatility with the long end and short end negative risks.  For stocks to get their groove back and focus on the COVID-19 vaccine driven outlook Powell needs to send a stronger dovish commitment than last week.”

2.52pm: Wall Street rebounds

US markets have opened in a positive mood after slightly better than expected jobs data.

After Wednesday’s losses as bond yields rose amid concerns about rising inflation, the Dow Jones Industrial Average has climbed 158.22 points or 0.51% to 31,428.31. The more broadly based S&P 500 is up 17.18 or 0.45% at 3836.9 while the tech-heavy Nasdaq Composite has added 54.71 points or 0.42% to 13,052.46.

The weekly US jobless claims came in at 745,000, up from 736,000 the previous week but marginally better than the forecast figure of 750,000.

Ian Shepherdson, chief economist at Pantheon Macroeconomics, said: “We expected a substantially bigger rebound after the huge winter storm pushed claims down, so this reading suggests that the underlying trend in layoffs is falling, thanks to the reopening now underway across many states.

“As always, though, two good weeks in this volatile series don’t prove anything, but whatever happens next week, we expect the trend to fall sharply over the next few months, provided the new COVID-19 variants don’t trigger a spring wave in cases and, more importantly, hospitalizations. The jury is still out.”

Investors will be keeping an eye on comments later from Federal Reserve chair Jerome Powell at a Wall Street Journal Jobs Summit later. The Fed has played down the worries about rising inflation but this does give him another opportunity to outline how the central bank views the recent movements in the bond market.

Michael Hewson at CMS Markets UK said: “Powell will have the opportunity to comment further on the recent rise in yields, and while there is an argument that they are reflective of a more positive economic outlook, there is also a risk that if they rise too quickly the Fed may well have to be more forceful in its interventions…to keep them under control.”

Supported by the upbeat start on Wall Street, the FTSE 100 remains off its worst levels, down 35.45 points or 0.53% at 6640.02.

1.54pm: US jobs claims help markets

Leading shares have recovered from their worst levels after better than expected US jobs figures have given some support to Wall Street.

Ahead of the widely watched non-farm payroll figures on Friday, US jobless claims rose by 9,000 to 745,000 last week but this was slighly better than forecasts of a figure of 750,000. The news has seen futures for the Dow Jones Industrial Average and Nasdaq Composite edge marginally into positive territory, although the S&P 500 is effectively flat.

So having fallen as low as 6581, the FTSE 100 is now down just 25.67 points or 0.38% at 6649.8.

Water firm Pennon Group PLC (LON.PNN) had its ejection from the FTSE 100 confirmed on Wednesday but, as is often the way, its shares have decided to belatedly rally, up 22.2p or  2.45% at 929.8p.

WM Morrison Supermarkets PLC (LON.MRW), the other departure from the leading index, is also better, up 0.61% or 1.05p at 172.3p.

12.20pm: Cautious US open eyed

The FTSE 100 index remained lower at lunchtime as investors eyed expectations for a weaker start on Wall Street this Thursday.

Around midday, the UK blue-chip index was down 67.56 points at 6,607.91.

US stocks are expected to extend the previous session’s retreat as investors await comments from Federal Reserve chairman Jerome Powell about the economic outlook.

Futures for the Dow Jones Industrial Average futures edged 0.3% lower, while S&P 500 index futures shed 0.4%, and Nasdaq-100 futures lost 0.6% as technology stocks bear the brunt of the market’s concerns having risen strongly.

Investors are hoping Powell will answer questions on how he views a recent jump in bond yields when he speaks at The Wall Street Journal Jobs Summit at 12.05pm ET. The yield on the 10-year US Treasury note ticked down to 1.464% having jumped to 1.469% on Wednesday, its second-highest level this year and ending three days of declines.

US central bank officials have previously said that they will keep monetary policy loose until the economy is stronger and that they view the rise in yields as a signal that investors are optimistic about the economic recovery.

Expectations have been bolstered by President Biden’s proposed $1.9 trillion coronavirus (COVID-19) relief package. Democrats in the Senate agreed on Wednesday to narrow eligibility for some of the direct payments that are part of the bill, a concession to centrists whose support is needed to pass it.

Investors will also eye the latest US jobless claims for the week ended February 27, due at 8.30am ET for signs that employment is recovering, particularly ahead of Friday’s always-key US non-farm payroll data for the full month.

Investor faith in the economic rebound was unshaken by data released overnight that showed US private payrolls rose less than expected in February.

11.45am: Engineering group returns to dividend list

There is little sign of a recovery in UK markets as they take their lead from falls elsewhere amid growing concerns about rising inflation. The FTSE 100 is currently down 68.74 points or 1.03% at 6606.73.

So Melrose Industries (LON.MRO) , the industrial group which bought GKN in 2018, must be lower after it reported a full year loss of £523m compared to a £55m profit and warned it was unlikely to see a recovery in its key aerospace business in 2021?

In fact its shares are up 3.3p or 1.87% at 180.25p. Investors have taken heart from news it generated record cash flow, allowing it to return to the dividend list with a 0.75p a share payment. It promises a progressive dividend policy in future.

Analyst Laura Hoy at Hargreaves Lansdown said: “There were some green-shoots in Melrose’s full-year results, particularly in the Automotive and Powder Metallurgy divisions where pent-up demand offered a boost at the end of the year. While that will provide momentum into 2021, those tailwinds will dissipate as we move forward.

“Unfortunately the group’s largest growth engine, Aerospace, struggled the whole year through and the hard times are set to continue through 2021. Traffic in civil aviation has slowed to a crawl and fewer planes means demand for Melrose’s products has plummeted. Robust defence spending offered some shelter, but ultimately the division will suffer until planes are back in the skies.

“Despite all that, management’s focus on cash preservation mean the group was able to pay out a modest dividend.” 

10.31am: Share buyback boosts software and services group

With technology shares falling sharply in the US on Wednesday it is surprising to see a software company among the biggest risers in the UK blue chip index.

But here is Sage Group PLC (LON.SGE), up 2.55% or 14.8p to 594.2p. The reason? It has just announced a share buyback programme of up to £300m from March to September, using the proceeds from recent disposals and its own cash generation. While you could argue whether buybacks are worth it or not, Sage shareholders seem to have made up their minds on the matter.

Not that this has done anything to stop the accelerating decline in the FTSE 100, with the leading index now down 94.02 points or 1.41% at 6581.45.

Russ Mould, investment director at AJ Bell, said: “The FTSE 100 surrendered its gains from Wednesday as the sell-off in the bond market resumed with grim familiarity as inflation fears continue to stalk the markets.

“Investors can take some comfort from the fact European markets aren’t as weak as their counterparts in Asia and the US overnight.

“However, the mood was clearly cautious, with the increase in corporation tax announced by Rishi Sunak in his Budget likely contributing to the downbeat mood, albeit not coming into force for two years.”

A positive UK construction sector survey has done little to help the mood. The latest IHS Markit construction PMI has climbed to 53.3 for February, up from 49.2 the previous month. Anything over 50 shows expansion, anything below, contraction. But cost pressures rose due to problems in getting supplies, adding to concerns about rising inflation.

 

9.30am: Market decline accelerates

Leading shares are stuck firmly in the red, with commodity companies among the biggest fallers.

Worries about rising bond yields have returned to haunt stock markets, while a decline in metal prices after recent gains is hitting the miners. A negative note on iron ore from Bernstein is not helping.

So Rio Tinto PLC (LON.RIO) – which has seen the departure of its chairman following the destruction of aboriginal sites – is down 435p or 6.76% at 6000p, the biggest faller in the blue chip index. Its shares have also gone ex-dividend.

BHP Group PLC (LON.BHP) is down 116p or 4.93% at 2238p while Glencore PLC (LON.GLEN) has fallen 10.05p or 3.35% to 289.65p.

There is some support from oil prices, with Brent crude 0.28% better at $64.25 a barrel despite a big build up in US stocks reported on Wednesday. All eyes will be on the OPEC+ meeting later, when production increases are likely to be discussed. 

Michael Hewson at CMC Markets UK said:”Crude oil prices shrugged off a huge 21.6m build in EIA stockpiles yesterday. This was due to refining capacity falling to 56% of overall capacity, the lowest on record. This meant that the oil never made it to the refinery, causing gasoline inventories to fall off a cliff as the whole Texas supply chain froze up due to the cold weather.

“With OPEC+ due to meet later today there has been some speculation that there could be an agreement to push up production so that prices have a chance to cool off, and avoid a possible demand destruction scenario. This speculation has cooled in recent days on reports that Russia is considering rolling over its cuts into April rather than raising output, with the result that oil prices have started to edge higher again.”

Heading higher are utility companies, big infrastructure spenders which could benefit from the Budget’s proposal to cut a company’s tax bill by 130% on any cost of business investment.

SSE PLC (LON.SSE) is up 25.5p or 1.96% at 1327p while National Grid (LON.NG) has climbed 14.2p or 1.75% to 824.4p.

Overall the FTSE 100 is down 65.82 points or 0.99% at 6609.65.

8.45am: Leading shares looking a little unwell

The old saying used to go that if America sneezes, Britain catches a cold. However, the financial markets appear to have turned this adage on its head.

So, sticking with and torturing further the metaphor, the Footsie currently appears to have a bout of the sniffles, while the US, particularly the NASDAQ, looks to be headed for the Covid ward.

The tech index ended the session 2.9% lower, which was bad news for the Scottish Mortgage Trust (LON:SMT), a big investor in Silicon Valley. which dropped 4% early doors.

Rio Tinto (LON:RIO) fell 7% after it began trading without the entitlement to a dividend payment. The remainder of the sector, meanwhile, handed back some of the recent gains that had been driven by the improving economic outlook.

Aviva (LON:AV.) starred as shares in the insurance giant were bid up 3.7%. The company’s back-to-basics approach appears to be working, according to Richard Hunter, head of markets at Interactive Investor.

“Aviva is closing in on its preferred target markets and has shown some promising signs of progress despite pandemic challenges,” he said.

“With operations in France and Italy now being added to other disposals in the likes of Singapore, Hong Kong, Indonesia and Turkey, Aviva is removing the shackles piecemeal to leave it concentrating on its core markets of the UK, Ireland and Canada.”

Proactive news headlines

Remote Monitored Systems PLC (LON:RMS) said its Pharm 2 Farm (P2F) subsidiary has received an initial order from the Volz Group of Companies for 1mln masks made from its α-virion antiviral material

Supermarket Income REIT PLC (LON:SUPR), has acquired a Tesco supermarket in Prestatyn, North Wales for £26.5mln. In a separate announcement, the REIT announced plans to raise around £100mln by placing shares at 106p each (versus last night’s closing price of 109.5p.

Franchise Brands PLC’s (LON:FRAN) final results for 2020 highlighted positive trading through the current lockdowns. It said that trading started 2021 strongly in the first quarter, with business-to-business sales described as resilient.

Westminster Group PLC (LON;WSG) said it hopes to get back to double-digit revenue growth in 2021.

Savannah Resources PLC (LON:SAV) said the ongoing metallurgical test work programme at its Mina do Barroso lithium project in Portugal has highlighted the potential for lower capital and operating costs.

Metal Tiger PLC (LON:MTR) said progress was encouraging at the Kitlanya East copper-silver project in Botswana, operated by Kalahari Metals Ltd (KML).

Westmount Energy Ltd (LON:WTE, OTCCQ:WMELF) has relayed the results of the Bulletwood exploration well, on the Canje block offshore Guyana, which encountered quality reservoirs but sub-commercial volumes of hydrocarbons.

Shares in Black Bear Energy Resources Plc (LON:), an oil and gas company with onshore assets in the USA, are now being traded on the JP Jenkins share dealing platform. Anthony Mason, founder and CEO of Black Bear said: “This will give Black Bear Energy Resources tremendous visibility and a strong presence in the London market.”

Frontier IP Group PLC (LON:FIPP) said its portfolio company Exscientia has completed a Series C funding round raising US$100mln with BlackRock funds.

Tower Resources PLC (LON:TRP) has extended its US$750,000 loan facility, provided by shareholder Pegasus Petroleum (beneficially owned by chairman Jeremy Asher).

Induction Healthcare (LON:INHC) has hired N+1 Singer as Nominated Adviser and its sole broker with immediate effect.

Rosslyn Data Technologies PLC (LON:RDT) has appointed Nexia Smith & Williamson as its new auditor, replacing Grant Thornton.

Filta Group Holdings PLC‘s (LON:FLTA) chief executive, Jason Sayers, will be introducing the company and taking questions at the Proactive One2One Investor Forum on 25 March, with the online forum due to start at 6pm GMT. Registration details can be found at https://www.proactiveinvestors.co.uk/register/event_details/327.

Touchstone Exploration Inc‘s (LON:TXP, TSX:TXP) president and CEO Paul Baay will present at the Shares and AJ Bell investor evening webinar on 10 March at 6pm GMT, followed by a virtual Q&A session.  

BlueRock Diamonds PLC (LON:BRD) chairman Mike Houston and finance director David Facey will provide a live investor presentation via the Investor Meet Company platform on Monday 8 March at 11am GMT.

Accesso Technology Group PLC (AIM: ACSO) will announce its preliminary results for 2020 on Tuesday 23 March.

Greencoat UK Wind PLC (LON:UKW) will hold its annual general meeting at Spanyards Farm, Adams Lane, Northiam, Near Rye, East Sussex at 2pm on 28 April.

6.50 am: FTSE 100 set for lower start

The FTSE 100 is set to start on the back foot on what will be a session with a busy reporting schedule among London’s blue-chips and mid-cap stocks.

Spreadbetter IG Markets sees the London benchmark falling around 46 points, as it making the price 6,604 to 6,607 with just over an hour to go before the open.

The diary for the day include final results for insurers Aviva PLC (LON:AV.) and Admiral Group PLC (LON:ADM), bookies William Hill PLC (LON:WMH) and Entain PLC (LON:ENT), defence firm Meggitt PLC (LON:MGGT) and a gamut of other mid-tier shares.

The lower start in London follows equity markets elsewhere with US technology stocks particularly rocked by weak sentiment, despite positive vaccine commentary.

“President Biden announced the US will have such a large supply of vaccines, that every adult in the country should be inoculated by the end of May, two months ahead of schedule,” highlighted David Madden, analyst at CMC Markets.

“The health news is very encouraging but it couldn’t fend off the bearish sentiment.”

In New York, the Dow Jones closed 121 points or 0.39% lower at 31,270 whilst the S&P 500 shed 1.31% finish the day at 3,819 and the Nasdaq fell farthest, losing 2.70% to 12,997 at the end of trading.

Asian indices similarly lowered. Japan’s Nikkei dropped 628 points or 2.13% to 28,930 and Hong Kong’s Hang Seng slipped 2.4% to 29,162, whilst the Shanghai Composite marked a 2.4% decline to 3,492.

Around the markets

The pound: US$1.3950, 0.03%

Gold: US$1,716 per ounce, up 0.44%

Silver: US$26.08 per ounce, up 0.22%

Brent crude: US$64.37 per barrel, up 2.6%

WTI crude: US$61.51 per barrel, up 2.9%

Bitcoin: US$49,516. down 0.27%

6.50am: Early Markets – Asia / Australia

Stocks in the Asia-Pacific region were lower on Thursday following overnight declines on Wall Street as bond yields rose again.

The Hang Seng index in Hong Kong slipped 2.30% while the Shanghai Composite in China fell 2.10%.

In Japan, the Nikkei 225 dived 2.13% and South Korea’s Kospi slipped 1.28%.

Shares in Australia fell, with the S&P/ASX 200 closing 0.84% lower.

READ OUR ASX REPORT HERE

Proactive Australia news:

Salt Lake Potash Ltd (ASX:SO4) (LON:SO4) (OTCMKTS:WHELF) (FRA:W1D) has syndicated its US$138 million senior debt facility with Sequoia Economic Infrastructure Income Fund (LON:SEQI) and the Commonwealth Bank of Australia (ASX:CBA) joining the facility.

Montem Resources Limited’s (ASX:MR1) coal quality testing on drilling samples from Chinook Vicary area of its Chinook Project in Alberta, Canada, have confirmed the presence of Tier 1 hard coking coal (HCC).

Kinetiko Energy Ltd (ASX:KKO) is about to produce its first gas from the Amersfoort Project in South Africa, a country that is hungry for energy having experienced regular and widespread blackouts in recent years.

Kin Mining NL (ASX:KIN) (FRA:8KM) has completed the share purchase plan (SPP) announced on February 10, 2021, with existing shareholders subscribing for an additional 6.45 million of new shares at $0.13 per share, raising around $838,500.

ioneer Ltd (ASX:INR) (OTCMKTS:GSCCF) (FRA:4G1) is undertaking a fully underwritten institutional placement to sophisticated, professional and institutional investors to raise A$60 million to help accelerate construction of the Rhyolite Ridge Lithium-Boron Project in Nevada, USA.

Corazon Mining Ltd (ASX:CZN) (OTCMKTS:CRZNF) is trading higher after receiving positive initial visual results from its current phase of drilling at Lynn Lake Nickel-Copper-Cobalt Sulphide Project in Manitoba Province, Canada.

Arrow Minerals Ltd’s (ASX:AMD) reverse circulation (RC) drilling program at Dassa gold deposit on the Divole West exploration permit in Burkina Faso has expanded gold mineralisation to a strike length of more than 900 metres.

Legend Mining Limited (ASX:LEG) directors and senior management have demonstrated strong confidence in the company’s growing nickel sulphide story focused on Western Australia’s Fraser Range by exercising options.

Element 25 Ltd (ASX:E25) (FRA:QFP) has confirmed delivery of the first stage of a planned multi-stage development at its 100%-owned world-class Butcherbird Manganese Project in WA, with completion on track and in line with the original target of the first quarter of 2021.

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