- FTSE 100 index sheds 68 points
- M&S looks to hold onto Ocado customers
- US indices in mixed open
3.45pm: M&S copies Waitrose products to keep Ocado customers
The Footsie was back comfortably above the 6,000-mark, but still 68 points underwater at 6,036.
Marks and Spencer Group PLC (LON:MKS) was trading 1% lower at 101.3p after reports it is copying Waitrose products to keep Ocado Group PLC (LON:OCDO) customers when it becomes its supplier next month.
The grocer also developed 750 new ones to avoid potential customers to stay loyal to Waitrose and buy on its own website, The Times reported.
There is a readiness team to ensure Waitrose products are the same for flavour, ingredients, price and size.
2.45pm: Lukewarm open at Wall Street
FTSE 100 trimmed some losses as Wall Street rang the opening bell, losing 88 points to 6,016.
The Dow Jones was only 1 point up to 27,201, while the S&P500 shed 3 points to 3,324.
Chief executive Ivan Glasenberg said “it would be inappropriate” to dish out the US$2.6bn needed for the interim distribution, but instead the board is planning to accelerate net debt reduction to below US$16bn.
1.35pm: US indices to open slightly lower after weekly jobs numbers
The Dow Jones and the S&P 500 are expected to open slightly lower but the unstoppable NASDAQ Composite remains … well, unstoppable.
Having had a few moments to absorb the latest weekly jobs data, spread betting traders reckon the Dow Jones index will open at around 27,183, down 19 points, and the S&P 500 at 3,323, down 5 points.
The NASDAQ, meanwhile, is tipped to open at 11,116, up 18 points.
First-time jobless claims in the US last week fell by 249,000 from the week before to 1.2mln.
First time U.S. weekly jobless claims total at 1.186 million.https://t.co/eXZu9LQeT8
— BAP EXECUTIVE SEARCH LLC (@BapSearchLLC) August 6, 2020
In London, the FTSE 100 is now sporting a triple-digit loss and has dropped below the 6,000 level; the index is off 106 points (1,7%) at 5,999.
Emilie Stevens, an equity analyst at Hargreaves Lansdown said the “first half of woe” was expected, “so we were more interested in news of whats happening now.”
“Early signs are positive, advertising is said to be gradually recovering, although still markedly down on usual levels and most of the paused productions are now back in action. Demand for fresh content has never been higher and ITV said itself demand for content from streaming platforms was particularly strong,” she noted.
11.40am: Equity markets slide as hopes of a US fiscal stimulus fade
Londons blue-chips remain in retreat as hopes of US legislators pouring another gallon of vodka into the punchbowl fade.
“Investors have become increasingly concerned that, having struggled to develop a coherent response to the virus itself, the US will now fumble its plan to save the economy. Having enacted an effective support programme for workers earlier in the year, the US now risks worsening the recession as millions more find themselves unemployed and without income. In such an environment, equities in all geographies look vulnerable to a correction, having rallied in no small part on the assumption that government largesse would continue,” said IGs Chris Beauchamp.
In London, the FTSE 100 was down 75 points (1.2%) at 6,029 as investors chew over the latest Bank of England bulletin.
At its August policy meeting, the Bank of Englands Monetary Policy Committee (MPC) unanimously opted to Keep the bank rate and asset purchase target unchanged at 0.1% and £745bn, respectively.
“Growth expectations were less pessimistic than they had been in May and inflation is seen to return to target in two years yet negative interest rates remain under review,” reported ING.
“Rates markets have already made up their mind about the probability of negative interest rates next year: it is very high and climbing,” said ING, which nevertheless is sceptical that negative interest rates are “a done deal”.
“The MPR's discussion on negative rates was lukewarm at best. Barring a deterioration of the outlook, we find the risk-reward of positioning for even lower policy rates poor,” the Dutch finance house said.
This @bankofengland Monetary Policy Report chart is about as clear an indication as you're likely to see of how Covid-19 is playing out differently across the income distribution. Lower income households are drawing down their savings; higher income ones are building theirs up pic.twitter.com/gvkTLA3Zqq
— Matt Whittaker (@MattWhittakerPB) August 6, 2020
Meanwhile, down the building site, things are looking up and for once it is not just because someone has dropped a breeze block from the scaffolding.
“The construction PMI climbed to 58.1 in July after jumping to 55.3 in June from 29.9 in May, and from a record low of just 8.2 in April. It had previously dropped to Aprils low from 39.3 in March and a 16-month high of 52.6 in February,” reported Howard Archer at the EY ITEM Club.
“The new orders index showed a second successive month of growth in July and was at the highest level since February. Sales were reportedly boosted by the easing of lockdown measures and the restart of work on sites.
“However, there were reports that the market remained apprehensive about committing to new projects,” he added.
Tim Moore, the economics director at IHS Markit, said construction companies took another stride along the path to recovery in July.
House building helped to deliver the strongest overall growth across the sector for nearly five years, Moore noted.
“Civil engineering and commercial activity are also back in expansion, which has been mainly due to the restart of work that had been delayed during the second quarter of 2020,” Moore said.
10.15am: Construction activity continues to bounce back
Resource stocks were weighing down the Footsie in mid-morning trading but there was some moderately cheering news from the UK construction index.
The FTSE 100 was down 81 points (1.3%) at 6,024, with the likes of mining giants Rio Tinto PLC (LON:RIO) and Glencore PLC (LON:GLEN) sustaining falls of more than 4% – the former has gone ex-div and the latter has released a half-year report – while oil giants BP PLC (LON:BP.) and Royal Dutch Shell PLC (LON:RDSB) were down 3.0% and 1.9% respectively.
On the bright side, the headline seasonally adjusted IHS Markit/CIPS UK Construction Total Activity Index registered above the 50.0 “no change” threshold for the second consecutive month in July.
The index rose to 58.1 from 55.3 in June.
IHS Markit/CIPS UK Construction PMI was 58.1 in
July compared to 55.3 in June, another considerable improvement in construction activity, particularly compared with the low activity levels in April & May when most sites were shut).#ukconstruction https://t.co/VsNbXrbmsz pic.twitter.com/McrLy6YVWF
— Noble Francis (@NobleFrancis) August 6, 2020
Residential building was the main growth driver in July, with activity increasing to the greatest extent since September 2014.
Survey respondents commented on the release of pent up demand and reduced anxiety among clients, IHS/Markit reported.
8.50am: Footsie falls further than expected
The FTSE 100 index retreated in early trade on Wednesday as traders struck a note of caution following generally downbeat official commentary from the Bank of England, which, as expected, kept the base rate on hold at 0.1%.
London's blue-chip benchmark opened 50 points lower at 6,054.57.
While the BoE said the UK was recovering quickly from the coronavirus pandemic it warned the economy would shrink by a fifth and unemployment would double by the end of the year as the furlough scheme unwinds.
“The Bank of England seems a lot less convinced by the prospect of a v-shaped recovery for the UK economy than even just a few weeks ago,” said Tom Stevenson of Fidelity.
“The decision to leave interest rates unchanged at 0.1% surprised no-one but the tone of the accompanying commentary was uncertain. No-one knows what recovery from coronavirus will look like and the Bank now accepts that its own predictions are less helpful than useful.
“The good news is that activity seems to have picked up sharply since the April trough. Both household consumption and the housing market are heading back to pre-pandemic levels. But unemployment is set to rise sharply as the furlough scheme unwinds and business investment is weak,” he added.
ITV (LON:ITV), after a brief revival, fell 3% as six-month earnings halved following a pandemic advertising slump.
“Quite apart from the substantial competition from rivals with money to burn such as Netflix, Disney+ and Amazon Prime, ITVs reliance on traditional advertising revenue is something of a thorn in its side,” said Richard Hunter, analyst at Interactive Investor.
“Companies understandably pulled back from advertising goods that they could not sell and, in any event, given the fact that costs became a priority, the advertising budget is often the first to give way.”
On the up with a 6.9% gain was insurer Aviva (LON:AV.), which resumed dividend payments and hinted it may pull out of certain international markets.
Proactive news headlines:
Kavango Resources PLC (LON:KAV) saw its shares surge in early deals after an update on its Kalahari Suture Zone (KSZ) prospect. The Botswana-focused mineral exploration company said the independent consultants report on the petrology and mineral composition of core samples from the 2019 drilling campaign confirmed two further characteristics of the geology of the KSZ that are shared by the Norilsk deposits in Russia, which host some of the world's richest mineralised zones of copper-nickel-platinum group metals. The two shares characteristics are the presence of cumulate rocks and sulphide liquid fractionation.
Immotion Group PLC (LON:IMMO) said it has launched a range of UV anti-bacterial cleaning cabinets under the Uvisan brand. The out of home virtual reality (VR) entertainment specialist said it has designed the Uvisan cabinets in response to the coronavirus pandemic, and while it had originally intended to use the product just to cleanse VR headsets at its larger partner locations, it has decided to sell the cabinets to third party companies following “numerous external commercial enquiries”. As a result, Immotion said it had seen “exceptional demand”, selling 10 cabinets in the last week including four to Chichester University, which has purchased the cabinets to protect sensitive equipment against coronavirus infection.
Jubilee Metals Group PLC (LON:JLP) chief executive Leon Coetzer said a joint venture to process up to 4mln tonnes of copper tailings in Zambia has “tremendous earnings potential”. The plan is to start with an initial 2mln tonnes of leftover material containing more than 2% copper via a processing facility that will cost US$15mln, with first production expected in the next four months. Jubilee said it expects is to add 10,000 tonnes to output per year at a cash cost of US$4,000 of the metal. Payback on the initial investment is expected in one year.
Genel Energy PLC (LON:GENL) chief executive Bill Higgs has highlighted the North Iraq-focused oil firms robust business model in its financial results for the six months ended June 30, 2020. Net production averaged 32,100 barrels of oil per day (bopd), versus 37,400 bopd in the comparative period of 2019. It generated some US$88.4mln of revenue for the six months compared to US$194.3mln in the first half of last year. Earnings (EDBITDAX) totalled US$65.1mln, from US$167.3mln in H1 2019. Genel reported a US$340mln operating loss, a US$32.2mln operating loss and a US$354.7mln net loss. Cash flow from operating activities amounted to US$85.5mln.
Anglo Asian Mining PLC (LON:AAZ) director Stephen Westhead has told investors that the company is looking forward to expediting work in the second half of the year, to deliver further positive progress in Azerbaijan. The metals explorer, in a statement, updated on its ongoing work programmes which are active in three contract areas. “Exploration of the near-surface gold targets at Gedabek are taking priority to rapidly develop mineral resources and advance mineral deposits towards production. Both Avshancli and Gilar will be explored by ground-based induced polarisation and magnetic geophysics in the second half of the year,” said Westhead, the group's director of geology & mining.
SIMEC Atlantis Energy Limited (LON:SAE) unveiled plans to raise funds to invest in a joint venture that will secure fuel supplies for its Uskmouth Power Station project as it reported a jump in 2019 results. The alternative energy group announced plans to raise around £6mln through a placing of shares at 12p a share. Existing shareholders will be able to participate in the offering via the PrimaryBid platform on a first-come, first-served basis, with any investment request over £50,000 first requiring consultation with the company. The funds from the share issue will be used to provide working capital and for investment in new fuel processing facilities via a joint venture (JV) with Dutch alternative fuels specialist N+P Group. SIMC Atlantis revenue in 2019 rose to £4.86mln from £2.22mln in 2018, with the bulk of those – £4.1mln – coming from the MeyGen project.
Savannah Resources PLC (LON:SAV) said the report commissioned from the University of Minho into the potential economic impacts of developing the Mina do Barroso Lithium Project has now been uploaded to Savannah's website. Available in Portuguese, or as an English translation, the full report and executive summaries can be found on the following pages on the site: http://www.savannahresources.com/investor-relations/presentations-and-reports/ and http://www.savannahresources.com/assets/mina-do-barroso/. In a statement, David Archer, Savannah's chief executive officer commented: "We are happy to share the Report completed by Professors Cerejeira and Carballo-Cruz from the University of Minho. We believe their excellent work brings further clarification regarding the many positive benefits that Mina do Barroso could bring.”
Bahamas Petroleum Company PLC (LON:BPC), the Caribbean and Atlantic margin focused oil and gas company, with exploration, production, appraisal and development assets across the region, has confirmed that its merger with Columbus Energy Resources PLC, effected by means of a Court sanctioned scheme of arrangement under Part 26 of the Companies Act 2006 was sanctioned by the Court on Wednesday. The Scheme will become effective upon the Court Order being delivered to the Registrar of Companies, which is expected to take place on or about August 7, 2020, consistent with the expected timetable of events as set out in Columbus's Scheme Document. Simon Potter, chief executive officer of Bahamas Petroleum commented: "Completion of the merger is a milestone for BPC as we move forward with our vision to create a business with a range of assets representative of each phase of our industry – a full-cycle exploration and production business.”