- FTSE 100 index sheds 3.38% or 202 points
- Rail companies whacked as government signals end to rail franchise system
- US stocks firmly in red
5.05pm: FTSE 100 tanks on day
FTSE 100 index joined fellow global indices in getting hammered on Monday as the coronavirus crisis continues to cause chaos in the markets.
The UK's top share index plunged over 202 points, or 3.38% to close at 5,804 – its worst day in more than three months, wiping over £51 billion off the index's value.
The midcap FTSE 250 also cratered, tanking almost 699 points to finish at 16,870.
Investors are highly fearful as it looks like more lockdown measures will be brought in by the UK government, notably in the capital London to stop cases of the killer virus spiralling.
Top laggard on Footsie, for the umptienth time this year, was BA owner IAG (LON:IAG) , which flew over 12% lower to 97.20p, but the sell-off was broad-based across all sectors.
"The food and drink business was only starting to back on its feet again when the concerns about rising cases and news of local lockdowns struck. Restaurant Group, Marstons and Mitchells & Butlers shares are all down over 10%," noted analyst David Madden, at CMC Markets.
"On the domestic transport front, Go-Ahead Group and FirstGroup singed new government contracts to keep rail services operating for the next six to 18 months. Westminster will essentially assist the struggling sector to ensure that the public can avail of the services."
11.30am EST: US and Canada 11.30am
US indices were heavily in the red on Monday. The Dow Jones Industrial Average tanked over 885 points, or 3.2% to 26,778. The S&P 500 shed over 78 at 3,241. The Nasdaq shed over 189 points at 10,603. Up in Toronto, the TSX shed over 370 points at 15,828.
4.00pm: UK investors experience "assault and battery day"
Its been a bad day for just about all of the FTSE 100s constituents, with the only exceptions being a couple of supermarket stocks.
The FTSE 100 was down 224 points (3.7%) at 5,783, returning to levels last seen in the middle of May.
You might think risk-averse investors would be fleeing into gold but not so! The yellow metal was trading 3.3% lower on futures markets at US$1,897.60 an ounce but it is doing better than silver, which was down more than 9%.
With fears riding high of tougher lockdown restrictions returning and the concomitant effect on the economy, the oil price has fallen heavily, with Brent crude for November delivery off US$1.75 at US$41.40 a barrel.
“It was as if someone forgot to hit snooze on the COVID-19 wakeup call. Months of warning signs and buried fears struck at once on Monday, the market buckling under the threat of another round of national lockdowns,” said Connor Campbell at Spreadex.
“As for the forex markets, the dollar was a big winner, its safe-haven allure drawing in investors and causing the pound and euro to fall 1% apiece,” he noted.
In London, railway stocks were friendless after the government ended the “heads we win, tails you lose” rail franchise system.
FirstGroup PLC (LON:FGP) reversed 13% to 37p and Go-Ahead Group PLC (LON:GOG) fell 5.5% to 615.5p after the government extended its hand-out programme for the rail operators for the next six to 18 months.
3:21pm: IG looks forward to Teslas Battery Day
IG highlights that the key talking points at Elon Musk's battery event are expected to focus on capacity, energy density, production efficiency, costs and battery life.
One potential surprise could be in regard to Tesla's use of cobalt, or the lack thereof, in future battery technologies.
The CFD trading group interviewed investment manager Ross Gerber, chief executive of Gerber Kawasaki Wealth and Investment Management, who said he is expecting “some big breakthroughs” from the electric vehicle pioneer.
Tesla is one of few bright sparks in early US trading. The Dow Jones, S&P 500 and the Nasdaq were all falling.
2.35pm: US indices dive
As expected, US indices took a bath when trading started this afternoon.
The Dow Jones industrial average slumped 600 points (2.2%) to 27,057 while the S&P 500 plunged 64 points (1.9%) to 3,256.
The tech-heavy NASDAQ Composite was 200 points (1.8%) lower at 10,593.
As in other global stock markets, fears of a second wave of coronavirus cases is putting on the frighteners.
“The seven-day moving average number of confirmed new US cases has risen for eight straight days and is little changed, net, since late August. The number of confirmed new cases over the weekend, 86.9K, was 13.7% higher than last weekend. Technical changes to data methodology in Arizona and Texas, and a rebound in testing activity, account for some of the increase, but at least some of the deterioration is real,” observed Ian Shepherdson, the chief economist at Pantheon Macroeconomics.
“The clearest indicator that new cases have stopped falling—and/or that younger people are passing the infection to older, more vulnerable people—is the sustained slowing in the rate of decline of hospitalisations,” he added.
Closer to home, the rate of increase of confirmed new UK cases is “still rapid but appears to have slowed a bit in recent days,” Shepherdson said.
“Widespread reporting of difficulty in obtaining tests, however, means that the case numbers probably are not reliable.
“Hospitalisation data are more consistent, and the numbers have increased substantially since early September. The rate of increase, though, might be starting to slow, but we need more data to be sure,” Shepherdson said.
The FTSE 100 remains deep in a hole but has at least recovered to 5,834, down 173 points (2.9%).
— Anurag Ranjan (@fno_hacked294) September 21, 2020
12.45pm: US indices expected to open sharply lower
US stock futures pointed to a near 450 point opening loss for the Dow Jones Industrial Average on Monday as political worries ahead of the fast-approaching US presidential election and fears over the coronavirus pandemic kept investors wary.
The death of Supreme Court associate justice Ruth Bader Ginsburg may have market implications, as what is expected to be a hotly contested nomination battle for her replacement could further impact sentiment in Congress, which has yet to agree on a new stimulus package for the coronavirus crisis or government funding beyond the end of September.
Edward Moya, senior market analyst, New York, OANDA commented: “Global stock markets are tumbling as coronavirus cases surge in Europe, political tensions in the US will likely derail any further fiscal support efforts, and after International Consortium of Investigative Journalists reported lenders delay in providing suspicious activity reports. With little on the economic calendar, risk aversion could remain steady throughout on the session.”
He added: “Surging coronavirus cases and doubts over the next over the next round of fiscal support is triggering a wide range risk-averse tone that is sending the dollar higher and sinking gold.”
“A deteriorating global economic recovery is growing as Europeans struggle to contain the latest wave of the virus, but that should only reinforce the stimulus trade going forward.
“The US economic outlook is starting to look a lot worse as the path for a fiscal agreement seems unlikely given the Republican and Democratic battle over who will be the next Supreme Court justice,” Moya concluded.
In London, the FTSE 100 was down 202 points (3.4%) at 5,805.
Noon: We've turned a corner – and are heading back the way we came
Weve turned a corner on the coronavirus (COVID-19) crisis, according to Chris Whitty, the governments chief medical adviser.
Unfortunately, its the wrong corner leading in a dismal direction.
There is now an increase in COVID-19 cases across all age groups in the UK, Sir Patrick Vallance, the governments chief scientific adviser, noted in a press briefing on the coronavirus pandemic.
“This increase in numbers is translating into an increase in hospitalisation. There is no doubt we are in a situation where numbers are increasing,” Vallance said.
The Whitty / Vallance briefing is under way. This is their key slide: modelling says if the viruss current contagion trajectory continues, we will hit almost 50,000 new cases a day in 4 weeks time. Today were at 4,000. pic.twitter.com/uVYXZNRhOB
— Tom Newton Dunn (@tnewtondunn) September 21, 2020
The market has taken the hint that tougher restrictions are on the way for the hospitality sector, which is a far cry from the “eat out to help out” initiative of a few weeks back.
Mid-cap pubs groups Mitchells & Butlers PLC (LON:MAB) and Wetherspoon (JD) PLC (LON:JDW) have been hammered – well, getting hammered is sort of their stock in trade – with the former down 21% at 120p and the latter down 9.2% at 772.5p.
Bus and trains groups are also on the run, with FirstGroup PLC (LON:FGP) 13% lower at 113.5p and National Express Group PLC (LON:NEX) 12% softer at 113.5p, while WH Smith PLC (LON:SMWH), which relies on heavy footfall at railway stations, bus depots and airports, lost a tenth of its value at 983p. The UK government has extended its emergency funding deal for train operators and signalled the end of the "complicated rail franchising system".
The FTSE 250 was down 697 points (4.0%) at 16,872, which means it was doing even worse than the FTSE 100, which was down 207 points (3.4%) at 5,800.
11:59am: IG says oil is in full retreat
As crude oil continues the decline that started last week, the West Texas Intermediary contract needs to fight back if a bullish trading view is to be revived or retained, so say the chartists at CFD trading firm IG Markets.
WTI crude fell below US$41.26, the marker for its 50-day moving average and the next target down is US$38.40 per barrel, according to IG analyst Chris Beauchamp. If bulls dont arrest the slide the next level down after that will by around US$36, he added.
Elsewhere in the commodity market, IG notes that whilst the gold price turned lower amidst todays volatility the yellow metal is holding its 50-day average, US$1,938, traders will eye a rally to US$1,970 in order to revive a forecast of higher prices.
10.45am: Pessimism reigns in British households
The IHS Markit UK Household Finance Index for September was unchanged from August at 48.0.
The index is intended to anticipate changing consumer behaviour accurately and it is one of those indices where a value below 50 indicates deterioration and a value above 50 indicates improvement.
"Pressure on household finances in the UK remained intense in September. The headline HFI figure was unchanged on the month and well below the 50.0 threshold, signalling another sharp deterioration in the financial situation of UK households.
"With just over a month to go until the end of the government furlough scheme, the survey measure of job security perceptions dipped further into negative territory, reflecting households unease about their jobs, whilst incomes from employment fell for the sixth month in a row,” said Lewis Cooper, an economist at IHS Markit.
"September data also signalled reductions in household spending, savings and cash availability, all of which highlight the crunch on finances at present. As a result, UK households were the most pessimistic since May with regards to their financial wellbeing in 12 months time.
"Given the latest figures and the recession the UK is facing during the pandemic, there is undoubtedly a long and uncertain road ahead for UK households to recover financially,” he added.
September IHS Markit #UK #Household Finance survey finds 18.7% of households expect next #BankofEngland move to be to cut #interest rates (20.9% in August). 53.2% expect a rate hike within a year (48.9% in Aug) while 66.8% expect a hike within 2 years (62.6% in Aug #interestrate https://t.co/aUjQ9xJpq3
— Howard Archer (@HowardArcherUK) September 21, 2020
The FTSE 100 was down 180 points (3.0%) at 5,827.
10.15am: Encouraging house price data overshadowed by lockdown fears
The latest Rightmove House Price Index indicated house prices rose 0.2% in September from August and were up 5.0% on September 2019.
“Increased competition for second-stepper homes has pushed prices to a record this month for those looking to take the next step up the ladder. Needing more space has always been the most popular reason for moving house, but now theres a new urgency for extra space to be able to work from home, which means that there are different sets of buyers competing for the same type of property,” said Tim Bannister, the director of property data at Rightmove.
“When comparing with last year, its remarkable that two regions have already caught up with and overtaken the number of sales agreed across the year so far, and if the market continues at its current pace then we could see all areas of England break even over the next month or so. We know that some people are now choosing to move out of London altogether, but these latest figures show that theres still plenty of activity in the outer areas of the capital. The market remains challenging in Zone 1, as the benefit of living within walking distance of an office in the City has dropped down buyers wishlists for now,” he added.
The FTSE 100 was down 191 points (3.2%) at 5,816.
9.40am: No nostalgia for March 23 lockdown spirit
Just four Footsie stocks are defying the trend as investors get a touch of the old March 23 lockdown revisited vibe.
The FTSE 100 is down 172 points (2.9%) at 5,836.
“In the UK, London's Mayor Khan is expected to request more wide-sweeping lockdown measures due to the Covid-19 curve moving in the wrong direction.
“Another worrying sign for the market is the UK's chief medical officer Chris Whitty and chief scientific officer Patrick Vallance will give a press conference at 1100 BST. The PM will not be there,” said Stephen Innes, the chief global market strategist at AxiCorp.
The scholarly PM – Prime Minister – is perhaps busy reading up on the reign of King Cnut and in particular his rebuke of fawning courtiers who overstated the extent of his executive powers.
Or perhaps not.
“The UK media widely reports that they will say that the country is heading in the wrong direction with the coronavirus. The press also notes that the government will this week consider whether and by how far to impose new national social distancing regulations,” Innes noted.
Can't wait for Chris Whitty to threaten to ground me
— Sarah Manavis (@sarahmanavis) September 21, 2020
The lockdown reprise is doing no favours to the share prices of British Airways owner International Consolidated Airlines Group SA (LON:IAG) and aeroplane engines maker Rolls-Royce Holdings PLC (LON:RR.).
IAG is down 12.1% at 96.6p and Rolls-Royce, which is expected to launch a big fund-raising soon, is off 9.8% at 165.6p.
Housebuilders are also getting the cold shoulder as a tightening of lockdown restrictions could nip the revival of the housing market in the bud.
8.40am: Dire start on Monday
The FTSE 100 index saw wiped more than 100 points off in early trade on Monday amid second coronavirus (COVID-19) lockdown fear as Britain teeters on the brink of a return to national house arrest.
The index of UK blue-chips opened 103 points lower at 5,904.10.
Englands chief medical officer, Chris Whitty, via a televised briefing later Monday, is likely to say the country faces a “very challenging winter” with COVID-19 cases headed in the “wrong direction”.
The prime minister, Boris Johnson, meanwhile, is reported to be considering a two-week mini-lockdown in England in a bid to stem the spread of the virus.
“Prospects for a sharp economic recovery have all but disappeared, as global growth receives the new threat of a resurgent pandemic,” said Richard Hunter of Interactive Investor.
“In addition, with talks for a further fiscal stimulus in the US seemingly in deadlock, investors have been choosing to vote with their feet over recent trading sessions given the deteriorating outlook.”
HSBC (LON:HSBA) shares were marked 3.2% lower in early trade, following their drop to a 25-year low in Hong Kong amid money laundering allegations. Standard Chartered (LON:STAN), also named in a Consortium of Investigative Journalists report, fell by the same quantum.
Indeed, it appeared to be open season on the whole banking sector.
Leading the FTSE 100 fallers, however, was the now perennial laggard Rolls Royce (LON:RR.), whose fundraising efforts were revealed in the media over the weekend. The stock dropped 7.7% as it also caught a chill on potential further restrictions on international travel, which will hit its major customer base – the airlines.
As if to underline the point, British Airways owner IAG (LON:IAG) was off 4% in Rolls slipstream.
One of only a handful of risers, Informas (LON:INF) crash to a heavy loss possibly wasnt as dreadful as anticipated judging from the 3.2% jump in the share price of the events and exhibitions group.
In the results statement, chief executive Stephen Carter said that as well as the resilience in the specialist subscriptions, data and content, he was also encouraged by the recovery of Informas physical events business in China, whilst virtual events are “maintaining our brands, developing our digital services and enhancing our data capabilities”.
Among the second-liners, Cineworld (LON:CINE) was off 7.5% amid second lockdown worries.
Proactive news headlines:
[email protected] Capital PLC (LON:SYME) has unveiled the outline terms of a strategic inventory funding agreement for up to €8bn over five years with a new “captive bank”. The fintech group said it has entered into a strategic agreement with a leading European alternative investment firm and its shareholders, 1AF2 and The AvantGarde Group, to acquire the European bank. The objective of the deal is to support the growth of the [email protected] platform, investors were told.
finnCap Group PLC (LON:FACP) has joined the list of companies resuming dividend payments after buoyant first-half trading for the group. In an update, the small-cap broker and corporate finance house said the record trading it had seen in the first quarter of its financial year had continued. As a result, revenue for the six months ending September 30, 2020, will be at least 37% higher at £19.5mln with a significant uplift in profitability on the prior period, the group added.
Power Metal Resources PLC (LON:POW) has acquired a 50% interest in a 2,680 square kilometre portfolio of base and strategic metal project interests in Botswana from Kavango Resources (LON:KAV) to be held in a new strategic joint venture holding company. Consideration for the acquisition payable to Kavango comprises £75,000 in cash, six million shares at a price of 1.25p each and five million warrants at 2p. Also, Power Metal commits to sole funding of US$150,000 over two years for exploration expenditure across the Ditau Camp and Kalahari Copper Belt projects to ensure expeditious and proactive project exploration, with any further expenditure above US$150,000 being funded jointly by Power Metal and Kavango.
Landore Resources Ltd (LON:LND) turned in a £695,000 loss for the six months to end June 2020, almost exactly level with the loss booked for the corresponding period a year ago. The company spent £102,750 on exploration at its highly prospective Canadian portfolio, which includes the BAM gold deposit on the Junior Lake project. Cash at the period end was £79,000. However, the company raised £2.9mln on June 29, 2020, and took delivery of the new funds after the period end. Separately, the company said it is also to acquire half of the 2% net smelter returns royalty held on the Lamaune Lake property for C$150,000 in cash and shares.
Maxcyte Inc (LON:MXCT) has said its full-year revenues are on track to be modestly ahead of current market expectations. The group said the first half of the year saw strong revenue growth driven by high-margin recurring annual fees from its cell therapeutics business, instrument sales and clinical milestone payments. Excluding its investment in its CARMA Cell Therapies subsidiary, the cell-based therapies and life sciences company saw underlying earnings (EBITDA) turn positive at US$0.6mln in the first half of 2020, compared to a loss of US$1.4mln the year before.
Frontier IP Group PLC (LON:FIPP) has noted that its portfolio company Fieldwork Robotics is to develop a cauliflower harvesting robot in collaboration with the Bonduelle Group. Frontier, a specialist in commercialising intellectual property, said the collaboration with Bonduelle, one of the worlds biggest producers of vegetables, is the second application of Fieldwork's patented agricultural robot technology to gain food industry backing. Fieldwork has already made strong progress with a raspberry-harvesting robot in collaboration with Hall Hunter Partnership, one of the UK's biggest soft fruit producers, and is now working with Bosch to optimise the software and design of the robotic arms. Frontier IP holds a 26.7% stake in Fieldwork.
IXICO PLC (LON:IXI) has been selected to provide its brain scan expertise to a trial being conducted by a leading network of Alzheimers research institutions. The UK group will collect and analyse positron emission tomography images generated by the Global Alzheimer's Platform Foundations (GAP) Bio-Hermes study. Its main purpose is the development of a database to investigate biomarkers on a head-to-head basis in conjunction with medical history elements. The trial will include 1,000 volunteers over the age of 60 screened for pre-clinical Alzheimer's as well as prodromal and mild dementia forms of the disease.
Trident Royalties PLC (LON:TRR) has entered into a binding agreement with Fe Limited (ASX:FEL) for the early payment of the second tranche of the consideration for the Koolyanobbing royalty acquisition, in exchange for a A$350,000 discount. As announced on March 25 and June 3, 2020, the second tranche of the payment for Koolyanobbing required Trident to pay A$3mln on June 4, 2021. Under the amended agreement, Trident will instead pay A$2.65mln by September 25, 2020, which will satisfy the obligation related to the second tranche fully. Early repayment of the facility will allow Trident to crystalise an effective annualised 17.5% risk-free return on capital whilst removing the future payment obligation and releasing security currently registered over the Koolyanobbing royalty in favour of Fe Limited.