- FTSE 100 index closes 58 points ahead
- US indices lower
- US industrial output falls 11.2% in April
5.10pm: FTSE 100 closes ahead
FTSE 100 index closed in positive territory on Friday with miners in support, but US benchmarks were under pressure after economic data and fears were heightened over US/ China relations.
Britain's blue chip benchmark closed the day over 58 points higher at 5,799, while the FTSE 250 added over 256 points at 15,660.
On Wall Street, the Dow Jones lost over 165 points at 23,460, while the S&P 500 shed around 19 at 2,833.
"Mining stocks such as Anglo American, BHP Group and Rio Tinto are some of the biggest gainers on the FTSE 100," noted David Madden, market analyst at CMC Markets.
"The better than expected industrial production figures from China overnight boosted sentiment in the mineral extractors. Given Chinas appetite for metals, any signs that the economy is recovering from the lockdown, typically helps the miners."
But looking across the Pond, Madden added: "The two largest economies in the world could see their relationship deteriorate as Washington DC is trying to stop Huaweis access to semiconductors.
"The US have previously had concerns in relation to Huawei on the ground of national security, as the worries were related to spying. A change in export rules from the US government, would make it more difficult for the Chinese company to acquire chips produced by US firms."
Also, today, it emerged that US retail sales had plunged by 16.4% in April, worse than the 12% fall that economists had been expecting. An auto sales report was even worse, showing a 17.2% decline.
On Footsie, among the top five risers on the day was silver giant Fresnillo (LON:FRES), which added 6.10% to 737.60p.
3.00pm: US industrial output and retail sales post biggest falls since records began
US markets have opened lower but not as deep in the hole as had been expected.
The Dow Jones industrial average was down 66 points (0.3%) at 23,557 and the S&P 500 was off 11 points (0.4%) at 2,840.
As well as some seriously bad retail sales data to handle, US investors also had to react to some bleak industrial production data.
Industrial output fell 11.2% in April, which was the biggest monthly fall since records began.
Capacity utilisation slumped to a new low of 64.9% from 72.7% in April.
“Manufacturing output has fallen to the levels last seen in 1997. Excess supply will undoubtedly hurt capital expenditure in coming quarters with more significant job losses expected,” said James Knightley, the chief international economist at ING.
“We are hoping that May should post a better manufacturing outcome with a number of production facilities restarting, but it is likely to be slow,” Knightley predicted.
As for the retail sales figures, Aprils numbers were down 16.4% month-on-month and were 23% below Februarys level.
“The recovery in retail sales will depend on household confidence, which hinges on healthcare and economic developments,” predicted Roiana Reid at Berenberg Capital Markets.
“Households will be reluctant to partake in certain activities until there is a vaccine or effective treatment for COVID-19 and the significant job losses, loss of income, and declines in net worth, will lead households to save more and spend less,” he predicted.
In London, Friday has seen the Footsie finally find forward gear and it has put a decent amount of pressure on the accelerator; the index was up 83 points (1.5%) at 5,825, helped by the pound losing almost two-thirds of a cent against the US dollar, at US$1.2169.
2.15pm: US indices to open lower
US retail sales posted the largest monthly fall since records began in April, falling by 16.4% from Marchs level.
Sales in April were down 21.6% year-on-year.
Shops selling clothes, electronics and furniture were the hardest hit, along with the restaurant sector, according to figures issued by the Commerce Department.
US indices on futures markets have retreated a bit further with the Dow Jones average set to open at around at 23,428 and the S&P 500 seen starting at around 2,827.
In London, the FTSE 100 was up 54 points (0.9%) at 5,795.
12.45pm: The end of Rico at Royal Mail
After yesterdays storming fightback, US shares are expected to give back a chunk of yesterdays gains today.
Spread betting quotes indicate that the Dow will open around 167 points lower at 23,459 while the S&P 500 is seen starting at around 2,834, 10 points below last nights close.
In London, the FTSE 100s end-of-morning slide has been halted and the index is now up 40 points (0.7%) at 5,782.
The market has reacted positively to the abrupt departure of the chief executive of Royal Mail PLC (LON:RMG), Rico Back.
“The coronavirus crisis has accelerated many existing trends, and unfortunately for Royal Mail one of those is the decline in addressed letters. That long, slow decline is no longer slow by anyones measure, and the volumes have probably been lost for good – companies and individuals that have discovered digital alternatives to increasingly expensive stamped envelopes will not go back,” said Nicholas Hyett, an equity analyst at Hargreaves Lansdown.
The shares were up 8.2% at 175.7p after the parcels delivery outfit announced the recently appointed chairman Keith Williams would assume executive duties.
“The groups saving grace is a pretty healthy balance sheet and significant levels of liquidity; however, we suspect Royal Mail is burning through cash at a fair rate of knots in the current climate and that places a time limit on how long Keith Williams has to turn the ship around. A background at British Airways may prepare the newly installed executive chair for the challenges of a highly unionised workforce, but coronavirus disruption is something quite different,” Hyett opined.
11.50am: Rally shows signs of flagging
Footsies bright start is beginning to flag as investors digest the latest gross domestic product (GDP) releases from the European Union.
The FTSE 100 was up 42 points (0.7%) at 5,783.
Real GDP in the Eurozone slumped by 3.8% quarter-on-quarter (QoQ) in the first quarter of 2020, after rising 0.1% in the final quarter of 2019.
The outcome was in line with the consensus forecast and the initial “flash” estimate.
The year-on-year rate change was -3.2%, versus +1.0% in the preceding quarter.
“The first quarter QoQ contraction of 3.8% is the sharpest on record; however, Germany only contracted by 2.2% and considering that France and Italy contracted by almost twice that much, we should expect to see some friction to arise when it comes to future contributions to any EU recovery structures,” suggested Artur Baluszynski, the head of research at Henderson Rowe, the wealth management firm.
The second quarter for Germany will be “much worse”, according to Deutsche Bank.
“We expect Q2 GDP to slump by 14% (qoq). Annual GDP is likely to contract by 9% in 2020 due to COVID-19,” the bank said.
[youtube https://www.youtube.com/watch?v=uYy8ShKqP5I]
10.30am: Traders take a punt on William Hill
It looks like the Footsie has finally found a forward gear on the last day of the week.
Londons index of leading shares was up 84 points (1.5%) at 5,825.
“European indices are on the rise this morning, with markets finally finding a bid after a period of steep losses. With critical support levels coming into play over the course of the week, the lack of a wider bearish breakdown highlights the fact that we still remain devoid of a strong enough driver of market sentiment to spark the next big break,” said Joshua Mahony at IG.
“Fears over the potential health implications of an easing of lockdown restrictions are based on a small number of cases, and thus it could take a widespread surge in COVID-19 cases to highlight the long-term economic implications of this crisis.
“Overnight data from China highlights the potential pathway for European nations, with the Asian powerhouse continuing to see dour data despite the headway made against the virus. Unfortunately, the ability to bring down Covid-19 deaths does not necessarily bring a sharp economic bounceback. One area of optimism came from the Chinese industrial production figure, which rose back into positive territory to signal a potential pick-up in business activity; however, with global demand on the wane, there will continue to be questions over Chinese growth as a result of the worldwide lockdown,” Mahony suggested.
Bookmaker William Hill PLC (LON:WMH), now no longer even a FTSE 250 constituent, was getting some love this morning after its trading statement included news of a waiver on the covenants attached to its revolving credit facility.
The shares rose 9.3% to 116.65p after the company said it was ready to spring into action once sporting events that punters can bet on start occurring again.
“We now know that William Hill has significant liquidity, which should put it in good stead to ride out coronavirus – total liquidity is above £700mln and monthly cash costs have been reduced to around £15mln. The groups borrowing restrictions have been relaxed too, waived this year and loosened next year. That provides important breathing room, but restrictions do come back into play next year, so its important business starts flowing again,” said Emilie Stevens, an equity analyst at Hargreaves Lansdown.
“And things are looking better on that front. The German Bundesliga is expected to start behind closed doors in May and horseracing is now live in France and expected to start in the UK in June. Football and horse racing are responsible for most of the groups online sports book and while increased gaming revenues have plugged some of the gap, theyve been missed. William Hill s planning for retail shops to open in some way in the second half of the year too but this is, of course, dependant on the UK keeping R down and lockdown restrictions easing,” she added.
9.10am: Market ignoresTrump's sabre-rattling
Sabre-rattling in Chinas direction by President Trump has been shrugged off by investors as just electioneering, as equities trend firmer.
The FTSE 100 was up 72 points (1.2%) at 5,813, led by telecoms giant BT Group PLC (LON:BT.A), which was up 6.9% at 109.15p on reports it is planning to sell off a chunk of its Openreach business.
Cruises operator Carnival PLC (LON:CCL) found itself in the unaccustomed spot of being in the top three risers on the Footsie leader-board after it announced yesterday “a combination of layoffs, furloughs, reduced work weeks and salary reductions across the company.”
The shares were up 6.2% at 882.2p. The company said booking trends for the first half of 2021 remain within historical ranges.
@CarnivalPLC has laid out the companys redundancy plan, which will include a combination of furloughs, salary reductions and reduced hours https://t.co/UJBHkUjYMw #carnivalcorporation #redundancy #coronavirus #cruise
— Cruise Trade News (@cruisetradenews) May 15, 2020
Scottish Mortgage Investment Trust (LON:SMT) is probably even less accustomed to being at the top of the Footsie leader-board – and to avoid any confusion, it has not made the podium today either but it was up 2.7% at 693p after publishing its full-year results that showed a 13.7% year-on-year increased in the bet asset value.
8.45am: Upbeat start to end the week
The FTSE 100 took its cue from Wall Street and Asias main markets to open in positive territory on Friday.
The UK's index of blue-chip shares started 71 points higher at 5,811.63, having dropped 162 points on Thursday.
While traders werent unduly perturbed by a slew of seemingly dire economic data from China, sentiment could turn on the latest GDP figure from the Eurozone later and US retail sales numbers this afternoon.
“The economic pictures is now the biggest driver for many assets as the weaker data points to just how deep the economic hole will be,” said James Hughes of Scope Markets.
The days big riser was BT Group (LON:BT.A) amid reports it is planning to sell a stake in its Openreach infrastructure business to fund the £12bn roll-out of fibre broadband. The shares advanced almost 10% early on.
It was a bounce-back day for the travel-related stocks, led by Carnival (LON:CCL), with the cruise lines group sailing 6.8% higher.
Not far behind were Intercontinental Hotels (LON:IHG) and easyJet (LON:EZJ), which were each up 3.6%.
William Hill (LON:WMH) gained 7% after an update on current trading that was not quite as bad as feared.
Proactive news headlines:
Sunrise Resources PLC (LON:SRES) has told investors that key documents in its permitting process for the CS Project, in Nevada, are now available for public comment. The company noted that the move marks the culmination of over 2 years of solid work involving the preparation of a detailed Mine Plan, extensive baseline field and desk environmental studies. "We are delighted to have reached this final stage in the permitting process and, whilst there have been a number of delays to the process, the end result is a robust environmental assessment,” Patrick Cheetham, Sunrise executive chairman said in a statement.
Zoetic International PLC (LON:ZOE) saw its shares jump on Friday as it predicted that distribution agreements agreed and that it is close to signing will lead to a “substantial increase” in sales of its Chill brand of cannabidiol (CBD) products in the US market. In a trading update, the CBD firm said the Chill brands focus on the tobacco replacement market is expected to be “especially attractive” as health concerns were exacerbated by the coronavirus pandemic, adding that it has also commenced negotiations for distribution of Chill products to two overseas markets. Zoetic also said it hopes to conclude “further significant distribution contracts” in the first quarter of its current financial year.
Asiamet Resources Ltd (LON:ARS) told investors it has landed a key approval for the BKM copper project in Indonesia, with the Governor of Central Kalimantan recommending the project to proceed into construction and development. It is part of a process for the project to secure a forestry borrow-to-use (Pinjam Pakai) permit from the Government of Indonesia. "Having recently secured the forestry permit for exploration, Asiamet is very pleased to have now received the Governor's recommendation for the Pinjam Pakai permitting process,” Asiamet executive chairman Tony Manini said in a statement.
discoverIE Group PLC (LON:DSCV) has said its business model is “resilient and flexible” and added that it had been encouraged by the continued “demand for its products” during the coronavirus (COVID-29) pandemic. In a trading update, the electronics designer and distributor said its sales increased by 8% year-on-year at constant currencies in the 12 months ended March 31, 2020, meaning earnings will be slightly ahead of the companys revised expectations following a strong recovery in China. The order book, meanwhile, was up 7% at a record £159mln, though sales to date for the first quarter are currently 10% lower on an organic basis compared with last year. This is partly the result of brief shutdowns of facilities in Sri Lanka, India and the US.
Ormonde Mining plc (LON:ORM) has told investors its management continues to review new project opportunities, whilst the coronavirus (COVID-19) pandemic has restricted the firms Spanish mine activities to the desktop. More than 80 projects have so far been looked at by the company since it agreed the divestment of its stake in the Barruecopardo tungsten mine project, it noted. “A small number of these opportunities remain promising, being of an appropriate scale whereby the company's cash would aid meaningful development, and which the directors believe could have the potential to add materially to shareholder value,” Ormonde said in a business update.
Keywords Studios PLC (LON:KWS) has raised £100mln via a share placing to leverage what it said was a “unique opportunity” to continue its acquisition strategy. The video game services firm said it had raised the funds through the issue of 6.9mln new shares at a price of 1,450p each, a 5.8% discount to its closing price on Thursday. Announcing its placing plans after Thursdays close, Keywords said while the coronavirus pandemic had increased the amount of video game playing, driving continued demand for content and for its own services, it was expecting to see “some stress in predominantly smaller service providers, which are typically single location and service with fewer clients and less able to weather the disruption”. The firm also provided a brief update on its current trading, reporting that despite greater pandemic disruption in the second half of March, revenues in March and April were 7% above the same two months of 2019 while the group had also gradually increased the operational capacity of its tesRead More – Source
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