- FTSE 100 gains 19 points
- UK GDP in July up 6.6%
- Sterling soft as Brexit trade talks conclude
- US markets start higher
3.30pm/10.30am EST: Proactive North America headlines:
Lord Global Corp (OTCMKTS:LRDG) inks deal with KeyOptions to bring new AI-based COVID-19 rapid screening technology to international markets
Citigroup (NYSE:C) becomes first US big bank to appoint female boss
Chesapeake Bank (OTCQX:CPKF) channels Q2 Holdings digital banking platform to enhance its customers' banking experience
2.47pm: Wall Street pushes higher at the opening bell
The final trading session of the week saw the main Wall Street indices start off on the front foot as the market looked to end the week on a positive note.
In the early minutes of trading, the Dow Jones Industrial Average was 0.44% higher at 27,654 while the S&P 500 climbed 0.39% to 3,352 and the Nasdaq rose 0.25% to 10,946.
Markets may also have been lifted by a another sharp rise in US consumer price inflation in August, with the figure showing the cost of living increased 0.4% during the month, which was higher than forecast but was slower than the 0.6% rise in July.
The biggest contributor to the rise was the cost of used cars and trucks, which climbed 5.4% in the sharpest rise in 51 years. A 2% rise in the cost of oil also added upward pressure, while a fall in grocery prices weighed on the figure.
Back in London, the FTSE 100 was trading sideways into late afternoon, up 19 points at 6,022 shortly after 2.45pm.
1.55pm: Mid-caps outdoing larger siblings
Londons big cap stocks have been zigzagging sideways for a few hours now, while the mid-caps on the more UK-focused FTSE 250 have been inching ever higher.
This comes after economic thinktank NIESR put out a fresh forecast for the UK economy, estimating we will emerge from recession at the end of this quarter.
Augusts GDP will grow 7% month-on-month following the 6.6% growth in July that was published today.
This will mean the third quarter will have grown an impressive looking 15%, but still not recovering all the 20% slump between April and June.
NIESR economist Kemar Whyte said: “There has been a welcome resumption of economic growth in the third quarter as the lockdown eased, signalling the end of a short, yet severe, recession in the first half of the year.”
He said despite the recovery in the past few months, “we have still only recovered just over half of the output lost due to the Covid-19 pandemic”.
“The evolution of the pandemic and the scale of expected withdrawals of government support pose downside risks on the pace of the recovery as we move to the end of this terrible year.”
The FTSE 100 is up 18 points 0.3% at 6,021, while the 250 is up 78 points or 0.4% to 17,649.
Futures markets are now only eyeing small gains for US stock indices, around 0.3-0.4%.
“Investors are likely turning their attention to next weeks Fed meeting, which throughout the pandemic has offered consistent support for the economy and risky assets,” said market analyst Edward Moya at Oanda.
He added: “Next week, the Fed might have to take a backseat to the brewing problems with the technology sector. First, we see how markets react to the ending of the buffer period and the start of sanctions on Huawei sanctions, forcing Taiwan Semiconducor Manufacturing to providing them with chips. The next tech domino is the Bytdance deadline to sell their TikTok' US business, which seems very unlikely at the moment.”
He said the tit-for-tat responses between the US and China “will be critical for the coming weeks”.
12.14pm: FTSE struggling for gains, Wall Street set for bounce back
Londons FTSE 100 clambered slightly higher over the morning, while the big US stock indices are all on course to start higher, according to the futures market.
The Dow Jones is predicated to bounce back with a 0.7% rise after a 1.45% decline overnight, while the S&P 500 and Nasdaq Composite are both seen rebounding 0.8% following their respective 1.8% and 2% drops a day earlier.
Software titan Oracle Corp (NYSE:ORCL) is up 4% in pre-market trade as results released outside of trading hours beat expectations, helped by revenue from key client Zoom Video Communications (NASDAQ:ZM). Oracle has been talked about as a potential buyer for the US operations of TikTok.
Back in Blighty, continuing a fairly volatile few days, the pound struggled higher by midday, up 0.2% against the greenback to 1.2831.
MORGAN STANLEY SAYS CHANCE OF WTO BREXIT OUTCOME HAS RISEN TO 40% VS 25% PREVIOUSLY
— Macro Intel (@macro_intel) September 11, 2020
This weeks clashes between London and Brussels over the Northern Ireland protocol have done “brutal” damage to sterling, said analyst John Hardy at Saxo Bank.
“The situation is as serious as it has ever been because this time we are finally talking about the actual reality on the ground for the UK post-Brexit that will prevail in less than four months.
“Will realpolitik prevail and the two sides hammer out an amicable agreement, or is this a fight on principles that means both sides are willing to suffer significant damage to defend their principles: the UK on its sovereignty and the EU on ensuring the UK doesnt enjoy advantages not available to its own members?
“I fear the latter,” Hardy wrote.
The Footsie has given up some of its gains and at pixel-time was up 18 points or 0.3% at 6,021.39.
10.45am: Boosts from Japan deal and weak pound
Giving a little bit of extra impetus to London trading this morning, the UK and Japan have agreed a post-Brexit trade deal.
This provides a rare boost for sentiment in a week that has been dominated by pessimism over the scope for an agreement by year-end, said market analyst Josh Mahony at IG.
“Interestingly, the shift in focus towards Asia for the UK has brought outperformance from the similarly Asian-focused Burberry, with the fashion firm heading up the FTSE 100 gainers in early trade.”
The Footsie index, up almost 20 points or 0.3% to 6,022.87, is outperforming its continental European peers because of a boost by a weak pound, down 0.1% to 1.2788.
Mahony says Londons equity bulls are hoping that we see further devaluation of the currency to new six-week lows to the benefit of internationally-earnings firms.
“Brexit fears are likely to play an increasingly significant role for both the pound and FTSE in the coming months. However, while many will hope both the EU and UK ultimately find common ground, the events of this week will certainly turn plenty of optimists who had expected a comprehensive trade deal by the December deadline.”
— Proactive (@proactive_UK) September 11, 2020
9.35am: Footsie back on front foot
Londons blue chips are inching higher as the analysis floods in about the earlier GDP data, which has been mulled over and shrugged off by currency traders amid the gloomy Brexit situation, with the pound now below 1.28 against the dollar.
While the ONS estimates that real GDP expanded 6.6% month-on-month in July and 8.7% in June, economists at Berenberg point out that July was still 11.8% below its pre-pandemic January level, compared to the 6.9% contraction during the financial crisis between February 2008 and March 2009.
They added that the strong gain in July exceeded expectations and suggests upside risk to a third-quarter forecast of 15.1% gain versus the second quarter, when there was 20.4% decline.
Comparing different sectors of the economy between July and pre-crisis February, the highly sectoral nature of this crisis is clear – financial services is almost back to normal, hospitality still down 60%. These sectoral different in output feed directly into the labour market.. pic.twitter.com/XCIlwIVfTU
— Resolution Foundation (@resfoundation) September 11, 2020
“While a better-than-expected uptick is possible for Q3, the recent escalation of Brexit tensions adds downside risks to Q4. The upside risk for our 2020 call overall (-10.2%) looks more modest despite the solid July gains.”
The data seems to show the UK economy continues to recover at a better rate than most of its counterparts on the European mainland, added Michael Hewson at CMC Markets, though he agreed that the recent deterioration in EU/UK trade negotiations could also act as a brake into year-end as the prospects of no deal increase further.
However he said the economic data is “almost a side show” against the tense backdrop of Brexit and between parliamentarians in Westminster.
The FTSE 100 is up 17 points or 0.3% at 6,019.93, with Burberry (LON:BRBY) and Primark parent Associated British Foods (LON:ABF) top of the leaderboard, surrounded by other multinationals happy with the weaker pound.
8.30am: Subdued start for FTSE
The FTSE 100 index managed to notch up a modest gain in opening deals on Friday helped by GDP data showing the UK economy grew for the third month in a row in July, up 6.6%, although after sharp falls overnight on Wall Street the initial gains soon disappeared.
After half an hour of trading, the UK blue-chip index had lost 2 points just holding above the psychologically important 6,000 level at 6,001.64.
Richard Hunter, Head of Markets at interactive investor, commented: “A lack of fresh impetus is holding markets back, with both the US and the UK being buffeted by economic and political concerns. In the US the most recent failure to agree the next round of stimulus came into sharp focus as the number of US citizens on unemployment nudged 30 million.
"The divergence between Wall Street and Main Street has become a political issue in the midst of an election campaign where the rhetoric is starting to intensify. At the same time, the main driver of the market recovery has also been the subject of some debate, as tech stocks on punchy valuations have come under review given that the pandemic-fuelled rise of recent months may have reached a plateau for the time being.”
He added: “Despite the welcome news of a further improvement to the UK economy in July, sterling remains weak. Given the clouds of the end of the furlough scheme, a likely rise in unemployment on top of the current recessionary trend and negotiations faltering between the UK and the EU which threaten further to derail an economy which is desperately trying to recover, the immediate outlook poses more questions than answers.
“This sterling weakness has in part provided a prop for the FTSE 100 over the last week, given the constituents exposure to overseas earnings. While this has allowed the index to avoid some of the sharper recent falls, it remains down 20% in the year to date. Even at this level, with some regarding the index as one of the cheapest globally on valuation terms, the UK remains hampered by the lack of an immediate or obvious positive catalyst.”
There was little on the corporate front to provide much alternate attention, certainly among the big caps.
However, further down the market, oil tiddler 88 Energy Limited (LON:88E) stood out, jumping 25% higher to 0.365p as it reported the findings of final petrophysical analysis of the Charlie-1 well exploration, revealing greater hydrocarbon pay than previously estimated.
According to 88 Energy, the wells net pay is significantly increased by the additional work and the largest additional contribution was in the Lima discoveries which are in the Seabee formation. The new analysis follows Premier Oils exit from the venture.
Proactive news headlines:
88 Energy Limited (LON:88E, ASX:88E) shares jumped higher on Friday as the firm reported the findings of final petrophysical analysis of the Charlie-1 well exploration, revealing greater hydrocarbon pay than previously estimated. According to 88 Energy, the wells net pay is significantly increased by the additional work and the largest additional contribution was in the Lima discoveries which are in the Seabee formation. The new analysis follows Premier Oils exit from the venture. The Upper Lima section is now estimated to have some 250 feet of net pay, versus initial estimates of just 8 feet, whilst the Lower Lima section is now seen to span 111 feet of net pay compared to the earlier estimate of 64 feet.
Pembridge Resources PLC (LON:PERE) shares rose on Friday after the group said its subsidiary, Minto Explorations Limited, has secured a prepayment funding facility with its copper concentrate offtake partner, Sumitomo Canada Limited. The company said the pre-pay facility of up to US$12.5mln is additional to Mintos existing offtake agreement, under which Sumitomo makes an advance payment of 90% of the value of concentrate output each month, with Pembridge noting that the facility represents a “further development” in Mintos relationship with Sumitomo.
CentralNic Group PLC (LON:CNIC) said it has agreed to acquire two businesses, Zeropark and Voluum known collectively as Codewise, for US$36mln (£28mln) in a move it says will expand its monetisation segment. In an announcement after the close on Thursday, the internet domain name specialist said the Codewise companies provide services to domain name owners and website operators so that they can generate recurring income from the monetisation of traffic to their websites, as well as tools for online marketers to acquire traffic and customers and to manage and optimise their online marketing activities. CentralNic said the acquisition will help it build market share and is expected to be “significantly earnings enhancing with immediate effect”. To help finance the acquisition, CentralNic said in a separate announcement on Friday morning that it has successfully raised £30mln in a “significantly oversubscribed” private placing of 40mln shares at a price of 75p each, a 6% discount to its closing price on Thursday.
Chaarat Gold Holdings Limited (LON:CGH) has said it is “on track” to deliver its full-year production guidance for its Kapan gold mine in Armenia, noting that the run of mine grades at the project have improved over the last two months. In a post-period statement accompanying its results for the six months ended June 30, 2020, the company said Kapan is still expected to deliver 55,000 gold equivalent ounces in the year, while grades at the mine improved in July and August and are now expected to be above levels seen in the first half for the rest of the year. Chaarat said these improved grades were the result of targeted development work carried out in the year to date which focused on “identifying higher grade ore blocks that require minimal development”.
Genel Energy PLC (LON:GENL) has revealed its intention to raise up to US$300mln in debt financing, to replace an existing bond that is set to mature in December 2022. It is looking to issue a new five-year bond and said it has engaged Pareto Securities to organise a roadshow with international credit investors. Genel noted that it had over US$350mln of cash at the end of August, with net cash stated at US$55mln.
The stock to be sold represents up to approximately 5.7% of the property franchise's issued share capital and is being offered at a price of not less than 150p each. Belvoir shares closed trade on Thursday at 155p. The final number and price of the placing will be agreed by broker finnCap and the selling shareholder, who is founder and former chairman Mike Goddard, at the close of the bookbuild process.
ImmuPharma PLC (LON:IMM) has provided an update regarding its submission to the US Food & Drug Administration (FDA) of a Special Protocol Assessment (SPA) for Lupuzor's Phase III trial in Lupus patients. In a brief statement, the specialist drug discovery and development company said that, in discussions, Avion Pharmaceuticals, its licensing partner for Lupuzor, has confirmed that, whilst the review period by the FDA for an SPA request is normally up to 45 days – which has now passed – Avion has as yet not received a response from the regulator and as such the file is still in the review queue, due to the current workload at the FDA. ImmuPharma said it will provide an update to the market as soon as Avion has received a response from the FDA and the company has been notified.
Blue Star Capital PLC (LON:BLU), the investing company with a focus on esports, technology and its applications within media and gaming, announced that it has allotted 100,000,000 new ordinary shares of 0.1p each in the company following an exercise of warrants at an exercise price of 0.1p each, providing the company with proceeds of £100,000
Power Metal Resources PLC (LON:POW), the AIM-listed metals exploration and development company said it has received a notice to exercise warrants over 2,250,000 new ordinary shares of 0.1 pence each in the company. It noted that subscription monies of £22,500 have been received by Power Metal in respect of the exercise.
Adamas Financial Asia Limited (LON:ADAM) said that further to its announcement September 7, 2020, it has been advised that there has been a further delay in the receipt of the remaining subscription monies under its recent funding. It added that it expects the remaining subscription monies from placees to be remitted over the course of the next few days.