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FTSE 100 on the rise; Wall Street expected to start higher

  • FTSE 100 index climbs 102 points
  • Higher open expected on Wall Street
  • CBIs monthly Distributive Trades Survey reports the sharpest fall in sales in the year to April since December 2008

1.05pm: Wall Street expected to start higher

US markets are expected to head higher on Wednesday as the easing of coronavirus lockdown measures across several countries boosted market sentiment on Wall Street.

Investors may also be willing to look past the gloomy picture in the oil markets and more towards equities as US earnings season begins to hit its stride and the prospect of more central bank stimulus increases risk appetite for equities.

Some are expecting the Dow Jones Industrial Average to climb around 330 points, which would take it to a seven-week high.

Meanwhile, in London, the FTSE 100 was up 102 points at 5,948 just after 1pm.

12.25pm: Hopes of a relaxation of lockdown restrictions boosts sentiment

More news from the retail sector that appears to contradict some of the data published by market research group Kantar this morning.

The CBIs monthly Distributive Trades Survey (DTS), which was conducted between 27 March and 15 April, reported the sharpest fall in sales in the year to April since December 2008 – a balance of -55% in April, from -3% in March. This represented the joint lowest balance in the history of the survey.

The CBI reported that two-thirds of retailers surveyed declared that the coronavirus (COVID-19) is having a significantly negative impact on their domestic sales.

39% of retailers reported the total shutdown of UK activity because of COVID-19 while 44% of retailers reported temporarily laying off staff and 8% reported permanent staff lay-offs.

Nearly all retailers (96%) reported cash flow difficulties, with just under half facing difficulties meeting tax liabilities (40%). 31% of retailers also faced constraints on the availability of external finance, the CBI said.

“Its no surprise that the lockdown is hitting retailers hard. Two-fifths have shut up shop completely for now and sales of groceries and other essentials also fell, suggesting households may have been dipping into stockpiles built up prior to the lockdown or tightening their belts more generally as incomes take a hit,” said Rain Newton-Smith, the CBIs chief economist.

"Although the livelihoods of hundreds of thousands of employees in retail remain at risk, there are encouraging signs that the Governments Job Retention Scheme is providing genuine relief, with many opting for temporary rather than permanent lay-offs.

“Continued support for retailers to cover their fixed costs will be vital for ensuring that businesses are able to re-open when its safe and appropriate to do so,” he added.

Howard Archer, the chief economic advisor to the EY ITEM Club, noted that the British Retail Consortium has also reported that shopper footfall has fallen by 83% since the government closed non-essential retail outlets in March.

“Grocers and specialist food and drink shops bucked the weaker trend in April with very strong growth reflecting the stockpiling by some households that has been occurring,” Archer reported.

“Meanwhile, the near-term fundamentals for consumer spending have clearly taken a substantial downturn as a result of coronavirus. Some people have already lost their jobs, despite the supportive Government measures, while others may be worried that they may still end up losing their job once the furlough scheme ends. Additionally, many incomes have been impacted.

“Furthermore, consumers are likely to adopt a much more cautious approach to discretionary purchases given the current economic environment,” Archer said.

Online sales are coming increasingly to the fore, Archer noted but he added that they can only make up a limited amount of the lost business.

“Significantly, online sales as a share of total retail sales reached a record 22.3% in March,” Archer observed.

Unsurprisingly #CBI distributive trades survey shows substantially weaker #retail sales in April as sales balance sinks to equal record low of -55% from -3% in March https://t.co/pNbVZISvmI

— Howard Archer (@HowardArcherUK) April 28, 2020

The FTSE 100 was up 86 points (1.5%) at 5,932.

11.30am: Advance picks up pace

After a hesitant start, the Footsie has found its mojo and cruised past the 5,900 mark and is now eyeing a return to 6,000.

To put that into context, the last time the index was above 6,000 was on 6 March.

The index is currently up 91 points (1.6%) at 5,938.

“Further gains for the FTSE 100 look odd on a morning when major components like BP and HSBC report poor earnings, but for the most part the gainers in the index are those that will see an upturn in activity as lockdowns ease across most of the globe, if perhaps not yet in the UK,” said IG's Chris Beauchamp.

Financials are very much to the fore this morning, with life assurance pensions consolidator Phoenix Group Holdings PLC (LON:PHNX), up 6.8% at 608p, banking giant Barclays PLC (LON:BARC) and Royal Bank of Scotland Group PLC (LON:RBS) – up 6.3% at 96.82p and 5.5% at 113.45p – plus wealth management firm St Jamess Place PLC (LON:STJ), up 5.8% at 840.6p, the picks of the bunch.

Among the mid-caps, building materials supplier Travis Perkins PLC (LON:TPK) and fantasy wargames company Games Workshop PLC (LON:GAW) are both faring well.

Travis Perkins was up 4.0% at 1,060.5p after it highlighted that branches across all of its businesses remain open.

Irish investment bank Goodbody reckons the first-quarter trading update shows that the builders merchant “is one of the winners in spite of Covid-19”.

“Given a greater amount of time spent indoors and the boom in DIY prompted by the UK lockdown, the group has been working to increase activity and since April 20th and has been opening more merchanting branches with a third of the network open through the lockdown,” said Robert Eason, the co-head of Equities – Capital Markets at Goodbody.

Games Workshop battled its way 9.2% higher to 5,810p after it said it will begin taking online orders again from Friday.

9.45am: Hesitant progress

The FTSE 100 has made hesitant progress this morning with risers among its constituents outnumbering fallers by slightly more than two to one.

Londons index of leading shares was up 22 points at 5,868, with insurance companies – likely to be beneficiaries of a recovery in global stock markets – prominent among the risers.

“Stock markets in Europe are showing small gains as traders are still hopeful that lockdowns will be relaxed. There is a sense that social distancing policies have helped governments get a handle on the Covid-19 crisis as the infection and death rates are tapering off. Dealers are taking the view that looser restrictions are in the pipeline,” said CMCs David Madden.

COVID Qs #16. Where are the winners? Thin on the ground. Delivery, maybe but TSCO is cutting staff, SBRY says margins impacted by security, screening & MKS says food trading has been adversely affected by lockdown. Were all in this together? But not in a good way

— Mark Brumby (@brumbymark) April 28, 2020

The quoted supermarkets are not having such a jolly time of it following the release of the grocery market share data released this morning by market research group Kantar.

Take home grocery sales in Britain increased by 9.1% in the 12 weeks to 19 April, according to the latest figures from Kantar.

Spending at Sainsburys was 8.4% higher than this time last year and 7.2% higher at Tesco. Morrisons and Asda saw increases of 4.3% and 3.5% respectively.

Despite this, Wm Morrison Supermarkets PLC (LON:MRW) was down 1.6% at 183.2p, J Sainsbury PLC (LON:SBRY) was 1.6% weaker at 197.95p and Tesco PLC (LON:TSCO) was down 0.6% at 233.8p.

Take home grocery sales in Britain increased by 9.1% in the 12 weeks to 19 April as consumers settled into life under lockdown and stocked up on food and household essentials, according to the latest figures from Kantar. https://t.co/mdEEz1ximA

— Poultry Business magazine (@poultrybusiness) April 28, 2020

8.30am: Results weigh

The FTSE 100 got off to an insipid start with the benchmark held back by weak numbers from HSBC (LON:HSBA) and BP PLC (LON:BP), two of its biggest constituents.

The UK blue-chip benchmark subsided 9.5 points early on to 5,837.31. Overnight Wall Street closed in positive territory, but it was a different picture in Asia on Tuesday, where the markets registered a mixed performance as reality set in.

In London, HSBC shares lost 1.7% of their value in early trade after the Asia-focused banking giant announced its first-quarter profits had halved and told investors it was making financial preparations for the impact of the coronavirus lockdown.

“The fact HSBC has put aside a sizeable lump for coronavirus related loan defaults isnt exactly a surprise and were actually reasonably impressed at how performance has held up so far,” said Nicholas Hyett, equity analyst at Hargreaves Lansdown.

“Loan growth has offset pressure from lower interest rates, while increased volatility in financial markets can actually be good news for the investment bank. Meanwhile, the banks capital base has been able to absorb the impairment and an increase in the risk profile of the banks loans without deteriorating significantly – albeit with the help of the suspension of 2019s final dividend.”

Meanwhile, BP shares shed 2% as the oil major reported a historic US$4.36bn loss for its first quarter as the coronavirus (COVID-19) pandemic and a big drop in oil demand took its toll, although the firm maintained its dividend.

Away from the numbers, easyJet (LON:EZJ) landed with a bump, down 1.7% after a bout of profit-taking following Mondays positive performance.

Not only is the budget airline one of the major casualties of the coronavirus outbreak, but it is also embroiled in a resolve-sapping spat with its founder, Sir Stelios Haji-Ioannou, over new aircraft deliveries.

But on the upside, Games Workshop (LON:GAW) registered a 9% rise after saying it is on track to make profits of £70mln for the year ending next month. It has also secured a £25mln overdraft.

Proactive news headlines:

Gaming Realms PLC (LON:GMR) has reported reduced full-year losses and higher revenues for 2019 and said that trading for the first quarter of 2020 came in “ahead of expectations”. Posting results for the year ended December 31, 2019, the mobile gambling games firm reported a loss from continuing activities of £4.6mln, down from £5.6mln in 2018, while revenues jumped by 11.5% to £6.9mln.

Rockfire Resources PLC (LON: ROCK) has revealed that results from its January 2020 rock sampling programme have identified a gold-copper-nickel-cobalt-Platinum-palladium anomaly located only two kilometres north of the company's Plateau gold deposit on the Lighthouse tenement in North Queensland, Australia. In a statement, the new anomaly, named Split Rock, is likely to enhance the prospectivity of the immediate vicinity of Plateau. Split Rock shares access tracks with Plateau, enabling minimal mobilisation of rigs between the two prospects.

Sareum Holdings PLC (LON:SAR), the specialist small molecule drug development business, announced that its CEO, Dr Tim Mitchell, will give a presentation at BioTrinity 2020, which will be delivered digitally from April 28 to May 1, 2020. The group said the presentation will provide an update of Sareum's two proprietary TYK2/JAK1 kinase inhibitor programmes, SDC-1801 and SDC-1802, targeting autoimmune diseases and cancers, respectively. Dr Mitchell will also highlight the emerging potential of this mechanism to modulate the severe inflammatory responses and respiratory symptoms arising from coronavirus and other viral infections, it added. The presentation will be made through the BioTrinity virtual portal and will be available to registered participants during the conference and until at least May 9 at https://biotrinity.com/showcase. And a copy of the presentation will also be made available on the companys website.

ANGLE PLC (LON:AGL) (OTCQX:ANPCY) believes its ground-breaking liquid biopsy system could have a role to play helping guide trials of the next wave of cancer immunotherapies. Its Parsortix system is used to harvest circulating tumour cells. Now ANGLEs scientists are using whats called an immunofluorescence imaging assay to check for programmed death-ligand 1 expression. Known as PDL1, this particular protein helps keep immune cells from attacking non-harmful cells in the body. However, it also allows the cancer cells to trick the immune system and avoid being attacked as foreign. If a PDL1 expression from a patients cancer cells is high, she or he will likely benefit from immunotherapy.

Sure Ventures PLC (LON:SURE) has said that Sure Valley Ventures, in which it holds a 25.9% stake, participated in a €2.2mln (£1.9mln) funding round for a business named Buymie. Buymie has developed a platform which uses artificial intelligence (AI) to allow customers to access large grocery retailers and receive short notice delivery to a chosen destination in less than an hour. The company has signed a multi-year partnership with Lidl Ireland to provide a personalised online grocery service, while consumers are also able to use Buymie to shop from Tesco in the country.

IronRidge Resources Ltd (LON:IRR) said it has begun a second phase drill programme at the Zaranou gold project in Côte d'Ivoire. The license borders with Ghana and is along strike from significant operating gold mines including the five million ounce Chirano mine and the 5.5mln ounce Bibiani mine. In an update, the company said it will undertake approximately 8,000 metres of air core drilling and 1,000 metres of reverse circulation drilling.

Supermarket Income REIT PLC (LON:SUPR) announced that it has successfully raised £139.8mln from a substantially oversubscribed placing of 135,748,028 new ordinary shares at 103p each. The group said that, after careful consideration of the level and quality of demand in the Issue alongside the possibility of acquiring additional assets, its board had determined to increase the size of the Issue to £139.8mln from the original level of £100mln, and added that notwithstanding the increased size of the Issue, investor demand substantially exceeded the gross proceeds raised and as such a scaling back exercise was undertaken.

Metal Tiger PLC (LON:MTR) has welcomed the decision of its associate Cobre to take full control of its Toucan Gold subsidiary, the vehicle that owns the Perrinnvale project in Western Australia. The resources investor has agreed to invest a further A$310,000 (£161,000) into Cobre to help it fund the transaction, which will see the Aussie-listed company pay cash of A$527,000 and issue 6.16mln shares to buy out the 20% minority owners. Metal Tigers investment will maintain its stake in Cobre at 19.9%.

European Metals Holdings Ltd (LON:EMH) (ASX:EMH) said its Czech subsidiary Geomet has now received €29.1mln following completion of its deal with power company, CEZ The €29.1mln investment deal between European Metals and CEZ has now completed. Accordingly, CEZ now has a 51% equity interest in Geomet, which is the holder of the licences to the Cinovec project, Europe's largest hard rock lithium project.

ECR Minerals PLC (LON:ECR), the gold exploration and development company focused on Australia, announced that at its annual general meeting (AGM) held at on Monday all resolutions proposed were passed.

Keywords Studios PLC (LON:KWS), the international technical and creative services provider to the global video games industry, has confirmed that, given the coronavirus (COVID-19) restrictions, it is no loRead More – Source