Politics

FTSE 100 pares losses after “pre-lockdown” employment figures

  • FTSE 100 index sheds 75 points
  • The number of paid employees in the UK in March grew by an estimated 0.8% year-on-year
  • The UK unemployment rate for the three months to February 2020 was estimated at 4.0%, little changed year-on-year

10.30am: Blue-chips pare losses

Leading shares have trimmed their losses after UK employment data that was a bit hard to fathom, given the lockdown situation.

The FTSE 100 was down 75 points (1.3%) at 5,738.

The employment figures released this morning showed some signs that the effects of the coronavirus (COVID-19) virus outbreak were already beginning to be felt in March, as the number of paid employees fell by 0.06% compared with the month before, based on early estimates.

The UK employment rate in the three months to February 2020 was estimated at a record high of 76.6%, 0.4 percentage points higher than a year earlier and 0.2 percentage points up on the previous quarter, the Office for National Statistics (ONS) said.

The ONS added the caveat that the estimated in this mornings release cover the period prior to the implementation of the coronavirus (COVID-19) social distancing measures.

The UK unemployment rate for the three months to February 2020 was estimated at 4.0%, largely unchanged compared with a year earlier and up by one-tenth of a percentage point on the previous quarter.

In real terms (after adjusting for inflation), annual growth is estimated to be 1.2% in total pay and 1.3% in regular pay in the three months to February 2020, both down from a recent peak of 2.0% in the three months to June 2019.

9.45am: Employment growth slowed in March

The number of paid employees in the UK in March grew by an estimated 0.8% year-on-year, following on from Februarys 1.1% increase.

Based on early estimates for March, the number of paid employees fell by 0.06% compared with the month before, the Office for National Statistics (ONS) said.

Median monthly pay grew by 3.6% in February 2020, compared with the same period of the previous year.

Includes my take on the latest #labour market data BBC News – #UK #employment rate at record high before lockdown https://t.co/26PyFWbK3x

— Howard Archer (@HowardArcherUK) April 21, 2020

9.00am: Resource stocks under the cosh

Resource stocks are dragging down the Footsie early doors – that includes miners as well as oilers.

The FTSE 100 was down 116 points (2.0%) at 5,697 with Royal Dutch Shell (LON:RDSB), down 5.4% at 1,272.6p, leading the retreat.

Also getting the treatment this morning was Primark owner Associated British Foods PLC (LON:AB) after it pulled its interim dividend and reported a fall in half-year profits from the effects of the coronavirus (COVID-19) pandemic.

“AB Foods has produced a measured response to the effects of the pandemic, battening down the cost hatches wherever possible and consolidating those parts of its business where some sort of earnings visibility is still possible,” said Richard Hunter, the head of markets at interactive investor.

“Unfortunately, its flagship retail operation cannot be overlooked. Primark represents some 65% of the groups adjusted operating profit and since the enforced store closures, any progress has been utterly derailed, leaving a gaping hole in the overall revenue picture. Previously running at sales of £650 million per month through its stores, that figure has now evaporated entirely. As yet, it is, of course, impossible to estimate when the stores might reopen – with some of the European ones likely to be the first – and even then, the continuation of social distancing is likely to lead to fewer people in those stores at any one time, which in turn would continue to crimp revenues and profits,” he added.

Safety controls-focused engineer Halma PLC (LON:HLMA) defied the trend, rising 1.2% to 2,166p after it told investors that it expects to perform “relatively resiliently” amid the coronavirus turmoil.

8.40am: Crude fall hits Footsie

The FTSE 100 opened sharply lower on Tuesday after a session of unprecedented volatility on the oil market that saw the price of West Texas Intermediate (WTI) trade in negative territory. In other words, buyers were being paid to take barrels of crude oil off traders hands.

In early trade in London that was still the case with WTI at -US$4.51 a barrel. Meanwhile, the index of UK blue-chips tumbled 101 points to 5,711.64.

WATCH: Morning Report: FTSE 100 plunges after US crude turns negative for first time ever

“Yesterdays historic plunge in US oil prices into negative territory may have made headlines and split opinion about the importance of a contract that is due to expire today, has little volume and is trading on very low liquidity, but it cant disguise what it tells us about the state of the global economy, as well as the oil market,” said Michael Hewson of CMC Markets.

“The very fact that the May contract even traded into negative territory tells us a sobering truth about how much supply is out there relative to demand and while June prices are still trading at $21 a barrel that doesnt mean that they wont go the same way, and fall sharply in the coming days, given that we saw net inflows into US Oil ETFs yesterday. How long before these long positions also start to bail out?” he added.

On the stock market, BP (LON:BP.) and Royal Dutch Shell (LON:RDSA) were each down 4%.

But miner BHP (LON:BHP) topped the losers with a 4.2% fall after cutting its 2021 budget because of flagging demand from the US.

However, the precious metals stocks, led by Fresnillo (LON:FRES) up 4.4%, were well bid after gold moved decisively above US$1,700 an ounce as investors sought haven investments. Egyptian digger Centamin (LON:CEY) was also among the gainers with a 4% rise after a production update.

Proactive news headlines:

Gfinity PLC (LON:GFIN) has signed a contract with YaLLa Esports, one of the leading esports teams in the Middle East and North Africa (MENA), to expand its RealGaming101 website into the region. The esports media firm said the partnership will see a new Arabic MENA focussed website, RealGaming101.me, launched later this month targeting 93mln engaged gamers in the region.

Equals Group PLC (LON:EQLS), the business-to-business-focused e-banking and payments group, said revenues in the first quarter of 2020 were up 32% year-on-year at £8.3mln. In an update, the company said it's business-to-business (B2B) accounted for 67% of the revenues, up from 46% in the same quarter of 2019 and 52% for the whole of 2019. The group said the “robust” first-quarter performance was driven by its international payments operations, where revenue was up 116% year-on-year (YOY) and corporate banking, where revenues were up 30% YOY.

Kromek Group PLC (LON:KMK) announced that it has received a Queen's Award for Enterprise for its contribution to international trade. The supplier of radiation detectors said it was recognised for its “outstanding” growth in overseas sales, up 52% in the three years to April 30, 2019. “It is an honour to receive this prestigious award following a period of significant international growth for Kromek,” chief executive Arnab Basu said in a statement.

MaxCyte Inc (LON:MXCT) said it “remained highly confident” after a strong year operationally and financially, although it recognised the coronavirus lockdown would have some impact on the business. The company, which earns its commercial income from its cell engineering expertise, saw revenues for the year to December 31, 2019, jump by 30% to US$21.6mln.

Personal Group Holdings PLC (LON:PGH), the provider of employee services in the UK, has confirmed that its underlying earnings were ahead of expectations in 2019. The group had tipped the wink last month about the better-than-expected performance and revealed Tuesday that its adjusted underlying earnings (EBITDA) clocked in at £11.0mln for 2019, down 4% from £11.4mln the year before but a bit better than investment analysts had been forecasting. Profit before tax rose 3% to £10.5mln from £10.2mln the year before on revenue that jumped 28% to £70.9mln from £55.3mln.

Power Metal Resources PLC (LON:POW) has said the ground position at the Alamo gold project has been significantly expanded, following a staking campaign undertaken by its local partner in the USA. The additional claim areas are being registered with the County and Bureau of Land Management and expanded land position will now cover an area potentially containing a proximal bedrock gold source for the 60 ounces of nugget mineralisation already identified near-surface. Power Metal Resources owns an option over the project and is currently undertaking due diligence.

Franchise Brand PLCs (LON:FRAN) plumbing businesses, Metro Rod, Metro Plumb and Willow Pumps, have seen “continuing demand” for a majority of their services, which have been designated as essential under the UK governments pandemic rules. In a trading update released after the close on Monday, the franchise business said it expected the B2B division, which includes Metro Rod, Metro Plumb and Willow, to continue to trade profitably during the coronavirus lockdown, adding that in the first quarter of the year, earnings (EBITDA) for the division were 42% higher year-on-year, while growth in Metro Rod system sales accelerated to 19% from 14%. Meanwhile, the companys B2C division, which includes its brands ChipsAway, Ovenclean and Barking Mad, was 5% ahead of the prior year in the first quarter, although the company said it had “significantly reduced or eliminate” franchise fees as the pandemic impacted customer demand for the franchisee's products from early March. Franchise Brands also unveiled plans for a share placing to issue up to 19.9% of its current issued share capital, with certain directors and senior management to participate for a minimum of £2mln.

Benchmark Holdings PLC (LON:BMK), the aquaculture genetics, health and nutrition business, has announced that Alex Raeber is stepping down as its chief scientific officer. In a statement, the firm said Raeber will cease to be a director of the company with effect from July 31, 2020. It added that he has decided that as the company is moving from a research & development investment phase into commercial execution, the time is right to move on to pastures new.

Tiziana Life Sciences PLC (LON:TILS) (NASDAQ:TLSA), the US and UK-listed biotechnology company focused on the discovery and development of novel molecules to treat human disease in oncology and immunology, said it has convened a general meeting to consider proposals to take increased authorities to allot shares; consider the replacement of share option awards and to adopt new articles of association. The meeting will be held on Wednesday, May 6, 2020, at 11.00am and, as the firm expects significant restrictions on personal movement to still be in place due to coronavirus (COVID-19) it will be an electronic meeting only.

Cello Health PLC (LON:CLL), the global healthcare-led advisory group, announced that its annual general meeting (AGM) will be held at 12.30pm on Wednesday, May 20 at the offices of Cello Health Consulting, Cello House, West Street, Farnham GU9 7EQ. The group noted that, further to its announcement on April 9, the board has decided that it is prudent to withdraw the recommendation to pay the final dividend of 2.95p per share, so consequently, the dividend resolution referred to in the notice of AGM will not now be put to the meeting. The company also advised that, if the stay at home measures remain in place, the meeting will be a procedural meeting, and attendance will be limited to a bare quorum comprised of two directors who are shareholders. In the light of these measures, shareholders will not be permitted to attend the AGM and are strongly encouraged to vote by proxy on all of the matters of business by appointing the chairman of the meeting as their proxy by submitting the form. It said it has also made arrangements for shareholders holding their shares in certificated form to vote electronically. Copies of the notice of AGM, accompanying letter and 2019 accounts are available to view on the company's website.

Advanced Oncotherapy PLC (LON:AVO), the developer of next-generation proton therapy systems for cancer treatment, has announced that further to its announcements of April 9, it has convened a general meeting of shareholders to propose resolutions to enable completion of the proposed share subscription. The meeting will be held at 2.00pm on May 11. 2020, and in light of the current British government restrictions placed on public gatherings in response to the coronavirus (COVID-19) outbreak it will not be possible for shareholders to attend in person so they are strongly urged to vote by proxy in advance of the deadline with the circular and form of proxy available on the company's website.

Baker Steel Resources Trust Limited (LON:BSRT) said its Annual Audited Financial Report for the year ended December 31, 2019, is available to view on the company's website.

6.50am: Footsie tumble predicted

The FTSE 100 is tipped to drop on Tuesday after extraordinary moves by crude oil overnight, with US prices dropping into negative territory.

Londons blue-chip index was heading for a fall of around 92 points or 1.6%, according to spread betters on the IG platform, presumably dragged down by oil giants Shell (LON:RDSB) and BP (LON:BP.).

Overnight, the US oil benchmark, West Texas Intermediate (WTI), fell to -$37.63 per barrel, after closing on Friday at $18.27.

Wall Street was understandably thrown by this, with equity markets all in the red, led by Dow Jones Industrials Average falling 592 points or 2.4% to 23,650.4. The broader S&P 500 tumbled 1.8% and the tech-heavy Nasdaq Composite was down 1%.

Asian markets were in the reRead More – Source