- FTSE 100 slides 76 points
- Tesla to join S&P 500 next month
- US indices to open mostly weaker
As in Europe, US investors are set for a pause for breath when trading starts later today.
Spread betting quotes indicate the Dow Jones will open at around 29,786, 14 points down on last night’s close.
The S&P 500 is expected to kick-off at around 3,609, down 18 points, but the NASDAQ Composite is tipped to go its own way and open 117 points firmer at 12,041.
“Tesla will be in play today as it was announced that the electric vehicle manufacturer will be admitted to the S&P 500 index in late December. This has been in the offing for some time now, but the confirmation should push up demand seeing as index trackers will need to buy it for their funds,” explained CMC’s David Madden.
Tesla was up more than 13% in pre-market trading.
— Proactive USA (@proactive_NA) November 17, 2020
Meanwhile, Neil Wilson of markets.com reports that announced plans to press on with its stock market listing this year despite the obvious hit to the travel sector from the pandemic.
“In a filing on Monday the company reported it had made a profit of $219 million in the third quarter, on $1.34 billion in revenue. This was down on a small amount from the $227 million in profit during the same quarter last year – its only profitable quarter in 2019 – which was on $1.65 billion in revenue; however the first half of the year was exceptionally tough for as it chalked up net losses of $916 million on revenue of $1.18 billion,” Wilson said.
On the macroeconomic front, US retail sales for October are expected to rise 0.5% month-on-month in October after climbing 1.9% in September.
US industrial production is tipped to be up 1.0% or so month-on-month, which would be the largest rise in three months.
Economists will also be keeping an eye out for the NAHB housing market index for November, which is expected to remain unchanged from October’s 85.
In London, profit-takers continue to hold sway with the FTSE 100 down 76 points (1.2%) at 6,346.
11.15am: Sterling’s strength saps enthusiasm for blue-chips
The Footsie’s losses have lengthened, with sentiment not helped by the strength of sterling against the dollar.
London’s benchmark of blue-chip stocks was down 33 points (0.5%) at 6,388, while sterling was almost half a cent higher at US$1.3246.
UK Finance, the “collective voice for the banking and finance industry”, has released its card spending update for August, which showed debit card transactions were 3.9% higher month-on-month and 2.5% higher year-on-year.
The total spend of £58.4bn was down 1.2% on July but 12.5% higher than in August 2019.
There were 273mln credit card transactions in August, up 4.7% month-on-month but down 10% year-on-year.
The total credit card spend of £13.8bn was 1.2% less than in July and 18.4% less than last August.
Outstanding balances on credit card accounts contracted by 12.6% over the twelve months to August, as a result of repayments outstripping new borrowing in the year.
“As lockdown restrictions continued to be eased in August, we saw record numbers of customers choosing to make contactless payments using debit cards. Contactless card transactions using either debit or credit cards also increased compared to July, suggesting that consumers are taking advantage of the £45 contactless spending limit,” said Eric Leenders, the managing director of personal finance at UK Finance.
“Meanwhile, the amount of spending on UK debit cards fell slightly in August following a record high in July but remained strong at £58.4 billion.
“The percentage of credit card balances attracting interest and the annual growth rate of outstanding balances on credit cards continued to decline – the latter dropping by 12.6% over the twelve months to August,” he added.
Laith Khalaf, a financial analyst at AJ Bell, said the latest card spending figures show the summer boom in full swing,
“It’s encouraging that the spending splurge was driven by debit card payments rather than credit card borrowing, meaning there will be less of a debt hangover to worry about,” Khalaf said.
“Credit balances have also fallen because quarantine rules put the brakes on holidays abroad, which are often paid for on credit because of the size of the transaction and the additional protections afforded by paying on a credit card.
“Robust consumer spending and lower levels of debt are good for the UK economy as a whole; however the financial benefit from the imposed frugality of lockdown has not been shared equally, with many people struggling to make ends meet as a result of the pandemic,” he noted.
9.50am: Attention switches to Brexit
After the Lord Mayor’s show … investors have seen some of yesterday’s froth blown off the top of share prices this morning.
The FTSE 100 was down 22 points (0.3%) at 6,400, as attention switched from potential vaccines to combat the coronavirus to this week’s Brexit negotiations, for which there is apparently no cure.
“Brexit – the endgame approaches. We are in the final few days of talks if, realistically, both sides want to get the treaty ratified at home. The departure of Dominic Cummings is a problem for the UK government as it seems to strengthen the ‘deal at any cost’ voices within, which weakens the British position and likely as not has only led to the EU hardening its stance. Expect lots of sources comments on the wires reflecting the posturing that is still going on, but the real work is taking place out of the public gaze. David Frost, the UK’s top negotiator, is reported to have said a deal could be done by next Tuesday,” postulated Neil Wilson at markets.com.
Defying the trend among blue-chips was fags maker PLC (), which was up 2.5% at 1,437.5p following its full-year results announcement.
IMPs said additional costs for COVID-19 and losses in its non-tobacco arm hit its results for the year to end September 2020 but the shares rose as it indicated it expects to deliver a stronger performance next year.
Plc FY Earnings:
Adj Operating Profit: GBP3.53B (est GBP3.52B)
Pretax Profit Pre-Items: GBP3.14B
Tobacco Volume Down 2.1% Y/Y
Sees FY EPS Slightly Ahead Of Prior Year
Final Div/Share: 48.01P
— LiveSquawk (@LiveSquawk) November 17, 2020
Credit checking giant PLC () was also firmer following a results announcement, the shares rising 1.5% to 3,038.05p on the back of its interims.
“An incredibly strong performance from ’s Consumer division is the standout feature of these results, more than offsetting the downturn in credit bureau data as lending dried up during lockdowns around the globe,” said Nicholas Hyett at Hargreaves Lansdown.
“That makes a change from recent years, where consumer has been a drag on performance. There’s a certain amount of natural counter-cyclicity built into the consumer business, with credit matching, in particular, becoming more attractive when banks are less willing to lend and consumers have a more pressing need for the best possible deal; however, we also think the introduction of Boost in the US is probably a key driver of performance. Boost allows consumers to add new data sets, such as utilities bills and subscriptions, to their credit reports. We suspect that’s doing a lot to improve awareness and engagement, while also helping ’s customers deliver more tailored credit decisions,” he added.
8.50am: Vaccine hangover
If pessimism has turned to optimism on Monday with the discovery of a second potential coronavirus vaccine, then the watchword Tuesday morning in London was caution.
The blue-chip index effectively marked time in the early exchanges with traders ignoring the ascent of the Dow Jones into record territory after hours.
Perhaps they had more than half an eye of the buffoonery of the UK government.
The suspicion currently is that even if supplies of a vaccine are available early in the New Year, Messrs Johnson and Hancock (not a comedy duo you’ll see at a Royal Command Performance) will inevitably conspire to muck things up.
It would be funny in a Chuckle Brothers sort of way if lives weren’t at risk. Meanwhile, spendthrift Rishi Sunak, the chancellor, is now being touted as a potential successor to the currently exiled, er isolating PM.
Negotiations with the EU, meanwhile, are reportedly close to a successful conclusion with a trade deal imminent.
If that is the case, the markets, usually very good at pre-empting big news, are taking the off-the-record rhetoric with a large pinch of salt.
Turning to the Footsie movers, the profit-takers were targeting the bounce-back stocks with Rolls Royce (), Whitbread () and IAG () down 2.6%, 2.3% and 1.3% respectively.
Alternative fund manager (LON:ICM) jumped 7.5% on the back of its “exceptional” investment performance since June (revealed today).
Among the mid-tier stocks, ’s downgrade of SSP (), the Upper Crust concession owner, helped precipitate a 6.5% decline in the share price.
Proactive news headlines
() has signed a construction contract for a 30 megawatt (MW) project in Porterstown in the Republic of Ireland. The company has also applied to increase the total capacity of its two assets in its Republic of Ireland portfolio from the original 60MW to up to a total capacity of 180MW.
() weathered tough trading conditions pretty well in the first half of its financial year, with underlying earnings (EBITDA) slipping to £5.2mln from £6.1mln the previous year.
() said further, possibly significant, orders for its coronavirus rapid test are expected through its widened network of partners. At the year-end (June 30) the molecular diagnostics specialist had £1mln of initial orders for the kit, with its 15-minute point of care device set to be launched in March.
() said it has participated in, generated staking revenue and realised profit from several key projects in the Polkadot blockchain ecosystem.
() has completed its acquisition of the Spring Hill royalty from (). The uncapped royalty provides for A$13.30 per ounce of gold produced from Spring Hill if the gold price is greater than A$1,500 per ounce, or A$5.70 per ounce if the gold price is lower.
() has signed a binding agreement with BK Gulf LLC to support the immediate scale up of manufacturing capacity for delivery of its proprietary H-Power fuel cell system. BK Gulf, a wholly owned subsidiary of Middle Eastern conglomerate Dutco Group is one of the region’s largest specialist mechanical and electrical contractors.
() said it has confirmed an order for 1,000 bespoke brick sets from Jagex Ltd, a UK video game developer and publisher.
() has named as its new chief executive the president of its US operation. Danny Lee has been appointed to the board of the regenerative medical devices company with immediate effect.
() said it has appointed Shawn Tabak as its new chief financial officer who will join the company on December 7. The AIM-listed wine retailer said Tabak’s appointment follows its previous announcement that its current CFO, James Crawford, has been appointed managing director of its UK business.
() has launched a new A$10mln share placing to fund its continuing exploration work in Alaska’s North Slope.
First Sentinel () announces that it has raised £95,760 from the issue of 95,760 further bonds at £1 apiece and that they will begin trading on Euronext Dublin today. With just over 3mln bonds issued so far, it is the seventh tranche of bonds to be issued out of a planned £7mln bond issue out to 2024.
() said its joint brokers are Turner Pope Investments (TPI) Limited and First Equity Limited. It will no longer be working with Novum Securities.
Ncondezi Energy Limited () non-executive director Scott Fletcher has purchased an aggregate of 2.2mln ordinary shares taking his total beneficial interest to 59.1mln shares, representing 16.9% of the company’s issued share capital.
PLC () said it will be participating in the London South East Investor Webinar at 6pm on Tuesday 1 December at lse.co.uk/events (https://www.lse.co.uk/events/).
6.44 am: Backraack on the cards
The FTSE 100 is heading for a bit of backtracking on Tuesday morning after making more gains on positive coronavirus vaccine news.
London’s index of blue chips has been called 25 points lower by spread-betters on the IG index, having finished almost 105 points higher at 6,421.29 the day before.
Overnight, Wall Street’s main indices all closed higher, with the Dow Jones hitting its first all-time high since February, climbing over 470 points or 1.6% to 29,950.44.
The broader S&P 500 rose 1.2% and the tech-fuelled Nasdaq Composite added 0.8%.
The change in outlook and market sentiment has been “more than palpable”, said market analyst Michael Hewson at CMC Markets, noting that pessimism about a Covid exit strategy has “transformed into unbridled optimism, that we have a pathway to recovery, and multiple possible vaccine candidates”.
“Despite this unbridled optimism it is also impossible to ignore the current backdrop to the vaccine news, which is seeing a continuation in the trends of rising infection, hospitalisation and mortality rates, across Europe and the US.”
Indeed, the all-time high for the Dow came despite confirmation of an average of 155,442 COVID-19 cases per day over the past week, an increase of 82% from the average two weeks earlier.
California was the latest US state to reverse plans to open up its economy, pulling a state-wide “emergency brake” amid a surge in cases.
“The situation in the United States is particularly worrisome, with new state-wide restrictions seemingly every day,” said Jeffrey Halley at Oanda.
“The election stand-off is complicating the picture, and it seems inevitable that US economic data will suffer into Q4. America matters as 25% of global GDP.”
Around the markets
Pound up 0.1% at US$1.3215
up 0.8% at US$44.17
Gold down 0.1% at US$1,887.63
6.45 am: Early Markets: Asia / Australia
Asia-Pacific markets were mixed today as vaccine hopes once again lifted Wall Street to record highs overnight.
In Japan, the Nikkei 225 gained 0.42% after touching a 52-week high on Monday while Hong Kong’s Hang Seng index was flat.
China’s Shanghai Composite dipped 0.50% and South Korea’s Kospi was down 0.10%.
Over in Australia, the S&P/ASX 200 gained 0.2% to close at 6498.2 points. This is the highest close since February 27, 2020.
Proactive Australia news:
() has received commitments to raise around $6.6 million through the issue of new fully paid ordinary shares at 15 cents per share via a single tranche placement to sophisticated and professional investors.
Polarx Ltd () has secured more favourable amendments to the terms of its option to acquire an 80% interest in the Caribou Dome copper deposit in Alaska USA and (a 90% interest in the adjacent Senator property (collectively the Caribou Dome Project).
Roots Sustainable Agricultural Technologies Limited () has initiated a pilot trial to test the effects of root zone heating of grapevines using its proprietary Root Zone Temperature Optimisation (RZTO) technology.
() has commenced a new diamond drilling campaign at its 3.02 million-ounce Abujar Gold Project in Côte d’Ivoire, which is designed to underpin 2021 gold resource growth and a definitive feasibility study (DFS) on its proposed large‐scale open-pit mining.
’s () latest results from a large program of ongoing electro-magnetic (EM) surveying surrounding the Lantern Prospect in the Fraser Range region of Western Australia has uncovered a large and strong conductor.
’s () ongoing feasibility study test-work for its San José Lithium Project in Spain is yielding positive technical improvements, putting the company a step closer to producing battery-grade lithium hydroxide.
() (FRA:B4T) is making steady progress as it drives its advanced high-grade iron ore projects – JWD West Wiluna and Yarram – towards near-term production.
Mako Gold Limited () believes its Tchaga prospect in Cote d’Ivoire has the makings of a significant gold discovery after revealing a new shallow, high-grade gold zone, with assays of up to 143 g/t gold.
() focused on enhancing the value and potential of its fully-owned Finniss Lithium Project in the Northern Territory over the September quarter as it drives the project toward a final investment decision by mid-2021.
() has provided an initial prospective resource estimate of 11.606 million net barrels of oil equivalent (BOE) for its holdings in the SWISH AOI, in the SCOOP play of the world-class Anadarko Basin in Oklahoma, USA.