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FTSE 100 marking time as some companies signal an end to closedowns

FTSE 100 dips 5 points
Taylor Wimpey tops Footsie leader-board after announcing plans to reopen buil..

By admin , in Cambridge , at April 23, 2020

  • FTSE 100 dips 5 points
  • Taylor Wimpey tops Footsie leader-board after announcing plans to reopen building sites
  • Aston Martin to resume output at its St Athan manufacturing facility

10.55am: Taylor Wimpey and Aston Martin eyeing return to work for employees

Londons index of heavyweight shares remains tethered on a short lease to last nights close.

The FTSE 100 was down 5 points (0.1%) at 5,766.

“A dire set of European PMIs has not led to a severe decline in stock markets,” observed Chirs Beauchamp, the chief market analyst at IG.

“If you had told an investor on 1 January that, within a few months, global PMIs would dive to a fraction of their previous level, they would have thought you mad. What is equally confusing perhaps is the way markets seem to have taken todays incredible readings in their stride, or at least in a relatively calm fashion but then it does not take a genius to infer from the film of deserted European capitals that activity has taken a hit to the solar plexus and will not immediately rebound. And with talk of a new Marshall Plan for Europe doing the rounds stock markets are doing their best to look past all the bad data,” he added.

Luxury car maker Aston Martin Lagonda Global Holdings PLC (LON:AML) raced 4.3% higher to 50.05p after it revealed it is planning to reopen its St Athan manufacturing facility on 5 May.

Meanwhile, housebuilder Taylor Wimpey PLC (LON:TW.), up 8.1% at 146p, continues to go well after it signalled it would start reopening building sites next month.

Aston Martin can probably apply social distancing in a factory controlled environment.

Not sure about Taylor Wimpey.

— CM (@CMcoggly) April 23, 2020

Investment platform operator AJ Bell PLC (LON:AJB) advanced 5.7% to 316p after its fiscal second-quarter update. Total customer numbers in the three months to the end of March increased to 262,179, up 22% year-on-year.

10.20am: The new normal

The Footsie is now more or less back to square one despite some eye-catching economic data this morning.

Londons index of leading shares was down 2 points (0.0%) at 5,769, with traders shrugging their shoulders at the IHS Markit/CIPS Purchasing Managers Index readings this morning, all of which hit all-time lows.

Brace yourself before looking at the chart: UK flash #PMI at all-time low of 12.9 in April. Our model indicates this means #GDP is likely falling at a quarterly rate of around 6.5%

— Chris Williamson (@WilliamsonChris) April 23, 2020

“Weve seen the purchasing managers indices (PMIs) collapse across Europe so far this morning, and the story is no different in the UK. These figures are the first ones to fully take into account the lockdown period, and that saw the services index, which of course represents the bulk of UK economic output, slip down to 12.3. That's easily an all-time low,” said James Smith, the economist covering developed markets at ING.

“Theres little doubt these are shocking figures, but the reality is they dont tell us an awful lot that we didnt already know. Being diffusion indices, PMIs arent able to tell us the extent to which output has deteriorated (although clearly the answer is a lot),” Smith said.

“As lockdowns are unwound gradually over the next couple of months, we might see the PMIs begin to rebound as more firms report higher output. We saw something similar happen with the Chinese business surveys but the reality is that the underlying economic recovery is going to be much more gradual,” Smith predicted.

9.45am: UK PMI readings fall to all-time lows

The IHS Markit / CIPS Flash UK Composite Purchasing Managers Index (PMI) fell to an all-time low of 12.9 in April from 36.0 in March.

The flash UK Services Business Activity Index plummeted to 12.3 from 34.5 in March while the Manufacturing Output Index crashed to 16.6 from 43.9.

The flash UK Manufacturing PMI fell to 32.9 from Marchs 47.8.

“The UK economy has been hit by the COVID-19 outbreak in April to a degree far surpassing anything seen in the PMI surveys 22-year history. Business closures and social distancing measures have caused business activity to collapse at a rate vastly exceeding that seen even during the global financial crisis, confirming fears that GDP will slump to a degree previously thought unimaginable in the second quarter due to measures taken to contain the spread of the virus,” said Chris Williamson, the chief business economist at IHS Markit.

"Simple historical comparisons of the PMI with GDP indicate that the April survey reading is consistent with GDP falling at a quarterly rate of approximately 7%. The actual decline in GDP could be even greater, in part because the PMI excludes the vast majority of the self-employed and the retail sector, which have been especially hard-hit by the COVID-19 containment measures,” he warned.

Duncan Brock, the group director of the Chartered Institute of Procurement & Supply (CIPS) said the UK private sector had been plunged “into the twilight zone”.

"The overall services fall in output was faster than manufacturing and the steepest since records began in 1996 as social distancing measures enforced for the population stopped everything in its tracks and an eerie silence descended over the UKs streets.

"Theres nothing to applaud in this months results. Even the slight rise in optimism from last months record low feels like a blip to what the economy is facing in 2020. The figures for April could not be more worrying but as we may not have reached pandemic peak yet, theres much more bad news to come,” he warned.

Traders in London did not seem overly surprised or concerned by the dire warnings. The FTSE 100 was down just 12 points (0.2%) at 5,759.

8.45am: Unilever tips the Footsie slightly into the red

The FTSE 100 index got off to a mixed start on Thursday with reactions to corporate news flow from the blue-chips cancelling each other out.

In early trading, the UK benchmark was down 11 points, or 0.2% at 5,760, largely as a result of Unilever PLCs (LON:ULVR) 4.5% fall to 4,054p.

The fast-moving consumer goods maker disappointed the market with its first-quarter trading statement.

“There are some pockets where the picture is less bright and these issues may have taken more prominence today with investors looking for solid returns,” said Richard Hunter at Interactive Investor.

“Underlying sales growth in Emerging Markets, for example, declined by 1.8% in an area which should nonetheless provide Unilever with some strong longer-term opportunities. By product line, Foods and Refreshment dipped 1.7%, which is meaningful given that the division contributes 35% of turnover,” Hunter added.

Just Eat (LON:JET) was 3.0% lower at 7,660p after it placed 4.6mln shares – roughly 3.2% of the companys issued share capital – at the equivalent of 7,620p, raising roughly €400mln.

In contrast, aerospace engineer Meggitt PLC (LON:MGGT) topped the Footsie leader-board after its first-quarter and coronavirus (COVID-19) update.

Meggitt shares were 6.9% higher at 265.1p after it said the majority of its manufacturing facilities remain open during the lockdown period.

“Our defence portfolio represents a significant part of the group's revenues and is performing strongly as work on key defence programmes continues as scheduled,” the company added.

Housebuilders have been volatile in the last few weeks but Taylor Wimpey PLC (LON:TW.) brought some cheer to the sector as it revealed it is to start a staged re-opening of its construction and sales sites from early next month using new social distancing protocols.

Taylor Wimpey shares rose 5.5% to 142.55p, dragging sector peers Barratt Developments PLC (LON:BDEV) and Persimmon PLC (LON:PSN) – up 3.6% and 3.1% respectively – higher in sympathy.

Proactive news headlines:

Kavango Resources PLC (LON:KAV) shares jumped higher on Thursday as the explorer highlighted progress at key projects in recent months. In an update, the group said its flagship Botswana exploration assets continue to advance and it noted that there has so far been minimal disruption as a result of the coronavirus (COVID-19) pandemic, as it had already focused work on desktop-based analysis and modelling. For the Kalahari Suture Zone (KSZ), for example, the company said it and its consultants are presently constructing a new model incorporating findings from a successful 2019 drill programme, with the aim of defining high-grade targets for the next campaign. Kavango noted that it is fully funded to the next phase of exploration at KSZ.

Open Orphan PLC (LON:ORPH) has revealed that its hVIVO subsidiary has commenced the testing of an anti-viral drug for treating coronavirus (COVID-19) on behalf of its client Nearmedic International. Nearmedic is a specialist pharmaceutical, biotechnological and medical business headquartered in Moscow; it is running tests using hVIVO's virology expertise and laboratory capability on an anti-viral drug that could potentially be used to combat SARS-CoV2 (COVID-19) infections. Open Orphan said this drug has both potential anti-viral and anti-inflammatory activity and as such could reduce both virus infectivity and disease severity respectively.

Braveheart Investment Group PLC (LON:BRH) has said its investee company Kirkstall is to collaborate with Animal Free Research UK to supply its Quasivivo proprietary testing equipment for use in coronavirus (COVID-19) research. Braveheart owns 64.7% of Kirkstall. In its update, Braveheart noted that another firm in its portfolio, Pharm 2 Farm (51.7%) is also now producing medical-grade hand sanitiser gel and plans to increase production to 2,000 litres per day by the end of May.

Ariana Resources PLC (LON:AAU) has reported what it says is a “significant” increase in the mineral resource estimate for its Kiziltepe mine in Turkey. The AIM-listed explorer said the updated estimate increased the resource at the site by 25% to around 321,000 ounces of gold and 5mln ounces of silver. The increase also represents a 72% uplift over the feasibility study resource on an undepleted gold only basis.

Next Fifteen Communications Group PLC (LON:NFC) has reported a double-digit rise in full-year profit and said it continues to win new work in spite of the coronavirus pandemic. For the year ended January 31, 2020, the digital communications firm posted a pre-tax profit of £40.2mln, up 12% on the prior year, while net revenues climbed 11% to £248.5mln. The group also said it had continued to “win new work”, having recently added DuPont, Google Cloud and O2 as new clients.

Amryt Pharma PLC (LON:AMYT) has said the read-out from its phase III study of its AP101 cream, a potential breakthrough treatment for a rare skin condition is likely late in the third quarter, or early in the fourth quarter of this year. The timeline was provided in a statement in which Amryt said its Global EASE trial would be concluded slightly earlier than anticipated against the backdrop of the coronavirus outbreak. Independent advice suggested the impact at this advanced stage of the recruitment process the would be “statistically negligible”. The companys AP101 cream is being developed for epidermolysis bullosa, a chronic and distressing genetic skin disorder that causes the skin layers and internal body linings to separate.

Collagen Solutions PLC (LON:COS) has highlighted “positive revenue momentum” in several of its business categories despite challenges towards the end of its full-year due to the coronavirus (COVID-19) pandemic. In a trading update for the year ended March 31, the AIM-listed biomaterials and regenerative medicines specialist reported 58% growth in revenues from its tissue business alongside 10% growth from development and 1% growth in contract manufacturing.

H&T GROUP PLC (LON:HAT) has said it was informed on April 21 that, between April 16 and 20, its chief executive, John Nichols exercised options for a total of 93,686 ordinary shares at a price of 245.5p each under the firms 2010 Option Scheme. It noted that Nichols sold 85,924 ordinary shares to satisfy tax only and 7,762 shares were retained as a result of the transaction. The company added that it has issued and allotted 127,601 new ordinary shares due to the exercise of the optiRead More – Source