Cambridge

FTSE 100 losses continue through the close

  • FTSE 100 index sheds 85 points
  • Chancellor of the exchequer unveils new jobs support scheme
  • US equities mostly lower

5 pm: FTSE 100 closes lower on coronavirus concerns

The UK benchmark index lost 76 points, 1.3%, to 5,822.8. The FTSE 250, similarly, dipped 190 points, 1.1%, to 16,802.7.

"Health concerns are playing on dealers minds and the rising number of new Covid-19 cases in the UK is concerning," CMC Markets UK analyst David Madden wrote Thursday. "…the FTSE 100 and FTSE 250 are underperforming when compared with their continental counterparts."

Falling hard Thursday was Smiths Group plc (LON:SMIN), which hit its lowest level since late June after announcing a fiscal year operating profit of £327 million, a 23% year-over-year drop. The technology company saw its share lose 7.5% to £1,324.50.

A snoozy morning turned into something a bit more exciting for the Footsie in the afternoon, but not in a welcome way for equity bulls.

The firm start expected on Wall Street was not exactly as advertised, with the Dow Jones and the S&P 500 losing ground, and that, along with some number crunching on the jobs support measures announced by the UK government today sent the Footsie into a dive to 5,814, down 85 points (1.4%).

“The return to tighter restrictions in the UK, if not (yet) full lockdowns, has concentrated minds in Westminster. While todays job support schemes push the potential cliff-edge for employment back to January, there appears to be a tacit acknowledgement that more will be forthcoming,” said Chris Beauchamp at IG Group.

“Like central banks, governments are going to find it hard to reverse out of policy support, leaving measures in place for far longer than imagined a few months ago. Given how widely-trailed the package was the lack of market reaction was to be expected, and sterlings lacklustre performance will also be down to continuing Brexit fears, the other major headache for Boris Johnson and his cabinet,” Beauchamp said.

Howard Archer, the chief economic advisor to the EY ITEM Club, said the chancellors Winter Economy Plan is a much-needed pick-me-up for the UK economy.

“While the COVID-19 restrictions announced by the Government earlier this week should have a limited economic impact in themselves, they nevertheless could have a negative impact on business and consumer confidence. There is also a risk that stronger restrictions on activity, which will have a greater impact on the economy, may have to be imposed over the coming weeks,” Archer said.

“It already looked likely that ending the furlough scheme in October would lead to a rise in unemployment, which would have a negative impact on growth prospects. Tax data indicated that around five million jobs were still supported by the furlough programme at the end of July. Latest data from the ONS suggest that around three million workers – around 12% of the workforce – were still on furlough or partial furlough in early September,” he noted.

“The Chancellor has acknowledged that he cannot save every job and he is keen to target new support measures at jobs that are considered viable. This has been a key factor behind the reluctance to just extend the furlough scheme,” Archer said.

“It is notable that the Jobs Support Scheme lasts through to 1 May 2021 and the hope is that, by then, the economy is on a sustainable, firm footing and that the impact on activity from coronavirus has been substantially diluted,” the economist concluded.

4:00pm: IG analyst says traders need a plan for election volatility

IG analyst Chris Beauchamp told traders to be prepared as a tightly contested US election could ratchet up market volatility over the coming months.

“2020 has been a rollercoaster ride already,” said Beauchamp.

“The prospect of a tightly contested election, one that may lead to an uncertain result that is fought out in the courts in a manner reminiscent of, but worse than, 2000, may make markets more volatile for longer. Make sure you have a plan, and that you follow it.

“This is going to be an exciting time, but a volatile one.”

The analyst added: “Whatever happens, investors and traders need to be prepared. Have a plan in place, using stop losses and defined risk levels.”

“If the lead up to the election, or the night itself, or the weeks afterwards, are volatile, then remember to either widen out stops and reduce position sizes, or step aside entirely to allow things to settle down.”

10.15am (3.15pm BST): Proactive North America headlines:

ImagineAR (CSE:IP) (OTCQB:IPNFF) inks five-year augmented reality deal with the NFL Alumni Association's player training academy

WeedMD Inc (CVE:WMD) (OTCQX:WDDMF) strikes a binding term sheet for $30M credit facility with LiUNA Pension Fund

MindMed Inc (NEO:MMED) (OTCMKTS:MMEDF) announces R&D collaboration with Liechti Lab in Switzerland on psilocybin

Versus Systems Inc (CSE:VS) (OTCQB:VRSSF) granted 23 new claims by US patent office for its in-game rewards platform

First Cobalt Corp (CVE:FCC) (OTCQX:FTSSF) estimates 13% reduction in operating costs for Canadian cobalt refinery project

Co-Diagnostics Inc (NASDAQ:CODX) says its Logix Smart “ABC” Test will be ready for US CLIA lab customers in first week of October

Mawson Gold Ltd (TSE:MAW) (OTCPINK:MWSNF) eyeing 'game-changing discovery' as it starts diamond drilling in Finland at Hirvimaa and East Joki zones

Cabral Gold (CVE:CBR) (OTCMKTS:CBGZF) identifies new high grade gold veins at Cuiú gold district

Exro Technologies Inc (CVE:EXRO) (OTCQB:EXROF) enters multibillion-dollar micro mobility sector through new collaboration with German drivetrain manufacturer Heinzmann

2.45pm: Wall Street opens in the red

Despite expectations of a higher start, the main Wall Street indices went into the red at the start of Thursdays session after the latest batch of US weekly jobless claims data showed a slight increase in Americans filing for unemployment.

Shortly after the opening bell, the Dow Jones Industrial Average was down 0.58% at 26,607 while the S&P 500 dropped 0.53% to 3,219 and the Nasdaq fell 0.49% to 10,581.

The downward turn in New York followed the release of jobless claims data for the week ended September 19, which showed 870,000 Americans filed for unemployment, 4,000 higher than the prior week and in contrast to market expectations of a fall to 850,000. However, continuing claims showed some more positive signs, falling to 12.58 million from 12.75 million but still above estimates of 12.28 million.

“In short, the momentum in the labour market is stalling. Next weeks September payroll data likely will report a modest seasonally adjusted increase in private jobs, perhaps 500K or so, half the August gain, and October could easily see private payrolls fall. Consumers spending – nearly 70% of the economy – cant continue to increase at its recent pace in the aftermath of the ending of enhanced unemployment benefits, and the latest upturn in Covid cases and hospitalisations – up yesterday for the third straight day – threatens to trigger renewed restrictions on economic activity, while inducing people to reduce their social interactions irrespective of state government action. Against this backdrop, the need for further fiscal action is obvious, but we no longer expect any meaningful relief bill until February”, said Ian Shepherdson, chief economist at Pantheon Macroeconomics.

Signs that the jobs market may be running out of steam may apply even more pressure to Congress to pass more economic stimulus, with talks around a fresh injection of government assistance currently politically deadlocked.

Back in London, the FTSE 100 has slipped back further after the negative start in the US, shedding 78 points to 5,821 at around 2.45pm.

2.00pm: Footsie ebbs after chancellor's speech

The package of support measures announced today by the chancellor of the exchequer, Rishi Sunak, will only work if the UK avoids a new lockdown.

Thats the view of Kallum Pickering, the senior economist at Berenberg.

“While the wage subsidy scheme should help to reduce a likely spike in redundancies as the current employment subsidy scheme ends on 31 October, it will only work if the economy avoids a second lockdown,” Pickering predicted.

“Amid the renewed surge in COVID-19 cases in the UK, the near-term economic outlook has darkened materially. With luck, the modest new restrictions, including closing restaurants and pubs at 10pm, limiting the number of people in social groups, a return to home working for more office workers and stricter adherence to mask-wearing will help to bring down the caseload while not inhibiting economic activity so badly that the recovery stalls. However, if the UK is forced to lockdown after 31 October, a mere wage subsidy scheme that requires workers to be on at least 33% of their normal hours will not help those workers in sectors that are forced to shut down. During the first wave, that included all non-essential in-store retail as well as restaurants, bars and entertainment. At peak, nearly a third of the labour force was on the scheme,” Pickering noted.

“In case of a new lockdown, or a serious further tightening of restrictions, the chancellor may yet need to step up the emergency support, including more generous measures to support jobs,” he warned,

Another exponent of the so-called dismal science, James Smith at ING, said the UK recovery is set to stall through the autumn and winter as the 'reopening phase' ends and new COVID-19 restrictions are brought in.

“A decline in October's GDP data looks likely,” suggested INGs developed markets economist but he added that so far, the restrictions on social gatherings that have been announced this week are unlikely to make a huge dent in gross domestic product (GDP).

“The new rules, including covering those areas with higher levels of the virus, are predominantly focussed on limiting social gatherings rather than outright closure of certain economic sectors.

“But theres still a clear risk that further measures could be on their way if the rate of case growth doesnt slow. A number of recent headlines have indicated the government may be mulling a two-week circuit-breaker mini-lockdown,” Smith said.

The chancellors measures dont seem to have generated much enthusiasm in the City, with the FTSE 100 ebbing to 5,856, down 43 points (0.8%) on the day.

12.40pm: US markets set to open higher

US markets are expected to rebound this afternoon despite misgivings about the US economy.

The Dow Jones industrial average is tipped to open at around 26,837, up 74 points.

The S&P 500 is expected to rise 7 points to 3,237 while the NASDAQ Composite, which was the hardest hit of the indices yesterday, is seen rallying to 10,829, up almost 200 points.

The rally is expected even as traders grow tired of waiting for another slug of vodka to be added to the punch bowl – or if you prefer, more fiscal stimulus.

Goldman Sachs has halved its growth forecasts for US economic growth in the fourth quarter to 3% from 6% in recognition that Congress is unlikely to attach additional fiscal stimulus to the continuing resolution.

“This implies that after a final round of extra unemployment benefits that is currently being disbursed, any further fiscal support will likely have to wait until 2021,” Goldmans runes readers said.

“An agreement between the Democrats and Republicans is not in sight, and investors are slowly giving up hope that a major stimulus package will be passed ahead of the presidential election in November,” said Milan Cutkovic, a market analyst at AxiCorp.

“Darden Restaurants will be in play today as the company will post its first-quarter results,” said CMC Markets David Madden.

“The hospitality sector has been hit hard by the pandemic. Even though the group saw a colossal rise in takeaways amid the lockdowns, revenue in the fourth quarter still fell by over 40%. Traders will be listening out for commentary in relation to costs –they have typically increased because of health and safety. EPS for the first quarter are expected to be 4 cents,” Madden said.

In London, the FTSE 100 has trimmed its losses some more as the chancellor of the exchequer, Rishi Sunak, gives his press conference.

The index of leading shares was down 17 points (0.2%) at 5,882.

Sunak is announcing a new jobs support scheme to enable companies to save viable jobs.

A key point of the scheme is for people to work a third of their normal hours and to be paid the normal hourly rate for those hours, with the government and the employers covering lost pay.

All employers will be allowed to apply for the new arrangements, which start in November, irrespective of whether they used the furlough scheme.

From 1 November, for the next six months, the Job Support Scheme will protect viable jobs in businesses who are facing lower demand over the winter months due to Covid-19. pic.twitter.com/8NpIKpQV8y

— HM Treasury (@hmtreasury) September 24, 2020

To continue supporting more than 150,000 businesses and to protect 2.4mln jobs, the Government has extended the 15% VAT cut for the tourism and hospitality sectors to the end of March next year.

The application deadline for all coronavirus loan schemes – including the future fund – has been extended to November 30,

Lenders have been enabled to offer Coronavirus Business Interruption Loan Scheme borrowers more time to make their repayments where needed.

The Self-Employment Income Support Scheme extension will support viable traders who are facing reduced demand over the winter months, covering 20% cent of average monthly trading profits via a government grant, Her Majestys Treasury announced.

UK retail sales volumes grew at the fastest rate since April 2019 in the year to September, according to the CBIs Distributive Trades Survey.

The surveys balance improved to +11% from -6% in August. Sales are expected to be flat in October.

Grocers were the primary driver of the expansion, with the overwhelming majority reporting rising sales volumes, the pressure group reported.

The survey of 123 companies, of which 56 are retailers, revealed that on average retail sales were perceived to be about 8% lower than they would have been at this time of year in normal circumstances.

The CBI highlighted that the average masked some divergent fortunes; sales of household furniture were 39% higher than normal, DIY & hardware sales were up 20% and groceries were up 10% but sales of clothing were down 40% and department store sales were down 23%.

#CBI distributive trades survey shows robust #UK #retail sales in September with the balance of #retailers reporting a year-on-year rise in sales volumes up to +11% (highest since April 2019) from -6% in August. But sales seen flat in October https://t.co/wEWRJmo3cc

— Howard Archer (@HowardArcherUK) September 24, 2020

“The latest results suggest that the recovery in retail spending over the summer months has continued into September, which is welcome news, but retailers appear cautious over the near-term outlook,” said Ben Jones, the principal economist at the CBI.

“The data highlights that there have been clear winners and losers within the retail sector as spending habits have changed. While some sub-sectors are thriving, others are still facing desperately difficult times,” Jones said, speaking before the chancellor of the exchequer announced his latest job support measures.

“With social distancing measures tightening again, those working in the hardest-hit sectors will be fearing the worst. Its clear that targeted support measures will be needed to ensure that viable businesses can emerge intact on the other side of this crisis,” Jones said.

Perhaps surprisingly, the year-on-year growth rate in online sales slowed to below the long-run average, to +35% from +46% in August. The surveys recipients think this weaker trend will continue, with Octobers growth rate expected to slow to +31%.

The FTSE 100 was down 17 points at 5,882.

11:45am: IG says the pound continues to fight against decline

IG, the CFD trading group, has noted that for the second day in a row the pound (GBP/USD) is fighting to hold above US$1.27.

“If it can find a floor here then a rebound towards US$1.30 may develop, with a rally above US$1.288 marking a breakout from trendline resistance. Further declines below US$1.2674 target US$1.25,” IG analyst Chris Beauchamp said in a note.

11.20am: Housebuilders buoyant; will Sunak throw them yet another bone?

Blue-chip equity prices appear to have bottomed out as traders wait for a press conference from the chancellor of the exchequer, Rishi Sunak, scheduled for 11.45am.

The FTSE 100 was down 25 points (0.4%) at 5,874, with Smiths Group PLC (LON:SMIN) leading the retreat after its disappointing full-year results.

“Even though Smiths Group is the tenth FTSE 100 firm to either re-join or declare its intention to re-join the dividend list, having previously scrapped a planned payment, investors do not seem overly impressed with the engineering conglomerates full-year results, as the shares are the worst performers in the UKs leading stock index today,” said Russ Mould, AJ Bells investment director.

The shares were off 8.1% at 1,316p.

“The understandable lack of any earnings guidance for the 2021 financial year, emphasis on investment for the companys long-term future (which could weigh on short-term profits) and the absence of a firmer timetable for the delayed, and long-awaited, spin-off of the Medical division are all possible reasons for the share price slide,” Mould suggested.

[NEW REPORT] Today Chancellor Rishi Sunak will unveil his plans to protect jobs once the furlough scheme ends. But how much is the coronavirus crisis already costing the govt? Read our new report on the impact of the pandemic on the UK's public finances https://t.co/CGpnlrEq2s pic.twitter.com/OFGbhJyqyk

— Institute for Gov (@instituteforgov) September 24, 2020

Housebuilders continue to defy the trend, possibly on expectations that Sunak will announce this afternoon some measures to keep the home fires burning (to coin a phrase).

“The furlough scheme is due to come to an end next month and what will happen in that regards will be the focus of traders attention. There is speculation about reduced working hours to encourage employers to keep staff on. Wage subsidies have also been mentioned as a possible option,” reported CMC Markets David Madden.

10.00am: United Utilities – today's unlikely glamour stock

The Footsie has pared its early losses but remains in the doldrums as investors fret over the rising second wave of coronavirus (COVID-19) cases.

Londons index of leading shares was down 39 points (0.7%) at 5,860, having dipped to 5,821 at one point.

“In Europe, new restrictions in the UK, France and Spain are also weighing on market sentiment. The governments are trying to implement a "soft" lockdown,” said Milan Cutkovic, a market analyst at AxiCorp.

“However, there is concern that if the corona cases rise continue to rise rapidly – which could well be the case in autumn/winter – more drastic measures will be needed again,” the analyst added.

Housebuilders are defying the trend, clawing back some of this weeks losses while United Utilities PLC (LON:UU.) – the very antithesis of a glamour stock – is enjoying a spell in the limelight, with a 1.6% rise to 865.4p after its trading statement.

United Utilities sees revenue and profit leak lower due to pandemic. ???????? #UnitedUtilities https://t.co/LTOr5kSIsQ

— Andrew Duncan (@andrewsduncan1) September 24, 2020

"While some headwinds remain for United Utilities, it was positive to hear today that cash collection has been consistent with pre-COVID targets. The extensive work undertaken by the company to improve cash collection over the last few years will hopefully pay dividends and protect against what will likely be an increase to bad debt once the government support schemes ease," said Harrison Williams, an equity research analyst at Quilter Cheviot.

“United Utilities has a high proportion of inflation-linked debt and is therefore benefitting from the current period of low inflation through lower financial expenses. Whilst beneficial in the short term, investors should note that a continued decline in inflation for a sustained period could put pressure on the groups regulated asset base growth and ultimately its dividend policy. A key driver of the investment case going forward will be the execution against expectations of outcome delivery incentive (ODI) outperformance in the new regulatory period. We believe the stock has upside potential if management can successfully deliver on this.”

Among the mid-caps, National Express Group PLC (LON:NEX) chugs 5.3% higher to 131.6p after it said it has traded slightly above its previously guided base case.

Both of its UK bus businesses have continued to see good passenger growth in recent weeks, it added.

8.50am: Down day for Footsie

The FTSE 100 index followed international stock markets sharply lower in early trading on Thursday roiled by concerns over the economic impact of the coronavirus (COVID-19) pandemic.

London's blue-chip benchmark fell 65 points to 5,833.98.

After-hours Fed chair Jerome Powell took aim at US politicians for being too concerned about electioneering to sign off another round of fiscal stimulus.

This simply added to the gloom that precipitated sharp falls overnight in the US with share prices there seemingly starting to factor in the reality – the worlds largest economy is currently rudderless.

Here in the UK, chancellor Rishi Sunak will unveil his latest aid for businesses once the furlough scheme is retired next month.

With around 5 million workers receiving support from the government, and the hospitality sector sunk by the latest round of COVID-19 restrictions, job support of some description is urgently needed.

Sunak will address the Commons from 11.45 am to outline the latest aid programme, which is likely to include a salary top-up scheme.

On the market, Smiths Group PLC (LON:SMIN) was off 6% in early deals following a lacklustre set of interims, which saw operating profits fall 23%.

“The restructuring programme that was announced during the summer is underway,” said David Madden, an analyst at CMC Markets. “Due to the uncertainty surrounding the health crisis, no guidance was offered – which wasnt a surprise.”

After a brief up day, both British Airways owner IAG (LON:IAG) and Rolls Royce (LON:RR.) found themselves back in the sickbay as the outlook for international travel deteriorated. The shares were off 5.5% and 5.3% respectively.

A huge loss and further lockdown warning saw shares in Cineworld (LON:CINE) tank almost 17% in the opening exchanges.

On the up and topping the FTSE 250 risers, however, was Pets at Home (LON:PETS), which added 11% after doing the reverse of Cineworld and upgrading its sales and profit forecasts.

Proactive news headlines:

Integumen PLC (LON:SKIN) has unveiled a new personalised coronavirus breath test, Microtox BT, and a complimentary digital health pass platform which it says has the potential to enable instant real-time testing for the virus.

The AIM-listed firm said the new test, adapted from its wastewater test Microtox PD, can analyse the breath and detect the spike protein of the coronavirus in real-time for those with a high viral load. Following extensive internal testing, the company said the test will now transition to the University of Aberdeen containment level 3 laboratory to undergo tests directly on the virus followed by a joint trial of up to 5,000 participants, results of which are anticipated before the end of the year.

Nuformix PLC (LON:NFX), which repurposes existing drugs for new uses, has struck a commercial deal for one of its promising targets. The firm has granted a company called Oxilio a six-month option over NXP001, which the latter will develop as a cancer treatment. If the option is triggered, Nuformix will receive a “significant upfront payment”, additional development milestones and a royalty on net sales capped at £2mln a year. In return, Oxilio will get a licence to the patent estate and ”know-how” related to NXP001.

Faron Pharma Oy (LON:FARN), the AIM-listed drug developer, told investors it expects data from a global coronavirus (COVID-19) trial involving its Traumakine drug in the final quarter of the year, as the firm posted its half-year results. Traumakine, an intravenously administered interferon beta -1a treatment, is part of the World Health Organisations global SOLIDARITY trial, which involves the drug as a treatment on its own and in combination with others. Faron also noted that its cancer drug development Clevegen is also making good progress through the phase I/II of the ongoing MATINS trial.

Braveheart Investment Group PLC (LON:BRH) has issued an update on the operations of its investee company Phasefocus Holdings Limited, in which it owns a 42.67% stake. The investment group said a switch to online sales meetings and virtual demonstrations for Phasefocus, which develops computational imaging technology, was “proving successful” for its high-value instrument, the Phasefocus Virtual Lens. Braveheart also said the investee firm continues to have a strong sales pipeline for its Livecyte2 instruments and has received orders from customers in Italy, Israel and China as well as software and hardware upgrades to existing Livecyte users at universities in York, Manchester and Hull and other locations.

Directa Plus PLC (LON:DCTA) saw its revenue treble in the first half of 2020 despite the constraints imposed by the coronavirus (COVID-19) pandemic. The period saw the producer and supplier of graphene-based products continue to grow strongly in its key selected industry sectors, securing important new contracts and new intellectual property rights, it told investors in its half-year report. Revenue rose to €2.81mln in the six months to the end of June 2020, up from €894,693 in the first half of last year. Revenue from the group's textiles division declined to €0.54mln from €0.82mln, with the coronavirus pandemic affecting demand. On the plus side, the divisions Co-mask anti-bacterial and anti-viral mask is seeing “significant and growing customer interest”, having received to date orders worth more than €400,000.

OptiBiotix Health PLC (LON:OPTI) said each of its divisions is “currently on course to reach profitability in the current financial year” after a busy start to 2020 commercially. In an outlook statement running alongside its interim results, the specialist in functional foods and ingredients based on good bacteria also told investors it was exploring the potential for “a dual international listing in the USA or other international markets”.

IXICO PLC (LON:IXI) said it has entered a five-year collaboration with the Friedreich's Ataxia Research Alliance (FARA) to become a member of the TRACK-FA neuroimaging consortium, focused on exploring novel imaging markers for Friedreichs Ataxia (FA). FA is a rare genetic disease that causes difficulty walking, a loss of sensation in the arms and legs and impaired speech. The disease can also damage parts of the brain and spinal cord and affect the heart. IXICO, an AIM-listed neuroscience data analytics specialist, said it will support the consortium to implement novel analysis algorithms to provide a trial-ready imaging solution for FA clinical trials.

Block Energy PLC (LON:BLOE) has highlighted significant operational progress with the early production facility (EPF) at the West Rustavi project, in Georgia, where gas sales are expected in the fourth quarter of 2020. Oil production at West Rustavi was suspended in April amidst coronavirus (COVID-19) restrictions, lower oil prices, and to preserve reserves. Today, Block revealed that some US$570,000 worth of crude was sold from its inventory, taking advantage of improving oil prices.

Bango PLC (LON:BGO) has announced a strategic partnership with Evergent, the revenue and customer-life-cycle management software firm. The AIM-listed data-driven commerce specialist said the two companies would work together to expand their over-the-topRead More – Source