- FTSE 100 index closes down over 40 points
- But FTSE 250 stays positive
- Wall Street shares are mixed
5pm: FTSE 100 closes in ditch
FTSE 100 recouped some ground but closed in the red on Monday as once again sentiment took a hit on coronavirus fears.
Britain's blue-chip benchmark finished down over 40 points at 6,064 as traders fear a second spike of the virus could cause governments to tighten rather than loosen restrictions.
FTSE 250, the midcap index, though managed to hang on, closing up nearly 12 points at 17,089.
On Wall Street, the Dow Jones Industrial Average plunged 186 points to 23,419, the S&P 500 shed around 12 points to 3,028 and the Nasdaq added around 14 at 9,603.
"While still deep in the red, indices have managed to rally off their lows, although there is still much work to be done to recover the ground lost in the second half of last week," said Chris Beauchamp, chief market analyst at spreadbetter IG.
"Coronavirus cases are on the rise in the US and China, and market anxiety has been compounded by the desire in parts of the US government to avoid a second lockdown and a miserable set of Chinese datapoints overnight."
Beauchamp said investors should expect further volatility both on the upside and the downside ahead.
"The blunt truth is that this rally was looking very long in the tooth – since April the gains have been relentless, and while investors made hay over the past few weeks there has to be some kind of reckoning."
3.55pm: UK-EU representatives meet over Brexit
FTSE 100 held onto its losses before close, shedding 69 points to 6,035, while sterling got a nudge up to a flatline, at US$1.2557, following a fresh official statement on Brexit.
Prime Minister Boris Johnson met the President of the European Council Charles Michel, the President of the European Commission, Ursula von der Leyen, and the President of the European Parliament, David Sassoli on Monday afternoon.
The two sides agreed that “new momentum was required” and noted the chief negotiators should find “an early understanding on the principles underlying any agreement”.
“The Parties underlined their intention to work hard to deliver a relationship, which would work in the interests of the citizens of the Union and of the United Kingdom,” the statement read.
“They also confirmed their commitment to the full and timely implementation of the Withdrawal Agreement.”
3.10pm: Wall Street dives at open on second wave fears
The Footsie dropped 75 points to 6,028 in the early afternoon as Wall Street opened in the red.
The Dow dived 574 points to 25,030, while the S&P500 tumbled 55 points to 2,985.
The markets are dampening down following the recent rally as fears of a second wave of coronavirus infections mounts.
“I'm sure there's probably also a strong element of positions being trimmed back after a strong run for stock markets,” said Craig Erlam, analyst at OANDA.
“Moments like this can often reflect where the market is as much as the newsflow and maybe investors are just feeling a little uneasy about the prospects of a second wave on a market that has pretty much already fully recovered.”
“I have no doubt there'll be appetite whenever we see dips like this. Obviously a few failures may test the resilience of the rally but as we've seen already, there's a huge disconnect between markets and the economic reality, there's little reason to think that's about to change.”
2pm: Westminster mulls temporary VAT cut
FTSE 100 was firmly down 63 points at 6,041 after lunch.
Meanwhile, Chancellor Rishi Sunak is reportedly considering a temporary VAT cut to encourage spending now that shops have reopened.
The Treasury is considering either a blanket or a targeted reduction in consumption taxes, the Times reported.
The retail sector is concerned social distancing measures and reluctance to go out may dampen sales over the next months, with some businesses risking to go bust.
This week, the Bank of England is expected to announce further stimulus to support the UK economy, still at the beginning of recovery, potentially expanding the Asset Purchase Facility by £150bn.
If shoppers are nervous about going to shops, cutting VAT won't help. And if they're worried about losing their jobs, it still won't. What's needed is help for unemployed people to find new jobs.
— Jonathan Portes (@jdportes) June 14, 2020
12.35pm: Wall Street to follow global stock malaise
The Footsie was still 69 points lower at 6,035 at lunchtime, while US indices are also expected to be in the red at the opening bell.
Futures indicate a 670-point dive for the Dow Jones, as Wall Street is hit by fears of a second wave of infections following new cases in China, where regional lockdown measures have been imposed in certain areas.
The weak sentiment won't be helped by data on consumer spending in China.
Retail sales remain well below last years levels despite lockdown measures being eased in March: while at this time in 2019 they were rising by 8%, Mays reading was a 2.8% dip.
“While these numbers have slowly improved from the over 20% decline seen in February, they speak to a marked reluctance by Chinese consumers to unlock the purse strings, which if repeated across the world is likely to see a similarly slow and protracted rebound,” said Michael Hewson, analyst at CMC Markets.
“This is in stark contrast to the v-shaped rebound being modelled by a lot of economists and analysts, and as such perhaps helps explain why financial markets are so nervous as we start a new week very much on the back foot.”
11.55am: BP's dividend could be at risk following write-offs and job cuts
FTSE 100 dropped 57 points to 6,048 before midday while sterling also trimmed its losses, now down 0.15% to US$1.2528.
BP PLC (LON:BP.) was a big faller in the blue-chip index, tumbling 4% to 310.45p after announcing it will make shuddering write-offs of US$13bn to US$17.5bn.
The oil major is quantifying the impact of the pandemic, expected to cause weaker demand for energy for a sustained period and accelerate the pace of transition to a lower-carbon economy.
The giant, which announced plans to cut 10,000 jobs last week, reported a record US$4bn loss for the first quarter but maintained the dividend at 10.5 cents per share.
Analysts now wonder whether the distribution for the second quarter will be cut.
“By laying bare the impact of the oil price crash on the business, slashing its oil price assumptions and taking tens of billions of dollars worth of write-downs, it is probably hoping any decision on the dividend will be seen in a more sympathetic light,” commented Russ Mould, investment director at AJ Bell.
“In hindsight the fact the second quarter dividend was not cut looks increasingly strange particularly given its closest peer, Royal Dutch Shell, was prepared to end its own proud track record on dividends stretching back to the Second World War.”
10.50am: easyJet resumes flights after three months
The Footsie regrouped in late morning after its early 100 point plus losses, shedding 84 points to 6,021.
Travel stocks were under pressure despite easyJet PLC (LON:EZJ) restarted its schedule after three months of grounding.
The budget airline tumbled 4% to 773.2p a couple of hours after its first flight, from London Gatwick to Glasgow, took off at 7am.
Airlines are implementing strict safety measures such as mandatory face masks for passengers and crew, deep cleaning and no food served on aircraft.
Fellow low-cost airline Ryanair Holdings plc (LON:RYA) was down 5% to 10.73p, while British Airways owner International Consolidated Airlines Group (LON:IAG) dropped 4% to 264.2p.
9.40am: Big queues outside Primark stores
The Footsie trimmed its losses in mid-morning, now down 93 points to 6,011, while sterling dipped 0.2% to US$1.2526.
The week started with the reopening of shops in England after months of lockdown.
Non-essential businesses such as fashion retailers are now allowed to resume trading observing heightened safety rules.
Boris Johnson said people should "shop with confidence" but respect social distancing measures.
“The World Health Organisation has warned that the government needs to lift the lockdown gradually and carefully, and that a robust and effective contract-tracing system needs to be put in place before any further measures – like reducing the 2 metre distance rule – can be relaxed,” noted Connor Campbell at Spreadex.
Hundreds queuing outside #Birmingham #Primark this morning – theyve opened the doors ahead of the official 8am start because of demand @bbcwm @bbcmtd pic.twitter.com/wVkn1DFE6U
— Kathryn Stanczyszyn (@stanchers) June 15, 2020
Customers flocked to Associated British Foods PLCs (LON:ABF) Primark stores, which saw large socially distant queues ahead of its 8am opening time.
However, the stock dipped 25p to 1,898p around the same time.
8.40am: Big knock on Monday
The FTSE 100 posted a triple-digit losing start to the week, taking the index back below 6,000 and to levels last seen in early March.
The index of UK blue-chips opened 137 points lower at 5,967.8.
The catalyst for such a tumble? China is back on alert after a coronavirus outbreak in a district of Beijing, which has prompted fears of a second wave of fatalities.
"The dreaded second wave will weigh on equity markets – it is already sparking a wave of selling – and force policymakers to chuck even more money at this," said Neil Wilson of Markets.com.
"Markets just need to think things are heading in the right direction to go up; its the rate of change that matters, so fresh waves of cases are taken as a sell signal. Equity markets had also clearly become overstretched and overbought."
Chinas worse than expected industrial production numbers also added to the nervousness.
BP (LON:BP.) suffered a 5% decline after crude prices were hit amid worries over the world economic outlook and as the super-major revealed plans for massive write-downs as the coronavirus pandemic shifts the global energy outlook.
However, the biggest morning casualty was Melrose Industries (LON:MLRO), which owns aero-engineer GKN meaning it is exposed to a prolonged embargo on international air travel.
Gas turbine maker Rolls Royce (LON:RR.) was a too casualty as it fell 3.9%, as was British Airways owner IAG (LON:IAG), down 4.1%.
The miners, whose fortunes rise and fall with the Chinese economy, were also on offer in early trading with Glencore (LON:GLEN) posting a 4.2% loss.
Bunzl (LON:BNZL) was one of only two Footsie risers, advancing 5% after the packaging giant said business had been resilient.
Reckitt & Benckiser (LON:RB.) nudged less than a percentage point higher on defensive buying.
On the FTSE 250, the return to action of some of the high streets big players lifted Watches of Switzerland (LON:WOSG) 4% higher early on.
Proactive news headlines:
Touchstone Exploration Inc (LON:TXP, CVE:TXP) has completed the final phase of testing on the Cascadura well in Trinidad, with two intervals both flowing above 5,000 barrels oil equivalent per day (boepd). A 24-hour test, limited by the capacity of surface test equipment, saw the upper section flow at an average of 5,472 boepd while the lower flowed at 5,157 boepd. Findings of flow and build-up testing suggested that the upper would have absolute open flow (AOF) of 390mln cubic feet per day, while the same test suggested an AOF of 92mln cubic feet per day from the lower.
Open Orphan PLC (LON:ORPH) said that a company in which it has a significant stake has been given a platform in a world-leading medical journal for its early-stage vaccine results. Imutex Limited is developing AGS-v, a mosquito saliva treatment for diseases such as zika, malaria, dengue fever and West Nile virus. Results of a phase I trial, carried in the prestigious Lancet publication, showed it to be safe while inducing a strong immune response in the healthy volunteers that took part in the assessment.
Bango PLC (LON:BGO) said it has launched a carrier billing option for mobile operator SoftBank Corp than can be used to make purchases from Amazon Incs (NASDAQ:AMZN) Japanese website. The mobile commerce firm said Amazon customers with a SoftBank mobile phone account will now be able to pay for goods, membership fees and subscription services and charge the cost to their mobile phone bill. The deal means Bango now powers carrier billing for Amazons Japanese website across the countrys three largest mobile operators, SoftBank, NTT Docomo and KDDI.
Integumen PLC (LON:SKIN) said it has seen “significant growth of new business opportunities” and a lack of difficulties arising from the coronavirus (COVID-19) pandemic as the biotech firm reported a revenue surge in its final results. For the year ended December 31, 2020, the company reported revenues of £1.02mln, up 342% on the prior year, while the companys underlying (EBITDA) losses narrowed by 7% to £1.06mln. In a separate announcement, Integumen said that to give itself “additional flexibility” to manage its growth, it has entered a £400,000 loan facility with bioplastic specialist Cellulac Limited. The unsecured loan is for a term of 24 months, with Integumen having the ability to draw down the loan in four equal amounts of £100,000 per month from June 30, 2020, until September 30, 2020.
Inspiration Healthcare Group PLC (LON:IHC) said it has now delivered two NHS ventilator consignments against orders it received in March. The med-tech specialist added that it has been working hard with its suppliers and expects to ship further equipment over the “forthcoming weeks”. On March 16 and 20, the company revealed it had received significant orders from the NHS for medical equipment and ventilators as the coronavirus (COVID-19) pandemic ratcheted up demand.
EQTEC PLC (LON:EQT) has reported sharply reduced full-year 2019 losses while the waste-to-energy specialist also noted increasing demand for its services into 2020. For the year ended December 31, 2019, the AIM-listed group reported a loss of €3.6mln, a narrowing from an €8.2mln loss in the prior year, while revenues were €1.6mln compared to €2.2mln in 2018. Post-period, EQTEC said contracted revenues in the first quarter of 2020 were at €2.35mln, already ahead of the total for the entire previous year.
Collagen Solutions PLC (LON:COS) said its order book “continues to be strong” across the year and that it has been granted an extension for the filing of its accounts for the year ended March 31, 2020. In a trading update, the biomaterials and regenerative medicine developer said it was performing in line with expectations and that it is “encouraged about the year ahead” despite operational challenges caused by the coronavirus pandemic. The firm said it has not seen a decrease in demand for its products and services, saying that as of June 8 it had orders or contracted development milestones for the 2021 financial year as well as revenue already recognised for the first two months of the current year of around £3.3mln, around 82% of revenues reported in its 2020 financial year.
Arecor Limited has presented positive results for the Phase I clinical trial of its ultra-rapid acting insulin product candidate, AT247, to the American Diabetes Association 80th Scientific Sessions (ADA) virtual meeting. “AT247 has clearly demonstrated faster insulin absorption with an accelerated Pharmacokinetic (PK) and Pharmacodynamic (PD) profile compared to NovoRapid and Fiasp,” Professor Thomas Pieber, the principal investigator for the study said, Arecor noted in a statement. Arecor pointed out that AT247 has been formulated to accelerate insulin absorption, post-injection, to enable more effective management of blood glucose levels.
Ariana Resources PLC (LON:AAU) has renewed its operating licence on the Ivrindi gold project, which is 100% held by the company and based outside of the Red Rabbit joint venture in Western Turkey. The operational licence has been extended for 10 years, expiring on June 3, 2030, with the possibility for an extension. In addition, a 45 hectare mining permit for gold has been secured on the same terms.
Faron Pharmaceuticals Oy (LON:FARN) NASDAQFIRSTNORTH:FARON), the clinical-stage biopharmaceutical company, has announced plans to initiate a new state of the art process for the manufacturing of interferon (IFN) beta-1a. To support this, Faron said, it has received a €2,100,000 low-interest rate loan from Business Finland, the governmental innovation financing agency of Finland. The loan is for a period of 7 years with repayment only commencing after 3 year and the interest is three percentage points below the Finish base rate of interest, subject to a minimum rate of 1 percent.
Emmerson PLC said it is shifting its focus to moving the Khemisset potash project towards what the company calls "shovel ready" status, following completion of the recent feasibility study. This new stage of work will include building operational capability, undertaking front end engineering and design, detailed design and sourcing financing. The group said the permitting process is well underway and includes stakeholder engagement, socio-economic impact assessments and the environmental and social Impact assessment.
Bezant Resources PLC (LON: BZT) has received an update from Mining and Minerals Industries Holding (MMIH) regarding its preparations in respect of the proposed listing of MMJV, the subsidiary that holds its 80% of the Mankayan copper-gold project in the Philippines, of which Bezant owns the other 20%. MMIH is planning to list MMJV on the Singapore Stock Exchange via a reverse takeover but has asked the Singapore Exchange for an extension to the process to allow for the negative effects of coronavirus. The application was initially refused, but an appeal has subsequently been lodged. MMIH is simultaneously pursuing alternative opportunities.
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