- FTSE 100 index gains 120 points
- US indices to open on the front foot
- Zoom Video Communications higher in pre-open trading after sparkling results
12.30pm: December to get off to a flying start in the US as well
As Dinah Washington sang, what a difference a day makes! Yesterday, US indices fell as traders banked November’s handsome profits but now we’re in December …
November’s gains were fired by hopes that a vaccine to combat the coronavirus (COVID-19) and December’s expected flying start for US indices is being attributed to the same cause.
Spread betting quotes suggest the Dow Jones industrial average will open 318 points higher at 29,957; the S&P 500 is expected to jump 38 points to 3,660 and the NASDAQ Composite is tipped to advance 185 points to 12,384.
Zoom Video Communications, arguably one of the hottest stocks of 2020, was on the rise in pre-market trading after posting third-quarter numbers after the bell yesterday.
“On an annualised basis, revenue surged by 367% to US$777.2 million, topping the US$694 million consensus estimate. Keep in mind, in the previous quarter the company saw revenue growth of 355% and that highlights that growth momentum is strong. EPS was 99 cents, easily topping the 76 cents consensus estimate,” reported CMC’s David Madden.
“Some people are speculating that if a vaccine is approved in the near term, it could take the shine off Zoom but in reality, it will probably take a long time for the drug to be mass-produced and rolled out. Therefore we are unlikely to see a return to pre-pandemic life anytime soon so that should keep Zoom’s demand elevated,” Madden suggested.
On the US macroeconomic side of things, most interest today will centre on the ISM manufacturing index for November.
“While the factory sector has recovered strongly in recent months, we suspect that last month’s ISM survey somewhat overstated the vigour. So mimicking the pull-back in yesterday’s Chicago PMI, we expect the headline index to decline 2.3pts to a still very respectable 57.0. The construction spending report for October and auto sales figures for November will also be of some interest. Meanwhile, Fed Chair Powell will testify on the CARES Act before the Senate Banking Committee,” said Daiwa Capital Markets.
In London, the FTSE 100 was up 120 points (1.9%) at 6,386.
11.00am: December off to a flying start
The release of a manufacturing survey that shows British manufacturing pulling out all of the stops ahead of Brexit has given further impetus to equities.
The FTSE 100 was up 119 points (1.9%) at 6,385, starting December with a bang after November was one of the best months for the stock market in decades.
The manufacturing Purchasing Managers’ Index (PMI) rose to a 35-month high of 55.6 in November (revised up from the ‘flash’ reading of 55.2), up from 53.7 in October.
“The latest purchasing managers survey points to the manufacturing sector showing considerable resilience in November amid the lockdown in England and restrictions on activity elsewhere,” said Howard Archer, the chief economic advisor to the EY ITEM Club.
“The Government has stressed that it wants manufacturers to stay open during the lockdown and many factories have been adjusted to meet social distancing requirements so employees can still work.
“It is also evident that there was an appreciable lift to manufacturing activity in November coming from the stockpiling of critical inputs and increased demand from the EU ahead of the ending of the UK-EU transition arrangement on 31 December,” Archer said.
“Output growth picked up in November and was at a healthy level with the index at 56.3. Markit indicated that the upturn in production volumes was linked to companies reopening following COVID-19 closures earlier in the year and improving demand.
“Output growth in November was led by the intermediate and investment goods sectors; however, consumer goods production and new orders were reported to have fallen for a second month. This contrasted with the consumer sector leading the UK economy’s bounce back in the third quarter and fuels suspicions that the lockdown and other restrictions, along with increased caution, will hold back consumer spending,” Archer reported.
Earlier, the Nationwide house price index rose 0.9% in November from October. The year-on-year increased quickened to 6.5% from October’s 5.8%.
“Nationwide’s data indicate that the average house price has jumped by £13.3K, or 6.2% since June, just before the Chancellor increased the threshold for stamp duty to £500K, from £125K. The tax saving on the average house purchase is only £2.1K, so buyers currently are materially worse off than those in the first half of this year,” observed Samuel Tombs, the chief UK economist at Pantheon Macroeconomics.
“What’s more, new quoted mortgage rates have jumped; the rate for a rock-solid five-year 75% LTV [loan-to-value] mortgage was 33bp [basis points – 100 bps = one percentage point] higher in October than in June. As a result, monthly mortgage repayments are much higher for current buyers than those before the pandemic,” he added.
“A relatively narrow cohort of well-off households, who already own their homes with little debt, seem to be driving the market with the savings that they have realised this year from working from home. We can tell this because the effective interest rate on all new mortgages has held steady since June, despite the sharp rise in quoted rates for high LTV loans, pointing to a decline in the leverage of the average home-buyer,” Tombs declared.
“House prices remain vulnerable to fall next year, when the trend towards working from home will be going into reverse, stamp duty will be higher, and mortgage rates still will be above their pre-Covid level, due to the weakened labour market. We think it will take further government interventions—either extending the stamp duty holiday, or establishing a new mortgage guarantee scheme—to prevent house prices from giving back some of 2020’s gains next year,” he warned.
|| Nationwide HPI (Y/y) Nov ||
|| Nationwide HPI (M/m) Nov ||
— Your Trading Advisor (@YTradingAdvisor) December 1, 2020
Market Report: FTSE kicks December off on the front boot as Moderna seeks emergency approval – YouTube https://www.youtube.com
9.50am: Manufacturers operating at full pelt in November
The seasonally adjusted IHS Markit/CIPS Purchasing Managers’ Index (PMI) rose to a 35-month high of 55.6 in November, up from 53.7 in October.
The PMI has now signalled expansion (i.e. been above the 50.0 level) for six successive months.
The upturn in production volumes was linked to companies reopening following COVID-19 closures earlier in the year and improving demand.
“Growth of the UK manufacturing sector picked up in November, temporarily boosted by ‘Brexit-buying’ among clients and the ongoing boost from economies re-opening following lockdowns earlier in the year,” said Rob Dobson, a director at IHS Markit, which compiles the survey.
“The effects were strongest felt among firms supplying inputs to other companies as warehouses were restocked, and among producers of investment goods such as machinery and equipment. The weak point was the consumer goods industry, which saw lower output and new order intakes amid depressed household sentiment caused by mounting job losses and the UK re-entering lockdown.
“Whether the upturn of manufacturing production can be sustained into the new year is therefore highly uncertain, especially once the temporary boosts from Brexit purchasing and stock building wane. On this front, some reassurance is provided by the survey’s gauge of business optimism. Confidence has risen to a level not seen since late-2014, with over three-fifths of manufacturers (61%) still expecting to raise output over the coming year. On the other hand, many manufacturers remain very concerned about the outlook and generally reluctant to expand capacity, hence employment fell for the tenth month in a row,” he added.
Duncan Brock, group director at the Chartered Institute of Procurement & Supply (CIPS) said manufacturing companies were running at full pelt in November.
“Companies in the UK, Europe and the US were buying at speed to meet the Brexit deadline, whilst covid-related supply chain disruption and increased safety measures for returning staff continued. As a result, an extended list of shortages started to appear along with the highest cost inflation for two years and disappointing delivery times last seen when the pandemic first hit,” said Brock.
“Though the Brexit bounce continued for some, reluctant spending amongst shoppers meant that the consumer goods sector fell behind and the level of orders and production dropped. The impact of redundancies in the UK has affected consumer confidence though manufacturing positivity for the year ahead was the highest since September 2014,” he added.
The data has added some extra va-va-voom to the FTSE 100, which is up 108 points (1.7%) at 6,374.
8.50am: Optimism returns for Advent
The FTSE 100 made a better-than-expected start to proceedings on Tuesday, the first day of Advent – recouping roughly half the losses it endured on Monday.
The index of UK blue-chips started December 49 points in the green at 6,315.13.
Vaccine hopes seemed to be driving sentiment once again with Moderna preparing to file for US and European approval of its coronavirus (COVID-19) jab.
In Westminster, Boris Johnson looks set to receive parliamentary backing for his tier system that will replace the current UK lockdown restrictions. Labour’s abstention from the vote effectively heads off a commons revolt by backbench Tories.
Elsewhere, knife-edge Brexit negotiations between London and Brussels continue to simmer in the background with little indication that a consensus has been found.
easyJet (LON:EZJ) rose 3.4% after a Goldman Sachs upgrade to ‘neutral’ from ‘sell’, while fellow budget airline Wizz Air (LON:WIZZ) lost 1.3% of altitude after the Wall Street bank turned seller of its stock.
Proactive news headlines:
Bahamas Petroleum Company PLC (LON:BPC) has laid out the plans for its assets in Trinidad and Suriname, targeting a ramp-up that envisages US$35mln of revenue per year by the end of 2021. Driven by a campaign comprising up to 17 new wells the company aims to take production up to at least 2,500 barrels of oil per day (bopd), versus a 2020 goal rate of 500 bopd. Additionally, subject to permitting and rig availability, the company noted that it could further accelerate production growth with an expanded programme of 11 extra wells.
Deltic Energy PLC (LON:DELT) has confirmed the formal award of six licences in the North Sea. The awards come in the UK’s 32nd offshore licensing round and were initially announced in September. Each new licence takes effect from today, Deltic noted.
Frontier IP Group PLC (LON:FIPP) said its portfolio company, Cambridge Raman Imaging Limited, has become part of CRIMSON, a €5mln pan-European project to develop bio-photonic cell and tissue imaging technology to understand the cellular origins of diseases in greater depth. The AIM-listed investment firm said Cambridge Raman, in which it owns a 25.8% stake, is part of a consortium of 10 organisations involved in the project, which is led by the Polytechnical University of Milan. Cambridge Raman will have a project budget of €468,312 and its role will be to commercialise the technology for use in a microscope.
Brickability Group Plc (LON:BRCK) has acquired West Midlands group Bathroom Barn for £645,000 – a deal that is expected to be immediately earnings accretive for the construction materials distributor. A supplier of radiator valves, elements and traditional valves to distributors and retailers, the new business will be integrated into the group’s Towelrads operation. “Bathroom Barn is a perfect partner for our highly successful Towelrads business and adds significantly to our product offering in this area,” said Brickability chief executive, Alan Simpson in a statement.
Westmount Energy Limited (LON:WTE) will become the first exploration and production company to be quoted on both AIM and the OTCQB Market after listing its shares in New York. Trading under the ticker WMELF, it is using the OTC as an international stage for its investments in the fast-emerging Guyana-Suriname Basin. “We are mindful of the substantial Guyanese diaspora living in the United States, and we are hopeful that this cross-trading facility provides an additional opportunity for exposure to exploration drilling outcomes in this prolific basin and the emerging Guyanese exploration success story,” said Westmount chairman Gerard Walsh in a statement.
Scotgold Resources Ltd (LON:SGZ) has poured its first gold from the Cononish mine in Scotland. The company is now focused on completing an accelerated expansion plan to increase production at the mine to 23,500 ounces per year. The current phase of production is targeting an annual rate of ore production of 36,000 tonnes and total gold production of 9,910 ounces for 2021.
Custodian REIT PLC (LON:CREI) said cash collection in the first half of its financial year had been better than expected, considering the coronavirus (COVID-19) pandemic impact. Adjusted for contractual rent deferrals, Custodian said 88% of rent due was collected in the six months to the end of September 2020. The cash collection rate allowed a 2p interim dividend to be announced at the end of October, which is one-third above the minimum level of 1.5p announced by the real estate investment trust (REIT) in April 2020 before the full impact of the national lockdown could be ascertained.
DeepVerge PLC (LON:DVRG), the scientific research and artificial intelligence specialist, has reiterated guidance for revenues of £4mln in 2020. In a brief update, the group pointed out that the figure excludes the contribution from Modern Water, which was acquired on November 9. With Modern Water’s revenues included, the top line is expected to rise well above £4mln.
Oracle Power PLC (LON:ORCP), the power project developer, has decided not to pull the trigger on the development of an iron ore asset in Guinea. Oracle said its partner, The Office of His Highness Sheikh Ahmed Dalmook Al Maktoum, was on board with the decision; the sheikh’s private office holds the exploration licence for the iron ore asset. The two parties will now jointly focus on additional opportunities within the natural resources sector in Africa.
Karelian Diamond Resources PLC (LON:KDR) turned in a loss of €447,000 for the year ended May 2020. During the period the company was granted additional reservations, adjacent to already held and known kimberlite bodies in Finland. A formal right of way was also granted giving vehicular access to the Lahtojoki diamond deposit and surrounding areas.
Conroy Gold and Natural Resources PLC (LON:CGNR) posted a loss of €677,000 for the year to May 31, 2020. During the period the company continued with development work on its extensive gold exploration ground in Ireland, and, after the period end, it signed a joint venture heads of terms agreement with Anglo Asian Mining (LOM:AAZ). “Work continued throughout the year on the 65-kilometre district-scale gold trend which the company has discovered,” said chairman Professor Richard Conroy in the group’s final results statement released after the London market close on Monday.
OPG Power Ventures PLC (LON:OPG) boosted profit before tax from continuing operations by 32% to £12.8mln in the six months ended September 30, 2020. Diluted earnings per share increased by 48.2% to 2.92p, although power generation at the group’s Chennai plant fell, in line with a drop in demand caused by the coronavirus (COVID-19). “I am proud to say that OPG is coming out from the COVID-19 pandemic as a stronger and more resilient company,” said chairman Arvid Gupta in the results statement.
San Leon Energy PLC (LON:SLE) has said it is closer to seeing the monetisation of its historic investments in the Barryroe project, offshore Ireland, as Providence Resources PLC (LON:PVR) and Lansdowne Oil & Gas PLC (LON:LOGP) sealed a farm-out transaction. The new farm-out deal with Norway’s SpotOn Energy – which is, in turn, teamed up with service providers Schlumberger, Aker Solutions, AGR, Maersk Drilling, Keppel FELS, Aibel – sets the project up for development. It comes after a prior transaction with a Chinese investor failed to close. SpotOn will own 50% of the Barryroe field whilst Providence and Lansdowne hold 40% and 10% respectively. San Leon, meanwhile, retains a 4.5% net profit interest over Barryroe.
Honye Financial Services Limited (LON:HOYE), a London-listed special acquisition company (SPAC), said it is optimistic it will find a fintech investment opportunity but is being cautious due to coronavirus (COVID-19) and Brexit. “The company has been actively searching for and analysing potential acquisitions but has not, so far, found one which satisfies our criteria. Honye will continue to explore other possibilities and as news of our area of focus has become more widely known, potential opportunities are being brought to the company’s attention,” it said alongside its annual results for the year to end July 2020. The loss for the year was £427,385, which reflected day-to-day administrative expenses and due diligence into prospective targets.
EQTEC PLC (LON:EQT) said it has appointed Jeff Vander Linden to its board as chief operating officer and strategy & operations director with immediate effect. The gasification technology company said the newly defined role will see Vander Linden focus on establishing project execution and business management disciplines, growing EQTEC’s partner ecosystem and strengthening the firm’s operational platform to scale its business through 2021 and beyond.
World High Life PLC (LON:LIFE) said it has appointed Robert Payment, its current chief financial officer, as acting chairman and chief executive. The company noted that David Stadnyk has stepped down as its chairman and CEO with immediate effect to devote time to other business interests having successfully established and floated World High Life on the London stock exchange. The group said it will be looking to appoint a non-executive chairman and a full-time CEO in the near future.
NQ Minerals PLC (AQSE:NQMI) (OTCQB:NQMLF) said it has signed a US$55mln loan facility with ING. The funds from the ING Facility are being used to retire all project debt maturing in 2020. This debt was secured over the assets of, and shares in, Hellyer, the company’s tailings reprocessing project in Tasmania, Australia. At the same time, Hellyer has signed life-of-mine marketing agreements with Traxys Europe S.A. for the purchase of all the metal concentrates to be produced from its tailings reprocessing activities.
Tower Resources PLC (LON:TRP) announced that Dr Mark Enfield has agreed to join its board as an independent non-executive director with immediate effect. It noted that Dr Enfield is CEO of Geoscience at EPI Group and has been an advisor to the Company’s board for more than five years, first through P.D.F. Ltd, which he founded in 1994, and more recently through EPI Geoscience, which was created through the acquisition of P.D.F. Ltd by EPI in 2016. The company also announced an issue of warrants in lieu of fees to Dr Enfield, amounting to 896,379 5-year warrants at a strike price of 0.375p, being the most recent closing price of the company’s shares, in lieu of director fees for the month of December 2020. The company is also making a further issue of 4,033,704 warrants to Duncan Rushworth, who has agreed to work with the company as an ad hoc strategic advisor to the company’s board. Rushworth has recently stepped down as the VP Business Development for Svenska Petroleum Exploration AB, where he has worked since 2007 across Svenska’s portfolio of assets in West Africa and Europe. The company also announced that non-executive director Peter Taylor will be stepping down from the board with effect from December 31, 2020. Taylor is one of the founders of the company, together with Peter Blakey who left the board in 2016, having contributed the original Neptune Petroleum assets in Namibia and Uganda in an RTO that established Tower Resources as an exploration company in January 2006, so he is now approaching his fifteenth anniversary on the company’s board. Jeremy Asher, Tower’s chairman and CEO, commented: “We are delighted to welcome Mark to the board, both for his technical expertise and also for his entrepreneurial experience in our sector. We also hope that Duncan will bring us a fresh perspective on our existing assets and perhaps more. While I wish that Peter could have stayed on Tower’s board forever, that is neither possible nor appropriate for a non-executive; however, I hope and believe we will continue to be able to draw on Peter’s counsel in the future.”
Alien Metals Limited (LON:UFO), a minerals exploration and development company, announced that, following the receipt of exercise notices, it has issued 1,050,000 ordinary shares of no par value in the capital of the company at an issue price of 0.25p per share.
Base Resources Limited (LON:BSE) (ASX:BSE), the African mineral sands producer, has said the latest company presentation, which was given on Tuesday at the Informa Mineral Sands Conference that is being held virtually, is available from the company’s website: www.baseresources.com.au.
Tiziana Life Sciences PLC (NASDAQ:TLSA) (LON:TILS), a biotechnology company focused on innovative therapeutics for oncology, inflammation and infectious diseases, has announced that its CEO and CSO Dr Kunwar Shailubhai will host a conference call on Wednesday, December 2, 2020, at 4.15pm ET to provide updates on the company. It said Shailubhai will provide updates on the company’s proposed move from AIM to the Standard Segment of the Main Market of the London Stock Exchange, ongoing clinical trials, as well as other recent developments in Tiziana Life Sciences. Live Call: details: +1-877-425-9470 (U.S. Toll-Free) or +1-201-389-0878 (International); Webcast: http://public.viavid.com/index.php?id=142634. For interested individuals unable to join the conference call, a dial-in replay of the call will be available until December 16, 2020, and can be accessed by dialing +1-844-512-2921 (US Toll Free) or +1-412-317-6671 (International) and entering replay pin number: 13713850.
6.50am: Start of Advent to bring small gifts
The FTSE 100 is expected to start slowly but positively on the first day of December, which is traditionally a strong month for stock markets.
After a 101-point fall on the last day of November, London’s blue-chip index still enjoyed its best month since 1989 with a gain of 611 points or 10.8% to 6,266.19.
For Tuesday, spread-betters are predicting the Footsie will advance 13 points.
Overnight, however, Wall Street endured a disappointing session, with the Dow Jones Industrials Average dropping 271 points or 0.9% to 29,638.64, the S&P 500 slipping 0.5% and the Nasdaq Composite finishing just below flat.
“The bullish moves seen in the past month were fuelled by positive reports from pharma companies that have made great strides in developing potential Covid-19 vaccines,” said market analyst David Madden.
“Yesterday, Moderna requested that the FDA give emergency approval for their drug because it is 94% effective. From a health point of view it was very encouraging but it failed to boost sentiment in stocks, probably because dealers were more than happy to bank some profits from the previous month’s gains.”
A new month will bring new economic data, with Tuesday being the day for the purchasing managers’ index manufacturing survey and Nationwide’s house price index.
There was a reading of 55.2 for the UK manufacturing PMI’s flash estimate in the middle of last month.
Economists at Pantheon Macroeconomics have said they do not expect this will change much: “It makes sense that manufacturers are faring much better than services businesses, given that they have not been required to shut during the second lockdown and are enjoying stronger demand ahead of the Brexit trade deal deadline.”
House prices were up 5.7% year on year in October, according to Nationwide and economists are expecting this to ease slightly.
Around the markets:
- Pound up 0.3% to US$1.3367
- Brent Crude Oil down 1.2% to US$47.59 per barrel
- Gold up 0.5% to US$1,786.24
6.45am: Early Markets – Asia/Australia
Asia-Pacific markets were higher on Tuesday as investors reacted to China’s Caixin/Markit manufacturing purchasing managers’ index (PMI) for November rising to 54.9 — its highest reading in a decade.
PMI readings above 50 signify expansion, while those below that level represent contraction.
The Shanghai composite rose 1.82% while Hong Kong’s Hang Seng index added 0.97%.
In Japan, the Nikkei 225 surged 1.34% and in South Korea, the Kospi gained 1.66%.
Australia’s S&P/ASX 200 jumped 1.08% after the Reserve Bank of Australia (RBA) held steady on its cash rate of 0.1%.
Proactive Australia news:
Buru Energy Limited (ASX:BRU) completed the latest lifting of Ungani crude oil from Wyndham Port on November 30 2020, with the MT NS Power lifting a total of 67,757 barrels gross with Buru’s share being 50%.
Miramar Resources Limited (ASX:M2R) is trading higher after beginning its first drilling campaign since listing on the ASX – a maiden aircore program at its Gidji Joint Venture Project, 15 kilometres north of Kalgoorlie.
Australian Strategic Materials Ltd (ASX:ASM) has produced 6 kilograms of a key neodymium iron boron (NdFeB) alloy at the Korean Institute of Rare Metals (KIRAM) facility in Korea for use in permanent magnets.
Brookside Energy Ltd’s (ASX:BRK) Orion Project Joint Venture with Stonehorse Energy Limited (ASX:SHE), which recently acquired the Thelma 1-32 well, is set to establish a new area of interest (AOI) to complement Brookside’s SWISH AOI in Oklahoma’s Anadarko Basin.
Australian Vanadium signs vanadium offtake, electrolyte supply and battery sales MOU with VRFB manufacturer
Imugene Limited (ASX:IMU) (OTCMKTS:IUGNF), a clinical-stage immuno-oncology company, has dosed the first patient in a Phase I clinical trial of its checkpoint immunotherapy candidate, PD1-Vaxx, in Melbourne, Australia.
Legend Mining Ltd (ASX:LEG) has recorded the best diamond drill hole to date at its Mawson prospect within the Rockford Project, Fraser Range, Western Australia, with RKDD034 intersecting 43.1 metres of massive nickel-copper sulphide, including one zone of 31.1 metres.