- FTSE 100 up 50 points
- GFG Alliance under investigation by Serious Fraud Office
- US retail sales forecast to rise in April
12.50pm: Greensill Capital’s biggest client GFG Alliance under investigation for suspected fraud
FTSE 100 held its gains in the early afternoon and was up 50 points to 7,013.
The Serious Fraud Office (SFO) has confirmed it is investigating suspected fraud, fraudulent trading and money laundering in relation to companies within the Gupta Family Group (GFG) Alliance, including its financing arrangements with Greensill Capital.
GFG Alliance, headed by Liberty House founder Sanjeev Gupta, was Greensill’s biggest client.
Greensill Capital, which used to buy up firms’ invoices at a discount, parcel them up and sell them on, went belly-up in March after insurers stopped insuring the company.
Fears have been rising that the knock-on effect could see the loss of thousands of jobs within the Gupta empire, including the 11 steel sites owned by GFG that employ some 3,000 workers.
11.55am: Wall Street futures rally ahead of retail sales data
The Footsie edged higher at lunchtime, adding 48 points to 7,011.
Wall Street future are also pointing at a green open as retail sales optimism is quelling inflation worries.
Retail sales are forecast to rise 1% month-on-month in April after surging 9.7% in March, helped by government stimulus.
“There’s a good chance this month’s retail sales number could come in ahead of forecasts as households continue spending those stimulus cheques,” said Sophie Griffiths at OANDA.
“With investors keen to buy the dips, the sell-off earlier this week is looking increasingly like a natural correction within the ongoing uptrend rather than anything more sinister.”
“Concerns over runaway US inflation have been offset by signs that the labour market recovery is still on track and reassuring Fed speakers. The Fed continues to drum home the message that it’s too soon to talk about tightening monetary policy, and the market is listening again. Fed speakers have been out in droves over the past few days, hoping to get the message across to the market: the Fed is not planning on moving on policy anytime soon.”
11am: Government mulls Channel 4 privatisation
FTSE 100 stayed put in late morning, rising 40 points to 7,004.
The government isn’t ruling out the privatisation of Channel 4 by the end of the current parliament, it has emerged.
Culture secretary Oliver Dowden said at a meeting on Thursday night it would “provide a sustainable future for the broadcaster” amid rising competition from online streaming services.
Channel 4 was launched in 1982 by the government, which remains its owner, but is funded commercially. It doesn’t receive taxpayer money and all the proceeds it makes are reinvested in its own activities.
“If it is the case that events still can’t go ahead because of a lack of insurance and a failure of the commercial insurance market, we stand ready to look at if we can use government intervention in exactly the same way as we did with the film industry,” Dowden was reported as saying by The Guardian.
9.40am: Amazon to create 10,000 jobs in the UK
FTSE 100 held its gains in mid-morning, rising 46 points to 7,009.
Amazon.com, Inc. (NASDAQ:AMZN) has just announced it plans to create more than 10,000 new permanent jobs this year in the UK, including roles at its corporate offices, Amazon Web Services (AWS) and operations network to bring its total UK workforce up to more than 55,000 people by the end of 2021.
The online shopping giant will invest £10mln over three years to train to up to 5,000 employees in new skills through its career choice programme, where the company pays course fees for staff who want to pursue a career outside of Amazon.
Ticking its ESG box, the US company says it is provides funding for adult education, offering to pre-pay 95% of tuition and associated fees for nationally recognised courses, up to £8,000 over four years, in courses of accountancy to HGV drivers and software developers.
“Amazon’s announcement today is fantastic news and a huge vote of confidence in the British economy,” said business secretary Kwasi Kwarteng. “As we build back better from the pandemic, this is a prime investment in our retail sector.”
8.40am: Is Cinven ready to go insane over Sanne?
The FTSE 100 made a positive start to proceedings as it crept back above 7,000 after a volatile couple of days.
Still lurking in the background are inflation worries, which were triggered on Wednesday by a shock US reading.
The fear is a too rapid recovery from the pandemic will force up prices and cause central bankers to row back on the ultra-accomodative monetary policy that has supported equity markets.
Lael Brainard, a Federal Reserve governor, said the central bank would be “patient” in its approach as she highlighted the uneven improvement in the jobs market.
“More broadly, the debate on inflation will rumble on,” said Richard Hunter, head of markets at Interactive Investor.
“On the one hand, some argue that ongoing technological innovation will largely make inflation a thing of the past, but the unprecedented monetary and fiscal stimulus currently in force could threaten any such trend.”
On the market, Sage Group’s (LON:SGE) interim results passed muster as the Newcastle-based software group’s shares advanced 2.6%.
The big fallers were the miners amid a bout of profit-taking and some (slight) easing of prices in the commodity markets.
The day’s big riser was asset management service provider Sanne Group (LON:SNN), which jumped 28% after rebuffing a £1.3bn bid approach from private equity firm Cinven.
Proactive news headlines
Mailbox REIT PLC (LON:MBOX) has become the first company to list on the IPSX specialist property exchange with a valuation of £84.85mln.
e-Therapeutics PLC (LON:ETX) raised £22.5mln in an equity funding, comprising a placing and a retail offer.
Bushveld Minerals Limited (LON:BMN) has completed essential maintenance at its Vametco asset in South Africa. The maintenance work is expected to improve on the reliability and performance issues experienced in the past.
Kavango Resources PLC (LON:KAV) shares rose in early deals on Friday after an update on the South Ghanzi Project in the Kalahari Copper Belt, saying seven conductive targets had been identified by airborne electromagnetic surveys.
Faron Pharmaceuticals Oy (LON:FARN, First North:FARON) said it had signed a sub-license agreement for the rights to a US patent covering the manufacturing of its interferon-beta 1a drug Traumakine.
Momentum Multi-Asset Value Trust plc (LON:SIGT), formerly Seneca Global Income and Growth, has declared an unchanged quarterly dividend of 1.68p. It will be paid on June 18 to investors on the register on May 28. The intention is to “at least maintain” the quarterly pay-out at the current level.
CentralNic Group PLC (LON:CNIC) has partnered-up with London & Partners subsidiary Dot London Domains Ltd, to supply technical registry services.
Providence Resources PLC (LON:PVR), the Irish based resource development company, has appointed former KPMG partner James Menton as its senior independent non-executive director with immediate effect.
Ergomed PLC (LON:ERGO) announced that its annual general meeting will be held in London on 10 June but is expected to be run as a closed meeting and shareholders will not be able to attend in person. Proxy forms are being sent today.
SourceBio International PLC (LON:SBI) said it has posted its accounts for 2020 and proxy forms ahead of its annual general meeting on 14 June at its offices in Nottingham. As the AGM will be a closed physical meeting, the company said it will provide a facility for shareholders to join either online or telephonically via the Investor Meet Company platform, with an opportunity to ask questions.
Trident Royalties PLC (LON:TRR) chief executive Adam Davidson and chief financial officer Martin Page will provide a live presentation via the Investor Meet Company platform on Wednesday 26 May 2021 at 5pm BST.
6.50 am: Bouncebackability?
The FTSE 100 is set to wipe out all of yesterday’s losses following yesterday’s rally on Wall Street.
Spread betting quotes indicate the FTSE 100 will open 42 points to the good at 7,005.
Yesterday, the Dow Jones industrial average jumped 433 points to close at 34,021 and the S&P 500 advanced 49 points to 4,113, ahead of US retail sales figures due to be released today.
“It is notable that the US consumer has been much more resilient this year, helped in no small part by significant amounts of fiscal stimulus, while the recovery in the US jobs market has also helped,” said CMC’s Michael Hewson.
“Today’s April numbers aren’t likely to be anywhere near as robust, with a consensus of around 1.1%, which seems pretty much in line, given how well the US jobs market is going; however, we could see an upside surprise given there is some evidence that not all the stimulus payments we saw in March have been spent yet.
“Combined with the continued solid progress in the US vaccine rollout, consumer spending should remain strong, particularly since US theme parks started to reopen in April, and Airbnb also saw a big rebound in its bookings, which suggests consumers are feeling much more confident,” he added.
In Asian markets this morning, both the Nikkei 225 and the Hang Seng are putting their best foot forward.
In Tokyo, the Nikkei 225 is up 622 points at 28,070 while in Hong Kong the Hang Seng is 261 points firmer at 27,980.
On the home front, the focus could be on the pubs and restaurants sector this morning after the latest edition of the Coffer CGA Business Tracker showed that managed pub and restaurant groups recorded a 26% drop in like-for-like sales in April compared to the same month in 2019; the comparison with two years ago rather than one is to take lockdowns out of the equation.
The figure covers three full weeks of outside-only service in England as well as briefer trading in Scotland and Wales, and represents a solid return to trading for the sector, the market research group said.
“Operators enjoyed the benefit of generally good weather and strong consumer confidence in the first fortnight of trading, though low temperatures and rain dampened sales towards the end of the month,” it added.
As for company results, we have interims from the accountancy software giant, Sage Group PLC (LON:SGE).
Sage’s story in recent years has been about moving away from licence sales and professional services and converting its customers to cloud-based services, with an update in January giving management a chance to emphasise how its priority is to grow recurring revenues.
For the final three months of 2020, the first quarter of the FTSE 100 company’s financial year, it reported an 11.3% rise in subscriptions helped generate a 4.7% rise in recurring revenues, offsetting a 24% decline in ‘legacy’ revenues.
“Expectations have been lowered sufficiently,” said UBS at the time, with the prioritisation of recurring revenue growth “is in tune with investors’ priorities”.
However, the UBS analysts still have “medium-term structural concerns” around competitive pressures, while also seeing potential headwinds to earnings from further disposals of non-core assets.
Sage has been a rollercoaster stock in recent years, zooming up above 800s and down to the 500s, with recent levels in the mid-600s posing investors a big question of which way it will swing next.
Around the markets
- Sterling: US$1.4046, down 0.05 cents
- Gilt: 0.9%, up 1.05 basis points
- Gold: US$1,824.20 an ounce, up 20 cents
- Oil: US$66.91 a barrel, down 14 cents
- Bitcoin: US$49,446, up US$194
6.50am: Early Markets – Asia / Australia
Stocks in the Asia-Pacific region were higher on Friday after Wall Street put the brakes on a three-day losing streak with the big tech and bank stocks rising on Thursday.
The Hang Seng index in Hong Kong gained 0.85% while the Shanghai Composite in China rose 1.33%.
In Japan, the Nikkei 225 surged 2.4% and South Korea’s Kospi gained 1.12%.
Shares in Australia rose, with the S&P/ASX 200 trading 0.68% higher.
Proactive Australia news:
Aurumin Ltd (ASX:AUN) has received all assays from the recent RC drilling at the Golden Slipper deposit at its 100% owned Mt Dimer Project in Western Australia, which included one of the best unmined results to date.
Fe Limited (ASX:FEL) has ramped up development activities at JWD iron ore deposit with mining contractor Big Yellow beginning earthworks on-site last week with expectations that this component of the first stage of early works will be completed this week.
Silver Mines Ltd’s (ASX:SVL) (OTCMKTS:SLVMF) diamond drilling program at Bowdens Silver Project near Mudgee in Central West New South Wales has intersected up to 3 metres at 1,302 g/t silver within 8 metres at 543 g/t silver from 307 metres.
Strategic Elements Ltd (ASX:SOR) is entering the defence sector with its autonomous vehicle platform and will conduct a feasibility and scoping study with the Defence Science and Technology (DST) Group.
Latin Resources Ltd (ASX:LRS) (FRA:XL5) is enhancing its exposure to copper amidst strong market fundamentals by acquiring 2.7 million shares worth C$540,000 in a private placement by Westminster Resources Ltd (CVE:WMR) (OTCMKTS:WMRSF).