- FTSE up 9 points, Wall Street set to recover
- Mining shares lifted by metal price rises
- Redrow leads builders lower
12.45pm: Wall Street on track for opening rise.
US markets are expected to open cautiously higher after a reasonable start in Europe, helped by the prospect of President Biden’s stimulus package and hopes of an economic bounce-back now the vaccination programme is picking up pace.
The Dow Jones Industrial Average is predicted to open around 87 points higher and the S&P 500 14 points better.
Investors will be looking at a speech by Federal Reserve chair Jerome Powell to the economic club of New York, while a number of big companies are reporting. The Coca-Cola Company has done slightly better than analyst expectations, with fourth quarter earnings edging up from $1.91bn to $2.02bn excluding special items. Net revenues declined by 5% for the quarter and 11% for the full year. James Quincey, chairman and chief executive, said: “The progress we made in 2020, including the actions taken to accelerate the transformation of our company, gives us confidence in returning to growth in the year ahead. While near term uncertainty remains, we are well-positioned to emerge stronger from the crisis.”
The company is cutting back its drink’s portfolio by about 50% to focus on its more mainstream brands.
Later Uber Technologies Inc reports full year figures, with its shares up around 7% pre-market. Michael Hewson at CMC Markets UK said: “Even without the pandemic Uber had already been haemorrhaging cash, before the economic lockdowns hit its cash flow even further. The ride hailing part of the business makes up the lion’s share of overall revenue, while its delivery or “eats” business is the small relation. In Q2 the company posted a net loss of $1.8bn as taxi bookings declined 73%, while delivery bookings saw a 113% rise. In Q3 these losses shrank but were still over $1bn, while revenues also came in short at $3.13bn. The company reiterated its guidance that it expects to be profitable on an EBITDA basis by the end of 2021, however given recent events it may well have to rethink that.”
On Tuesday Twitter Inc unveiled better than expected advertising revenues in the fourth quarter, up 28%, and although it warned about slowing user growth this year its shares are expected to open around 5% higher.
Meanwhile the FTSE 100 is in a holding pattern, up 9.44 points or 0.15% at 6541.
10.50: Mining shares lifted by recovery hopes
The FTSE 100 is being supported by commodity companies as metal prices benefit from hopes of a global economic bounceback once the pandemic has been tamed.
Glencore PLC (LON.GLEN) is up 2.79% or 7.35p to 70.75p, Anglo American PLC (LON.AAL) has added 2.49% or 64.5p to 2654.5p, Rio Tinto PLC (LON.RIO) has risen 2.29% or 132p to 5902p and BHP Group PLC (LON.BHP) is 1.85% or 38.5p better at 2120p. Michael Hewson, chief market analyst at CMC Markets UK, said: “The optimism over an economic rebound has been reflected in the rise that we’ve seen in copper and crude oil prices over the past few weeks, with the price of copper hitting its highest level in eight years. Platinum prices have also hit six-year highs on a similarly optimistic outlook about future global demand, as well as expectations over a transition to a greener global energy platform in the longer term.”
The strength in the pound – at a 33 month high against the dollar – is limiting some of the gains in the leading index. A stronger pound is not particularly good news for exporters, who probably have enough to cope with given the difficulties of a post-Brexit trading world.
Still, the FTSE 100 is still in positive territory, up 10.4 points or 0.16% at 6541.96.
But International Consolidated Airlines Group PLC (LON.IAG) is down 1.59% or 2.45p at 151.45p as Transport Secretary Grant Shapps warned people not to book holidays just yet.
9.30am: Positive Redrow update does little to help sector shares
Shares in housebuilders are crumbling following news that Persimmon PLC (LON.PSN) is putting aside a £75m provision for cladding issues and despite a confident trading statement from Redrow PLC (LON.RDW).
Persimmon is down 22p or 0.79% at 2761p. Announcing the provision it said: “As first and foremost a builder of traditional family homes, the Group has not been a major developer of high-rise buildings. We believe we account for less than one percent of all high-rise developments. However, in the past we have built multi-storey buildings which met all the fire safety rules and regulations in place at the time, but which used cladding materials which may now be considered unsafe and require removal.
“The Group believes strongly that it has a responsibility to step forward and tackle this issue head-on. Persimmon has therefore made a provision of £75 million in its 2020 results to pay for our contribution to any necessary work on 26 buildings that may be affected by the cladding issue”
Meanwhile Redrow has fallen 2.45% or 14p to 557.5p as investors took profits after a recent strong performance. First half pre-tax profit rose 11% at £174m and it achieved record six month sales of £1bn. It was upbeat on the outlook despite the ending of the stamp duty holiday.
But overall the FTSE 100 remains in positive territory, partly helped by a record performance from emerging markets on hopes that the global economy will recover strongly once the pandemic has eased. The leading index is up 12.61 points or 0.19% at 6544.17, with mining shares continuing to support the market.
But Ocado Group PCL (LON.OCDO) is down 64p or 2.37% at 2636p after Monday’s results and JD Sports Fashion PLC (LON.JD) has fallen 1.71% or 13.8p to 795.4p after it warned of extra costs because of Brexit.
8.35am: TUI climbs on vaccine hopes
The FTSE 100 made a positive start to proceedings as the pound’s ascent slowed to a snail’s pace, taking the lid off the index’s overseas earners.
With the sense of anticipation over America’s planned stimulus programme fading, excitement was being sought elsewhere, according to Richard Hunter, head of markets at Interactive Investor.
“Attention is now slowly turning towards beaten-down stocks and sectors which could stage something of a recovery in the post-pandemic world,” he said.
“Particular focus will remain on the likes of the oil and banking sectors, tourism and travel including airlines and hotels, as well as leisure sectors such as pubs and restaurants.”
Leading the blue-chips was London’s number-one bounce-back stock, Rolls Royce (LON:RR.), up 3.8% as the bargain hunters came out in force.
They also filled their boots with shares of TUI (LON:TUI), the travel giant whose prospects improve with every new vaccine injection administered.
International recovery hopes also put a pep in the step of the miners in the early exchanges with Glencore, up 1.9%, setting the pace in the sector.
Interactive’s Hunter, meanwhile, was uncharacteristically bullish on the outlook for UK stocks.
“Alongside the accelerated vaccine rollout, recent IPO successes and the potential for acquisition activity could herald a new dawn,” he said.
“The market remains undemanding in terms of valuation and has been largely overlooked by international investors in recent years.
“However, any return of the animal spirits in the beleaguered UK market may tempt those investors to reappraise.”
Proactive news headlines
AdEPT Technology Group PLC (LON:ADT) said it is reinstating its guidance for the current year outturn and for the year to March 31, 2022, following what it said was the “incredible resilience” of its business despite headwinds and challenges caused by the coronavirus (COVID-19) pandemic. The AIM-listed IT services firm also reported a trading update for the third quarter of its current year, saying that business had “remained resilient” and in line with management expectations during the final three months of the 2020 calendar year.
Bacanora Lithium plc (LON:BCN) announced it has begun initial site activities at the Sonora Lithium Project in Mexico.
Argo Blockchain PLC (LON:ARB) said it has entered a non-binding letter of intent setting out terms to acquire 320 acres of land in West Texas, USA, where it intends to build a new 200-megawatt cryptocurrency mining facility in the next 12 months.
Tirupati Graphite plc (LON:TGR) told investors that it is starting sales and bulk supplies to several large consumers of its expandable graphite products across the European Union/ European Economic Area after its subsiadiary Tirupati Speciality Graphite gained certification for its range of expandable graphite products for marketing and sales into the EU/EEA. The European Chemicals Agency has approved the company’s REACH registration and pilot trials and qualifications with customers have been successfully completed.
US Oil & Gas Plc (USOIL) told investors that it believes that the potential impact of the Biden administration’s temporary suspension of new drilling permits on Federal lands are not material to its exploration plans and prospects.
Crossword Cybersecurity PLC (LON:CCS) said it has raised £1.6mln through an oversubscribed placing and subscription. The AIM-listed firm said it raised the funds through the placing of 591,340 shares and a subscription of 38,460 shares to new and existing institutional shareholders at a price of 260p each, a 6.8% discount to its closing price on Tuesday.
Alaska explorer 88 Energy Ltd (LON:88E) plans to bolster its funds ahead of new well drilling, with a A$12mln placing, and, it also announced that managing director Dave Wall will leave the company in May.
Alien Metals Ltd (LON:UFO) told investors that, following the legal registration to acquire the Nueva Andromeda Permit next to San Celso, Mexico, it has issued 100,000 ordinary shares of no par value at an issue price of £0.00975p per share, to the two vendors under the terms of the option agreement. Under the agreement, the company has also agreed that should it exercise its option to acquire the permits in the future it will pay the vendors US$100,000 in cash.
ZAIM Credit Systems PLC (LON:ZAIM) said Stonedale Management & Investments Ltd, a company controlled by its finance director Simon Retter, bought 1.3mln shares in the company at a price of 4.4p per share. Retter now has a beneficial interest in 4.9mln shares, representing 1.12% of the total issued share capital.
Enteq Upstream PLC (LON:ENQ) has strengthened its management, with the appointment of Neil Bird as a product director ahead of a new product launch. The company is preparing to launch a new Rotary Steerable System product and Bird will be responsible for its development and commercialisation.
W Resources PLC (LON:WRES) told investors that non-executive director Oscar Marin Garcia will step down from the board on February 12 to focus on increased commitments in his own business, but said he is retaining his shareholding in the company. The search for a new non-executive director is underway, the tungsten and tin miner said.
Ergomed PLC (LON:ERGO) said it will announce its preliminary results for 2020 on March 23. Executive chairman Miroslav Reljanović and chief financial officer Richard Barfield will host a virtual presentation and conference call for analysts at 9.00am GMT on the day.
Rare diseases specialist Amryt Pharma PLC (NASDAQ:AMYT, LON:AMYT) said it is presenting at the virtual SVB Leerink Global Healthcare Conference on February 25, 8am EST. To tune in click here: https://wsw.com/webcast/svbleerink47/amyt.l/2992128
Remote Monitored Systems plc (LON:RMS) has placed on its website a list of questions from shareholders in relation to the forthcoming general meeting on Friday February 12, together with answers. The questions and answers may be found here: www.remotemonitoredsystems.com/investor-relations/documents/.
6.50 am: Blue-chips called higher
The FTSE 100 is expected to open higher on Wednesday as positive momentum return to equities despite a relatively flat performance in US indices overnight.
Spread-betters IG expects the FTSE 100 to add around 39 points at the open after ending Tuesday’s session around 8 points higher at 6,531.
Traders seem set to recover some ground after equity sentiment mostly ran out of steam in the US overnight, with the Dow Jones Industrial Average closing down 0.03% at 31,375 while the S&P 500 ended 0.11% lower a 3,911. The Nasdaq was the positive outlier, closing up 0.14% at 14,007.
“In all likelihood, after a few firm sessions, equities just ran out of short-term momentum, with a lack of new drivers from the Biden-stimulus progression prompting a wait-and-see-for-a day approach. The buy everything trade still has the upper hand and [fear of missing out] hasn’t gone, it’s just taken a little rest”, said Jeffrey Halley at OANDA.
Markets have been boosted in recent days by the fresh stimulus plans from the US as well as the rollout of coronavirus vaccines and declining case numbers in several countries, leading some to think the worst economic damage from the pandemic may have passed.
This optimism showed signs of returning in Asia this morning ahead of the Chinese New Year holiday, with Japan’s Nikkei 225 up 0.07% while Hong Kong’s Hang Seng rose 1.68%.
On currency markets, the pound was up 0.03% at US$1.382 against the dollar, although US inflation data later today could provide some catalysts for movement as US stimulus plans raise inflation concerns.
Around the markets:
Sterling: US$1.382, up 0.03%
Brent crude: US$61.13 a barrel, up 0.07%
Gold: US$1,842 an ounce, up 0.23%
Bitcoin: US$46,480, down 1.19%
6.50am: Early Markets – Asia / Australia
Stocks in the Asia-Pacific region were higher on Wednesday as China’s consumer price index declined 0.3% in January as compared with a year ago, while the producer price index rose 0.3%.
The Hang Seng index in Hong Kong surged 1.82% while the Shanghai Composite in China rose 1.52%.
In Japan, the Nikkei 225 gained 0.19% and South Korea’s Kospi was 0.86% higher.
Shares in Australia rose, with the S&P/ASX 200 closing 0.52% higher.
Proactive Australia news:
BlackEarth Minerals NL (ASX:BEM) has soared to a new record high on signing a graphite supply and marketing agreement with Luxcarbon GmbH, Germany – a move that further positions the company as a supplier of graphite concentrate and downstream graphite products to EV and alternative energy markets.
Brookside Energy Ltd (ASX:BRK) (OTCMKTS:RDFEF) is fully-funded to drill and complete the much-anticipated Jewell Well in the SWISH AOI of Oklahoma, USA, after an A$8.25 million capital raising, with shares up as much as 50%.
Kin Mining NL (ASX:KIN) is undertaking a capital raising of around $15 million to progress the next phase of exploration and resource growth at its Cardinia Gold Project near Leonora in Western Australia.
Ansila Energy NL (ASX:ANA) (OTCMKTS:PGNYF) (FRA:P6V) has started implementing several workstreams following the completion of its acquisition of the remaining 78.4% interest in Hartshead Resources Limited (HRL) that it doesn’t already own – solidifying its position as a new UK North Sea gas developer.
Blackstone Minerals (ASX:BSX) (OTCQX:BLSTF) (FRA:B9S) has begun trading on the US-based OTCQX Best Market under the code of OTCQX:BLSTF following the rapid increase in value of its shares and strong interest from US investors.
Pantoro Ltd (ASX:PNR) (FRA:RKN) has issued a Letter of Intent for the award of engineering, procurement and construction (EPC) works for the processing facility at the Norseman Gold Project to GR Engineering Services (ASX:GNG).
Castillo Copper Ltd (ASX:CCZ) (LON:CCZ) (FRA:7OR) has further extended the large copper discovery at Big One Deposit within the Mt Oxide Project in Queensland’s Mt Isa copper-belt following the final results from its 2020 program and recently found historical assays.
Ora Banda Mining Ltd’s (ASX:OBM) (FRA:M6N) infill drilling program at Riverina South deposit within the wider Davyhurst Gold Project in Western Australia has delivered strong assay results of up to 3 metres at 32.4 g/t from 34 metres.