- FTSE 100 sheds 60 points
- JD Sport higher after lifting guidance
- US indices to open on the back foot
1.32pm: ING says Bank of England will avoid negative interest rates
As the afternoon continued to progress, the FTSE 100 continued its slow crawl downwards, falling 60 points to 6,812 at around 1.30pm.
Among those leading the blue-chips lower were mining giants Anglo American PLC (LON:AAL) and BHP Group PLC (LON:BHP), which were down 2.8% at 2,745.5p and 2.5% at 2,167p respectively in a possible sign that news of fresh outbreaks of COVID-19 in China could weigh on commodity prices in the short-term as the country’s economy may start to slow amid containment efforts.
At the top of the pile was retailer JD Sports Fashion PLC (LON:JD.), which rose 4.1% to 885.4p as the firm upgraded its profit forecasts after strong online trading in the run-up to Christmas.
Meanwhile, those worrying that the ongoing pandemic crisis could push the Bank of England to introduce negative interest rates are unlikely to see their fears realised, according to analysts at ING.
The Dutch bank said while the short-term outlook is “incredibly bleak”, recovery prospects have improved since the central bank’s last meeting in November and as a result, they expected policymakers will “opt against a move to negative interest rates in February”.
“At the February meeting, the Bank is expected to unveil the findings of its survey of commercial banks which sought views on how sub-zero rates would impact them. We’ve long felt the impact on bank profitability is unlikely to be the factor that steers the [monetary policy committee] away from using negative rates. But there is clearly still an active debate on whether the policy would carry many benefits. While some external MPC members, including Silvana Tenreyro, have indicated their support, other members – notably Chief Economist Andy Haldane – have thus far been less enthusiastic”, ING said.
However, ING said there were risks to its view including a slower pace of vaccine rollout than its currently forecast, greater short-term damage to the economy caused by a tightening of lockdown restrictions, and a government with a more risk-averse approach to reopening to try and keep hospital admissions lower.
12.15pm: US indices to drift lower as investors fret over the Fed’s bond purchase plans
US indices look set to follow their European counterparts and head south ar the start of the week.
The Dow Jones industrial average is expected to shed 90 points to open at around 30,908 while the broader-based S&P 500 is tipped to start at 3,807, down 18 points.
The Nasdaq Composite is seen opening its account at around 13,053, down 148 points.
Bond yields have hardened on speculation that the US central bank, the Federal Reserve, will taper off its purchases of bonds this year.
“Bond yields, despite last week’s move above 1% in the US 10 year are still very low, which means in the absence of a viable alternative stocks still look attractive, despite today’s weakness,” observed CMC’s Michael Hewson.
“One other reason for the slightly weaker start to proceedings is an increase in coronavirus cases in China, which has thus far managed to avoid a second wave of infections, and where the economy is looking fairly resilient. If the virus regains a foothold here, as Chinese authorities impose new regional restrictions, that could well act as a brake on recent economic activity,” he added,
Meanwhile, the clock ticks down on President Trump’s sojourn in the White House. It is due to end on January 20, assuming they can winkle him out that apparently is not soon enough for some Democrat politicians, who are reportedly going to introduce an article of impeachment today seeking to charge President Trump with “incitement of insurrection”.
The House of Representatives could vote to impeach Trump on Wednesday; if it does, it would make Trump the first president to be impeached twice.
It all seems a bit pointless – notwithstanding the fact Trump presumably still has the authority to blow us all to kingdom come – from a practical standpoint but would send some sort of signal.
“The Democrats are moving to try and impeach Donald Trump before Joe Biden’s inauguration on January 20th and while that won’t have too much of an effect on actual governance – something Trump hasn’t been interested in since November anyway – it is indicative of an unstable, and potentially violent, few months in America,” suggested Connor Campbell at Spreadex.
After Friday’s surprising US jobs report for December, the calendar for US macroeconomic data is bare today.
In London, the FTSE 100 languished in the red all morning and it is still there now, down 30 points (0.4%) at 6,843.
Retailer JD Sports Fashion PLC (LON:JD.) is defying the weaker trend, rising 4.4% to 887.8p after a trading update this morning in which the company, according to AJ Bell’s investment director, Russ Mould, it smashed expectations.
“It grew like-for-like sales materially in the period encompassing Christmas. To guide for profit ahead of expectations despite the massive disruption resulting from Covid is a mammoth achievement,” Mould said.
“It also demonstrates the fact that retail spending itself has held up reasonably well despite the crisis – it’s just that sales have shifted from physical stores to the internet.
“In this context, JD Sports’ online channel has delivered and then some, both in the UK and across the Atlantic. The company has also mastered the basics of retail, it is good at managing stock and costs, and crucially it keeps the cash flowing in,” he continued.
10.00am: As Bitcoin plunges, the FCA warns about investing in cryptocurrency
In recent days, the only thing that seems to have been rising faster than stock markets has been the number of coronavirus (COVID-19) cases.
A 39 point (0.6%) fall on the FTSE 100 to 6,834 does not imply that investors have woken up to this apparent contradiction but it does appear that they are not keen to chase equity prices higher just yet.
“European markets were in a holding pattern early on Monday as investors parsed signals of recovery, vaccine rollouts, surging case loads and tougher lockdowns,” said Neil Wilson at markets.com.
If equity markets are a bit dull it is Excitement City, Arizona in cryptocurrency markets with Bitcoin down US$1,759 (4.6%) today at US$36,217 after slumping below US$33,000 at one point.
The Financial Conduct Authority (FCA) has issued a warning to investors saying investing in cryptocurrencies “generally involves taking very high risks” and that investors should be prepared to lose all their money if they do so.
(I presume that is a warning and not a prediction).
“Consumers should be wary if they’re contacted out of the blue, pressured to invest quickly or promised returns that sound too good to be true. Visit the FCA’s ScamSmart pages for more information on how consumers should protect themselves from fraud,” the FCA said.
Perhaps coincidentally, while Bitcoin plummets, gold has perked up, rising US$12.60 (0.7%) to US$1,848.60 an ounce, although its performance once again lags silver, which is up 2% in price today.
I said, “I see so I could make quite a good living doing that, several thousand Pounds a month?
“O yes sir very easily”
“OK, so why do you make a living calling people like me when you could be doing that instead?”
— RS Archer (@archer_rs) January 6, 2021
8.35am: Monday mood subdued
The FTSE 100 made a slow start to the new trading week with initial exuberance over the vaccine roll-out and US stimulus measures giving way to the grim reality of mounting coronavirus (COVID-19) cases on Monday morning – almost 55,000 new infections were recorded in the UK with 573 deaths.
The index of UK blue-chips marked time with a 5 point loss to open up at 6,868.60
New, more draconian lockdown measures are reportedly being contemplated to prevent the spread of the more virulent form of COVID-19 with the NHS close to being swamped.
“Without the artificial buzz of the new year, or a seismic event like a pair of Senate races, the markets were forced to contend with the day-to-day realities of trading in 2021,” said Connor Campbell of Spreadex.
Atop the risers was JD Sports (LON:JD.) with a 3% gain as it increased its profit forecast after enjoying strong online trading in the run-up to Christmas.
On the FTSE 250, the casualties were those worst affected by the pandemic.
Proactive news headlines:
Anglesey Mining PLC (LON:AYM) has released the results of its preliminary economic assessment (PEA) of the Parys Mountain copper-zinc-lead-gold-silver project on the island of Anglesey in North Wales. The assessment is based around an updated resource estimate of 5.2mln tonnes of indicated together with 11.7mln tonnes of inferred ore. Financial modelling for the expanded case development scenario shows a pre-tax net present value (NPV) at a 10% discount of US$120mln for Parys, with an internal rate of return running at 26% over a 12-year mine life.
88 Energy Ltd (LON:88E) (ASX:88E) revealed it has struck a deal to acquire the Umiat oil field, which is located on Alaska’s North Slope. Umiat is located immediately adjacent to the southern boundary of the company’s Project Peregrine acreage. It is a historic oil discovery, dating back to 1945, in shallow Brookian (Nanushuk) sandstones. A well, Umiat-23H, was tested by a prior operator back in 2014. It achieved a sustained rate of 200 barrels per day with a maximum rate of 800 barrels measured.
Directa Plus PLC (LON:DCTA), the graphene nanoplatelets-based products supplier, has raised its full-year revenue guidance for 2020. The company has said it continued to trade strongly in the final weeks of 2020, with better-than-expected sales of G+ enhanced face masks and growth at Setcar SA, the company’s 51%-owned environmental remediation business. “To have finished 2020 with better revenues than expected even at the start of December is enormously satisfying. We saw a year of hard work, in difficult circumstances, by all of our employees culminate in this success,” said Giulio Cesareo, the founder and chief executive officer of Directa Plus in a trading update.
SourceBio International plc (LON:SBI) said it has landed a supply agreement with an unnamed high street retail and pharmacy group to provide lab-based testing services to support the roll-out of coronavirus (COVID-19) tests across UK stores. The company has inked an initial 12-month deal with the offering being trialled initially across a limited number of sites before scaling up. SourceBio currently provides COVID-19 services to the NHS, the Department of Health & Social Care and private healthcare customers.
MaxCyte Inc (LON:MXCT) said it has signed a clinical and commercial licensing agreement with immunology firm Myeloid Therapeutics Inc to advance novel cell therapies to treat solid tumours, T-cell lymphoma and glioblastoma. The company said Myeloid will obtain non-exclusive clinical and commercial rights to use MaxCyte’s flow electroporation technology and ExPERT platform, which it will use to advance its pipeline of programs, while in return MaxCyte will receive undisclosed development and approval milestones, and sales-based payments, along with other licensing fees.
DeepVerge PLC (LON:DVRG) has confirmed its first profitable quarter as well as highlighting a 300% increase in revenues for 2020. The AIM-listed environmental and life science artificial intelligence (AI) company said in a year-end trading update for 2020 that strong sales in the fourth quarter had delivered its first EBITDA profitable three-month period, while revenues for the whole year rose to GBP4.4mln from GBP1.02mln in 2019. DeepVerge also forecast revenues of GBP10mln for 2021, adding that “several large projects, including two multi-million pound opportunities due for decision [this year] have the potential to drive higher growth”.
Open Orphan PLC (LON:ORPH) said the first volunteer has been dosed with a new needle-free, nasally-administered coronavirus (COVID-19) vaccine. The phase I trial of the next-generation single-dose inoculation will take place at the company’s hVIVO’s facility, a specialist centre for human challenge studies. The advance has been developed by a US company called Codagenix and will be subject to a randomised, double-blind, placebo-controlled dose-escalation assessment.
OptiBiotix Health PLC (LON:OPTI) said it has reached an agreement with Fondazione Edmund Mach – Centro Ricerca e Innovazione (FEM), based in Trento, Italy, and the University of Southampton, to jointly fund and carry out a research project examining the role of its microbiome products – LPLDL, SlimBiome/WellBiome – to improve sleep, stress, and anxiety. The life sciences company, which is developing compounds to tackle obesity, high cholesterol, diabetes and skincare, said the research includes the application of systems approaches to understand the far-reaching effects of microbiome modulators on the biomolecular system of the host and their implications for health and disease. The agreement funds a PhD studentship to explore the potential of prebiotics – SlimBiome/ WellBiome – and probiotics – LPLD – for their ability to manage sleep, stress and anxiety. The agreement includes a double-blind, placebo-controlled, human study carried out during a period of stress-induced sleep disruption.
[email protected] Capital PLC (LON:SYME) has entered into an agreement with Lenovo Financial Services META, a payments solutions provider. The London-listed fintech platform operator said its SYME platform will be positioned as an alternative solution to compliment Lenovo Financial Services’ existing vendor programme offerings to their network of customers in the Middle East, Turkey and Africa (META) region (excluding South Africa). The purpose of the co-operation agreement, made with the strategic support of its funding specialist, iMASS, is to deliver a dedicated inventory monetisation programme to Lenovo Financial Services’ customers that could also allow them to evaluate the opportunity to adopt the upcoming Shari’a version of the platform.
Advanced Oncotherapy PLC (LON:AVO) confirmed it is on track to have a fully operational proton beam therapy unit in 2021 with “good progress” being made at the assembly facility in Daresbury, Cheshire. The company has hit a number of key landmarks in recent weeks. In a technical update, investors were told the LIGHT system is now capable of supporting the delivery of a proton pulse every five milliseconds. This occurred following the conditioning of the high-power radio-frequency (RF) accelerating units with the optimal RF phase and amplitude stability reached.
Guild Esports PLC (LON:GILD) said it has signed a third top-ranked professional esports player to its Fortnite team. The developer of esports teams said it has signed a contract with Anas El-Abd, a Danish gamer currently ranked as the seventh-best Fortnite player in Europe, for one year to compete under the Guild banner in all upcoming European and international tournaments with an option to renew for another year.
Frontier IP Group PLC (LON:FIP), a specialist in commercialising intellectual property, has noted that its portfolio company Elute Intelligence Holdings Limited has successfully raised GBP250,000 through its first equity funding round. The investment, made by private investors in return for a 10% equity stake, values Elute at GBP2.5mln post-money, and Frontier IP’s holding of 41% at GBP1.0mln. Proceeds from the fundraising will be used to support Elute’s recently launched Patent Reader and development of an enterprise search tool based on the same underlying technology, which uses forensic linguistics to speed searches through unstructured document datasets
Union Jack Oil PLC (LON:UJO) has updated on the Wressle oil field development project, in Lincolnshire, where a rig arrived last week and operations are now underway. Following the arrival of the rig and equipment on-site work to recomplete and reperforate began, with the aim of flowing the Ashover Grit reservoir before the end of January.
Oracle Power PLC (LON:ORCP) chief executive, Naheed Memon has provided an extensive update to the market in respect of developments during the fourth quarter of 2020. “The final quarter of the year was a significant period for the company, presenting considerable opportunities despite frustrations relating to certain delays in Pakistan,” said Memon in the update. “Despite the prolonged process which we have experienced over the past nine months with the Ministry of Energy, I can say unequivocally that our Thar Block VI Project has never featured more prominently in the minds of key decision makers and government agencies in Pakistan, as the country looks to unlock the exceptional value of this strategic national asset.”
IronRidge Resources Ltd (LON:IRR) has completed the sale of its non-core May Queen gold project in Queensland to Australasian Gold Ltd (AGL). IronRidge will receive 4.5mln shares representing 28.1% of the enlarged share capital of Australasian Gold. IronRidge will also invest A$100,000 at A$0.10 per share to provide Australasian Gold with additional working capital, taking the total holding to 32.3%.
Power Metal Resources PLC (LON:POW) has updated on ongoing work being undertaken by Kalahari Key Mineral Exploration Pty Ltd at the Molopo Farms Complex, which is targeting prospective massive nickel sulphide and platinum-group metal mineralisation in Botswana. Following the successful drilling of the first two diamond drill holes to their initial target depth an extensive technical review is currently underway at the Molopo Farms Complex project. Initial geological core-logging by KKME’s consulting geologist has identified 4.4 metres (m) of ultramafic rocks with finely disseminated sulphides at approximately 270m vertical depth in one hole.
W Resources PLC (LON:WRES) said it has drawn down a further GBP500,000 tranche from the GBP4mln convertible bond facility it has with Atlas Capital Markets. This is the second drawdown made from the facility which was secured on March 30, 2020. This convertible bond tranche has a 5% coupon and 3-year term.
Power Metal Resources PLC (LON:POW), the AIM-listed metals exploration and development company said it has received notices to exercise warrants over 14,606,326 new ordinary shares of 0.1p each in the company at an exercise price of 1.0p per ordinary share and 4,210,526 warrants at an exercise price of 0.75p per ordinary share. Subscription monies of GBP135,537 have been received by Power Metal in respect of these exercises.
Rock Resources PLC (LON:RRR), the natural resource development company, with interests in gold, copper, cobalt, manganese and other minerals, has announced that its annual general meeting (AGM) is to be held at the company’s business address, We Work, 71-91 Aldwych House, London, WC2B 4HN on Friday, February 12, 2021, at 1.00pm. As a result of coronavirus (COVID-19), in accordance with the UK Government’s measures to restrict gatherings, physical attendance in person by shareholders of the company will not be possible and the AGM will be held as a closed meeting. Shareholders will not be permitted to attend the AGM in person and are strongly encouraged to submit their proxy vote, appointing the chairman of the meeting as their proxy, in advance of the meeting to ensure that their votes are registered.
6.50am: Slow start predicted
The FTSE 100 looks set to make a subdued start to proceedings on Monday – taking its cue from Asia’s main markets which were mixed.
US stock futures, meanwhile, are indicating a down day for Wall Street, which closed the first trading week of the new year in record territory.
Stimulus and vaccine hopes appear to have given way to a bout of cold hard reality as coronavirus (COVID-19) infection rates continue to rise.
In the US, Democrats will call on vice president Mike Pence to use the 25th amendment to get Donald Trump out of office now otherwise house speaker Nancy Pelosi will begin impeachment proceedings.
Here in the UK, Prime Minister Boris Johnson is reportedly mulling even tighter restrictions on the general population with the NHS starting to become overwhelmed by COVID-19 hospitalisations.
Among the measures being floated are compulsory masks outside and people only being allowed out once a week to exercise.
On Sunday, it was announced new infections were almost 55,000 with a further 573 people dying from the virus.
Looking ahead, it looks set to be a big week for corporate news – particularly from the retail sector.
Trading statements covering the recent key festive period are expected from Tesco (LON:TSCO), ASOS (LON:ASC) and Boohoo (LON:ASC) as well as JD Sports (LON:JD.) and Primark owner Associated British Foods (LON:ABF).
On the macro front, we have inflation, jobless claims and retail sales data from the US on Wednesday, Thursday and Friday respectively and UK GDP on Friday.
On the markets:
- Pound US$1.3505 (-0.46%)
- Bitcoin US$34,385,32 (-15.3%)
- Gold US$1,842.00 (+0.46%)
- Brent crude US$55.31 (-1.21%)
6.45am: Early Markets – Asia / Australia
Shares in Asia-Pacific were mixed on Monday as China’s producer price index fell 0.4% in December compared to a year earlier, according to the country’s Bureau of Statistics.
Mainland Chinese stocks slipped with the Shanghai composite declining 0.78% while Hong Kong’s Hang Seng index advanced 0.22%.
South Korea’s Kospi shed 0.12% after gaining more than 2% earlier in the day. In Australia, the S&P/ASX 200 declined 0.90%.
Markets in Japan were closed for a public holiday.
Proactive Australia news:
Castillo Copper Ltd‘s (ASX:CCZ) (LON:CCZ) (FRA:7OR) surged as much as 90% as assays for the 200 series and six drill-holes for the 300 series significantly extend known mineralisation at the high-grade Big One Deposit within the core Mt Oxide Project in northwest Queensland.
Canaccord Genuity has released its Top Australian Stock Picks for 2021, covering predictions across a range of sectors, including investment recommendations, potential catalysts and bull/base/bear target price scenarios for 22 companies.
This year, Perseus Mining Ltd (ASX:PRU) (TSE:PRU) (OTCMKTS:PMNXF), Tietto Minerals Ltd (ASX:TIE) and Euro Manganese Inc (ASX:EMN) (CVE:EMN) (OTCMKTS:EROMF) (FRA:E06), have made the metals and mining list.
PolarX Ltd (ASX:PXX) (FRA:PX0) has secured an option to acquire a mining lease agreement over the highly prospective Humboldt Range Gold-Silver Project in Nevada, which comprises 177 lode mining claims.
Piedmont Lithium Ltd (ASX:PLL) (NASDAQ:PLL) (OTCMKTS:PDDTF) has established a strategic partnership with Sayona Mining Ltd (ASX:SYA) (OTCMKTS:DMNXF) (FRA:DML) by purchasing equity stakes in Sayona and its Quebec subsidiary Sayona Quebec Inc, as well as a binding supply agreement for at least 50% of Sayona Quebec’s planned spodumene concentrate production.
Twenty Seven Co Ltd (ASX:TSC) has signed the tenement sale and purchase agreement (SPA) with Revolution Mining Pty Ltd to acquire two tenements, E77/2540 and E77/2539, nearly doubling and expanding the Yarbu Gold Project in Western Australia.
Anson Resources Ltd (ASX:ASN) (FRA:9MY) has engaged Novonix Battery Technology Solutions to test the performance of lithium hydroxide and lithium carbonate samples extracted from the company’s flagship Paradox Brine Project in Utah, USA, in lithium-ion battery cells.